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Volume 23, Issue 1, Jim Carnegie, Editor & Publisher
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Tuesday Morning January 3rd, 2006
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Radio News ®
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 The split is complete
for CBS and Viacom
Infinity Broadcasting had already adopted the CBS Radio name (12/15/05 RBR #244) and over the weekend Viacom exited the broadcasting business for the second time. The new CBS Corporation was promoting its new logo and separate stock listing in TV spots on New Year's Day and today investors will be able to buy the pure play broadcasting stock - - although, in truth, there's also outdoor, book publishing and theme parks thrown in. The stocks of New Viacom (the cable TV/movie studio company) and CBS had already been trading on a "when issued" basis for several weeks. Based on Friday's trading, the market is giving a bit more value to the parts than to the former whole. The more widely held non-voting Class B stock of "old" Viacom closed forever at 32.60. In when issued trading, CBS Class B closed at 25.50 and New Viacom Class B at 41.15. Add together and divide by two (shareholders receive a half share of each new company for one of the old) and you get 33.32 and half penny. Beginning tomorrow, RBR's daily stock listings will include CBS Class A (ticker "CBSA) and Class B ("CBS"). To square up bookkeeping for the separation, New Viacom" announced January 1st that it had paid a 5.4 billion bucks dividend to CBS Corporation. In an SEC filing, the companies also said that they would jointly determine the 2005 bonus for Sumner Redstone, who is now Chairman of both New Viacom and CBS. His new contract with CBS entitles him to a 1.75 million salary and 1.3 million in deferred compensation annually, plus a bonus. He signed a contract with identical terms for New Viacom.
RBR observation: 6.1 million bucks, plus two bonus checks. Not bad for a couple of part time jobs.
 Senate battlegrounds shaping up
As we saw in 2004, when it comes to raking in dollars in the political category, location is everything. This time around, US Senate races in at least 10 states may make it onto the national party radar screens, meaning cash flowing from out of state may supplement home-grown supplies of green. Each party has 14 defending incumbents, and there are five open seats. The Democratic Senatorial Campaign Committee will be trying to regain the upper chamber, and according to AP, with 22M in the bank, it has more than double the cash on hand of its Republican counterpart. The Dems will be targeting seven states currently held by Republicans: Arizona (Jon Kyl defending), Missouri (James Talent defending), Montana (Conrad Burns defending), Ohio (Mike DeWine defending), Pennsylvania (Rick Santorum defending), Rhode Island (Lincoln Chafee defending), and Tennessee (open, Bill Frist exiting). The Republicans are of course conceding nothing, and think they may take a few out of the Democrat's column, including Maryland (open, Paul Sarbanes exiting), Minnesota (open, Mark Dayton exiting), and New Jersey (Robert Menendez defending, filling out remainder of term for Governor-elect Jon Corzine).
RBR observation: Senate seats rival governorships are the highest profile elective offices at the state level, and these high-profile campaigns just can't resist leaning on TV. Radio, however, is a great quick-hit medium, giving candidates the opportunity to almost instantaneously react to breaking news and challenge opponent statements. The sooner local radio stations and organizations point this out to the various campaign organizations, the more they stand to benefit.
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Another medium enters the fray
Advertising is already ubiquitous, and now, to coin a word, it is even ubiquitouser. It's not enough that you can't watch the entertainment portion of an advertiser supported TV program; you can't sit on a subway car or ride a bus; you can't look at the gear of a professional athlete; you can't watch a homerun sail over a fence at a baseball game; you can't look at the name of the stadium; you can't enter a public restroom, and in some bars you can't talk to a seeming innocent civilian or even look into a urinal; you can't look at the floor of your local supermarket; you can't even look at the forehead of certain enterprising youths with temporary tattoos; all of these things you cannot do without seeing somebody's commercial message. Now, another venue is in play, according to the Associated Press: graffiti. Wall art is said to be in use as part of a stealth campaign promoting PlayStation. Philadelphia, San Francisco and New York are said to be among several locations where the campaign is being run. In Philadelphia, the campaign is being assailed as fomenting urban blight and being otherwise illegal. Observers feel that fines for large corporations such as Sony could easily be swallowed as a cost of doing business. The best hope is that the corporation can be shamed into eschewing the practice.
 Hollywood battling
over product placement
Actors and writers want a cut. If more and more advertising cash it going directly into a program instead of into the breaks surrounding the entertainment portion of the program, actors and writers who make it happen want some of the money to be diverted in their direction. According to a Reuters report, unions representing both groups are making zero headway with major networks and studios which would just as soon keep the income to themselves.
RBR observation: There are bigger issues in radio than placement. Nonetheless, it's important for all broadcasters to follow issues concerning commercial speech. In this case, Some observers think the unions are using product placement as leverage to gain traction on other issues. On the other hand, the Writer's Guild has threatened to make an FCC issue out of product placement. Although one attorney cited in the article thinks the FCC threat is no more than a ploy, it is a fact that product placement is prominent on the list of things that concern Democratic Commissioner Jonathan Adelstein, meaning that ploy or not, the WGA will be able to find at least one set of sympathetic ears at the Commission - - and probably two, if you take Michael Copps into consideration. Payola issues have been center ring in the New York state circus run by AG Eliot Spitzer, and could well become a more prominent issue in Washington is the Dems can goad Chairman Kevin Martin into some kind of action. Stay tuned.
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| Wall Street Media Business Report TM |
2005: A year best forgotten
Wall Street traders beat up on radio stocks in 2005 - - and not without justification. With only one month left to be reported, the RAB said that radio revenues were flat through November (12/28/05 RBR #251) - - a worse showing than even the most pessimistic forecasters had been looking for as the year began. Of the 28 terrestrial and satellite radio stocks reported daily by RBR, only four managed to post growth in 2005. Jefferson-Pilot, which is primarily an insurance company, rose on a deal to sell the entire company to Lincoln National. Emmis Communications rose because it spent much of the year selling off its TV assets, with a couple of deals yet to be announced. Gaylord, which is barely even in radio any more with a single AM station, rose on the strength of its hotel business. So, of the four gainers, the only one to move up on the strength of its broadcast performance was Univision - - and it rose only 0.4% for the year. RBR's Radio Index began falling in January and never looked back. By the time the year was over, our index of 15 companies whose main business is radio had fallen 21.1%. The year's worst performers were Spanish Broadcasting System, which plunged 51.6% as investors punished the radio company severely for announcing plans to enter TV as well, and Interep, a penny stock which dropped 52% in the face of a terrible year for national sales and some prominent client defections.
| Read 'em and weep |
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Ad Business Report TM
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Icon hall of fame established
A new Kansas City museum is scheduled to cut the ribbon in 2007. It will be devoted to preserving the legacy of advertising icons which have risen above their initial promotional purposes and become part of American pop culture. Aptly named the Advertising Icon Museum, it'll kick off with over 2K examples, led by Jolly Green Giant, Cap'n Crunch and Kool-Aid Man. There will be a 3-D "Walk of Fame" for new inductees selected by online voters, including this year's winners, Juan Valdez and the Geico gecko. There will also be a two-story mock-up of a typical US residence with each inducted icon represented in the appropriate room.
RBR observation: We hope they will "leave the light on" for Tom Bodett. It is incumbent on national creative talent to ensure there is a constant fresh supply of audio-only icons to warrant a sound room in the museum.
 New AT&T, new branding campaign
AT&T, the company created by the merger of the former long distance company AT&T into regional bell company SBC, has kicked off the New Year with a major advertising campaign to establish its renewed 120-year-old brand. "Your World. Delivered." is the slogan for the massive branding campaign, which kicked off its first TV spot on ABC's "Dick Clark's New Year's Rockin' Eve 2006." The year-long, multifaceted campaign will feature nationwide ads for the company's long-distance service and regional ads for its other services in the 13 states where people now get their local telephone service from AT&T. "The new AT&T will lead the industry in delivering the next generation of integrated solutions that deliver on the promise of virtually anywhere, anytime connectivity. This campaign will bring to life our pledge to deliver the real and proven solutions that enable our customers - - consumers, small businesses, federal government agencies, global and regional corporations - - to take charge of their world," said AT&T CEO Edward Whitacre Jr.
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| Media Markets & Money TM |
Davidson continues its growth pattern
Davidson Media has entered another market. This time it's getting an AM-AM duopoly in Louisville KY from Mortenson Broadcasting. The price tag is 2.65M cash. The sale of WLOU-AM and WLLV-AM completes Mortenson's exit from the market - - late last year it sold WLBJ-AM to New Albany Broadcasting Co. (12/3/04 RBR #235) for 1M. Broker John Pierce managed to get himself written into the contract as well - - Mortenson will pay 25K for his services in putting the deal together.
US Hispanic universe expanding
Estuardo and Leonor Rodriguez are getting a second AM station in the Greenville-New Bern-Jacksonville market to go along with their Hispanic-formatted WLMR-AM Kinston. The addition will be WSRP-AM Jacksonville NC, coming for 475K from Eastern Broadcasting Inc. By closing, the buyers will have turned over 225K cash and a 250K note for the station. It will also mark the end of an LMA with a third party. La Invasora has been warming up the station for the buyers since 3/31/04.
Wilkey back in the game
Joshua Wilkey, President of WilkeySouth Media Brokers, is returning to station ownership with a deal to buy three stations. But while he is buying WXJB-FM Harrogate, TN, WFXY-AM Middlesboro, KY and WANO-AM Pineville, KY from the Estate of Warren A. Pursifull for 900K, Wilkey is immediately reselling WXJB-FM for an as yet undisclosed price to Ron Merideth's M&M Broadcasting, based on a just-approved FCC rulemaking to change its city of license to Halls, TN, just north of Knoxville. Meredith will operate it as a combo with WYSH-AM Clinton, TN. For his part, Wilkey is launching a new company, Cumberland, OmniMedia, LLC, and will relocate to Middlesboro, KY to oversee the two AMs. Current GM Jeremy "Beau" Farmer will add VP stripes and stay on to run day-to-day operations of the stations.
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| Washington Media Business Report TM |
Getting off
If you are honest in your dealings with the FCC, and if the violation is minor enough and promptly corrected, sometimes you can close the book on an infraction without having to open the old checkbook. Such was the case for a number of television stations as 2005 came to a close - - five of which belonged to Hearst-Argyle (still hanging on in the radio business with an AM-FM combo in Baltimore). In three cases, it simply had licenses renewed after reporting minor overages in commercial run-time during children's programming - - this was the case at WXII-TV Winston-Salem NC, KHBS-FM Ft. Smith AR and KHOG-TV Fayetteville AR. The other two were somewhat more serious, but resulted in cash-free FCC admonishments. Both involved public file omissions, relatively brief instances where children's programming and/or issues programming info was missing from the file. Such was the case at WBAL-TV Baltimore, where the information was misplaced after a remodeling project, and WLWT-TV Cincinnati, where children's info was absent for three quarters in 1997-1998. The sixth station, Beach TV Properties' WPCT-TV Panama City Beach, was also admonished for a 1998-1999 hiatus in children's programming data. All six licenses were renewed.
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| Entertainment Media Business Report TM |
Patrick signs off to run for office
 Another radio talk show host has gotten bitten by the political bug. Dan Patrick did his last afternoon drive show last Thursday (12/29) on KSEV-AM Houston to run for the Texas State Senate. He's one of four Republicans seeking the seat being vacated by the retirement of Republican Jon Lindsay. According to the Houston Chronicle, he's the frontrunner in the polls, although another candidate has raised more money for the primary battle. Only one Democrat has filed so far in the heavily Republican district. Patrick should have no trouble getting his old air shift back after the election. He's also GM of the station, His son, Ryan Patrick, is keeping the mic warm in dad's absence.
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| Monday Morning Makers & Shakers |
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Transactions: 11/21/05-11/25/05
All it takes is one biggie to reverse a slump. TV was no help during Thanksgiving week, but the Susquehanna to Cumulus stock transaction was, pushing a month which barely made it over 40M all the way into over the billion dollar threshold.
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Total
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Total Deals
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5
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AMs
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15
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FMs
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27
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TVs
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0
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| Value |
1.2034B
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| Complete Charts |
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Radio Transactions of the Week
34 stations, 1.2B, need we say any more?
| More... |
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TV Transactions of the Week
Still no action.
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| Transactions |
85M WNDU-TV South Bend IN. 100% of Michiana Telecasting Corp. from The University of Notre Dame du Lac (John I. Jenkins) to Gray Television Group Inc. (J. Mack Robinson et al). 1.5M escrow, balance in cash at closing. Includes non-compete. Buyer will also provide 8.5M letter of credit. Cross-ownership with newspaper The Goshen News, 25 miles away in the South Bend DMA. LMA intil closing. [File date 12/5/05.]
965,460 KCOB AM & FM & KRTI-FM Newton IA (Newton, Grinnell IA). 65.46% of Central Iowa Broadcasting Inc. from John E. Carl (65.46% to 0%) to Frank V. Liebl (32.59% to 94.36%) & Jon D. Liebl (1.95% to 5.74%). 320K note, 645,460 non-compete. Existing duopoly. [File date 12/8/05.]
562.8K WOYE-AM CP Orlando (St. Cloud FL) from Jose J. Arzuaga Jr. d/b/a Amedia to Centro de la Familia Cristiana Inc. (Roberto Candelario, Ramona A. Candelario, Carlos A. Thillet). Cash. CP is for 1160 kHz. [File date 12/9/05.]
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| Stock Talk |
Wall Street ends 2005 on down note
If you made money in the stock market in 2005, you beat the down trend. With concerns about Merck and General Motors weighing on the market, the Dow Jones Industrial Average fell 67 points on the year's last trading day, to end at 10,718 - - a drop of 0.6% for all of 2005.
The story was much the same for radio stocks, only worse. The Radio Index fell 1.811, or 1%, on Friday, to 181.304. That ended a year long slide of 21.1% which left the index barely above its 2005 low of 181.028, set on December 21st. Friday's worst performer was Radio One, with its Class A stock down 3.2% and Class D off 2.4%. The only radio stock to rise on Friday was Viacom. Its Class A stock gained 1.1% and Class B 0.8% just before the company's split into New Viacom and CBS Corporation.
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| Radio Stocks |
Here's how stocks fared on Friday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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37.98
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-0.50
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Jeff-Pilot
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JP
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56.93
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-0.20
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Beasley
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BBGI
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13.51
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unch
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Journal Comm.
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JRN
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13.95
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-0.07
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| Citadel |
CDL |
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13.44 |
-0.17 |
Radio One, Cl. A
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ROIA
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10.27
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-0.34
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Clear Channel
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CCU
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31.45
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-0.23
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Radio One, Cl. D
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ROIAK
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10.35
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-0.25
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Cox Radio
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CXR
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14.08
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-0.27
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Regent
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RGCI
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4.64
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-0.04
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Cumulus
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CMLS
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12.41
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-0.14
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Saga Commun.
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SGA
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10.87
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-0.22
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Disney
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DIS
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23.97
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-0.20
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Salem Comm.
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SALM
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17.49
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-0.10
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Emmis
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EMMS
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19.91
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-0.01
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Sirius Sat. Radio
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SIRI
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6.70
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-0.04
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| Entercom |
ETM
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29.67
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-0.28
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Spanish Bcg.
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SBSA
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5.11
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unch
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Entravision
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EVC
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7.12
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-0.03
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Univision
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UVN
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29.39
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-0.19
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Fisher
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FSCI
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41.43
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-0.53
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Viacom, Cl. A
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VIA
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32.76
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+0.34
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Gaylord
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GET
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43.59
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-0.86
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Viacom, Cl. B
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VIAb
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32.60
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+0.25
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Hearst-Argyle
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HTV
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23.85
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-0.20
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Westwood One
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WON
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16.30
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-0.09
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Interep
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IREP
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0.36
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unch
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XM Sat. Radio
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XMSR
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27.28
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-0.40
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Bounceback
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 We want to
hear from you.
This is your column, so send your comments and
a photo to [email protected]
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Stations for Sale
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NEast CapCity FM
Suburban FM, strong revenue history-less than 8.5x BCF - 2M.
[email protected] or
781-848-4201
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Below the Fold
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Ad Business Report
New AT&T ads
Start with new branding campaign...
Washington Media Business Report
FCC Fines and Getting off
If you are honest in your dealings and if the violation is minor ...
Media Markets & Money
US Hispanic universe expanding
Estuardo and Leonor Rodriguez are getting a second AM...
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TVBR - TV News
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2005: The year
of penny stocks
No, we're not saying that 2005 was a year to make a killing playing the penny stock market. We have no idea whether it was or not. What we do know is that three public TV companies who began the year in the reputable part of the stock market, where stocks of five bucks or more per share can be readily traded and even bought on margin, are ending the year in penny stock hell - - being traded by the market's scavengers. ACME began the year at 7.01 and despite a nice asset sale to put its finances in better order, has been beaten down to about half that. Nexstar worried investors by playing hardball with a couple of cable MSOs. Although that worked out well in the end, the company's stock had slipped below the magic five buck mark late in the year and has lately been bouncing back and forth over the barrier - - most recently to the low side. Young Broadcasting was hard hit by a soft ad market that was exceptionally soft in San Francisco, home to what is far and away its largest station, KRON-TV. Its stock has sunk from 10.56 last New Year's Eve to lately be staying well below three bucks. Also toying with the five buck line recently has been Spanish Broadcasting System - - the nation's second largest Spanish radio group, which was severely punished by investors for announcing a deal to acquire its first TV station. It's been lately a bit above five bucks - - only half of its stock price of a year ago. Of course, Granite and Paxson began 2005 in penny stock hell and have stayed there throughout the year. Paxson recently resolved its differences with shareholder NBC Universal and Granite announced a deal to sell its two big market WB stations, but both stock prices still remain below where they were when the year began.
TVBR observation: How many group heads have we heard from this past year who'd been bitten by the Wall Street bug a few years back, but didn't get their IPO preparations together in time? They're breathing a sigh of relief that they didn't get caught up in the rat race of having to answer to The Street's expectations quarter after quarter - - and seeing their stock price fall for reasons beyond their control. Now it's the guys who did make it through the IPO window who are trying to figure out how to go private - - and that ain't easy in the current market.
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RBR Radar 2005
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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'06 No light at the end of the tunnel
RAB's report that radio revenues were flat in November was no surprise, but the issue now is figuring out when things will get better. Wachovia Securities analyst Marci Ryvicker is looking for that light at the end of the tunnel, but she doesn't see it yet.
RBR observation: Ryvicker analysis is to the point and all should take extreme caution to her words as RBR could not have said it any better - "At this point in time, we do not feel that the radio industry has a well-defined near-term catalyst as the sector's fundamentals continue to deteriorate, M&A activity has slowed, and both investors and advertisers have become increasingly more interested in new media." Key is simple - New Media - ad clients are going to test and try all new technology delivering content as this holiday sales proved it with hand held technology.
12/29/05 RBR #252
National red ink
flattens radio's November
local revenue registered a modest 1% gain over the same month in 2004, but the month came in flat when a 5% decrease in national revenue and a 1% decrease in non-spot revenue were factored in. Flat is the story for YTD.
RBR observation: Up until recently, the two- and four-year political cycles were much more obvious in television than radio. It seems to us that the bigger problems were the overall weakness in advertising in general and the growing pains of Clear Channel's LIM initiative. Everyone is looking forward to the natural leveling effect of comparing LIM numbers with new LIM numbers in 2006. Plus political will be working in everyone's advantage. There should be no excuses for continued red ink in 2006, barring the usual forced considerations like someone just plain screwing up.
12/28/05 RBR #251
Back to the future for Clear Channel
It took most of '05 to complete the process, but the big restructuring that Clear Channel Communications (CCU) announced back in the spring has been completed. A few weeks after the IPO of Clear Channel Outdoor as a 90% owned subsidiary of CCU with its own stock (CCO), CCU divorced itself from Clear Channel Entertainment by passing out shares of a new company, Live Nation (LYV), to shareholders - one share of LYV for each eight shares of CCU owned.
RBR observation: Don't look for any more spin-offs from Clear Channel. The TV group and Katz Media Group are too small to be viable as stand-alone public companies (as Katz already proved once). And it would make no sense to create a separate stock for Clear Channel Radio (although the ticker LIM, Less is More, comes to mind), since radio is CCU's main business. Rather, it's time to hunker down and improve operating performance. With the easy comps from 2005 resulting from LIM, there can be no excuses for not delivering growth in 2006.
12/27/05 RBR #250
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