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Volume 23, Issue 104, Jim Carnegie, Editor & Publisher
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Friday Morning May 25th, 2006
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Radio Business Report returns Tuesday, May 30.
The RBR/TVBR offices will be closed Monday in observance of Memorial Day.
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Radio News ®
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Senate indecency lite may have inside track
With fine-raising bills passed by wide majorities in both the Senate and the House, it appears that the legislation is on the on-ramp to becoming a law. This is especially true with an important member of the House saying that when it comes to resolving differences between the two versions, he'd be happy to accept the weaker Senate version. According to reports, that member is House Energy and Commerce Committee chair Joe Barton (R-TX). The streamlined Senate version of the Broadcast Decency Enforcement Act calls for a tenfold increase in FCC fining power for an incident of broadcast indecency, taking the dot out of 32.5K to make it a hefty 325K. The House version would take the ceiling up to a round 500K, and has additional provisions to target performers (the Senate simply goes after broadcast licensees) and mandate license revocation proceedings for repeat offenders.
 RBR observation: Indecency
Just when it looked like this bill would languish for the third straight year, Senate sponsor Sam Brownback (R-KS) and majority leader Bill Frist (R-TN) were able to bypass the Senate Commerce Committee (and those who would offer amendments) and get Brownback's version passed by unanimous acclimation. If Barton is willing to go along with the Senate version, it looks like it is going to happen. It always seemed like a mortal lock, since it was difficult to find anyone on Capitol Hill who was opposed to it. (Because of this near unanimity of opinion, it is almost useless as a campaign issue, since support comes from both parties and all points on the ideological spectrum.) The question is whether or not it is a nuclear reaction to a minor problem. We again challenge anybody to listen to the radio or watch broadcast television between now and 10PM tonight. The odds are overwhelming that no matter where you tune in, you will not be subjected to indecent material. Whatever that is, by the way, since the latest FCC attempt to clear up the definition is just as confusing as all prior attempts. It may be that the bill constitutes mutually assured litigation, just as Commerce Committee Ted Stevens (R-AK) fears. Once this gets into the courts, who knows what might happen? We would rather hear an occasional naughty word than have people worried about their next re-election campaign messing around hallowed First Amendment territory.
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XM shares recovering
For a while it looked XM Satellite Radio's stock price was going to continue in the free-fall that began Wednesday after the company reduced its subscriber outlook. But the share price recovered in afternoon trading on Thursday and ended the session up 4%, partially recouping the previous day's sell-off. Meanwhile, Sirius shares were up all day and finished with a gain of nearly 15% after CEO Mel Karmazin issued a statement late Wednesday denying that his company is having similar problems. Although shares of XM have lost over 50% of their value so far this year, Goldman Sachs analyst Mark Wienkes doesn't yet see a buying opportunity. With gross subscriber adds lighter, he notes that "churn will mathematically increase and marketing spend to regain mindshare is also likely to rise." He notes that the new forecast from XM means that it will add 2.567 million net subscribers this year, which is a decrease from the 2.7 million added in 2005. And Wienkes thinks the guidance from XM is still too high. He expects to see only 8.4 million subs by the end of this year.
 Hastert demands retraction from ABC
ABC News is standing by its story that House Speaker Dennis Hastert (R-IL) is under investigation by the FBI in a corruption probe, even though the Department of Justice (DOJ) has issued a statement stating flatly, "Speaker Hastert is not under investigation by the Justice Department." Hastert is demanding a retraction. Following that statement from DOJ, ABC News posted an update on its website insisting that its report was correct. "Despite a flat denial from the Department of Justice, federal law enforcement sources tonight [5/24] said ABC News accurately reported that Speaker of the House Dennis Hasters is 'in the mix' in the FBI investigation of corruption," ABC News said. So far, no other media organization has reported that Hastert is being investigated, except to report on the ABC story along with Hastert's denial and demand for a "full retraction." Conservative bloggers, meanwhile, were gleefully speculating that ABC News Chief Investigative Correspondent Brian Ross, who reported the original story, could soon be heading down the same path as CBS' Dan Rather, who stepped down under pressure following a botched "60 Minutes II" story on President Bush's military record.
CBS raises its dividend
With CBS Corporation working to sell nearly a billion bucks worth of radio stations and no plans to make any major acquisition, the company has plenty of cash on hand - so the board of directors has decided to send more of it to the shareholders. Instead of 16 cents per share, the quarterly dividend is now going to be 18 cents - a 12.5% increase. "I'm pleased to announce the second dividend increase since we became a new company. This represents a 29% increase in our quarterly dividend since the start of the year," said CBS CEO Les Moonves. The increased dividend will be paid July 1st to shareholders of record on June 5th.
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Ad Business Report TM
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 "All Snapple, all the time"
launches on WFNX for 40 days
Snapple will be the sole sponsor of all programming and promotions on WFNX-FM Boston and its two regional simulcast stations. For Snapple's investment of more than 2 million, Phoenix Media Communication's WFNX Radio Network will eliminate all other advertisers from the Memorial Day weekend through July 4th. In place of traditional spots, air talent will acknowledge Snapple on the air for its sponsorship of the "Summer Free for All." As well, WFNX will be the station "Playing the best stuff on earth" (a derivation on Snapple's tagline), sound effects mixed in during stop sets, like the "whoosh" a Snapple cap makes when a bottle is opened. Snapple will also be identified as the brand behind promotions including free concerts, giveaways at area beaches, and events with retailers. Online includes a special website accessible from FNX's main site with downloadable music, ring tones, voice tones and text messaging. The sponsorship was concocted by Jay Coleman, EMCI President (Cadbury Schweppes Americas Beverages' AOR), who calls it "brandcasting." In addition to EMCI, two other outside agencies are working on the sponsorship are G8wave, a division of Phoenix Media Communications and Rainmaker Media.
RBR observation: As with our suggestions for HD-2 formats, the underwriting idea seems smart - "This hour brought to you by." The Snapple idea takes that one big step further. We know similar moves have been done before, but this should serve as a fresh test with all the new factors (read: competition from satellite and iPods, etc.) in play. Will regional Snapple sales increase substantially during this period? Will WFNX ratings during this time period increase as well? One would think so. Radio and its advertisers are always looking for creative solutions. Listeners are often looking for stations with less commercials. Radio is looking for reasons to keep listeners listening. It's a big buy Snapple has made. We congratulate them on the risk. We hope they'll release data on the outcome to the industry. This could present another sea change, as Clear Channel has done with "Less is More."
Yahoo! and eBay form ad pact
Yahoo! and eBay announced a partnership that has boosted recent talk that they may end up merging. With this deal, Yahoo will be the exclusive third-party provider of all graphic ads throughout eBay's site. Yahoo! will also use eBay's PayPal system to allow its own customers to pay for Yahoo! services. Yahoo! search features will be integrated into a co-branded version of the eBay toolbar, and the two will explore developing "click-to-call" ad technologies on their respective sites. Click-to-call provides a link inside an ad that allows users to directly call the advertiser to make a transaction. Under the pact, which gives Yahoo access to eBay's huge base of online shoppers, the companies will begin to roll out joint initiatives later this year. This will include a testing phase that will take place over the next several months, with a plan to achieve full implementation in 2007. "Our consumers will benefit from the combination of Yahoo! and eBay's leading technology and services, providing them with one of the best online experiences," said Terry Semel, Yahoo! CEO. "Yahoo! holds a leadership position in all forms of online advertising. This partnership with eBay provides us with a great opportunity to further extend our sponsored search and graphical advertising reach to one of the largest and most active communities on the Web."
 KFC wants Idol runner-up
Although Katharine McPhee didn't become the 2006 American Idol on Wednesday, KFC is offering the future star her first corporate recording deal - a chance to write and star in an upcoming ad for its newest product, KFC Famous Bowls. The 10K commercial recording deal plus a year's supply of KFC Famous Bowls offer stands until 6/7. "KFC feels strongly that both finalists are true winners and we are excited to offer the runner-up an opportunity to further showcase her talents in an upcoming KFC Famous Bowl commercial," says Scott Bergren, KFC EVP/Marketing.
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| Wireless Media Business Report |
 Making mobile video a
viable advertising option
By Brian Wieser, CFA
(from April's RBR/TVBR Solutions Magazine)
Mobile video represents a tremendous opportunity for the telecommunications, broadcasting and advertising industries around the world if it is successfully deployed. How the industry participants move forward will have a significant impact in affecting the growth of this medium. We anticipate that advertisers' active involvement will ultimately drive new revenue opportunities for broadcasters and carriers alike. Carriers and broadcasters will need to work together to identify optimal business models and support the availability of content consumers will demand in the future. Among the hundreds of millions of consumers around the world with access to mobile video, relatively few actually watch it today. There are several reasons behind this fact, including relatively limited content options, expensive handsets capable of playing video and associated subscription fees.
| Read More... |
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| Media Markets & Money TM |
WHAP redux: VA AM sold again
Mainquad Communications at one point had a 200K deal to sell WHAP-AM Hopewell VA (12/7/05 RBR #238), a deal which it would appear has failed to come to fruition. They are trying again, this time with the aid of brokers Jamie Rasnick of John Pierce & Company for the seller and Dave Garland of Dave Garland Media Brokerage for the buyer. The price is the same, and the seller is obviously the same. Now playing the role of buyer is Rick Brady or Silver Dolphin Communications. The 1340 kHz station is in the Richmond area.
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| Washington Media Business Report TM |
Network neutrality hearings on the Hill
Broadcasters do not really have a dog in this portion of the telecom fight, not any more than all citizens have a dog anyway, but we tuned in to check out the opening remarks anyway. Those who favor network neutrality and want to see it maintained, like John McCain (R-AZ) and Byron Dorgan (D-ND), basically want it to operate like it has, and like the phone system. As each phone call is treated the same, they want all Internet content providers to be treated the same. They believe this is not adding any regulation at all, other than to charge the FCC with ensuring that network neutrality remains the prevailing rule of the virtual road and that big companies don't become gatekeepers. The other side, voiced by John Sununu (R-NH) and an ad campaign making the rounds in the Washington market (if not elsewhere), do consider maintenance of net neutrality to be added regulation, and say that if its worked just fine without regs, none should be added until it is shown they are needed. Bill Nelson (D-FL) probably spoke for many Americans when he noted that net neutrality is a complex issue and needs a great deal of study.
RBR observation: Our self-serving two cents? If we understand it correctly, gate-keeping and hefty pay-to-play fees are what consumer organizations fear, at the cost of the wide variety of readily accessed information, opinion and entertainment under the current system. As a small company that is a daily traveler on the Internet, we certainly don't want to be forced into a bidding war with companies we compete with like Clear Channel, Reed or VNU for fair treatment and presentation. We say, keep the phone call model. Our legal hinge? That's what Internet access providers must live with if they want to use our public right of way. If Verizon doesn't like that, there are lots of other ways to earn a dime. Maybe they can set up a hot dog stand/cell phone kiosk near the Smithsonian...
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| Ratings & Research |
Readership increasing steadily for newspaper
front sections; 11 other sections in decline
 From 2000 to 2005 the percentage of adults reading the front section of a daily newspaper increased from 51.4 to 53.0% in the 87 metro markets surveyed regularly by The Media Audit. The percentage of adults varies from 68.2% in the New Haven metropolitan area to 41.8% in the Las Vegas market. There are 16 markets where more than 60% of adults read a front page section regularly and 19 markets where less than 50% read a front page section regularly. "The same research shows the percentage of adults reading the other 11 sections of a daily newspaper declined," says Bob Jordan, president of International Demographics, which produces The Media Audit. "The declines tell an interesting story. The severest decline in percentage of readers was in the weekend television guide book. Its percentage of readers dropped from 31.9 to 23.1 between 2000 and 2005. It appears to be the most vulnerable product because it can/and has been most easily duplicated by other media." The Movie/Entertainment section readership dropped from 26.5 to 23.1 while Travel sections dropped from 19.6 to 17.7 and Lifestyle/Fashion from 23.7 to 21.7. The demographic profile of the front page readership shows the group to be better educated and more affluent than the general population. Those earning more than 50,000 in annual household income index at 108 (100 is average of the general population). Those earning more than 75,000 and more than USD100,000 have indexes of 113 and 117. Those with liquid assets of 100,000 or more, 250,000 or more, index at 126 and 135. Those who traded stocks/bonds/securities during the past year index at 125. More than 74% of the front page reader group says they voted during the past year in a local, state or national election.
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| Transactions |
715K WDCI-FM Mortantown WV (Bridgeport WV) from WDCI Radio Inc. (Bruce Wallace, Thomas F. Thompson) to W. Russell Withers Jr. 35K escrow, 665K cash at closing, 15K non-compete. Cross-ownership with WDTV-TV Weston WV (CBS Ch. 5), which is in the Clarksburg-Weston WV DMA. [File date 5/5/06.]
100K WJES-AM Saluda SC from Edgefield-Saluda Radio Company Inc. (Michael C. Casey) to Jeffrey S. Roper. 10K escrow, balance in cash at closing. [File date 5/4/06.]
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| Stock Talk |
Inflation? What inflation?
Modest GDP growth and a drop in existing home sales calmed Wall Street fears about inflation and further Fed rate hikes. The Dow Industrials moved up 94 points, or 0.8%, to 11,211. The S&P 500 and Nasdaq Composite were each up over 1%.
Radio stocks were more modestly higher. The Radio Index gained 0.656, or 0.4%, to 157.594. CBS shot up 3.5% for its widely held Class B stock and 3.4% for Class A after announcing an increase in its dividend. Fisher Communications rose 2.2%.
Satellite radio stocks recovered from the previous day's sell-off. XM gained 4.4% and Sirius soared 14.7%.
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| Radio Stocks |
Here's how stocks fared on Thursday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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39.76
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-0.11
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Hearst-Argyle
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HTV
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22.33
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+0.15
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Beasley
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BBGI
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7.18
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-0.02
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Journal Comm.
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JRN
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11.81
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+0.05
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| CBS CI. B |
CBS |
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26.30
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+0.90
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Lincoln Natl.
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LNC
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56.10
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+0.38
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| CBS CI. A |
CBSa |
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26.27
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+0.86
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Radio One, Cl. A
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ROIA
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7.82
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unch
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| Citadel |
CDL |
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9.74 |
+0.02 |
Radio One, Cl. D
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ROIAK
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7.86
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+0.02
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Clear Channel
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CCU
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31.14
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+0.40
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Regent
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RGCI
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4.22
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+0.03
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Cox Radio
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CXR
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14.44
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-0.23
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Saga Commun.
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SGA
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9.65
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+0.07
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Cumulus
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CMLS
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11.66
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+0.14
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Salem Comm.
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SALM
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14.61
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+0.06
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Disney
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DIS
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30.15
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+0.01
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Sirius Sat. Radio
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SIRI
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4.22
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+0.54
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Emmis
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EMMS
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16.09
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+0.21
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Spanish Bcg.
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SBSA
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5.61
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+0.10
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| Entercom |
ETM
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27.20
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-0.07
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Univision
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UVN
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35.60
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+0.39
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Entravision
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EVC
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8.05
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+0.09
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Westwood One
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WON
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8.20
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+0.01
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Fisher
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FSCI
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43.49
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+0.95
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XM Sat. Radio
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XMSR
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14.35
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+0.60
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Gaylord
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GET
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44.44
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+0.84
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-
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-
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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]
The recent RBR report on the CEA's support for XM on music payouts (5/22/06 RBR #100) again shows the broadcasters dumb enough to hop into the sack with this bunch of anti-broadcast thugs known as the Consumer Electronics Association (similar in nature to our own NAB, whose sole purpose is the selling of floor space to manufacturers) that the decision to dance with the CEA for HD purposes only spreads the satellite source material from pay sat-radio on a little thicker...
| Read More |
Jerry Smith
Free Radio Tech Consultant
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Below the Fold
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Ad Business Report
All Snapple, all the time
On WFNX - as with RBR suggestions for HD-2, the underwriting idea...
Yahoo! and eBay form ad pact
Partnership that has boosted recent talk that they may end up merging...
Media Markets & Money
WHAP redux
VA AM sold again...
Washington Media Business Report
Nets neutrality hearings on the Hill
Broadcasters do not really have a dog in this portion of the telecom fight...
Ratings & Research
Readership increasing steadily
For newspaper front sections; 11 other sections in decline...
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Radio Media Moves
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Mile High media move
Denver market veteran Thomas Nolan has joined Entravision as General Sales Manager of its three-station radio cluster. He was most recently with NRC Broadcasting.
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More News Headlines
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BCFM/BCCA name award winners
Pam D'Elia, Corporate Director of Credit and Collections for the Cox-owned TV rep firms, will receive the Broadcast Cable Credit Association's (BCCA) member Contributor Award during the organization's annual conference June 11-13 in Orlando. Also being honored is Ron Wilkinson, Controller for Emmis Communications' WKCF-TV, conveniently located in the host city, Orlando. He will receive the Jack Zwaska Career Achievement Award from the Broadcast Cable Financial Management Association (BCFM), parent organization of BCCA. BCFM and BCCA hold their annual conferences jointly.
USPS debuting
Amber Alert stamp
The US Postal Service is issuing a new stamp honoring the Amber Alert system used to find missing children. USPS unveiled the stamp at a ceremony in DC yesterday, which is National Missing Children's Day, in front of John Potter, Postmaster General, Alberto Gonzales, US Attorney General and Regina Schofield, Assistant Attorney General for the Office of Justice Programs & the National Amber Alert Coordinator for the DOJ. A second ceremony will be held in Arlington, Texas, where Amber Hagerman, after whom the program was named, was kidnapped. The new stamp depicts a mother and child embracing and says, "Amber Alert saves missing children."
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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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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 by reducing its subscriber forecast for 2006. - Meanwhile Sirius tried to distance itself from XM's troubles, issuing a statement reaffirming its guidance that it would have more than 6.2 million subscribers by the end of the year. 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.
05/25/06 RBR #103
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