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Welcome to RBR's Daily Epaper
Volume 22, Issue 141, Jim Carnegie, Editor & Publisher
Wednesday Morning July 20th, 2005

Radio News®

NAB pushes for IBOC standard, now
Marsha J. MacBride and Valerie Schulte of the National Association of Broadcasters were able to put the organization's thoughts on IBOC in a nutshell. "NAB urges the commission to adopt the NRSC-5 standard as the foundation of its technical rules for hybrid digital/analog radio operations in the US as expeditiously as possible. We further urge the Commission to complete swiftly its outstanding work on permanent authorization, final operational requirements, licensing and service rules changes for AM and FM digital audio broadcasting." NAB wants to bring a remaining uncertainty to an end as soon as possible. "Importantly, FCC action to finalize its rules and adopt a single technical standard will promote the continued roll-out of digital broadcasting by providing broadcasters, equipment manufacturers and consumers with the confidence that IBOC is the next generation of ubiquitous, free radio service." NRSC is the National Radio Systems Committee, a joint effort between the NAB and the Consumer Electronics Association. They back the iBiquity Digital Corporation's system. In conclusion, NAB wrote, "NAB believes that we are entering a new and exciting radio world, with free over-the-air radio broadcasters standing ready to meet the challenges of the digital age and serve their audiences with exciting digital sound and other services."

RBR observation: Time for Mr. Chairman and crew to get off their butts. Anyone remember old AM stereo debate? If so let us know and the FCC know why it is important to get the standard done, like yesterday. Your interaction at [email protected]

Reynolds exits Viacom
You can forget about the rumors that Viacom TV stations Group President and CEO Fred Reynolds would return to his former CFO post when CBS (radio, TV and outdoor) splits off from the rest of Viacom next year. In a surprise move, he's left the company to become President, CEO & CFO of Evercore Partners - - a 1.25 billion bucks private equity and venture capital firm. "Evercore presented a uniquely appealing situation. I enjoyed every bit of my almost twelve wonderful years [at Viacom], as well as great relations with so many people who will continue to make Viacom the terrific company it is," Reynolds said. Prior to becoming CFO of Westinghouse in 1994 (which then merged with CBS and then Viacom), Reynolds was CFO at various units of Pepsico.

RBR observation: When it looked like Reynolds was going to be the odd man out in the Viacom-CBS merger, he emerged as Mel Karmazin's surprise pick to run the O&O TV group, despite the fact that he'd never managed a TV station. But Reynolds did a great job of implementing a more sales-focused culture at the CBS O&Os in particular, demonstrating just why the Zen Master had picked him for the post. Now Reynolds has delivered his own surprise. We can only guess that Evercore is likely to add some media investments to its portfolio with him at the helm. Based on the portfolio of companies listed on its Website, Evercore's only media investments today are American Media (National Enquirer and related titles) and a cable/Internet/telecom company in the Netherlands. But with Reynolds exiting, it appears Les Moonves will now be searching for both a TV group head and a CFO for post-split CBS.

PPM impact assessment due out today
Besides Arbitron saying that Portable People Meter service will cost 40-65% more than its traditional diary ratings, there are lots of other financial implications in a possible switch to PPM. Forrester Research was hired last October to conduct a detailed study of the financial impact of PPM on the radio industry (10/25/04 RBR #208) and its findings are being made public today. Although Arbitron paid for the study, Forrester was selected by a special committee of the RAB. In fact, Dave Pearlman, President of Pearlman Advisors, who is consulting the RAB's PPM Task Force, assures us that Arbitron officials haven't even seen the results yet. Check back in tomorrow's RBR Daily Epaper for the full skinny on the Forrester study, plus analysis and reaction.


XM makes a global satellite radio bet
Here's an interesting turnaround. WorldSpace used to be a shareholder in the predecessor to XM Satellite Radio and sold its stake at a healthy profit to help fund its launch of a satellite radio business serving Africa and Asia. Now XM has made a 25 million bucks investment in WorldSpace, with warrants to acquire another 37.5 million worth of WorldSpace stock and invest with WorldSpace and other partners around the globe. At the same time, WorldSpace upped the expected price for its pending IPO to 18-20 bucks per share. It had previously expected 16-18 (6/28/05 RBR #126).

PTC takes aim at Fox
The Parents Television Council says at least 500K children were in the audience when Fox Network program "The Inside" explored raunchy sexual themes. It filed a indecency complaint with the FCC since the program aired at 9:00 PM Eastern/Pacific and 8:00 PM Central, well before the onset of safe harbor. PTC enumerated a range of sexual themes as being present in the program, as well as images of dismemberment and mutilation. As is frequently the case, PTC named one of its hometown Washington stations in the complaint - - this time it was Fox's own O&O WTTG-TV Channel 5. "Graphic scenes of forced sodomy and S&M fetishes are not appropriate for family audiences, and Fox should know better. This episode will fill young minds with horrific images and warped views about sexuality and human relationships, said L. Brent Bozell, president of the PTC. "This is yet another prime example of why Congress needs to pass the Broadcast Decency Enforcement Act, because with the threat of higher fines for indecent content, millions of children could be spared from viewing sexually graphic shows like The Inside because the consequences would hopefully cause Fox to think twice before airing such content."

Hearst-Argyle lowers expectations
Hearst-Argyle Television (and two radio stations) has told Wall Street it will report Q2 results on July 28th - - and that they won't measure up to previous guidance. Rather than being off only a low single digit percentage from last year, the company now says revenues will be down 4.8% to 188.5 million. It noted, though, that the figure is still up 4.9% from Q2 of 2003, the previous year without a federal election. Due to a tax settlement with the IRS, Hearst-Argyle expects to report Q2 earnings of 63 cents - - nearly double last year's 37 cents. However, absent that tax benefit, earnings will be 30 cents - - a bit below the previous guidance of 31-33 cents issued on April 29th.


Adbiz©

Radio buyer gets into creative
How involved can a buyer be in aiding creative? Quite a bit. Kim Vasey, Senior Partner/Director of Radio, mediaedge:cia, tells RBR/TVBR she has been busy taking creative seminars for radio spots and touring some of the radio groups, sharing what she's learned. Point being, with shorter spots getting such a push, creative has to get better for effectiveness. Says Vasey: "I really am a strong believer in the power of the shorter message. I went to Roy Williams' seminar in Buda, TX - - the full version he personally hosts. One day we spent almost the entire day doing writing exercises. From having gone through that process, and how much it has helped me in talking to the clients and helping them get a perspective on how to say something more effectively with radio, I came back from that seminar and put a presentation together based on learnings from that program. I've been sharing that presentation, at the Cox Broadcasting managers meeting with their salespeople in Atlanta last week; the week before last with 45 Emmis NY salespeople; some of the Greater Media stations in New Jersey; some of the Interep salespeople; the WOR salespeople. It's all about the creative messaging - - using effective audio and how to write and say something better."

CRN launches radio effort for Sara Lee Deli
CRN International announced a radio campaign for Sara Lee Premium Quality Deli Meats and Cheeses designed to drive brand awareness, increase market share and develop strong trade partnerships. This consumer and trade radio campaign utilizes the reach and intimacy of local radio to deliver the brand messaging. The approach combines an integrated strategy utilizing contests, "FSI Madness" (Free Standing Inserts), fixed position radio-personality endorsements, "30/30 Plus" trade marketing, sponsorships and brand and product mentions. "The Sensational Deli Sandwich Contest" will leverage the buzz around National Sandwich month and drive consumers to the Sara Lee website, www.SaraLeeDeli.com to submit their deli sandwich recipes featuring Sara Lee Deli Meats and Cheeses. A grand prize of 5000 bucks will be awarded to one national winner with additional runner up prizes.

Project on Government Oversight
criticizes Army ad procedures

The Army's most recent extension of Leo Burnett USA's recruiting ad contract (7/12 RBR #135) is drawing criticism from watchdog group Project on Government Oversight over the fact this is the fourth contract extension for Burnett, which initially won a maximum four year contract for Army advertising 7/00. The extensions added a year and a half on the original contract. By law, government contracts are required to be bid competitively to keep costs down. So the Project on Government Oversight says these extensions mean the Army may not be getting the best price, and that the contracting system is ripe for abuse. Agencies involved in the canceled review this time around McCann Erickson Worldwide, Y&R Advertising, Ogilvy & Mather and Grey Worldwide.


Media Business Report
Schwarzenegger puts the cap
on supplements
California Gov. and real-life strongman Arnold Schwarzenegger has decided to sever his relationship with magazines Flex and Muscle & Fitness - - and a reported five year, 8M dollar consultancy with publisher American Media. Schwarzenegger had come under fire for a perceived conflict of interest. The magazines rely heavily on food supplements to add page count to their advertising efforts. Schwarzenegger ran afoul of watchdogs when he vetoed a bill which would have discouraged high school students from dabbling in such substances. "This is one of the most egregious apparent conflicts of interest that I have seen," Larry Noble of the Center for Responsive Politics told Associated Press. Schwarzenegger's staff defended the arrangement at first, noting that it was in part an ongoing 30-year relationship, and that all aspects of it were fully disclosed. Nonetheless, in a statement Schwarzenegger said, "I don't want there to be any question or doubt that the people have my full devotion. Therefore, effective today [7/15/05], I will relinquish my title as executive editor and forego any compensation from the magazines."


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Media Markets & MoneyTM
Urban Radio scores 17 million bucks
Kevin Wagner's Urban Radio Communications announced a 17 million equity and mezzanine debt financing by Goldman Sachs and 21st Century Group. That brings the total capital raised to 21 million. With the cash infusion, Urban Radio announced that it had closed on previously announced deals to acquire 10 stations (see below) - - bringing its total station count to 13. "This transaction is a transformational event for Urban Radio. We are now poised to grow organically and through additional acquisitions," said Wagner. As part of the transaction, both Goldman Sachs urban Investment Group and 21st Century Group will place representatives on Urban Radio's board of directors.

RBR observation: If 21st Century Group doesn't ring a bell, how about Rick Neuman? The former Chancellor Media (now part of Clear Channel) executive will be representing the investment fund on the Urban Radio board, along with John Ware. Neuman is also a partner at Hicks, Muse, Tate & Furst. The Goldman Sachs fund will be represented by Precious Williams. Urban Radio's initial investors included Marv Dyson, Donovan McNabb, Tim Hardaway, and Michael Finley. Marv Dyson was formerly President/GM of WGCI-AM & FM and WVAZ-FM in Chicago. Dyson and Wagner go way back. Dyson hired Kevin Wagner into the radio business as an account executive 24 years ago.

Urban Radio closes in on acquisitions
Kevin Wagner has moved no less than ten stations from the pending to the closed pile, taking his Urban Radio Communications to 13 stations in four markets. Clear Channel spin-offs make up the bulk of the group. Added in Toledo are WIMX-FM and WJZE-FM - - Urban replaces CCU as the buyer at the latter station. In Florence-Muscle Shoals AL, it now has the keys to WLAY AM & FM, WVNA AM & FM and WMXV-FM, all from Clear Channel. Also in from CCU are WACR-FM Columbus-Starkville and KBCE-FM/KMXH-FM Alexandria LA. The group keys on the African-American population, using Urban AC, mainstream Urban and Urban Gospel as its primary formats.

Dove flies in Lubbock
NextMedia has agreed to purchase KBTE-FM Tulia TX, in the Lubbock Arbitron market, from Dove Media pursuant to a purchase option. According to Media Services Group broker Bill Whitley, who handled the deal, the pricetag weighs in at 1.5M. That makes it an official part of a four FM Lubbock superduopoly, along with KLLL-FM, KONE-FM and KMMX-FM, and clear the way for its subsequent transfer to Wilks Broadcasting Group, along with a four-FM Reno NV cluster, for 34M.


Washington Beat
Debt reducers reduced by FTC
Two related firms, Briggs & Baker and Debt Resolution Specialists, took to the radio airwaves and the Internet, claiming that anyone who signed on as a client would benefit from their ability to amazingly lower their consumer debt load. You'll never in a million years guess what their technique was, so we'll just quote the FTC. "The FTC alleged that, once consumers signed up for these programs, Briggs & Baker and DRS told consumers to end all contact with their creditors and stop making payments on those accounts." Of course, ending all contact with creditors is easier said than done, and many of these clients only found themselves even deeper in debt. The companies, now bankrupt, are bared from any further advertising, and the FTC holds an unsecured claim of nearly 9M, which is the total amount of consumer injury caused by the firms.

Martin may be a backer of a la carte
There weren't many surprises for regular readers of these pages in the recent Wall Street Journal interview with Kevin Martin. The biggest non-surprise is that Martin is hamstrung by the current two-two voting scenario on the FCC's 8th Floor, reducing his actions to pretty much to bland, mundane and otherwise non-controversial agenda items. However, he did indicate a willingness to at least listen to arguments about imposing a system allowing a la carte basic cable menus, which will be music to the ears of some, including John McCain (R-AZ) and a alarm to others, like NCTA. The a la carte comments grew out of commentary on indecency. Martin noted that pay services such as HBO were beyond the reach, and rightly so, of indecency regulation since their presence on an individual's channel lineup is a paid-for option. However, he offered that he saw no reason why consumers shouldn't be given a thumbs up or down option on all cable offerings. McCain has long ridiculed the CATV industry for force-feeding unwanted channels on subscribers, and making them pay while doing so. The concept has backing from indecency and consumer watchdogs. However, the cable industry has countered that a la carte menus would actually force increases in overall subscription prices, and others - - like radio group and basic cable entrepreneur Radio One - - have argued that a la carte would make it extremely difficult for new channels to gain a foothold.


Ratings & Research
RAB and Dial-Global sign
with Mediamark Research
The RAB and Dial Communications-Global Media announced the signing of multi-year contracts with MRI, a leading provider of magazine audience and multi-media research data. "MRI continues to provide extensive qualitative and lifestyle information to agency planning groups. It makes sense for radio as an industry and Dial-Global specifically to invest in all of the tools which effectively demonstrate radio's value in reaching consumers," said Charles Steinhauer, Dial-Global SVP/Research, Operations. Added MRI CEO Kathi Love: "MRI provides the sharpest picture possible about American consumers; who they are, what they buy, how they think, and what they read, watch and listen to. Our single-source data will help the radio industry win their fair share of national advertising."


Transactions
20M KDDS-FM Seattle-Tacoma (Elma WA) from Puget Sound Broadcasting LLC (Gregory J. Smith) to Bustos Media of Seattle License LLC, a subsidiary of Bustos Media Enterprises LLC (Amador Bustos). 1.5M escrow, 3M contingent on transmitter relocation, 2M contingent on completion of booster stations, 13.5M cash at closing. Superduopoly with KAYO-FM Auburn-Federal Way WA. [File date 6/15/05.]

245K WBCV-AM Johnson City-Kingsport-Bristol (Bristol TN). 100% of Sunshine Broadcasters Inc. from Jennings Dotson (49% to 0%), Christopher Dotson (15.5% to 0%), Newl Dotson (15.5% to 0%), Gene A. Baird (15% to 0%) and Austin Cook Shrink (5% to 0%) to Jonas Mitchell, Lisa Bennett, Rick Mitchell, Robert Bennett (each 0% to 25%). 71K deposit, 174K note. [File date 6/14/05.]


Stock Talk
A rebound day
Investors regained a little confidence yesterday as such companies as Merrill Lynch and IBM posted strong Q2 results. The Dow Industrials rose 72 points, or 0.7%, to 10,647.

Radio stocks went along for the ride. The Radio Index gained 2.615, or 1.3%, to 203.389. Beasley led the way with a 4.4% gain. Radio One's Class A stock rose 2.6% and Class D 2.7%.


Radio Stocks

Here's how stocks fared on Tuesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

42.89

-0.15

Jeff-Pilot

JP

50.69

-0.24

Beasley

BBGI

14.96

+0.63

Journal Comm.

JRN

16.61

+0.15

Citadel CDL
11.48 +0.21

Radio One, Cl. A

ROIA

12.88

+0.32

Clear Channel

CCU

31.87

-0.01

Radio One, Cl. D

ROIAK

12.87

+0.34

Cox Radio

CXR

15.93

+0.30

Regent

RGCI

5.72

+0.11

Cumulus

CMLS

12.15

+0.01

Saga Commun.

SGA

14.28

+0.28

Disney

DIS

25.76

-0.29

Salem Comm.

SALM

20.58

+0.13

Emmis

EMMS

18.25

+0.21

Sirius Sat. Radio

SIRI

6.85

+0.01

Entercom

ETM

32.01

+0.30

Spanish Bcg.

SBSA

8.50

+0.09

Entravision

EVC

8.34

+0.04

Univision

UVN

27.20

-0.07

Fisher

FSCI

45.06

+0.56

Viacom, Cl. A

VIA

32.81

+0.23

Gaylord

GET

47.55

+0.04

Viacom, Cl. B

VIAb

32.51

+0.23

Hearst-Argyle

HTV

24.03

-0.40

Westwood One

WON

20.05

+0.18

Interep

IREP

0.52

-0.03

XM Sat. Radio

XMSR

35.76

unch

International Bcg.

IBCS

0.01

unch

-

-

-

-

-



Bounceback

Send Us Your OpinionsWe want to
hear from you.

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

So the PTC is pissed-off again because ABC's broadcast of "Live 8" allowed one instance of the F-word to slip through. Big f***ing deal! Get over it. There are far bigger problems in the world today than worrying over whether or not our kids heard some rock star utter a profanity. As George Carlin once said, "it's only a word."

Larry Fuss, President
Contemporary Communications LLC
Las Vegas, NV


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RBR Radar 2005
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

ZenithOptimedia
downgrades
ad expansion
Advertising prognosticator and scorekeeper has revised downward its most recent prediction for worldwide advertising sales growth. It had been looking for a global increase of 5.4% as of last April, but now expects the year to end only 4.7% to the good. The culprit? US network Television.
RBR observation: prognosis for 2006, taking it from a 6.5% increase down to 6.1%. The charts take into account most forms of advertising, including television, radio, newspaper, magazine, cinema, outdoor and Internet. View the charts.
07/19/05 RBR #140

Prediction: 46.8M
satellite radio subs by 2014
No RBR but Kagan sees satellite radio subscriptions will hit 46.8 million by 2014, generating 7.6 billion in revenues. That's still just a fraction of what terrestrial radio does, but impressive nonetheless if it proves to be true. Basing its latest estimates on recent programming deals announced by the two satellite services, and especially their deals for factory installs by auto makers - - not the least of which is the Hyundai deal to install XM receivers in 100% of its vehicles. Kagan is projecting that XM will turn cash flow positive in Q3 of 2007 and Sirius sometime in 2008. RBR observation: Hey, wait a minute - - hasn't XM been promising shareholders it would be cash flow positive in Q3 2005? That will be its first quarter with more than four million subscribers for the entire three month period - - the supposed magic number. At least Kagan has figured out that that's not going to happen. 07/19/05 RBR #140

Eddie Fritts fires letter to
Congress on WCS-XM deal
Wrote members of Congress 7/14 claiming XM Satellite Radio's deal to buy WCS Wireless and its licenses is "part of a longstanding pattern of deception by the satellite radio industry." satellite companies have "proven once again they simply cannot be trusted." He asks the legislators to support the proposed H.R. 998 bill to solidify a prohibition against local content on satellite. RBR observation: We applaud Fritts and the NAB's efforts to initiate some way to make XM and Sirius follow the rule of their licenses, even though the entity that issued those licenses-The FCC-isn't. Please send your comments on this issue to [email protected] Your fellow broadcasters thank you.
07/18/05 RBR #139

Publisher Perspective
Foolish All are with Bill S.1372
Senators involved: Conrad Burns (R-MT) Mel Martinez (R-Fla.), Olympia Snowe (R-Me.) and George Allen (R-Va.). None of which have a clue what they are about to undertake and the potential problems all broadcasters and total media will face if this gains more speed. Why? What happens with bills? How much pork will be added to the belly. Our recommendation is these fabulous four should do a bus trip to Tampa, FL and take a tour of the Nielsen technology plant and talk with the 4,000 plus employees working on the issue at hand to find the pros and cons, especially Martinez. Hey Sen. Mel there are over 4,000 voters there you have done POed.
07/18/05 RBR #139

SBS to launch cable net too?
May be a bigger deal than anyone thought. This may be an entrée into a new national TV network for the broadcaster. What may help get it off the ground, so to speak is the SBS/Interep Hispanic Radio Network, which is already in the minds of broadcast buyers around the country. Not to mention the cross-promotional benefits already in place with the SBS radio stations across the country. The demand is definitely there for another national Hispanic TV net. Getting carriage is less and less a problem in the digital cable world. 07/18/05 RBR #139

They can't be serious
about Sirius/ABC
We thought we made a strong case that there wasn't even much excuse for any smoke, much less fire, when it came to rumors about a Sirius Satellite Radio/ABC Radio betrothal. But the rumors just don't want to go away. This despite the fact, as we pointed out, that Sirius would have to wheedle ABC into accepting essentially a no-money-down deal, and despite the newer rumor out of the Wall Street Journal that ABC may be looking into a "reverse Morris Trust" structure for any sale, which would require an existing radio group roughly equal in value to the combined ABC radio stations and networks. Reuters reports essentially that a friend of a friend in the analyst community have it on good authority that Sirius has no interest in ABC. RBR observation: Let's see if we got this right - - this second wave of rumors started because Sirius' Mel Karmazin was seen talking to ABC's Robert Iger in Sun Valley ID. By that standard, if President Bush's designated shepherd for a potential Supreme Court nominee, ex-Sen. Fred Thompson, is seen in the first class cabin of an airplane upon which Judge Judy happens to be a passenger, the headline may well read "Judge Judy headed for SCOTUS." C'mon. Not even Sen. Jerry Springer ! (D-OH) would believe that one (what, he didn't even run?). (Come to think of it, maybe Ms. Sheindlin would be a good pick - - "I'll tell you when to speak, Counselor - - what's your full name anyway, Fibber Lee Bailey?") 07/15/05 RBR #138


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