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Volume 24, Issue 112, Jim Carnegie, Editor & Publisher
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Friday Morning June 8th, 2007
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Radio News ®
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 Lincoln Financial Media
on the auction block
Confirming speculation over the past couple of months (4/27/07 RBR #83), Lincoln Financial Group announced late yesterday that it has engaged Merrill Lynch & Co. to advise it on options for its broadcast group, Lincoln Financial Media, including possible divestitures. "Lincoln Financial Media is a well run business unit and widely respected within the broadcast industry. As we begin our evaluation of strategic options for this business we look forward to determining a favorable course of action to benefit our key stakeholders," said Jon A. Boscia, Chairman and CEO of Lincoln Financial Group. Lincoln, a Philadelphia-based insurance company, acquired the radio and TV operations with its 2005 acquisition of Jefferson-Pilot Corporation for 7.5 billion.
| View the List |
RBR observation: We gave you the shopping list on May 1st, but it is worth another look. These are primo properties in strong markets, pretty much without exception. These radio and TV properties should bring 1.5 billion and then some.
Hedge funds pressuring Tribune
Amid all of the activity at Tribune Company as management tries to win FCC waiver approvals and complete a complicated restructuring, while simultaneously trying to turn around slumping ad sales for its newspaper and TV properties, the company now also has to deal with some hedge funds trying to cash in on the tumult. They have served Tribune with default notices on hundreds of millions in bonds due in 2029, claiming the company has to pay up now because of its sales of some TV stations and plans to sell the Chicago Cubs. If the funds were to succeed, Tribune would be forced to immediately pay off the 1.26 billion face value, although the securities have been trading for less than half that. According to an SEC filing by Tribune, a letter from two hedge funds who claimed to own about 37% of the exchangeable subordinated debentures in question said they were issuing a "notice of default," based on purported violations by the company of the "maintenance of properties" clause of the issue. A second letter a few weeks later extended the claim to a third hedge fund, with the three claiming to own 55% of the securities. Tribune says the claims are without merit, noting that another section of the terms for the issue clearly states that the covenant does not prevent the company from discontinuing the use of any properties or disposing of them if management determines there is a business reason to do so.
RBR observation: This is a standard game for certain hedge funds. They buy up large amounts of a bond issue with a far-out maturity date that is trading at a deep discount to its face value. Then they have their lawyers concoct an interpretation of the issuance terms which, if upheld in court, would amount to a technical default, even though the company is current on any and all payments due. The ploy doesn't work often. But it must succeed once in a while, since the hedge funds keep playing the game.
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Rehr returns Karmazin fire
NAB President/CEO David Rehr has decided not to let Sirius Satellite Radio honcho Mel Karmazin's recent description of NAB activity go unanswered. Karmazin called the NAB's opposition to the proposed XM/Sirius merger "disgraceful." Rehr described the opposition as open and honorable, and proceeded to enumerate many of the reasons that NAB believes the merger should be prevented. For the good of all concerned, Rehr suggested that the two companies simply withdraw their merger application right now.
| Rehr's letter to Karmazin is here (pdf) |
RBR observation: You have to read this letter, our new Broadcaster NAB president David Rehr, Rips a New One into ‘Zen Master’ Mel. Ouch that has to hurt! Mel, soak in warm water with epsom salts.
 Key senator in hot water?
Ranking Member of the Senate Commerce Committee Ted Stevens (R-AK), pictured, has some extracurricular problems back in his home state. Details of a corruption scandal has been coming out involving an Alaska-based energy company and some state politicians. One of those implicated was Stevens' son Ben, who was president of the Alaska State Senate. Now word is coming out that there may be a problem with some work done on Ted Stevens' house back in 2002. The energy company is Veco Corporation, and some of its key execs have pleaded guilty to bribery in connection with members of the state legislature. In Stevens case, Veco allegedly oversaw improvements to Stevens' private home in Alaska, bringing in local contractors to actually do the work. Investigators want to know why a company with a rap sheet, that is not in any way connected to the home improvement business was handling such a transaction for Stevens. One of the contractors spoke to the local media about the situation awhile back, but now nobody is talking, other than Stevens' brief confirmation that he has been instructed by the FBI to preserve certain documents.
RBR observation: It hasn't been a very good couple of years for some of the Republicans on Commerce. Conrad Burns (R-MT) and George Allen (R-VA) both lost very close elections last November. Burns was brought down, in part, by ties to Jack Abramoff, and Allen had his legendary YouTube moment which if nothing else taught politicians to be on their guard and on their best behavior 24/7. Will Stevens be next? Stay tuned.
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Legal Eagle-eye view of indecency decision
Peter Gutmann of Womble Carlyle Sandridge Rice PLLC is back with an opinion of the very welcome ruling from the Second Circuit on the broadcast of fleeting expletives. The FCC was hit with yet another charge of being "arbitrary and capricious," and broadcasters - for now - can breathe a bit easier when using a live mic.
| Read Mr. Gutmann's take (pdf) |
Advertising Coalition fights for free drug speech
A bill advancing through the House of Representatives would put a three year ban on advertisements for new drugs, and an association of associations (along with two networks) wants it defeated on constitutional grounds. The group, banding together as the Advertising Coalition, pleaded its case with Energy and Commerce Committee Chairman John Dingell (D-MI) in a recent letter. The AC says Supreme Court precedent holds that "restrictions on speech, even if they advance a government interest, must be the last and not the first choice of regulators." It recommends that instead of the outright three-year ban, the FDA be given regulatory tools modeled on those used by the FTC for dealing with false advertising. At this point, all FDA can do with a false claim finding is withdraw the product completely from the marketplace, a nuclear option which for that very reason is not often used. "A far more effective method would be to determine in an administrative proceeding if the advertising is false and give FDA the power to impose civil monetary penalties for violations." AC points out that the advertising often has benefits, educating consumers about symptoms and prompting check-ups that otherwise might not occur. CBS and NBC were signatories, along with NAB, NCTA and other advertising and publishing organizations.
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Ad Business Report TM
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 MMB takes home Grand Prize
2007 Radio-Mercury Awards
Boston-based agency, and first-time entrant to the Radio-Mercury Awards, MMB has won this year's 100,000 Grand Prize with Badonkadonk, a radio spot created for Subway Restaurants. The architects of the best radio commercials were honored yesterday with a total of over 170,000 in cash prizes during the 16th annual Radio-Mercury Awards ceremony, held at Cipriani NYC. A total of 16 winners received a trophy along with their cash award. 5,000 dollars was awarded to each of nine winners from the General Category and to one winner from Spanish-Language, 30-Second, Radio Station-Produced, and the new Urban Category. In addition, a 2,500 award was presented for the best PSA. The Masterfoods brand has worked well for TBWA\Chiat\Day NY. Last year the agency won a Radio-Mercury for Starburst, and this year they won for a spot from the Combos campaign. Other winners in the General Category included: Arnold with Crispin Porter + Bogusky for American Legacy Foundation; BBDO NY for FedEx; Crispin Porter + Bogusky for Miller Lite; DDB Chicago for Anheuser Busch; DeVito/Verdi for Legal Sea Foods; Goodby, Silverstein & Partners for Comcast; JWT NY for JetBlue; and MeadsDurket for San Diego Radio Broadcasters Association. The top award in the 30-Second Category went to The Martin Agency, for a spot created for one of the Radio industry's biggest spenders, Geico. The Spanish-Language Category win went to first time winner CreativeOndemandD for a spot created for Regions Bank. ABC Radio, Minneapolis took home the Radio Station-Produced prize for local advertiser Surdyks Liquors. This year's new Urban Category Award was scooped up by the Uniworld Group for a Burger King commercial. The PSA Award and accompanying donation went to Kirshenbaum Bond + Partners for a spot created for The Ad Council/Adopt US Kids. The Creative Circus from Atlanta took home the Student Award.
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| Media Business Report TM |
 News Corp. cuts print jobs in UK
It's hard to find a major newspaper anywhere that isn't reducing staff these days, but News Corporation seems to have chosen an inopportune time to trim the editorial staff at its four national newspapers in the UK. The cuts to save an estimated 30 million pounds (59 million US bucks) annually comes as News Corporation CEO Rupert Murdoch is trying to sweet talk the Bancroft family into selling him Dow Jones & Co., including the Wall Street Journal, for five billion bucks. The main WSJ union is already battling fiercely against any sale to Murdoch and the job cuts in the UK will likely add to staff fears of a sale to News Corporation. According to the rival Guardian newspaper, the newsroom cuts at the four papers owned by News International, a News Corporation subsidiary, total 100 people from some 1,400 currently employed.
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| Media Markets & Money TM |
Kunin goes camping in Pine City
WCMP AM-FM has been sold. The Pine City MN combo is headed for Red Rock Radio Corporation, which is 85% owned a subsidiary of Curtis Squire Inc., which is owned by Myron Kunin and four of his sons. Ro D. Grignon will have the remaining 15% of Red Rock. The seller, earning 1.6M, is Quarnstrom Media Group, and its head, Alan R. Quarnstrom will be party to non-compete and consulting agreements. The terms are unique. Instead of the usual cash component of a typical transaction, the buyer will pay off an unspecified amount of existing liability on the combo, and will pay the rest in 40 equal quarterly payments over the next ten years.
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| Washington Media Business Report TM |
 Different strokes for Canadian folks
A pair of advertising campaigns run by Canadian province Ontario between 2003 and 2005 alerted citizens to the five warning signs of a stroke. The ROI was measurable in one sense, and priceless in another. In the first case, according to a Reuters report, there was a marked increase in ER visits to get symptoms checked out. This is critical, since the first three hours can be a make or break when the most common type of stroke occurs. What cannot be calculated, other than to use the priceless descriptor, is the number of lives saved and the amount of medical expenses which are saved. The campaign was not repeated in 2006, however, and the unsurprising result was that the number of strokes that went unrecognized and untreated during the critical window went back up. The obvious conclusion is that such an advertising campaign needs to be continuous. A health official in Ontario did mention two numbers which bear consideration. 1.8M was spent on the campaign per year, against over 800M spent treating strokes.
RBR observation: You never see Coke or McDonald's or any other global brand taking an extended holiday from advertising themselves, so there's no reason to expect it to be any different for this kind of message. So maybe we should encourage the government to take advantage of the media to promote the general welfare. The trick is to determine what kind of information has a real measurable public benefit and what kind doesn't need to be tied to a continual media drumbeat.
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| Entertainment Media Business Report TM |
Post ponders its own "Post Radio" ratings
The Washington Post penned an article yesterday on its "Washington Post Radio," a partnership with Bonneville in DC that uses rim-shotter WTWP-FM out of Warrenton, VA and 1500 AM in DC.
| Excerpts: |
RBR observation: It's really tough for Bonneville, because no matter how you cut it, WTWP is competing with its local cash cow All-News WTOP-FM. That's the biggest reason this station is foundering. WTOP owns this market, largely because of the traffic on the 8's (The traffic in the DC metro area is absolutely maddening - makes LA look like a driver's paradise). Also, the 107.7 FM frequency doesn't cover the market like WTOP. Our suggestion: turn 107.7 to Hispanic or Indie Rock like "Indie 103.1" in LA and keep WTWP on AM 1500.
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| Internet Media Business Report TM |
 DirecTV to air
pro video gaming live
DirecTV announced that the Championship Gaming Series (CGS) will now air live when it begins its exclusive run on DirecTV's original entertainment channel, The 101. The broadcast, which was originally slated to be videotaped and aired at a later date, will be the first-ever gaming event to present all the action as it happens, allowing fans at home to experience professional gaming match-ups as they would any other sport. The coverage will commence with the start of the CGS league on 7/9 with two, 2-hour shows of new programming each week on The 101, leading up to the National Championships. Following the U.S. National Championship, the CGS will turn its focus to other parts of the world with events in London, Dubai, Shanghai, Sydney, and Singapore. The World Championship will be distributed to over 100 million homes with broadcasts on BSkyB, Star, and DirecTV. The inaugural season of the CGS begins next week with the national combine events June 9-11 at the Fox Studios in LA, followed by the league draft on 6/12 at the Playboy mansion.
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| Ratings & Research |
Study: advertisers need to
selectively use product placement
Marketers and advertisers who are looking for product placement to become a substitute for traditional advertising need to be selective in how they use placements since not all product placements are equal, according to a just-released analysis of BIGresearch's Simultaneous Media Survey (SIMM 9). Over 15,000 consumers participated in the latest bi-annual survey. Product placement is growing as an option for marketers to reach advertising-weary consumers. In the survey, the top category that consumers said product placement influenced their purchases was electronics, with 12.6% saying so. Grocery and apparel followed to round out the top three. When compared to other media's influences to purchase electronics, such as TV (32.3%), Newspaper Inserts (32%), Radio (19.6%) or Internet (22.7%), product placement is a viable option, but not a replacement for traditional media. However, African American, Hispanic and Asian consumers were much more likely to be influenced to buy electronics, grocery and apparel from product placements. "Advertisers recognize that consumers are in control of today's market and many are attempting to get their brand message out in non-traditional ways," said Gary Drenik, BIGresearch CEO. "However, today's consumer knows when they are being manipulated and product placements must be carefully planned with this in mind or else risk being ignored by consumers."
Arbitron analyses diary entries for
Internet radio listening to AM/FM stat ions
Arbitron released a 30-market analysis of diarykeeper entries for Internet-based listening to AM/FM radio stations. In the study, diary entries for Internet listening to AM/FM radio stations grew substantially in Fall '06 accounting for 20,331 unweighted quarter-hours. In Spring 2006, only 4,684 quarter-hours were noted in survey diaries. The increase in entries coincides with implementation of new diary instructions (effective Fall 2006) that identify Internet and satellite radio as sources of listening for respondents to note in their diary in addition to AM/FM radio. Stations are credited for their Internet listening in Arbitron's ratings reports only if the station's stream is a 100% simulcast (including all programs and commercials, for all of the station's broadcast hours.)
| Read More... |
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| Transactions |
1.5M WKHW-FM Rushville IN from RSE Broadcasting LLC (David Sheets) to Rodgers Broadcasting Corporation (David A. Rodgers). 75K escrow, balance in cash at closing. Superduopoly with WKBV-AM/WFMG-FM Richmond, WIFE-AM Connorsville & WZZY-FM Winchester IN. [File date 5/18/07.]
440K WCBQ-AM Oxford NC and WHNC-AM Henderson NC from The Paradiso Network Inc. (Alvin Augustus Jones) to The RAFTT Corporation (Jerome Friemel). 22.5K earnest money returned to buyer, 300K to retire debt, 30K to assure Jones handles all FCC compliance issues, balance in cash at closing. [File date 5/18/07.]
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| Stock Talk |
Stocks take a hit
Surging bond yields sent stock prices lower on Thursday as investors continued to worry about the possibility of rate hikes. The Dow Industrials fell 199 points, or 1.5%, to end at 13,267.
Almost all radio stocks were lower. The Radio Index fell 0.989, or 0.6%, to 160.559. Journal Communications fell 2%. Most other radio owners were down 1% to just under 2%.
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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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51.25
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-0.72
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Hearst-Argyle
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HTV
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25.89
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-0.17
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Beasley
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BBGI
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8.73
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-0.14
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Journal Comm.
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JRN
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13.51
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-0.28
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| CBS CI. B |
CBS |
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32.59
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-0.42
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Lincoln Natl.
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LNC
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70.74
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-0.81
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| CBS CI. A |
CBSa |
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32.65
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-0.38
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Radio One, Cl. A
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ROIA
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7.42
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-0.03
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| Citadel |
CDL |
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8.38 |
-0.12 |
Radio One, Cl. D
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ROIAK
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7.38
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-0.07
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Clear Channel
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CCU
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38.30
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-0.10
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Regent
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RGCI
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3.39
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-0.04
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Cox Radio
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CXR
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14.35
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-0.15
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Saga Commun.
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SGA
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9.84
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+0.14
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Cumulus
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CMLS
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9.33
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-0.05
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Salem Comm.
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SALM
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11.93
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+0.01
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Disney
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DIS
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34.26
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-0.65
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Sirius Sat. Radio
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SIRI
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2.78
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-0.04
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Emmis
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EMMS
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9.81
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-0.18
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Spanish Bcg.
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SBSA
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4.50
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-0.03
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| Entercom |
ETM
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26.24
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-0.09
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SWMX
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SMWX
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0.24
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-0.02
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Entravision
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EVC
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10.41
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+0.12
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Westwood One
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WON
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7.75
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-0.15
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Fisher
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FSCI
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50.49
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-0.09
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XM Sat. Radio
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XMSR
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10.87
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-0.38
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Google
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GOOG
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515.06
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-3.19
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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
Radio-Mercury Awards
MMB takes home Grand Prize 2007...
Media Markets & Money
Kunin goes camping in Pine City
WCMP AM-FM has been sold headed for Red Rock Radio Corporation...
Entertainment Media
Business Report
Post ponders its own
"Post Radio" ratings Washington Post Radio reassessing programming...
Ratings & Research
Arbitron analyses diary entries
For Internet radio listening to AM/FM...
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Stations for Sale
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 Market your Stations For Sale
in our daily epapers.
Contact
June Barnes
[email protected]
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More News Headlines
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MINI Now Offering
HD Radio as Factory
Installed Option
MINI USA is now offering a factory-installed digital HD Radio receiver as an option in the all-new 2007 MINI Cooper and Cooper S hardtops, produced from June. MINI joins its sister brand, BMW to be only one of two automotive brands to currently offer HD Radio technology to its customers.
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TVBR - TV News
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Retailers cited
for selling unlabeled
analog TVs
The FCC is not sitting around and waiting to enforce its new rules requiring that all analog-only television receivers still on store shelves come with a prominently-displayed warning label. The new requirement became official on 5/25/07. On 6/4/07 FCC Enforcement Bureau officials went out into the field and caught six retailers with their labels down. The guilty parties are all well-known: Kmart, CompUSA, RadioShack, Best Buy, Circuit City and Target. Each was slapped with an official citation and warned that if they're caught again, the consequences will most likely hit them in the wallet. Fines for violation of the labeling requirement amount to a maximum of 11K per instance, with a 97.5K ceiling on a fine for a single continuing violation. The retailers were invited to respond to the citation via personal interview at an FCC field office convenient to corporate headquarters or via written statement. The FCC also released a pair of consumer advisories, entitled "Buying the Right TV: What Every Consumer Should Know" and "Closed Captioning for Digital Television."
TVBR observation: This will no doubt please John Dingell (D-MI) and Ed Markey (D-MA), who are pushing for a comprehensive FCC strategy on getting consumers up to speed by next week. However, we can't remember ever coming across an FCC consumer advisory in our off-hours capacity as telecommunications civilian. We find it unlikely that any more than a handful of private citizens will stumble across these documents, and the handful that do are likely not the ones who need to be brought up to speed. At least one outlet, the New York Times, ran a story on the topic published 6/7/07, despite the fact that it no longer has a direct self-interest, having sold off all of its television properties. Will your station run something?
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RBR Radar 2007
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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Figenshu back to Radio
Figenshu, known as 'Fig,' resigned his COO position at Softwave Media Exchange (SWMX), 6/06/07 RBR/TVBR First Bulletin, and will return to the day to day operations of his first passion, Radio. Fig is not saying yet what this radio venture is, but it will be broadcast radio after June 29th, his final day at SWMX.
RBR observation: The old saying 'You can take the guy Out of Radio' but 'You Cannot take the Radio Out of the Guy' applies more to Fig than your average radio guy, he is not average. If you are guessing where Fig will be after his 30 day rest is back with Dan Mason and CBS Radio - Nope. This dog has more teeth than just going back to chew on an old bone. One thing is for sure, Fig has a stronger working knowledge of today's technology business environment than many in radio today.
06/07/07 RBR #111
Campaigning on radio
Question: If you're running for office, should you use radio advertising to preach to the choir or should you try to convert nonbelievers to your cause? The answer is yes. And that underscores the value of radio to a political campaign. It can easily be tailored to both of these strategies. Experts in radio's role made these and other points at a program presented by NAB and RAB in Washington Wednesday, 6/06/07.
RBR observation: Radio can be devastatingly effective is reason enough to put it in the budget. For this complete report see RBR it is important to help you get the political dollars and not lose out to TV.
06/07/07 RBR #111
"US braces for flood
of celebrity F-words"
That was the headline yesterday from across the pond. The Times of London headline suggested that American celebrities will be looking for open mikes so they can get the same publicity that Cher, Bono and Nicole Richie got for their live TV comments. The story from their US correspondent didn't really live up to the catty headline, providing a nuts and bolts account of how a federal appeals court rejected the FCC's changing of its indecency policy as "arbitrary and capricious" and then FCC Chairman Kevin Martin's expletive-laden response.
TVBR observation: We think the idea that network TV in the US is now going to be replete with celebrities tossing around F-bombs every time there's an open mic is ludicrous.
06/07/07 TVBR #111
RBR observation
For SWMX the Fig loss is deep
But nobody is indispensable just some harder to replace. The good that will come out of Figenshu's departure will be to give CEO Josh Wexler a clear opportunity to sit back and analyze what SWMX has accomplished in the past 18 months as SWMX has been on a very fast track. Wexler will have to seek the next generation of executive that is needed in moving SWMX to the next on-line selling playing level. Our recommendation would be two executives: One for Radio the other TV as doing day to day business with these mediums is different. TV is layback - Radio is for warriors. Stay focused.
06/07/07 RBR #111
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SmartMedia Magazine
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In our June issue...
TRN's Mark Masters: "Talk Radio, the real revenue generator"
OneonOne with Meredith's
Paul Karpowicz
Valerie Geller:
Citizen Journalism
Selling towers and leasing them back
Click here to read!
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Hard finding that key person
to fill the important position at your organization? Media HeadHunters is the place that key media firms use to get results. See Media HeadHunters and get results with service--Period.
Need assistance
contact Cathy Carnegie
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