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Volume 23, Issue 124, Jim Carnegie, Editor & Publisher
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Monday Morning June 26th, 2006
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Radio News ®
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 RBR First: CCU may Retract RFP letter
Only a day after Clear Channel, which is leading the ratings RFP process, kicked CBS Radio and possibly everybody off the evaluation team that has signed with Arbitron (6/23/06 RBR #123),a major local broadcast buyer who did not want to be mentioned by name told RBR that CC Radio may retract that letter soon and invite everyone back on the RFP committee.
RBR questioned: Why is it that CC Radio asked the radio broadcasters to leave the RFP Committee that signed with Arbitron for PPM, but not the agencies that did? "Yes, we have a contract with Arbitron for PPM. I think this is still up for discussion on the committee-it's not a done deal. All the committee members didn't agree that the best course of action for the committee as a body was to exclude Arbitron customers."
Shouldn't broadcasters be allowed to make the best decisions as they see fit for their companies, while still participating in the RFP process of determining the best future course? "Yes, and there's also a question about whether that move is in the spirit in which the committee was formed in the first place."
Seemed it was a move to punish these broadcasters. "I can't say. Or was it just a fly-off-the-handle move that might be retracted later? It may be retracted. It's on the table now. I don't know that that decision is going to stand the way it is. There were plenty of people on the committee with emails flying, saying that maybe it would be better to reconsider this. It wasn't just the agencies. It was everybody. The committee is really trying to do the job, and this just makes it look narrower. If there is a better way to measure, I'd sure like to see it. And if we're on the trail of one, I'd like to know what it is and how it might work."
RBR observation: What does this all look like through the lens of Wall Street and Madison Avenue? Like radio is not coming together with one (1) voice, like they are in-fighting or a B rated comedy movie: The gang that couldn't shoot straight. This is not good for the total radio business.
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 Televisa group makes its bid
After suffering yet defection from his bidding group, Televisa CEO Emilio Azcarraga Jean was finally able to make a bid for Univision on Friday. The Televisa group was able to make its delayed bid after the remaining equity backers, Bill Gates' Cascade Investment and Bain Capital, came up with billions more after other members left the group, having decided that the pricing couldn't be justified. The latest to exit is the Cisneros Group, which owns Venevision, after Televisa the second-largest supplier of programming to Unvision - and like Televisa, already a major Univision shareholder. Venevision did not give a reason for its withdrawal. Three equity funds, KKR, Blackstone and Carlyle had earlier dropped out of the bidding group. So now the bids are in, but it is clear that they are not anywhere near the 40 bucks per share that Chairman Jerry Perenchio had been hoping for. The Los Angeles Times reported that the Televisa group was aiming at 36, just 50 cents above the previous bid submitted by Haim Saban's group. After being told that the bid was too low, Reuters reported Friday that the Saban group's bid had expired and that they had no plans to return to negotiations with Univision unless the Televisa talks collapsed. There was widespread speculation that Perenchio would not accept 36 as the final offer, just a bit over 11 billion bucks, but it was clear that he would have to settle for less than the 40 bucks a share he had targeted, which would be closer to 13 billion - or he'll have to call off the auction.
RBR observation: What went wrong? Blame the Fed. Since Perenchio put Univision up for sale rates have been going nowhere but up. That's made it more expensive to finance the multi-billion bucks deal and also raised questions about just how much growth to expect in Univision ad revenues going forward. Carlyle, KKR and Blackstone balked at the risk and the Saban group went with a low-ball pitch. So now there is only one bidder. It remains to be seen whether Perenchio and Azcarraga can find common ground in a tougher financing environment than existed when this process began.
Copps goes international
Michael Copps, the FCC's senior Democrat, found a global audience for his sermon against media consolidation via a contribution to the 6/21/06 edition of Financial Times. His main argument is his perceived link between media consolidation and cross-ownership and the homogenization of the news. In keeping with the international theme, he looks back to the tour of the US of Alexis de Tocqueville back in the 1800s, who "...marvelled at the astonishing circulation of letters and newspapers among these savage woods." Copps notes that this source of national pride has suffered from the almost total loss of in-market newspaper competition. He cites both the consolidation of radio and television ownership and the electronic media's focus on entertainment and advertising rather tan news as problems. He argues, "It is pretty easy to see how media consolidation smothers local news. It is a lot cheaper to develop a single slate of national content and ship it off to local television and radio outlets. But local news and community events are democracys lifeblood." He warns against media cross-ownership and Internet consolidation. "The fight against consolidation is not liberal versus conservative or red state versus blue. It is a grassroots, all-American campaign to preserve the very democracy that de Tocqueville saw in America. Every citizen is a stakeholder in the outcome and every citizen should be part of the decision-making."
RBR observation: One thing is for sure. The NPRM on media ownership is not going to be quiet.
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PTC puts CBS on the clock
There is a lot of interest in the eventual decision from CBS on how to handle the 550K fine which the FCC has attached to the Janet Jackson 2004 Super Bowl incident. The Parents Television Council has put a shot clock on its website to keep track of the payment deadline, now that the FCC has refused to back off the fine. PTC says it needs to pay by 7/31/06 or risk losing licenses, based on the 5/31/06 date on which the FCC reaffirmed the fine. The anti indecency group quotes CBS's reasoning for fighting the fine: "Quite obviously, the fleeting exposure of a female breast for 9/16 of a second is not 'repeated,' and no reasonable construction of the term 'willful' applies to an incident that is unknowing and accidental." PTC notes however that the 550K fine pales in comparison to ad rates earned during the event, which it pegs at 2.3M per 30-second spot. "The PTC will keep the public's attention fully focused on the actions of CBS and whether or not they pay the fine as required by law with a clock on the PTC homepage counting down the days until CBS's time expires at midnight on July 31." CBS affiliates have already petitioned
RBR observation: Just for the record, at 2.3M dollars for 30 seconds, a 9/16 of a second ad would cost 43,125 dollars. Just in case you were wondering.
 NAB wants foul called
for interference
According to the National Association of Broadcasters, people are increasingly making use of Part 15 devices, in particular FM modulators, to transfer signals from satellite radio, MP3s and iPods to their automobile FM receivers. And in so doing, they're interfering with reception in other cars sharing the road and trying to listen to licensed FM stations. Engineering firm Meintel, Sgrignoli and Wallace (MSW) ran tests on 17 such devices, and found 13 exceeded the legal limit of 48 dBuV/m. Six were over by 2,000% and one was over by 20,000%. Further, excessive bandwidth use threatens stations on 1st and 2nd adjacent as well as co-channel frequencies. It's a problem in its own right, and even more troublesome as the radio industry tries to glide into digital operation. In a letter to Senate Commerce Committee leaders Ted Stevens (R-AK) and Daniel Inouye (D-HI), it presents the MSW findings to instruct the Committee's work on opening up "white spaces." It sent another the FCC Chairman Kevin Martin seeking regulatory relief, in the form of making sure all such devices are brought into compliance with the rules.
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| Wall Street Media Business Report TM |
Cumulus completes stock buyback from public
While the Univsion auction was bogged down, Cumulus Media was putting the finishing touches on its successful Dutch auction tender to buy back a large portion of its stock. The final tally determined that 15,345,112 shares were tendered at or below 11.50 per share, which was the final buyback price. Since that exceeded the maximum of 11.5 million shares for the offer, Cumulus bought back 14,423 odd-lot shares and then a pro-rated 74.93% of the remaining shares that were tendered. That added up to 132.3 million bucks for the share buyback from the public. The buybacks reduced the public float for Cumulus by about 24.1%, leaving approximately 36.2 million Class A shares outstanding. In addition, as previously disclosed, Cumulus will buy back five million Class B shares from affiliates of Bank of America Corporation, an original investor in the company, at the same 11.50 price. That transaction is scheduled to close this Thursday (6/29).
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Ad Business Report TM
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 ThomasNet taps ESPN Radio for multimedia marketing push
ThomasNet.com, a leading destination site for industrial buyers, launched a multimedia marketing campaign with ESPN Radio that combines elements of online games, podcast sponsorships, online ads and traditional radio advertising to bring the ThomasNet message to a national audience that is heavily populated with business and industrial listeners. At the center of the campaign is ThomasNet's sponsorship of "MikeMan," an online game featuring the hosts of ESPN's Mike & Mike in the Morning show. The game features host Mike Golic navigating an industrial course of coils, gears, drums and machinery while avoiding capture by co-host Mike "Greeny" Greenberg. The first in a series of personality-based online games planned by ESPN Radio, the MikeMan sponsorship will be promoted by the network online and on-air. The MikeMan game can be accessed by going to www.espnradio.com.
Running through September, the ThomasNet campaign also features:
-- A full flight of ThomasNet spots on ESPN's premier programs The Herd with Colin Cowherd and the Dan Patrick Show in addition to Mike & Mike in the Morning.
-- Streaming audio spots and banners on ESPNRadio.com.
-- Gateway streaming audio ads on podcasts available at ESPN Radio's new PodCenter and through iTunes.
-- Extended reach of ThomasNet's sponsorship of the MikeMan game to audiences listening to Mike & Mike on XM and Sirius Satellite Radio and watching on ESPN2.
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| Media Markets & Money TM |
Other shoe drops in Hilton Head
Triad's acquisition of 1.4M acquisition of WGZO-FM in the Hilton Head SC market requires the company to lose an FM to make room. We already knew that the station would be WWVV-FM out of Ridgeland SC, and that it was going to John Broomfield's JB Broadcasting. Now we also know that the price will be 800K cash. Essentially, Triad is paying 600K for an FM upgrade. Broomfield will put down 40K, which will be held by brokerage firm Kalil & Company, which handled this deal. Broomfield and Triad's David Benjamin have gone to contractual pains to make sure they don't step on one another's toes, at least for the first year following closing. Broomfield has agreed to stay away from all local Triad formats, specified as Modern Rock, Adult Hits, Classic Hits, Gold AC and Sports. In turn, Triad will avoid Broomfield's as yet undetermined new format for WWVV, whatsoever it turns out to be.
RBR observation: From Broomfield's perspective, this transaction reminded us of what used to be a fairly common group radio practice not so long ago. Back when the national caps kept a tight 12- or 20-station lid on the number of radio stations one group could own, we'd often see regional arrays of stations, with one station or combo conveniently located in a geographically unrelated and highly desirable resort/vacation market. Like this completely fictional market array: Burlington, Poughkeepsie, New London, Bangor, Trenton......and Fort Myers. Broomfield will have a mini-version of this. Very mini. He has an AM-FM combo in the small, unrated Greenwood SC market, in the western portion of the state. Perhaps he and his family have made a practice of visiting the shore at Hilton Head from time to time on vacation. Now such a trip can be written off the old tax return as they check out their brand new local Hilton Head business interests. The IRS won't care if they do so while sipping the tropical beverage of their choice...
 FCC remains on sidelines
on Granite sale dispute
Harbinger Capital Partners Master Fund IO owns about 39% of Granite Broadcasting's 12.75% Cumulative Exchangeable Preferred Stock. Harbinger says Granite has a 19.7M interest payment due 6/30/06 which it lacks the cash to remit. Without the 85M sale of WMYD-TV Detroit and 65M sale of KBWB-TV San Francisco to subsidiaries of D.B. Zwirn & Company, Harbinger says Granite will be unable to make the payment and will go into Chapter 11. Harbinger goes further to claim that Granite will head into Chapter 11 regardless of whether the station sales go through, making the sale "...a fraudulent conveyance." Harbinger suspects Granite's condition will prevent realizing full price for the group's portfolio. For these reasons, it's petitioning the FCC to deny the sale. Granite says the FCC is an inappropriate venue for this particular dispute, and the FCC agrees with Granite. The Commission pointed out that the sale meets all tests as contained in the Communications Act of 1934. "The Commission has consistently held that it is not the proper forum for the resolution of private disputes and that any redress should be sought in a local court of competent jurisdiction." The FCC noted that Harbinger brought up "no statutory or rule violations, and has not shown that grant of the applications would disserve the public interest." So as far as the FCC is concerned, the sale is on.
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| Washington Media Business Report TM |
 Another pirate walks the plank
The tale of the latest buccaneer waylaid by the FCC for sailing the FM spectrum with a license is unusual. Florida is the hotbed for such piracy, and New York and California are other popular locales. But the case of William W. Scrugham's 100.3 mHz operation opens up new territory. If there is ever a competition for the designation "middle of nowhere," the town of Kamiah ID could not be blamed for submitting an application. At the base of the Idaho panhandle, it is miles from any rated Idaho markets, and is actually closer to but not close to Spokane WA. Geographical reference points are obscure. To the north, Orofino ID. To the south, Grangeville ID. Further to the west, Lewiston ID and Clarkston WA. The east, the Clearwater Mountains. The question isn't so much that there was a rogue station out there, but rather how anyone found out. Still, the freight for operating an illegal station remains 10K. Scrugham has not filed any response to FCC communications on the matter.
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| Monday Morning Makers & Shakers |
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Transactions: 5/8/06-5/12/06
It wasn't a huge week, but it was active with a variety of trades. The biggest was a seven station sale for 10.5M involving two small Midwest markets. Seven more hit seven-digits, and there was even a rare in-market radio/TV combo sold (on the noncom side). It didn't set any records, but it was an indication of a healthy station trading market.
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Total
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Total Deals
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14
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AMs
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11
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FMs
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9
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TVs
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3
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| Value |
34.684M
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| Complete Charts |
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Radio Transactions of the Week
Double O flicks its Bic for Bick
| More... |
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TV Transactions of the Week
GOCOM gets a pair in Illinois market
| More... |
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| Transactions |
450K KTAA-FM Tyler-Longview TX (Big Sandy TX) from Institute of Basic Life Principles (William W. Gothard) to Community Broadcasting Inc. (Richard T. Bott, Charles M. Watkins, Sherley E. Bott). Cash. [File date 6/1/06.]
135K WSWV AM & FM Pennington Gap VA. 100% of BC Broadcsting Co. from Billy Louis Carter (100% to 0%) to Robert Charles Wright & Lisa Ann Wright (each 0% to 50%). 10K earnest money, 45K cash at closing, 80K note. [File date 5/31/06.]
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| Stock Talk |
Clouds still hanging over Wall Street
A drop in orders for big ticket durable goods was the latest bad economic news to press down on stock prices. The Dow Industrials fell 30 points on Friday, or 0.3%, to close at 10, 989, ever so slightly below the 11K mark.
Take that negative news and throw in the turmoil over the Univision auction - and radio stocks were almost all lower. The Radio Index fell 1.202, or 0.8%, to 146.302. The worst decliners were Beasley, down 3.9%, and Saga, off 2.5%.
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| Radio Stocks |
Here's how stocks fared on Friday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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37.01
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+0.02
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Hearst-Argyle
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HTV
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22.06
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+0.22
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Beasley
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BBGI
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6.44
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-0.26
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Journal Comm.
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JRN
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11.06
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unch
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| CBS CI. B |
CBS |
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26.50
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+0.55
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Lincoln Natl.
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LNC
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54.99
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-0.33
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| CBS CI. A |
CBSa |
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26.40
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+0.44
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Radio One, Cl. A
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ROIA
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7.17
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-0.07
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| Citadel |
CDL |
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8.86 |
+0.04 |
Radio One, Cl. D
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ROIAK
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7.15
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-0.07
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Clear Channel
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CCU
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30.03
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-0.24
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Regent
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RGCI
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3.53
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-0.05
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Cox Radio
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CXR
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13.82
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+0.06
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Saga Commun.
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SGA
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9.27
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-0.24
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Cumulus
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CMLS
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10.49
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+0.01
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Salem Comm.
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SALM
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12.44
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-0.20
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Disney
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DIS
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29.12
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-0.16
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Sirius Sat. Radio
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SIRI
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4.47
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+0.28
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Emmis
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EMMS
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15.99
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+0.03
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Spanish Bcg.
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SBSA
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5.02
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-0.08
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| Entercom |
ETM
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24.85
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-0.09
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Univision
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UVN
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32.95
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+0.15
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Entravision
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EVC
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7.94
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-0.04
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Westwood One
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WON
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7.43
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-0.04
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Fisher
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FSCI
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41.81
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-0.19
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XM Sat. Radio
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XMSR
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13.46
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-0.04
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Gaylord
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GET
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41.94
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-0.16
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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
ThomasNet taps ESPN Radio
For multimedia marketing push...
Media Markets & Money
Other shoe drops in Hilton Head
Triad's acquisition of WGZO-FM requires the company to lose an FM...
FCC remains on sidelines
On Granite sale dispute...
Washington Media Business Report
Another pirate walks the plank
The latest buccaneer waylaid by the FCC for sailing the FM spectrum...
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Radio Media Moves
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Adrienne Pabst joins
CBS Radio Sales/LA
as VP/DOS
CBS Radio Sales announced that Adrienne Pabst is the new VP/Director of Sales for CBS Radio Sales in Los Angeles. Pabst joins Interep from Clear Channel Radio, where she was National Sales Manager of its eight station Los Angeles cluster since 2004.
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More News Headlines
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Fritts hangs out
his shingle
You knew that Eddie Fritts was going to start his own lobbying/consulting firm after retirement from the NAB and the National Journal reports that he has now opened the doors of the Fritts Group. Two former NAB staffers have joined him - Kathy Ramsey, who was executive vice president of public affairs, and John Lively, who was director of government relations. Clients are said to include CBS, News Corp., Ion Media Networks, Vonage and others, including our favorite - GoDaddy.
Horses knock MI station off air
The Kalamazoo, MI Gazette reports plow horses on a farm are being blamed for knocking WNWN-FM Battle Creek off the air for more than 10 hours beginning last Monday. P.J. Lacey, WNWN PD, told the paper there were about eight plow horses in a pasture on a farm in Girard where the transmitter is located: "The plow horses have worn a path to where the pole is that has our transmitter and guide wires. They rubbed up against the pole and managed to shake loose the wires.'' The station is back on the air now.
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TVBR - TV News
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Nice parting gifts
for Chapman
It's not on the level of corporate golden parachutes that have drawn fire on Wall Sttreet, but Gary Chapman won't be going away empty-handed when he retires from LIN Television on July 10th (6/15/06 TVBR #117). In a filing with the SEC, LIN revealed that Chapman will get a lump sum payment of 5,378,739. Already awarded stock options for 140,999 shares of Class A stock and 292,846 shares of restricted stock will vest in full, although Chapman must exercise the options within 60 days. In addition, LIN will provide life, health, medical, dental and vision insurance for the retiring CEO for three years. And finally, he gets the title to his company car, valued at 51,000. We're guessing it is not a Honda Civic. All in all, LIN says the retirement package will result in the company recording increased overhead expenses of approximately seven million in Q2. Meanwhile, a special committee of three directors has been appointed to lead the search for a new CEO. The members are William S. Barnowsky Jr., Peter S. Brodsky and Royal W. Carson III.
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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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RBR First
CCU dumps companies in RFP process who've signed with Arbitron
RBR was first to report this issue and other trades followed that Clear Channel, which is leading the Next-Generation Electronics Ratings Evaluation Team RFP process, is kicking everybody off the evaluation team that has signed with Arbitron, according to RBR sources. They don't want them to be part of the RFP process anymore - and since Clear Channel launched the whole thing, it is controlling who gets to participate.
RBR observation: We had wondered what was going to happen. We had heard that some of the groups who had already signed contracts for PPM still wanted to help evaluate the competing system from The Media Audit/Ispos. While it might have been good for the industry to try to keep everyone working together, we can understand Clear Channel's position as well. Should someone serve on a jury if they've already made a decision? We also hear, though, that CC Radio itself was in negotiations with Arbitron for its own PPM contract, but cut off talks when MRC accreditation didn't come as quickly as expected. This seems to be a game of chess where everyone is trying to figure out what works to their own advantage, rather than really trying to arrive at the best solution for the entire radio industry and its advertisers.
06/23/06 RBR #123
Univision auction crumbling; Azcarraga scrambling
A week ago it looked like Emilio Azcarraga Jean had the inside track to win the bidding for Univision. After all, his company, Televisa, and bidding partner The Cisneros Group (Venevision), already owned more than 20% of Univision and were its main program suppliers. But now Azcarraga Jean is scrambling to even make a bid, after losing three of his equity fund backers.
RBR observation: Has Bill Gates now become the key player in this drama? With the three equity firms out, the Microsoft king's personal investment company, Cascade Investment, is the only outside partner left in the Televisa-Venevision group. How badly does the world's richest man want to become a major player in US Hispanic media?
06/23/06 RBR #123
Entertainment and media biz
to grow 6.6% annually
Yep radio is part of the mix as the global entertainment and media (E&M) industry has entered a solid growth phase and will increase at a 6.6% compound annual growth rate (CAGR) to 1.8 trillion in 2010, according to PricewaterhouseCoopers' Global Entertainment and Media Outlook: 2006-2010. Full report on your outlook in
06/22/06 RBR #122
FitzSimons stands firm
Tribune CEO Dennis FitzSimons insisted at the Mid-Year Media Review conference in New York that a majority of the company's board of directors, including the independent directors, are firmly behind Tribune's plan to buy back up to 25% of its outstanding shares for around two billion bucks, despite opposition from the Chandler Trusts, Tribune's second-largest shareholder. He said the tender offer is on track, with closing set for June 26th. Complete details in
06/21/06 RBR #121
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Board Operator
Talk Radio Board-op needed for national syndicate. Must have 2 years of Talk Radio board-op experience. ISDN Unit, Telos call-screening software and hardware knowledge required.
See Radio Careers
Sr. Level Radio Engineer
The Motor Racing Network (MRN Radio) has immediate opening for Sr. level Engineer. Must be able to quickly analyze and repair issues, supervise a staff, and take initiative in all technical aspects of business. Experience in RF and satellite distribution, Audio Vault, studio design and construction, remote broadcast facilities and project and operational budgeting is necessary. Travel is required.
See Radio Careers
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