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Volume 22, Issue 215, Jim Carnegie, Editor & Publisher

Wednesday Morning November 2nd, 2005

Radio News®

Viacom profits up as split approaches
"These guys are ready to rock," declared Viacom CEO Sumner Redstone as he prepared to hand over the CEO title to Les Moonves at CBS Corp. and Tom Freston at New Viacom. In what's likely to be its last quarterly report as a united company, Viacom reported that revenues were up 10% to 5.9 billion, led by growth at its cable networks. Earnings per share from continuing operations rose 12% to 47 cents. Television revenues were down 2%, but a good chunk of that was attributed to a drop in syndication sales after the previous year's blockbuster launch of "CSI." TV ad revenues were reported to be up 7% on the strength of CBS' strong ratings. Even the long-struggling radio operation saw revenues rise 2% - - the third straight up quarter for Infinity. With the company apparently hitting on all cylinders, analysts wanted to know why Viacom didn't do any more than affirm its previous guidance of mid single digit revenue and operating income growth and high single digit EPS growth for all of 2005 and CFO Michael Dolan admitted that management was being conservative with its guidance. While much of the conference call focused on the coming split, Freston emphasized that breaking the company in two is not a silver bullet - - he and Moonves will have to focus on growing their respective businesses. For his part, Freston vowed that he would never become complacent about the strong cable brands he'll be overseeing. Moonves said the new CBS Corp. would make its "best in class" mass media businesses perform better each quarter and also grow revenues by tapping new revenue streams. Once again, he insisted that CBS will be paid for retransmission consent.

RBR observation: Good thing that Freston isn't going to be complacent in cable, since he could be facing a new competitor at some point. In the Q&A with analysts, Moonves acknowledged that CBS would consider getting into cable TV in a way that would extend its existing brands and content, although he ruled out competing head to head with Viacom's strongest cable brands in kids programming or music. On the M&A side, Moonves said CBS Corp. would mainly be looking for tuck-in acquisitions. He also said there is "no great need to look to divest anything." That makes it sound like suspended efforts to sell off radio stations outside the top 20 markets will remain suspended.

Moonves: Stern loss is "slight concern"
After seeing revenues grow at Infinity for three straight quarters, Wall Street analysts are wondering what's going to happen to the radio unit inside the new CBS Corp. when it begins 2006 without the "King of All Media." Bear Stearns analyst Victor Miller tried to pin down Viacom Co-COO/President and future CBS CEO Les Moonves on the impact of losing 5% of Infinity's revenues, but Moonves insisted there was only

"slight concern" about Stern's departure. Noting that Infinity recently announced 10 different replacements for Stern on various stations (10/26/05 RBR #210), Moonves said some will work and some won't. But he also noted that Stern's contract had gotten so expensive that Infinity wasn't making much profit on his show anyway.

RBR observation: Stop and Please listen to Moonves audio clip above (slight concern) and you will not believe your radio ears. Words and phrases like: Not concerned about Howard because the margins are not that great - Revenues will be down and costs will be down - some formats will work some won't work - comparing Stern to a hit TV show - and in short it is all about cost reductions and margins as that is the game in radio. Hello, it is finally said on the record by the soon to be new CEO of CBS Corp that radio is just cost cutting and reduced to margins or in short just tossing crap against the wall and seeing what sticks. Which brings into play - any sale off of Infinity stations - as they are just numbers on the books and Moonves quote of "no great need to look to divest anything" and now it is more clear why some higher ups inside Infinity are not concerned - as the new boss is not concerned. Buy out Ad Age every week but somebody did a great snow sales job on Moonves. Radio is just about the margins? Not programming, content, branding, marketing, people - Just Margins - swell just swell.

Christian: One size doesn't fit all
RAB may be ballyhooing a 4% rise in national spot sales for September (11/1/05 RBR # 214), but Saga Communications CEO Ed Christian warned analysts in his quarterly conference call that national results vary widely from market to market and region to region. He noted that the Midwest is up significantly, while the Northeast is down year-to-date. He also warned that many broadcasters may not want to talk about October results, preferring to jump from the up numbers of September to hopes for November and December. "What we saw in October, which doesn't make us any different from our peers, is that we saw a cessation of spending on car stores," Christian said, adding that it was across-the-board, imports as well as domestic dealers. Christian's always interesting conference call also included a discussion of how competitive factors can sometimes damage an entire market, making even the best operators unable to hold the line on pricing. His case in point was Portland, ME, where he said CPMs had gone from 45 to 25 because one operator had failed to exercise pricing discipline.

RBR observation: Ed indicated that the offending operator isn't Citadel, which he said was facing the same problem in Portland. As we look at the market, we see only three companies with clusters large enough to move the CPM needle: Saga, Citadel and Nassau. Now, who do you suppose Ed was wagging his finger at for being naughty?

Promoting minority/women
into broadcast ownership
"Minority Ownership and Employment in the Mass Media: A Path to Power" was the title of a Leadership Conference on Civil Rights Education Fund session in Washington at the US Capitol, put on for the benefit of congressional staffers and other interested parties. Mark Lloyd of the Center for American Progress summed up the ongoing nature of the project by quoting an old Langston Hughes poem: "Looks like what drives me crazy / Don't have no effect on you / But I'm going to keep on at it / Until I drive you crazy too." (We hope we transcribed that correctly.) Lloyd signaled that proponents of increased media ownership for women and minorities were not about to give up the fight - - especially in light of the fact that despite a US minority population of roughly 33%, only 4% of commercial radio stations and 1.9% of commercial television stations are owned by an African American, Hispanic or other minority group. The panel, moderated by UCC's Gloria Tristani, laid much of the blame for this on the FCC, especially during the Michael Powell regime, which they said seemingly failed to take seriously mandates from both Congress and the courts to promote ownership by women and minorities. The probable overhaul of Telecom 1996 in Congress, and the do-over of the 6/2/03 FCC ownership ruling at the behest of the Third Circuit formed the backdrop of the educational session.

Broadcast ownership battle lines
Media Access Project's Andrew Schwartzman said the public outcry which both preceded and followed the 6/2/03 ownership ruling caused major ripples in both Congress and the courts, but had no discernible effect on the Republican side of the 8th Floor. He predicted it would be necessary again in 2006. "This is going to be a big fight," he said, noting that Clear Channel is already crying for even more regulatory relief, while FCC Chairman Kevin Martin awaits Republican reinforcements. He said a major, mostly off-the-radar-screen target for activists will be eliminating the "archaic" 50% UHF discount when calculating television ownership cap compliance. MMTC's David Honig talked about a dismal record from the Powell FCC on minority/women ownership. Powell's own highly-touted diversity panel, he said, sent 44 proposals before the Commission, only two of which received any action. And 13 MMTC proposals made at the time of the 6/2/03 ruling not only weren't acted on, their existence was not even acknowledged. Celia Viggo Wexler of Common Cause said her organization was prepared to work hard to make sure a variety of media viewpoints are available to American citizens. Katherine Grincewich decried the lack of public interest requirements, and the lack of planning, especially for children, as the television set of the future becomes more and more interactive and computer-like.

RBR observation: RBR asked the panel generally what they would like to see happen if in January 2007, Commerce Committee Ranking Members Sen. Daniel Inouye (D-HI) and Rep. John Dingell (D-MI) find that voters have promoted them to Chair. The laundry list is every bit as long as you might imagine. It goes from resuscitating the tax credit to promote minority ownership and exercising tighter congressional oversight and control over the FCC (starting with truly enforcing reporting requirements already in place but largely, they said, glossed over). It includes promoting things like LPFM. It goes all the way to restoring horizontal ownership limitations per the 1992 Cable Act. It includes revisiting and, if possible, rolling back local and national media cluster caps. Failing in that, they would certainly do everything possible to see that there is no further loosening of ownership restrictions. Restoring the tax credit, which thanks to John McCain (R-AZ) and others is already pending - - in a cubbyhole somewhere - - seems to be a quick fix which may be possible to enact without too much resistance. Honig took business realities into consideration, noting that especially in small radio markets, economies of scale are necessary to provide meaningful local content in the face of competition from iPods and satellite radio. Lloyd said anything that helps close the 33% population/4% license gap will be pushed. Bottom line: Get ready for another long, loud, public battle spiced with a very unstable political situation.

TV Watch initiates
1-2-3 campaign
TV Watch, a group of industry organizations trying to protect broadcast free speech from over-reaching regulation spurred by anti-indecency forces on Capitol Hill and in the watchdog community, is initiating a campaign to get parents online with content control at the home level. Online also happens to be where the campaign is being conducted. Step One is offering a downloadable guide to TV ratings, with detailed explanations of all of the coding currently in use. Step 2 is up to the parents - - they must decide what to let through and what to filter out. Step 3 is actually setting the filters, with an interactive guide providing guidance. Steps one and three are available at televisionwatch.org/parents.

Conference Calls Q2 2005

SBS reschedules Q3 conference call
Although Spanish Broadcasting System says its stations in the Miami market were able to stay on the air throughout the power disruptions that followed Hurricane Wilma, not so for corporate headquarters, which was closed October 24-28. Thus, SBS has postponed its Q3 earnings report and conference call from this Thursday to next week on Tuesday, November 8th.

CBS Corp. vs. New Viacom
With Viacom on track to complete its split into two companies by year end, investors are likely more interested in seeing how each of the new units performed, since they'll soon face the question of whether to hold or sell each of the new stocks. Here's how the Q3 results break down for what will become CBS Corp. and New Viacom.
| View the Chart |

Revenues and expenses
up at Saga
Saga Communications reported that Q3 revenues were up 5% to 36 million, including acquisitions, but operating income declined 5% to 7.9 million. On the bottom line, net income decreased by three cents a share to 17 cents (3.4 million in all). Radio revenues grew by 5.4% to 32.3 million, but that gain was only 0.2% on a same station basis. Operating income for radio was down 3.1% to 9.5 million - - a 5.6% same station drop. TV managed to replace its political ads from a year ago, with Q3 revenues up 1.4% to 3.7 million, but operating income declined 24.9% to 316K.

Sirius reports higher Q3 revenues, losses
Sirius Satellite Radio, like AM, reported stronger Q3 revenues, against higher losses. Sirius reported revenue of 66.8 million, a 250% increase over the 19.1 million reported for the year-ago quarter. However, Sirius reported a net loss of 180.4 million, or (0.14) per share, compared with a net loss of 169.4 million, or (0.14) per share, for the quarter.
| Read More... |

RBR observation: We continue to caution putting so many eggs in the Howard Stern basket. The Stern expense is huge, when you add his exorbitant contract with the huge marketing campaign that's planned. Unless subscribers are indeed willing to pay extra for Stern and line up in droves because of his debut there, things are not going to be pretty. Other premium-pay satellite channels, such as Opie and Anthony and Playboy, didn't pan out the way they thought. At least there are advertising opportunities on the Stern channels, but without subscriber numbers, those would dry up as well. There is a lot of resources being dedicated on a gamble.

Adbiz©

Liberty Mutual Awards Advertising Account
to Hill, Holliday of Boston
Global insurer Liberty Mutual has selected Hill, Holliday of Boston as its new AOR beginning 1/1/06 (following a review). Other contenders included Euro RSCG New York and the incumbent kirshenbaum, bond + partners NY. Liberty Mutual' 2005 advertising budget is 59 million. "We're looking forward to working with the talented folks at Hill, Holliday," said Steve Sullivan, Liberty Mutual's SVP/Communications. "They demonstrated real insights about our business and showed great creativity in the process." Mike Sheehan, Hill, Holliday CEO said, "Liberty Mutual is a company for which we've always had great admiration and respect. We were honored to be considered in their review of agencies and we're thrilled to have the opportunity to help them grow moving forward." Pile and Company, the Boston-based management-consulting firm, managed the review.

Automotive advertising guru Ty Woodhall
joins Real World Marketing
Award-winning Creative Director and automotive industry expert Ty Woodhall has joined the team of full-service agency Real World Marketing, Inc. As Creative Director, Woodhall will be responsible for campaign development, execution and overall creative direction for the agency. Real World Marketing is a leading marketing and advertising agency that specializes in the automotive industry. "We're pleased to add someone as talented and experienced as Ty to our team," said Jay Wilson, CEO/Real World Marketing. "With his impressive automotive background he will enhance our team and bring additional value to our clients." Woodhall brings to Real World Marketing seventeen years of success in marketing and branding experience. He's noted for work with companies such as Boyd Coddington, Budnik, Chip Foose Design, Hot Rods by Boyd, Rad Rides by Troy, Rockford Fosgate, Orion Industries and Precision Power. Clients, include The Barrett-Jackson Auction Company, Carroll Shelby, Vantage Mobility International, Honda, Toyota, Acura and Clay Lacy Aviation.

Media Markets & MoneyTM

Karmazin pays 2.8M for an AM
We're talkin' Craig Karmazin here. His dad is still a 100% satellite guy. Broker Bob Mahlman tells us that Karmazin's Good Karma Broadcasting has signed the contract to buy WEFL-AM West Palm Beach, FL for 2.8 million. Karmazin has been LMAing the station since it was put on the air three years ago (760 kHz, 3kw/1.5kw) by veteran broadcaster Carl Como Tutera.

The Waitt is over for NRG Media
NewRadio Group and Waitt Media are officially one, operating as NRG Media LLC. The company claims to be the nation's seventh largest in terms of stations, with 88 operating in seven midwestern states, icluding Iowa, Kansas, Nebraska, Sout Dakota, Minnesota, Illinois and Wisconsin. It also operates the Waitt Farm Network and the Waitt Radio network. Mary Quass, who came from NewRadio is the CEO, and Waitt's Norm Waitt is the majority owner.

Close encounter in Comanche
Bill Whitley of Media Services Group tells us that Cherry Creek Radio has concluded its acquisition of KCOM-AM in Comanche TX. David Bacon's Texas West Media collects 164K. The station will give CCR a double duopoly in the area, joining KYOX-FM Comanche, KSTV-AM Stephenville and KSTV-FM Dublin.

Washington Beat

House subcom looks at digital broadcast
The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property Oversight is sitting Thursday to look at the copyright implications of the digital revolution on both radio and television broadcast. The session, entitled "Content Protection in the Digital Age: The Broadcast Flag, HIgh-Definition Radio, and the Analog Hole," begins at 2:00 PM Thursday, 11/3/05.

Programming

XM lassoes WNYE-FM NY for CMA gig
XM Satellite Radio announced it will go terrestrial for the first time to broadcast country music on New York City's WNYE-FM. XM's country music programming is part of XM's exclusive partnership with the Country Music Association (CMA) in advance of the CMA Awards, which will be held in the Big Apple on 11/15. XM's new country hits channel Highway 16 will broadcast on the NYC-owned FM from 11/2 thru 11/4, providing music fans with the only country music available on traditional radio in the New York market. XM's commercial-free programming kicks off two weeks of CMA programming on WNYE leading up to the Awards.

RBR observation: Now there's one terrestrial repeater that's definitely being used for local broadcasts - - another breach of XM's FCC license? ;-)

Transactions

550K KLVQ-AM & KCKL-FM Athens/Malakoff TX from Love Radio Company Inc./Cedar Creek Radio Co. Inc. (Adabeth Routt) to Lake Country Radio LP (James Stansell). 25K escrow, 475K cast at closing, 50K consulting/non-compete agreement. [File date 10/4/05.]

475K KPZE-FM Carlsbad NM from Linda S. Bloom, trustee or Runnels Broadcasting System LLC to Pecos Valley Broadcasting Company (Sam F. Beard, David A. Ruckman). Cash, letter of credit. Duopoly with KSVP-AM/KTZA-FM Artesia NM. [File date 10/5/05.]

Stock Talk

Dude, better sell more computers
A disappointing sales outlook from computer maker Dell pressed on stock prices Tuesday. The Dow Industrials fell 33 points, or 0.3%, to 10,407.

Radio stocks were down slightly. The Radio Index was off 0.127, or 0.1%, to 191.325. Salem, which reports Q3 results today, was the best performer, up 4.1%. Of the companies which reported on Tuesday, Viacom was up 1.8% and Saga fell 4.2%.

Radio Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		37.40	-0.01	Jeff-Pilot	JP		54.46	-0.42
Beasley	BBGI		14.50	-0.07	Journal Comm.	JRN		14.00	-0.15
Citadel	CDL		13.73	-0.05	Radio One, Cl. A	ROIA		11.71	-0.14
Clear Channel	CCU		29.90	-0.52	Radio One, Cl. D	ROIAK		11.72	-0.08
Cox Radio	CXR		14.63	+0.33	Regent	RGCI		5.03	-0.04
Cumulus	CMLS		12.08	-0.08	Saga Commun.	SGA		12.06	-0.53
Disney	DIS		24.66	+0.29	Salem Comm.	SALM		19.49	+0.77
Emmis	EMMS		19.57	unch	Sirius Sat. Radio	SIRI		6.52	+0.29
Entercom	ETM		29.76	+0.89	Spanish Bcg.	SBSA		6.13	+0.03
Entravision	EVC		8.02	-0.18	Univision	UVN		26.67	+0.53
Fisher	FSCI		48.25	-0.56	Viacom, Cl. A	VIA		31.61	+0.56
Gaylord	GET		39.36	-0.12	Viacom, Cl. B	VIAb		31.55	+0.58
Hearst-Argyle	HTV		24.05	+0.09	Westwood One	WON		18.62	+0.12
Interep	IREP		0.43	unch	XM Sat. Radio	XMSR		27.85	-0.98
International Bcg.	IBCS		0.01	unch	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments to [email protected]

It's not policy at ICBC Broadcast Holdings to comment on competitor's business plans but thank you Joel Hollander, Chairman and Infinity Broadcasting for the October 31, 2005 sponsorship of Advertising Age. Infinity bought 23 ad pages and an insert in the issue with advertising featuring its new Free FM product - - in an open and progressive way. The campaign, taking a line from one of the ads, exhibits "Brashness and insight, courageousness mixed with slapstick, provocativeness minus the rudeness. It's fresh while honoring the past." We should all be so courageously positive about our opportunity to succeed. For the attention to radio, even from a competitor, thanks to Joel and best wishes to Infinity.

Skip Finley
Vice Chairman
ICBC Broadcast Holdings

Radio Media Moves

Athans to
Air America
Democracy Radio Co-Founder and former CEO Tom Athans has joined Air America Radio as Exec. VP. Athans, who helped launch both "The Ed Schultz Show" and "The Stephanie Miller Show" into national syndication, will head Air America's newly established syndication division, developing new programming to expand its lineup. He will also head Air America's Washington, DC corporate office.

Stations for Sale

NYC Prime Radio
Time for Lease
7 days a week available p/t-f/t Business, Foreign language, religious, Health, Infomercials accepted. 212-769-1925 [email protected]
TV & Satellite time also available. Station Inquiries welcome

NEast Facilities
Small City 25kw FM, Profitable, Canadian border area, nice facility, good upside @$595K. Top 100 mkt AM daytimer, Low dial position,
low expenses, good pop coverage, stick @$495K
[email protected]
or 781-848-4201

Below the Fold

Programming
XM lassoes WNYE-FM NY for CMA gig, will go terrestrial for the first time
RBR observation: another breach of XM's FCC license?

Media, Markets & Money
Karmazin pays 2.8M for an AM and The Waitt is over for NRG Media NewRadio Group and Waitt Media are officially one...

Washington Beat
House subcom looks at digital broadcast copyright implications of the digital revolution on both radio and television broadcast. ...

Transactions
Got a few
KLVQ-AM & KCKL-FM
Athens/Malakoff TX...

More News Headlines

Today is National Traffic Director's Day
The Traffic Directors Guild of America (TDGA) would like to remind our readers that today is National Traffic Director's Day. Be sure to give your traffic department a pat on the back for a job well done. Lunch and/or a gift wouldn't be a bad idea either!

TVBR - TV News

Raycom gets set to liberate some TVs
After buying the 15 television stations at Liberty Corp. (8/26/05 TVBR #168), the "For Sale" sign is officially posted at Raycom Media. The surprise is that there are 12 listings - - overlap problems from the Liberty merger only required four spins. Receipts for the baker's dozen and then some - - the actual stick count includes 13 full powered stations, including two from Liberty the group isn't keeping, and two LPTVs - - is expected to be north of 600M. Belmoro Corporate Advisors and Wachovia Securities are handling financial advisor chores. President/CEO Paul McTear said, "The sale of these properties, which either duplicate existing market holdings or lie outside our core geographies, will allow us to strategically reshape our holdings and provide the resources to reinvest in expanding our reach within priority markets. Although it was a difficult decision to part with these valuable stations and the 833 exceptional people they employ, their sale to interested buyers with whom they have a better strategic fit will benefit not only Raycom and the eventual purchasers, but also the stations and their employees."
| Here's the real estate |

RBR Radar 2005

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

Cumulus is radio's new #3 with Susquehanna acquisition
At 1.2 billion bucks worth with some big equity funds - - Bain Capital, The Blackstone Group and Thomas Lee Partners - - to create a new partnership, Cumulus Media Partners LLC, which could make an acquisition at a higher multiple than the dismal one being used to price Cumulus' stock. In fact, this deal is structured to be accretive to Cumulus, the public company. RBR observation: First Lew is a happy man and a creative one. Now time to plan a pro-active strategy to run them and not like radio is being programmed, managed and marketed today. The only one that may have a concern is Interep Chairman/CEO Ralph Guild as Cumulus departed earlier this year for Katz and their fold of rep firms owned by Clear Channel and RBR suspects this deal when closed will follow the same trail.
11/01/05 RBR #214

Comcast buy of Susquehanna Communications has
multiple price tags
It surprised no one with the total transaction value is 775 million. At the same time, a new partnership headed by Cumulus Media agreed to buy Susquehanna Radio for 1.2 billion. TVBR observation: Take a lesson from Comcast and Cumulus - Plan your work now for 2006 because -Time waits for no one and if you stand still long enough you are bound to catch a bullet.
11/01/05 TVBR #214

Is Clear Channel a "buy"?
After digesting last week's Q3 numbers and the company's outlook Wall Street analysts are divided on whether now is a good time to buy Clear Channel Communications stock. Declaring that "Less Down is Good," RBR observation: Analysts seemed to welcome assurances from Clear Channel Radio CEO John Hogan that local managers have "almost complete autonomy" over the mix of various length spots to meet their Less is More targets. RBR/TVBR soon heard from several of those managers who apparently never received that memo. Rather, they say, they are on a tight leash from San Antonio headquarters and closely monitored weekly. They tell us that if they aren't right in line with the national LIM limits, there is hell to pay.
10/31/05 RBR #213

VNU sale Or get some Street Smarts
Bets on whether of not VNU (home of AC Nielsen and LPM) will carry through its 7 billion bucks deal to acquire IMS Health the smart money is on the deal being dropped even though it cleared US antitrust review. The unpopular move by VNU management has motivated the big investors to demand change at the company, so pressure is on - either buy back stock, sell off assets or sell the entire company to the highest bidder. RBR observation: In either an asset sale or breakup scenario, it appears the piece of VNU most likely to be in play is its Business Information division includes names as Adweek, Billboard, and The Hollywood Reporter. Big investors don't see the division as a major growth vehicle and would be happy to see it sold off.
10/27/05 RBR #211

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