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Welcome to RBR's Daily Epaper
Volume 23, Issue 201, Jim Carnegie, Editor & Publisher
Monday Morning October 16th, 2006

Radio News ®

Air America, Radio's Iron Lung,
Filed the big B for Bankruptcy
We all know by now that Air America Radio has filed for Chapter 11 bankruptcy protection Friday, after denying rumors weeks ago that it would file (9/18/06 RBR #181). Air America said the filing became necessary after negotiations with an original creditor broke down. We're not sure if that has anything to do with recent stories that Rob Glaser, the Real Networks founder who rescued the network from its first financial crisis, recently walked away with his money. Nonetheless, Air America has lost some 41 million since May 2004 (It launched 3/31/04). The network says will keep broadcasting to 87 affiliates while it resolves issues with its creditors. The company will operate in the interim with funding from its current investor group. Air America's board also Friday named VP Scott Elberg as its new CEO. Elberg, a former GM of WLIB-AM New York, has been with the net since May '05. "Nobody likes filing for bankruptcy, however, this move will enable us to concentrate on informing and entertaining our audience during the coming months," said Elberg. "Staying on the air is crucial for the Network's primary ratings period as well as for the country which is facing its most important mid-term election in recent history." The filing marked the latest problem for the two and a half year old liberal talk net. This April, Danny Goldberg was the latest to step down as CEO and was replaced by an interim chief exec from a management consulting firm.

| From Air America's statement | RBR's Who's who of creditors |

RBR observation: Seems the network got off the ground with shoestrings and credit cards in the first place. So it was never running with a decent amount of cash. A lot of that cash, 625K, had to be paid back to a Bronx charity that improperly loaned the network money that should have gone to needy kids. The signals in many markets are puny however ratings were getting pretty decent in many markets as well. Nevertheless, through all of the management realignments, battles with affiliates over payments and other problems, the network has kept running and kept affiliates. If they do finally get a major investor with enough contribution to right Air America and find management that can run the place, it should be able to recover. But that is much easier said than done. Maybe George Soros will consider.

Harsh language kicks off
PTC campaign

The Parents Television Council has complained to the FCC about bad language on a pair of broadcast TV network offerings, My Network TV's "Desire" and NBC's "ER." It's urging the Commission to polish its brand new 325K fine and put it to use. MNT, the new Fox Television junior network, was cited for the s-word, airing 9/21/06 well before safe harbor nationwide, at 8:00PM Eastern/Pacific and 7:00PM Central/Mountain. The NBC infraction was the use of the word "t*ts" on 10/5/06, which was in safe harbor Eastern and Western but aired at 9:00PM in the Central/Mountain time zones. PTC claims neither show was rated to activate the v-chip. Both were rated TV-14 and neither had an "L" descriptor attached to indicate that the language used may be undesirable for children. Perhaps even worse, the programs were scripted, so neither was a case of fleeting, unplanned speech. PTC Executive Director Tim Winter said, "The broadcast networks are now intentionally scripting illegal obscenities into prime time television series, and they are doing it to be openly defiant of the law." he concluded "We urge the FCC to use its newly authorized financial penalties granted by Congress and signed by the President to the fullest extent. This complete and utter disregard for the law will not be tolerated." The organization urged its membership to weigh in with the Commission as well.

RBR observation: For what it's worth, the George Carlin routine which became inextricably tied to FCC indecency enforcement posits the idea that the word "t*ts" does not belong on the list of seven unmentionable words back when he first began performing it. NBC may be able to argue that the word has lost much of its indecent baggage since then. Perhaps not, though, and MNT will have an extremely difficult time explaining its use of the s-word. Maybe this will be the one that inspires the FCC to bring out the heavy artillery. But it must be noted that there is a strange silence surrounding these events. Will anything come of this? Stay tuned.


Media touts diversity to Supremes
A friend of the court brief has been filed with the Supreme Court on behalf of a widely divergent group of media and telecommunications companies in the case of Parents Involved in Community Schools v. Seattle School District No. 1. Their main point: "Amici urge the Court to find that it is a government interest - and a truly compelling one - that America's young people, the workforce of tomorrow, be educated in schools that prepare them to work together productively in the diverse, multicultural world in which they will live." The group says such individuals are necessary for the conduct of their mission as "...disseminators of ideas and information." They note that, "There is positive friction generated when individuals from different disciplines, cultures and thinking styles come together to develop creative ideas." Represented in the Supreme Court filing are Access1 Communications, The Bakewell Company, BET Networks, Border Media Partners, Bustos Media, Diamond Broadcasting, Emmis Communications, Granite Broadcasting, Hispanic Broadcasters of Philadelphia, Inner City Broadcasting, ION Media Networks, KB Prime Media, La Favorita Broadcasting, LIN Television, Millennuim Digital, MTV (Viacom), Multicultural Radio Broadcasting, Norsan Group, Perry Broadcasting, Post-Newsweek Stations, QUALCOMM, Radio One, Viacom and ZGS Broadcast Holdings.

Someone to Wachovia me?
Wall Street analyst is extending its blanket to a quartet of broadcast companies. Each is praised for taking steps to alleviate the pain of a weak advertising market these steps are tempered by, well, a weak advertising market. The foursome, Hearst-Argyle (which retains a toehold in the radio business), Gray, LIN and Sinclair are rated Market Perform. Hearst-Argyle earns kudos for "investments in content and distribution," as well as building its digital business. Gray also earned nods on digital, and was cited for leadership in the local news wars. LIN's efforts in the digital arena were noted. And Sinclair was cited for its aggressive stance on retransmission negotiations and generation of new business. But all are dragging the anchor of the poor television advertising environment. Additional challenges were cited. Hearst-Argyle and Gray are heavily affiliated with NBC, Sinclair is exposed to the question marks floating over CW and My Network TV, and LIN has all three in its mix.

Equal time with Leno for Schwarzenegger foe?
The FCC may decide as early as today if Jay Leno and NBC's Tonight Show owe an appearance to California Democratic governor candidate Phil Angelides. He is opposing Republican incumbent Arnold Schwarzenegger, who coincidentally or not first announced his intention to run for the office on the same show back in 2003. That time there were over 100 other candidates in the electoral circus following the recall vote ousting Democrat Gray Davis. This time its much more a standard one-on-one Republican v. Democrat contest, and Angelides feels that the free appearance on the Tonight Show is an unfair gift of airtime.

RBR observation: Rules governing air time do not pertain to bona fide news and interview programs, and the powers that be in Washington have had a fairly free-wheeling interpretation of just what kind of program qualifies. No brainers are the Sunday morning talking head shows on all the big networks. It's also easy to see how politically-oriented comedy programming such as Bill Maher's "Real Time" HBO program or Comedy Central's "The Daily Show," and well as radio's Don Imus, can qualify for an exemption. The line may seem a bit fuzzier when it gets to Howard Stern (whose political interest seems to begin and end mostly where it intersects with his own personal problems, such as staying away from indecency fines). According to E!Online, NBC is saying that the Tonight Show qualifies for the news exemption. We'll see what the FCC thinks.


Executive Comment
This past Friday Moody's Investors Service downgraded Emmis Communications Corporation's Corporate Family rating from Ba3 to B1 which added more injury as Emmis CEO had a long week as Wall Street used Emmis as a punching bag and a number of analysts used Emmis as a forecaster of business in 4th quarter for the radio medium. Jonathan Jacoby at Bank of America was one of a few of analysts (10/12/06 RBR #199) who think the guidance that Emmis gave for the current quarter should be seen as a "foreboding" sign for how calendar Q4 is shaping up for all of radio. So RBR took to the streets and asked a number of radio executives for their input not just on 4th quarter but what radio must do to succeed starting now and into next year.

What are three things that radio must do to be competitive in this new media environment?
Jeff Smulyan, Chairman & CEO, Emmis Communications: In a nutshell, we need to fully understand how listeners and viewers will consume media in the future, we must continue to create content that is relevant and compelling, and we must make sure we reach people where they live. I still think a preponderance of people of all ages will choose to get their audio entertainment and information from radio. Everyone has one, it's free, it's immediate, it goes anywhere. We'd be foolish not to deliver great audio the way people decide they want to get it, but I think Emmis will be agnostic regarding platforms. Younger people are less consumed these days about technical stuff than our generations were. They care far less about audio quality than we did and remember, iPods don't deliver the best audio experience. What they care about is getting what they want when they want it. Our task in this business is to make sure we provide that. That will mean we embrace other platforms in the process.

RBR note: During this week you will hear from these executive if you have a Comment on the RBR question What are three things that radio must do to be competitive in this new media environment? Let us know in 250 words or less along with a photo to [email protected]

Kerby Confer, Partner, Keymarket and Forever Companies,
Peter Ferrara, President & CEO, HD Digital Radio Alliance,
Skip Finley, Vice Chairman, ICBC Broadcast Holdings, Inc.,
Rolland C. Johnson, Chairman and CEO, Three Eagles Companies,
Bruce Maduri, President & CEO, Genesis Communications,
William O'Shaughnessy, President & Editorial Director, Whitney Radio,
Rick Buckley, owner & CEO, Buckley Broadcasting
Mary Quass, President/CEO, NRG Media, LLC


Wall Street Media Business Report TM
Bring us your dogs, your ponies, your huddled stations
Cox Radio has set the date for its confab with analysts to discuss the radio group's Q3 2006 results. It'll hit the teleconference infrastructure on 11/8/06 at 11:00AM Eastern. Cox owns and/or operates 80 stations in 18 markets, highlighted by clusters in Atlanta, Houston, Miami, Orlando, San Antonio and Tampa. As usual, RBR will listen in so you don't have to.

In the mean time, coming up this week, RBR will cover McGraw-Hill, Tribune, Arbitron, New York Times and Belo.


Ad Business Report TM

Air America bankruptcy
won't deter ad buys

RBR asked Rich Russo, JL Media's SVP/Director of Broadcast Services, whether or not the Air America bankruptcy filing (see related story Radio News) will turn advertisers away from the network. "We would treat them as any other situation. If we did business with them, they don't owe me money, they just owe me spots. So theoretically, if I did business with them, as long as they ran my spots, we'd pay them. So from an agency point of view, if the format makes sense for the client we're buying for, it doesn't matter what the financial state of the company is. We're not paying cash in advance because we're established. So they're not going to run away with our money. However, the issue is if you're booking something far enough in advance, will they still be on the air by the time your flight starts? If I'm booking something for December, and it's feasible that they might not exist, that could be a problem. So if you're going to book something with them, you might want to book it late, that's all. You book it on Friday for Monday."


Media Business Report TM
Promo Only MPE adding video
Most record labels are well past the days of FedEx-ing new releases to radio stations overnight to keep anyone from jumping the gun on new music. Since launching just over two years ago (10/26/04 RBR #209) with 700 radio stations signed up to receive music track downloads via the Internet, Promo Only MPE has grown to over 10,800 registered users and delivered over a half billion downloads for more than 600 major and independent labels. What's next? Video. Dean Ernst, Director of Promo Only, tells RBR/TVBR that version 3.0 of the company's software, to be distributed any day now, will provide for downloads of full iPod videos. Ernst says in a lot of cases Program Directors and Music Directors just want to see the video to get a better idea of how the new song is being presented, but in some cases labels are making them available to stations to post on their website for downloads by listeners - and that will be spelled out for users.


Media Markets & Money TM
Action on the WI-MI frontier
In this case, WI-MI refers to Wisconsin and Michigan. It's along the far northern border close to the shores of Lake Superior. On the Wisconsin side, in Hurley, you'll find WHRY-AM, and across the border into Michagan town Ironwood you'll find WUPM-FM. Charles H. Gervasio's Big G Little O Inc. is selling the stations to Gerald J. Hackman and John J. Nix, and their Bay Broadcasting Inc., for 1.4M all-told. 1.25M cash will be for the stock of Big G Little O, and the rest will go to Gervasio in the form of a non-compete agreement. The buyers own an AM-FM combo not far to the north (but out of duopoly range) in Hancock MI, and Hackman has a 49% interest in a station even farther north in Ontonagon MI.


Washington Media Business Report TM
AT&T merger put on ice
The proposed acquisition of BellSouth by AT&T ran into a deadlock at the FCC last week. Originally on the agenda for Thursday, 10/12/06, it was moved back a day then canceled entirely. Republican Chairman Kevin Martin was unable to get a vote to approve the transaction with his third Republican, Robert McDowell, on the sidelines due to conflict of interest concerns. That gave Democrats Michael Copps and Jonathan Adelstein the opportunity to throw up a blockade by voting to a 2-2 tie. The Democrats are looking to assure that the rights of consumers and competitive issues will be considered fully. According to the Washington Post, AT&T was willing to make some concessions but was not willing to submit to net neutrality provisions. Martin, in a letter to the Democrats shared with the press, asked that if they have further concerns, that they "...extend us the courtesy of raising them as son as possible to avoid any further delay in our consideration of this transaction," and noted that in his opinion many concerns have been addressed already. Martin has opened up a 10-day window for public comment and scheduled a meeting to reconsider the matter for 11/3/06. The two Commerce Committee heads on Capitol Hill left no doubt as to where they stand. Ted Stevens (R-AK) and Joe Barton (R-TX) want this deal approved. In a joint statement they wrote, "We are concerned by the Commission's failure to act on the application this week after such a thorough review and a complete record. We certainly hope that the delays requested by Members of the Commission are substantive in nature, although the Commission has had ample time to debate the merits of AT&T's acquisition of BellSouth." The DOJ has approved the merger.

RBR observation: The Commissioners on both sides seem to have come closer together than they were when they began consideration of this, but they can take testimony and produce studies until the cows come home and there is likely to be an unbridgeable chasm. That would be the concept of network neutrality. Although the party-line is not rock solid on this issue, most Democrats are for codifying it now, most Republicans would rather wait to see if it's going to be a problem. The issue is tying up the telecom update/video competition bill on the Hill, and now it's probably largely responsible for tying up this deal. A lot may depend on who has the upper hand after 11/7/06: Election Day, so maybe Martin scheduled the next meeting about four days too early.


Monday Morning Makers & Shakers

Transactions: 8/27/06-9/1/06
Was it back to school week in your jurisdiction? Sure looked like it in the Makers & Shakers district, where broadcasters shook off the late summer doldrums with over 40 stations and well over 300M changing hands. The filing of three fourths of the CBS/Entercom agreement accounted for about a fourth of the volume and two thirds of the value.

8/27/06-9/1/06

Total

Total Deals

12

AMs

9

FMs

22

TVs

11
Value
328.075M
| Complete Charts |
Radio Transactions of the Week
CBS to Entercom, parts 1, 2 & 3
| More...
|
TV Transactions of the Week
Another chapter in Pegasus saga
| More...
|


Transactions
7.5M KXEB-AM & KJON-AM Dallas-Ft. Worth (Frisco, Carrollton TX) and KFNI-AM San Antonio (Pleasanton TX) from BMP DFW License Company LP/BMP San Antonio License Company LP, subsidiaries of Border Media Partners LLC (Thomas Castro et al) to Chatham Hill Foundation Inc. (Joe C. Thompson Jr., Dorothy K. Thompson, Joe C. Thompson III)/La Promesa Foundation (Len Oswald et al). 750K escrow, balance in cash at closing. LMA until closing. Non-profit buyers filed together; Chatham gets Dallas stations, La Mesa gets San Antonio station. [File date 9/21/06.]

2.9M WCNR-FM Charlottesville VA (Keswick VA) from Force 5 Communications LLC (Jeffrey D. Shapiro) to Saga Communications of Charlottesville LLC, a subsidiary of Saga Communications Inc. (Edward K. Christian). Buyer is loaning full amount to seller. Superduopoly with WQMZ-FM, WWWV-FM, WINA-AM & WVAX-AM. LMA until closing. [File date 9/20/06.]

170M KCNS-TV San Francisco; WSAH-TV New York (Bridgeport CT); WMFP-TV Boston (Lawrence MA); WOAC-TV Cleveland-Akron (Canton OH); and WRAY-TV Raleigh-Durham (Wilson NC) from EW Scripps Company (Kenneth Lowe et al) to Multicultural Television Broadcasting LLC (Arthur Liu, Yvonne Liu). 8.5M escrow, balance in cash at closing. To allow for non-simultaneous closings, KCNS is valued at 64M; WSAH/WMFP at 61M; and WOAC/WRAY at 45M. Cross-ownership in New York with WWRU-AM, WNSW-AM, WPAT-AM, WKDM-AM & WZRC-AM; in San Francisco with KATD-AM, KIQI-AM & KEST-AM; in Boston with WLYN-AM & WAZN-AM. All stations were Home Shipping Network affiliates, KCNS on Channel 38; WSAH on Channel 43; WMFP on Channel 62; WOAC on Channel 67; WRAY on Channel 29. [File date 9/29/06.]


Stock Talk
How now, Dow cow?
The Dow-Jones index may be hitting highs, but you'd never know it if all you're looking at are broadcast stocks. Many of them simply seem unable to hitch a ride with some of the non-broadcast high flyers. A few broadcasters picked up around half a buck, but more were singing the blues about red results.


Radio Stocks

Here's how stocks fared on Friday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.73

-0.02

Hearst-Argyle

HTV

23.84

-0.17

Beasley

BBGI

6.88

-0.01

Journal Comm.

JRN

11.67

+0.27

CBS CI. B CBS

28.15

-0.17

Lincoln Natl.

LNC

64.01

+0.60

CBS CI. A CBSa

28.16

-0.22

Radio One, Cl. A

ROIA

6.52

+0.07

Citadel CDL
9.74 +0.01

Radio One, Cl. D

ROIAK

6.50

+0.05

Clear Channel

CCU

30.71

-0.04

Regent

RGCI

3.79

-0.01

Cox Radio

CXR

15.93

+0.27

Saga Commun.

SGA

7.77

-0.02

Cumulus

CMLS

10.19

+0.22

Salem Comm.

SALM

12.83

+0.51

Disney

DIS

31.11

-0.19

Sirius Sat. Radio

SIRI

3.88

+0.03

Emmis

EMMS

11.73

+0.25

Spanish Bcg.

SBSA

5.14

+0.02

Entercom

ETM

26.39

+0.35

Univision

UVN

34.99

+0.15

Entravision

EVC

7.44

-0.01

Westwood One

WON

7.57

+0.09

Fisher

FSCI

42.47

+0.59

XM Sat. Radio

XMSR

12.05

+0.32

Gaylord

GET

46.70

+0.55

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

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




Below the Fold
Executive Comment
Three things that radio must do
Emmis CEO Jeff Smulyan views are,
How listeners and viewers will consume media...

Ad Business Report
Air America bankruptcy
Rich Russo, JL Media says it won't deter ad buys at the network level...

Media Business Report
Promo Only MPE adding video

Only tells RBR that 3.0 of the company's software, to be distributed any day now...

Washington Media Business Report
AT&T merger put on ice
Ran into a deadlock at the FCC...

Stations for Sale

Southern Small Markets
FMs and AM-FM Combos
Florida, Louisiana,
Mississippi, South Carolina
Call Gordon Rice @ 843 884-3590
[email protected]


Radio Media Moves

Arbitron's Mocarsky upped to SVP/Press & Investor Relations
After 24 years, Arbitron VP/Communications Thom Mocarsky has been promoted to SVP/Press & Investor Relations. Thom oversees the company's press and investor relations programs and is the company's chief spokesperson. In recent years, he has helped to guide the company's transition from a subsidiary of Ceridian to a publicly traded entity with a current market capitalization of more than 1 billion. Since 1992, Mocarsky has played a pivotal role in introducing and marketing Arbitron's Portable People Meter. In addition, he has been instrumental in promoting Project Apollo.




TVBR - TV News

Google faces copyright fight over YouTube
Dick Parsons, Time Warner CEO, fired a shot at Google last week, saying his group would pursue its copyright complaints against its just-announced purchase YouTube.com. Google paid 1.6 billion for YouTube last week. Time is one of several media companies concerned about possible illegal use of content on YouTube. Parsons told the UK Guardian: "You can assume we're in negotiations with YouTube and that those negotiations will be kicked up to the Google level in the hope that we can get to some acceptable position. Parsons said Time Warner had also looked at buying YouTube but balked at the price. "The best buyer for YouTube was Google because it has the most advanced ability right now to monetize traffic. Whether they overpaid or not, time will tell," reported The GuardianBoth YouTube and Google, which has also come under fire for infringing copyright, remove content where breaches can be demonstrated. Meanwhile, Chad Hurley, YouTube founder, said the company is committed to developing tools to identify the content and monetize it so content owners can have a new outlet for their content.

TVBR observation: It is not just about copyright infringement. We've heard numerous films posted by folks in the Mideast showed graphic scenes of US and coalition soldiers getting killed, with a backdrop of joy and victory. Those are now gone and removed from the site. There are plenty of libelous and revolting videos that will get out for a while, but as the process to report and remove them improves over time, the liability and outrage factors should diminish. In the meantime, we figure Google has some deep pockets for out-of-court settlements. Bottom line, Google is looking for ways to make the copyright holder money through their site. So infringement or not, the copyright holders may end up being happy their stuff went up on the site.


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

Ballmer warns media
companies about Google
Why is Google paying 1.65 billion for YouTube? "The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google," says Microsoft CEO Steve Ballmer.

RBR observation: What some forget and RBR reminds that there are a few small companies challenging Google especially in the media buying area. They just do not get the headlines because they are too busy making their systems work and putting money into the radio business. Just look around you'll find them Exchanging Media dollars with radio.
10/13/06 RBR #200

Moody's downgrades Emmis
From Ba3 to B1. Additionally, Moody's assigned a B1 rating to the proposed 600 million senior secured credit facilities, consisting of a 150 million six-year revolving credit facility and a 450 million seven-year Term Loan of the Emmis subsidiary, Emmis Operating Company (EOC). Proceeds from the proposed credit facilities will be used to fund a 150 million special dividend to Emmis' common stockholders in addition to refinancing EOC's 6-7/8% senior subordinated notes and current bank facilities. Complete analysis in
10/13/06 RBR #200

Arbitron sues The Media Audit/Ipsos
The ratings device battle heads to federal court now, with Arbitron claiming that the system being used by The Media Audit/Ipsos, based on Smart Cell Phones, violates three of the patents that Arbitron filed for its Portable People Meter (PPM).What PPM patents does Arbitron claim TMA/Ipsos is treading on? Arbitron VP/Communications Thom Mocarsky told RBR/TVBR that one of the patents is for encoding audio with an inaudible message. And there is more.

RBR observation: There is nothing random about this lawsuit being filed with the federal court in Marshall, TX. The small Eastern District of Texas court has become a hotbed of patent litigation. . Arbitron is moving to squash the challenger like a bug. OK, Arbitron won't be quite this blunt and move full-steam ahead to roll out PPM as the new standard for US radio ratings.
10/12/06 RBR #199

Political: 1B still in warchests
TNS Media Intelligence says the staggering figure of 1.4 billion represents the minimum that will be spent on broadcast advertising this year. And even more amazing is the estimate that only about 400M of that has been spent, leaving at least one billion still on the table and seeking airtime.

RBR observation: The much larger issue is the ad category of Political. Broadcasters think political during elections but look at that number of 1.4 B and RBR reminds all again that Political will be a consistent stream of local ad revenue. Watch it in 2007.
10/12/06 RBR #199

Emmis bellwether negative for radio
Wall Street agrees to disagree on Emmis. Goldman Sachs analyst Mark Wienkes in a note to investors after Emmis issued its numbers Q2 results and soft Q3 outlook for revenue down low double digits against another low single digit rise in operating expenses sets the tone for the other operators, which are set to report Q3 results in late October/early November. Radio continues to see a challenging environment, with indications that growth and profitability will be pressured into 2007. At Bear Stears Victor Miller disagreed with the idea that Emmis was a negative indicator for the rest of radio. Miller believes the weakness in Emmis' guidance is related to company specific issues. In addition to weakness in the New York and Los Angeles markets ..Emmis is facing competitive issues at its urban formatted radio stations in both markets, and recently reformatted its country station in Los Angeles. We do not believe that other radio companies are experiencing the same type of operating weakness.

Publisher note: It is always good to see and hear health discussion from Wall Street. Wienkes and Miller agree to disagree as RBR mentions another analyst disagrees with one of RBR readers. Just does my 57 year old heart good to know all can speak and be heard. RBR always has the room for broadcasters to interact. Comments can be sent to [email protected] For complete details on the financial findings read
10/11/06 RBR #198

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