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Volume 23, Issue 134, Jim Carnegie, Editor & Publisher
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Wednesday Morning July 12th, 2006
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Radio News ®
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 BMO-my-gosh:
Analyst's crystal ball is cloudy
Lee Westerfield at BMO Capital Markets was looking for a reasonably healthy 6-6.5% gain in US advertising revenues for 2006, followed by a more modest 4.4% gain in 2007 (a non-political year). Apparently the forecasts weren't modest enough, and both have been revised downward, to 5.8% and 3.2% respectively. For radio, however, this is just the beginning of the ugliness. According to BMO, the industry gained 1.7% in 2004 and was flat in 2005, numbers that it thinks will actually look good compared to what's coming up. With a loss of 0.7% on the books for 2006 Q1, BMO trends the industry at -1.4 Q2 and -1.1 Q3, followed by a minuscule 0.4% gain Q4 and a -0.7% performance for the year. 2007 is expected to be another red hole, at -1.5%. Television, with its cyclical infusions of political and Olympic cash, will continue its mountain range pattern. Spot TV posted a 10.7% gain in 2004, lost 7% in 2005, is expected to post quarterly 2006 gains of 4.3%, 4.9%, 12% and 12.7% for an annual gain of 8.9%, followed by a 2.9% decrease in 2007. Broadcast networks are not expected to do as well. After posting a 6.5% gain in 2004 and a 1.7% loss in 2005, it'll trend 9.7%, 2.1%, 2.6% and 0.4% to an annual figure if 3.8%, and will come in flat in 2007.
RBR observation: Newspapers and magazines are also in trouble. And you can probably guess where the money's going. If you guessed Internet, treat yourself to a virtual cookie. As a new medium, however, it's easy to post gaudy comps. Its annual trend is 32.5% in 2004 and 30.3% in 2005, with a projection of 37.4% for this year. Then BMO thinks it'll start coming down to earth, with a gain of only 22%. The steadiest business is perhaps the oldest. Outdoor's actual and predicted gains, going back to 2004 are as close to a straight line as you'll find on the media chart, trending 6%, 6.9%, 5.7% and 5%.
 Mancow leaving Q101
after eight years
Erich "Mancow" Muller's contract with Emmis' Q101 Chicago has not been renewed, so he's seeking a new flagship station. His last day is 7/14. Mancow syndicator Talk Radio Network says this move doesn't affect his other 35 affiliates and Mancow's flagship deal in Chicago is up to Mancow-the deal there is separate from TRN. "Mancow's track record of success in the top ten markets combined with the fact that his show has become an attractive environment for more than 25 national brand advertisers since 2004 position him favorably to take full advantage of the ratings quagmire created by Stern's early replacements," said TRN CEO Mark Masters.
| Read More... |
RBR observation: It's pretty confusing. CBS Radio is under a lot of pressure to make the post-Stern stations shine-especially in Chicago where he would be a shoe-in. Mancow could help, so we don't completely rule that possibility out. We've heard there have been some conversations in the past between the two. And remember, bottom line, this could all be posturing right now by Emmis to get Mancow to go for a lower-priced contract. They've got weeks and weeks to negotiate more-and they meaning Emmis and Mancow and Mancow and CBS Radio. It's really a wildcard right now in the Windy City.
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Tribune trying to work at cross-purposes
The Los Angeles Times and KTLA-TV are both fine media properties. So are the Hartford Courant and WTIX-TV. The problem is that they are not supposed to be co-owned, and FCC rule changes which would have made the combos legitimate have been log-jammed in Washington (with a detour through the Third Circuit Court in Philadelphia). Now the clock is ticking again, as licenses come up for renewal. Generally, the FCC grants such waivers with relatively short duration for the purpose of spinning off properties to come into compliance. It may have been more lenient with broadcast/newspaper combinations while rules which would have relaxed restrictions on such combinations were pending. The FCC has already announced that it will be taking up the rules again this summer as ordered by the Third Circuit, and FCC Chairman Kevin Martin has not been shy about expressing his opinion that the cross-ownership ban should be repealed. Consumers groups, on the other hand, have not been shy about objecting to such combinations, and one of them, Media Access Project, has filed against such waivers in the past. According to Advertising Age, watchdogs express little doubt that any renewed attempts to get waivers will be fought.
RBR observation: Regardless of your opinion of broadcast/newspaper cross-ownership, it is a simple fact that the rules banning hybrid combos were not struck down by the Court. To the contrary, it cited studies showing that such combinations were frequently the best news sources in their market. The problem the court had was with the seemingly "arbitrary and capricious" media caps for radio, TV and newspaper when cross-breeding media, and the flawed underpinnings supporting them. Anyway, it is not Tribune's fault that this issue is stuck in the machinery of government. Since the issue is open, and may very well end up with a result favorable to Tribune, it seems only fair that they be allowed to hang on to their properties until the matter is decided, even if it takes several more years.
 Lots of prime radio properties up for grabs
Following hot on the heals of the sale of Susquehanna Radio to Cumulus Media Partners and ABC Radio to Citadel Broadcasting, some other prime radio properties are also being shopped. The biggest such trimming of assets, at least that has been publicly announced, is CBS Corporation saying it is interested in selling its radio stations in 10 markets - and not necessarily the company's smallest markets. All in all, the list runs to 39 stations whose value could approach a billion dollars. Meanwhile, as Citadel Broadcasting prepares to close on its 2.7 billion acquisition of the ABC Radio group, Citadel CEO Farid Suleman has indicated that he plans to divest about 150 million worth of radio stations. Who are the buyers? "It's a lot of existing broadcasters backed by private equity," said Eddie Esserman of Media Services Group. "It's some guys who have owned or operated who want back in and think that multiples are coming down to an attractive level to attract their interest. There seems to be a resurgence of the broadcasting entrepreneur who has been notably absent for the past few years, probably driven away by multiples," he noted. Are the public companies going to be sitting on the sidelines just watching this? "Well they're not very acquisition minded right now unless it's incredibly strategic," Esserman told us.
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Ad Business Report TM
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 ZenithOptimedia ups
global ad spend forecast
ZenithOptimedia predicts global ad expenditure will grow 6.1% in 2006, upgrading its forecast since April from 6% growth. ZenithOptimedia forecasts growth of 5.3% in 2007 and 5.6% in 2008, slightly above the 5.0% average rate that ad expenditure has grown at over the last 10 years. ZenithOptimedia also says internet is growing far faster than any other medium, thanks to rapid innovation in the types of internet advertising, and in ways of measuring it and tracking consumers' responses to it. "We forecast internet ad expenditure will grow 76% between 2005 and 2008, while the other media grew by between 10% (for radio) and 27% (for cinema)." ZO now forecasts the internet to account for 7.0% of worldwide ad spend by 2008, up from its 6.5% forecast in April and 6.0% in December; it accounted for 4.7% in 2005. ZO also expects the internet to overtake outdoor this year, a year earlier than their prediction three months ago. The five largest advertising categories are retail, auto, telecommunications, medicine and finance. Retail is the largest, accounting for 49 billion in ad spend worldwide in 2005, up from 33 billion in 2001. Of all the big categories, retail advertisers spend the most on newspaper advertising, and the proportion of their budgets they allocate to newspapers has barely fallen over the past five years, from 40% in 2001 to 39% in 2005, despite the steady decline of newspaper circulation in developed markets. "Newspapers' short lead times allow advertisers to print timely information on price promotions, and they can be used to promote both national brands and local stores. Without the support of retailers, newspapers' share of the total ad market would have fallen faster than it did, from 32% in 2001 to 30% in 2005." Of the five largest categories, medicine is the only one to have reduced the proportion it spends on television, and it has done so only fractionally - from 75.2% in 2001 to 74.9% in 2005. Retail, finance and telecommunications advertisers all spent proportionately more on television in 2005 than in 2001.
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| Washington Media Business Report TM |
The self-perpetuating political category
Joe Schwarz (R-MI) is defending his seat in the US House of Representatives, which he hasn't even had for a full term yet. That's not unusual, but he's taken some political hits which are a bit unusual for a Republican. But there are Republicans and Republicans, and Washington watchdog Club for Growth has placed Schwarz on their hit list, and has been buying time in Schwarz's Battle Creek MI turf on grounds that he has, among other things, supported unnecessary government spending (like the funding of CPB) and supported some tax increases. Already the Michigan Chamber of Commerce has come to his defense with a flight of radio ads, and now a group called The Republicans Who Care Individual Fund is going on TV with a campaign that attacks Schwarz's primary opponent, Tim Walberg.
RBR observation: Sure it's called Battle Creek, but who knew it would be a battle ground, especially so early? We've already heard of three groups spending their money on local broadcast outlets, before hearing anything about what the candidates themselves are doing. It seems almost impossible to overestimate the final tally in the political category each even-numbered year. (Those laws to limit the amount of money spent on electioneering sure are working, aren't they?)
 Gambling action on Capitol Hill
The House of Representatives has voted to put severe restrictions on Internet gambling, with anti-gambling legislators outnumbering those who see it as a matter personal freedom and choice by 317-93. Without getting into details, we note that politicians look out for their own. Like the Do Not Call Registry, which does not prevent politicians from interrupting your dinner with a phone call, the anti-gambling bill does nothing to hinder state lotteries, and also protects horse racing. Thus, two potent advertiser categories have emerged from the vote unscathed. According to the Associated Press, the future of the bill is uncertain anyway, since it does not have a very high profile in the Senate as of yet.
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| Media Markets & Money TM |
Houston AM jumps off the Raftt
Brokered ethnic KILE-AM is getting a new owner. The Raftt Corporation will enjoy a 9M payday courtesy (2M of which will be in the form of a promissory note) of David Gow and his Gow Communications, contingent on approval for a facilities upgrade. The station is already approved to go to 50 kw during the day, and just needs its license to cover to make that a reality. It will also attempt to add night service with 1 kw. Raftt Corp.'s principal is Jerome Friemel.
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| Ratings & Research |
Arbitron goes electronic
Subscribers to Arbitron's Radio Market Report now will have access to Arbitron's new eBook, which will premiere on the Internet this Monday and include the Spring 2006 ratings. Arbitron's eBook is a web-based replacement for the service's printed Radio Market Report, which includes comprehensive ratings information for all 297 metro markets that Arbitron covers. Benefits of the new system, according to Arbitron, are faster delivery; the elimination of having to pay for what used to be an optional advance release; and easier searchability. Sales reps can use the new report to import information directly into presentations, and the report includes more information on which groups own which stations. A demo is available at https://ebookdemo.arbitron.com/.
 Brewers join Sponsorship Scorecard
Nielsen Sports announced the Milwaukee Brewers has joined its lineup of Major League Baseball teams using Sponsorship Scorecard to measure brand exposure. The Brewers is the seventh MLB team to sign up this season for the service, which provides both a ratings currency and a reliable means of verification for sponsor- placed media in all televised sporting events. Sponsorship Scorecard will measure sponsor-placed media seen during telecasts of Brewers home games throughout the 2006 baseball season. Measurement results include the number of occurrences and duration of time a sponsor's brand signage appears on-camera during a sporting event, along with household and demographic impressions. The service also distinguishes if a sponsor's signage actually appears in-stadium or is digitally inserted onto the screen. Sponsorship Scorecard also determines whether a sponsor receives a video or audio mention, as well as the location of each occurrence, such as in centerfield or behind home plate.
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| Branding |
Sports is not a "package" deal
By Dave Barnett, Director of Sports for Emmis Sports Marketing
Yesterday Dave discussed why Sports are not about the cost per point, AQH or Cume (7/11/06 RBR #133). The second-biggest problem I see when working with stations is that every staff has a certain number of sellers who are not sports fans; therefore, they don't embrace the opportunity that lies before them. This problem is very real for every rights holder or affiliate in the country. There are two solutions to this problem and one is much easier than the other.
| Read More... |
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| TVBR TV News |
Tribune will be trying to catch a waive
The Los Angeles Times and KTLA-TV are both fine media properties. So are the Hartford Courant and WTIX-TV. The problem is that they are not supposed to be co-owned, and FCC rule changes which would have made the combos legitimate have been log-jammed in Washington (with a detour through the Third Circuit Court in Philadelphia). Now the clock is ticking again, as licenses come up for renewal. Generally, the FCC grants such waivers with relatively short duration for the purpose of spinning off properties to come into compliance. It may have been more lenient with broadcast/newspaper combinations while rules which would have relaxed restrictions on such combinations were pending. The FCC has already announced that it will be taking up the rules again this summer as ordered by the Third Circuit, and FCC Chairman Kevin Martin has not been shy about expressing his opinion that the cross-ownership ban should be repealed. Consumers groups, on the other hand, have not been shy about objecting to such combinations, and one of them, Media Access Project, has filed against such waivers in the past. According to Advertising Age, watchdogs express little doubt that any renewed attempts to get waivers will be fought.
TVBR observation: Regardless of your opinion of broadcast/newspaper cross-ownership, it is a simple fact that the rules banning hybrid combos were not struck down by the Court. To the contrary, it cited studies showing that such combinations were frequently the best news sources in their market. The problem the court had was with the seemingly "arbitrary and capricious" media caps for radio, TV and newspaper when cross-breeding media, and the flawed underpinnings supporting them. Anyway, it is not Tribune's fault that this issue is stuck in the machinery of government. Since the issue is open, and may very well end up with a result favorable to Tribune, it seems only fair that they be allowed to hang on to their properties until the matter is decided, even if it takes several more years.
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| Transactions |
9.25M KMGS-AM Dallas-Fort Worth TX (HIghland Park TX) from First Broadcasting Capital Partners LLC (Ron Unkefer et al) to Dallas Broadcasting LLC (Dan Patrick et al). 450K escrow, 6.8M cash at closing less LMA payments, 2M note. LMA until closing. [File date 6/15/06.]
95K FM CP Guymon OK from Todd Deneui to Grace Community Church of Amarillo (Rupert L. Dowell Jr., John Roger Moore, Mathew Garparovich, Tommy Stafford). 10K down payment, balance in cash at closing. CP is for Class C1 on 99.5 mHz with 100 kw @ 417'. [File date 6/16/06.]
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| Stock Talk |
A good day for radio stocks
Winners beat losers by a yesterday, but not by a longshot. Standouts included Clear Channel, down 0.63, Fisher, up 0.48 and Arbitron, down 0.26.
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| Radio Stocks |
Here's how stocks fared on Tuesday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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37.83
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-0.26
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Hearst-Argyle
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HTV
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21.77
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-0.04
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Beasley
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BBGI
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6.95
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-0.05
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Journal Comm.
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JRN
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11.20
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+0.05
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| CBS CI. B |
CBS |
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27.43
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+0.06
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Lincoln Natl.
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LNC
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56.05
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-0.23
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| CBS CI. A |
CBSa |
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27.44
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+0.07
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Radio One, Cl. A
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ROIA
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7.39
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-0.03
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| Citadel |
CDL |
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9.03 |
+0.07 |
Radio One, Cl. D
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ROIAK
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7.40
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-0.02
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Clear Channel
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CCU
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30.49
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-0.63
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Regent
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RGCI
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4.39
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+0.05
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Cox Radio
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CXR
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14.90
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+0.18
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Saga Commun.
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SGA
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8.51
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-0.20
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Cumulus
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CMLS
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10.47
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+0.28
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Salem Comm.
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SALM
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12.00
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-0.40
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Disney
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DIS
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30.25
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+0.33
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Sirius Sat. Radio
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SIRI
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4.32
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+0.04
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Emmis
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EMMS
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14.90
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+0.05
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Spanish Bcg.
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SBSA
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5.12
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unch
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| Entercom |
ETM
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26.01
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-0.21
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Univision
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UVN
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33.17
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-0.03
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Entravision
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EVC
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8.44
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+0.19
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Westwood One
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WON
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7.94
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+0.04
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Fisher
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FSCI
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41.60
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+0.48
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XM Sat. Radio
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XMSR
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14.04
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+0.09
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Gaylord
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GET
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40.64
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-0.47
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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
ZenithOptimedia ups
Global ad spending forecast And a great surprise, the Internet is growing... wow...
Branding - Sports Business
Pt 3, Sports is not a "package" deal
The second-biggest problem a certain number of sellers who are not sports fans. This problem is very real...
Media Markets & Money
Houston AM jumps off the Raftt
KILE-AM is getting a new owner...
Washington Media Business Report
Gambling action on Capitol Hill
Voted to put severe restrictions on Internet gambling...
Ratings & Research
Arbitron goes electronic
We all know that but now you will have access to Arbitron's new eBook...
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Stations for Sale
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Seller Financing of
2 New C-3 FMs
Serving the beautiful resort area of Mountain Home, AR.
Turnkey package.
Lease to Own to a qualified buyer.
Complete information at www.mountainhomeradio.com
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Radio Media Moves
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Envision Names new VP/Affiliate Relations
Envision Radio Networks has upped Rebecca Pixley to the newly created Vice President of Affiliate Relations position. Rebecca joined Envision as Director of Affiliate Relations in 2004. Prior to ERN, Rebecca was Director of Operations for both MJI Broadcasting and Premiere Radio Networks, and started in radio as music director for KEZO-FM/Omaha.
ABC News Radio
hires new DC-based
correspondent
ABC News Radio has hired Steven Portnoy as a Washington D.C.-based correspondent. Portnoy has worked for ABC's owned WMAL-AM in Washington for three years as an anchor/reporter. He served in the same capacity in Syracuse, New York for WSYR-AM. Portnoy is a graduate of Syracuse University and has been recognized with numerous honors including three regional Edward R. Murrow awards for Investigative Reporting, Continuing Coverage and Spot News Reporting. He also placed first in Radio at the 2001 Hearst Broadcast News Championships. "Steven is an enterprising journalist with a passion for Radio," said ABC News Radio Vice-President, Steve Jones. Portnoy will report to Robert Garcia, Washington Bureau Chief, ABC News Radio.
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More News Headlines
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Geico mea culpa
When we wrote our tongue-in-cheek story about Geico and geckos yesterday, we were referring to Madison Avenue as a shorthand method of referring to the advertising business in general. We did not mean to imply that Geico's advertising was actually generated from an address on that famous New York City thoroughfare. In fact, we didn't know where it came from. However, an alert reader did, and felt that kudos should go to the agency that created the campaign, the Martin Agency. Martin operates far from the hustle and bustle of the Big Apple, operating amid what hustle and bustle you'll find in Richmond VA.
RBR observation: Who knew that typical Madison Avenue depravity had spread all the way down to the Virginia capital?
School is closed
Ted Hepburn Company reports that the sale of the Connecticut School of Broadcasting, all 13 campuses, is complete. DLJ Growth Capital Partners and KNIGHTSTONE Media partnered to acquire the School from founder Dick Robinson. Dan Duman of York Street Partners advised the buyers, while Hepburn assisted Robinson.
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Download Now
June '06 RBR/TVBR Solutions Magazine
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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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Emmis rides big market
FMs into the red
The competitive radio situation seems to be favoring operators in smaller markets, and small market is anything but a description of Emmis Communications. Weakness in New York and Los Angeles took a toll on its fiscal 2007 Q1 bottom line. And the group isn't talking as it lays the groundwork for a return to the private sector. Emmis radio properties actually did pretty well, as long as they were located to the east of the Atlantic Ocean.
RBR observation: Bear Stearns analysts note that the weakness being experienced has knocked share value down from a peak of 19.50 less than a year ago, making it a good time to buy them back. But it may be too good for some shareholders, who would rather see some of that value returned before they cash out. Meanwhile, over at Wachovia, analysts advise radio-watchers not to put too much stock in Emmis's radio results, saying that the problems are specific to Emmis rather than being applicable to the industry as a whole.
07/11/06 RBR #133
Peter Smyth addresses quality-quantity balance issue in radio
"From the Corner Office" column, Greater Media CEO Peter Smyth talked about the "quality-quantity balance" issue in radio by stressing for radio, "bigger may not be better":
RBR observation: Certainly, when consolidation hit the radio industry, the bigger groups saved a ton of money on corporatizing/hubbing playlists and voice talent, merging ad sales, accounting, traffic, etc. Unfortunately, as most of us know now, the quality and local factor dropped off as well-at the worst time. Just about the time radio-especially music stations-started to become known as predictable and stale among many-especially the younger demos-they were given the Internet, iPods and satellite radio to find their new music. Smyth is right-there is no better time than now to keep that local relationship going with the listeners. Play their requests, put them on the air, tell them what's going on around town. And most of all, at least for the younger demos, be the destination they can go to hear new music consistently. It's a different world today and should be treated as such. For example, invite listeners to share their new music, invite them to help power the playlist. The more younger listeners feel a part of the station and its community, the more they'll come back to radio.
Ps: Same goes for RBR - Independently Owned and can Share in the Voice plus tell it like it is.
07/11/06 RBR #133
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RBR Editorial & Sales
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