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Volume 23, Issue 118, Jim Carnegie, Editor & Publisher
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Friday Morning June 16th, 2006
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Radio News ®
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 Cumulus Dutch auction over-subscribed
It appears shareholders were only too happy to sell their stock back to Cumulus Media. The Dutch auction process announced last month (5/11/06 RBR #93) was oversubscribed, so only about 74% of the shares tendered will actually be bought for the auction price of 11.50 per share. That was at the low end of the 11.00-12.50 range for the auction and 15,529,859 shares were offered at or below that price. But Cumulus is only buying 11.5 million, so it will buy back approximately 73.96% of the shares tendered by each shareholder. Based on the results of the Dutch auction open to all shareholders, Cumulus will buy 4.5 million shares of Class B stock from two Banc of America investment funds who invested to launch the company. Since there will still be funds available from the maximum authorized buyback of 200 million, it looks like Cumulus will buy some more shares, up to a maximum of 500,000, from the BofA entities.
RBR observation: Back when the Dutch auction buyback was announced, Cumulus CEO Lew Dickey noted that the upper end of the price range, 12.50, was an 8.1% premium to the previous day's closing price of 11.56. But radio stocks have continued to suffer on Wall Street, so lots and lots of shares were tendered well below that cap. As a result, the selling shareholders will get no premium at all, but rather are selling for six cents less than they could have gotten back on May 10th. What's next? We wait to see whether Lew is taking a play from Jeff Smulyan's book. Will he bid to buy out all of the remaining shareholders in a few months, take Cumulus Media private and merge it with Cumulus Media Partners?
 EMI settles with Spitzer
The 4th and final major record label group, EMI, has settled so-called "payola" charges by New York Attorney General Eliot Spitzer. Although Spitzer made his usual declaration that the record company had agreed to "end its pervasive 'pay-for-play' practices," the penalty exacted was the smallest yet, a mere 3.75 million bucks to be distributed to music charities in the State of New York. "When a record label engages in an elaborate scheme to purchase air time for its artists, it violates state and federal law and presents consumers with a skewed picture of the country's proclaimed 'best' and 'most popular' music. We're pleased that our investigation of payola in the music industry has resulted in significant business practice reforms that will help generate more diverse airplay," Spitzer declared. EMI agreed to end the practices that Spitzer claimed violated federal law, FCC rules and a broad New York business law, including elimination of almost all promotional support for radio stations.
RBR observation: You've heard of junk bonds. How about junk law? At least the three previous settlements with record labels had some evidence of alleged payola received by individual station employees, although, contrary to Spitzer's claims, no actual wrongdoing by licensees. This time he is really grasping at straws. Read the settlement with EMI and try to find the payola. One PD got a video game, but there was no specific link to any airplay. Oh, and some others got concert tickets. God forbid that a record label would want air personalities to attend a concert by one of their artists and talk about it on the air! Heaven help the people of New York if they elect this guy governor. Maybe if he loses he'll go back to law school for a refresher course.
| EMI settlement |
| EMI exhibits |
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Tribune rating cut to junk by Moody's
After reviewing Tribune Company's plans for a two billion bucks stock buyback, Moody's Investors Service has downgraded the company's outstanding debt - five billion in all - to junk status. Moody's says plans to sell off 500 million in assets and cut costs by 200 million aren't sufficient to counteract the increased leverage from the stock buyback. In its ratings actions yesterday, Moody's downgraded Tribune Company's senior unsec. debt rating to from Baa3, the lowest investment grade rating, to Ba1, one notch lower. It also downgraded Tribune's short-term commercial paper rating to Not Prime from Prime-3. Moody's assigned a Ba1 Corporate Family Rating to The Tribune Company, but added that its outlook for the company's ratings going forward is stable.
| Read what Moody's had to say about Tribune |
 Tribune board and management
stand behind stock buyback
Following the public move by the Chandler family to force a breakup and sell-off of Tribune Company, while foregoing the two billion bucks stock buyback now underway (6/15/06 RBR #117), the company issued a response standing behind the decision to launch the buyback. William A. Osborn, Tribune's lead independent director, said: "Tribune's Board of Directors evaluated a broad range of strategic alternatives at numerous meetings over a period of months. The actions suggested by the Chandler Trusts in today's letter were considered by the board prior to its approval of the tender offer. After receiving recommendations from management and the board's outside financial and legal advisors, all the directors except those representing the Chandler Trusts approved the tender offer as being in the best interest of all shareholders." Dennis FitzSimons, Chairman, President and CEO of Tribune Company said: "After extensive deliberations by the Board, which included a detailed review of the environment in which all media and newspaper companies are operating today, we recommitted to an aggressive performance improvement program. This includes continued expansion of our Internet portfolio, the sale of non-core assets, and additional cost saving initiatives. In a changing media environment, our commitment to quality journalism and service to our communities will continue to be a top priority. We believe Tribune Company has a great future and we are focused on creating long-term value for all of our shareholders, many of whom are employees."
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Speed limit 325K: It's the law
"By allowing the FCC to levy stiffer and more meaningful fines on broadcasters who violate decency standards, this law will ensure that broadcasters take seriously their duty to keep the public airwaves free of obscene, profane and indecent material. American families expect and deserve nothing less." Those of the words of President George W. Bush seconds before signing the FCC's new 325K indecency fine into law. A slip of the lip just became potentially ten times more expensive. Bush said, "It's going to help American parents by making broadcast television and radio more family-friendly." He acknowledged the responsibility of parents to monitor what their children watch or listen to, and noted tools such as the v-chip. He also noted steadily coarsening of the language being broadcast and the rapid rise in complaints to the FCC, and the fact that the old 32.5K fine was "meaningless" to many broadcasters. Dennis Wharton of the NAB said, "In issues related to programming content, NAB believes responsible self-regulation is preferable to government regulation. If there is regulation, it should be applied equally to cable and satellite TV, and satellite radio."
| The President's full remarks |
 Martin tees up some big ones
Multicast must carry and the rules of the road for broadcast ownership will be on the agenda when the FCC commissioners meet in public next week on Wednesday, 6/21/06. The multicast issue is couched as a rulemaking, the ownership as a review. Multicast must carry was shot down on a 4-1 vote when Michael Powell brought it up near the end of his run as FCC Chairman, with current Chairman Kevin Martin as the "1." The ownership issues, newly labeled (in a way only a bureaucracy would think appropriate) "2006 Quadrennial Regulatory Review: Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996; 2002 Biennial Regulatory Review: Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996" essentially tackles the Third Circuit court remand of the stalled, if not failed, attempt to revamp the rules initiated by Powell on 6/2/03. It will specifically take into account three separate issues: Cross-Ownership of Broadcast Stations and Newspapers (MM Docket No. 01-235); Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets (MM Docket No. 01-317); and Definition of Radio Markets (MM Docket No. 00-244).
RBR observation: The mere fact that multicast is back on the agenda cannot be good news for its opponents in the cable industry, who were sitting on what looked to be a win at the FCC. Democrats Michael Copps and Jonathan Adelstein opposed it at the time because they wanted the quid of licensee public interest requirements in return for the quo of their vote to approve multicast. It will be interesting to see if Martin will do some horse-trading with them. On the other hand, he may not need to if Debi Tate and Robert McDowell see things his way. Interestingly enough, House bigwigs Joe Barton (R-TX) and Fred Upton (R-MI) have warned Martin off the topic, while Senate bigwig Ted Stevens (R-AK) said go ahead. On the ownership side, we expect a mere priming of the pump. We think the fireworks will come much further down the road. However, the battle lines should be delineated, and perhaps there will be some light shed on issues like public hearings and study parameters. All in all, this will easily be the biggest open meeting of the Martin era thus far.
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| Wall Street Media Business Report TM |
Up month for the Gray Lady
The New York Times Company reported that May ad revenues rose 4.4% to 184.6 million. News Media Group (newspaper/Internet/radio) rose 3.1% to 166.3 million. CEO Janet Robinson said it was the best month so far this year, with strength in many categories, particularly retail advertising in the News Media Group. TV revenues gained 6.6% to 12.7 million. Excluding the recent acquisition of KAUT-TV Oklahoma City, TV revenues would have been up 3.1%, with political spending up and automotive down.
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Ad Business Report TM
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 Give me good radio!
We asked a few on the agency side what radio could do better - on the content side or behind the scenes - to make their clients happier - or they, themselves, as listeners.
(from June's RBR/TVBR Solutions Magazine)
Natalie Swed Stone, US Director,
National Radio Investment, OMD:
"As I see it...These are changing and challenging times and ALL media are being scrutinized and reevaluated with a new set of metrics and criteria. Programming is certainly one of them and we see much progress here-with new programming announced daily (it seems). Another is engagement; Another ROI. Research is ever more critical. Basically, it's the advertiser piece clients are looking at-not just the program anymore. Where do they air exactly? Who heard exactly? How engaged were they exactly? Were they moved to buy? Will they/did they buy? How many touchpoints are there with the property? This is not just radio's unique challenge - every medium is having to reinvent/reposition/redefine - actually renew! A shakeup seems necessary in marketing, in research methods, in accountability standards. Radio should be looking to measure up to the Internet - since the Internet is basing its success and business on all of these criteria very important to today's advertisers. If radio does not step up in research and marketing sophistication very quickly - it may not benefit from the shifting budgets."
Monday: Matt Feinberg, SVP/National Radio, SVP/Director, Interactive Broadcast, Zenith Media Services.
The Gap chooses Carat for planning after review
Carat has won planning for The Gap after a review that included Mediaedge:cia, Starlink, Palisades Media Group and the buying incumbent PHD. The account reportedly includes The Gap, Gap Body, Baby Gap, Gap Maternity and Gap Kids.
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| Media Markets & Money TM |
Simmons settles into Memphis
Educational Media Foundation has accumulated a lot of frequent acquirer miles, but very little of its activity has taken place on the AM side. It has now completed the spin of one of its rare AM stations to Simmons Media. According to broker John Pierce, the announced 2M pricetag for KQPN-AM (the former KSUD) held through closing. The station moving toward completion of an upgrade to 1 kw-U at 730 kHz. The station is licensed to West Memphis AR.
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| Washington Media Business Report TM |
 Fine day for edgy video games?
Video games prevent players from watching broadcast content, but on the plus side, they may divert some of the copious amounts of outrage found on Capitol Hill when their content slips too far into the realm of the violent and sexual content, and with their sometimes obscure ratings. Chairman Cliff Stearns (R-FL) used his of the Commerce, Trade & Consumer Protection Subcommittee to look into them. Among the complaints was the fact that underage children are often able to acquire games rated "M" for mature, which are supposed to be available only to those over 17 years old. The primary target, as usual, was Grand Theft Auto, which has come to stand for video game excess much the same way that Janet Jackson and Howard Stern carry the banner for broadcast indecency. The FTC noted that it recently settled with the game's maker over embedded indecent material far beyond what was allowed under its rating, but noted it had not power to fine the maker. Fred Upton (R-MI) said, "I thought the FTC had more teeth. There are no real consequences. None."
RBR observation: Do not be surprised if Upton, fresh off his major success shepherding the Broadcast Decency Enforcement Act all the way to the White House for a presidential signature, sees what he can do about providing the FTC with a nice new set of regulatory choppers.
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| Ratings & Research |
ABC Radio makes debut on May Webcast Metrics ratings
Ando Media has released its monthly Internet Radio Top 20, a listing of the top-performing Internet radio stations and networks measured by the Webcast Metrics audience measurement platform. May changes of significance include the debut of ABC Radio Group.
| View the Charts |
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| Internet Media Business Report TM |
 "Gold Rush" online reality game
debuting on AOL
Gold Rush, a multi-media cross platform hunt for hidden gold reality event from Mark Burnett Productions and AOL.com, will debut on AOL.com 9/13. The first televised clue will be broadcast 9/14 on CBS. With over 2 million in solid gold hidden across America, the game engages participants to complete a series of pop culture challenges on AOL.com for a chance to actually search for the real-life treasure. Each round will end with the discovery of 100,000 in gold, until the final week, when competitors will vie for the 1 million cache. The clues that help lead participants to the gold will be found throughout AOL.com and these clues are solved by Gold Rush players finding "answers" hidden on CBS TV shows and commercials, as well as in print magazines and radio shows. "Picture thirteen heavily-guarded trucks - each loaded with a fortune in solid gold - dispatched on September 13 to be hidden in plain sight," said Mark Burnett. "Gold Rush is unlike any other game ever conceived, with potentially millions of Americans searching for caches across the country. Finally, a reality game that anyone can play."
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| Transactions |
12.5M WXMP-FM/WZPW-FM Peoria IL from AAA Entertainment Licensing LLC/B&G Broadcasting Inc., subsidiaries of AAA Entertainment LLC (Peter H. Ottmar) to Regent Broadcasting of Peoria Inc., a subsidiary of Regent Communications Inc. (William L. Stakelin et al). 625K escrow, balance in cash at closing. Includes non-compete. Superduopoly with WGLO-FM, WFYR-FM, WVEL-AM. Buyer is spinning off WVEL-FM, WIXO-FM & WPIA-FM. [File date 5/24/06.]
150K KOFE-AM St. Maries ID from Campbell River Holding Company LLC (Bobby Meadows) to Philip J. Plank. 15K down payment, addition 25K upon buyer's sale of KSSB-FM Calipatria CA, 110K note. [File date 5/23/06.]
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| Stock Talk |
Happy days are here again...
Fed Chief Ben Bernanke said that inflation expectations have stayed within historical ranges - making Wall Streeters think he is not going to go overboard on raising rates. So, the Dow Industrials rose 198 points, or 1.8%, putting the Dow back above the 11K mark at 11,015.
Radio stocks joined in the celebration. Entravision rose 6.4% and Regent gained 4.5%. Cumulus, however, fell 6.5% after announcing that its Dutch Auction stock buyback had priced at 11.50.
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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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37.78
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+0.34
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Hearst-Argyle
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HTV
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21.72
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+0.05
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Beasley
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BBGI
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7.06
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-0.02
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Journal Comm.
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JRN
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11.22
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+0.08
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| CBS CI. B |
CBS |
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26.27
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+0.44
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Lincoln Natl.
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LNC
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56.30
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+1.28
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| CBS CI. A |
CBSa |
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26.28
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+0.46
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Radio One, Cl. A
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ROIA
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7.05
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+0.08
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| Citadel |
CDL |
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9.08 |
+0.12 |
Radio One, Cl. D
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ROIAK
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7.05
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+0.03
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Clear Channel
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CCU
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29.81
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+0.25
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Regent
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RGCI
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3.97
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+0.17
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Cox Radio
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CXR
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13.70
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+0.20
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Saga Commun.
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SGA
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9.74
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+0.31
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Cumulus
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CMLS
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10.81
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-0.75
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Salem Comm.
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SALM
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13.86
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-0.11
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Disney
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DIS
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29.19
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+0.50
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Sirius Sat. Radio
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SIRI
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4.14
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+0.04
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Emmis
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EMMS
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16.29
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+0.44
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Spanish Bcg.
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SBSA
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5.55
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+0.06
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| Entercom |
ETM
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25.21
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+0.25
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Univision
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UVN
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35.29
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+0.62
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Entravision
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EVC
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8.31
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+0.50
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Westwood One
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WON
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7.82
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-0.05
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Fisher
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FSCI
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43.42
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+1.60
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XM Sat. Radio
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XMSR
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13.87
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+0.55
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Gaylord
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GET
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42.35
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+1.53
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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]
Re: 01 second spots
 Think elections.
"Vote for Hillary" - After every spot set, within each spot set, maybe a few more times between records.
Would you listen for any decent span of time? Not me.
Once CC actually starts selling adlets, blinks, slices, chunks or wheezes, it'll take approximately that one second before someone says (in one second) "bonus me."
Clutter is clutter.
Bob Wood
now in life after radio
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Below the Fold
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Ad Business Report
Give me good radio!
Ad Agency execs see it from their side...
Media Markets & Money
Simmons settles into Memphis
Completed the spin of one of its rare AM stations...
Washington Media Business Report
Fine day for edgy video games?
Video games prevent players from watching broadcast content...
Internet Media Business Report
"Gold Rush" online
Reality game debuting on AOL...
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Radio Media Moves
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 Eisen upped
at AURN
Howard Eisen has been promoted to Senior Vice President, Sales, at American Urban Radio Networks. Eisen joined AURN in 2001 and was most recently VP, Eastern Region.
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More News Headlines
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Rather headed for unemployment?
First the New York Post (last week) and now the Washington Post have run stories quoting unidentified sources as saying that Dan Rather will not get a contract renewal with CBS News and could leave the network as soon as this fall. Neither Rather nor CBS is commenting on the record. With the elimination of "60 Minutes II" the Washington Post report says CBS is overloaded with correspondents for "60 Minutes," especially with the addition of Katie Couric and Anderson Cooper as contributors. So, after 44 years, Rather's tenure at CBS may be coming to an end.
Cisneros joins Televisa bidding group
According to a Reuters report, the Cisneros Group of Companies has joined with Televisa and five equity firms to bid for Univision. Cisneros owns Venevision, after Televisa the second largest provider of programming to the Univision TV networks. Having both Televisa and Cisneros onboard gives the bidding group the advantage of already owning more than 20% of the stock of Univision.
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International
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Wong gongs
Hong Kong duo
A pair of radio show hosts wondered which female celebrity was the most desirable, and tried recently to get answers from their listeners. The way they asked the question got them two months of idleness, and cost their employer about 18K (in US currency). According to Kyodo News, they apparently did not use any heavy-seven type words, but they did ask who respondents would like to "indecently assault." That was enough to get women's groups howling and to draw the action from Joseph Wong, who heads up media oversight for the Hong Kong government. The condemnation and punishment were meted for airing a program "of bad taste." The station's manager indicated that it would accept the punishment without protest.
RBR observation: We have no idea if such a charge would fly here in the US, but we suspect not. There is no doubt that anyone broadcasting such a program here would be on the receiving end of torrents of outrage, but without venturing into graphic depictions or using any of that special group of words, it's not clear that this incident would be actionable by the FCC.
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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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Chandlers want Tribune breakup
Going beyond their previous objection to the two billion bucks plus stock buyback planned by Tribune management, the Chandler family has filed a detailed letter with the SEC which rips management for "strategic missteps" and calls for the company to be broken apart and sold off. The Chandlers, who controlled Times Mirror prior to its merger with Tribune, hold the second largest block of Tribune stock. Without mentioning CEO Dennis FitzSimons by name, the letter from the two Chandler trusts to the Tribune board of directors notes that since the beginning of 2003 - "when current management of Tribune was put in place" - the value of Tribune's stock has fallen over 38%, which the letter compares unfavorably to an 8.8% decline for other newspaper stocks and 29% for broadcast stocks.
RBR observation: No specific mention of the sole radio property, WGN-AM Chicago, but the Chandler family clearly wants to hang a for sale sign on everything. They are fed up with FitzSimons and want to take their money and walk away.
06/15/06 RBR #117
Nielsen goes multiplatform;
Phasing out diaries
Come 2011, Nielsen Media Research plans to have electronic measurement in all US TV markets, eliminating diaries completely. The ratings revamp plan unveiled will also measure viewing of TV shows, regardless of the platform, including such things as iPods and Internet viewing. It is being called Anytime Anywhere Media Measurement, or A2/M2. In other words, Nielsen has now mapped out its plan to "follow the video."
TVBR observation: Nielsen VP Jack Loftus told TVBR that his boss, CEO Susan Whiting, had briefed the new owners about the initiative some time ago and has kept them up to date on it, so there was no need to wait for a green light from them. "This is not about waiting. This is about moving ahead very, very quickly," There is no denying, though, that electronic measurement is going to cost more than stations are currently paying for diaries. TVBR advice is to learn about the electronic business environment we are living in right this minute. Embrace it in your daily lives beside your Blackberry. If you do not have people on staff that understand Electronic Technology then go outside your company and find those young people that are in touch with reality today. Or, get a career change.
06/15/06 TVBR #117
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