Welcome to RBR's Daily Epaper
Volume 24, Issue 210, Jim Carnegie, Editor & Publisher
Friday Morning October 26th, 2007

Radio News ®

Another shareholder
pressuring Emmis

This time it is Arnhold and S. Bleichroeder Advisers LLC calling for the creation of a special committee of independent directors to work with CEO Jeff Smulyan on a "value-creating transaction." And the owner of some 4.6% of Emmis' Class A shareholders wants the directors to let shareholders vote on selling the company to Smulyan, even if they don't like the price. The letter to independent directors Susan Bayh and Peter Lund states agreement with filing by other shareholders saying that "aggressive action" must be taken by the board of directors to benefit minority shareholders. Since Smulyan has voting control of the company via his super-voting shares, the latest letter says the only practicable solution is a going private transaction to sell the entire company to Smulyan "We strongly support the idea of a buy-out, funded in part by asset sales, that delivers a substantial premium to the current trading price of approximately five dollars per share," the letter says. While a new offer from Smulyan might not value the company at what the independent directors believe the company is worth on the open market, the letter appeals to the board to put such an offer to the shareholders anyway - and let them decide. "Arnhold and S. Bleichroeder are longtime shareholders of Emmis, and we value their input," the company said in a statement sent to RBR. It said the letter will be forwarded to its directors.
| Read the letter |

RBR observation: The question is, what could Smulyan offer now? Given the company's ongoing problems, it won't be the 15.25 per share that he offered last year, only to have it rejected by the board - and certainly not the 16.80 that was discussed during the failed negotiations. It sounds like Arnhold and S. Bleichroeder Advisers are ready to take about anything that's a significant premium to where the stock price has been lately, but would other shareholders be as willing to take what they can salvage and run away licking their wounds?

FCC puts localism on the Halloween docket
The FCC's October Open Meeting will include the final localism forum in the set begun way back under former Chairman Michael Powell. It will follow four other items in a meeting scheduled to run from 9AM until 2PM at FCC headquarters. And the announcement drew immediate fire both within and from outside the Commission.

Commissioners Michael Copps (D) and Jonathan Adelstein (D) issued a joint statement, saying "Tonight's Public Notice doesn't bode well for the future of the Commission's localism and media ownership proceedings. Over two weeks ago, we agreed to clear our calendars for the possibility of a localism hearing in Washington on October 31st. But neither we nor the public received any confirmation that the hearing would occur until tonight -- just five business days before the event. This is unacceptable and unfair to the public. And it makes putting together an expert panel nearly impossible. Is the Commission serious about allowing the public to participate in the agency's decision-making? Or is the goal to be able to claim that hearings have been held, even if the public has not had a chance to fully participate?" Watchdog Free Press piled on. Its Executive Director Josh Silver said, "Chairman Martin's actions suggest that he's never been serious about paying attention to the public. He's already made up his mind, and is hell-bent on gutting the rules. This is a slap in the face to the vast majority of Americans who oppose consolidation and a direct insult to the bipartisan members of Congress who have called for a fair and transparent public process." The agenda also includes a vote on a "directive that local franchising authorities not unreasonably refuse to award competitive franchises" looking to enter business where cable service is already established.

RBR observation: It hasn't been a good week for Chairman Martin. Conventional wisdom has it that his main goal is to loosen cross-ownership restrictions, which the Third Circuit almost praised while remanding the rules back to the FCC for changes or better justification. But in the absence of any firm guidance on just what changes are in the works, the imaginations of anti-consolidationists are free to run wild. Nonetheless, this may have worked better if Martin had announced back in July that he'd hold meetings on this and that date with an eye toward a 12/18/07 vote. The recent announcement of the December target date, and only after that the announcement of the localism meeting -- with a Washington State public forum still to be worked in -- does make this look like a rush job.

Will Supremes
enter expletive fray?

The Second Circuit ruled in favor of programmers when it considered FCC fines over the utterance of fleeting expletives, including the f-bomb, on live television. The FCC wants to appeal upward, and the Supreme Court may decide whether or not to take the case soon. According to USA Today, that decision may arrive by early next year. The FCC's indecency rules used to hinge on whether questionable content was repeated or intended to pander or titillate. Inadvertent unplanned incidents were generally excused with at worst an admonition. But in the heightened awareness of the topic following Janet Jackson's moment in the Super Bowl back in 2004, the FCC unilaterally modified the rule to automatically include the f-bomb under any circumstances. The immediate case concerns f-bombs uttered during various awards programs broadcast live on the Fox Network.

RBR observation: A court ruling could be narrow and not really answer the question everyone wants answered: What is and is not OK. An example of a narrow ruling is that the FCC changed the fleeting rule without opening the issue up for public study and commentary, and without public hearings on the matter. The issue could then be remanded to the FCC for reconsideration in a process that provides for public input. Or, we suppose, a court could rule that the fleeting and inadvertent standard was correct all along, and anything less would have an unacceptably chilling affect on live broadcasting. An earth-shaking ruling would be that under the broadest possible reading of the First Amendment, anything goes. The FCC would simply like to be able to levy fines for what it considers to be definitively obscene. Stay tuned.

Others have spoken: Cue Hinchey
You didn't need the Hubble Telescope to see this coming. Rep. Maurice Hinchey (D-NY) is right on top of FCC Chairman Kevin Martin's plans to bring as-yet unrevealed media ownership rules changes up for a vote by mid-December. Hinchey is founding member of the Future of American Media Caucus, and despite the unrevealed nature of the changes, he apparently believes the FCC has an "expedited plan for massive media consolidation." That's how he headed a release on the matter, written on behalf of 42 Democratic members of the House of Representatives. "After all of the controversy that this proceeding has generated over the past four years, we believe that another round of public commentary is essential before a final vote," he said. "At its heart, the debate over the future of media ownership in America is a debate over the future of our democracy. Therefore, we hope you will agree that the Federal Communications Commission must do everything it can to be able to honestly say that it is ending this proceeding after having considered every factor on behalf of the public whose airwaves it purports to represent." He concluded, "Chairman Martin's proposal would only serve to further shrink an already limited diversity of opinion found among American news outlets. His plan is the exact opposite of what is needed in this country. The FCC ought to be looking for ways to expand the variety of viewpoints and diversity of ownership rather than limiting and further consolidating them."
| House letter signers here |

RBR observation: With all due respect, and without taking sides on any possible facet of the issue, we see little use for any further public forums on the topic. They invariably attract the same group of watchdogs: You can agree with them or not, but we've all already heard it. In most cases there have been ample representatives of the broadcast community, but the average citizen who attends a forum comes not to praise broadcasters but to grind axes. That is their right, and many of them may have valid points. But we've heard them, too. We think this boils down to what Martin thinks he can get past both the 8th Floor and the courts, tempered by the now almost certain response it will attract from Congress. Get ready for lots of noise between now and 12/18/07, and maybe even more noise thereafter.

XM optimistic on merger
and OEM sales

Retail sales of XM Satellite Radio receivers are below expectations, but XM CEO Nate Davis, pictured, says OEM sales have more than counteracted that decline and will surpass expectations for 2007. Management remains optimistic that its merger with Sirius will get regulatory approval by the end of this year, but regardless XM management remains focused on running its business. Q3 retail sales of receivers fell 22% and Davis noted that churn actually exceeded new retail sales. But the company is predicting that Q4 OEM sales will hit one million, meaning that total OEM sales will surpass XM's forecast of three million. Despite moving into lower priced vehicles, XM said its OEM conversion rate remains stable, with 52.5% of new car buyers converted to subscribers as their trial periods ran out in Q3. The overall churn rate decreased to 1.69% for the quarter from 1.82% a year earlier. XM is forecasting that it will finish the year with 9-9.2 million subscribers and that subscriber revenues for this year will be around a billion bucks. Since the last week of December is a big week for new receiver activations, the company warned that costs will be up for Q4, with the payoff pushed into next year. As for the pending merger with Sirius, Chairman Gary Parsons insisted that he is "as confident today as we have ever been" and he is still optimistic about getting FCC and DOJ approval by the end of this year. Asked whether the current political turmoil over the FCC's efforts to revise its broadcast ownership limits, Parsons insisted that the issue does not directly relate to the assessment of the XM-Sirius merger.

RBR observation: Maybe it's not directly related to the ownership review, but we sure haven't heard of any FCC member being willing to stick his/her neck out and say they plan to vote to approve the merger. The only Commissioner on the record one way or the other is Michael Copps, and his vote is "no." That leaves the satellite guys still three short of the three votes they need on the FCC - and that's the easy part. DOJ is the bigger hurdle.

Copps presses for News Corp/Dow Jones hearing
Commissioner Michael Copps is still upset about the pending 5.6 billion bucks acquisition of Dow Jones & Co. by News Corporation and is insisting that the FCC should do something about it. In a letter to Chairman Kevin Martin, Copps calls for the Commission to open an inquiry into whether News Corporation should be allowed to own one of the big four TV networks and two of the nation's largest newspapers. Copps insists that the FCC needs to look into the implications for the New York market - never mind that the Wall Street Journal is a national newspaper with only 302K of its 1.7 million print subscribers in the New York metropolitan area. Copps wants to reexamine whether national newspapers should be counted when examining local media ownership, insisting that the precedents which concluded that they should not be were reached "with very little specific economic or legal analysis."

RBR observation: This is absolutely idiotic! Suppose the FCC held the inquiry that Copps wants. What then? No FCC approval is needed for the Dow Jones acquisition to close. It has no authority over whether News Corporation, Google or the Government of North Korea buys Dow Jones & Co. Would the Commissioners be so ridiculous as to hold a non-binding straw poll on whether or not they want the deal to take place? It would have no more legal effect than polling the staff of RBR.

Wall Street Business Report TM
XM still buying red ink by the barrel
The cash burn continues for XM Satellite Radio, so the company assured Wall Street in its quarterly financial report that it still has access to cash to cover its red ink. As of September 30th, the company said it had 231 million in cash on hand, plus access to 400 million in credit facilities, for total available liquidity of 631 million. XM's Q3 loss grew to 145.4 million, or 47 cents per share, two cents worse than the Thomson/First Call analysts' consensus of 45 cents. A year earlier the company lost 85.5 million, or 32 cents per share. Q3 revenues rose 20% to 287.5 million, in line with expectations.

Ad Business Report TM

New Applebee's campaign includes radio, TV, online
Via by McCann Erickson, Applebee's will introduce a new campaign 10/28 that begins a restaging of the brand and repositions the restaurants as a special place for people to come together. The humorous effort, which uses Internet and TV to feature the restaurant chain's new "spokesapple," introduces several new brand elements including an updated logo; new menu design and strategy; hip uniforms for restaurant associates; and the new tag line, "Together is good." The campaign, which premieres during Extreme Makeover, Desperate Housewives and the fourth game of the World Series, features three, 30-second and 15-second TV spots where a red delicious apple with a voice encourages people to come together at Applebee's. The TV spots will run for eight weeks, promoting Applebee's popular Pick n' Pair lunch combos and the new Applebee's Steakhouse Classics. Other components include radio spots, print and in-store signage. Applebee's also will run Web ads on sites that bring people together, such as reunion.com, evite.com and classmates.com.

Media Business Report TM
Tribune sells Connecticut papers again
Tribune Company has a new buyer for its Stamford and Greenwich, CT newspapers after a previous 73 million bucks sale to Gannett unraveled (5/29/07 #104). They are now being sold to Hearst for 62.4 million and they will be managed by MediaNews Group under its new joint venture with Hearst. The deal with Gannett fell apart after a judge ruled that the buyer had to assume a union contract at The Advocate, the newspaper in Stamford, CT. A Tribune spokesman told RBR that Hearst has agreed to assume that contract with the United Auto Workers local. The other newspaper being purchased is the Greenwich Time. Tribune will retain the real estate for a separate sale, as it had also planned to do under the previous sale deal.

RBR observation: Just a few days ago Hearst Corporation finally consummated a long-pending deal to acquire a 31% equity stake in MediaNews Group's operations outside the San Francisco Bay area for 317 million bucks. The deal had been held up for more than a year while regulators studied whether to allow Hearst to swap The Monterey County Herald in California and St. Paul, MN, Pioneer Press to MediaNews Group for the equity stake, along with 27 million in cash. MediaNews Group owns quite a few newspapers in New England, where Hearst-Argyle Television, of which Hearst is the majority owner, has several TV stations, so you might think this has FCC crossownership implications. Nope. Hearst got Class C stock in MediaNews Group. The voting Class A stock is mostly held by trusts for the Scudder and Singleton families. Also, Hearst-Argyle's New England stations are in Massachusetts, New Hampshire, Maine and Vermont, so there is no crossownership issue with these two newspapers in Southern Connecticut.

Media Markets & Money TM
Close encounter in NY Galaxy
A major portion of a multipronged deal in the Utica-Rome NY market has come to closure. According to Kalil & Co., Ed Levine's Galaxy Communications is now at the controls of WIXT-AM/WSKU-FM Little Falls, WSKS-FM Whitesboro, WADR-AM/WOKR-FM Remsen, WRNY-AM/WUMX-FM Rome and WUTQ-AM/WOUR-FM Utica. It acquired the stations from Clear Channel for 3.1M. Various spin-offs by Galaxy and other deals are associated with this. One of them, the sale of WRCK-FM Utica from Galaxy to Educational Media Foundation has also closed. Accfording to brokers John Pierce and Bill Schutz, that spin-off was valued at 1.224M. Pierce note that it's the fourth station bought by EMF from Levine, along with one in Syracuse and two in Albany. For a detailed account of all the related transactions,
| read our write-up from 8/2/07 RBR #150 |

Washington Business Report TM
FCC will not help with zone defense
John Stokes and his Skyline Broadcasters are trying to upgrade KGEZ-AM in Kalispell MT. The station has had an easement since 1949 allowing its two-tower array to exist on a 160-acre plot owned by local farmers, of which it uses only 31 acres. Stokes came on the scene when he acquired the station in 2000. Stokes informed the farmers, the Anderson family, that he wished to enlarge or move the towers within the 160 acres; they argued he was limited to the original 31 acres. Further, they argued the site was in disrepair and took him to court, seeking to oust him from the property altogether. The Montana Eleventh Judicial District Court ruled that Stokes could stay on the 31 currently-occupied acres if and only if the repairs were made. Stokes appealed to the FCC, saying that local governments "have absolutely no jurisdiction to order an alteration, change, modify, remove, deny construction, deny placement, or restrict use of any approved FCC radio station facilities." The FCC said it takes precedence over local government in matters of spectrum allocation. However, that authority does not extend to land usage matters. "For example, the Commission has adopted no rules preempting local zoning requirements affecting the construction of broadcast towers." End result: Stokes is at the mercy of the court.

Entertainment Business Report TM
REACH Media taps Gary Bernstein
as programming head

Radio One and REACH Media have joined forces to bring aboard former Superadio Networks chief Gary Bernstein, to run and expand Syndication One, effective immediately. He'll work directly with Alfred Liggins and David Kantor to expand REACH Media and Radio One's syndication infrastructure through innovative analog and digital cross platform content branding. Syndication One currently offers The Yolanda Adams Morning Show, The Al Sharpton Show, The Rickey Smiley Morning Show, CoCo Brother's Spirit of Hip Hop program, and other signed talent soon TBA. "Gary Bernstein is unquestionably one of the real visionaries and leaders in radio syndication," adds REACH Media CEO David Kantor. "He possesses a rare combination of sales, marketing, and programming savvy that has enabled him to achieve monumental results." Syndication One will have offices in Boston, New York, and Dallas.

WPHH-FM Hartford
changes format

Yesterday Urban WPHH-FM Hartford became fm104one, airing the deepest music playlist with the longest uninterrupted music sweeps and widest selection of music in Connecticut. Core artists include; The Clash, Smashing Pumpkins, 311, The Ramones, Beastie Boys, Sublime, Dave Matthews, Foo Fighters, Incubus, Green Day and many more. fm104one will initially air DJ-free. The on-air experience is complemented on-line at 1041music.com, which will have a major focus on social networking. The Web site will also let listeners discover new music and offer feedback. Local and national bands will be webcast. The site will also feature video concerts and will showcase the full culture of the station.

N/A KALI-AM Los Angeles CA (West Covina CA) from Multicultural Radio Broadcasting LLC (Arthur S. Liu) to Transition Radio LLC, Trustee (William B. Schutz Jr.). Placed in trust for resale due to pending acquisition of KHIZ-TV Barstow CA. [File date 10/11/07.]

Stock Talk
Stocks off slightly
An unexpected rise in home sales wasn't enough to maintain an early boost in stock prices and the market ended the day down. The Dow Industrials slipped three points to 13,672.

Radio stocks fell more. The Radio Index declined 0.517, or 0.4%, to 120.567. Emmis was down 2.7% as the worst performer. Salem was the best, up 3.4%.

Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change




















Journal Comm.







Lincoln Natl.




Citadel CDL
4.32 +0.02

Radio One, Cl. A




Clear Channel




Radio One, Cl. D




Cox Radio












Saga Commun.




Debut Bcg.




Salem Comm.








Sirius Sat. Radio








Spanish Bcg.
















Westwood One








XM Sat. Radio





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Below the Fold
Wall Street Business Report
XM still buying red ink
By the barrel as cash burn continues...

Media Business Report
Tribune sells Connecticut
Papers Again, a new buyer is Hearst for 62.4 million...

Media, Markets & Money
Close encounter in NY Galaxy
Galaxy Communications now at the controls...

Washington Business Report
FCC will not help
With zone defense, End result Stokes is at the mercy of the court...

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Radio Media Moves

New Rochester VP/GM
Entercom announced that Susan Munn has been named Vice President/General Manager of its four-station cluster in Rochester, NY (WBEE-FM, WBZA-FM, WFKL-FM and WROC-AM). Munn began her Entercom career in 2001 as Director of Client Marketing Services in the Rochester market. She was named Director of Sales at Entercom Rochester in 2004, and has led the group to record increases in both revenue and market share each year since her appointment.

adds TV

Ex-mayor and ex-con Buddy Cianci has already found post-prison employment as midday talk host on WPRO-AM Providence. Now he has also signed on as chief political analyst and contributing editor at WLNE-TV (Ch. 6, ABC).

From Florida to Sunny
Tony Florentino has joined Saga Communications as Program Director of WSNY-FM "Sunny 95" Columbus, OH, effective November 12th. He had most recently been VP of Operations for Marshall Arts Communications in Naples, FL.

Upped at Bonneville
Bonneville International has promoted three senior corporate staffers to vice president. Paul Yates is now Bonneville Vice President and Controller. Alvin Cottrell is Bonneville Vice President and Treasurer. Kent Nate is Vice President and Controller for Bonneville Communications and Bonneville Satellite, both divisions of Bonneville International.

More News Headlines

Disney commits
2M for fire aid

With its Southern California corporate home area devastate by wildfires, The Walt Disney Company announced that it will contribute two million bucks to relief efforts for the nearly one million local victims. An initial 200K is being donated to the American Red Cross for immediate relief efforts and the remainder will be earmarked for volunteer centers and future rebuilding, including helping to restore Southern California's natural environment.

Laura Ingraham Joins Fox News Channel
Talk Radio Network's Laura Ingraham has joined Fox News Channel as primary substitute host of The O'Reilly Factor and Hannity & Colmes, as well as a contributor, announced Bill Shine, SVP/Programming. In making the announcement, Shine said, "I have been an admirer of Laura's work for quite some time. She is a welcome addition to the Fox News family." Ingraham added, "After years of guest appearances on Fox, I couldn't be happier about the opportunity to add my voice to FNC's stellar lineup."

RBR Radar 2007
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

CBS Radio reorganizes
Hires Interep's CBS Radio Sales President Michael Weiss to be in charge of sales for all CBS Radio-owned stations. Here's one lead that many at the top level should follow, CEO Dan Mason is taking a more hands-on role, overseeing 57 stations in 10 top markets. (for the total reorganization plan see RBR)

RBR observation: It's really a more direct form of management, moving away from the Clear Channel style of RVP roles. The changes have Market Managers now reporting directly to top management at CBS Radio, providing faster response and more efficient communications. This is a big leg up for Herman, who adds Riverside, Sacramento, Las Vegas, Denver, Rochester, NY, Pittsburgh, Cleveland, Orlando, Palm Springs, Phoenix, Tampa, West Palm, Hartford, Charlotte, Atlanta, Baltimore, Minneapolis, San Diego and St. Louis. At the top, though, it emphasizes again what a hands-on guy Dan Mason is. He's already been dealing personally and directly with re-formatting stations in the largest markets that have been the biggest problems for CBS. How's that working out? We get his latest report card a week from today when CBS reports its Q3 results.
10/25/07 RBR #209

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Have a passion for Sports and want to be in South Florida, then the #1 one sports station 790 The Ticket - WAXY, Miami is seeking experienced AEs. Strive to be the best on and off the field of play in Sports radio today and join our team. 790 The Ticket, We've got Game. E.O.E. See Radio Careers.

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