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Volume 22, Issue 160, Jim Carnegie, Editor & Publisher

Tuesday Morning August 16th, 2005

Radio News®

Spot loads down, rates up
Harris Nesbitt analyst Lee Westerfield confirms that radio inventory was cut in July - - by an average of 7.5% in the top 10 markets, with Clear Channel cutting far more - - a whopping 26.5% from a year ago. And he notes that "yield per minute" is increasing, as reported by CCU and some other groups in their quarterly conference calls. Even so, says Westerfield, "We caution investors that radio may at best be able to achieve our +1.6% growth forecast for the year." Although the EBITDA multiples for public radio stocks have contracted 22% this year, by his calculation, he merely sees a leveling off now - - not a buying opportunity. Based on data from Media Monitors, the Harris Nesbitt analyst also found evidence that the use of :30s - - a key element of CCU's Less is More initiative - - is taking hold. Compared to July of 2004, the use of :30s increased 49.6% for the top 10 markets. A lot of that was due to CCU's push, with the amount of airtime devoted to :30s up 169.7% on its stations. But most other major groups showed double digit percentage gains in the use of :30s. Exceptions were Infinity, up only 4.2%, and Salem, down 42.4%.

RBR observation: But back to the yield-per-minute news, which is where the long-term good news lies. Westerfield calculates that revenue per minute increased 7-8% in July for the top 10 markets. That's what will make LIM worthwhile for Clear Channel and for other groups who are also cutting inventory to push up prices. It will, however, take time.

How does a 2% year sound?
After hearing Q2 results for radio companies, Goldman Sachs analyst Mark Wienkes is sticking with his estimate that radio revenues will grow only 2% for all of 2005. But since the first half of the year was only up 1%, according to the RAB, he warns that 2% "might even be aggressive." While some radio companies reported growth in the low to mid single digits for Q2, Wienkes says the quarter was flat industry wide because those gains were counterbalanced by the decline at Clear Channel from its Less is More initiative. And while he notes rumors that some public companies may try to go private by finding backers for leveraged buyouts, Wienkes doesn't see anything compelling about radio stock prices. Rather, he says, valuations have just come down to reflect slower growth.

Reynolds rethinks his exit strategy

Les Moonves can apparently be quite persuasive. After announcing his intention a month ago to become a venture capitalist (7/20/05 TVBR #141), Fred Reynolds has agreed to stay put and become CFO of CBS Inc. when Viacom is split in two. "We're pleased to have Fred's significant talent and energy here at CBS where he belongs, working closely with me in all aspects of our operations," said Moonves, who will be CEO of CBS post-split. Moonves still has a job to fill - - Reynolds' previous post as head of the Viacom O&O TV group.

Veronis, Suhler sees tepid growth for broadcast
In its annual Communications Industry Forecast, the merchant banking company Veronis, Suhler, Stevenson (VSS) projects a shift from advertiser-supported media to media where consumers make their own selections - - with more marketing dollars following them to those new media entities. As such, VSS is projecting unimpressive growth for broadcasting over the next few years. "We believe the broadcast radio sector is transitioning from a growth business to a mature one," the report says. With radio revenues expected to rise only 2.7% this year (which is higher than many Wall Street estimates), VSS is projecting that radio revenues will rise at a compound annual rate of 4% through 2009. The forecast isn't much better for TV. VSS sees the spikes in even years (election/Olympics) becoming less pronounced than in the past five years due to such challenges as DVRs and increased competition from cable and the Internet. The firm's forecast is that broadcast TV (network/local/syndication) will grow only 2% this year and average 4.3% compound annual growth through 2009.

Gripes of wrath, Q1 2005: Indecency down
The FCC received well over 300K indecency complaints in the final quarter of 2004 - - there were 317.8K to be more precise. Less than half that amount came in during the opening three months of 2005, down to 157.7K. The FCC said there were less organized campaigns directed at specific radio and television programming. The vast majority of the complaints - - 138.7K - - came in January. Although the FCC didn't say what program received most of them, the biggest issue at the time was an F-bomb delivered by a member of rock band Motley Crue on an NBC New Years Eve program. Complaints about accessibility amounted to 16. 555 items offered general criticism about broadcast programming, and 63 messages were put into the "other programming issues" category.

RBR observation: There has been an almost eerie silence on the indecency front all year, until the Robert Novak outburst a few weeks ago. And that came in the safer harbor of cable, beyond the jurisdiction of the FCC indecency cops. But there's bound to be another incident, and it happens the current lull will make it seem all the more thunderous.

Icahn makes it official
Carl Icahn confirms that he wants to force a break up of Time Warner (8/11/05 RBR #157) and is trying to get other investors to back the move. And he'll need quite a bit of help. Icahn and his backers have accumulated more than 120 million T-W shares, but that's still only about 2.6% of the outstanding shares. Although he said T-W management has been doing a "commendable" of enhancing shareholder value, "it has not moved quickly enough and has not proposed measures which would enhance values to the degree necessary to realize the inherent value" of the company. Rather than just spinning out a portion of Time Warner Cable in an IPO, Icahn wants a complete divestiture. Then he wants a huge stock buyback program - - 20 billion bucks worth, while the company recently announced a buyback of three billion. He'll be meeting later this week with T-W CEO Dick Parsons to press his point.

Conference Calls Q1 2005

Radio up, TV down at Liberman
With its IPO still on hold, Liberman Broadcasting reported an up Q2 via LBI Holdings, which already has public bonds. Net revenues were up 6.6% to 26.4 million for the quarter. Radio revenues shot up 20.5% to 14.2 million for the Spanish media specialist, with the gain primarily attributed to national spot business. But national was the soft spot for TV, particularly in California, at TV revenues declined 6% to 12.2 million. Liberman noted tough comps - - with TV revenues up 30.6% in Q2 of 2004. "We currently anticipate net revenue growth for 2005 from both our radio and television segments due to increased advertising time sold and increased advertising rates. Our programming, focused sales strategy and the expected continued demand for Spanish-language advertising should continue to increase our advertising time sold and advertising rates in 2005 for both segments," the company said. Adjusted EBITDA rose 1.3% in Q2 to 13.5 million, with radio EBITDA up 32.6% to 8.7 million and TV EBITDA down 29% to 4.8 million.

Adbiz©

Nike effort celebrates the body real
Taking a page from Dove's "Real Women, Real Curves" campaign, Nike has introduced a print effort that features women's "big butts, thunder thighs and tomboy knees." The ads, via Nike's longtime AOR Wieden + Kennedy Portland, features six different parts of the body, including a posterior in an ad that shows a well-rounded butt and copy, "My Butt is big and round like the letter C, and 10,000 lunges have made it rounder but not smaller. And that's just fine. It's a space heater for my side of the bed. It's my ambassador. To those who walk behind me, it's a border collie that herds skinny women away from the best deals at clothing sales. My butt is big and that's just fine. And those who might scorn it are invited to kiss it. Just do it." Other ads refer to "thunder thighs," legs that "were once two hairy sticks" and shoulders that "aren't dainty."

Hoover names TWBA AOR
Maytag's Hoover vacuum unit has named TBWA/Chiat/Day Playa del Rey, CA as its creative agency of record, following a review. Element 79 Chicago, was the incumbent. Universal McCann will continue to handle media. Hoover last year spent 56 million in measured U.S. media, according to TNS Media Intelligence. The target: Dyson vacuum, which now has 20.3% share of the category for 12 months ended in May, according to NPD Group. TBWA's first work will reportedly be for the launch of a new product later this year.

Sears to consolidate with Y&R; dump Ogilvy
Sears announced yesterday it would consolidate all advertising and its brands under one agency--Young & Rubicam--on 10/1. The announcement follows presentations where Sears asked its two principal agencies, Y&R and Ogilvy & Mather Worldwide for proposals to "integrate the account and reinvent the collaborative process to enhance value and improve speed to market." "The single-mindedness with which we are pursuing our goal of restoring Sears to preeminence requires a similar focus in our agency partnerships," said Luis Padilla, president of merchandising and marketing for Sears Retail. "Both firms presented persuasive proposals, but we are in constant pursuit of new approaches to better connect with and profitably serve customers as one company with extensive capabilities." Under athe new agreement between Sears and Y&R, the agency will have advertising responsibility for the Kenmore, Craftsman and DieHard brands, as well as non-product Sears, Roebuck and Co. advertising. This includes broadcast creative and production, motor sports, multicultural marketing and customer relationship management. The agreement doesn't change planning or buying, currently with MindShare.

Media Business Report

Is Rupert about to Blinkx?
In his quarterly conference call, Rupert Murdoch told analysts that News Corporation was working on an acquisition in the Internet search arena. In his view, it was a very important acquisition, although he said he doubted that Wall Street would think it very significant. Now the Los Angeles Times has identified the likely target - - Blinkx, a privately held Internet search engine (blinkx.com). What apparently makes the company so attractive to Murdoch is that its voice recognition software searches podcasts, Internet videos and, yes, even TV, not just text.

RBR observation: The connection is obvious. With Blinkx, News Corp. would be able to provide viewers with a way to search for programs of interest on its broadcast and cable networks - - and likely license it to other broadcasters (both radio and TV) as well.

Media Markets & MoneyTM

Rent to buy deal for Tallahassee daytimer
Religious WCVC-AM Tallahassee is changing hands-on hands for now, and may change hands for good if Kepha Broadcasting decides to act on a purchase option that goes with an LMA agreement. Seller WCVC Radio stands to collect 350K in that event. According to broker Ron Kempff of Kempff Communications, Kepha will keep the 1330 kHz facility's format Religious, with emphasis on Catholic programming.

Cash and Cary?
Radio station WEEO-AM Shippensburg PA is going from the Allegheny Mountain Network to Eric J. Swidler, according to broker Roy Rosenblum, who handled the deal. The price is 65K. After parting with the Easy Listening outlet, Allegheny will still have Modern Rocker WEEO-FM in the Hagerstown MD-Chambersburg-Waynesboro PA Arbitron market, and ten other stations in various central Pennsylvania locations. Shippensburg is located on the northern fringe of the far-flung market, and the AM version of WEEO is not listed by BIA as being a participant.

RBR observation: Longtime Allegheny Mountain Network owner and operator Cary Simpson is at least indirectly responsible for the very existence of RBR. He hired a young, freshly minted civilian to handle a radio shift at WKBI-AM St. Marys, PA, launching a career that after many twists and turns resulted in the founding of Radio Business Report by Jim Carnegie. Had it not been for Mr. Simpson, Mr. Carnegie may have headed off in a completely different direction, perhaps, as many of you who know him may now be speculating, a position somewhere in the cream soda business.

Close encounters in the Texas capital
Patrick McNamara of American Media Services tells us that the 18.6M deal sending KKLB-FM, KFON-AM, KELG-AM and KTXZ-AM in the Austin TX market from Dynamic Radio Broadcasting to Tom Castro's Border Media Partners has made it to the finish line.

Washington Beat

More Auction No. 37 CPs cleared

Another cluster of successful bidders in last fall's FM Auction No. 37 have been cleared for takeoff, pending payment of the remainder of their bid. The deadline for payment is 8/29/05, and the drop-dead deadline after the grace period elapses is 9/13/05. James Falcon is the applicant for four of them, one in Eldorado OK, one in Knox City TX and two in Seymour TX. College Creek Broadcasting is picking up three Nebraska sticks, in Allen, Minatare and Mitchell. The others have one each, Ad Astra Per Aspera Broadcasting in Hutchinson KS, JER Licenses in Lovelock NV, Vermont Broadcast Associates in Barton VT and Tin Can Communications in Winthrop WA.

Programming

CC Online reaches over 850,000 listeners per week
Arbitron and comScore Media Metrix's online radio ratings for June indicate Clear Channel Online Music and Radio, a network of almost 400 of the company's online radio stations, debuted in the comScore Arbitron Online Radio Ratings with an estimated 860,900 listeners during an average week in June. The number of people tuning in to the Clear Channel network online during an average midday quarter hour Monday-Friday 10AM - 3PM for Persons 12+ was 147,500. The June report of the comScore Arbitron Online Radio Ratings service rated AOL's AOL Radio Network; Yahoo! Music; Microsoft's MSN Radio and WindowsMedia.com; Clear Channel Online Music and Radio, and Live365 during an average broadcast week in the month of June. All of the networks, with the exception of Clear Channel, are represented by Ronning Lipset Radio.
| See the list: |

Transactions

4.875M KFNX-AM Phoenix (Cave Creek AZ) from North American Broadcasting Co. D.I.P. (Francis Battaglia) to Premier Radio Stations (Lyle P. Campbell, Battaglia Broadcasting Company). Contract price listed as part of reorganization plan. [File date 7/12/05.]

1 WFSO-FM Olivebridge NY from Christian Media Associates Inc. (Kennety L. Plog) to Redeemer Broadcasting Inc. (Danny C. Elmendorf, Deborah J. Elmendorf, John L. Vance). Cash. Transfer from one noncommercial entity to another. [File date 7/11/05.]

Stock Talk

Oil prices down, stocks up
The pattern repeats itself. Whichever way oil prices go, stocks go the other way. On Monday, oil prices were a bit lower, so stocks went up. The Dow Industrials gained 34 points, or 0.3%, to finish at 10,634.

Radio stocks moved with the market. The Radio Index gained 1.579, or 0.8%, to 209.118. SBS led the way with a 2.3% gain. Radio One's Class D stock was also up 2.3%, but its Class A gained only 2%.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		42.50	+0.62	Jeff-Pilot	JP		50.78	+0.51
Beasley	BBGI		13.78	-0.25	Journal Comm.	JRN		15.96	+0.15
Citadel	CDL		13.75	+0.20	Radio One, Cl. A	ROIA		13.90	+0.27
Clear Channel	CCU		33.95	unch	Radio One, Cl. D	ROIAK		13.91	+0.31
Cox Radio	CXR		15.80	+0.06	Regent	RGCI		5.65	+0.08
Cumulus	CMLS		12.93	-0.02	Saga Commun.	SGA		14.10	+0.01
Disney	DIS		26.17	+0.41	Salem Comm.	SALM		19.08	+0.28
Emmis	EMMS		21.63	+0.26	Sirius Sat. Radio	SIRI		6.69	-0.04
Entercom	ETM		34.28	+0.18	Spanish Bcg.	SBSA		7.97	+0.18
Entravision	EVC		8.16	-0.08	Univision	UVN		27.19	+0.16
Fisher	FSCI		45.56	-0.14	Viacom, Cl. A	VIA		35.47	-0.19
Gaylord	GET		44.66	+0.26	Viacom, Cl. B	VIAb		35.39	-0.20
Hearst-Argyle	HTV		26.20	+0.16	Westwood One	WON		20.93	+0.40
Interep	IREP		0.73	unch	XM Sat. Radio	XMSR		33.47	-0.17
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]

Mel Rainer, amen to what you said! (8/12/05 RBR #158) But really...when was the last time a major radio CEO did anything but kiss up to Wall Street? You may be waiting a long, long time for that toast! If this industry wants to do the right thing, it will buy back its stock and declare "death to shareholder value!" On one of my clients' stations, we regularly run IDs that say, "While the other stations in town are worried about shareholder value, we're just worried about the values at the supermarket." They do very well positioning themselves as the only locally-owned and run station in the market, and they are beating the corporate guys' competition soundly.

Cary Pall
Columbus, Ohio

Radio Media Moves

Hawkins watches
the coast
Rich Hawkins has been promoted to Regional Vice President of the Central Coast trading area for Clear Channel Radio, comprised of the San Luis Obispo, Santa Barbara, Santa Maria, Lancaster/Palmdale and Victorville, CA markets. Hawkins had been Market Manager for San Luis Obispo and Santa Maria.

Fox News Radio ups Davis to Director of News Programming
Fox News Radio has promoted Mitch Davis to Director of News Programming and has named Mike Elder Director of Talk Programming. Retaining his title of Managing Editor, Davis will oversee all news programming for the network.

Fitzgerald lands at Lite
Former WCBS-FM Oldies personality Mike Fitzgerald is going back on the air in NYC, joining Clear Channel's WLTW-FM "Lite FM" as a part-timer and fill-in personality.

More News Headlines

ABC News Radio expands
sports coverage

Duke and The Doctor add six

XM adds Reggaeton

International

CBC locks out
5,500 workers
The Canadian Broadcasting Corporation (CBC) locked out 5,500 workers after last-ditch contract talks failed to make significant progress, the Canadian Media Guild union said. The Guild, which represents television and radio hosts, producers and technicians, said the work stoppage is the biggest ever at the publicly-funded broadcaster. The dispute centers on the use of contract workers at the broadcaster. The CBC will continue its programming but on a scaled back basis. Its Newsworld channel switched to the BBC World Service and morning radio news programs were very brief. Viewers and listeners across Canada tuned in to unfamiliar faces and voices on the airwaves yesterday morning. Richard Stursberg, CBC EVP/Television, told the AP the network will rely on the 10% of its work force that is not unionized to maintain programming. Among those locked out is anchor Peter Mansbridge, who hosts the net's flagship television newscast The National. The workers have been without a contract for more than a year, and the main issue is outsourcing. The CBC says it needs more flexibility to hire new staff on a contract basis instead of full-time. The guild says 30% of the CBC's work force is already non-permanent, giving the network all the flexibility it needs.

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RBR Radar 2005

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

Gary Fries bids adieu as
RAB must prepare for new era
RAB Executive Committee has been notified, Gary Fries told the committee that he would not seek a renewal when his contract as President and CEO expires the end of 2006. RBR observation: For those who do not remember the line of succession it has been Miles David, Bill Stakelin, Warren Potash and Gary Fries with his 15 years is quite a run. We recall that Gary was recruited by fellow radio executives and RAB board members to rejuvenate a somewhat moribund Radio Advertising Bureau and make in an active player in taking radio's message to advertisers and giving people at the station level the tools and knowledge they needed to win. In recent years, Gary has been pressing hard for the radio industry to move faster on electronic transactions and passive audience measurement, sometimes annoying group owners who wanted to hold onto the status quo for as long as possible. But it seems most group heads have become converts and! realize that more accountability and better ROI for advertisers means more money for radio. What's going to be difficult now is finding a new RAB chief who has the stature to push his members when they need a push - - and the guts to do so for the next 10 years. 08/12/05 RBR #158

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