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Welcome to RBR's Daily Epaper
Volume 24, Issue 156, Jim Carnegie, Editor & Publisher
Friday Morning August 10th, 2007

Radio News ®

Declines continue for Westwood One
Q2 revenues came in below Wall Street expectations for Westwood One, down 17.4% to 111.1 million. CEO Peter Kosann says there are signs that demand for the company's programs and services will improve by Q4. "We are far from satisfied with our performance. That said, we are now seeing signs of increased advertising demand, and thus we begin planting new seeds for future growth by making incremental investments in infrastructure and programming in the back half of the year," Kosann told analysts in his quarterly conference call. He also said that he is optimistic that WW1's new 10-year agreement with CBS will be completed this month, so it can then go to shareholders for approval. The new contract, as previously described, will end the contract to have CBS Radio manage WW1, but commit CBS Radio stations to carrying WW1 inventory for another 10 years. Kosann, who is a CBS employee, will be leaving and the search is underway for his successor. Once WW1 is set free from CBS many on Wall Street expect it to hang out a for sale sign. WW1 still expects revenue percentage declines in the high single digits to low double digits for the second half of this year.

RBR observation: These are tough times for the network radio business, but Kosann was welcoming new ABC Radio Networks owner Citadel to the business. In his view, Citadel is likely to be an aggressive player and help drive up CPMs for everyone. The CEO is celebrating the success of the recently launched "Dennis Miller Show." With most of the analysts on the call in the New York market, he invited them to lobby their favorite radio station to add Miller to their lineup. Which station does he want? Kosann says he'll take any highly-ranked station in New York. The CEO also noted that Miller's show has quickly become profitable for WW1 in part because the talent cost is not outrageous. Kosann said WW1 has passed on other proposed projects with big name stars because they simply want too much money.

Battle lines drawn at Regent
Riley Investment Management says it will sue the management and board of directors at Regent Communications because the company has not called a special shareholders meeting that Riley requested. The investment group has been pushing for a sell-off of Regent's assets and wants to put three directors of its choosing on the board. Riley claims that it has backing from holders of more than 20% of Regent's stock (Riley itself now owns 6.7%) demanding that a special shareholders meeting be called for September 3rd. Riley said it would file suit in Delaware Chancery Court, either today or yesterday, because Regent's management and board are "citing irrelevant technicalities" to stall calling the special meeting. "While more than 20% of the Company's shareholders delivered to the Company requests for the special meeting, we were initially told that the 20% requirement had not been met. After sending the Company for a second time documentation that 20% of the shareholders had made the same request for a special meeting, we were told that our request was invalid because the Company did not receive 'original' copies of the request from each and every stockholder making the request. There is no such requirement in the Company's bylaws or Delaware law," Riley said in its latest letter. Asked about Riley's call for the special meeting during his quarterly conference call earlier this week (8/8/07 RBR #154), CEO Bill Stakelin said Regent management and its legal advisors would give consideration to all shareholder proposals.

Looking ahead at Citadel
Citadel Broadcasting executives are expecting Q3 to fall in line with Q2, with sluggish economic conditions leading to another drop from results achieved in 2006. However, Chairman/CEO Farid Suleman sees potential for positive results in Q4, and he had the company gearing up for revenue gains in 2008. The basis for Q4 optimism is twofold. First, political cash should start flowing into station coffers, and second, program changes that have recently or are now are being implemented are expected to start paying off at about that time. Suleman is willing to spend money to make it: "It's not about cost cuts, it's about revenue growth," he said. One example is the company's plan to expand the news operation at KABC-AM Los Angeles, which he feels will strengthen one of its new core properties. Other big plans are in the works to turn interactive media into a revenue generator. Suleman is prepared to drop 3M-5M into a project to put most of the 232-station group on the same interactive platform. The company intends to focus on debt paydown between now and the end of the year, a focus that will move any thought of dividends into 2008, unless the board of directors feels differently - but Suleman thought they would agree with this approach. Citadel is now actively shopping its spin-off stations. Suleman said he just finished hiring bankers to move this inventory. Not surprisingly, he expects the properties to go in in-market strategic buyers rather than going in a package to a group or private equity player, and expects market values to hold at their present level for the foreseeable future.

June puts the slug in sluggish
2007 has been a lack-luster year, and the results for June have taken the lack of luster to a new low. The Radio Advertising Bureau/Miller Kaplan Arase & Co. revenue results for the month came in 3% lower than June 2006. A 3% decline in local and an 8% decline in national resulted in an over 4% overall drop in spot revenue. A 14% gain in the burgeoning non-spot category salvaged 1% of that back to bring the industry to -3% total for the month. So far the year has stayed within shouting distance on either side of par with 2006 results, improving by no more than 3% (that happened in February) and swinging the same distance under par this month. It did set a new low for the year in combined local/national revenue, which had lost no more than 2% in any one month prior to this one. Marci Ryvicker at Wachovia piled on a little extra bad news, noting that May and June tend to produce 20% of annual radio revenue and serve as a fairly reliable bellwether for the rest of the year. She said that the weakness was not a surprise, and that there is "no end to declines in sight." She knocked Q3 predictions down from a 1% gain to a 1% loss, and the full year from an 0.2% gain to an 0.3% loss.

Five named to National
Radio Hall of Fame

Three living legends and two giants of the past will be inducted into the National Radio Hall of Fame at a Chicago gala on November 3rd, with the live broadcast on ABC Radio hosted by Sean Hannity. Inductees this year include New York Top 40 radio legend Dan Ingram, pictured, of WABC-AM and WCBS-FM fame; Marian McPartland, whose "Piano Jazz" program has aired on NPR for more than 25 years; former New York Yankees infielder Jerry Coleman, who has had an even longer career in radio, serving as the voice of the San Diego Padres on XPRS-AM & FM San Diego for 32 seasons; the late Jimmy Durante, who hosted "The Jimmy Durante Show" on radio in the 1930s and '40s before moving to TV in the '50s; and ground-breaking African-American writer/producer Richard Durham, also deceased, who wrote and produced "Destination Freedom," debuting in 1948 on WMAQ-AM Chicago, running to 91 episodes that showcased the lives of prominent African-Americans.

Wall Street Media Business Report TM
Citadel glides on the red side of even
ABC Radio assets officially became a part of Citadel Broadcasting, and adding their Q2 2007 results into the pot brought the company's net revenue total to 141.2M. Take it out for a pro forma snapshot, and the total 31.3M to 109.9M, which is a 2.3% decrease from Q2 2006's 112.5M performance. The company blamed the decrease on reversals in several markets, including Birmingham AL, where it is undergoing format changes, along with weak conditions in Providence RI and an unexpected down streak in western markets, including Tucson AZ and Modesto CA. The quarter included a non-cash impairment of 13.6M, which is a write-down of the carrying value of the 11 stations it has to sell due to the ABC acquisition. Chairman/CEO Farid Suleman said, "The completion of the merger with ABC Radio was a major accomplishment for the quarter and the Company is excited about the addition of these large market radio stations, the ABC Radio Network and the significant on-air talent and management experience that is part of the ABC Radio business. For the balance of 2007, the Company is focused on the integration of the ABC Radio and Network business with our existing operations and the sale of certain radio stations which is expected to reduce the Company's outstanding indebtedness."

Saga Q2 net income
relatively flat

Saga Communications reported Q2 net operating revenue increased 1.8% over the comparable period in 2006 to 38.4 million and operating income was approximately flat at 8.8 million. Net income decreased 178 thousand to 3.8 million (.19 per fully diluted share) for the quarter compared to 4.0 million (.19 per fully diluted share) for the comparable period in 2006. Free Cash Flow increased 878 thousand to 5.6 million. For the same period, station operating expense increased 647 thousand to 27.0 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue increased 1.5% to $38.3 million, operating income was approximately flat at $8.8 million and station operating expense increased 486 thousand to 26.9 million.
| Read More... |

DG FastChannel Q2 revenues up 43%
DG FastChannel, a provider of digital media services to the advertising, entertainment and broadcast industries, reported Q2 revenue of 21.7 million compared to 15.1 million in the comparable period of 2006. The consolidated revenue for the quarter includes approximately one month of results of operations of Pathfire, which was acquired 6/4. Q2 saw revenue growth of 8% on a year-over-year basis. Net income was 3.3 million, or 0.20 per diluted share, compared with net income of 1.1 million, or 0.12 per diluted share in Q2 '06. Scott Ginsburg, CEO of DG FastChannel commented on the results, "The second quarter was an active and successful period for DG FastChannel highlighted by record financial results. Additionally, we entered into several strategic acquisitions and partnerships that will expand the breadth of our next generation, state-of-the-art digital media offerings across new and exciting markets. Our strategy of constantly upgrading our technology platform and consolidating complementary businesses is setting new benchmarks for revenue, EBITDA, net income and EPS. Importantly, margins and operating efficiencies also are improving. Year-over-year revenue rose 43% to 21.7 million, driving a 67% increase in diluted earnings per share."

Ad Business Report TM

Ed Christian on
national and local business

In yesterday's Saga Communications Q2 conference call, CEO Ed Christian mentioned that in speaking with Katz Media CEO Stu Olds recently on national business, Christian noted Olds said the number of spots sold this year is higher than last year. However, each month Katz goes in about 5% below last year on pre-booking. "So not only do they start with a -5, we also have the introduction of the :30s, which have hurt the average rate in the marketplace. So that's part of the issue." He added that local radio has to re-invent itself and quit only going for the low-hanging fruit. "We have made this commitment to go out and do the developmental calls that are necessary to restore the growth in this industry." He says it can be done, radio just got lazy. The number of cold calls and spec spots required for each AE each week to develop new revenue need to go up. He added they are adding internet audio stream ad insertion devices on two to three stations per week via Ando Media (7/26/07 RBR #146).

Media Business Report TM
Universal Music makes equity investment
Universal Music Group said it has acquired a stake in the operator of hip-hop/urban social networking website (a.k.a. The deal is part of the company's strategy to gain new sources of revenue and media outlets for its recording artists. The ad-supported site caters to hip-hop fans who can upload their own raps and compete for a record deal with SRC Records, a label distributed by Universal. The site also sells the song files for 99 cents each.

Media Markets & Money TM
Long haul truckers wanted for this move-in
Most people who look at KELE-AM in Mountain Grove MO see a small station in a small town 60 miles east of Springfield. But the imaginative folks at Ron Unkefer's First Broadcasting Capital Partners looked at the station and they saw: Cincinnati. They now have a deal in the works to acquire the Missouri station and set off a chain reaction in southern Ohio. For starters, KELE will move to Ripley OH, in the Cincinnati market where FBCP owns WOXY-FM, WAOL-FM & WAXZ-FM. (The latter station is moving out of the Cincinnati market to Salt Lick KY, and is being sold to Gateway Radio Works for about 60K.) Once KELE is comfortably located in Ripley, WAOL-FM will be free to exit its Class C3 facility there, drop down to Class A and move closer to Cincinnati, to the town of Amelia. Quorum Radio Partners are making it all possible, selling KELE-AM to FBCP for 150K.

Washington Media Business Report TM
FCC gives Sommers a wintry response
Nothing doing, said the FCC to the Informal Objection submitted by William Sommers of Pittsboro NC. He was objecting to the license renewal for Fox-affiliate WRAZ-TV 50, part of a Capitol Broadcasting duopoly serving the Raleigh-Durham market (along with CBS 5 WRAL-TV). Sommers' complaint isn't about the Fox Broadcasting Network. It's about co-owned basic cable service Fox News Network. Sommers reasons that WRAZ may have or possibly will broadcast material from the cable outfit, then notes that the cable channel says it is "fair and balanced," which in his opinion it is not, making the slogan "deceptive, false and misleading." The FCC brushed the complaint aside, since it wasn't even about the station in question, and no material facts concerning the operation of WRAZ were submitted.

RBR observation: To call this a frivolous complaint is an understatement. The wonder is that it took so long for the item to worm its way through the cogs and sprockets at the FCC. Sommers set this affair in motion way back on 11/1/04. With no evidence, and the wrong alleged perpetrator even if there was evidence, you'd think this could have been wrapped on 11/2/04.

Internet Media Business Report TM
Internet gridlock imminent without new investments
According to a new report by the New Millennium Research Council, with YouTube and dozens of imitators generating over 100 million user-generated videos a day, today's Internet traffic is piling up rapidly in a non-stop "digital rush hour" jam that could wind up in gridlock. To keep pace with current and future bandwidth demands, major investments in new capacity and intelligent network technologies will be needed.
| Read More... |

Watchdog names its
best and worst advertisers

Parents Television Council awards green lights to television shows it likes, and red lights to those it doesn't. Parents are urged to direct their children to the green side of the equation. The indecency watchdog watches more than the programs, though. It also keeps tabs on who advertises where, and it has put out its latest list of the greenest and reddest advertisers. "Television sponsors contribute to the television culture, either in a positive or negative way, by what programs they choose to support with their advertising dollars," said PTC's Tim Winter. "We applaud those on our best list because they are contributing to the well-being of millions of families by choosing to be responsible sponsors." He contrasted the positive advertisers with those supporting other shows which he said contain a litany of offensive material, including show that "...depict sadistic torture and drug use, discuss themes of bestiality, oral sex, and other sexually graphic dialogue, describe horrific crimes against children, and use foul language." Procter & Gamble and Disney led the green list; Toyota and General Motors were tops on the red.
| PTC top ten lists here |

TVBR observation: We are dead against censorship, and have used this space to document the incredible difficulty administering a regulatory regime that must dwell in very gray areas in First Amendment territory. However, we have no objection at all when a watchdog uses its platform to shine its spotlight on what it considers to be good and bad behavior. This is a completely appropriate use of the First Amendment by PTC.

1.2M KFPB-FM Flagstaff-Prescott AZ (Chino Valley AZ) from Prescott Radio Partners (James L. Primm) to Prescott Valley Broadcasting Company Inc. (Sanford Cohen, Terry Cohen). 120K escrow, balance in cash at closing. Duopoly with KQNA-AM/KPPV-FM Prescott Valley AZ. [File date 7/16/07.]

690K KNCY-AM Nebraska City NE/KNCY-FM Auburn NE from Arbor Day Broadcasting (Dean Sorenson, Richard Chapin) to Riverfront Broadcasting LLC (Carolyn Becker, Doyle Becker). Cash. [File date 7/17/07.]

Stock Talk
A down day all around
Volatility has been the rule lately on Wall Street. Stocks headed back down yesterday after a French bank froze three funds that had invested in sub-prime US housing loans - adding to the credit market concerns that were already depressing stock prices. The Dow Industrials plunged 387 points, or 2.8%, to close at 13,271.

Radio stocks were down again. If you're keeping track, that's 14 straight down sessions. The Radio Index fell 2.193, or 1.8%, to 122.434 - again its lowest level since December 27, 2000. Westwood One plunged 13.9% after reporting Q2 results that came up short of expectations. Radio One was beaten up again. Its Class A fell 9.1% and Class D 7%.

Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change




















Journal Comm.







Lincoln Natl.




Citadel CDL
4.53 -0.10

Radio One, Cl. A




Clear Channel




Radio One, Cl. D




Cox Radio












Saga Commun.




Debut Bcg.




Salem Comm.








Sirius Sat. Radio








Spanish Bcg.
















Westwood One








XM Sat. Radio





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Below the Fold
Ad Business Report
Ed Christian on
National and local business local radio has to re-invent...

Media Markets & Money
Long haul truckers
Wanted for this move-in at Mountain Grove, MO...

Washington Media Business Report
FCC gives Sommers
A wintry response like Nothing doing, said the FCC to the Informal Objection...

Internet Media Business Report
Internet gridlock
Imminent without new investments...

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More News Headlines

Lawsuit against Univision
As Univision's new owners work to sell of its record division, one Latino label has sued it for 10 million bucks. According to the Los Angeles Times, Platino Records charges that Univision Music stopped promotion of Platino's releases, which Univision Music distributed, causing sales to plunge. Platino's owner had testified in another lawsuit brought by a former Univision Music executive who claims he was fired after he refused to offer radio station programmers in LA payola to play his company's records.

RBR Radar 2007
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Clear Channel sale to Devine craters; 11 markets back in play
Chris Devine's Blue Point Media, one of the first big buyers announced in the Clear Channel Radio divestitures of small and medium market clusters, will not be a buyer after all. An internal memo to managers of the 11 clusters says Clear Channel intends to move promptly to identify a new buyer, and, as such, the managers can expect to get requests for updated market data. Here are the Clear Channel clusters formerly going to Blue Point.

RBR observation: There had been rumors for some time that this deal was in trouble. Devine and partner Bruce Buzil (who was not a part of Blue Point) had put some of their other radio companies - Millcreek Broadcasting, 3 Point Media - Delta, 3 Point Media - Franklin and 3 Point Media - Utah - into Chapter 11 bankruptcy reorganization a few months ago. That didn't inspire confidence and Devine apparently lost his original financing for the Clear Channel deal. There were attempts to find a new lender, but, alas, now the deal is dead. To see the stations and markets involved in this DOA deal view RBR
08/09/07 RBR #155

21 broadcast groups, rep firms
"Buy In" to TVB's ePort
The TVB announced 21 television broadcast groups and two Rep firms have committed to date to TVB ePort, an eBusiness platform that will enable a new wave of open-standard electronic transactions between advertisers, agencies, broadcasters and station reps. Chicago-based Spot Buy Spot will build the platform and that the first phase would launch in November, enabling Spot TV buyers to send Q1 2008 orders electronically. The entire suite of open standard transactions--from avail through invoice for stations' airtime, websites, digital subchannels and other multiplatform offerings--is expected to be available through TVB ePort by March 2008.

TVBR observation: Now this is the way a medium and their trade representative should work and grow together. Called Commitment and putting their money where their ideas and beliefs are. This is good for local TV.
08/09/07 TVBR #155

Will the good old days ever return?
Regent CEO Bill Stakelin's long career in radio in both large and small markets, plus a stint heading the RAB, CL King analyst Jim Boyle asked whether, after more than six years of slow-to-no-growth, is this still a cyclical downdraft or a long-term change? Stakelin said the impact of new media has changed the equation, but that online is a big opportunity for radio. "There's gold in them thar hills and we think we're good enough to mine it on behalf of our shareholders." Boyle asked Stakelin to predict the future, "When the larger markets and all of us regain our focus on the fact that this is a local-based, local-driven advertising medium and we get back to the basics of selling our local markets and serving the advertisers and their needs in those markets - be it in Buffalo or Watertown, New York - then I think we will have more control over our own destiny and how we can drive revenues and increase profits."

RBR observation: Lets also add leadership when radio owners stop being portfolio managers and become operators. When they loosen the money strings to research, marketing, programming then radio will see the growth. When we have the creativity locally we will have the growth.
08/08/07 RBR #154

Is credit tightening threatening radio dealmaking?
Despite the recent roiling of the credit markets, the Wall Street consensus is that Chairman Ben Bernanke and his fellow Fed members won't change rates today. And, unless there are more drastic changes in the economy, they are viewed as likely to stay the course for many, many months to come. Deals of that sort require major financing commitments and the lenders who do those big deals (and who typically work with the very large private equity funds) are the ones now moving first to tighten terms or pull back on lending commitments.

RBR observation: Clear Channel must be nervous about getting to the closing table on the biggest deals from its radio divestitures, since only a few of the smaller deals have actually closed thus far. American Security Capital Partners not only switched radio operators, but also bankers for the 452 million bucks purchase of 187 stations by what's now called Frequency License LLC. When last we heard, the new financing was still being put together for what is far and away the biggest buy from the Clear Channel portfolio thinning. Not today, maybe not next month, but if credit gets tighter and threatens to slow down the economy, Bernanke and the Fed will need to lower rates and keep economic growth from flat-lining. If he stays too focused on inflation, to the exclusion of all other economic factors, he runs the very real risk of repeating the foolish policies of his predecessor who ran the US into an unnecessary recession back at the start of this decade. (Complete details in RBR)
08/07/07 RBR #153


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