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Volume 23, Issue 103, Jim Carnegie, Editor & Publisher
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Thursday Morning May 25th, 2006
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Radio News ®
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 Trouble in satellite land:
XM cuts subscriber forecast
Already reeling from a federal investigation into how it counts subscribers and a raft of shareholder lawsuits that followed, XM Satellite Radio shocked Wall Street yesterday by reducing its subscriber forecast for 2006. Rather than nine million subscribers, it is telling The Street to expect 8.5 million at year end. XM's stock, which had already been in a slide, fell over 11% yesterday. "Subscriber growth for the first quarter of 2006 was consistent with our initial guidance of nine million subscribers by the end of 2006. Although XM has regained retail market share since the first of the year, the satellite radio category has seen an overall softness at retail during the second quarter to date, and we have been later than anticipated with broad availability of our new products," said CEO Hugh Panero. Despite lowering its revenue target for 2006 to 835 million bucks from 860 million, XM insisted that it will still turn cash flow positive for Q4 and all of 2007. Sirius tried to distance itself from XM's troubles, issuing a statement late yesterday reaffirming its guidance that it would have more than 6.2 million subscribers by the end of the year. "We continue to experience dramatic growth and strong demand for our service across our retail and automotive OEM channels. This supports our expectation that we will capture the majority of retail satellite radio net additions in 2006," said CEO Mel Karmazin.
RBR observation: The big question for satellite radio has always been "Where is the plateau?" If subscriber growth slows markedly before XM gets to 10 million subscribers, all of those rosy forecasts from analysts of 30, 40, 50 million subs a few years down the road will fly out the window. As for whether a satellite radio company can generate positive cash flow from operations - we wait to be convinced. Both XM and Sirius have promised investors that will happen this year. But then, both had also once promised investors that it would happen when they got four million subs.
S&P cuts Cumulus' ratings
After looking at the company's plan to buy back 200 million bucks worth of its stock (5/11/06 RBR #93), Standard & Poor's has decided that Cumulus Media is more of a risk for its debt holders. S&P announced that it has lowered its ratings on the radio company, including dropping its corporate credit rating to B from B-plus. S&P also assigned a B rating to a new credit facility that Cumulus has entered into with a consortium of banks. "The rating action recognizes the two-turn increase in Cumulus Media's leverage, pro forma for its proposed USD200 million debt-financed share buyback," said S&P credit analyst Alyse Michaelson Kelly. S&P's statement went on to express worries about the entire radio industry: "Given the broader secular challenges facing the radio advertising sector, Standard & Poor's is skeptical about Cumulus Media's ability to restore its leverage profile to the range appropriate for the prior rating in the intermediate term. Demand for radio advertising is stagnant, and a catalyst to propel the industry back to mid- to high-single-digit revenue growth does not appear likely in the near term."
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 City Hall steps into cable sports dispute
Almost two months into their second season in Washington, the MLB Nationals still are MIA on Comcast cable systems throughout the market, hostage to a dispute between the cable giant and the Baltimore Orioles. Nats games scheduled for over-the-air broadcast, and some carried by ESPN, are the only ones most Washington-area residents can see. Washington Mayor Anthony Williams has signed an order, passed unanimously by the city council, to show the games or face a franchise renegotiation. The dispute hinges on the Orioles and their new Mid-Atlantic Sports Network (MASN), born in 2005 to compete with Comcast SportsNet and the current cable home of the Nats. The Orioles naturally figure they'll air Orioles games on MASN next year when its Comcast contract runs out. Comcast says it should have a right to try to renew its Orioles rights. Although MASN/Orioles have a court win under their belt, Comcast is appealing. According to reports, Comcast executives say they are 1) trying to resolve the MASN dispute as quickly as possible; and 2) are in no hurry to comply with the DC threat since they feel it is illegal under federal law.
RBR observation: Unlike video coverage, the radio side of the Washington Nationals broadcasting scene is in much better shape than it was last year. Bonneville acquired the rights, and is using its Washington Post Radio frequencies on both the AM and FM band to air coverage. On the TV side, even if the law allows the city to pull this off, it would seem to be only a partial solution anyway. Comcast is said to have somewhere around 1.3M subscribers in the multijurisdictional DC market, only 100K or so of which are residents of the District. Nonetheless, cable's dominance of the regional sports network business is a big bone of contention as broadcast, satellite, cable and telco interests collide in both the telco rewrites going through Congress and the upcoming digital transition. This dispute figures to be close monitored by Commerce Committee members on both sides of the Capitol.
Comin' to your town to political party it down?
Quite a few municipalities expressed interest in hosting national political conventions in 2008, but apparently only a few were interested enough to put forth a serious proposal. According to the Associated Press, each party is now said to be weighing four possible sites. New York and Minneapolis-St. Paul remain on both lists. New York was the last site for the Republicans back in 2004. Other sites being considered by the Republicans are Cleveland and Tampa-St. Petersburg. The Democrats, who last met in Boston, are also looking at Denver and New Orleans.
At deadline: Stern lawsuit settled
Lawyers for both sides announced late yesterday that the lawsuit that CBS filed against Howard Stern (3/1/06 RBR #42) has been settled. But no one is saying what the terms are. CBS had sued Stern and his agent, claiming multiple breaches of contract, fraud, unjust enrichment and misappropriation of CBS Radio's broadcast time. The suit had charged that Stern had promoted Sirius on his terrestrial radio show while keeping it secret that he would receive Sirius stock worth hundreds of millions by persuading new subscribers to sign up for the satellite radio service. Stern had denied any subterfuge.
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Ad Business Report TM
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 Toyota/Lexus sign to co-sponsor
Monday Night Football
Toyota, Lexus and ESPN announced a fully integrated multiplatform promotion for ESPN's Monday Night Football and its surround programming and content for the 2006-07 season. The new association will transform the traditional three-hour primetime football game telecast into a 24-hour multimedia event. Highlights include a shared halftime show with Lexus sponsoring nine of the 17 scheduled Monday Night Football halftime shows and Toyota owning the remaining eight. During the halftime program, Toyota and Lexus will be featured in the opening and closing graphics, as well as during the game itself and other surround programming -- including info in ESPN The Magazine, on ESPN Radio, ESPN.com and ESPN's SportsCenter. While Toyota and Lexus co-own the sponsorship, each brand will offer unique promos via ESPN.com called "The Lexus Perfect Play" and "Monday Night Surround presented by Toyota." "The Lexus Perfect Play" offers fans the opportunity to vote on their favorite play from Sunday's round of games. A team of ESPN experts will determine three "perfect plays" from Sunday's games and fans will be invited to vote on their favorite via "The Lexus Perfect Play" link on ESPN.com. During the Lexus Monday Night Football halftime shows the winning play will be revealed. On weeks that Toyota is the halftime sponsor the winning play will be featured on ESPN.com. Each fan who casts a vote has an opportunity to win "The Perfect Fan Experience," a weekly three day/two night trip to NYC and the ESPN studios in CT, during the season. "The unique multimedia approach Lexus and Toyota have created with ESPN enables us to meet consumers where they want to be met, not just through broadcast media," said Deborah Meyer, Lexus VP/Marketing. "By making use of all of the touch points ESPN has to offer -- radio, print, internet as well as television -- we are able to deliver content to customers whether they are driving in their car, on their computer, reading or watching TV."
Carat USA launching print division
Carat Media Group Americas President Ray Warren announced the hire of Leslie Grand as Vice President, Director of Print Trade. Grand will be launching Carat Trade's print division and will oversee all print and out-of-home media buying for Carat Trade, the corporate trade division of Carat USA. "Leslie's trade experience and vast relationships within the media community will be a tremendous resource to Carat USA as well as Carat Trade," said Warren. "We are very pleased to bring another highly-regarded and seasoned executive to the Carat team, as we strive to maintain our position as a top media services company." Launched in 2001 by Kathy Kladopoulos, EVP Managing Director, Carat Trade provides services that allow clients to recover full value on their underperforming assets including inventories, receivables, and real estate, in exchange for media commitments. Grand joins Carat Trade after nearly a 10-year stint at Active International, where she most recently served as VP/Print Media Director.
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| Washington Media Business Report TM |
 CommComm looks at neutrality
Part II of the Senate Commerce Committee's study in four acts of S. 2686, the Communications, Consumers' Choice, and Broadband Deployment Act of 2006 (three hearings and a mark-up) kicks in today with John McCain (R-AZ) back at the gavel in a pinch-hitting role for Chairman Ted Stevens (R-AK). The topics, net neutrality and interconnection, are more or less peripheral to broadcast concerns. Witnesses include Paul Misener of Amazon.com; Tom Tauke of Verizon, Timothy Regan of Corning Incorporated, Ben Scott of Free Press, Roger Cochetti of CompTIA and Earl Comstock of COMPTEL. Starting time has been moved back to 11:15 AM.
Longer growing season for RFD
RFD Communications and its RFD-TV are under fire from Farm Journal Inc. and various watchdog organizations for occupying precious and limited noncommercial space on DBS providers like DirecTV and EchoStar's Dish TV. The problem: The complainants say the service shows commercials and therefore does not qualify for such carriage. Farm Journal kicked off the battle at the FCC 11/28/05. The deadline for comments on the matter was 5/22/06, with reply comments due 6/6/06. RFD has asked for an extension to 7/5/06 over Farm Journal's objections. The FCC has determined to split the difference. RFD will have some extra time, in order to "...serve the public interest in gathering a full record," but only until 6/5/06. The reply deadline has been moved back to 6/16/05.
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| Entertainment Media Business Report TM |
 NPR now offering 52 podcasts
NPR continues its leadership in podcasting with the introduction of 11 titles this week, growing the total of NPR Podcasts to 52. Additionally, more than 80 NPR Member stations are currently contributing to the www.NPR.org public radio podcasts directory, which now features 313 titles from around the country. The new entries mark the fourth phase of NPR's podcasting project. As of April 2006, users have downloaded 25 million NPR Podcasts since the first 16 titles were made available nine months ago. The 11 new features include: more themed collections of NPR broadcasts, additions to the ALT.NPR brand of original-to-podcasting content, a popular segment from the music series World Café and a new full program.
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| Internet Media Business Report TM |
Citadel adding online video with ROO
ROO, a large online broadcast network and online video solutions provider has signed with Citadel Broadcasting to become its online video partner. ROO will provide Citadel a turnkey video solution including online video content across a number of genres including news, music, business and fashion and the tools to sell online ads targeted by demographic and location, for the Citadel Interactive network. Citadel will, in turn, significantly increase the reach of the ROO network and supply a variety of exclusive specialized content and events to run across the ROO network. Citadel will work with ROO to expand its online presence to include broadband video offerings. In particular, Citadel will engage ROO to develop a compelling online video experience for its RightNowRadio.com Internet radio initiative, which is to launch this summer. Said Mike Pallad, VP of Sales for Citadel: "ROO's video offerings, including entertainment, news, sports and fashion will significantly expand Citadel Interactive's on-line experience for its end users. This video partnership will enable our increasing base of on-line advertisers to include targeted video messages in their on-line marketing campaigns."
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| RBR Stats |
Tribune Interactive reports April traffic data
Tribune Interactive (TI), a subsidiary of Tribune Company, reported that TI news and information sites drew an audience of more than 14 million unique visitors in April, According to Nielsen//NetRatings. This audience represents a 28% increase over the same period last year. TI also reported that in April 2006 its network generated 300 million page views, based on internal data. The Tribune Interactive network has more than 50 websites that offer continually updated and breaking information.
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| TVBR TV News |
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 Shivering SHVA ruling
handed to EchoStar
DBS Dish Network operator EchoStar was soundly defeated in the 11th Circuit in Atlanta in a suit brought by ABC, CBS, Fox and NBC concerning the illegal importation of distant signals into local markets. Found to be a violation of copyright law, EchoStar is barred from continuing the practice. EchoStar was ordered by Judge William Dimitrouleas to turn off ineligible subscribers. The Court said, "As if the magnitude of its ineligible subscriber base were insufficiently disconcerting, we have found no indication that EchoStar was ever interested in complying with the Act. Indeed, based on the district court's findings, we seem to have discerned a 'pattern' and 'practice' of violating the Act in every way imaginable." NAB President and CEO David K. Rehr was more than happy to claim victory, saying, "NAB is pleased with the unanimous 11th Circuit Court decision. This opinion affirms the importance of localism in television, and vindicates an eight year effort by TV broadcasters to stop EchoStar's blatant and massive abuse of copyright law."
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| Transactions |
850K WJCP-FM Austin IN from Pieratt Communications Inc. (Marty Pieratt) to BK Media LLC (Blair W. Trask, Kelly O. Trask). 30K escrow, 650K cash at closing, 170K note. Duopoly with WZZB-AM/WQKC-FM Seymour IN. [File date 5/4/06.]
172.7K WEBJ-AM Brewton AL from Candy Cashman Smith to Brewton Broadcasting Company (Dennis R. Dunaway, Jan Dunaway, Chandler Dunaway). Note. First payment was 1/15/06. LMA 12/1/04. [File date 5/4/06.]
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| Stock Talk |
A happy day on Wall Street
A drop in durable goods orders had traders hoping the Fed will ease back on rate hikes and inspired them to buy stocks. The Dow Industrials rose 19 points, or 0.2%, to 11,117.
Radio stocks also posted modest gains. The Radio Index gained 0.976, or 0.6%, to 156.938. Entravision led the advance, up 3.1%. Arbitron gained 2.7% and Saga was up 2.6%.
It was not a happy day on the satellite radio side. After announcing a lower subscriber forecast, XM fell 11.4%. Those worries carried over to Sirius, which fell 5.6%.
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| Radio Stocks |
Here's how stocks fared on Wednesday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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39.87
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+1.05
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Hearst-Argyle
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HTV
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22.18
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-0.01
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Beasley
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BBGI
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7.20
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+0.15
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Journal Comm.
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JRN
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11.76
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+0.06
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| CBS CI. B |
CBS |
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25.40
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+0.55
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Lincoln Natl.
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LNC
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55.72
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-0.84
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| CBS CI. A |
CBSa |
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25.41
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+0.55
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Radio One, Cl. A
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ROIA
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7.82
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+0.09
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| Citadel |
CDL |
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9.72 |
-0.21 |
Radio One, Cl. D
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ROIAK
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7.84
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+0.05
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Clear Channel
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CCU
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30.74
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+0.39
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Regent
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RGCI
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4.19
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+0.04
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Cox Radio
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CXR
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14.67
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-0.06
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Saga Commun.
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SGA
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9.58
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+0.24
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Cumulus
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CMLS
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11.52
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+0.14
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Salem Comm.
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SALM
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14.55
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+0.05
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Disney
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DIS
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30.14
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-0.09
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Sirius Sat. Radio
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SIRI
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3.68
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-0.22
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Emmis
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EMMS
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15.88
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-0.31
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Spanish Bcg.
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SBSA
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5.51
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-0.01
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| Entercom |
ETM
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27.27
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-0.08
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Univision
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UVN
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35.21
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-0.10
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Entravision
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EVC
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7.96
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+0.24
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Westwood One
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WON
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8.19
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-0.07
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Fisher
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FSCI
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42.54
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+0.22
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XM Sat. Radio
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XMSR
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13.75
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-1.76
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Gaylord
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GET
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43.60
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+0.33
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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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Below the Fold
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Ad Business Report
Toyota/Lexus sign to co-sponsor
Monday Night Football & its surround programming & content...
Washington Media Business Report
CommComm looks at neutrality
Part II of the Senate Commerce Committee's study, 4 acts of S. 2686...
Entertainment Media
Business Report
NPR now offering 52 podcasts
With the introduction of 11 titles...
Internet Media Business Report
Tribune Interactive reports
April traffic data drew an audience of more than 14 million...
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Radio Media Moves
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Brian, meet Bob
Brian McDonough has returned to broadcasting as Market Manager for Connoisseur Media in Wichita, where the company recently launched KIBB-FM "Bob 100.5 FM." McDonough was GM of KMEG-TV Sioux City, IA, before returning to Wichita, his hometown, to launch a weekly sports publication.
SRN adds Jim Bligh
The Salem Radio Network appointed Jim Bligh as East Coast Affiliate Relations manager, based in NYC. Bligh formerly worked as Managing Director of Affiliate Relations for SFX Radio Networks. Most recently he interfaced with radio stations nationwide via the Nextpert News Network.
ABCRN ups Goldfaden
ABC Radio Networks has named Stacey Goldfaden to Senior Director of Western Sales for ABC Radio Networks, responsible for developing and managing advertising sales across all ABCRN products and services in the Western territory. She also oversees the execution of collaborative selling internally within the ABC Radio Networks sales teams in Los Angeles and San Francisco.
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More News Headlines
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Exline passes
One more broadcaster from the Greatest Generation signed off 5/20/06. Bill Exline came back from WWII to pursue a long and successful broadcast career that included ownership, representation, management, and finally, brokerage. The Exline Company has been assisting on station transactions, mostly out west, since 1972. Exline was 85.
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May RBR/TVBR
Digital Magazine
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Take a look at what's in the May RBR/TVBR Solutions Magazine:
We track the latest evolutions and address the latest topics with our annual Television Upfront feature, speaking to everyone from CBS's Jo Ann Ross to NBC's Keith Turner; TWC's Liz Janneman, OMD's Joe Uva and Magna Global's Bill Cella.
We asked Christine McKenzie, Chrysler Group Executive Director of Brand Events and Agency Relations all about the importance of their annual Media Day in Detroit.
We take a look at the annual Hispanic Radio Upfront events in NYC and interview Colleen Brown, President and CEO of Fisher Communications.
These and other hot industry issues addressed in May.
Read RBR/TVBR in 2 simple steps:
1.Create a simple account with Zinio and download the Zinio Reader.
2. You can then download the
May Issue of RBR/TVBR
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RBR Radar 2006
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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CBS names radio markets to be sold
To divest 35 radio stations in 10 markets it wants to exit. The tally comes to 39 stations, four more than Moonves indicated last week. The list is not limited to smaller markets. Included are three markets in the top 30.
RBR observation: Our first thought - wouldn't it be more than interesting if hometown boy Randy Michaels were to buy that four-station Cincinnati cluster and start over again? These are certainly not the dregs that CBS is out to sell. With only two stations in San Antonio the company needed to get bigger or get out - and CBS is not in a mode to buy radio stations. Fresno and Greensboro were publicly shopped before then pulled back when CBS (then Infinity) didn't like the market conditions. Interested? Here is the shopping list see
05/24/06 RBR #102
Will the total CBS price tag
hit a billion?
If you add up revenue estimates for 2005 of the 39 radio stations that CBS is looking to sell, the total is just shy of 173 million bucks. BIAfn Vice President Mark Fratrik thinking the sale could bring close to a billion bucks. Key is looking for in-market competitors to be aggressive bidders for the CBS properties in markets where it has only a few stations, while new entrants are more likely to want the large clusters to keep intact.
05/24/06 RBR #102
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