Radio News ®

Westerfield slashes 2005
ad spending outlook
Saying that the US advertising market is "backsliding" into 2005, Harris Nesbitt analyst Lee Westerfield has slashed his forecast of US ad spending growth in 2005 to 3.7% in 2005. That's slower than the 4.9% overall growth he still expects to see in 2004 - - and well below the 7.2% he'd previously forecast. "Two steps forward, one step back. So it seems it goes in the halting recovery of US advertising," Westerfield said yesterday in a research note to clients. "Constraining adspend recovery next year, we see a combination of faltering consumer spending and hesitant business investment undercutting the macroeconomy, while at the same time reduced Auto output, peaking Financial services branding, and Airline insolvencies undermine marketing categories that had supported our prior 2005 views." For radio, Westerfield says the national spot data he's been tracing indicates that national spot for radio will be down 5-7% in Q3 and 7-9% in Q4. "For each quarterly period, the data show additional weakening since Labor Day," he noted. "Driving the trend are foreign automakers, retailers, and telecom marketers withdrawing from the radio market," Westerfield stated. He's now estimating that radio over all will be up 2.4% in 2004 and 2.8% in 2005. In television, excluding political ad spending, Westerfield says spot TV is pacing down 5% for Q4. "Only one month ago, spot TV ex-political seemed to be growing an estimated 5-7%. Even today, spot TV looks superficially solid, up 20% with the robust political figures included. But after November 2, the focus will be solely on ex-political spot ad growth," the analyst noted. Thus, for 2005 he's expecting spot TV to be down 4.9% against actual 2004 numbers (or up 1% excluding political) after being up 10.9% this year.

Publisher observation: Don't know how many times I have to say this but Local and get involved with your communities. GM's have the worst job in this business. No, now let's make that the analysts because the GM's have cut everything to the bone and can't get any more blood from any stone. So now the winds of Naples, Florida now seeing four straight hurricanes in a row and hurricane season doesn't end until November 30th. The giant owners, now is the time to focus if you plan to divest and find the willing local entrepreneur to purchase what you offer. My follow up called Naples, FL Pt 2 - here is my point number 9 "Stop sucking up to Wall St. They are moving on anyway. Take your big time cash flow and go private. Radio is no longer capable of the growth they want anyway. We were better without them. A few are rich, most are not."

Billin' coup? Will CBS hand it to Janet?
According to the New York Post, Viacom/CBS is thinking about sending a bill to Janet Jackson for 550K dollars, just enough to cover the fine the FCC is charging the company for Jackson's Super Bowl wardrobe malfunction. The article says that nobody at Viacom believes the incident was an accident as claimed by Jackson and accomplice (witting or unwitting) Justin Timberlake. The Post says that the odds are Viacom will not pursue the plan, just "mulling it over."

RBR observation: The likelihood of Jackson writing a 550K check is slim - - not without a long, drawn-out civil suit with murky prospects of success for Viacom. The FCC, of course, will certainly expect Viacom to pay the fine, and it won't wait around for Viacom to try and collect it from a third party, no matter what that third party's roll in the incident. We note in passing, however, that increasing the FCC's ability to go after indecent on-air talent was a factor in some of the proposed new indecency legislation. As Congress lurches toward enacting a major indecency fine increase, watch out for talent fines, three-strike rules and other fun items for your attorneys and bleep-button engineers to ponder.

Campaign ad watch
Things continue to swing in the swing states. Here are today's crop of reports on ad spending as campaign 2004 steams toward the finish line. The New York Times reports that a Republican 527 group called the Progress for America Voter Fund, formed to counter Democratic groups, it getting ready to drop some 12M dollars in nine states, starting with Iowa and Wisconsin. The group is said to have attracted a total of 50M in donations and pledges, 20M of which has already been spent. Media Fund, a leading Democratic 527, has spent 45M so far, according to NYT, and is running ads with the dual purpose of attacking George W. Bush and bringing in more cash for the final month of the campaign. Things are heating up in the Florida race for the seat of exiting Sen. Bob Graham. Each campaign, according to the St. Petersburg Times, has 2M to spend right away, and reportedly the Republicans have another 3.5M in reserve for the final two weeks. The race pits Democrat Betty Castor against Republican Mel Martinez. Former Republican presidential candidate and current watchdog Gary Bauer wants to preserve the institution of marriage by attacking John Kerry, and he is spending 500K in Michigan and Pennsylvania to do it. NARAL Pro-Choice America is running a campaign to promote abortion rights, and why this will be easier to do with Bush out of office, in five states: Oregon, Washington, Pennsylvania, New Hampshire and Wisconsin.

RBR observation: Nobody's spending any money in Texas or Massachusetts. Hmmmmm. Let's see where the fast buys hit by next Thursday after the first debate.

BU plans for RI station sale assailed
The announced plan of Boston University to sell a pair of Rhode Island AM stations, upon which it had been running NPR programming as a complement to its own Boston FM WBUR, has gotten a lot of attention in Rhode Island. The state Attorney General Patrick C. Lynch has requested numerous documents related to the running of WRNI-AM Providence and WXNI-AM Westerly, according to the Boston Globe. A spokesperson for BU said it would do its best to comply with the request. RI governor Donald L. Carcieri is also said to be closely watching the situation. BU has listed the stations with the Media Services Group brokerage firm (9/22/04 RBR Daily Epaper #185), which is shopping them around. BU says it would prefer to sell to another noncom which would maintain the stations' NPR affiliation. However, people in Rhode Island, particularly those who have raised money for the stations, are furious. At least one group pegs the level of support at 3.5M. The Providence Journal says they carry a 9M deficit, but are also said to be currently operating at the break-even point.

St. Louis stations settle
gambling ad charges
In the first case of its kind, the owners of three St. Louis radio stations - - KFNA-AM & FM and KRFT-AM - - agreed to pay 158,000 dollars to settle federal charges that they aided illegal gambling by accepting ads from offshore Internet-based gambling operations. "Offshore sports books and on-line casino gambling operations which do business in the United States generally do so in violation of federal criminal laws," stated Jim Martin, the local US attorney. "We will continue to investigate and pursue such activity, as well as the promoters, aiders and abettors of such criminal enterprises." Announcement of the settlement came as Missouri Sports Radio sold two of its three stations to Big League Broadcasting (9/27/04 RBR Daily Epaper #188). As a result of the settlement, Missouri Sports Radio will not face any criminal prosecution.

RBR observation: But is there any crime here? Maybe. Maybe not. The US Attorney in St. Louis has been leading a nationwide probe into advertising by offshore casinos - - threatening broadcasters and Internet site operators with federal criminal prosecution if they don't stop carrying the ads. That tactic has been quite successful, with companies such as Clear Channel and Infinity dropping all such ads and cooperating with the investigation. But there's considerable doubt whether Martin's theory that carrying ads constitutes participation in illegal gambling will hold up in court. To date, no one has actually been prosecuted. At least one Internet site operator has sued the feds in federal court, seeking a declaration that he (and others) aren't doing anything illegal by accepting the ads. That case is pending.

Emmis canary chirps this morning
All ears will be on Jeff Smulyan this morning for the first look at how the radio and television station business is doing. With its fiscal calendar putting its quarterly reports about a month ahead of everyone else, Emmis is the canary in the coal mine for investors and analysts trying to find out how the broadcasting business is faring. The Thompson First Call analysts' consensus is that Emmis will report 7% revenue growth to 167 million dollars and 21 cents in earnings per share - - up from 14 a year ago. More importantly, folks will be listening to Smulyan during this morning's conference call for word on current pacings.

Adbiz ©

Campbell's integrates
in NBC's "American Dreams"
NBC, Campbell's Soup and Scholastic Magazine asked younger viewers to get creative 9/26 by entering an essay contest to promote NBC's 1960s drama "American Dreams." Campbell's is promoting the show and the contest (which offers a grand prize of a 100,000 college scholarship and walk-on roles for the winner and a friend) on 42 million tomato soup cans, and in print, radio and TV advertising. In return, Campbell's is being integrated into numerous episodes of the series. The first, on 9/26 showed the 60's Campbell's commercial in the program's content. Scholastic is developing an in-school curriculum focused on the essay topic of "How does your American dream compare to that of your parents" that will reach more than 11 million students in 60,000 high school classrooms. The essay contest runs through 11/30.

RBR observation: For those who viewed the season premiere of American Dreams saw a perfect blend of product content into programming and that is where we will see more ad dollars heading. The ad, well, it was the 1960's Campbell's tomato soup Mmm Mmm Good. Now, if a local radio station, say oldies personality, and the local NBC-TV can just get together when many local NBC affiliates run their live in-house show, you have a winner. We figure it is going to take a TV guy with Radio experience to get it done. Better start working on it like now because again Local content is King.

Mitsubishi's move to pull network
TV advertising a hot item
One of the biggest buzzmakers at the New York Advertising Week last week was Mitsubishi Motors' announcement recently at the iMedia Brand Summit in Utah that it has abandoned 120 million (75% of total spend) in broadcast TV spend. Mitsubishi had decided that the lackluster fall schedule wasn't worth the price and has shifted its money to Internet, cable and magazines. Just one more blow to the network TV upfront as more and more advertisers find it to be often overpriced and over-promised (in ratings). Mitsubishi's "See What Happens" online campaigns, which have used cliffhanger broadcast and cable TV ads to drive viewers to a website where they can watch the rest of the story, have drawn a strong audience response. Deutsch and iDeutsch are Mitsubishi's creative agencies.

Ad industry launches recruitment crusade
Also from Advertising Week, USA Today reports Madison Avenue was advertising itself last week to rejuvenate its lackluster image with consumers, clients and the next generation of young people who might choose it as a career. "We wanted to raise the spirits of the industry after three very tough years," says Burtch Drake AAAA CEO, which sponsored the program. "We went through a tremendous downsizing and lost 25% of [the industry's] jobs. When that happens, it's not good for morale."

Other newsworthy issues addressed:
Message overload. Advertising executives attended meetings to find ways to make marketing more effective. "We live in an attention economy," says Andrew Robertson, president at BBDO Worldwide. "There is nothing more scarce than consumer attention, and it's only going to get worse."
Next generation. There was a pitch to recruit young people entering the workforce. "We have to make sure we bring as many smart, young talented people as possible into the business," says Lee Garfinkel, chairman and chief creative officer at DDB.
Diversity. For today's multicultural market, diversity is still in short supply among those who create marketing messages. The percentage of minorities working for the AAAA's 100 biggest members rose to 18.7% in 2002 from 13.4% in 1994 but fell to 17.2% in 2003 amid widespread layoffs. AAAA announced "Operation Success," a program to boost diversity through recruiting, training and vendor relationships.

American Express Financial Advisors
launches TV, print effort
American Express Financial Advisors has launched a new campaign focused on the power of personalized financial advice in times of market uncertainty. The campaign focuses on the current mindset of mass affluent investors who are worried and concerned about their financial future. "Investors need and want personal financial planning, knowledgeable advice and a trusted brand - this is what AEFA has always offered," said Jim Cracchiolo, chairman and chief executive officer of AEFA. "It is this expertise and guidance that allows our clients to sleep at night." With the help of Ogilvy & Mather NY, AEFA decided upon this approach after conducting in depth research, including surveys and focus groups of mass affluent investors, current clients and American Express financial advisors. The campaign is one element of a broad-scale marketing focus to reach mass affluent consumers. The campaign begins with broadcast ads appearing in news, sports and entertainment programs on network and cable including "The Today Show," "Monday Night Football," "CSI," "The Apprentice," and "Extreme Makeover: Home Edition" among others. In October, print ads will appear in a combination of weekly and monthly lifestyle, news, business and personal finance publications: USA Today, Wall Street Journal, New York Times, Time, Newsweek, US News and World Report, Money, Kiplinger's Personal Finance, Smart Money, Travel & Leisure, The Advocate, Golf Magazine, Sports Illustrated Select, Food & Wine, Oprah, Real Simple, Business Week, Fortune, Forbes and Black Enterprise.

Media, Markets & Money tm

Washington Beat

Ratings & Research

Transactions

WILM-AM Wilmington DE from Delaware Broadcasting Company to Clear Channel Communications Inc.

WEYZ-AM Erie PA (North East PA) from Corry Communications Nc. to Mercyhurst College.

KVOV-FM Glendale Springs CO from Public Broadcasting of Colorado Inc. to Carbondale Community Access Radio Inc.

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