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Volume 22, Issue 155, Jim Carnegie, Editor & Publisher

Tuesday Morning August 9th, 2005

Radio News®

Miller pushes again for "Plan B"
With Clear Channel due to report earnings this morning, Bear Stearns analyst Victor Miller is again pushing his "Plan B" (6/1/05 RBR #107). With Clear Channel's stock price still languishing, Miller wants the company to forget about spinning off CC Entertainment, but sell it outright, forget about an IPO of CC Outdoor and a special dividend and instead focus on "The Mother of all Buybacks." Since Miller first proposed his alternative to the restructuring proposed by Clear Channel management (5/2/05 RBR #86), he notes that instead of boosting value, the company's stock has instead fallen to a 52-week low. That makes the math even better for his preferred alternative. "At an average of 33 bucks, CCU could repurchase nearly 27% of its shares. At the end of the process we estimate that CCU would have leverage of 4.08X and generate nearly 3.25 in FCF per share in 2005, pro format for the full buyback. After suffering through LIM in 2005, 2006 should be more promising with FCF per share approaching 3.75," Miller said.

RBR observation: Even Miller admits that his "Plan B" is unlikely to occur, but he insists it would work better than management's plan to boost shareholder value. As we noted before, though, one big sticking point for Miller's proposal would be finding anyone willing and able to buy CC Entertainment for anything approaching two billion - - and that's a huge haircut from the 4.4 billion that CCU paid for it five years ago. Miller thinks 1.5 billion is a "realistic 'low end' valuation" for CC Entertainment, but we suspect it would be hard to find bidders even at that price who have the financial ability to actually do the deal.

FCC to investigate payola allegations
Based on the evidence unearthed by New York Attorney General Eliot Spitzer in his payola investigation, FCC Chairman Kevin Martin has ordered the Commission's Enforcement Bureau to investigate any evidence of payola violations in the New York AG's settlement with Sony BMG Music - - plus any additional allegations that come up. "The FCC has longstanding rules prohibiting payola. These rules serve the important purpose of ensuring that the listening public knows when someone is seeking to influence them. Broadcasters must comply with these rules. The Commission will not tolerate non-compliance. While payola may not be a widespread practice in the broadcasting industry, to the extent it is going on, it must stop," Martin said. The Republican Chairman's move was applauded by Democrat Commissioner Jonathan Adelstein, who had been pressing for the FCC to get involved. "I believe this payola scandal may represent the most widespread and flagrant violation of any FCC rules in the history of American broadcasting," Adelstein declared.

RBR observation: Note the difference in the two statements. Martin says payola "may not be a widespread practice," while Adelstein calls it "the most widespread and flagrant violation of FCC rules" ever. Spitzer appears to hold the latter opinion, but as we've previously noted - - while the New York AG found some real evidence of payola, a lot of what he claims is illegal under his never court-tested interpretation of state laws that don't deal specifically with broadcasting at all are not, in fact, violations of the federal payola law. This investigation needs to be handled at the federal level so one state Attorney General, who just happens to be running for Governor and pushing hard to get his name in the headlines, doesn't set standards for the entire nation that are overdone.

Emmis reaches deal with NY AG
over "Smackfest" contest
Emmis Communications announced it has reached a settlement with the New York Attorney General's Office (Eliot Spitzer) over its investigation of the WQHT-FM (Hot 97) "Smackfest" contest (3/22 RBR #57). As part of the settlement, Emmis has agreed to pay 240,000 to the State of New York, with an additional 60,000 going to Safe Horizon. Safe Horizon's mission is to provide support, prevent violence and promote justice for victims of crime and abuse, their families and communities. "Despite the fact that the contestants voluntarily participated in what was supposed to be harmless entertainment, it was not our finest hour, and New York City deserves better," Emmis Radio President Rick Cummings said. "We have listened to the concerns and worked closely with the Attorney General's office to come to an agreement that will benefit and educate the community." In addition to supporting and working with Safe Horizon, Hot 97 will launch a vigorous anti-violence campaign, which will include PSAs, public affairs programming and the distribution of Safe Horizon literature from the Hot 97 fleet of vans. The parties have submitted the settlement to the court for approval.

Spitzer investigating Air America loan
Evan Cohen may be long gone from Air America Radio, but the financial tangles he left behind are creating a PR nightmare for the liberal talk network. The New York Post now reports that New York Attorney General Eliot Spitzer's office is investigating how 875,000 bucks from a non-profit social services agency ended up as loans to help get Air America Radio off the ground. Cohen, who founded the network, was also development director for the Gloria Wise Boys & Girls Club. City funding for the organization was cut off after the New York City Department of Investigation found financial improprieties, including the loans to the radio network (7/28/05 RBR #147). Air America claims it is not legally liable for the loans, but intends to reimburse the non-profit group anyway (8/1/05 RBR #149). The Post reports that the network has so far put 50K into escrow, but that the DOI is pushing for the entire 875K ASAP.

Transition looms
as Jennings is mourned
The death of Peter Jennings at age 67 (8/8/05 TVBR #154) was not unexpected, since he'd not been on the air since learning in April that he had lung cancer, but it is shocking because it completes an unprecedented period of turnover in the top anchor chairs at America's television networks. NBC alone has a permanent anchor for its major daily newscast, and Brian Williams has only been in that position for a few months following the retirement of Tom Brokaw. CBS has been reassessing its newscast format as well as who will anchor it, with Bob Schieffer filling in since Dan Rather's retirement. Now ABC News as well is without a chief anchor. Charles Gibson and Elizabeth Vargas had been the principle fill-ins during Jennings' illness. No successor is likely to be named soon. For now, it is a time for his colleagues to mourn the Canadian-born journalist who had been the public face of ABC News since 1983, when he was named sole anchor of the "ABC Evening News," having joined the network in 1964. "For four decades, Peter has been our colleague, our friend, and our leader in so many ways. None of us will be the same without him," ABC News President David Westin wrote in a note to staffers. ABC News Radio aired a one-hour special remembering Jennings last evening. "A Tribute to Peter Jennings," anchored by ABC News Correspondent Charles Gibson, includes memories from Ted Koppel, Barbara Walters, Dan Rather, Tom Brokaw, and many others.

Emmis deadline apparently flexible
After our report yesterday that final bids for the Emmis TV group were due by the end of the day, we heard from sources that the deadline isn't absolute. Would-be bidders are apparently being urged to finish up their analysis of the financials and other information and submit their offers by the end of this week - - but even that target may slip a bit as Emmis tries to get the maximum amount possible for its 16 stations. Stay tuned. By the way, you can add Gray Television to the list of publicly declared bidders. President Bob Prather told analysts yesterday that he's interested in "one or two" of the Emmis stations, but definitely is not bidding for the whole group.

Conference Calls Q2 2005

Salem's Q2 easily
beat the industry norm
With its revenue streams less dependent on mass market advertisers, Religious specialist Salem Communications easily outpaced the radio industry in Q2. "Despite a challenging quarter of flat revenue growth for the overall radio industry, Salem achieved 6.2% same station revenue growth and 10.6% same station operating income growth. Salem's performance was a result of strong same station growth at our News Talk stations, which grew revenue by 23.7% and at our contemporary Christian music station in Atlanta, which grew revenue by 20% in the quarter. Our Christian Teaching and Talk stations continued their history of steady and consistent performance growing same station revenue by 5.7% in the quarter," said CEO Ed Atsinger. Salem reported that net broadcasting revenue increased 7.8% to 51.5 million. Broadcast cash flow increased by about a million bucks to just under 20 million.

Adbiz©

Online ad market to reach
18.9 billion by 2010
JupiterResearch released its 2005 Online Advertising Forecast at the Search Engine Strategies Conference & Expo 2005. The forecast reveals that online advertising will continue steady growth over the next five years, eventually reaching 18.9 billion in 2010, compared to 9.3 billion at the end of 2004. This growth reflects not only advertiser confidence in the medium, but also the strength of advertising on search engines in 2010. Search engine advertising will generate more revenue than standard display advertising by 2010. Compound annual growth rates tell the story: display will grow at 7% and search will grow at over 12% over the next five years. The rise of search engine marketing, however, is only one element of an overall growing online advertising market. Other areas will also experience sustained growth over the next several years. Classified advertising will grow at nearly 10%, reaching 4.1 billion in 2010. Advertisers will also take great advantage of the growing number of broadband-connected households to field rich and streaming media advertisements. Rich media spending will grow at a 25% compound annual growth rate (to .5 billion) and streaming media will grow at a 30% compound annual growth rate (to 943 million) by 2010. Publishers will see revenue grow from several sources, including direct sales and network revenue-share deals. This year, the revenue of ads priced on a performance basis will surpass that of ads sold on an impression basis. Much of this performance inventory will come from network providers, which are increasing their use of targeting technology to provide better results for publishers.

L.L. Bean In Review
L.L. Bean has placed its 27 million-dollar account in review. Martin/Williams is the incumbent. Competing are Cossette Post, Hill Holliday, J. Walter Thompson, Saatchi & Saatchi, BBDO Worldwide and DDB Worldwide.

Radio & Television Business Report

Radio's Important September Face Off
UpFront 2005 - will radio face the mild reception as Network TV? Top media agency buyers and network radio sellers participating so far: Kelly Cadotte, Natalie Swed Stone, ,Irene Katsnelson, Chris Fontana, Rich Russo, Matt Feinberg, Matthew Warnecke, Kim Vasey, and Lisa Opensky Greenberg.

And we go One on One with Charles Courtier, Executive Chairman of Mediaedge:cia

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Media Markets & MoneyTM

Clear Channel in TV duop buy; selling a radio
You don't often see Clear Channel Communications making a TV acquisition, but it's paying 18.5 million to add a second TV station in Salt Lake City. In order to stay within the FCC's ownership limits, Clear Channel will be divesting one of its seven radio stations in Salt Lake so it can acquire KUWB-TV (Ch. 30, WB). While awaiting FCC approval, the station has entered into a shared services agreement with Clear Channel's KTVX-TV (Ch. 4, ABC). "The addition of KUWB will be a great complement to our current holdings in the market. Clear Channel Television and Radio are both very excited about the opportunities this acquisition presents," said Steve Spendlove, Regional Sr. VP of CC Television. Although Salt Lake City is the largest market for ACME, the company told analysts in yesterday's quarterly conference call that it had not achieved positive cash flow because the market is so competitive.

NY Times Co. invests in jobs search engine
The New York Times Company announced an investment in Indeed Inc. (indeed.com), a search engine for jobs that "enables job seekers to search millions of job listings from over a thousand Web sites." The Times Co., along with Union Square Ventures and Allen & Company, are investing a total of five million bucks for a minority interest. "We are pleased to join Union Square Ventures and Allen & Company in backing Indeed, an innovative new firm that provides compelling job search capabilities to Internet users," said "The Times Company has strong help-wanted franchises in print and online, and we believe it is important to invest in new technologies and services in this advertising category," said Martin Nisenholtz, Sr. VP, Operations, at the NY Times Co. There was no immediate indication whether the job search engine would also be associated with the company's broadcast stations.

Washington Beat

Martin girding for indecency push?
With no fanfare, nor even a routine announcement, Kids First Coalition founder Penny Nance resigned as a lobbyist for various anti-indecency groups and took a part-time position as a special advisor at the FCC, as first reported yesterday by Media Week. Specifically, Nance is now working with the FCC's office of Strategic Planning and Policy Analysis.

RBR observation: Should broadcasters be worried? Maybe. Maybe not. While she's been calling for stronger enforcement of the statute against broadcast indecency, Nance has been even more vehement in fighting for crackdowns on Internet pornography and what she sees as "a huge indecency problem" on basic cable. If she has FCC Chairman Kevin Martin's ear to push new indecency policies which will be warmly welcomed on Capitol Hill, the end result could be the level playing field with cable that broadcasters have been seeking for years. If Nance succeeds in getting the FCC to extend indecency regulation to cable, there will be one of two outcomes - - either cable will have to adhere to the same (almost impossible to comprehend) guidelines that currently apply to broadcasters, or the courts will strike down the indecency law once and for all, leaving broadcasters to let viewers' and listeners' standards dictate, just as they do now for the cable guys.

Transactions

915K KFMH-FM Belle Fourche SD from Laramie Mountain Broadcasting LLC (Victor A. Michael Jr.) to Bad Lands Broadcasting Company Inc., related to Northeast Broadcasting Company Inc. (Stephen A. Silberberg, J. Louis Silberberg, Edward F. Flanagan, Lisa Burgess). 50K deposit, 65K cash at closing, 800K note. Buyer also gets 350K option to acquire tower site. Duopoly with pending acquisition of KRKI-FM Newcastle WY from same seller. [File date 7/1/05.]

900K KMQS-FM CP & KKTN-FM CP Victor ID from Michael Radio Group (Victor A. Michael Jr.) to Jackson Radio Group Inc., related to Northeast Broadcasting Company Inc. (Stephen A. Silberberg, J. Louis Silberberg, Edward F. Flanagan, Lisa Burgess). 50K deposit, balance in cash at closing. Will for duopoly when built. KMQS is licensed for Class C2 on 92.3 mHz with 26 kw @ -509', and has applied for a CP for Class C3 on 92.3 mHz with 800 w @ 1,086'; KKTN is licensed for Class C3 on 103.7 mHz with 800 w @ 1,086'. [File date 7/1/05.]

800K KRKI-FM Newcastle WY from Michael Radio Group (Victor A. Michael Jr.) to Bad Lands Broadcasting Company Inc., related to Northeast Broadcasting Company Inc. (Stephen A. Silberberg, J. Louis Silberberg, Edward F. Flanagan, Lisa Burgess). 50K deposit, balance in cash at closing. Duopoly with pending acquisition of KFMH-FM from same seller. [File date 7/1/05.]

350K KJMP-AM Fort Collins-Greeley CO (Pierce CO) from Radio Frontier Broadcasting (Victor A. Michael Jr.) to White Park Broadcasting Inc., related to Northeast Broadcasting Company Inc. (Stephen A. Silberberg, Edward F. Flanagan). 10K deposit, balance in cash at closing. [File date 7/1/05.]

Stock Talk

Stocks drop as oil rises
Concerns about stability in Saudi Arabia sent oil prices to record highs and stock prices fell. The Dow Industrials were down 21 points, or 0.2%, to 10,537.

Radio stocks were down slightly. The Radio Index declined 0.108, or 0.05%, to 202.792. Salem, which reported strong results after the bell, was down 2.3%. Fisher was the best performer, up 3.7%.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		41.56	+0.06	Jeff-Pilot	JP		49.71	-0.06
Beasley	BBGI		13.52	+0.12	Journal Comm.	JRN		15.81	-0.01
Citadel	CDL		12.50	+0.06	Radio One, Cl. A	ROIA		13.09	+0.11
Clear Channel	CCU		33.12	-0.26	Radio One, Cl. D	ROIAK		13.07	+0.09
Cox Radio	CXR		15.50	-0.04	Regent	RGCI		5.56	unch
Cumulus	CMLS		12.20	-0.11	Saga Commun.	SGA		14.57	+0.10
Disney	DIS		25.41	-0.07	Salem Comm.	SALM		19.73	-0.47
Emmis	EMMS		20.56	+0.01	Sirius Sat. Radio	SIRI		6.60	-0.16
Entercom	ETM		31.27	+0.07	Spanish Bcg.	SBSA		7.92	-0.11
Entravision	EVC		8.17	+0.06	Univision	UVN		26.60	-0.19
Fisher	FSCI		44.14	+1.58	Viacom, Cl. A	VIA		34.45	+0.26
Gaylord	GET		45.11	+0.26	Viacom, Cl. B	VIAb		34.30	+0.30
Hearst-Argyle	HTV		24.93	-0.11	Westwood One	WON		19.80	+0.15
Interep	IREP		0.69	+0.01	XM Sat. Radio	XMSR		33.28	-0.43
International Bcg.	IBCS		0.01	unch	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments to [email protected]

Regarding Larry Fuss' comments (7/20/05 RBR #141).

Larry - - as a president of a media conglomerate corporation, of course you're going to say that it's just one word, because if people aren't listening to a radio station and buying the products that the advertisers wants them to buy, it is your wallet (and the wallet of every other media bigshot) that suffers. As a citizen (and an old-fashioned one, apparently), I don't think it's NECESSARY for a person of ANY age to have to be exposed to such garbage as the "F" word or anything else of a "Howard Stern" or "Opie and Anthony" kind of nature.

Andrea Wiener
New York City

Naturally, those whose vocabulary (apparently) typically features crudity and/or profanity, like Mr. Fuss, are not going to see anything wrong with ABC's failure to bleep out this musician's use of the 'f' word. Asking what is the big deal about one word is like asking what is the big deal about one theft of only one item, or the murder or only one person. The reason for obscenity standards is that although there may be some, like Mr. Fuss, who don't care, there are a great many others who do. I, for one, do not wish my children, my wife, myself, or any guest in my home to be subjected to verbal garbage via network television, no matter how infrequent it may be. What's wrong with a little profanity? When uttered publicly, it bespeaks a profound disregard for one's fellow man, a very purposeful type of inconsiderateness. It is plain rude. It is course. It is born out of either of two things: Ignorance or Malice. Why would a news network concern itself with such things? Out of a regard for common decency. Decency is valued. Indecency is not valued. When that standard gets turned on its head, then the very nature of civilization itself is threatened. Almost anytime someone says "What's the big deal?" about something that is so offensive to so many people, where there is already an existing standard established that is clearly understood, you can bet that individual has an agenda that is not in support of that standard. In this case, the standard itself is not in question; Mr. Fuss' remarks question why it should be upheld and or enforced. So, in answer to Mr. Fuss, and all other inconsiderate potty-mouths incapable of anything but the most selfish lines of thought, there is no 'big deal'. There is, simply put, an existing standard, it is a good standard, and it should be enforced and upheld. Period.

Ed Personius
President
The Radio Works
radio advertising agency

Arbitrends

More News Headlines

WYUU-FM Tampa launches
Spanish format

Six to enter National Radio
Hall of Fame

BMW to offer HD Radios as option

Radiosophy launches
broadcast partner program

ABC affiliates switching to Fox News are losing Paul Harvey

Radio People - Media Moves

Valeri returns
Former WAAF-FM Boston Program Director Ron Valeri has returned to the Entercom station to once again be its PD. His previous six-year run at the station ended in 1995. Valeri most recently was VP/COO of Global Artist Management since 2002.

Anthony Sciulli
named VP/Arbitron Manufacturing and Supply Chain Management
In this newly created role, he will be responsible for establishing manufacturing and supply chain strategies for the Arbitron Portable People Meter system. Sciulli will oversee the company's working relationship with more than 100 suppliers in 12 countries, including the U.S.-based manufacturing firm that produces the encoders, household hubs, docking stations and portable meters that make up the PPM audience measurement system.

Continental Electronics makes key appointments
Continental Electronics, a leading provider of RF broadcast transmission equipment, announced it recently made four key staff appointments that position the company to capture the emerging market for digital radio. Named to the position of director of business development is Matthew Straeb and to the position of engineering product manager is Don Spragg. Within the marketing department, Michael Troje is assuming the position of broadcast sales manager from Bret Brewer, who will continue as regional sales manager.

RBR Radar 2005

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

Analysis - PPM more good than bad
Former analyst Jim Boyle hired by Arbitron to make his own analysis of the Forrester Research study on PPM but free to speak his mind. Boyle says Forrester may be too rosy in its growth projections, but he sees PPM as being a net positive for radio.
RBR observation: It's all about ROI. Advertisers and their agencies what to measure the return on their investment - - and what they've been saying lately is that paper diaries don't cut it when it comes to audience measurement. As Boyle notes, radio's "customers are currently voting with their proverbial wallets to move disproportionately away from radio advertising." By his count, 14.6 billion in domestic ad spending has already moved over the past five years "in the favor or more easily measurable, more accountable, and more ROI-proven media." So it's up to the radio industry to decide whether it is worth the additional cost of PPM (or another passive measurement technology) to give its customers what they're demanding. Even if it's not the 5% swing that Forrester indicated, but rather Boyle's 1.6%, that's still a lot of ad billing and it appears that radio wou! ld, indeed, get a return on its investment. 08/08/05 RBR #154

How about both CBS Radio
and ABC Radio at WW1?
Westwood One CEO Shane Coppola admits it's an intriguing idea, but don't go jumping the gun. If such a deal does go down, the driver will be ABC's radio station group - - but Westwood One is certainly an interested bidder if the buyer wants to spin off ABC Radio Networks.
08/08/05 RBR #154

General Manager

Saga Communications Brad Eure retires and we seek his replacement with a radio professional that has passion and commitment to the radio business to take the leadership at WWWV / WQMZ & WINA Charlottesville, VA. Saga, we believe in our people. Interested then tell us about yourself.

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