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Welcome to RBR's Daily Epaper
Volume 22, Issue 197, Jim Carnegie, Editor & Publisher
Friday Morning October 7th, 2005

Radio News®

Citadel joins dividend payers, and how!
Its stock may be out of favor on Wall Street (along with other radio companies), but Citadel Broadcasting has come up with a way to reward its patient shareholders. Its board of directors has voted to start paying a quarterly cash dividend. The first payment of 18 cents per share - - a yield of more than 5% - - will be made January 18, 2006 to shareholders of record on November 30, 2005. The company's stock jumped over 2% on the news at the beginning of trading on Thursday and finished the session up 1.9%. "We're pleased that our board of directors has approved the payment of a regular dividend to stockholders. The regular quarterly dividend recognizes the Company's significant free cash flow and underscores the Company's commitment to enhance shareholder value. At the same time, we will continue to have the financial flexibility to invest in strategic opportunities," said Chairman and CEO Farid Suleman. Bear Stearns analyst Victor Miller notes that Citadel's 72-cents-per-year dividend amounts to a 5.3% yield on its Wednesday closing price of 13.58, before the dividend was announced prior to the market opening on Thursday. That's a hefty yield, so his note to investors asks, "Will value investors take note?" Miller had suggested in a September 30th note that Citadel might be considering a dividend because its stock buybacks had reached the point where they might begin to affect liquidity. Miller likes the idea of paying dividends to attract new investors. "We think an emerging theme in radioland could be 'turning high free cash flow yields into high dividend yields'," the analyst repeated from his previous note. Goldman Sachs analyst Mark Wienkes was also excited by the hefty dividend, which he said set a record for radio companies and was in line with those in the telco sector - - "though we'd argue that Citadel's and the radio industry's prospects are appreciably brighter than that of the wireline biz." He suggested that other mid-cap radio companies would follow Citadel's lead in paying dividends.

RBR observation: Despite recent slow revenue growth, properly run radio stations are still great cash flow generators. Thus, most radio companies have been able to use cash on hand to buy back their own shares and a growing number are paying dividends to their shareholders. We doubt that the decision to begin making a dividend payout would infringe on Citadel's ability to do either of the deals it's rumored to be in the running for: a purchase of Susquehanna Radio (which would require a major cash infusion by Forstmann Little & Co.) or a stock/swap acquisition of ABC Radio.


Adelstein takes anti-consolidation message to Iowa
FCC Commissioner Jonathan Adelstein participated in the "Town Meeting on the Future of Media" in Iowa City - - amid plenty of like-minded people who believe broadcast ownership consolidation has gone too far. Strong local content is seen to be at risk. Adelstein said it was important to get out on the road to hear what private citizens have to say, as opposed to staying in Washington where most of the opining is done by lobbyists. He hit all the usual notes - - distant owners lack the focus that local owners have when it comes to local issues and tastes, and that a diminishing number of owners constricts the variety of viewpoints available to the public. Adelstein praised the court remand of portions of the 6/2/03 ownership ruling and stressed that the next attempt at an ownership rulemaking should prevent further consolidation. "You can't put the toothpaste back in the tube," he said, according to the Des Moines Register. Locally-owned KZIA-FM Cedar Rapids had its GM, Eliot Keller, on hand, who noted that his was the last station standing not owned by Clear Channel or Cumulus in the Cedar Rapids-Iowa City market. "I hope the FCC doesn't allow local ownership to go the way of the dinosaur," he was quoted in the Iowa City Press-Citizen. Adelstein also wrote an editorial for the Iowa City Press-Citizen, published in the 10/4/05 edition.
| Read it here |

RBR observation: The Commish is on a stump but get real as we approach the ten year mark of the 1996 Telecommunications Act - many of these groups' eyes were bigger than their stomach and those who went public now wish under breath they never went down that road. The key we now watch after ten years is when these mega groups will be properly staffed, programmed and properly managed. Commish, RBR gut says you do not have to worry about next year as radio has too many real issues to over come like HD radio, PPM, EDI, etc. Relax have a cream soda.

New analyst at Lehman Brothers
The broadcast sector analyst position at Lehman Brothers won't be left vacant following the promotion of Bill Meyers to Associate Director of US Equity Research (10/5/05 RBR #195). "I am leaving you in good hands!" Meyers assured us. Stepping into the post is Anthony DiClemente, pictured. He'll be working with associate Layne Moffett. DiClemente has been with Lehman for five years and has been covering the Small-Cap Entertainment sector for the past four. Prior to his coverage of the Small-Cap Entertainment sector, DiClemente worked as a senior associate on both the Telecom and Media & Entertainment research teams. Before joining Lehman, he was a financial consultant for Stern Stewart & Co. He graduated from the University of Virginia's McIntire School of Commerce with a BS in Finance. DiClemente is a Chartered Financial Analyst.
| Here's a list of the companies he'll be covering |


Watchdogs want prosecutions in pay-for-say
Now that the Government Accountability Office has determined that government pay-for-say contracts and VNR releases are illegal, a pair of watchdogs - - Free Press and the Center for Media Democracy - - are calling for heads to roll. They want AG Alberto Gonzalez on the case. They promise to deliver "thousands of letters" to Gonzalez, as well as leadership at the congressional Judiciary and Appropriations committees in hopes of getting some action. "For US citizens to participate meaningfully in our democracy, they must know whether the news they receive is truly independent or the result of illegal, covert government propaganda," said CMD's Diane Farsetta (pictured). "What the GAO report documents is no less than an assault on the integrity of journalism and the democratic process." Free Press's Timothy Karr added, "It is now up to the public to pressure our government to enforce the law and stop propaganda crimes." Robert W. McChesney, president of Free Press, said, "The only way for justice to be served is for thousands to stand up and demand that charges stick against an administration that has set aside more than a quarter billion dollars to push propaganda on the public." The groups are calling for prosecution "...to the fullest extent of the law."

RBR observation: OK - - what is the fullest extent? And who, exactly, gets stuck? It's not Armstrong Williams' fault he was hired. Maybe we're missing something, but it's hard to see exactly where this can go. Are there laws on the books which attach criminal penalties to any of these practices? Perhaps this is a case where holding the practices up to public ridicule is the most effective form of enforcement, along with Congressional oversight to make sure that there is no money in the budget for such nonsense. Remember, too, that there are many occasions where news releases from government agencies are perfectly desirable - - like those VNRs of Neil Armstrong walking on the Moon. We don't want to throw out the baby with the bath water.

Moody's downgrades Viacom ratings
Sumner Redstone has been touting the split of Viacom into two companies as the best thing since sliced bread for shareholders, but Moody's Investors Service isn't convinced the same is true for banks and bondholders. As a result, Moody's has dropped Viacom's senior unsecured ratings three notches to Baa3, its lowest investment grade rank. "The downgrade results from Moody's expectation that the rated securities will all remain with the slower growth company, to be renamed CBS Corporation (CBS), and will have increased debt and materially weakened credit metrics," the ratings agency said. However, it added, "The outlook for the ratings is stable." Moody's has not yet evaluated the creditworthiness of New Viacom, which will be spun off from the current Viacom. As the deal is structured, the surviving successor to the current Viacom will be CBS, while New Viacom will be a new company.
| Here's more of Moody's analysis |


Adbiz©

PWC: Media, entertainment
to see faster growth

Entertainment and media industries will grow faster in the second half of the decade than the first, reaching 1.8 trillion in annual sales by 2009, according to a PriceWaterhouseCoopers report. The report forecasts the US would remain the largest media market at 690 billion by 2009 but would grow at the slowest average annual rate - - 5.6%. The Asia-Pacific region, driven by gains in China and India, was seen expanding fastest, at nearly 12% per year, to reach 432 billion in the same period. The Internet led other media in projected rate of growth for ad sales in the coming five years, with nearly 16% average annual growth forecast for 2005 to 2009, compared with 4.7% growth for radio. Internet ad sales were expected to account for just 32 billion of the 477 billion in projected global ad spending by 2009. Television ad sales were expected to account for 186 billion - - the greatest share of the total. Newspaper publishing was expected to see the slowest growth during the period, with 3.3% compound annual growth in ad sales and circulation revenue bringing sales to 202 billion worldwide by 2009, according to the report. The fastest-growing media sector worldwide will be video games, with double-digit growth spurred by sales of next-generation consoles, online and wireless Internet access spending and online advertising. The report projected that the global video game industry would almost double in size from 25 billion in 2004 to 55 billion in 2009. Music sales will emerge again, reinvigorated by digital distribution and mobile music sales for ring tones. PWC expects the global number of households with DVD players to surpass 304 million, those with broadband Internet access to total 321 million and subscription TV households to reach 167 million households all by 2009.

Wieden + Kennedy scores Coca Cola
Coca-Cola is reportedly moving its 150 million account to Wieden + Kennedy, Portland from Berlin Cameron & Partners NY,after a review. Wieden was given the account by Pio Schunker, VP-director of advertising for Coca-Cola North America, said AdAge. Vying along with Berlin Cameron and Wieden were WPP Group's Ogilvy & Mather; Publicis Groupe's Publicis; Interpublic Group's McCann Erickson; and independent Mother. London-based Naked and Santa Monica, Calif.-based Amoeba, rounded out the shops. Wieden and Red Cell are now the two finalists.


Media Business Report
Fox poaches Swanson from CBS
Having been passed over for the top TV O&O group job at the new CBS Corp. (9/19/05 TVBR #183), Dennis Swanson has been lured away by News Corporation to become President of Station Operations, Fox Television Stations Group. He'll report to work today, reporting to Jack Abernethy, CEO, Fox Television Stations Group. "Dennis is a top television executive with invaluable experience and tremendous knowledge of the television industry," said Abernathy. That may be an understatement, since Swanson's vast resume now includes high management positions at all four of the big O&O groups - - ABC, NBC, CBS and now Fox. "I look forward to working for Jack Abernethy to build the Fox stations to their full potential," said Swanson. In his new job he'll help manage the 35 Fox O&O stations, including powerhouse Fox/UPN duopolies in several of the top 10 markets.

The official bio: Before joining Fox Television Stations Group, Swanson was Executive Vice President and Chief Operating Officer, Viacom Television Stations Group, where he oversaw operations of the division's television stations. Swanson previously served as president and general manager of WNBC-TV in New York, and was president of ABC Sports from 1986-1996. He was also president of ABC Daytime and ABC Children's Programming from 1991-1993. Prior to joining ABC Sports, Swanson was the president of ABC-owned television stations from 1985-1986, and earlier served as vice president and general manager of WLS-TV, the ABC owned-and-operated station in Chicago where he gave Oprah Winfrey her first daytime talk show. Swanson began his career as an assignment editor and field producer for NBC News in Chicago, and currently serves as the Chairman of the Board of Trustees of the National Academy of Television Arts and Sciences (NATAS).

TVBR observation: Les Moonves shouldn't be surprised. When he leap-frogged Tom Kane over Swanson, who had hired Kane into the CBS O&O group in the first place, he had to figure Swanson would not take kindly to it. Rather than sitting back for a while and then drawing a retirement check from CBS (to go with the one he already gets from GE/NBC), Swanson was ready to take on a new challenge. He'll essentially be making a lateral move, from the top operations job at one O&O group to the top operations job at another - - still not the CEO, but at a company which is anxious to take advantage of his expertise and experience. Not that the Fox group is in bad shape - - these are some of the highest margin TV stations in the business. So it's now up to Swanson to figure out ways to make them even better.


Media Markets & MoneyTM
AGM AM spin already on the books
When we found out about American General Media's plan to buy a San Luis Obispo FM that was planning a move to Bakersfield, we speculated that one of its AM stations in there would be going bye-bye (10/6/05 RBR #196). Guess what? That deal has already been done. AGM has a 2.05M deal for KLRM-FM, a S.L.O. station headed for Lost Hills CA, on the outskirts of Bakersfield. That would take the group's cluster to four AMs and four FMs, a no-no in a market that will support nothing larger than a seven station cluster. We speculated that one of the AMs is headed out of the cluster, and so one is. John Pierce brokered a deal for KBID-AM Bakersfield which hit the FCC database in mid-September. AGM will get 625K from Gore-Overgaard's Force Broadcasting LLC. That deal should be done well in advance of AGM's timetable to get the KLRM deal closed and its new facility built.

DG Systems hangs out for sale sign
As more and more companies now have the infrastructure to deliver ads and audio-video content on their own, the third-party distributors are finding their futures cloudy. Former Evergreen Media group owner and DG principal Scott Ginsburg announced his company has retained Southwest Securities to explore a "combination, sale or merger of the business with another entity or strategic partner." DG will report its Q3 financial results in mid November. DG stock is trading near a 52-week low.


Washington Beat
FTC collects some green
from touters of Supreme Greens

Did you know that there is a product out there that "...can prevent, treat, and cure cancer, heart disease, arthritis, and diabetes." And that's not all - - it can also be credited with "...causing substantial weight loss..." and is safe for "...pregnant women, children - - including those as young as one year old - - and any person taking any type of medication." The product is herbal supplement Supreme Greens - - as seen on Pax Television Network and the Outdoor Channel - - and of course the claims are nonsense. SG Developer Alejandro Guerrero has entered into an agreement with the FTC under which he will either fork over 65K or his car, a 2004 Cadillac Escalade. Two others will cough up 5K and 10K respectively. Guerrero is liable for another 1.47M in penalties if it is discovered he misrepresented his personal finances, and the other two are liable for a combined 2.7M. Several other companies are still under litigation in the matter.

RBR observation: The FTC made no mention of any action against Pax or Outdoor. Still, you are walking on shaky ground when you allow such material on your schedule - - at the very least, it is a disservice to your audience.


Programming
Waitt, Commonwealth radio will syndicate "Bob FM"
Waitt Radio Networks and Commonwealth Radio have signed an exclusive arrangement to syndicate the "Bob FM" Adult Hits format, which skews more AAA than "Jack FM." Joel Folger, of Folger Entertainment Company, will consult. "We are excited about this new exclusive opportunity because our research indicated that in addition to the benefits of offering stations a very broad and extensive play list, the Bob FM format is one, in the genre, that will support stations wanting to be local and involved with their listeners on the air. WRN specializes in delivering localized content for our affiliates, so localizing the format is critical to us." Says Erle Younker, VP/GM of WRN. WRN produces seven other "localized" music formats including: Modern Rock, Hot AC, Mainstream AC, Mainstream Country, Classic Country, Classic Rock and Oldies; and has a commercial production division.


Transactions
795K WEIM-AM Fitchburg MA from Liveair Communications Inc. (David Wang) to Central Broadcasting Company LLC (William J. Macek). 79.5K escrow, 79.5K cash at closing, 636K note. [File date 8/31/05.]

260K WLOH Columbus OH (Lancaster OH) from Frontier Broadcasting LLC III (Bart Johnson) to WLOH Radio Company (Arlene D. Bohach, Mark E. Bohach). 157,916.52 debt assumption, 102,083.48 cash at closing. [File date 9/2/05.]


Stock Talk
Another down day - - except for radio
Several Federal Reserve officials made statements this week indicating that the Fed is likely to continue raising rates, so Wall Street traders are not in a happy mood. The Dow Industrials fell 30 points on Thursday, or 0.3%, to 10,287.

Radio stocks, however, got a boost from Citadel announcing plans to begin paying a dividend that works out to a 5%+ yield. The Radio Index gained 0.286, or 0.2%, to 195.920. Citadel's stock rose 1.9%. Saga did even better, gaining 2.2%. The day's worst performer was Spanish Broadcasting System, which declined 3.5%.


Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.19

+0.38

Jeff-Pilot

JP

51.19

+0.34

Beasley

BBGI

13.89

+0.24

Journal Comm.

JRN

14.61

+0.08

Citadel CDL
13.84 +0.26

Radio One, Cl. A

ROIA

12.52

-0.02

Clear Channel

CCU

31.54

-0.12

Radio One, Cl. D

ROIAK

12.54

+0.02

Cox Radio

CXR

14.82

+0.04

Regent

RGCI

5.21

-0.02

Cumulus

CMLS

11.78

-0.17

Saga Commun.

SGA

13.31

+0.28

Disney

DIS

24.09

-0.14

Salem Comm.

SALM

18.24

+0.31

Emmis

EMMS

20.72

-0.34

Sirius Sat. Radio

SIRI

6.39

-0.33

Entercom

ETM

30.92

+0.07

Spanish Bcg.

SBSA

6.97

-0.25

Entravision

EVC

7.80

+0.13

Univision

UVN

25.90

-0.13

Fisher

FSCI

44.19

-0.81

Viacom, Cl. A

VIA

31.74

-0.25

Gaylord

GET

46.77

+0.37

Viacom, Cl. B

VIAb

31.68

-0.15

Hearst-Argyle

HTV

25.38

+0.32

Westwood One

WON

19.20

-0.22

Interep

IREP

0.55

+0.03

XM Sat. Radio

XMSR

34.14

-1.47

International Bcg.

IBCS

0.01

unch

-

-

-

-

-



Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments to [email protected]

We asked our readers for feedback on how to number HD Radio
(10/4/05 RBR #194)
...and you delivered.

Folks
AM radio dial position always ends in a zero - - 1560, 570, etc. FM radio dial position always ends in an odd number. I believe in both cases, it is easier for a person to remember the dial position that way. Maybe we should do something similar for the channel numbers for HD radio. First two digits always an even number. Last two digits always an odd number. Hit Country 26-49, Love 28-03, Maybe 260-49 and 280-03 or some variation like that.

Michael B. Levine
Director of Affiliate Relations
Matrix Media Inc.
Chicago, IL

Dear RBR,
Thank you for sharing the Cox proposal. If anything has driven home the absolute mistake of out of control deregulation (megga groups) it is the continuing saga of HD Radio. The amazing invention we call Radio once belonged to all the people. Open to creativity, community service, and innovation by all. Now it appears the very fabric of the industry can be shredded and rearranged for the express personal gain of a few mega groups behind closed doors. (Would it be wise to rearrange the English Language, then allow a corporation to patent it?) Who decided it would be OK to allow a few people to change the way we are allowed to transmit the public's message, then give them an iron clad patent which will likely suppress future innovation for decades, for the sole purpose of their individual profit. (Take a lesson from the computer industry's problems with Microsoft. Some things are too precious to be monopolized by a single corporation.)
| Read More... |

Tommy Lee
Ohatchee, Alabama


Radio Media Moves

Promotion at Arbitron
Arbitron has promoted Brad Kelly to Vice President of Group Sales, working with the largest broadcasters and agency holding companies, and overseeing the Group Sales team efforts around the country. Kelly has been at Arbitron for 15 years, most recently as VP of National Radio Sales.


Stations for Sale

AM Opportunities
Great AM's in, SC Tennessee and SW Virginia! There are wonderful smaller markets with lots of potential. Some terms possible for solid buyer.
Cliff at Clifton Gardiner & Co (303)758-6900
[email protected]

Santa Fe New Mexico
Price Reduced!

A Market #237 FM ready to go! Santa Fe is a unique and rich market with a great opportunity for an aggressive, innovative operator!
Cliff at Clifton Gardiner & Co
(303)758-6900
[email protected]


More News Headlines





October RBR/TVBR Digital Magazine

Radio News ®
HD consortium in the works

TV News
LPM cussed and discussed


Read RBR/TVBR in 2 simple steps:
1.Create a simple account with Zinio and download the Zinio Reader.
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RBR Radar 2005
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Praises gains in yield per minute
Harris Nesbitt analyst Lee Westerfield, using slightly different parameters, reports that inventory reductions held fast in September. What's different about Westerfield's monthly tracking and that of Wachovia's Marci Ryvicker is that he tabulates all stations, AM & FM, for drive time in the top 10 markets, while Ryvicker tracks FM stations only, also for drive time, in the top 12 markets. RBR observation: Less is More may be a nationwide effort for Clear Channel, but it appears to vary widely in its impact on individual markets. Houston appears to be a hotbed of :30 spots.
10/06/05 RBR #196

RBR Observation: HD Radio is a chance to re-brand radio
Radio is at an important crossroads with the launch of HD Radio multicasting and RBR is calling for some creative thinking to make sure this opportunity to re-brand radio isn't missed or muddled. We presented our channel numbering proposal. We want to hear from you by email via [email protected] We want to facilitate an industry-wide discussion of this vital issue. See our first feedback in today's Bounceback section. For full HD details read
10/05/05 RBR #195

Mandel comments on Apollo issues
I think that the Apollo Project is a great idea. It's something that advertisers want. It will be, ideally, multimedia. And ideally, these things are paid for by the advertisers and the media companies and the advertising agencies - - all of the people that would use the information. And everybody has to put in equally. Everybody has the potential to get a benefit out of Apollo, so everybody should have some skin in the game..."
RBR observation: One thing we respect about Mandel puts his money where his mouth is - period - and you always know where you stand when you go toe to toe with him.
10/05/05 RBR #195

VNU is in a Dizzy -
Will Billboard go on the block?
VNU, parent company of Nielsen Media Research, is facing a revolt by major institutional shareholders over its pending seven billion bucks deal to buy IMS Health. One possible outcome is that VNU may look at selling its trade publishing unit, including Billboard and The Hollywood Reporter.
RBR observation: Will Perry Partners step up to bid for Billboard to combine with Radio & Records? Or has Rick Perry had enough of the trade publishing business? We also have to shake our heads at 7 billion as this is a heavy price to pay for a seat at the NYSE. The entire VNU company has a lot a risk going into 2006 and our recommendation to VNU bosses - Do not wear rose colored glasses because with out focus no company can have clear vision.
10/04/05 RBR #194


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