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Welcome to RBR's Daily Epaper
Volume 23, Issue 197, Jim Carnegie, Editor & Publisher
Tuesday Morning October 10th, 2006

Radio News ®

NABOB sounds the alarm
on further dereg

The National Association of Black-Owned Broadcasters says that since the 1996 Telecommunications Act went into effect, African American ownership of broadcast stations has gone down significantly. It expects the current FCC may go further down the deregulatory path and is asking its membership to throw up stiff opposition. NABOB says African American ownership is down 20% over the last 10 years. "Additional deregulation will most certainly lead to a further decrease in the number of African American owners of broadcast stations." Therefore, it will actively oppose any further deregulation. It is calling on all for hard evidence, writing, "We ask all NABOB member stations to provide information to NABOB about the impact of consolidation upon your stations and upon the communities you serve."

New radio markets teed up
Arbitron has just released its Fall radio market rankings, and two brand new markets are making their debut. Meanwhile, Eastlan has also announced initiation of radio ratings service for a pair of markets, one of which is already covered by Arbitron, setting the stage for head-to-head competition. Coming from Arbitron are Las Cruces NM, boasting 159.2K individuals 12+, and holding #227 in the Arbitron ranking chart which now goes all the way to #299. Las Cruces is in the south of the state, not far from both El Paso TX and Ciudad Juarez across the border in Mexico. Also making its bow will be Kalispell-Flathead Valley MT, checking in at #262 with 115.5K people 12+. It's in the northwest corner of the state, a good 80-85 miles north of Missoula. New from Eastlan will be Lawrence KS, which splits the difference between Kansas City to its east and Topeka to its west. The 2000 census pegged total population there at 80.1K. Eastlan is also initiating coverage of the St. Cloud MN market, despite the continuing presence of Arbitron there. Arbitron places it at #218 with a 12+ population of 164.8K.


VNU wants all of NetRatings
New CEO David Calhoun is moving quickly to put his stamp on VNU. The latest major step is to make a bid to buy out the public shareholders of NetRatings and make the Internet ratings company, now owned 60.5% by VNU, a wholly owned subsidiary. The offer of 16 bucks per share is a 10% premium to the closing stock price on Friday. VNU, however, insists it is really a 15% premium, since it shouldn't be expected to pay a premium for the 4.90 per share in cash that NetRatings is holding. And VNU says the offer works out to an enterprise value multiple of 54 times 2006 EBITDA and 36 times 2007 EBITDA based on Wall Street estimates. RBR/TVBR calculates that, if the offer is accepted, VNU will be paying just over 225 million to cash out the other shareholders of NetRatings. VNU said it had requested that the NetRatings board create a special committee of independent directors to consider the proposal. VNU also noted that it is not interested in selling any of its stake - only buying out the other shareholders, so there will be no auction of the company. NetRatings acknowledged that it had received the offer and was calling a special meeting of its board to decide what course to take.

RBR observation: As yet there is no indication of any dramatic course change by VNU since Calhoun came aboard. The purchase of R&R for 18.5 million was already underway before he was named to the top job, so his first significant move - and one which had already been widely expected - was to put the European computer magazine operation up for sale (10/3/06 RBR #192). VNU also did a little housekeeping last month, agreeing to sell its 34.3% stake in Solucient, an information products company in the healthcare industry, to its partner, Thomson Corporation. We wait to see if Calhoun has any really big plays up his sleeve.

Time to cast your ballots
We're not talking about the federal/state elections on November 7th. Those individual races haven't attracted nearly as many candidates as what we're talking about - the three open seats on the Arbitron Radio Advisory Council. 19 people are running for the Top 50 Markets seat, 15 for the Continuous Measurement Markets 51+ seat and 15 for the twice per year Standard Markets seat. That's 49 candidates in all, with only three winners. We will know the results before we know who will control the next session of the US Congress. Ballots are due October 19th and results will be announced after the Council meeting October 23-25 in Houston. Here is the list of candidates.
| View the pdf |


Dolans make new Cablevision buyout offer; Emmis similarities?
After failing in a bid to take Cablevision private last year (10/26/05 TVBR #210), the founding Dolan family is back with a higher bid - 27 bucks per share, for a total, including debt, of 19.2 billion. Will this deal get done? In pitching the new offer to shareholders, Charles and James Dolan note that it is a 17% premium to the average closing price over the past two weeks, even though the stock had been trending up in recent months. Adjusted for a 10 bucks per share special dividend paid in April - which put about 700 million of the three billion total in the bank accounts of the Dolans - they say the offer is 14.9% higher than the failed offer they made last year. The new bid values Cablevision, including debt, at 19.2 billion. The Dolans say they would finance the buyout by investing all of the shares they currently own, amounting to some 1.7 billion in value, and that Merrill Lynch and Bear Stearns have committed to financing the rest. "Our goal in making this proposal is straightforward. As we have said previously, we believe strongly that responding to the intensifying competition in our industry and the risk of new entrants will require a long-term, entrepreneurial management perspective that is not constrained by the constant focus on short-term results demanded by the public equity markets," the Dolans said. At Goldman Sachs, analyst Lale Topcuoglu was not impressed by the bid, which was only 13% above the closing price on Friday, while he noted that the average premium in LBOs since 2002 has been 24%. Nevertheless, he advised holders to sell at 27, since he sees a 45% of the offer being accepted, only a 30% chance of its being increased and a 20% risk of withdrawal.

RBR observation: What does a cable TV LBO have to do with radio? We just thought our readers would find it interesting that the Dolans failed to convince the directors to accept their first buyout offer. Then they got the company to make a special dividend payment, which gave them a big pile of cash. Then they came back with a higher buyout offer. We would note that Jeff Smulyan failed to convince the directors of Emmis Communications to accept his first buyout offer. Now Emmis is paying out a special dividend (9/18/06 RBR #182). Will the similarities continue?

Q2 wasn't much better on the TV side
You read here last week how poorly radio stocks performed in Q3 (10/3/06 RBR #192). Think it was better on the TV side? Not much. Of the 34 TV and TV-related stocks reported daily by RBR's sister publication TVBR, only 13 were in positive territory year-to-date, one less than at the end of Q2. ACME, whose future hinges on the success of the new CW network, continued to be the best performer this year, up 48% year-to-date, having battled back from beginning the year in penny stock territory. Also, it is the only pure-play TV company in positive territory. The mega-media companies have generally outperformed the pure play TV companies, with Disney up 29%, News Corporation 25% and CBS up 11%. Univision is up 17% on the strength of a buyout deal to take the Hispanic TV/radio/music giant private. With few exceptions, the first three quarters of 2006 have not been kind to TV stocks - and Q4 isn't looking much different, since the expected windfall of political advertising will be followed by tough comps in 2007.
| View the Chart |


Wall Street Media Business Report TM
Emmis canary chirps this morning
Emmis Communications, with its out-of-sync fiscal year, starts off the new round of quarterly reports this morning. Thomson/First Call says analysts are looking for earnings per share to be up 131% to 12 cents from five cents a year ago. Look for questions from analysts on why Emmis chose to go with a one-time special dividend, rather than another big stock buyback.


Ad Business Report TM

XM launches fall marketing campaign
XM Satellite Radio has launched a multi-platform marketing and branding campaign, the first from the company's new AOR, Lowe New York. The new campaign will be integrated across network and cable television, print, interactive, direct marketing, retail and automotive channels. The new creative will be featured in a series of television commercials that incorporates the XM logo in unique ways along with simple, line art drawings animated against a black backdrop and pulsing music. The first two spots, "Switch" and "Hair," debuted yesterday during Prime Time. "Switch," is set to music from emerging artist Regina Spektor's single. "Better," and reveals the world of XM to be "Surprising. New. Amazing." "Hair" follows the signature "waves" of XM's logo on a journey across the XM music dial, with music from Johnny Cash, punk band The Circle Jerks, Beethoven, 80's group Flock of Seagulls, Snoop Dogg and classical opera composer Ruggiero Leoncavallo. Both spots end with the line, "170 channels to find what turns you on. Are you on?"

RBR observation: Seems XM is no longer using traditional radio, at least with this campaign. Could it be too many groups are refusing XM and Sirius ads for the buy to be effective? Could it be the battle lines are just too well drawn between satellite and traditional radio?


Media Business Report TM
Internet advertising continuing to gain
The Interactive Advertising Bureau, along with Price Waterhouse, is claiming 7.9B in first half revenues, over half of which it pulled in during Q2. The Q2 total of 4.1B was a 5.5% pick-up over Q1, and the medium is 37% ahead of where it was at the halfway point of 2005. The multi-category category breaks down its gains by type as follows: Search ads were up 40% to 3.164B; display advertising (rich media, ad banner/displays, sponsorship and slotting fees) was up 31% to 2.413B; classifieds were up 20% to 1.582B; referrals/lead generation was up 7% to 592M; and email advertising was up 2% to 158M. Still, research firm eMarketer is detecting a slowdown in the pace of growth, according to Adweek.com. It's looking for a 26% gain to 16B by year's end, and a $21B total for 2007.

RBR observation: All hot new ad categories follow the same arc. They can't help it. If it is a viable medium at all, its early growth is exponential as income has minimal comps in prior measuring periods to deal with. If it is a viable medium, its bottom line will continue to grow even as the once-gaudy comparison percentages start to level off. However, online is likely to face the same problem facing all media at this point: The increasing difficulty of getting the attention of a large audience in an increasingly fragmented world. Adweek also notes that, like other media, online is facing difficulty with metrics, and as we all know, media planners and buyers are extremely interested in ROI, and they want as much transparency as possible. Many broadcasters have tracked missing dollars to online, and think that the novelty factor is leading to experimenting, draining away business that broadcasters might have claimed otherwise. Some expect that a lot of these experiments will fail and the money will start coming back. Will it? Stay tuned.


Media Markets & Money TM
Alexander City AM changes hands
WRFS-AM is being sold. Ed L. Smith's Joy Christian Communications is sending the station to Racquel Humphrey. The price tag is 230K cash. The station is beyond the reach of Arbitron. Its city of license, Alexander City AL, is situated on Rt. 280 halfway between Birmingham and Columbus GA, but the closest rated territory is Montgomery, some 30+ to the SW.


Washington Media Business Report TM
Out of the running
Were not even out of the 2006 midterms yet, and the 2008 presidential run is already a topic of intense speculation. But at least one individual being touted as a candidate for the nation's Chief Executive is downplaying any intention of running. That would be Jon Stewart of Comedy Central's "The Daily Show." It's not known if there is an organization formed for the purposes of managing such a run, but there does seem to be a clothing firm which is putting out "Stewart/Colbert '08" T-shirts. Colbert refers to Stewart's Comedy Central colleague Stephen Colbert, who formerly worked on "The Daily Show" and now follows it with one of his own. Far from taking the concept of a run for office seriously, he instead reinforced his opinion that his fake news program should not be taken seriously, according to the Associated Press.


Internet Media Business Report TM
Google buys YouTube for 1.65B
The rumors were true. Google has struck a deal to buy YouTube in an all-stock deal valued at 1.65 billion bucks. What Google is after is the advertising revenue it can generate on the consumer video sharing site and is promising hands-off regarding content. "Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community," Google promised in its announcement. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. "Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners," said Chad Hurley, CEO and Co-Founder of YouTube - and now an extremely wealthy guy.

RBR observation: Now we will see whether Mark Cuban was right. Will there be a feeding frenzy of copyright violation lawsuits now that YouTube has deep pockets backing to go after? One potential legal battle was avoided recently as YouTube announced a deal with Universal Music, which had been threatening copyright litigation - but there are plenty of other content owners who may want a piece of YouTube now that it has a parent with billions and billions.

MySpace lawsuit DOA
Despite his attempt to hype his lawsuit in the media, MySpace founder Brad Greenspan didn't get far in court with his claim that he was cheated out of more than a billion bucks when Intermix Media, which owned MySpace, was sold to News Corporation for 580 million (10/9/06 RBR #196). Los Angeles Superior Court Judge Carolyn Kuhl has already dismissed the suit. "News Corporation and Fox Interactive Media feel vindicated by Judge Kuhl's ruling and have always believed that this is merely a situation of unchecked envy leading to a loss of common sense," said Mike Angus, General Counsel of News Corporation's Fox Interactive Media in announcing the dismissal.


Music Media Business Report
Google and WMG
strike content deal

Warner Music Group and Google announced a strategic business relationship designed to give Google users the ability to stream on-demand WMG's music video collection for free, through an ad-supported revenue sharing agreement, or to purchase videos online for download. Starting this month, users in the U.S. can watch any of the thousands of music videos, artist interviews, "behind-the-scenes" footage and other artist-related content from WMG on Google Video. In the coming months, users can also access audio-visual content from WMG through Google's partner websites in its AdSense network. In addition, Google will develop technology that, when implemented, will enable users to include certain content from companies such as Warner Music Group in the videos they create and upload to Google Video. WMG will be able to monetize its content online by leveraging Google's advertiser network of advertisers. WMG's music video catalog will be sponsored by Google advertisers. Ad revenue will be shared by WMG and Google. WMG's music videos will be available for purchase as downloads on Google Video for 1.99. In the coming months, WMG will also work with Google to distribute its video collection to websites around the world via Google's extensive AdSense publisher network. Web publishers will be able to display videos that match the tone of their sites. For example, a fan site devoted to a particular WMG artist can run ad-supported music videos from that artist. Each time a user is interested in the accompanying ad and clicks on the link, the web publisher, WMG and Google will share in the resulting revenue.


Engineering Business Report TM
Steve Davis on HD glitches
Steve Davis, Clear Channel Radio SVP/Engineering, tells us of the most recent improvements in HD Radio gear that are currently being implemented to solve some of the problems we mentioned last week with equipment glitching and causing dead air in many HD-2 multicasts ("A big reason for "intermittent" HD-2 broadcasts"-10/4/06 RBR #193).

Davis, who participates in Radio & Television Business Report Magazines' November Capital Expenditures feature, tells us:
"We are at 'Gen 2' with IBOC/HD now. The first generation of exciters was completely PC-based and thus subject to lock-ups as with any PC. The major manufacturers, in partnership with iBiquity, have implemented new embedded code in their latest generation of exciters, meaning that these run more like a typical digital audio processor rather than a PC. Clear Channel anticipated this and purchased all of our exciters with the understanding that they would be upgraded when that technology was available. And we're in the process of doing that. I know other major broadcasters are too. Yes it's a learning curve but we are well on the way to making this work."


Transactions
2.6M WUUS-AM/WNGA-FM Chattanooga TN[ (Rossville GA, South Pittsburg TN) and WGMN-AM/WVGM-AM Roanoke/Lynchburg VA (Roanoke, Lynchburg VA) from Capstar TX LP, a subsidiary of Clear Channel Communications Inc. (Mark Mays) to 3 Daughters Media Inc. (Gary E. Burns). 130K escrow, balance in cash at closing. Superduopoly in Roanoke/Lynchburg with WBLT-AM Bedford VA. Clear Channel retains three FMs in Chattanooga and six FMs in Roanoke/Lynchburg. [File date 9/20/06.]

800K WCRS-AM Greenwood SC/WHZQ-FM Cross Hill SC from Pro-Com Communications Inc. (Wayne Shortridge) to Peregon Broadcasting LLC (Jonathan Perez). 40K escrow, balance in cash at closing. [File date 9/20/06.]


Stock Talk
Small gains, but gains nonetheless
Despite concerns about a North Korean nuclear test, stock prices managed small gains on Monday, but volume was low due to the Columbus Day holiday. The Dow Industrials rose eight points to 11,858 - a bit short of record territory.

Radio stocks managed small gains as well. The Radio Index was up 0.890, or 0.6%, to 141.172. Radio One led the way, with its Class A up 3.7% and Class D up 3.5%. Clear Channel rose 2.1%. It is also worth noting that Spanish Broadcasting System is creeping up and could soon be out of penny stock territory - only 14 cents to go.


Radio Stocks

Here's how stocks fared on Monday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.18

+0.30

Hearst-Argyle

HTV

23.30

+0.28

Beasley

BBGI

6.91

+0.01

Journal Comm.

JRN

11.25

+0.02

CBS CI. B CBS

28.56

+0.09

Lincoln Natl.

LNC

63.93

+0.16

CBS CI. A CBSa

28.55

+0.03

Radio One, Cl. A

ROIA

6.18

+0.22

Citadel CDL
9.74 +0.03

Radio One, Cl. D

ROIAK

6.18

+0.21

Clear Channel

CCU

30.65

+0.63

Regent

RGCI

3.60

-0.08

Cox Radio

CXR

15.63

+0.22

Saga Commun.

SGA

7.62

-0.10

Cumulus

CMLS

9.86

+0.01

Salem Comm.

SALM

11.19

unch

Disney

DIS

31.39

+0.05

Sirius Sat. Radio

SIRI

3.87

-0.02

Emmis

EMMS

11.90

-0.10

Spanish Bcg.

SBSA

4.86

+0.14

Entercom

ETM

25.87

+0.05

Univision

UVN

34.82

+0.04

Entravision

EVC

7.39

unch

Westwood One

WON

7.27

+0.07

Fisher

FSCI

40.35

-0.65

XM Sat. Radio

XMSR

11.82

-0.15

Gaylord

GET

46.60

+0.73

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

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

I notice a lot of stories that CL King Analyst James Boyle is "expanding his coverage of radio" (10/6/06 TVBR #195), yet all I read is that he issues downgrades for every company and predicts continued doom and gloom for the sector. Maybe I'm missing something but isn't he driving himself out of work if the eventuality is that no one is recommending radio, only that if you own it, sell? Second question - why does RBR/TVBR print these stories? Is it really newsworthy that a Stock Analyst, who breathes rarified air Vs John Q Public (has Sat Radio subscription, iPod provided to him and spends all day on a computer, surfing the Internet, thinking everyone else does too, crunching numbers, not making them, not producing anything of much positive value really) thinks radio is a business to sell out of, not buy into?

Gary A. Weiss, Regional Vice-President
Raleigh/Richmond/Charlotte
Radio One Inc.
Raleigh/Durham, North Carolina

RBR note: RBR/TVBR receives a number of comments on this same subject and to remind many we reported all of the bullish stuff in the late 90s, now Wall Street is going the other way. It would be absurd to ignore the analysts who are moving the prices of radio stocks. We are sure a lot of our readers have radio and or television stock from their own employer (or one or more former employers) as a big portion of their personal net worth. They no doubt want to know why Radio, TV stocks or media stocks for that matter are going up or down. So RBR and TVBR will have to borrow this phrase: "We report, you decide."


Below the Fold
Wall Street Media Business Report
Emmis canary chirps this morning
Out-of-sync fiscal year, starts off the new round of quarterly reports...

Media Business Report
Internet advertising continuing
To gain as IAB along with PW claiming 7.9B in first half revs...

Internet Media Business Report
Google buys YouTube for 1.65B
Now we will see whether Mark Cuban was right...

Engineering Business Report
HD glitches
Steve Davis, Clear Channel Radio SVP/Engineering, tells us at RBR...



Stations for Sale

WANTED! FM CP's
(commercial or noncommercial)
John W. Saunders, Media Broker
713.789.4222
[email protected]

Central Coast
FM Rated Market

Power Increase Approved.
Asking $1.5M
Call Brett Miller @ 805.237-0952
www.mchentinc.com




September RBR/TVBR
Digital Magazine

In September's RBR/TVBR Solutions Magazine:
Executive Comment: What are three things top radio execs say should be done to be competitive in this new media environment?

AdBiz: Our annual network radio upfront special: In this two-parter, we ask top media agency buyers and network radio sellers for their take on the 2007 network radio upfront, along with the big issues driving the dollars. Also, EMCI's Jay Coleman on taking WFNX-FM Boston commercial free for weeks this summer, with Snapple as sole sponsor.

Media Markets and Money: How good is the financing market right now for broadcast transactions?

OneonOne:
CBS Radio CEO Joel Hollander

News/Talk:
Fox News' Shepard Smith


Read RBR/TVBR in 2 simple steps:
1.Create a simple account with Zinio and download the Zinio Reader.
2. You can then download the
September Issue of RBR/TVBR




RBR Radar 2006
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

XM reports terrestrial repeater violations to Commission
XM has explained to the FCC in a filing that several of its terrestrial repeaters were operating at power levels over their authorized power but is asking for time to fix the problem.

RBR observation: Funny how it took so long to admit. Whitney Radio President Bill O'Shaughnessy years ago pounded the drums on this issue for all the trade press-and NAB-to hear: The repeaters were being operated illegally all over the place in his territory of Westchester County, NY as well as plenty of other areas. Good news is they've admitted to the problem and are asking for time to fix it. Yet another problem XM will have to throw money at.
10/09/06 RBR #196

Assessing the iPod threat
With car makers moving to integrate iPod technology into the dash, Lehman Brothers analyst Anthony DiClemente sees a growing threat to in-car radio listening. He theorizes that iPod integration in cars could accelerate a decline in radio TSL, particularly in younger demos. At a recent conference in San Francisco, Apple CEO Steve Jobs said 70% of new cars sold in the US by the end of 2007 will offer iPod connectivity as an option.

RBR observation: We stated in March 2004 that iPod would be the biggest challenge to radio not satellite radio. Now just think what the iPod was just two years ago. Today the iPod also has video. iPod that little thing that is challenging both radio and television and consumers are paying for that little thing and yes that little thing will have to be put into the audience measurement side of the ledger sheet. The obvious solution is to give listeners unique content that they can't get on an iPod and the local element that they can't get on satellite radio. If all you are offering is a format that sounds like someone else's iPod, listeners are not likely to choose that over their own iPod. Get your acts together.
10/06/06 RBR #195

Troubles continuing for Emmis
CL King analyst Jim Boyle has added Emmis Communications to his slowly growing coverage universe, but he doesn't see any reason to recommend the stock to investors. Some players may want to ride the stock for the four bucks a share special dividend to be paid out in November, he says, but beyond that he gives Emmis a Neutral rating. Even now radio stocks trade at EBITDA multiples one or two turns greater than newspapers, but Boyle sees that gap eroding. Back to Emmis, Boyle notes that most of the TV sales have been completed, so the few stations remaining to be sold won't do much to cut debt leverage. Meanwhile, the four bucks special dividend will raise leverage and the collapse of CEO Jeff Smulyan's effort to take the company private removed a positive catalyst, so Boyle doesn't see anything to get him excited about radio stocks in general or Emmis in particular.
10/06/06 RBR #195

NBA Minute


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