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Volume 23, Issue 137, Jim Carnegie, Editor & Publisher

Monday Morning July 17th, 2006

Radio News ®

Media companies taking some elbows
Last week Tribune Company started the disappointing earnings report, which resulted in a downgrade from "Buy" to "Hold" from Standard & Poor's. The downgrade followed the company's report of a 62.9% decline in net income for Q2. Then, Ta-Dum, Walt Disney was punished and downgraded by CIBC. Strap in, folks, Chapter Two of the 2006 conference call season is just beginning. At Tribune, losses in operating revenue weren't nearly so dramatic, amounting to a 1.4% loss from 1.45B to 1.43B, but it was a three way hit, with a 1% loss in publishing, a 1.3% loss in broadcasting and a 6.3% loss in the one-station radio portfolio. Tribune is looking to cut costs by 200M over the next two years, with much of the savings expected to come from trimming the payroll. Friday, the Associated Press said that the Chicago Tribune would lop off 120 jobs, amounting to 4% of its total, later this year. The ABC downgrade, which was reported by Bloomberg and came from CIBC's Jason Helfstein, took its rating from "sector performer" down to "sector underperformer." Helfstein is looking for a strong H2 performance from Disney, followed by profit dilution next year when the bill for its acquisition of Pixar starts coming due. Adding most bodily harm was Bear Stearns' Victor Miller noting that weak performances at outgoing ABC radio stations are knocking down Citadel's eventual pricetag (and likely taking Citadel's stock price with it).

RBR observation: This is where the gloves come off and it is hard knuckles time. Conference call excuses and pointing the blame has run out of air over the past four years and punishment is to follow. Do some deserve to get punished? Yes but our recommendation is to start with the biggest and work your way down the list and view each group separately. Bottom line: CEO's can no longer point and pass the blame to their clusters, individual stations and management teams. Heck, many in those management positions have been fired by the majority in upper management as it is called CYA. Some of those managers fired were experienced and brought money in for certain public groups but they had habits of questioning one to many times and got pink slipped. Finally you just have plain dumb ass decisions by some CEO's one right after another and to our surprise they all still have their jobs. So get ready for the second half of year and what excuses will be given with the up coming second quarter blah blah calls. It will be interesting to hear if anyone will be stand up and tell it like it is. If the CEO's and CFO's do not RBR will that you can take to the bank.

It is not how much is that
merger in the window...
...it is how long is that merger window likely to be open, according to a number of analysts. It all ties into the political climate. Democratic electoral prospects look as good now as they have in a long time. In congressional terms, you have to go farther back than the Republican victory during 1994 Newt Gingrich's "Contract With America" campaign. And nobody knows what will happen past the upcoming midterms, other than that for the first time in a long time there will be no sitting president OR VP to defend the White House. If Democrats succeed in wresting back either the Capitol or the White House, they will have a much better chance of enforcing their less favorable view of media mergers. One analyst who spoke to Reuters said that companies thinking about doing a deal realize they are working against a political shot clock. "The regulatory environment is probably as favorable for deals as it is ever going to be, so companies that are considering deals have to be factoring that in right now," Stanford Washington Research Group analyst Paul Gallant told Reuters. Putting further pressure is the fact that local and national caps are still in place, and there's no telling how long the FCC's second look at them will take, much less how much court action will follow. Others aren't so sure there will be that much difference under Democratic control. For example, deregulatory Telecom 1996 was ushered in under Clinton, and a merger of the two biggest satellite MVPDs was restrictively nixed under Bush.

RBR observation: Without taking sides on whether there should be more regulation, less regulation, or it should be kept as is, we think that Democrats, as much as they might wish to roll back ownership caps to previous levels, will not be able to pull off such a feat. It's hard to imagine a legal way to force big companies to sell off properties to get under new, more restrictive caps. But they will probably do everything they can to put the brakes on any further consolidation. And they may have help from across the aisle. Many Republicans of various ideological stripes have joined with Democrats in resisting further media consolidation, a coalition of legislators that has been held in check by Republican congressional leadership. If the Democrats are at the levers, they'll probably be able to get what they want to the floor, and will probably get much of what they want.

Uh oh: CEOs, consumers agree, and that ain't good
The Conference Board has found that as a group, the nation's CEOs have decreasing confidence in the health of the US economy. CB's Lynn Franco said, "CEO's confidence has waned in the second quarter and expectations signal slower economic growth in the coming months." Only 27% think that current conditions constitute an improvement over the recent past, and only 21% expect things to improve in the near future. Meanwhile, on the other side of the cash register, consumer confidence dropped from 84.9 in June to 83.0, according to Reuters, reporting on a University of Michigan study. That was coupled with a drop in retail spending in June of 0.1%, which flew in the face of an expected 0.4% gain and marked the first negative result since early in the year. Energy is said to be the major culprit.

RBR observation: Broadcasters are dealing with serious structural problems, not the least of which is newfound competition with online advertising. It would be nice to get a little help from an expanding economy that brings consumers along for the ride. Interestingly, the CEOs thought that despite tougher times, they would still be able to keep their profit margins up to snuff. So if spending is going down, but profits increase, you'd have to think that the ones getting hurt are the ones that buy the cars, the groceries, the restaurant meals, and all the other things that pay the freight for broadcast outlets. Analysts are seeing only gloom on the horizon, and unfortunately, this one-two punch from CEOs and consumers is just more of the same.

Warshaw's round two is a Connoisseur build-out
After selling his first Connoisseur group, mostly to Cumulus Media, for 258 million, Jeff Warshaw was still many decades too young to retire to Naples, Florida and spend his days on the golf course. But he couldn't find any good opportunities to get back into radio, at least not any that made financial sense at the multiples being asked, so he stayed on the sidelines for a while.

"For the past few years the past five year I have been working with this very large hedge fund called Farillon Capital. We invested in a bunch of radio stocks and radio bonds and media companies and we invested in media companies both long and short over that period of time. We have a very good track record and continued to do that and tried continuously to get back into the business as an owner. We just couldn't find deals that made sense for us," Warshaw told RBR/TVBR. What he eventually found was an FCC auction opportunity. As a selective but aggressive bidder, Warshaw won 10 CPs and set out to build the new Connoisseur from scratch. But he didn't stop there. "Almost all of the stations, the CPs that we bought, have been improved in some way or will be improved in some way to increase value and to give them better signals over their markets. One of them was a Class A, now it's a C. We saw an engineering opportunity that these stations were stuck in adjacent frequencies and we bought them both. We cut the engineering that otherwise couldn't have been done. In the case Huntington [WV], we were able to negotiate a deal with another broadcaster to improve our signal. In Wichita [KS] we bought another station (KTCM-FM), which we've downgraded in order to improve our station-things like that. We feel like we created value at the auction by buying the right stations at the right prices and now we feel like we've created value by improving a lot of the facilities," Warshaw said. And he sounds like a proud poppa now that several of the stations are actually on the air. "As you know our first sign-ons were in Bloomington, Illinois. We signed on with two brand new stations and both of them debuted in the top five, 25-54."

Wall Street Media Business Report TM

Bring us your dogs, your ponies,
your huddled accountants
We mentioned above in Radio News of the heavy hits to the body Tribune, ABC took and possibly what is ahead for Citadel. There were many additions to the quarterly conference call schedule so here is a corporate compendium ring side seat. Coming Up: Tuesday, 7/25/06: McGraw Hill, which runs a few TV stations along side its massive publishing and other operations, will go public at 8:30 Eastern. Friday, 7/28/06: Belo Corp. will do the talking, at noon Eastern. Tuesday, 8/1/06: Radio operators will be interested in how Sirius Satellite radio is doing, and can find out at 8AM Eastern. Wednesday, 8/2/06: Television group Granite Broadcasting presents at 10 AM Eastern. Thursday, 8/3/06: Pure radio player Beasley Broadcast Group presents at 11AM Eastern. Later, at 5PM, Hispanic radio/TV operator Entravision will take center stage. Monday, 8/7/06: Radio One hits the wirelines at 10AM Eastern. Tuesday, 8/8/06: Here's a big one. Clear Channel, with interests in television and with the largest collection of radio stations in the history of the globe, will spin results and take questions at 9AM Eastern. Another radio/TV operator with a radio slant, Saga Communications, will follow that afternoon at 1PM Eastern. Wednesday, 8/9/06: Walt Disney takes the floor, at 8:30 Eastern.

RBR note: After they report then RBR reports with our analysis and yes Observations.

Ad Business Report TM

Volvo and CC Katz Advantage to launch
Pirates of the Caribbean 2 effort
Volvo Cars of North America teamed with Clear Channel Katz Advantage (CCKA) to launch the radio campaign in support of the Volvo global sponsorship of the summer film release, Disney's Pirates of the Caribbean: Dead Man's Chest. The national radio campaign will air beginning today in 32 top markets on 168 Clear Channel and Katz Radio Group stations handled by CC Katz Advantage. The campaign and promotional theme reflects the blockbuster's Pirate Treasure Theme in which a treasure chest full of "Pirate Booty" is placed in each Volvo dealership in the U.S. The centerpiece of the campaign is the Volvo Pirates Treasure Sweepstakes in which visitors to Volvo dealer locations may select a treasure coin to be entered into the sweepstakes at www.volvocarstreasure.com. Over 30,000 prizes will be awarded including a Grand Prize trip for four on a secret tropical treasure hunt; home entertainment systems; Zizzle's Pirates of the Caribbean Dead Man's Chest prize package; Kodak digital cameras; download codes for legally "Pirated Music".

RBR observation: Congrats to Volvo and Clear Channel Katz. And if you did not know that NBC Universal's USA Network ponied up for Disney's Pirates of the Caribbean: Dead Man's Chest, which broke box-office records over the July Fourth Weekend. USA paid as much as $25 million for the cable rights to the second film in the Pirates' trilogy. Now this is a chance for many in radio to get on board by tagging into that local USA Network avail with your radio promo. One thing to remember Pirates will air in fall 2008 so you have time to plan.

RECMA 8th Global Billings edition released
RECMA (Research Company Evaluating the Media Agency Industry) has just released its 8th Global Billings report, with ranking based on projected 2006 figures that combine general forecasted market growth, applied country-by-country, and new account wins until the end of May 2006. The leading network is Starcom MediaVest, owned by Publicis; followed by OMD, part of Omnicom; then MindShare, a WPP / GroupM subsidiary; and Carat Group (including Vizeum) owned by Aegis. In fact, Starcom MediaVest is taking the lead in 2006 with a projected growth rate of +17% while OMD, leader in 2005, has dropped into the #2 position with 8% projected growth over 2005. The Networks' share of the global marketplace of media planning and buying range from 1.6% for PHD to 7.4% for Starcom MediaVest Group, resulting in a combined market share of 56%. The remaining +40% share is distributed between local players and independent media agencies, media departments of advertising agencies and in-house media departments (of advertisers). The second ranking presents the hierarchy of the Groups of networks. With a 17.5% worldwide market share, GroupM is, by far, the leading Group, ahead of Publicis - which reaches a 12.9% market share , while Omnicom holds 9% market share (that is half of GroupM's). Publicis, owner of Starcom and ZenithOptimedia, is forecast to enjoy the greatest growth among the networks with an expected rise in billings in 2006 of 13.3% (thanks largely to the inclusion of General Motors's media buying account and a major part of Gillette global account consolidated with P&G).

RBR Close Up

Sports stations and streaming -- Technology today and the value of using the internet for your ROI.
Sports stations: With streaming becoming ever increasingly important in your business how have you integrated the technology with your station?

Says Chuck Bortnick, VP/GM of WFAN-AM New York:
Launched on April 11 with a special web only broadcast of the Mike and The Mad Dog Show, WFAN has been streaming for just over 60 days. However, in this short period of time, the station has become one of CBS Radio's most popular online destinations. In addition, the promotion of the stream on-air and online has increased click-throughs across the entire website opening up a host of additional advertising opportunities for our clients. WFAN's stream is an audio broadcast simulcast except when the station is airing sports play by play, including the NY Mets and NY Giants, among others, which the FAN does not have Internet rights to air. In those cases, the station is featuring best of shows from Imus and Mike and the Mad Dog, and other special programming. We are steadily working towards creating a complete lineup of custom original content to be broadcast exclusively online, as well as a place to develop new talent. We've seen a steady increase in the number of weekly minutes streamed to a high of more than 11 million minutes with the average session lasting approximately 85 minutes. Additionally, our sales efforts have focused on selling the online inventory above and beyond the spots we sell for broadcast over the air. Implementing the stream has not only created an additional revenue source for the station, it has afforded us the opportunity to target a wider pool of clients and the ability to create alternative advertisements, including video spots and interactive banner ads.

Tomorrow, we hear from Paul Agase, VP/GM, WSCR-AM Chicago

Media Markets & Money TM

Salem spins out of Baltimore
Religious radio leader Salem Communications usually tries for a radio triple threat: an FM playing Contemporay Christian, an AM offering brokered Religion, and an AM offering conservative Talk. But it only has one lonely AM in Baltimore, but not for long. It is selling WITH-AM to non-profit Peter and John Radio Fellowship, headed by John Thomas Bisset, for 3.25M cash. Unlike Salem, the Fellowship will have a station to pair with it, WRBS-FM.

Price revealed in Rapid City
The two-AM, four-FM cluster will fetch 19M cash for David Benjamin's company. Kalil & Co. called us verify the transaction sending six Rapid City radio stations from Triad Broadcasting to a subsidiary of Schurz Communications. The stations, with formats from the BIA market study accompanying a contract filed at the FCC, are KBHB-AM (Country-Oldies), KKLS-AM (Oldies), KFXS-FM (Classic Rock), KKMK-FM (AC), KRCS-FM (CHR) and KOUT-FM (Country). The cluster is at the ceiling of the local cap in the 21-station market.

Washington Media Business Report TM

FEC also in fine form
Following the enactment of the Bipartisan Campaign Reform Act, the Federal Election Commission has gone into high gear. With many more regulations to enforce, it has already collected over 5M this year. With general elections still months away, there's every reason to expect this number will go much higher. It already eclipses the total for any full year in FEC fine collection history. "We are trying to improve compliance with the law through better information, education and training. Yet we remain willing to enforce the law aggressively when violations occur," said Robert Lenhard, Vice Chairman of the Federal Election Commission.

RBR observation: Luckily for broadcasters, these fines are almost always about building campaign war chest, not spending them. There is no requirement that a broadcaster do a background check on any cash a candidate spends with a station. However, do not let this candidate "go blue" over your airspace.

FCC hosts Commission pioneer
Dr. Benjamin Lawson Hooks was Executive Director of the NAACP, a judge, a professor, an attorney, an ordained minister, an orator, and a civil rights pioneer. He was also the first African American to serve as an FCC Commissioner. He was nominated by Richard M. Nixon in 1972 and served until 1977. The FCC commission and the FCC Benjamin Hooks Chapter of Blacks in Government will acknowledge his contributions in a ceremony on 7/19/06 at 12:00 PM in the Commission Meeting Room. The public is invited to attend.

RBR observation: But we warn you: There may be members of Congress there and all five Commissioners will be speaking. RBR secondary observation: Just kidding.

Entertainment Media Business Report TM

Greenstone Media
adds Rolonda Watts
GreenStone Media announced that nationally known TV talk show host, radio personality, and screen actor, Rolonda Watts, will join the company's daytime lineup in the Noon-3PM ET timeslot. "Rolonda will be a breakout success on radio," says Edie Hilliard, VP/COO of GreenStone Media. "She's got personality, smarts, connections, and savvy. Plus, she has four successful years hosting her own national TV talk show. We're ecstatic to have her." Although she is best recognized as host of TV's The Rolonda Show, syndicated by King World/Watts Works Productions, and from morning radio stints on KABC, KLAC, and 100.3 The Beat, Rolonda got her start as a reporter. Her talent as a young journalist quickly earned her positions with WNBC-TV New York, as reporter and local morning news anchor of The Today Show, and later, with WABC-TV New York, and then the nationally syndicated news magazine show, Inside Edition.

RBR Stats

Consumer spending starts to cool, according to NRF
Although temperatures may be rising, consumer spending may be cooling off. According to the National Retail Federation, retail industry sales for June (which exclude automobiles, gas stations, and restaurants) rose 6.7% over last year and increased 0.2% seasonally adjusted over May. June retail sales released by the U.S. Commerce Department show that total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 6.2% unadjusted year-over-year and decreased 0.2% seasonally adjusted from May. While industry-related sales paint a somewhat rosier picture than Commerce numbers, it still represents a slight slowing in consumer spending. While year-over-year increases remain strong, month-to-month gains appear flat.

Engineering Business Report TM

CRL acquires Autogram
Circuit Research Labs, a leader in audio processing for AM, FM, TV, and Internet broadcasting, announced the acquisition of Autogram, designers and manufacturers of quality audio consoles. The products will be sold under the name "Autogram/CRL". Production, sales, and service of Autogram/CRL consoles will move from Plano, Texas to CRL's Marketing and Production facility located in Benton, Arkansas in the Little Rock, Arkansas Metro Area. Autogram Founder and President Ernest Ankele, along with his wife and partner DeLores, will remain with the company on a consulting basis for 3 years, allowing for a smooth transition for the product line. Ankele has recently commented, "We make our consoles so solid that they just keep going and going."

Monday Morning Makers & Shakers

Transactions: 5/29/06-6/2/06
After a hot month of action, TV traders took a well-deserved breather as May melted into June. The radio action was mostly down-market, and when that happens, it's usually the rule that the dollar totals involved aren't all that high. Sometimes, a 400M agreement isn't big enough to get the nod as top transaction as the week. This time, the apex didn't quite reach 4M.

5/29/06-6/2/06	Total
Total Deals	10
AMs	8
FMs	9
TVs	0
Value	12.96M

| Complete Charts |

Radio Transactions of the Week
Vascocu goes to school
| More... |

TV Transactions of the Week
Do not disturb

Transactions

50M WTGL-TV Orlando-Daytona Beach-Melbourne FL (Cocoa FL) from Good Life Broadcasting Inc. (Ken Mikesell) to Trinity Christian Center of Santa Ana Inc. (Paul Crouch Sr., Jan Crouch, Paul Crouch Jr.). 5M escrow, balance in cash at closing. Station is noncommercial indy on Channel 52 (DTV 53). [File date 6/21/06.]

8.5M WMAM-AM/WLST-FM Marinette WI, WSFQ-FM Peshtigo WI & WAGN-AM/WHYB-FM Menoninee MI and WJMS-AM/WIMI-FM Ironwood MI from Barracuda Broadcasting Inc./Triple Crown Broadcasting LLC et al (David W. Winters) to Armada Media Corp. (Tommy G. Thompson et al). 500K escrow, balance in cash at closing. Existing superduopoly in Marinette/Peshtigo/Menominee. [File date 6/21/06.]

1.4M WGZO-FM Hilton Head SC (Parris Island SC) from Zip Communications Inc. (Michael R. Shott) to Montery Licenses Inc., a subsidiary of Triad Broadcasting Company LLC (David J. Benjamin III). 70K escrow, balance in cash at closing. Superduopoly with WFXH-AM Hilton Head Island, WGZR-FM Bluffton, WFSH-FM Hilton Head & WLOW-FM Port Royal. Buyer plans to spin-off WWVV-FM Ridgeland. JSA since 6/1/02. [File date 6/21/06.]

Stock Talk

Radio stocks take another hit
Stocks staged a major sell off Friday, with the Dow giving up 394 points in the last three sessions, after the escalating conflict in the Middle East unsettled investors and drove crude-oil prices to record highs. For radio stocks, losers beat winners by an unhealthy margin.

Radio Stocks

**Here's how stocks fared on Friday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		36.27	-0.06	Hearst-Argyle	HTV		20.65	-0.24
Beasley	BBGI		6.90	-0.07	Journal Comm.	JRN		10.57	+0.02
CBS CI. B	CBS		26.52	-0.43	Lincoln Natl.	LNC		55.00	+0.15
CBS CI. A	CBSa		26.53	-0.42	Radio One, Cl. A	ROIA		6.84	-0.22
Citadel	CDL		8.47	-0.15	Radio One, Cl. D	ROIAK		6.90	-0.20
Clear Channel	CCU		29.17	-0.25	Regent	RGCI		4.10	-0.23
Cox Radio	CXR		14.16	+0.13	Saga Commun.	SGA		8.02	-0.13
Cumulus	CMLS		10.01	-0.05	Salem Comm.	SALM		11.61	+0.02
Disney	DIS		28.49	-0.21	Sirius Sat. Radio	SIRI		4.03	-0.06
Emmis	EMMS		14.31	-0.26	Spanish Bcg.	SBSA		4.89	+0.03
Entercom	ETM		24.70	-0.20	Univision	UVN		33.21	-0.21
Entravision	EVC		7.94	-0.06	Westwood One	WON		7.65	-0.02
Fisher	FSCI		39.40	-0.15	XM Sat. Radio	XMSR		12.89	-0.14
Gaylord	GET		38.21	-1.08	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
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Below the Fold

Wall Street Media Business Report
Bring us your dogs, your ponies, your huddled accountants
There were additions to the quarterly conference call schedule get your ring side tickets here...

Ad Business Report
RECMA 8th Global Billings edition
And in the number one slot is Starcom MediaVest, owned by Publicis...

RBR Close Up:
Streaming - What they are doing with streaming Today:
Chuck Bortnick, VP/GM WFAN-AM as WFAN stream has become one of CBS Radio's most popular online destinations...

Media Markets & Money
Salem spins out of Baltimore
Usually tries for a radio triple threat but is It is selling WITH-AM...

Washington Media Business Report
FEC also in fine form
More regulations to enforce, it has already collected over 5M...

Stations for Sale

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Radio Media Moves

XM restructures marketing department
XM has restructured its marketing team and created a new automotive marketing group headed by Steve Cook, who becomes EVP/Automotive. Former Sprint Nextel marketing VP My-Chau Nguyen joins XM as SVP, Marketing and former Intel Worldwide Advertising Director Sean Connolly on as VP/Brand Management and Media, both reporting to a Chief Marketing Officer to be appointed at a later date.

More News Headlines

"The Formats" to perform at Marconis
The NAB Marconi Radio Awards Dinner & Show will feature a performance by "The Formats," a broadcaster band led by legendary blues guitarist and BMI songwriter Steve Cropper and featuring FCC Commissioner Jonathan Adelstein on harmonica. Other band members include:

Vocals - NAB Joint Board Chairman and Bonneville International Corporation President and CEO Bruce Reese, Emmis Communications CEO Jeff Smulyan, Sandusky Radio President Norman Rau, Regent Communications Senior Vice President, Operations Fred Murr, and BMI President and CEO Del Bryant.

Guitar - Air America's Gary Krantz and ABC Radio Group President Mitch Dolan.

Keyboard - Greater Media President and CEO Peter Smyth.

Bass - Norm Phillips, most recently with Susquehanna Radio.

Drums - South Central Communications President-Radio Craig Jacobus and URBan Radio Broadcasting President Kevin Wagner. Former Jefferson Pilot President-Radio Clarke Brown is the band's producer and is encouraging other musically-inclined broadcasters to contact him at [email protected].

RBR note: If you get nothing else by going to Dallas this year this event should be a little fun.

TVBR - TV News

All Original on Deck
at Court TV
Under new corporate parent Turner Broadcasting, Court TV is moving even more heavily toward original programming. In coming months, the legal-toned cable network plans to premiere six new series, six documentaries and two specials, as well as bring back flagship series such as Forensic Files and Psychic Detectives. The new series are Speeders, in which busted traffic violators tell all; Beach Patrol: Miami Beach, a spin-off of Beach Patrol: San Diego; Swat USA, an up-close look at SWAT teams; America's Crime Writers Investigate: Murder They Wrote, in which a famous crime author takes a new look at an old crime; Til Death Do Us Part, starring underground film director John Waters as The Groom Reaper, come to ruin weddings everywhere; and Missing Persons Unit, which is like a real-life Without A Trace. Court TV also is preparing to premiere On Native Soil: The Documentary of the 9/11 Commission Report. The film first airs Monday, August 21 at 10 p.m. ET, and features narration by Kevin Costner and Hilary Swank. On a lighter note, SPAM: The Documentary, a humorous look at the email spam that plagues us all, will air later this year. Court TV plans to acquire and air four to six documentary films each year. The channel recently has been seeing a growth spurt: Court TV's second quarter was its most-watched ever among adults 18-49.

RBR observation: For the upper demo into programming content of this nature is a place to market your station. Hate to say this but check with your local cable operator for the avails. Radio, find the media your listeners are viewing and cross market to them.

RBR Radar 2006

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

Is Citadel getting a
floundering mouse?
Victor Miller of Bear Stearns is noting some very poor performances from the Walt Disney/ABC radio stations that are headed for the Citadel portfolio, and says that the problems seem to be occurring despite the type of challenges facing some of its competitors. It hasn't lost Howard Stern, nor is it as reliant on the top two markets as is Emmis. Bear Stearns was looking for gains in 2006 EBITDA of 5.8% for both companies at one time. It's knocked its Citadel projection down by 2%, but expects the ABC shortfall could be as much as 20%, and notes that the 2.7B pricetag has dropped 240M to 2.46B. It says Citadel's stock price may already have been a casualty with other potential wounds awaiting. Stay tuned...

RBR observation: Once this transaction is complete if you thought the 100 at CBS radio was a black day just wait.
07/14/06 RBR #136

CBS Radio CEO Joel Hollander
makes cuts across CBS Radio
A company-wide memo went out on Wednesday, 06/12/06, that includes job cuts-a small percentage of people across the entire company. About 100, especially in sales, management, programming and on-air. It's in line with the company's announcement it will sell stations in 10 markets and managing costs moving forward. Cuts are across all 179 stations. Some stations had one, some had two, some had no cuts. Joel said it was a necessity move to ensure competition in the changing climate of radio.

RBR observation: Surprised? The real surprise was the mass of flashing bulletins about a completely unsurprising business move. So what is the real issue to all of yesterday's flashing bulletins when it should be no surprised at all but business. Remember CBS Radio CFO Walter Berger just stated the plan during the Interep/Bear Stearns event not long ago and was resolute in outlining a sound four-point, long-term strategy for accelerating annual revenue increases at CBS: 1. Further portfolio "rationalization" 2. Operating Expense Rationalization (not necessarily reduction) 3. Recognizing the value of "content" production and 4. Monetize that value by "re-purposing" content for additional alternate distribution platforms. So while nobody likes getting pink slipped, when you're talking approximately 100 positions that range from management, sales and programming, it is not the Armageddon that some may try to paint. The next real key factor to pay attention to is what will be the final tally of CBS stations sold? And what will be done with those mega dollars to monetize, rationalize and re-purpose those funds for CBS radio growth? It is business and RBR follows the business so stay with us we will follow the money trail. To read the Hollander Memo see
07/13/06 RBR #135

What if this is the
top of the mountain?
Here's a chilling thought from Lee Westerfield and Dan Salmon at BMO Capital Markets. What if the less than exciting advertising revenue results we're seeing now represent the apex of a growth period following the ad recession that BMO says ended in Q2 2002? They discount the idea that we're in a "muted ad cycle," instead positing that "...a secular shift owing to new media technologies is leveling the US advertising cycle, and that we are now at or very near the advertising peak." BMO sees a combination of factors supporting this hypothesis. One is weakness from certain advertiser categories.

RBR observation: Those of us in the publishing rather than the broadcast sector may be a step ahead of those of you in the broadcast arena who we serve. It's no accident this article is being delivered to your computer over a wire or electromagnetic wave rather than coming out of a bag being carried by someone in a blue uniform. You told us that when we went to the trouble to print the news we gathered, stick it in an envelope, slap a stamp on it and put it on a truck, it was stale by the time you got it. We used to go through that process every week. Now we only do it once a month, but now, spared the time needed for the old-fashioned production process, we come to you every day, virtually. We had to adapt. We HAD to. We suggest you do everything in your power to do the same.
07/13/06 RBR #135

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.

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. This trend is real and will not stop for radio until the owners of the mega groups get a hold of the problem which is numerous and compounding daily. Shake your head in your local market or do something about it locally.
07/12/06 RBR #134

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