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A glimpse of the Kerry FCC
At a press conference last month, Rep. Maurice Hinchey (D-NY), a leading foe of media consolidation, suggested that his task - - resisting consolidation in general and the FCC 6/2/03 ownership ruling in particular - - would be much easier under a John Kerry-appointed FCC. We can now confirm that this will be true.

RBR observation: We can only say that, as far as EEO goes, those guys and gals in with the wooden hammers and long the black robes have a thing or two to say on the subject, and as a result the FCC is quite familiar with the phrase "try, try again." The FCC will continue to face this challenge regardless of who sits in the Oval Office. However, Hinchey is absolutely correct on consolidation. The FCC is charged with redoing its 6/2/03 ruling, and if three Democrats control the process, the results are sure to be radically different than they were on the first Republican-controlled go-around.
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Citadel looks ahead
Citadel Broadcasting Corporation is investing in its future by building on what it has rather than buying what it doesn't - - although it is in buying mode, like many other broadcasters, it's main acquisition target is itself. Citadel is looking at a 3% gain for Q3. Chairman/CEO Farid Suleman said July was worse than that, and August and September are beating it. Political is not figured in. With stations in the state capitals of battleground states like Tennessee, Michigan, New Mexico, Arkansas and Pennsylvania, Suleman views as-yet unplaced business in the political category as insurance on meeting or beating guidance. Citadel is over $16M into a stock buyback program authorized to go to the $100M level. Suleman explained that low stock prices coupled with the still-unrealistic compensation expectations of wouldbe station sellers make the buyback the most attractive use of free cash flow at present. Citadel will consider fill-ins and sticks in the interim. And it's also seems poised to act if, as Suleman hinted, Viacom's Infinity starts spinning off some of its non-core markets. Citadel has been implementing numerous station overhauls, primarily via strategic format flips, and has others under consideration. It expects a pay-off in 2005.
Editor's note: There is an obvious strong relationship between Farid Suleman and Infinity COO Joel Hollander. We suspect that if Infinity decides to sell any station(s) Farid will bet first at the plate. Same goes for any trades but don't look for a Citadel Spokane for an Infinity Philly...

Citadel comments on the Clear Channel diet
Citadel is the first company we've heard admit that it could stand to trim some spotload as Clear Channel pursues its diet initiative. "This is a great move by Clear Channel," said Chairman/CEO Farid Suleman. "As the largest company, they're exhibiting great leadership." He said it should improve the product, and hopefully, CC will market those improvements to the benefit of everyone in the business. Citadel, who competes with Clear Channel in most of its markets, plans to pay close attention to CC's spotload level, and do what is necessary to remain competitive. Suleman believes the diet will work, clearing clutter and driving up rates. "A lot of companies have responded favorably," he said. Asked about companies breaking ranks to undercut competitors, he commented, "I think you're going to see a lot more pricing discipline, even in the largest markets."

RBR economic snapshot
The economic recovery continues to caterpillar forth, with each new day providing a freshly mixed bag of signs for the tea-leaf readers to ponder. This time, while jobless claims were down, so were retail sales. But there is something which may be going up - - interest rates. The number of new claims for unemployment insurance came in slightly below forecast for the last week of July, and was a good bit below the newly-idle figure for July 2003. However, the numbers caused a less-statistically volatile four-week rolling average to rise. Meanwhile, rising gas prices and an end to easy home-mortgage refi's were blamed for sluggish retail sales. Retailers, in fact, were told to expect more of the same going ahead. (This is despite commentary we've heard that back-to-school is coming back strong.) Finally, the New York Times is predicting that Fed Chairman Alan Greenspan is going to put another quarter of a percent onto the prime rate, moving it from 1.25% to 1.5%. This is because for all the sluggishness, there are also positive signs, such as renewed consumer confidence and a jump in auto sales.

A choice proposition on DTV
Most television broadcasters are currently operating on two channels, with one broadcast going out in analog and the other in digital. The time is rapidly approaching when final decisions must which channel - - perhaps one the two already occupied or perhaps a third option - - will become the permanent home when the station is digital-only. We suspect that if your station has been NBC-4 for decades (that's where my family usually gets its local TV news here in Washington), then Channel 4 is going to be the lucky winner in the channel election process. But it doesn't have to be. Here, straight from the FCC, are the channel election parameters. Monday: powering up requirements. | More... |

Conference Calls, Q2 2004

Citadel well-fortified in Q2
Citadel easily outperformed Q2 2003 in Q2 2004, posting a 12% gain in net revenue, and, due to a number of factors, a 720% gain in operating income. Station operating income was up a more down-to-earth 13%. Much of the gain was due to new acquisitions, however. Station-to-station revenue was more in line with industry results, registering a 4.7% gain. With stock prices low and station prices high, the company is buying its own stock rather than investing in new broadcast properties. Station operating income was up 12/7% over all, and 7% on a station-to-station basis. The 720% gain in operating income was credited to higher revenues combined with decreased depreciation/amortization expense and non-cash stock compensation expense.

Univision sails past industry norms
Hispanic giant Univision stormed through Q2 2004, posting a 55% increase in net revenue and a 101% increase in net income. It's net revenue total for the quarter was $495.3M, up from $320.2M during the same quarter in 2003. On a pro forma basis, the numbers were still exceptional. Pro forma net revenue was up 25%, pro forma operating income was up 31%, and pro forma net income was up 63%. "Our growth can be attributed to strong quarterly performance at each of our divisions as advertisers continued to increase their commitment to building brands nationally and locally through our Spanish-language media assets," said Chairman/CEO Jerrold Perenchio. The television performance was highlighted by continued success drawing Hispanics away from English language TV. And the radio division reported a pro forma growth rate of 19%, compared to the overall radio rate of only 2%. Univision is predicting a robust Q3 with net revenue gains in the high teens.

Hot times for Hispanics:
SBS beats guidance
Spanish Broadcasting System grew from $36.M to $40.3M in net revenue for Q2 2004, a gain of 10%, blowing away prior guidance which had predicted a low- to mid-single digit gain. The Hispanic radio operator rode a hot hand in Miami and Los Angeles, coupled with more modest gains at its New York and Chicago properties. YTD, net revenue is pacing 8% ahead of the first half of 2003. "Our second quarter revenue growth is among the strongest in the industry, highlighting the leading positions of our stations," said Chairman/CEO Raul Alarcon Jr. SBS is looking to post mid-single digit gains in Q3. The company is currently in the midst of a plan to sell off non-core assets. It has already completed the spin of an AM-FM combo in San Antonio to Border Media Partners. It has two pending deals in the fire, one involving an FM in San Francisco and the other involving a trio of suburban Chicago stations.

Adbiz ©

A big reason for the 18-34 drop in TV viewing?
Hispanic Business magazine may have nailed it. In the recent issue, a story, "The New Frontier," addresses the issue of the drop in 18-34 viewers. The boom in Hispanic population in the US bulks up a bit in the 18-34 demo. However, there aren't 100+ channels for them to view as with general market nets. So they go elsewhere. Also, Hispanics tend to be more into radio listening than television viewing. The solution: build more Hispanic TV/cable nets, especially those reaching English-speaking Hispanics. Excerpts:

Radio Ad Effectiveness Lab
to release new worldwide study
The RAB announced the Radio Ad Effectiveness Lab (RAEL) will release its Wirthlin Worldwide study "Personal Relevance, Personal Connections: How Radio Ads Affect Consumers" 8/18. The new report concerns a large-scale project conducted in 2004 with Wirthlin Worldwide to better understand how Radio advertising affects consumers in ways that are different from television and newspapers. It is the first in a series of major research studies from RAEL, all designed to help advertisers and agencies maximize Radio ROI. RAEL is an independent organization established in 2001. RAEL is funded by radio industry companies and works with advertisers, agencies and broadcasters to further the understanding of how radio advertising works, to measure radio's effectiveness and to increase advertiser and agency confidence in radio. Meanwhile, RAEL just released the "Guide To Radio Advertising Testing Services," a directory of radio commercial testing firms which were willing to share sufficient information with them. Access the guide here.

Media, Markets & Money tm

Washington Beat

Programming

O&A to XM
XM Satellite Radio announced that fired WNEW-FM and former syndicated talkers Opie and Anthony will make their long-anticipated return to radio with a live, weekday show debuting 10/4. The show will be carried exclusively on a new premium XM channel 202. Subscribers will have to pay an extra $1.99 per month per radio to hear them over the new O&A-only channel. O&A have not been on the air since 8/02, when they were fired over the now-infamous "Sex in St. Patrick's Cathedral" stunt. O&A held a press conference yesterday at at the Hard Rock Cafe in NYC, where they announced they'll start a national road trip before their debut to meet fans and sell subscriptions.

Transactions

$14M WOJZ-FM Atlantic City (Egg Harbor City NJ) from Nassau Broadcasting II LLC (Louis Mercatanti) to Millennium Atlantic City II License Holdco LLC (James P. Donahoe et al). $10M advance payment, $2M escrow, $2M cash at closing. WOJZ-FM is part of four consolidated markets, with WKOE-FM Ocean City NJ (mkt #1), WFPG-FM Atlantic City NJ (mkt #1, #2, #3), WKXW-AM Atlantic City NJ (mkt #1, #2, #3), WIXM-FM Millville NJ (mkt #1, #2), WPUR-FM Atlantic City NJ (mkt #2, #3), WCHR-FM Manahawkin NJ (mkt #3, #4), & WBBO-FM Ocean Acres NJ (mkt #4). No overlap with WADB-AM/WJLK-FM Asbury Park NJ, WOBM-AM Lakewood Township NJ, WOBM-FM Toms River NJ, or WBUD-AM/WKXW-FM Trenton NJ. [File date 7/9/04.]

$45K WCMA-AM Corinth MS from Power Valley Communications Inc. (Frederick A. Biddle) to New Mind Broadcasting LLC (John H. Beebe). $4.5K escrow, balance in cash at closing. [File date 7/12/04.]

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