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Welcome to RBR's Daily Epaper
Volume 23, Issue 119, Jim Carnegie, Editor & Publisher
Monday Morning June 19th, 2006

Radio News ®

Cumulus stock still falling
Shares of Cumulus Media that weren't bought back in the company's Dutch auction tender are now worth even less, with the price continuing to fall after the buyback priced near the low end of its range (6/16/06 RBR #118). Public shareholders agreed to sell 11.5 million of their shares back to Cumulus for 11.50 each, which was six cents less than they could have gotten in the open market a day before the auction was announced. On Friday the stock fell nine cents, so Cumulus shares are now down to 10.72. Where is the floor? Analysts seem to be positive about the Dutch auction, but that hasn't translated into investors rushing to buy up the shares that remain available after the company reduced its float by 27%. Bear Stearns analyst Victor Miller told clients that the stock buyback was accretive for FCF, with cash flow rising about 6% as a result, but he also said that the company's increased leverage is a concern. His target price for the end of 2006 is 13 bucks, a 20% upside if it proves to be true, and he maintained an Outperform rating on the stock. Wachovia Securities analyst Marcia Ryvicker told clients that the increase in interest expense resulting from the buyback offsets the benefit of reducing the number of shares that Cumulus has outstanding, so she has lowered her EPS estimates for the company. She has a target valuation range of 11-13 and maintained a Market Weight rating for the stock.

RBR observation: Both Miller and Ryvicker mentioned the possibility of Cumulus being taken private at some future date, but neither sees that as a near-term likelihood. RBR has one eye on Emmis in their private move and the other on Cumulus. The third eye, which is in the back of our head, is viewing the rest of the business mood swings. Stay with RBR and we will keep our eyes and ears open for you.

Pickering already
reloading on indecency?

Joe Barton's (R-TX) second in command at the House Energy and Commerce Committee is Chip Pickering (R-MS). Although Congress signed off on the Senate version of the Broadcast Decency Enforcement Act rather then the more stringent measure put forth by Fred Upton (R-MI), Pickering is already making noises about bringing back some of Upton's planks in separate legislation. In particular, he suggested revisiting a three-strikes license revocation rule, fines aimed at performers who "knowingly" go beyond the bounds of decency, and a shot clock for dealing with complaints. Nor have the cable and satellite businesses escaped Pickering's notice. "I hope the cable and satellite industries see the importance of this issue and voluntarily create a family tier of programming and offer culturally responsible products. Soon, technology will provide consumers with total choice in their media subscription, but until then I hope the industries will move faster and allow consumer options now. Media corporations have a civic responsibility not only to prevent fraud and financial abuse, but also to not corrupt or degrade our culture."

RBR observation: Huh? The media is supposed to prevent fraud and financial abuse? Where did that come from? Does Pickering have a point to make about broadcast content or is he just stringing words that he thinks sound good together? Just like Eddie Fritts always said, no battle in Washington is ever entirely won or lost, and in this case Pickering is certainly positioned to continue applying the heat. However, as far as a review of indecency goes, it will be interesting to see who gets to it first, the legislature or the judiciary.


NBC and Clear Channel Radio get real together
Reality TV that includes radio as well has been launched on Clear Channel Radio with spots containing clues to draw viewers to yesterday's premiere of NBC's new "Treasure Hunters" series. The campaign used various-length spots which required listeners to listen from pod to pod to get the clues, which in turn required them to view the TV show for the completion. According to a joint release, here is how the radio campaign worked: :05 spots between songs teased an upcoming sequence of clues and questions. :15 spots ran in the very next ad break with the first clue. Listeners had to stay tuned to the next ad break to continue the sequence. :30 spot in the break revealed the answer to the first clue and added a second clue. This spot also featured enhanced sound bites from the show. :60 spots ran in the third ad break of the hour and added a final third clue that could only be answered by watching Sunday night's series premiere. The spots also directed listeners to the show's interactive online game found at www.nbc.com/treasurehunters. "In order to help promote the interactive nature of the program, we put together a breakthrough creative solution," said Tim Farish, Vice President of Media Planning, The NBC Agency. "This resulting campaign is innovative and fun, and takes advantage of the new ways radio can be utilized to make our message stand out to listeners."

RBR observation: Big is sometimes better and Clear Channel has proven that its huge radio platform can be used effectively to hype a new TV show. Fox's "American Idol" wouldn't be what it is today without the heavy promotion employed during the first season on CC Radio. The radio element was one of three legs that launched Idol and made it a national icon: Coke had the idea, Fox bought it and Clear Channel promoted the hell out of it with their LA Morning host, Ryan Seacrest.

MoveOn mad about dropped ad
Politically motivated 527 group MoveOn.org is complaining about an ad that had disappeared from Cox cable systems in the Tidewater area of Virginia. MoveOn has been running a campaign targeting Republican members of the US House of Representatives it thinks are vulnerable or perhaps can be made vulnerable. Protests from thus targeted Republicans have labeled MoveOn's charges as false, and threatened to possibly include media outlets which run them in legal actions. On top of that, although the organization says its ads continue to run in the Virginia Beach-based district of Thelma Drake (R-VA), they have been pulled at Cox Cable. MoveOn thinks it is more than a coincidence that two execs of Cox are listed as contributors to Drake. MoveOn also lodged similar complaints about cable MSO Time Warner. MoveOn exec Eli Pariser said, "Let me get this straight: First, the GOP gets exposed for protecting war profiteers like Halliburton and now executives at Cox and Time Warner, who censored our TV ads, are exposed giving money to the GOP. If that isn't the definition of political back-scratching, I don't know what is." MoveOn has officially lodged complaints on the matter with the FCC and with local franchising authorities.

RBR observation: We're not taking sides on this as a matter of politics. And as we've pointed out many times in the past, the same media executives can often be found hedging their bets and contributing to both parties one way or another. But are we the only ones who think that MoveOn will have a very legitimate gripe if a pro-Republican ad is allowed to run on the same system that turned this ad down?


RBR News Analysis
They must be joking
The Washington Times weighed in on multicast must carry last week, and demonstrated an astonishing failure to understand the technical nature of the question. Here, in part, is what the paper wrote in an editorial. "A multicasting mandate would diminish the choices available to customers by forcing cable and satellite companies to carry the broadcaster's choice of programs, i.e. more of the same, rather than the diverse cable networks that have to compete to be carried. And such a mandate would consume a lot of the capacity of the fiber-optic network that could and should be used for other broadband services that consumers want and deserve."

In a RBR word, Huh? As a matter of law, cable companies are required to carry all broadcast television stations in their market so that the cable viewers get important local content. Each station is entitled to 6 mHz of bandwidth, which is enough to accommodate the high-definition programming which has been the major thrust behind the switch to digital broadcasting. It is also enough to support six or more streams of programming when the hi-def is not being used. So is the Times suggesting that whenever a broadcast station is not in hi-def, an alert cable head-end employee is going to flip five side-channels in a broadcaster's 6 mHz zone over to five high-demand cable services? The entire concept is preposterous. Cable opposes multicast on grounds of competition, not bandwidth scarcity. The bandwidth argument is completely bogus. The fact that it continues to have legs on Capitol Hill is stunning.


Ad Business Report TM

Give me good radio!
(from June's RBR/TVBR Solutions Magazine)
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. Continued from Friday RBR 06/16/06 #118.

Matt Feinberg, SVP/National Radio, SVP/Director, Interactive Broadcast, Zenith Media Services:
"In my universe of one I listen to mostly Public Radio, College Radio, and a variety of streamed stations because they provide me the better listening experience. It gives me the news, information and entertainment that I enjoy. Increasingly my personal usage of commercial radio has decreased just because there is less and less choice out there (though I do like the JACK format). The airwaves are too cluttered and the tightened playlists...I'm a music fan so the restrictive playlists are not appealing. From a professional standpoint I'm always listening to New York radio because I need to and when I travel I always look forward to checking what's on the local airwaves ("love INDIE 103 in LA")..."
| Read More... |

Video games poised to steal pie share
According to a c/net report, planted advertising in video games amounted to about 80 million bucks in 2005 a figure which it says grossly undervalues its potential effectiveness. Research firm Parks Associates is predicting that the number will skyrocket to 400M by 2009 and reach the 1B mark two years after that. Parks says that 50 dollars is spent on television advertising to reach households that play video games, but those same households see only 10 cents worth of advertising when the games are turned on. It predicts that this ration will change, particularly as children get parents hooked on games and the demographic of game-players spreads. Ad types are listed as virtual billboard, pre-game and product placement.

RBR observation: Yet another hungry mouth sliding a chair up to the table...

Lincoln's dream is to
launch four new models

Ford Motor Company's luxury line, Lincoln, is set to launch four new models this year, with a new marketing campaign built on the theme that owning a Lincoln is the American Dream. "The 'Dreams' marketing platform is about the vision that motivates successful people and the rewards for achieving success," said Al Giombetti, president of Ford and Lincoln Mercury marketing and sales. "It's an idea that fits perfectly with our brand because we are turning Lincoln into a new American success story on the strength of innovative products. In fact, 80% of our showroom is all-new for 2007." While sales have been tough this year for US automakers, Lincoln has enjoyed an 8% retail sales increase through the first five months of 2006, in part because of two successful new models. "Lincoln will build on the success of the 2006 Zephyr and Mark LT with four terrific vehicles that are designed to inspire and reward those who believe in and pursue the American Dream," said Mike Richards, general marketing manager for Lincoln Mercury. "Each of these vehicles - the new Lincoln MKX [pictured], MKZ, Navigator and Navigator L - will deliver a business class driving experience that will celebrate our customers' success." The 2007 Lincoln MKZ and MKX enter the two most important and growing luxury segments: medium premium utility and medium premium sedan. Lincoln will also launch the restyled and thoroughly re-engineered 2007 Navigator, along with the new "L" version, featuring a longer wheelbase.

RBR observation: If the dream is selling four new models then marketing, branding dollars will be necessary at the national level. But the real key is customers in the showrooms and that means again Local...Local...Local....and again Radio can help with those remotes to drive the floor traffic of the dealers. TV just can not do what radio can put fans in the stands with remotes.


Media Business Report TM
Verizon's FiOS ushers in
noncom multicast

Even though multicast must carry rules remain up in the air, Verizon has agreed with the Public Broadcasting Service (PBS) and the Association of Public Television Stations (APTS) to carry the full digital signal of three noncom stations in a given service area along with any others with nonduplicative programming. That would be the full signal, regardless of whether its being used for HDTV or split streams. According to reports, Verizon isn't so sure about the same deal for commercial stations, but AT&T is. APTS President & CEO John Lawson welcomed the deal, even as he decried the perpetual attempts by Republicans in Congress to undermine the stations he represents. "At a time when some in Congress question the important contribution that public television stations make to the communities they serve, Verizon's commitment to public television and to delivering high-quality programming to its growing television-customer base is significant." Commercial stations may not get the same treatment, however. Verizon executive Terry Denson told the Washington Post, "PBS represents quality programming." Commercial stations did not get the same vote of confidence. They did over at AT&T, however, which also is entering the MVPD business. The company expressed a willingness to carry forward whatever broadcasters are willing to offer, and told Reuters that it is currently participating in negotiations to that end, regardless of whether multicast must carry is mandated or not. It says that as a new entrant, it wants as much content as it can get.


Media Markets & Money TM
Religious groups spin CPs
Four licensee names are involved in a pair of FM CP transactions, but they only two completely separate organizations. The buyers in both cases include principals Clark Parrish, Diana Atkin, Earl Williamson, Dennis Clouch and Gary Phelps. As Edgewater Broadcasting, they're getting WKHN-FM CP Hubbard Lake MI from James J. McCluskey's Great Lakes Community Broadcasting Inc. (McCluskey represents the lone outsider group.) Then, as Radio Assist Ministry, they're getting an FM CP earmarked for Vienna GA from World Link Radio, which lists the same principals minus Clounch and Phelps. Both are cash deals, and both are for stations in unrated portions of their respective states. The Hubbard Lake CP, priced at 35K, is for a Class A on 88.1 mHz with 1.1 kw @ 367'. The town is in the northeast part of the Lower Peninsula, southwest of Alpena. The Vienna CP is going for 150K. It too will be a Class A, just over the divide into commercial territory at 92.1 mHz, with 5.1 kw @ 348'. Vienna is in the south-central part of Georgia roughly between Macon and Albany without being close to either.


Washington Media Business Report TM
FCC CAC sets session
The FCC's Consumer Advisory Committee (CAC) will get together 7/21/06 for a full-day session during which it will take up a number of issues. For starters, it will receive a briefing from the FCC staff to get an update on "Agency activities." This in and of itself may be a matter of interest, since last we heard from CAC at the end of last month, it was complaining that it had fulfilling its advisory role and reported to the Commission last November, and had not heard a peep in response since. One of the planks to be discussed in July is a "revised recommendation from its Media Working Group regarding media ownership rules." This will come a month to the day after FCC Chairman Kevin Martin and his fellow commissioners have a crack at them.

RBR observation: We have little doubt as to which groups' crack at the ownership rules will carry the most weight...


Monday Morning Makers & Shakers

Transactions: 5/1/06-5/5/06
Granite was able to respin its television stations in Detroit and San Francisco, and that was just about the entire station trading story for the first week of May. The biggest radio transaction involved noncommercial stations that aren't even on the air yet. There was a top-10 market FM sold, also noncommercial, and with less power than your average LPFM, it didn't exactly fetch a large price.

5/1/06-5/5/06

Total

Total Deals

11

AMs

3

FMs

9

TVs

2
Value
153.774M
| Complete Charts |
Radio Transactions of the Week
From one religious group to another
| More...
|
TV Transactions of the Week
Big market boulders chipped off Granite
| More...
|


Transactions
2.8M WIXO-FM, WVEL-FM, WPIA-FM Peoria IL (Bartonville, Glasford, Eureka IL) from Regent Broadcasting of Peoria Inc., a subsidiary of Regent Communications Inc. (William L. Stakelin et al) to Independence Media of Illinois LLC (David F. Jacobs). 100K escrow, 1.775M cash at closing, 925K note. Existing superduopoly. Seller is buying WXMP-FM/WZPW-FM Peoria IL in separate transaction. [File date 5/24/06.]

1M WOKA AM & FM Douglas GA. 60% of Coffee County Broadcasters Inc. from Normand Fletcher (20% to 0%), Tullis V. Allen (20% to 0%), Cecil Hutcheson (10% to 0%) and Betsey Hutcheson (10% to 0%) to Jim L. Squires (20% to 50%) and Dwayne H. Gillis (20% to 50%). Cash allocated proportionately to sellers. [File date 5/24/06.]


Stock Talk
Stocks slip a bit
The Dow Industrials remain above the psychological 11K mark, but slipped a little on Friday, despite an improved foreign trade report. Inflation concerns continue to keep a cloud of caution over Wall Street. The Dow dipped a fraction to 11,015 to finish the week, with other major indices also down slightly.

Radio stocks did not do as well, with almost all down for the day. The Radio Index fell 2.334, or 1.5%, to 149.434. Spanish Broadcasting System plunged 5.6% and Saga dropped 4.4% as the worst performers.


Radio Stocks

Here's how stocks fared on Friday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

37.56

-0.22

Hearst-Argyle

HTV

21.82

+0.10

Beasley

BBGI

6.94

-0.12

Journal Comm.

JRN

11.20

-0.02

CBS CI. B CBS

25.99

-0.28

Lincoln Natl.

LNC

55.95

-0.35

CBS CI. A CBSa

26.00

-0.28

Radio One, Cl. A

ROIA

6.93

-0.14

Citadel CDL
8.91 -0.17

Radio One, Cl. D

ROIAK

7.01

-0.04

Clear Channel

CCU

29.86

+0.05

Regent

RGCI

3.78

-0.19

Cox Radio

CXR

13.64

-0.06

Saga Commun.

SGA

9.31

-0.43

Cumulus

CMLS

10.72

-0.09

Salem Comm.

SALM

13.64

-0.22

Disney

DIS

29.45

+0.26

Sirius Sat. Radio

SIRI

4.07

-0.07

Emmis

EMMS

16.45

+0.16

Spanish Bcg.

SBSA

5.24

-0.31

Entercom

ETM

25.11

-0.10

Univision

UVN

35.75

+0.46

Entravision

EVC

8.12

-0.19

Westwood One

WON

7.72

-0.10

Fisher

FSCI

42.76

-0.66

XM Sat. Radio

XMSR

13.60

-0.27

Gaylord

GET

42.26

-0.09

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments and
a photo to [email protected]

And the band played on [while the Titanic......]

The discussions regarding whether :30s, :60s or :01's are more effective miss the point. The number of UNITS that a station plays determines how much CLUTTER is perceived on the air. What would truly make every spot more effective IS LESS OF THEM. How about if we return to those thrilling days of yesteryear and actually care about what's best for the benefit of THE LISTENER, rather than philosophical discussions regarding the length of spots for the benefit of THE ADVERTISER? The unintended consequence of playing shorter, but more units, will be further erosion of the effectiveness of radio advertising. One of the reasons that advertisers are buying less radio advertising is because it doesn't work as well as it did before. And, it has become less effective because we have jammed so much of it down the listeners throats that they finally "Just said no."

Imagine a world in which stations play 8 units an hour. Think about a) the increase in the price of spots (due to diminished supply) and b) the resulting increased TSL. By focusing on the listener (for a change), we would actually be focusing on the advertiser.

We began to lose the business the day we stopped focusing on the listener and started focusing on the advertiser.

Russ Oasis
WKLU
Indianapolis




Below the Fold
Ad Business Report
Give me good radio!
Matt Feinberg, Zenith Media Services "If I were to change radio..."

Media Business Report
Verizon's FiOS
Ushers in noncom multicast...

Media Markets & Money
Religious groups spin CPs
Four licensee names are involved...

Washington Media Business Report
FCC CAC sets session
Starters, receive a briefing from the staff to get an update on "Agency activities."...

More News Headlines

First face-off
set in Montana
Senate shoot-out

With a tight Senate race expected this year in Montana, the first debate between incumbent Sen. Conrad Burns (R-MT) and Democratic challenger Jon Tester, currently a member of the state senate, is taking place next Sunday (6/25) at the Montana Broadcasters Association convention in Whitefish, MT. The hour-long debate will be carried by every TV station and every radio station in the state - some live, some tape-delayed - according to the association. Burns, as you no doubt know, is a former broadcaster. Tester is an organic farmer and formerly owned a custom butcher operation.


Stations for Sale

Chattanooga AM/FM
Jorgenson Broadcast Brokerage
(828) 859-6982
[email protected]

FM Stations
Nevada Boomtown-$950K; CA Coast-$1.5M; OR Coast-$700K; Northwest -$900K
MCH Enterprises, Inc.
(805) 237-0952
www.mchentinc.com


Radio Media Moves

Brown honored
in Missouri

The Missouri Broadcasters Association has given its highest award, the Distinguished Broadcaster Award, to Ed Brown, Creative Services Director of the four-station Emmis Radio cluster in St. Louis. His employer notes proudly that Brown is the first person to receive the award who was not a station owner or GM.

New leaders for NJBA
Bob Dunphy, vice president/market manager tri-state for Clear Channel Radio in Sussex, has been elected chairman of the New Jersey Broadcasters Association. Other officers named were: first vice chair Andrew J. Santoro, senior vice president Millennium Radio, LLC, Trenton; second vice chair Elizabeth G. Christopherson, CEO/executive director New Jersey Network Public Radio & Television, in Trenton; secretary Allen Lewicki, director of operations WAWZ-FM Star 99.1, Zarapeth; and treasurer Charles McCreery, owner/president of Clear Communications, Vineland.

Triumphant
return in LA

After a brief flight with Sirius Satellite Radio, Lisa Padron has come back down to earth and rejoined Interep's CBS Radio Sales as Vice President of Sales in Los Angeles.


RBR Radar 2006
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

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 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

RBR observation: 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?
06/16/06 RBR #118

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

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


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