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Volume 23, Issue 108, Jim Carnegie, Editor & Publisher
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Friday Morning June 2nd, 2006
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Radio News ®
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 Analyst says LIM effect is waning
After reviewing the Winter Arbitron numbers, Lehman Brothers analyst Anthony DiClemente estimates that ratings for Clear Channel's sizeable portfolio of radio stations were down 0.9%, snapping a streak of five straight up books since beginning its "Less is More" campaign to reduce commercial inventory. "Audience share gains of 2-3% in the past four ratings books bolster Clear Channel's position to reclaim some degree of revenue share in 2006, though perhaps not as much share as many investors may expect. Having reset its commercial loads to levels at least 20% below previous levels in 2005, and having already experienced the corresponding revenue declines, we expect Clear Channel's radio revenues to grow 4.4% versus our flat radio industry growth forecast in 2006," DiClemente wrote in a research report. Meanwhile, DiClemente found that ratings for stations that used to carry the "Howard Stern Show" fell off a cliff in the Winter book. "On average the revenue-weighted ratings for the former Howard Stern radio stations were down 39% year-over-year," the analyst said. Having had Stern on 27 of its 173 stations, CBS saw its ratings fall 8.6%. "The economic impact resulting from the loss of Howard Stern may continue to drive underperformance for CBS Radio revenues, which were down 6% in Q1 2006 in the context of the industry's revenue decline of 0.8%," DiClemente said.
RBR observation: Like Less is More is now being compared to year to year. The upper brass at CBS will not be able to blame Stern for their under performing after the Spring books are out. CBS boss Les Moonves is already putting stations up on the block but reports coming back to RBR from a few potential buyers is some have never seen such deplorable conditions of stations in their radio careers. Plus the level of arrogance of the seller is also mind shaking. All we can tell these possible buyers is plan your work, work your plan and do it with passion or do not buy.
Tribune debt ratings slashed
Two billion plus in stock buybacks may be good news for Tribune Company shareholders (5/31/06 RBR #106), but the ratings agencies say that's not the case for its bank lenders and bondholders. Moody's, S&P and Fitch have all cut their ratings on Tribune since the stock buyback announcement. As it stands now, all three have given Tribune their lowest investment grade rating. Moody's Investor Service was especially harsh, however, and threatened to cut Tribune again - into junk bond territory. Here is what Moody's said about its continuing review of Tribune's ratings: "Moody's review will focus on Tribune's ability to complete the full extent of its repurchase plan and to rapidly reduce financial leverage through asset sales and cost savings over the ensuing eighteen month period. Moody's estimates that, if fully executed, the proposed repurchase program would increase adjusted debt to over 4.0x EBITDA, and over 10.0x FCF, as per Moody's standard adjustments. Moody's views these prospective levels to be outside investment grade parameters for the newspaper industry. Should the company fully execute the share repurchase plan, a non-investment grade rating is likely. The review will also focus on management's commitment to reducing leverage in the event that only a portion of the share repurchase program is executed."
RBR observation: Much could be hinging on CEO Dennis FitzSimons' successful execution of the related plan to sell off a half billion bucks worth of non-core assets, including some smaller market TV stations (yet to be identified). That, along with some 200 million in overhead reductions, will improve the leverage situation and perhaps put Tribune back in the good graces of the ratings companies. But if the asset sales are slow to come together, Tribune could find itself with junk bond ratings - and have to pay more for what it borrows.
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 Livin' the private life and lovin' it
Greater Media CEO Peter Smyth posts a monthly commentary on the company's website and the one he put up yesterday is definitely worth a read. From the perspective of heading one of the largest private companies in radio, Smyth reviews how the ups and downs of Wall Street have taken their toll on the public guys. But while they have been trying to meet the quarterly demands of impatient investors, Smyth says he has been fortunate to be in a situation where his investors are "patient capital" - a family that has been in radio a long time. "We do not have to chase the 90-day window of quarterly reporting, and we can look at our business on a longer time line," Smyth wrote.
| Go here to read the entire commentary |
RBR observation: Not mentioned specifically in Smyth's commentary is that being private gives Greater Media the ability to go out and buy stations when the public guys are forced to stay on the sidelines because their stock prices have been beaten down to where any deal to buy really desirable properties would be dilutive in the view of Wall Street. Thus, his pending deal to buy WCRB-FM Boston.
FEC makes a federal
case-by-case out of 527s
The Federal Election Commission, faced with a court order to either rewrite its rules governing campaign contributions to 527 groups or better explain them, opted for the latter. This means the groups can still run on unregulated soft contributions and will be handled by the FEC on a case-by-case basis. Both the campaign of George W. Bush and House campaign reform champions Christopher Shays (R-CT) and Marty Meehan (D-MA) had challenged the rules, which left groups like MoveOn.org and Swift Boat Veterans unshackled by funding restrictions which apply to other political organizations. At least one of the judges who heard the Shays-Meehan case seemed to indicate that the FEC needs to do much more than rejustify its old approach. Judge Emmett Sullivan wrote, "...judging from the FEC's track record in the 2004 election, case-by-case adjudication appears to have been a total failure." Noting that some of the challenges to 527 groups brough before the FEC have languished for almost two years, Sullivan wrote, "This merely demonstrates the patent inadequacy of the case-by-case approach. The FEC can take years to complete an administrative action, and penalties, if they come at all, come long after the money has been spent and the election decided."
RBR observation: The FEC justified not doing anything about 527s back in 2004 because it believed that by the time it got through the standard public hearing process and whatever backroom wrangling might go on within the agency, it would be too late to be effective for that election cycle. It is amazing, with that experience, that it has been allowed to sit basically unattended and bleed into another election cycle. Perhaps the judicial reliance on a remand for new rules or new explanations is not sufficient. We wonder if the courts will be happy with the actions of Kevin Martin over at the FCC when he deals with remanded media ownership rules. In both cases, it seems the most likely outcome will be that the agencies will simply be hauled straight back to court if they simply put the same challenged rules in a better wrapper.
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 Tate congratulates Frist, asks for more
FCC Commissioner Deborah Taylor Tate fired off a letter to Senate Majority Leader Bill Frist (T-TN) thanking him for his efforts in getting the Sam Brownback (R-KS) Broadcast Decency Act passed by the full body (it is now headed for conference committee where it is expected to prevail over the more stringent House version). Tate went a good bit further, however, establishing herself as a major children's advocate on the FCC's 8th Floor. Acknowledging the critical role parents play in deciding what broadcast content children are exposed to, she mentioned that it would be nice if they are able to "...someday purchase cable on a per channel basis." If John McCain (R-AZ) has his way, Frist may have a chance to floor manage just such a proposal. She continued, "I hope that you will also consider other, positive measures that will encourage the production and broadcast of quality children's programming as well. Children's programming is among the most expensive types of television to produce, but it can be an invaluable part of a child's education if it is integrated into a child's lifestyle in a healthy way." She concluded, "Indecency legislation is just one step towards making television a positive force in our children's lives, but there's so much more we can do."
RBR observation: Broadcasters are motivated to provide programs for children. A dollar spent to reach the 6-18 demo buys just as many paper clips as one aimed at 18-49. ABC/Disney remains committed to its Children's radio format, and Children's programming is now on the cable schedule almost all the time, much more than was the case when we were children, and is available 24/7 to houses with VOD. More choice is always nice, but the current problem for parents isn't so much that there isn't enough for the kids to listen to or watch. It is making sure there is also time for reading, physical activity, imaginative play or simply talking with mom, dad and the rest of the family. Sometimes, the best thing you can do in a child's relationship with the media is show the kid where the off switch is. So beware: the words "child" and "Washington" can bubble into a toxic brew leading to rules and regs which may be unnecessary on the one hand but difficult to vote against on the other. Legislators and regulators should proceed with caution; meanwhile, broadcasters should make sure they are complying in good faith with existing regulations if only to head off the addition of new ones.
Norville set to emcee Service to America Awards
With former President Bill Clinton set to receive this year's Leadership Award and Miss America Jennifer Berry coming to present the Service to Children Awards, the NAB Education Foundation has now added another big name to the agenda for the Service to America Awards June 12th in Washington, DC. Deborah Norville of "Inside Edition" will emcee the event. During the awards ceremonies, Gulf Coast broadcasters and broadcasters nationwide will be honored for their public service efforts before, during and after Hurricane Katrina with the Samaritan Award.
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Ad Business Report TM
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 Russo on the Stern/CBS Radio settlement
Rich Russo, JL Media's SVP/Director of Broadcast Services, wanted to share an observation on the 2 million settlement between CBS Radio and Howard Stern (5/30/06 RBR #105): "Not completely believing that they sold the archived broadcasts of Stern for 2,000,000, if that is indeed true and Sirius and Howard now own those shows to do whatever they want to do with them, then CBS got fleeced big time. They could have made more streaming the shows online or even running them on weekends on the some of their FMs and generated more revenue than 2,000,000. They could have put out compilations of the song parodies and generated more than that, much much more and I am sure that one of those right wing nut job groups would have paid numerous times more than that to destroy the tapes. I can't possibly imagine that they outright relinquished the rights to those broadcasts for that price, it's way too low for the volume of material and the retran. or resale value of it. If they truly did outright for that price, then they just handed Sirius a new revenue stream that will help defray the cost of the Howard deal and let Mel pillage CBS for a drop in the bucket. It just can't be true, but you never know."
RBR observation: Perhaps they will enlighten us?
IPG will bring together FCB, Draft units
Interpublic Group announced it will bring its Draft and FCB units together to create a global integrated marketing organization with a single management team and P&L. Draft FCB Group, the new entity that will emerge, represents a communications model designed to address the needs of clients in today's consumer-driven marketing environment. "Clients are increasingly looking to us to deliver more personalized, creative and accountable communications programs, with best-in-class capabilities across the marketing spectrum," said Michael Roth, Interpublic's Chairman and CEO. "Steve Blamer and Howard Draft each came forward to propose linking these two strong companies with highly complementary capabilities. We carefully considered the potential of a combination and believe that the resulting organization will be highly responsive to the new realities that are transforming the consumer and media landscape." Effective immediately, Howard Draft has been named Chairman and CEO of the joint Draft and FCB operations. After a transitional period, Steve Blamer, 50, will be leaving FCB and Interpublic. FCB's Jonathan Harries has been named Worldwide Chief Creative Officer for the new company. The Integration Committee will report to Draft and meet regularly with a Transition Board made up of Draft and Interpublic's EVP, CFO Frank Mergenthaler and its EVP, Strategy, Philippe Krakowsky. Independent or separately-branded units currently grouped with either FCB or Draft, which include FCBi, Marketing Drive, R/GA and Zipatoni will continue to operate independently, serving their existing client rosters and collaborating across Interpublic.
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| Media Markets & Money TM |
Red Zebra achieves grouphood
The brand new Dan Snyder station group known as Red Zebra Broadcasting has struck a deal which will get it into its second market, extending the range of its Sports-themed radio group. There should be quite a few listeners in Richmond VA who will want to hear the play-by-play for Snyder's NFL Washington Redskins. The station is WXGI-AM, which operates on 950 kHz. The seller is Gee Communications. The seller is Gee Communications. The station the three Washington area stations Red Zebra bought earlier this year for 33M. Red Zebra CEO Bennett Zier commented, "I am excited bout our continued growth and our new ability to serve loyal Redskins fans in and around Richmond. WXGI is the perfect addition to our new group." In addition to carrying the Redskins, the station will retain its affiliation with ESPN Radio.
RBR observation: Although the pricetag was undisclosed, we checked our old files and found that Gee bought the station back in 1997 for 650K. We'd guess that price has gone up since then.
 Election win and a radio station
Fresh from winning the Republican nomination for the Texas State Senate in an overwhelmingly Republican district (3/22/06 RBR #57), Dan Patrick is now getting a second radio station to expand his talk radio empire beyond KSEV-AM Houston, which he already LMAs. Broker Michael Bergner says this deal is a purchase, although the price has not yet been revealed. Patrick is buying KMGS-AM Highland Park in the Dallas-Ft. Worth market from First Broadcasting, which recently upgraded the 1160 kHz facility to 35kw. Upon his expected election to the Texas Senate in November, Patrick will broadcast his afternoon show from Austin on KSEV and KMGS. And he's on the hunt for more stations. "From Plano and Pasadena to Richardson and Rockport to Denton and Deer Park, we look to engage and energize the public in the policy decisions being made every day by our elected officials," Patrick said.
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| Washington Media Business Report TM |
Non-clairvoyant FCC turns down Beer
The FCC as a matter of policy has determined not to attempt and read the minds of its licensees. As a result, First Broadcasting Capital Partners (FBCP) has had its plan to move WOXY-FM from Oxford OH to Mason OH reaffirmed over the repeated (and apparently somewhat repetitive) objections of Bradley J. Beer. Beer repeated his claim that FBCP was using first-service claims for Mason as a wedge to get out of Oxford, relying on a noncommercial FM there as retained service, as a ruse to actually begin serving Cincinnati. He noted that the transmitter was situated so as to maximize coverage of the city while providing only "...minimum city-grade coverage to Mason." The FCC said first of all that Beer "...improperly seeks to relitigate the Mason reallotment..." But it explained its rationale for granting the reallotment anyway. In a nutshell, if the relocation provides new service to one place without depriving the place it left, the FCC is open to a plan that does not interfere with other existing stations. It long ago abandoned attempts to divine the actual intent of the licensee moving a station, in 1983, in fact, since there is absolutely no way to accomplish such a feat. It relies on rules requiring the licensee to serve its community with a city grade signal, programming of interest and a local studio. If the station fails to do any of these things, the citizens of Mason will be free to challenge its license renewal. Better this than to "...try to determine how the station will be operated in the future."
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| Engineering Business Report TM |
 iBiquity partners with Sanyo
to strengthen relationships
w/Japanese automakers
In response to the swiftly growing adoption of HD Radio technology among Japanese auto makers, iBiquity Digital Corporation, the developer and licensor of digital HD Radio broadcasting, announced today that it has contracted with the Sanyo Trading Co. to support and expand iBiquity's presence in Japan. Sanyo Trading, a leading Japanese international trader and sales representative firm, has a long track record of successfully representing US and European companies to Japanese automakers. "The growth of HD Radio in the U.S. and other markets has gained tremendous momentum in the past year," said Jeff Jury, iBiquity COO. "Our efforts with Japanese automotive OEMs have been steadily increasing. As a result, we are pleased to partner with a world class organization such as the Sanyo Trading Co. to provide even greater assistance to automotive OEMs launching HD Radio technology." BMW offers HD Radio as an option in its 5, 6 and 7 Series automobiles. Eight additional automotive companies have committed to offering HD Radio receivers in some 40 models over the next several years.
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| Transactions |
10.5M KHMO-AM, KICK-FM, KPCR-AM & KRRY-FM Quincy IL-Hannibal MO (Hannibal, Palmyra, Bowling Green, Canton MO) and KSIS-AM/KSDL-FM & KXKX-FM Sedalia MO (Sedalia, Knob Knoster MO) from Bick Broadcasting Co. (James E. Janes) to Double O Missouri Corp., a subsidiary of Double O Corporation (Terry Bond et al). 525K escrow, balance in cash at closing. Existing duopolies. LMA 6/1/06. KPCR-AM has CP to upgrade and change city of license to Quincy IL. [File date 5/10/06.]
2.484M WZEW-FM Mobile AL (Fairhope AL) from Baldwin Broadcasting Co. (Barry D. Wood) to .COM+ LLC (Kenneth S. Johnson, Kenneth S. Johnson Jr., Charles T. Camp). Bankruptcy proceeding. Cash less loan balance and credit for LMA payments. LMA 5/15/02. Duopoly with WNSP-FM Bay Minette AL. [File date 5/9/06.]
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| Stock Talk |
Retailers give stocks a boost
Good sales reports from major retailers had more impact on Wall Street traders than bad sales reports from automakers. The Dow Industrials rose 91 points, or 0.8%, to 11,260.
Radio stocks also got a little boost. The Radio Index gained 2.199, or 1.4%, to 157.934.
CBS led the way, up 3.5%. Entravision rose 2.9%.
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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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40.36
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+0.50
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Hearst-Argyle
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HTV
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22.38
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+0.22
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Beasley
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BBGI
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7.25
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-0.02
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Journal Comm.
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JRN
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11.59
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+0.07
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| CBS CI. B |
CBS |
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26.64
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+0.91
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Lincoln Natl.
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LNC
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56.74
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+0.56
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| CBS CI. A |
CBSa |
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26.62
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+0.90
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Radio One, Cl. A
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ROIA
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7.45
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+0.08
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| Citadel |
CDL |
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9.57 |
+0.06 |
Radio One, Cl. D
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ROIAK
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7.48
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+0.15
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Clear Channel
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CCU
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31.37
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+0.57
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Regent
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RGCI
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4.30
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+0.13
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Cox Radio
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CXR
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14.41
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+0.34
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Saga Commun.
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SGA
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10.33
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+0.24
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Cumulus
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CMLS
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11.80
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+0.22
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Salem Comm.
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SALM
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14.58
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+0.11
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Disney
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DIS
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30.62
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+0.12
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Sirius Sat. Radio
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SIRI
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4.51
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+0.01
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Emmis
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EMMS
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16.35
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+0.29
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Spanish Bcg.
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SBSA
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5.55
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+0.09
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| Entercom |
ETM
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26.99
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+0.33
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Univision
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UVN
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36.45
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+0.50
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Entravision
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EVC
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8.09
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+0.23
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Westwood One
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WON
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8.04
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+0.02
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Fisher
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FSCI
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44.00
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+0.23
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XM Sat. Radio
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XMSR
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14.74
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+0.32
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Gaylord
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GET
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45.55
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+1.73
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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
Russo on the Stern
"Not completely believing that they sold the archived broadcasts...
Media Markets & Money
Red Zebra achieves grouphood
Struck a deal which will get into its second market...
Washington Media Business Report
Non-clairvoyant
FCC turns down Beer...
Engineering Business Report
iBiquity partners with Sanyo
To strengthen relationships w/Japanese automakers...
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Stations for Sale
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For Sale - Metro Rank #31
Salt Lake City
50KW AM, New RF Equipment
The EXLINE Company
415-479-3484
[email protected]
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Radio Media Moves
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Moves in NYC
Clear Channel has given Tom Poleman, already Sr. VP of Programming and Marketing for its New York cluster, the additional title of Operations Manager for WHTZ-FM "Z100." Also, Sharon Dastur moves up to Program Director from Assistant PD, Darren Pfeffer becomes Marketing Director of Z100 as well as WWPR-FM "Power 105.1" and Susan Bacich becomes Marketing Director of WAXQ-FM "Q104.3" as well as WKTU-FM.
 Changing
of the guard
Elyria-Lorain Broadcasting Company (ELBC) announced that Lonnie Gronek is the new General Manager of its five stations - two in the Cleveland market and three in Sandusky, OH. Gronek was most recently Regional GM of five Ohio markets for Westwood One's Metro Networks. Tim (Kelly) Parkinson, who had been Market Manager for ELBC in Sandusky, has been named Operations Manager for all five stations. After heading the ELBC radio group for 22 years, Gary Kneisley is retiring at the end of 2006.
Jeff Hillery
tapped by FNR
Jeff Hillery has joined Fox News Radio (FNR) as senior producer for "Brian and The Judge," the network's latest talk radio show featuring Brian Kilmeade and Judge Andrew Napolitano. For the past six years, Hillery served as Program Director for KLIF-AM in Dallas.
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More News Headlines
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Repping in the
Blue Grass State
Regional Reps Corporation has signed to rep the Commonwealth Broadcasting Corporation five-station cluster in Bowling Green, KY. The Cleveland-based rep is now the exclusive national sales representative for WCDS-AM, WOVO-FM, WPTQ-FM, WHHT-FM and WKLX-FM.
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Download Now
May '06 RBR/TVBR Solutions Magazine
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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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FCC upholds CBS Super Bowl fine
Saying that the half time show staged at Super Bowl XXXVIII by CBS was indeed indecent, the FCC has denied the group's plea for rescission of the 550K fine it was charged for the Janet Jackson wardrobe malfunction. Wrote the FCC, "The Order rejects CBS' claim that the halftime show was not indecent.."
RBR observation: The lines are drawn. Will CBS pay up or try to book a judge and courtroom? Stay tuned. By the way anyone remember who played in Super Bowl XXXVIII?
06/01/06 RBR #107
Mel puts his money
where his mouth is
RBR may have expressed doubts about whether Sirius Satellite Radio can meet its promise to Wall Street to be cash flow positive by year end but CEO Mel Karmazin is a confident man. In a filing with the SEC, Karmazin reported that he bought a million more shares of Sirius stock yesterday for 4.468 million bucks.
RBR observation: We would not be so bold as to suggest that Mel decided to buy yesterday because of our story. Rather, he was likely prohibited from making any insider transaction while negotiating the settlement of the lawsuit that CBS Corporation brought against Sirius over Howard Stern. That litigation was settled last week, with Sirius paying two million to CBS for the rights to Stern's old terrestrial radio shows, likely freeing Mel to unleash his pent-up desire to buy more stock.
05/31/06 RBR #106
Will the satellite guys keep their promise to Wall Street?
The Holy Grail for proving that satellite radio is a viable business is for one or both of the companies to start producing positive cash flow. Neither achieved that when they hit the four million subscriber mark, which had long been pitched to Wall Street as the magic number for hitting cash flow break even. Having missed the original target, both XM and Sirius have told investors that they expect to turn cash flow positive by the end of 2006. Are they moving closer to that goal? RBR has been crunching the numbers from their Q1 results to find out - view
05/30/06 RBR #105
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