TVBR's Daily Morning Epaper

Volume 22, Issue 73, Jim Carnegie, Editor & Publisher

Wednesday Morning April 13th, 2005

TV News®

Q2 still soft for Gannett TV
After reporting that Q1 broadcast TV revenues were down 5.1%, Gannett CEO Doug McCorkindale told analysts to

expect more of the same in Q2. The automotive sector continues to be a concern - - and not just for broadcast. McCorkindale said auto was soft across Gannett's platform - - newspapers and TV in the US and for its newspapers in the UK as well. Of course, TV is being impacted in the US by the lack of political advertising, so he's expecting Q2 TV revenues to be down in the mid to high single digits.

TVBR observation: Suggest you listen to the audio of McCorkindale when he speaks of forward pacing. The same on what they don't have today compared to last year as Local up and National down. The buzz word and which we anticipate to hear more of during this TV year from operators will be - Volatile.

Media General sees small gain
for TV in Q2
After pushing hard to eek out a 1% revenue gain for TV in Q1, Media General is preparing repeat that magic in Q2. The company is telling Wall Street to expect a small increase in broadcast ad sales over last year. "For the Broadcast Division, while time sales are expected to be slightly above last year's second quarter, driven mostly by Local transactional sales, segment profit will be down from last year. The major contributing factor will be the expense necessary to generate new revenue growth to offset the absence of political and Olympics revenue," the company said.

FTC lauds media effort to screen diet ads
The Federal Trade Commission has for several years been working to get false or misleading claims concerning weight loss products and programs off TV, radio and print. Comparing spotloads in 2004 to 2001, FTC's Deborah Platt Majoras was able to say, "Good media screening is good business. I encourage the media to continue their efforts to identify and reject clearly false weight-loss advertisement." An FTC study noted that suspect advertising was down a solid 50% in comparing 2001 to 2004. The media is credited with a positive response to the FTC's 2002 call for better screening. There's still a ways to go. "Although the decline in deceptive ad claims is significant, the survey results show there are still areas for improvement," wrote the FTC. "The FTC will continue its efforts to encourage media voluntarily to screen out clearly false weight-loss advertisements."

FCC gets muzzled
The Thomas Jefferson Center for the Protection of Free Expression has named the 2005 recipients of its annual Jefferson Muzzle awards - - given to "those who in the past year forgot or disregarded Mr. Jefferson's admonition that freedom of speech 'cannot be limited without being lost.'" Topping the list: The FCC. "Unfortunately, each year the finalists for the Jefferson Muzzles have emerged from an alarmingly large group of candidates," wrote the organization in announcing the awards. "for each recipient, a dozen could have been substituted." They note that attacks on the First Amendment come from all sides. Indeed, the Democratic and Republican National Parties were each recipients of their own Jefferson Muzzle Award this year. The FCC was cited for ramping up its indecency enforcement without providing an understandable definition of what indecency actually is. Congress's ongoing attempt to jack up fines and pressure from groups like Parents Television Council and American Family Association was also mentioned.

TVBR observation: What can we say? The FCC has been working hard for three decades or so to win this award. It is well deserved - - and it is high time for the courts to step in and tell the Commission that it has to obey the law of the land.

Over 9 million watched Pope's funeral
Despite the early hour in the United States, Nielsen Media Research calculates that over nine million people watched the funeral Friday (4/8) of Pope John Paul II on ten broadcast and cable networks. For seven English networks - - ABC, CBS, NBC, CNN, Fox News Channel, MSNBC and WGN Cable - - Nielsen estimates that the telecast from 3:30 to 7:00 am (ET) drew 8,822,000 viewers 2+ in 7,887,000 households for a 7.2 rating and 39 share based on its National People Meter Sample. (WGN's coverage ran only 4:00-5:30 am.) For the three Spanish networks - - Telemundo, Azteca America and Univision - - Nielsen estimate 370,000 viewers in 340,000 households for a 3.2 rating and 22 share based on its National Hispanic People meter Sample.

Richardson to address RTNDA
New Mexico Governor Bill Richardson, who's been mentioned as a possible contender for the Democratic Party's presidential nomination in 2008, will be the keynote speaker for the RTNDF Luncheon next Wednesday (4/20) during RTNDA@NAB in Las Vegas. Before being elected governor in his home state in 2002, Richardson had been Energy Secretary and US Ambassador to the United Nations during the Clinton Administration, after serving 15 years in the US House of Representatives.

Conference Calls Q1 2005

Media General pulls off Q1 gain for TV
With political and Olympics revenues a mere memory from 2004, Wall Street is expecting most TV companies to post negative revenue numbers this year. But Media General surprised with a gain for Q1 - - even a 1% gain to 71 million is impressive in this environment. "In the Broadcast Division, aggressive sales development initiatives drove strong Local time sales for the quarter. National television advertising was soft, and political revenues were virtually absent compared to last year's presidential primary spending," said Chairman and CEO J. Stewart Bryan III. Local time sales gained 6.3%, even as national fell 1.9%. But with the cost of going after that new business on the local level, expenses were up, so Media General's broadcast division profits fell 21.8% to 11.3 million. Publishing revenues were up 5.7% to 143.3 million and segment profits rose 12.5% to 29.3 million. For the quarter, Media General took a one-time charge of 316.2 million to write down the value of its FCC licenses, as required by a new accounting rule, so it posted a net loss of 13.25 per share. Without that charge, it earned 38 cents per share - - a penny below the Thomson Financial/First Call consensus.

TV revenues down 5.1% at Gannett
With virtually no election advertising this year and no Super Bowl revenues for its six CBS affiliates who'd enjoyed the windfall a year ago, Q1 TV revenues fell 5.1% at Gannett. Local was down 2% and national dropped 12%. Including recently acquired Captivate Networks (elevator TV), broadcast division revenues were down 2.9% in Q1 to 164.6 million. Operating broadcast cash flow fell 13.8% to 66.4 million. Excluding Captivate, cash flow declined 12.7%. The lack of political and Super Bowl revenues weren't the only problem, though. CEO Doug McCorkindale noted that auto advertising was down in the mid single digit range. On the bottom line, Gannett was right on the Thomson Financial/First Call consensus with Q4 earnings of 1.05 per share.

Adbiz©

DirecTV and Chrysler Group
join forces in interactive TV ads
DirecTV announced a long-term deal with Chrysler Group to join the new DirecTV Advertising Development Partner Program. This program allows DirecTV to provide clients with a robust interactive advertising and research vehicle that spans across multiple DirecTV product platforms, such as interactive basic set-top receivers, digital video recorders and the DirecTV Media Center. The program will launch in September. | More... |

L.A. Times to spend 10 million on marketing
Tribune's Los Angeles Times said Monday it would spend more than 10 million this year on marketing campaigns to boost its declining circulation. The fourth-largest U.S. daily newspaper said it launched a 2.5 million ad campaign late last month and would spend 8 million on database/direct marketing efforts to attract new readers. It said ads will run on radio, TV, in the newspaper and online.

Richards Group scores Stainmaster Carpet
Stainmaster has awarded creative buying and planning to The Richards Group in Dallas. Incumbent BBDO NY resigned the account earlier this year, which initiated the review. Richards Group beat out Doner, Southfield, MI; Martin Agency, Richmond, GSD&M, Austin and Martin/Williams, Minneapolis. Invista, which bought Stainmaster and other brands from DuPont last year, spent about 10 million on the carpet brand in 2004, according to TNS Media Intelligence.

Hesterberg leaves Ford
Automotive News reports Ford's top North American marketing exec is leaving the company to run Group 1 Automotive Inc. Earl Hesterberg, 51, becomes CEO of the Houston-based public dealership group less than four months after taking over Ford's North America marketing operation from retired executive Jim O'Connor. Hesterberg previously held the top marketing job at Ford of Europe, worked for Nissan and was president of Gulf States Toyota. Ford Division President Steve Lyons, 56, will take Hesterberg's place as Ford's group vice president of North America marketing, sales and service, Ford announced late Monday. Lyons, a 33-year Ford veteran, had led Ford Division for the past three years.

Media Markets & MoneyTM

Sillerman sets stock sale
Now that he's nailed down both the late Elvis Presley and the living Simon Cowell, Bob Sillerman is getting ready to raise money on Wall Street. His new company, CKX Inc., has filed with the SEC to sell up to 316.25 million bucks worth of new stock to the public. The company said it expects to complete the stock offering by the end of Q2. According to CKX's announcement, "The company is engaged in the ownership, development and commercial utilization of entertainment content, including the rights to the name, image and likeness of Elvis Presley, the operations of Graceland and proprietary rights to the Idols television brand, including the American Idol series." Bear, Stearns & Co. is acting as the sole book-running manager and Lehman Brothers Inc. is acting as joint lead manager for the offering.

Transaction outlook: 2005, Part 3
Today we put the question to Eddie Esserman of Media Services Group: What kind of deal making is going to go on this year? "You said when we spoke earlier that there was uncertainty about the FCC ownership rules, but I think they're pretty clear for radio, until they go back and rework or redefine the unrated markets. I think you'll see some, perhaps some housecleaning from some of the larger companies to bring their clusters into the current rated market size definitions, so that if they ever decide to exit, they'll be able to do that and probably not flood the market. So I think you'll begin to see some of that. I think you'll probably see some groups beef up in areas to be new definition compliant to maximum size in markets where they're not - - probably not a lot of those. The remaining individual owners I know will continue to be bombarded. Inventories have been tight for a long time; some of those deals will get done. On pricing, I think multiples are high. I'm not sure that they're going to go down - - I don't see much out there that's going to drive them higher this year, but conversely, I've not seen them back up a whole lot." What about in television? Is everybody still waiting for what happens with the ownership rules? "I think the ownership rules play a more important part there, but I think some deals will continue to get done. There was quite a flurry of LPTV activity, but I don't see that continuing. But I think a fair number of deals will wind up getting done this year.

Washington Beat

Multimedia execs biding their time
Executives from Gannett and Media General share a common headache - - common ownership of broadcast and newspaper properties in one market. It wasn't supposed to be a headache by now - - most expected that the existence of such companies would have been the law of the land almost a year and a half ago. However, implementation of rules allowing such combinations was put on ice by the Third Circuit Court, and concerned parties are waiting for (1) the FCC to write new rules; (2) the FCC to better justify its earlier proposal; or (3) the Supreme Court to step in. According to an Associated Press report, Gannett exec Douglas McCorkindale doesn't expect the regulatory fog to clear up for the next two years or longer. General Media's J. Stewart Bryan III was hopeful that the Supreme Court would step in. However, that result would not be a guarantee that the two companies would get their wishes fulfilled, and could actually prolong the entire process. Stay tuned.

Sometimes it's what's not on the docket...
The Senate Commerce Committee is getting set to mark-up a number of bills Thursday 5/14/05. It will consider bills on matters such as coastal mapping, junk faxes, minority tech opportunities and transportation safety. What's missing? Hmmmmmm...what's going on with that Broadcast Decency Enforcement Act of 2005 which has already been passed overwhelmingly by a floor vote in the House...

Programming

Peacock has "Revelations"
Like everyone else in Hollywood who noticed the amazing success of Mel Gibson's "The Passion of the Christ," NBC is trying to cash in on American religious fervor. Premiering tonight (8:00 pm ET) is episode one of a six-hour made-for-TV mini-series, "Revelations." Bill Pullman stars as a Harvard astrophysicist who believes all worldly events can be explained by science. He is challenged by a nun, played by Natascha McElhone, who leads him on a journey into the unfamiliar world of faith. "Drawn together by personal tragedy, these unlikely partners - - one who worships God and one who worships science - - are propelled into a deepening mystery, finding evidence that the world, as predicted by The Book of Revelation, has reached The End of Days. "Revelations is from executive producer Gavin Polone ("Panic Room") and writer/creator David Seltzer ("The Omen"). It is produced by Pariah.

WB thrilled with Fran's debut
Critics hated it, but viewers liked Fran Drescher's new sitcom, "Living with Fran," so much that the WB has decided to leave it at 9:30 on Friday nights, where it drew its strongest numbers following "Reba." The series debuted last week with two shows - - one at 8:30 and another at 9:30, sandwiching "Reba." According to the WB, "Fran" grew in every key demo from its 8:30 premiere to its second episode at 9:30, "proving to be the perfect companion piece for The WB's top-rated comedy 'Reba'." The new comedy scored the second-highest ratings of the season in the 9:30-10:00 time period for the network among adults 18-34 (1.6/6), persons 12-34 (1.5/6), women 18-49 (2.5/7) and total viewers (4.4 million), while equaling the season best in adults 18-49 (1.8/6). Also, "Fran" retained 94% of its "Reba" lead-in among adults 18-34 and persons 12-34, 95% of its adult 18-49 rating and 93% of its total audience. "Living with Fran" is from Regency Television with executive producers Bob Myer, Jamie Kennedy and Fran Drescher and co-executive producers David Garrett & Jason Ward, Tim Kelleher and Frank Lombardi.

TVBR Ratings

"Housewives" outscore college hoops
Even the college basketball championship couldn't beat ABC's "Desperate Housewives" in the Nielsen ratings, so CBS Sports had to settle for second place. That bumped Fox's "American Idol" to 3rd and 4th for its two nights of talent competition. For the week, CBS was an easy winner with an average rating of 8.1 and a 13 share. It also won the 18-49 demo. Second overall was ABC at 5.9/10, followed by NBC at 5.7/9, Fox 5.3/9, UPN 2.1/3, WB 2.0/3 and Pax in the rear at 0.5/1. Here are the top 20 network primetime shows for the week of 4/4-10. | More... |

GM Talkback

The Sarbanes-Oxley Act
Recently, TVBR talked with the industry about how has the Sarbanes-Oxley Act affected their accounting routine. By the end of last year, publicly held companies had to be in compliance (billing systems). Tomorrow, we get opinion from Bill Moll, President/CEO, Clear Channel Television.

Ed Piette, CBS's KCCO-TV Minneapolis
The Sarbanes-Oxley Act has impacted every area of our station. Without a doubt, the Accounting department is hit the hardest because they have to document and track almost every transaction. We have implemented new software to record every audit test that's done. But the new act also means that management throughout the station has to be focused on all business activities and verify the accuracy of documentation required for the audits. Even our IT department has to upgrade systems and institute even more rigid security measures. There is no question that the Sarbanes-Oxley Act has put the focus on accountability, and that was exactly the intention.

Stock Talk

Stocks jump on Fed comments
Wall Street cheered as minutes of the Federal Reserve's policy making meeting of March 22 were released, showing that the Fed intends to stick with only small rate increases, even as it sees signs of inflation heating up. The Dow Industrials rose 59 points, or 0.6%, to close at 10,508.

Ditto for TV stocks. Both companies which reported Q1 earnings got a boost - - Gannett rose 1.5% and Media General 0.9%. The big gainer, though, was Young, up 6.3%. ACME, which is now in penny stock territory, fell 4.3%. Of the other penny stocks, Paxson was down 7.2% and Granite 3.1%.

Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Acme	ACME		4.51	-0.20	McGraw-Hill	MHP		84.84	-0.80
Belo	BLC		24.11	+0.11	Media General	MEG		61.42	+0.54
Clear Channel	CCU		34.54	+0.26	Meredith	MDP		46.48	+0.09
Disney	DIS		28.14	+0.01	News Corp.	NWS		17.51	+0.09
Emmis	EMMS		18.52	-0.22	Nexstar	NXST		6.83	+0.13
Entravision	EVC		8.97	+0.06	NY Times	NYT		35.67	-0.03
Fisher	FSCI		51.32	-0.02	Paxson	PAX		1.16	-0.09
Gannett	GCI		80.00	+1.19	Saga Commun.	SGA		15.53	unch
Gen. Electric	GE		36.09	+0.27	Scripps	SSP		48.57	+0.27
Granite	GBTVK		0.31	-0.01	Sinclair	SBGI		8.01	-0.09
Gray	GTN		14.18	+0.12	Time Warner	TWX		17.96	+0.11
Gray, C1. A	GTNa		12.96	-0.05	Tribune	TRB		39.35	+0.49
Hearst-Argyle	HTV		25.54	-0.17	Univision	UVN		27.90	-0.10
Jeff-Pilot	JP		49.55	+0.73	Viacom, Cl. A	VIA		35.05	+0.12
Journal Comm.	JRN		17.13	+0.15	Viacom, Cl. B	VIAb		34.80	+0.10
Liberty Corp	LC		40.59	+0.14	Wash. Post	WPO		894.00	-5.50
LIN TV	TVL		16.85	-0.15	Young	YBTVA		8.77	+0.52

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Bounceback

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Less is More - - an idea so old
it's new again.

I read with a chuckle

Ron Nickell's comments on Less is More being a restyling of a concept used over 30 years ago (4/12/05 TVBR #72). Drake Chenault was not the only one implementing this idea. Some of you may remember the Beautiful Music format devised by Jim Schulke. His idea was smooth, easy listening with as few commercial breaks as possible - - 4-5 per hour and few spots in those breaks. His format was eminently successful in markets nationwide and had 2 stations in Philadelphia vying for honors as the top 5 in the market. One using his format, the other using the fewer breaks per hour concept and similar format as well. Having said that, it is a new day and 2005 is not using the same dynamic as radio did in 1975! Not to say that Less is More is not a good idea, but the balance between ratings success and revenue streams is a much more complicated equation. I applaud all who keep trying but remember that the audience is the final arbiter of who has that success.

Stan Elgart
President
Felsgart Communications

Upped & Tapped

Hinnant to Q
Q Television Network announced that Carol Hinnant has joined the gay/lesbian cable net as Vice President of Affiliate Sales and Marketing. She had been in a similar position at Here! TV.

Hussein joins
Deutsche Bank
Deutsche Bank Securities announced that Samir Hussein has joined it as a Director in the Media & Telecom Investment Banking Group in North America, specializing in diversified media and entertainment companies. He was formerly with Banc of America Securities.

More News Headlines

Sinclair renews DirecTV retrans

Panel to assess the
future of radio news

Adelstein to keynote
BCFM/BCAA confab

International

Study: Japanese
watch the most TV
According to a just-released report from Eurodata TV Worldwide, the average level of 2004 TV consumption increased on nearly every continent last year, but Japanese viewers watch more TV than anybody. The report, unveiled at a panel discussion at the MIPTV convention in Cannes, also found Americans' use of TV climbed by three minutes last year to an average of four hours and 28 minutes. The Japanese watched the most television last year, with a daily average of five hours (5:00). Americans were second, followed by Argentinians and Greeks, who consumed 4:25 and 4:04, respectively. At 2:30 daily each, China and Sweden watched TV the least.

May - Radio & Television Business Report
The First Real Monthly
Business Media Magazine

Upfront looms on
the horizon

May Radio & Television Business Report focuses on One-On-One interviews with the money Ad Players: David Verklin, Steve Grubbs, Harry Keeshan, Jon Mandel, Ray Warren, Ira Berger, Jean Pool, Julie Roehm and others that read TVBR religiously. They're participating because they want you to know what they need to help make informed decisions. They comment on programming that they view promising for this upfront; they examine thoroughly the real issues that affect the marketplace as all are getting busy. This is a large story already and getting bigger.

Watch for the May Issue of
Radio & Television Business Report. The 2005-2006 Upfront Examined.
If you have not revalidated, do so at www.tvbr.tv to ensure the delivery of your May issue.

TVBR Radar 2005

Television News you won't read any where else. TVBR--First, Accurate, and Independently Owned.

Watchdogs unhappy
with CPB shuffle
In a joint statement, CPB President/CEO Kathleen Cox and Chairman Kenneth Y. Tomlinson announced that Cox was adding an ex- to her title, effective immediately. New hire Ken Ferree on board as EVP/COO for only a few weeks COO following his recent exit from a controversial tour of duty as the FCC's first Media Bureau Chief, will fill in for Cox while the search for a new President is conducted. Jeff Chester of the Center for Digital Democracy is not so sure argues that Ferree supported the deregulatory regime of Michael Powell at the FCC. TVBR observation: Yes, Ferree was working for an FCC chairman who espoused deregulatory, open market ideas. It was Powell's job to make those types of determinations, and it was Ferree's job to create regulation within Powell's framework and the law. It was not Ferree's job to barnstorm the countryside getting input from concerned Americans. That said, we found Ferree to be extremely open and communicative - - he was anything but evasive, and he was willing to state his own opinions when asked. 04/12/05 TVBR #72

Piece of pie for gamemakers?
There's a new agency out there, set to make a play for a piece of the advertising pie, and it's not looking to place the ads on the air, over the wire, from satellite or in print. Company called Massive, owned by Mitchell Davis, has noticed that video games rob eyeballs from purveyors of traditional program distributors, either over the same television screens the programmers used to have pretty much to themselves, or on a computer screen. Massive plans to do product placements, initially not on television but on Internet games, particularly focusing on the genres of sports, shooting and strategy. Tech from Massive will put billboards and other forms of product placements into the games, and it will be able to modify the ads. This will also work over game consoles/TVs eventually, as long as an Internet connection is present.
TVBR observation: Imagine Pacman. He eats little dots. No extra money there. Why not real Dots. This isn't entirely a new concept putting billboards on the homerun fences at ballparks (easily adaptable to video games), and we've seen things like resort town versions of Monopoly where the properties are local business establishments. Even the old BIA "Investing in Radio" game. All this goes exponential with electronics and the Internet. This is why RBR & TVBR and our Magazine are Electronic and Digital.
04/12/05 TVBR #72

Neil takes WSJ to task
You've got to hand it to the PR firms working for XM and Sirus - - they've done a heck of a job getting newspapers to run stories that make it look like satellite radio, which still has relatively little penetration of the US media market, is already a major player and has terrestrial radio on the run. Cox Radio CEO Bob Neil got fed up with all of the hype and fired off a letter to set the record straight at the Wall Street Journal. RBR observation: Go Big Bob - this speaks better than some sticken PR agency when top level broadcasters take control and fight back and go on the attack. Good programming. 04/12/05 TVBR #72

Now, everybody
wants to buy Paxson
After two years of searching for a buyer for Paxson Communications, Bear Stearns and Citigroup never managed to bring a viable deal to the table. But now that the company has dismissed its investment bankers, it seems that people are lining up to make a bid. In addition to Byron Allen, the New York Post reported Friday that Jeff Kwatinetz's Hollywood talent agency, The Firm, is also trying to line up financing to buy Paxson. The problem with both of those bidders is that, as far as TVBR can determine, they don't actually have the 2.2 billion plus in place to make a formal bid.
TVBR observation: It's by no means certain that the company will be sold. Now that Paxson has cut staff and is ending its local JSAs, management is working on a new structure that will get the company out of producing any programming of its own, generate substantial cash flow, and provide a way to refinance the company's debt. No, it won't be all infomercials - - that would violate Paxson's contracts with cable systems - - so it looks like the company will become more of a time broker - - leasing airtime (and its valuable cable clearances) to program producers willing to pay their own way and sell their own ads.
04/08/05 TVBR# 71

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