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Welcome to RBR's Daily Epaper
Volume 23, Issue 150, Jim Carnegie, Editor & Publisher
Thursday Morning August 3rd, 2006

Radio News ®

Less really IS more, and that's a problem
Cox Radio President/CEO Robert Neil likes the idea of less-is-more (LIM), but not the way he sees it going down right now. His personal gripe is the new emphasis on shorter spots that has gone hand in hand with LIM, which he says has actually led to more commercials than when most of them were 60 seconds, increasing the perception of clutter and driving down pricing. Neil believes the industry standard should be 10 minutes of advertising per hour, with 10 minutes = ten spots. He called it a simplistic solution, but no more simple than supply and demand. He compared spotloads to a 100-seat airplane cramming in 130 seats. Yes, you sell more tickets, but at the expense of customer satisfaction. Eventually, he believes, too many short spots thwart the ability to hold the line on pricing, because clients believe they are losing value as their ad is buried in a multi-spot stopset. Looking ahead, he said, was difficult, but Cox expects to do better in H2. Problem categories have been automotive and retail, and visibility has been hurt as advertisers in general hold off on buying until the last second. The plus side to this is that seemingly appalling pacing rates have turned out to be not all that bad once the final tallies are in. The company is hoping that ratings gains and an influx of political dollars Q4 will bolster the bottom line.

Field insists shorter spots are better
After hearing what Bob Neil had to say in the morning, it is not surprising that analysts asked Entercom CEO David Field for his take in the afternoon. He agreed with Neil that, over time, radio spot loads will come down more, but Field said radio is currently not in a seller's market. But he disagreed with Neil's claim that :30s are bad. "It's a better way to conduct our business because we will be able to create a far greater yield for each second, if you will, than we can in a 60-second environment. To deliver a message in 30 seconds, or 15 or 10 is just far more efficient than doing so in 60 seconds. There is no reason in this day and age why that is necessary," Field said.

RBR observation: We just read Cox's Bob Neil's take on spot length compared to Entercom's David Field. With respect to both executives, you can first spot that Neil is the programmer of the two and Neil's simplistic solution it just may be wise to keep it simple. RBR has to agree on this debate with Bob Neil except make it 9 minutes instead of 10. Clutter is something radio needs much less of and get back to being local and entertaining if you are going to compete for today's listeners with all kinds of devices. And if the radio business can not decide on a simplistic solution how is HD going to make any difference? Radio right today just has too many bean counters in control.

Google selling satellite radio ads
Google is moving ahead with its plans to become a middle man for ad sales across the full spectrum of media. Google-owned dMarc already connects buyers and sellers of spots on terrestrial radio and now it is moving into satellite radio. XM announced a deal to have dMarc sell commercial inventory on its non-music channels. "By providing access to XM's premier satellite audience, Google advertisers will have an easy way to target, schedule, deliver and measure satellite radio campaigns in a timely and efficient manner," said Ryan Steelberg, Google's head of radio operations. Google says advertisers will now have a simple, automated way to reach XM's millions of subscribers nationwide and XM will have access to Google's large and small advertisers to offer relevant, targeted messages to their subscribers. After months of trials, dMarc says a new platform is now in full production for its advertisers. In addition, customers of Google AdWords, its Internet advertising marketplace, will be able to place terrestrial and satellite radio spots when the dMarc platform is integrated into AdWords, which is targeted for the fourth quarter of this year.

RBR observation: From the time it bought dMarc early this year (1/18/06 RBR #12), Google has made it clear that terrestrial radio was just the beginning. It paid 102 million for dMarc, but the payoff for management and former investors could grow beyond one billion if certain targets are met. dMarc has been working to make its system compatible with software from vendors besides its own Scott Studios. Television is also on the drawing board. In other words, Google doesn't want to be seen as just a giant player in Internet advertising - it wants to be a one-stop shopping center for advertisers to buy all types of media. Some people in radio, TV and print may see that as a threat, giving Google too much clout, but others hope it just means that buying and selling advertising becomes simpler and grows the pie for everyone. RBR last word of caution is to go slow and do your own research on all the companies getting into this inventory business. We will have more on this issue of Google but for now RBR would like your comments along with a photo, email to [email protected]


Hinchey and friends
keep Martin on notice

Maurice Hinchey (D-NY) was able to collect 84 congressional signatures on a letter to FCC Chairman Kevin Martin, reminding him that Hinchey's Future of American Media Caucus wants an open and transparent process when the Commission looks at revising media ownership rules this year. The letter begins with a simple request. "As the Federal Communications Commission begins its review of rules governing our nation's broadcast media ownership, we write to ask you to conduct the proceedings in an open and transparent way by fully disclosing the proposed rule changes and holding a series of public hearings on the proposal." Hinchey praised the FCC's plan to make the proceeding a prominent feature of fcc.gov, as well as its plans to take the proceeding out into the public, but added that "...we strongly believe that this does not go far enough. Indeed, the FCC has the opportunity and the responsibility to get it right this time by scheduling an extensive, national series of town hall meetings during this round of discussion, both in major media markets and small rural towns, to collect empirical data and conduct a thorough analysis on the state of media ownership and consolidation."

RBR observation: Over on the Senate side of the Capitol, Byron Dorgan (D-ND) was able to get an amendment tacked on to the Ted Stevens (R-AK) telecom bill which would force the FCC to disclose any changes it plans to implement to the Commerce Committee prior to acting. But the Stevens bill appears to be in for a delay, so there's no telling how this will go down.

Telecomma? Lengthy pause in store for Stevens?
The main thrust of the Ted Stevens telecom update is to grease the wheels for telephone companies to go into direct competition with cable companies in the MVPD business. However, both the telecoms and cable want to do so without the enforcment of network neutrality principles. While there is general agreement about allowing MVPD competition, the net neutrality issue has inspired stiff and at least partially bipartisan resistance, imposing the need for a 60-vote supermajority to get the bill to the floor. It looks like the prospects for that happening before the Senate adjourns for the remainder of August are in the slim-to-none category. According to Roll Call, one of the obstacles Stevens is facing is coming from his own party. Some of his colleagues, locked in tight re-election struggles, are using telecom money to fill their campaign coffers, a source which figures to dry up if they get there way on the Hill now. This group would prefer to leave the bill alone until November.

Air America moving to WWRL
Air America Radio has finally confirmed what RBR reported back in April (4/27/06 RBR #83) - it is losing WLIB-AM New York as its flagship at the end of this month. RBR readers already know that Randy Michaels will be taking over programming of WLIB next month with a new lineup of local, liberal-leaning talk shows. Air America announced late yesterday that it has a deal to make WWRL-AM New York, owned by Access.1 Communications, its new network flagship. The agreement was jointly announced by Jim Wiggett, Acting CEO of Air America Radio and Chesley Maddox- Dorsey, President and COO of Access. 1. The liberal network will move its programming down the dial from 1190 to 1600 effective September 1st.


Wall Street Media Business Report TM
Q2 2006 Conference Calls
Cox surfs the downturn and increases net income
Cox Radio President/CEO reported a quarter of almost flat revenues but a hefty 24.6% increase in net income. Net revenue went from 117.253M to 117.151M, a barely perceptible loss of 0.1%, and operating income was down 4.8%. Neil thought a flat outcome was good given the loss of a percent by the industry as a whole during the quarter. Net income improved from 20.594M to 25.668M Q2 2006 over the same period in 2005, representing a seven cent jump per diluted common share of stock, to 27 cents. Free cash flow was also up significantly, from 27.498M to 30.595M, an 11.3% increase. Growth markets included Orlando, Miami, Houston, Tulsa and Honolulu, hindered by weaker performances in Jacksonville, Richmond, Dayton and Louisville. Cox Radio managed to marginally increase its local results during the quarter, improving 0.6%, a total dragged down by a 5.6% loss in national business.

Entercom sees sequential improvement continuing
Struggling with some of the toughest ad markets in the country and the drawn-out impact of Hurricane Katrina on its New Orleans cluster, Entercom managed to beat Wall Street expectations in Q2, with revenues down 3% (down 4% same station) to 116.5 million - a point better than expected. CEO David Field told analysts that the radio market has improved significantly in Boston, the company's biggest market. He said business is improving sequentially for Entercom, so Q3 will be a bit better. The company is projecting that on a same station basis Q3 revenues will be down in the low single digits.


Ad Business Report TM

How I spent my summer vacation as an ad
Would you like to have a free rental car for your next vacation? Who wouldn't? There is a catch. The car will be wrapped in advertising. The idea for this venture came from Arizona State University student Eric Malloff and the Tribune newspaper for the East Valley-Scottsdale area of suburban Phoenix reports that two rental car companies have signed up for a pilot project this fall. Alamo/National will offer some of the rolling ad cars to customers in Phoenix, as will Fox car rentals in Los Angeles. Malloff, who has raised a quarter-million in start-up capital, told the newspaper he is talking with a major beverage company, which he declined to name, about being the first advertiser.

RBR observation: Our guess is that the rental car companies won't have much trouble finding customers willing to take the free cars, instead of the ones you have to pay for. Unless you're going to a family wedding or something, who cares if a bunch of strangers see you driving around in a car wrapped with advertising? Besides, it will be easy to spot in a crowded parking lot. Judging the effectiveness for the advertiser won't be easy, but it is a unique niche that should get them noticed.

Kellogg expected to raise prices
The squeeze seems to be on in Battle Creek. Facing increasing costs in the commodities it needs for production, cereal giant Kellogg is feeling a pinch in the profit margin which will require attention this fall. According to AdAge.com, it is expected to raise prices and cut package sizes. Its chief competitors are expected to follow suit. While this not be popular when members of the media employment pool head to the supermarket, the plus side is that it was chosen over the other common alternative when this situation arises. That would be cutting marketing budgets. According to analysts, Kellogg's approach will be on a brand-by-brand basis rather than an across-the-board basis, minimizing risk. It is also believed that General Mills, silent for the time being, will be more than happy to follow Kellogg's lead.

Tequila ads invite debate
Patron Tequila has launched new TV, outdoor and print ads that direct people to an interactive website where they can weigh in on topical issues, many of them of the humorous nature. The campaign created by The Richards Group pitches the idea that Patron is "simply perfect," thus the website is simplyperfect.com. Visitors will be asked to vote on such weighty issues as vinyl vs. digital or book vs. movie, while being reminded that "Some perfection is debatable. Some is not." The TV ads are currently airing on cable nets, such as Comedy Central, E!, Golf channel, Logo, SciFi and Bravo.


Media Business Report TM
Younger demo more open to new tech
Forrester Research has released its latest study on technology adoption, and it will probably come as no surprise that the cutting edge is found in the 18-26 Gen Y age group. At over 12 hours a week, they've already shown themselves to spend 28% more time on the Internet per week than Gen Xers, who are hardly computer illiterate, and they more than double usage totals for the 51-61 segment of the boomer group. Forrester calls the young group "net natives," and says it actually spends more time on the Internet than it does with television. It is also said to be more susceptible to advertising than older demos, and can be reached via mobile communication devices.

RBR observation: Radio and television are both going digital, and it will be imperative to the future viability of broadcasters to tailor aspects of this conversion to the tastes and needs of Gen Y (and those even younger in line behind them), and, even more important, to make sure they find out about it.


Media Markets & Money TM
Superduopoly blooms in Bloomington
Jeff Warshaw's Connoisseur Media already operates WBBE-FM & WVMG-FM in Bloomington IL. It's taking the FM duopoly up to superduopoly status with the acquisition of WIHN-FM from AAA Entertainment. "I-Rock is a great station. We are extremely excited to add it to our Bloomington-Normal cluster which is under-going explosive growth," said Warshaw, whose other stations employ Jack and AC formats. AAA retains two additional FMs in the market and another three stations in Peoria.


Washington Media Business Report TM
Long live WIVI
Rox Radio Enterprises is a case in point on the importance of keeping your FCC records up to date and on the up and up. At license renewal time for WIVI-FM in Charlotte Amalie VI, it faced a multifaceted petition to deny from one of its own shareholders, Bryan D. Hollenbaugh. For starters, Hollenbaugh apparently did not file his complaint correctly, and Rox was permitted by the FCC to submit a late objection since they were at first unaware that the petition even existed. Let's get to the particulars. Hollenbaugh claimed he owned 20% of the licensee, but was listed with only 8%. Rox said that was because of share dilution, and the FCC said it was a private matter for the courts, not the FCC. Hollenbaugh said that there wasn't enough news and programming aimed specifically at West Indians. The FCC said programming is at the discretion of the licensee, and the complainant provided no evidence of an actionable problem. Hollenbaugh claimed there were no West Indian employees, a violation of EEO regulations. The FCC noted that the absence of a certain minority was not proof of a violation of those regulations, and further noted that Rox's EEO compliance was up-to-date and thorough. Finally, Hollenbaugh claimed the station exceeded allowable RF levels. Rox argued that it was in compliance with the exception of one hot spot which was virtually inaccessible to the public and station employees alike. Rox had the records to answer all complaints. Petition denied.


Ratings & Research
Close-up: The future of radio ratings
With the Next-Generation Electronics Ratings Evaluation Team down to two finalists to bring electronic ratings to US radio, RBR asked both The Media Audit/Ipsos (TMA/I) and Arbitron to answer a series of questions about their systems.

What advantages does your system offer over its competitor?
Arbitron: Arbitron's PPM service is ready to go! There is now a check mark by hundreds of market tests, industry studies, system enhancements, independent audits and due diligence. With more than 14 years and 80 million in development behind it, the Portable People Meter (PPM) is ready today for implementation. Radio broadcasters, advertisers and advertising agencies have been pounding the drum for a faster implementation of electronic audience measurement. Arbitron is addressing that marketplace need and making the transition to electronic audience measurement in Houston this year. The PPM is a proven system. The reality of the PPM is in stark contrast to those who are trying to find someone to pay for a test to see if their product idea might work.

TMA/I: The Media Audit/Ipsos designed a media measurement system not for the next few years but for the next several decades. Our solution takes into consideration today's lifestyle, technology as well as the need for flexibility to adapt to lifestyle and technology changes in the future. A key advantage to The Media Audit/Ipsos solution is the data collection instrument - the cell phone. A primary way to achieve high cooperation and compliance is to passively integrate your media monitor into peoples' lifestyle. The cell phone does that! The Smart Cell Phone solution is much more than an electronic radio measurement system. Advertisers want to know consumers' inter-related media exposure. The Media Audit/Ipsos Smart Cell Phone media measurement solution does this - holistically measuring the consumer, their shopping patterns and their exposure to all media, radio, TV, print, outdoor & etc. The Media Audit/Ipsos Smart Cell Phone uses two audio monitoring systems: Encoding and Signal Matching. While it is expensive to have dual monitoring systems, it is important. This is a great benefit for radio as it means that if a station's encoder goes down then the listening isn't lost because the signal matching feature will pick up all radio listening.

Tomorrow: How far along are they on having a product ready to deploy for US radio ratings?


Internet Media Business Report TM
TBS begins iTunes sales
Turner Broadcasting System has been offering free downloads of some of its programming on Apple's iTunes, but now it is time to see if consumers will pay up. Hit programming from CNN, Adult Swim and Cartoon Network is now being offered for purchase and download a 1.99 per show. CNN will provide original episodes of CNN Presents, including "Taming the Beast: Inside the War on Cancer," "The Fight Over Faith" and "Captured: Inside the Army's Secret School." Drawing from the world's largest cartoon library, Cartoon Network will provide episodes from the networks series Johnny Bravo (season one). Adult Swim, Cartoon Networks' late night sister service, will provide episodes from original productions, including Aqua Teen Hunger Force, The Venture Bros., and Sealab 2021 (season three).


Transactions
1.9M WCBG-AM Cincinnati OH (Covington KY) from Richard L. Plessiner Sr. to Davidson Media Station WCVG Licensee LLC, a subsidiary of Davidson Media Group LLC (Peter Davidson). 200K escrow, balance in cash at closing. 500K allocated to non-compete. LMA 7/17/06 @ 20K/month + expenses. [File date 7/13/06.]

700K WSIC-AM Statesville NC from Capstar TX LP, a subsidiary of Clear Channel Communications Inc. (Mark Mays) to Iredell Broadcasting Inc. (Mark P. Sanger, William C. Blevins). 40K escrow, balance in cash at closing. LMA until closing. [File date 7/14/06.]


Stock Talk
Thanks P&G and TW
Strong earnings reports from Procter & Gamble and Time Warner gave a boost to the entire market. The Dow Industrials rose 74 points, or 0.7%, to 11,200.

Radio stocks were mostly higher. The Radio Index gained 0.761, or 0.5%, to 141.396. Cox Radio jumped 4.3% as Wall Street cheered its earnings report and guidance. Entercom, which reported after the market closed, was up 1.1%.


Radio Stocks

Here's how stocks fared on Wednesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

36.02

-0.28

Hearst-Argyle

HTV

20.84

+0.76

Beasley

BBGI

6.32

-0.19

Journal Comm.

JRN

10.69

+0.22

CBS CI. B CBS

27.15

+0.32

Lincoln Natl.

LNC

57.06

+0.57

CBS CI. A CBSa

27.21

+0.36

Radio One, Cl. A

ROIA

6.95

-0.04

Citadel CDL
9.56 +0.22

Radio One, Cl. D

ROIAK

6.97

-0.04

Clear Channel

CCU

29.38

+0.43

Regent

RGCI

4.07

+0.13

Cox Radio

CXR

15.03

+0.62

Saga Commun.

SGA

7.63

+0.05

Cumulus

CMLS

9.58

+0.15

Salem Comm.

SALM

12.03

-0.05

Disney

DIS

29.80

+0.45

Sirius Sat. Radio

SIRI

4.02

-0.06

Emmis

EMMS

14.83

+0.05

Spanish Bcg.

SBSA

4.70

-0.03

Entercom

ETM

25.05

+0.27

Univision

UVN

33.50

+0.03

Entravision

EVC

7.59

-0.01

Westwood One

WON

6.75

+0.08

Fisher

FSCI

40.19

-0.05

XM Sat. Radio

XMSR

12.16

-0.03

Gaylord

GET

38.26

+1.04

-

-

-

-

-


Bounceback

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Below the fold
Wall Street Media Business Report
Cox surfs the downturn
And increases net income a hefty 24.6%...

Ad Business Report
How I spent my summer
Vacation as an ad, there is a catch...

Media Business Report
Younger demo is the target
18-26 Gen Y age group are the tech generation, no surprise except media habits...

Media Markets & Money
Superduopoly blooms
In Bloomington as Jeff Warshaw at it again...

Ratings & Research
The future of radio ratings
The Media Audit/Ipsos (TMA/I) & Arbitron answer RBR questions...

Stations for Sale

CD Border 25kw FM
Profitable competitive op.
Small/dual market FM with huge upside for turnaround operator.
595K 781-848-4201 or [email protected]


Radio Media Moves

Larkin heads south
Cox Radio announced the appointment of Susan Larkin to Vice President and General Manager of WBDO-AM and WWKA-FM Orlando, effective August 14th. She joins Cox Radio from ABC Radio's KQRS-FM Minneapolis, where she served as General Sales Manager.

Krogstad to Dial Global
John Krogstad has joined Dial Global Digital 24/7 Formats as Managing Director of Affiliate Sales, coming from competitor Waitt Radio Networks, where he was Regional Manager. Prior to Waitt, Krogstad was Senior Director, Formats, for Westwood One, whose 24/7 formats were acquired this week by Dial Global.


More News Headlines
Harley "Hog" talk
at Radio Show

Ever wonder how the once-struggling Harley-Davidson brand name was revitalized to the powerful position it has today? The guy responsible for representing the motorcycle maker to the world during that period is going to be the keynote speaker at the NAB Radio Show. Ken Schmidt, who is now an owner at VSA Partners in Chicago, will speak Thursday morning, September 21st, with his keynote to be followed by NAB President and CEO David Rehr, addressing his first NAB Radio Show.




RBR Radar 2006
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

New analyst sees troubles for radio
Morgan Stanley analyst Benjamin Swinburne has initiated coverage of five radio stocks, but worries that radio is losing listeners and advertising share, so historically low stock prices are not bargains for investors. They also believe radio will continue to lose advertising share to Internet, TV and Outdoor and that Internet (classified and paid search) in particular represents a major threat. We also believe greater programming investment is needed to stem usage declines. His only overweight (buy) recommendation is for Cox Radio, based on the possibility of Cox Enterprises taking it private. Otherwise, he sees no reason for investors to buy the stocks. He ranks Radio One at equal-weight (hold) "due to its low relative valuation." Swinburne gave underweight (sell) ratings to the other three - Clear Channel, Entercom and Cumulus.

Publisher observation: This is one of the very few analyst reports that have called it on the money. Greater need for investment in programming, agree. But RBR highly recommends to all analysts to look at the day to day upper management and their level of performance. Some are better at sending out pink slips to hit their margins. Investments needed? You bet but in people with experience. Judge from the top down and Check out the CEO's resume to see if each has the knowledge, experience needed to run and manage these radio operations. You will be surprised.
08/02/06 RBR #149

Happy days for Mel
Unlike XM Satellite Radio, which lowered its guidance for the rest of the year after hitting some potholes in Q2, Sirius Satellite Radio raised its full-year guidance after reporting strong Q2 results. Instead of 600 million in revenues this year, Sirius is expecting 615 million. Instead of over 6.2 million subscribers by year end, Sirius has now set the target at 6.3 million. And Sirius is not encountering the churn problem that has hit XM, so Sirius is projecting that its monthly churn rate will hold steady at 1.8%. So CEO Mel Karmazin was a happy guy.

RBR observation: Mel was also excited about plans for a Q4 marketing push featuring Howard Stern to convince his millions of fans who haven't yet done so to buy satellite radio receivers and subscribe to Sirius. He said this will be the first holiday sales season with Stern officially pitching Sirius. It seems to us he did a pretty good job unofficially last year plugging Sirius time and time again on his syndicated radio show. Back then he had millions of listeners. Now he has thousands - and they are the ones who already have Sirius subscriptions. Just what can the "King of All Media" possibly do now that could come close to matching the hype of last year?

Publisher observation: You can bet if Might Mel has the cash to spend on marketing Stern and Sirius it will be using the tube, key print and the Internet. This Christmas will tell the future and remember the smart marketers begin to do their Christmas marketing after Labor Day.
08/02/06 RBR #149

Clear Channel stock:
Wall Street darling or dog?
Jim Boyle, at CL King, has issued a sell call for the stock of Clear Channel Communications, Marci Ryvicker back at Wachovia Securities has reiterated her view that Clear Channel is a buy. Victor Miller at Bear Stearns is also out with a note tapping Clear Channel as his top pick in radio.

RBR observation: So who is correct in darling or dog? Depends on your view of the company management as these executives will set the course on darling or dog. That is what the Wall Street guru's do not say. Companies are not bad just some that run them. So judge the executives on your decision as this goes for all companies not just Clear Channel.
08/01/06 RBR #148

RBR observation:
Thank you CBS
The move by CBS to take the FCC to court over its fine for Janet Jackson's Super Bowl flash should be welcomed by everyone in broadcasting, from shock-jocks to conservative Religious stations. At long last licensees are going to get a clear definition of what does or does not constitute indecency - and whether the law that prohibits the broadcasting of indecent material between 6:00 am and 10:00 pm is constitutional.
08/01/06 RBR #148

Back with a vengeance
Long-time radio analyst Jim Boyle is out with his first reports for his new employer, the boutique Wall Street firm CL King & Associates, and he is no shrinking violet. Boyle sees a tough second half of 2006 ahead for radio and he has issued his first-ever sell call - for industry giant Clear Channel. Despite the increased radio revenues that Clear Channel reported for Q1 over 2005, Boyle notes that its revenues were still behind Q1 of 2004, before its Less Is More initiative. "So after two years of change, CCU radio's top-line hasn't grown and its station operating income fell 16%. Audience increases have ground to a halt.
7/31/06 RBR #147


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