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Volume 22, Issue 121, Jim Carnegie, Editor & Publisher

Tuesday Morning June 21st, 2005

Radio News®

Wachovia analyst ratchets down radio
Back down your 2005 radio revenue expectations again is the word from Wachovia Securities analyst Marcia Ryvicker. Citing a slowing economic environment, cautious comments by radio operators at last week's Interep symposium and continued revenue disruption from Less is More and similar efforts, Ryvicker has reduced her growth expectations by one percentage point for most of the remaining months of this year. For the full year, that means that she is now expecting industry growth of 2.6%, rather than here previous estimate of 3.4%. She expects Q2 growth of 2%, rather than 3%, Q3 growth of 3%, rather than 4%, and Q4 growth of 3%, rather than 5%. "Radio is doing everything it can to 'fix' itself, in our view, and we applaud the industry and its hard-working members for their collaboration and ideas. But one concern remains: Is the radio industry so far behind that during its race to catch up, it is likely only to run into disappointment after disappointment?" she asked.

RBR observation: Whatever happened to 7% and 8% annual growth? That's supposed to be "normal" for radio, but it's been a while since we had a "normal" year. Ryvicker noted that only a few of the panelists at last week's Interep symposium expressed confidence that radio will return to those "normal" growth levels. Rather, she and other industry observers are looking for normal growth to be redefined at a lower level. We hope she's wrong, but given how this year has been going, we aren't going to claim that she's shooting too low with her forecast that 2005 growth won't even make it to 3%.

Chuck Sherman dies at 71
Long-time NAB Executive Vice President of Television Dr. Charles "Chuck" Sherman has died at age 71 after a long illness. After retiring from NAB in 2002, he had served as President of the NAB Educational Foundation (NABEF) until 2004. Sherman is credited with launching NABEF's annual Service to America Summit and founding the "100 hundred plus" conference which focuses on small and medium market television stations. In 2003 the NAB established the Chuck Sherman Television Leadership Award which recognizes leadership, service and commitment to local television in medium and smaller markets. "Chuck Sherman was 'Mr. Television' at NAB for nearly 15 years. Chuck will best be remembered for helping launch NABEF's Service to America Summit, and for directing the Foundation that has helped many minorities and women advance into leadership ranks of local broadcasting. The NAB family extends our condolences to Elaine and the entire Sherman family," said NAB President Eddie Fritts. Contributions in remembrance of Chuck Sherman may be made to the Charles and Elaine Sherman Lectureship Series at Temple University.

New York Oldies listeners won't let go
"Jack" has been on the air for over two weeks now at 101.1 in New York, but fans of Oldies WCBS-FM aren't giving up their fight to bring back their favorite station. A protest rally is planned for today at 11:30 am outside the studios at 1515 Broadway. Meanwhile, the final ratings for the jettisoned format are giving some additional ammunition to those who want Infinity to bring back the Oldies. Arbitron reports that WCBS-FM was up a bit in the 25-54 demo in the just-released Arbitrend (March-May), still at #11 for the demo, although it was a bit below year-ago levels. However, if you look at only the final month, May, 'CBS-FM jumped to #6 for the demo.

RBR observation: But what about June? What might have been? Well, we'll never know. But one month spikes (or drops) are nothing unusual - - that's why Arbitrends run over three-month periods. As we all know, one month does not a trend make. And speaking of trends - for the recent Aribtrend results for NYC just look to the right side of RBR Epaper and look at NYC. WCBS-FM was there, 12+ with a 3.1, if you are looking at trends.

Rigas gets 15 years
A federal judge in New York sentenced Adelphia Communications founder John Rigas to 15 years in prison for his conviction on charges of looting the company and defrauding investors. His son, Timothy, received a 20 year sentence. "I apologize for this horrible thing that happened to all of us," John Rigas said in comments addressed to Adelphia shareholders before hearing his sentence." He insisted that he did nothing except improve conditions for his employees and family. John Rigas, who is 80 and fighting bladder cancer, could have received a much harsher sentence, but the judge took his age and health into account. After two years, the Bureau of Prisons may release Rigas if doctors say he has less than three months to live. After the multi-billion bucks scandal sent Adelphia into bankruptcy court, the company sold its only radio station to Entercom and now has a transaction pending to sell its cable TV systems to Time Warner and Comcast.

CPB is ideological battleground
Ken Tomlinson, Chairman of the Corporation for Public Broadcasting, hired a contract consultant to evaluate program content on public broadcasting programming. The results of the study made it to Sen. Byron Dorgan (D-ND), who confirmed reports that the consultant was rating guests on various programs as "anti-Bush" or "pro-Bush." Dorgan said, "This is a very dangerous road to travel, to be measuring programming on public television on the basis of whether it is supportive of the President of the United States." He said there was evidence that the consultant was trying to pin the appearance of liberal bias on PBS programming, to the extent that Sen. Chuck Hagel (R-NE), who has not always seen precisely eye-to-eye with the President on Iraq policy, was labeled a liberal. "My guess is that is going to surprise a lot of Nebraskans," commented Dorgan. Meanwhile, a consortium of watchdogs including Common Cause, Free Press and the Center for Digital Democracy, sent a 150K-signature petition to CPB asking it to "Stop playing politics with public broadcasting." In particular, the groups object to the candidacy of former Republican exec Patricia Harris as CPB president, questioning how her appointment can be anything other than political as she has no broadcast experience.

Take Rt. 62 to FM ownership
Auction No. 62 is on approach to take-off. The auction seminar coincides with the opening of the application window, on 7/27/05. The app window shuts down 8/12/05, upfront checks are due 6/30/05, the mock auction is scheduled for 10/28/05 and the auction itself kicks off 11/1/05. Top prizes have a minimum opening bid of 200K - - they include a Class A in Indian Wells CA, a Class A in Satellite Beach FL, and a Class C in Vale OR. The second tier opens at 150K, with a Class A in Jenner CA, a Class A in Nanakuli HI, a Class A in Westwood KY, a Class C in Drummond MT, a Class C1 in Okracoke NC, a Class C1 in Enderlin ND, and a Class A in Brandon SD. There are 172 sticks on the block in all. The FCC announced that a freeze on any changes affecting any of these allotments goes into immediate effect.

Adbiz©

Tobacco ads to be pulled from school mags
Tobacco ads in school library editions of Time, Newsweek, People and Sports Illustrated magazines will be eliminated under a nationwide agreement announced Monday. The deal between publishers, tobacco companies and states attorneys general follows a 2003 agreement by publishers and tobacco companies in which tobacco ads were banned from classroom editions of the magazines. Monday's agreement, necessary according to officials since school libraries often don't subscribe to the classroom editions, provides for "selective binding" of those editions beginning this summer. Tobacco companies have agreed to a publishing method that will keep their ads from school library subscriptions.

Sony moves to McKinney & Silver
Sony has reportedly selected Havas' McKinney & Silver, Durham, NC as AOR for its 100 million account. McKinney bested Fallon Worldwide, BBDO Worldwide, Leo Burnett and a joint effort by Saatchi & Saatchi, NY and Team One, El Segundo, CA after a review. Arnold Worldwide was dropped from the review in early May after it won RadioShack. The incumbent, Y&R, split with Sony in early February. During the review, Fallon was awarded a project for a Sony audio offering.

"Rock Star: INXS" product placement
cuts CBS out of deal
In CBS's upcoming reality strip "Rock Star: INXS" (the search for a new lead singer for rock band INXS), audio gear from manufacturer SLS International will be prominently featured. To get its products on the show, SLS offered compensation, but not to CBS. The producer, Mark Burnett, received SLS stock options with a value of about 100,000 dollars. SLS isn't buying traditional spots on the show and hasn't dealt with CBS for the program, SLS CEO John Gott told the Wall Street Journal. The show is scheduled to air 7/11. A CBS spokesman told the paper the deal between SLS and Burnett is atypical. The network is selling product placements and commercial time, along with Burnett, for the show.

RBR observation: What comes around goes around. More and more with product placement, the industry seems to be coming back to its roots. Product placement used to be huge, with sponsors basically owning some of the shows in the 50s. Remember the "Texaco Star Theater"? This seems to open up that paradigm all over again with the sponsor and producer actually buying into one another.

Media Business Report

Viacom buys NeoPets
If you don't have young children at home, you may never have heard of NeoPets. But the Internet site is a major draw for young web surfers, with more than 25 million members who come to the site regularly to care for their virtual pets, participate in the online community and - - you knew this was coming - - view ads. Neopets routinely ranks among the top 10 "stickiest" sites in Web surveys, which is why Viacom's MTV Networks is shelling out big bucks the acquire the privately-held company. Details weren't disclosed, but the Wall Street Journal reported that the sale price was around 160 million. "The hidden value of NeoPets is the fact that over 60% of its audience is over age 13, which aligns with the audiences of many of our MTV Network brands," said MTV Network Vice Chairman Herb Scannell in announcing the acquisition. NeoPets CEO Doug Dohring and his senior management team will stay on to continue running the company after the sale to Viacom.

Media Markets & MoneyTM

Union accepts Alaska's KUDO
Chinook Concert Broadcasters proved the skeptics wrong when it took a commercial Classical format into Anchorage AK, and it's trying to do the same with Progressive Talk. A labor union has stepped forward to help the broadcaster keep that project on track. The station, which carries Air America programs on its schedule, will be bought by the International Brotherhood of Electrical Workers. According to the Anchorage Daily News, the price will be 500K. KUDO's Rich McClear said in a general letter on the station's website that IBEW will then turn the station back over to current Chinook management for at least three years. The union has promised to upgrade the transmission plant, install a new automation system and build a new studio to allow local origination of progressive programming. IBEW's Gary Brooks explained to his own rank and file, "KUDO features pro-family, pro-working people, progressive Talk programming. I believe the purchase of this radio station is a solid investment in our local union's future and vital to maintaining a forum for progressive Alaskan ideals."

Washington Beat

Caps off to open window
Mutually exclusive FM allotment proponents have until 9/19/05 to get their universal settlement agreements in to the FCC. In order to clear backlog of disputed allotment proposals, which the FCC has said number around 300, the usual requirement that reimbursements are not in excess of an applicant's "legitimate and prudent expenses" has been waived for the duration of the window. Eligible parties must have a released NPRM concerning their item, and its comment deadline must have been on or before 6/14/05. Settlements which do not meet this requirement will be accepted, but will not have the expense waiver.

An un-granted deal in Lincoln
The sale of Lincoln Broadcasting LLC, permittee of KOWH-TV Lincoln NE has been rescinded, at least temporarily. World Investments Inc. has applied to sell the Channel 51 CP to CFM Communications LLC for 300K, a deal filed in March 2004 in which CFM actually stepped in as buyer for Pappas Telecasting Company. However, a principal of CFM, Carol Miller, was involved in litigation with another Lincoln telecaster, Mitts Telecasting Company, which is licensee of KXVO-TV. Although the matter between Miller and Mitts is said to be unrelated to the deal for KOWH-TV, the FCC said Miller's sworn statements in the Mitts case call into question the truthfulness of CFM regarding its deal with World. Hence, the grant to go ahead with the deal, issued last month, has been rescinded pending further review. The FCC did not reveal the nature of Miller's testimony.

Ratings & Research

Arbitron RADAR 85 Provides
Top 25 DMA analysis reports
Arbitron announced the Top 25 DMA markets will be available to RADAR clients and can be accessed through the Market-by-Market Analysis reports, beginning with RADAR 85's release 6/27. Users can choose either all Top 25 markets or select markets within the Top 25 to be displayed. An increase in sample size will also be reflected, from 80,000 to 85,000. By the release of RADAR 88 3/06, the RADAR service will be based on an annual sample size of 100,000 diarykeepers. Initial findings in RADAR 85 indicate that, over the course of a typical week, radio reached 95% of Persons 18+ who live in a household with an income of 75,000 or more. 95% of college grads listened to radio, as compared to 92% of people who did not go to college. 82% of Persons 18+ listened to radio while in their cars.

TVBR - TV News

Dolan move puts Rainbow in play
The Dolans have put aside their feud over the now-defunct Voom satellite TV service and decided to make Cablevision a family company. Chairman Charles Dolan and his son, CEO James, are offering to buy out their public shareholders for 21 bucks a share, after spinning off Rainbow Media Holdings, the programming arm, to shareholders as a separate company. They say Rainbow is worth 12.50 per share, bringing the total value to 33.50 per share - - a total of 7.9 billion for the public shareholders. The buyout proposal continues a going private trend in the cable business. Cox Communications recently bought out its public shareholders for 8.5 billion and Insight Communications went private in a 650 million LBO.

TVBR observation: The question now is where will Rainbow end up? It's not likely to operate for long as a standalone public company and the bidders are likely lining up already to try to claim it. Its properties will include the national cable networks AMC, IFC and WE, fuse, regional sports networks, Madison Square Garden, the New York Knicks, the New York Rangers, Radio City Music Hall, News 12 (an all-news cable channel in suburban NYC) and Clearview Cinemas. Those names should attract interest from NBC Universal, Viacom, News Corporation and others.

Transactions

450K KMCR-FM Montgomery City MO from Chirillo Electronics Inc. (Phillip A. Chirillo) to Broadcast Management Inc. (Randy Wachter). 22.5K escrow, balance in cash at closing. [File date 5/11/05.]

430K KWDO-FM Waldo AR from George S. Flinn Jr. to Noalmark Broadcasting Corporation (William C. Nolan Jr., Edwin B. Alderson Jr.). 43K escrow, balance in cash at closing. Superduopoly with KMEX-FM/KIXB-FM El Dorado AR. No overlap with KELD-AM/KAGL-FM El Dorado. [File date 5/10/05.]

Stock Talk

Oil spike sends stock lower
Oil prices hit a record high, sending stock prices lower. The Dow Industrials fell 14 points, or 0.1%, to 10,609.

Radio stocks followed the downward trend. The Radio Index was down 2.408, or 1.2%, at 204.668. Beasley fell 1.9% and Arbitron 1.6% to pace the retreat.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		43.69	-0.69	Jeff-Pilot	JP		50.18	+0.02
Beasley	BBGI		14.29	-0.27	Journal Comm.	JRN		16.53	-0.13
Citadel	CDL		12.05	+0.10	Radio One, Cl. A	ROIA		13.12	+0.13
Clear Channel	CCU		30.35	+0.34	Radio One, Cl. D	ROIAK		13.14	+0.16
Cox Radio	CXR		16.12	+0.14	Regent	RGCI		5.85	-0.05
Cumulus	CMLS		12.18	-0.02	Saga Commun.	SGA		14.98	+0.46
Disney	DIS		26.59	-0.11	Salem Comm.	SALM		20.01	-0.02
Emmis	EMMS		17.71	-0.04	Sirius Sat. Radio	SIRI		6.01	-0.01
Entercom	ETM		33.37	+0.27	Spanish Bcg.	SBSA		9.55	+0.07
Entravision	EVC		7.73	-0.02	Univision	UVN		26.94	+0.09
Fisher	FSCI		48.86	-0.37	Viacom, Cl. A	VIA		33.59	+0.03
Gaylord	GET		42.98	-0.22	Viacom, Cl. B	VIAb		33.30	-0.18
Hearst-Argyle	HTV		25.02	+0.30	Westwood One	WON		20.47	+0.13
Interep	IREP		0.46	unch	XM Sat. Radio	XMSR		33.81	+0.82
International Bcg.	IBCS		0.01	unch	-	-	-	-	-

Bounceback

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Arbitrends

Upped & Tapped

Loftus to Infinity
After eight years as COO of Shamrock Communications and manager of its Wilkes Barre-Scranton cluster, Jim Loftus is moving to Infinity to be General Manager of WOGL-FM Philadelphia. Loftus had spent 12 years in Philadelphia radio before his stint with Shamrock.
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More News Headlines

Westwood launches
"Randy Jackson's Hit List"

CNNRadio launching
Sci-Fi summer show

Online "American Idol" launching

TV Watch urges parents
to supervise kids viewing habits

May Digital Magazine
Now Available

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RBR Radar 2005

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

RBR observation: The six year Viacom/CBS marriage and divorce
Was it worth it? Back when the proposed merger of Viacom and CBS Inc. was announced in 1999, we were pretty much alone in saying that CBS Inc. shareholders were being short-changed in the deal. The deal was portrayed as a merger of equals, but the truth was that CBS shareholders were having to trade voting stock for non-voting Viacom Class B shares. In our view, they should have been paid a premium for giving up voting control to Sumner Redstone, but they weren't. Sumner Redstone is the controlling shareholder of both companies. Given the track record they've had with him so far, that doesn't appear to be anything to celebrate. 06/20/05 RBR #120

Viacom pays price for splitting
The plan to divide into two companies is not without consequences. Standard & Poor's has lowered Viacom's corporate credit and senior unsecured ratings from A-minus to BBB-plus - - that's still investment grade, but only three notches above junk bond status. RBR observation: You can argue that big isn't always better, but big almost always is better when it comes to borrowing money. Lenders like assurances that they'll be paid back and big companies with multiple revenue flows generally offer less risk than a smaller company with the same leverage multiple. Having to pay more to borrow will reduce shareholder value, so it's tricky to try to balance the pros and cons of the split. Redstone has obviously decided that the pros outweigh the cons. Reports have interested offers for its Simon & Schuster publishing house and the Paramount theme parks what we called "stray assets" that don't really belong in either new company, but are being assigned to CBS. We doubt that Les Moonves would mind seeing them go away. 06/17/05 RBR #119

Viacom break-up: What's the point?
There's only one issue driving Sumner Redstone - Wall Street valuation. The big question is whether the split will actually accomplish what Redstone wants. Will investors pay more for stock in the two parts than they're currently willing to pay for the whole? If not, then the split will have been for naught. RBR observation: Investors are fickle folks. We recall that just a few years back, radio stocks were a hot commodity. See the data in the chart. 06/16/05 RBR #118

Outback puts creative in review
Has put its advertising creative account into review and is working on menu changes to boost sales. Outback's measured media was 60 million last year, according to TNS Media Intelligence. However, ad spend is more than 100 million this year for the first time as the company shifted spending to national media. President/COO Paul Avery "We're putting spot TV back in several markets...that will take effect in July. We need to get back into marketing on a regional, local, individual unit basis." Regarding the use of television, Fulton Smith-Sykes, VP Marketing, tells RBR/TVBR, "What is happening within any medium, whether it's digital convergence in the wireless world, or how you use your television to interact, becomes more important on your creative strategy and your creative communication than ever. Editor's note: Read our One On One interview with Fulton, and Director of Media Cherie Shive in our upcoming July Solutions Magazine issue.
06/17/05 RBR #119

Ratings company wants
to take Nielsen to court
A company which want to break into the TV ratings businesses with a set-top box system of measurement is taking Nielsen Media Research to court in a antitrust lawsuit which it hopes will break up Nielsen's monopoly grip of the television ratings business. The complainant is erinMedia, owned by Frank Maggio, who said his own system is better than Nielsen's antiquated methodology. RBR observation: Good luck and have lots of money Mr. Maggio and be prepared to lose every dime. Just common sense and history wags the dogs tail.
06/17/05 RBR #119

President/General Manager
Schurz Communications, Inc. is seeking President/General Manager candidates for one of its network affiliated television stations. Demonstrable success required in leading strong news & sales efforts. See TV Careers

Seeking Challenge
Professional communications executive with strong international media background seeking a new challenge. Prior experience includes: CEO& COO. See Positions Wanted

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