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Volume 23, Issue 218, Jim Carnegie, Editor & Publisher

Wednesday Morning November 8th, 2006

Radio News ®

Q4 looking up for Cumulus
Cumulus CEO Lew Dickey says Q4 is pacing ahead a strong 11% after growing only 1.3% pro forma in Q3. "We're just seeing a general firming across the board," he told analysts. Where is that growth coming from? Lew says it is too early to be sure, but his guess is that radio is taking share from newspapers as advertisers reassess their ad spending. To be sure, political plays a role, but the Cumulus CEO figures the political windfall accounts for only 2-3 points of that 11% improvement. At this point December is not a strong as October and November, but Lew says December is holding up "very nicely."

RBR observation: The good news continues. For the past several years, radio CEOs were talking about how the second half was going to bring a recovery - but it did not happen. Nobody made such predictions this year, but now, rather than a second half recovery, it looks like there is a final quarter recovery underway for virtually all radio companies. (SBS is a notable exception. See below.) We now wait to see if the private equity guys are smarter than the public market and are swooping in to grab the biggest radio company, Clear Channel, just as the good times are beginning to roll.

Mega TV a drag on SBS;
Radio pacing lower
Start-up Mega TV boosted a 5% radio revenue increase in Q3 to 8% overall at Spanish Broadcasting System. But since TV produced an operating loss of 14.8 million, that 1.3 million in new revenue was pretty expensive for SBS. Although the controversial move into TV is a major reason for SBS being in penny stock territory, CEO Raul Alarcon insists that building a multi-media platform is the way to go. While he admitted it will take longer than originally planned to get Mega TV to profitability - and he declines to estimate when it will turn profitable - Alarcon insists that the Miami TV operation has a lot of promotional value for the SBS radio stations in the market. He said he was not prepared to take Mega TV off the SBS balance sheet, by spinning it off into a private company, because "it is so integral to what we are doing with radio." CFO Joe Garcia told analysts that TV is expected to post a loss of 5-6 million in Q4, while radio revenues are expected to be down in the low to mid single digits. That is in sharp contrast to many other radio groups, who have indicated that Q4 is pacing up nicely. SBS blames the decline on not doing some promotional events, because advertiser support for such events has declined, and on soft national pacings. So, while Alarcon was bragging about how SBS again outperformed the radio industry in Q3, his company appears to be trailing the industry in the current quarter.

FCC reaffirms anti-F-word decision
Cher and Nicole Richie took the occasion of the Billboard Music Awards to drop an f-bomb (Richie added an s-bomb for good measure), and on court remand, the FCC upheld its finding that they both were examples of broadcast indecency. However, an s-bomb on a news program was excused, and numerous episodes of ABC's "NYPD Blue" were let off the hook on procedural grounds. FCC Chairman Kevin Martin explains: "I am pleased the Commission acted with appropriate deliberation in responding to the Court's limited remand. The Commission has always held that the use of certain words could be indecent. Consistent with that precedent, this order affirms that the use of the F and S words in the 2002 and the 2003 Billboard Music awards was indeed indecent. Hollywood continues to argue they should be able to say the F-word on television whenever they want. Today, the Commission again disagrees. * It is oftentimes difficult to distinguish between true news programming and infotainment. While I found the interview with a contestant on 'Survivor: Vanuatu' to be extremely close to that line, I believe the Commission's exercise of caution with respect to news programming was appropriate in this instance. * Finally, the Commission dismissed complaints about episodes of NYPD Blue, solely on procedural grounds and they were not decided on the merits." The NYPD grounds were the fact that complaints about the program's airing on a Kansas City station came from outside that market. The FCC vote was not unanimous. Commissioner Jonathan Adelstein, who had previously expressed concerns about the Commission being inconsistent in its indecency decisions, again complained that the FCC has not laid a basis for its indecency standard that can be defended in court against constitutional challenges.

RBR observation: The bottom line here is that the FCC has once again held that it no longer follows the fleeting and inadvertent standard it once did, at least when it comes to the f-word. A Fox spokesperson told Reuters it was looking forward to going back to court for some clarity.

MIM holds that
harsh language is harmful
"But it isn't just religious Americans who get upset about swearing. A common element in sexual harassment suits is the use of vulgarity in the workplace. Violent confrontations among non- religious combatants are often provoked at least in part by swearing or cursing. The large majority of parents do not want their children using four-letter words, regardless of whether religion is or isn't an important part of the parents' lives." Morality in Media President Robert W. Peters sent these comments to the FCC as it looked into the remand of indecency decisions against various TV programmers. He cited "40 news stories from 1992," predominantly from the New York press corps, to support his claims. "One reason that I decided to include evidence of harm to adults was to make the point that if swearing can result in harm to adults, what do we think it is doing to children? It doesn't take a barrage of four letter words to adversely impact a child. One curse word is more than enough. While we can't shield children in today's world from all swearing, we should want to minimize their exposure to indecent language in broadcasting and in other media." He added, "Clearly the Constitution, as our nation's founding fathers understood the document and as the Supreme Court itself understood it for almost 200 years, was not intended to cripple the power of government to help protect children from obscene or indecent language."

RBR observation: Leaving out religion, assembly and petition portions, the First Amendment says "Congress shall make no law...abridging the freedom of speech, or of the press..." There is no mention of an overriding need to protect children from free speech. None. We would argue that the perception that profanity is more common in instances like Peters discusses is that by their very nature, such instances can be emotionally charged, and like it or not, emotionally charged situations are more likely to bring out the worst in some than other situations. However, it is not necessary to resort to profanity to inflict severe psychological damage on your target. Harmful speech may be a problem, but harmful does not necessarily equal profane. And there is no way to legislate or adjudicate against harmful speech (short of the old 'shouting fire in a crowded room' exception). Further, we have yet to see any child go off the deep end from hearing one inadvertent curse word.

FCC: Wave bye-bye to waivers
The Rainbow Coalition and the United Church of Christ, Office of Communication have united to try and block another FCC waiver allowing Rupert Murdoch's News Corp. to continue along a newspaper and two television stations in the New York market. Technically, the watchdogs are asking that the most recent waiver, granted 10/6/06, be rescinded. The properties in question are the New York Post, WWOR-TV and WNYW-TV. Rainbow's Jesse Jackson said, "Too few, own too much, at the expense of too many. The American ideal of e-pluribus unum (out of many, one) applied to telecommunications demands the democracy of airways. Ownership of such should be people - up, not privileged - down."

RBR observation: Whether you are for or against relaxing the rules for cross-ownership, the simple fact of the matter is that it is a pending matter. The Third Circuit Court, the most recent entity to slam on the brakes, did not challenge the concept of owning a combination such as the Fox NY operation. It challenged the FCC's underpinnings for the concept. Indeed, the Third Circuit, in a ruling cited in many quarters as a repudiation of the infamous 6/2/03 ownership rulemaking, actually noted that there was evidence in favor of cross-owned combinations. So if the very Court which put the "pending" back into the matter thinks there is evidence to perhaps allow the Fox and other similar combinations, then it is only fair to allow them to remain standing until such time as a new regulation is officially on the books.

Time to cover short positions?
Bear Stearns analyst Victor Miller, long a radio bull while most of his peers have been hesitant to give buy recommendations to radio stocks, is telling his clients that the recent run-up in radio stocks can continue. After lots of up and down swings, Miller notes that the latest rally has run nearly 100 days, bringing radio stocks up nearly 22% since their August lows. As we have seen from Q4 guidance in a string of recent conference calls, radio ad sales are reported to be firming - and the growth is broad-based, not just niche players. So there is evidence that radio has begun a recovery. That could put pressure on investors holding short positions to cover them in Q4, helping to continue the rise in radio stock prices. Miller estimates that 18% of the public stock float for Cumulus was short as of October 15th, along with 14% for Cox Radio, 13% for Entercom, 12% for Emmis and 8% each for Westwood One and Citadel. Investors who have shorted a stock - selling stock borrowed from someone else - are betting that it will go down, so they stand to lose money if it goes up. The more it goes up, the more they lose, so pressure builds to cover a position - buy stock to cover the borrowed shares - as the price goes higher.

Wall Street Media Business Report TM

Q3 Conference Calls
Cumulus in-line, but raising the bar
Cumulus Media came in right where expected for Q3, with pro forma revenues up 1.3% to 84 million, although station operating income was down 0.9% to 32.1 million. On an as-reported basis, Q3 revenues were down 1.6%, but that was due to the company's Houston and Kansas City stations being spun off for a 25% stake in Cumulus Media Partners, the private equity-backed company that acquired the former Susquehanna Radio stations. Based on the recent sales of stations by CBS - and Cumulus CEO Lew Dickey insists the Susquehanna stations were much better assets than the CBS spin-offs - he figures the Cumulus Media Partners stations are clearly worth more than the 12 times multiple that he and his financial backers paid for them. Although Lew declined to get into any financial details of the private CMP, he did say that those larger market stations are also seeing a turnaround in Q4, particularly in national accounts. Cumulus told Wall Street that its stations are pacing up a hefty 11% for Q4, with EBITDA tracking to increase over 25%.

SBS outperformed in Q3, but not now
Spanish Broadcasting System officials told analysts yesterday that national advertising is soft in Q4 - that some advertisers have simply dropped out of Spanish radio for some reason and the company also got little in political spending - so SBS is projecting that Q4 radio revenues will be down in the low to mid single digits. Add that to a projected low of 5-6 million bucks from its start-up Mega TV operation in Miami and Q4 is looking pretty bleak for the Spanish media company, just as conditions are improving for the overall radio marketplace. SBS reported that net radio revenues were up 3% in Q3 to 44.6 million - while the radio industry was flat - and TV kicked in 1.3 million versus zero a year ago, so total revenues rose 7% to 45.9 million. Adjusted operating income before depreciation and amortization rose 2% to 17.1 million.

Ad Business Report TM

25 advertisers run 24,000
radio spots in one week
In the final week leading up to America's midterm elections, radio advertising by political candidates and those who support their causes has increased to fever pace. In fact, the top 25 political advertisers collectively aired 23,666 radio spots between October 30 and November 5 on major market stations tracked by Media Monitors. Numbers in parenthesis refer to the rank on this week's various Spot Ten charts. On this weeks's Spot Ten Politics '06 chart, three California candidates & issues aired more than any others: Vote No On Proposition 87 (#1) airing 3,600 spots, Vote Yes on Propositions 1A through E (#6) with just over 1,100 spots, and campaign spots promoting John Garamendi (#7) for Lieutenant Governor (#7) with just under 1,000 spots.
| Read More... |

Media Markets & Money TM

Georgia Eagle swoops down again
Joe Robinson and Cecil Pope, as George Eagle Broadcasting, just picked up WNNG-AM, which serves the Macon GA market from its perch in Warner Robins. That deal, filed at the end of October, was valued at 650K and put the AM into a duopoly with certain stations in which Staton had an interest. Now the Staton stations, along with two others, are also folding Eagle's nest, in a deal valued at 3.9M. The Macon area stations include WCEH-AM & WRPG-FM in Hawkinsville and WQYX-FM out of Cordele (WCEH is not considered to be part of the Macon market). The other two stations, WPMX-FM Statesboro GA and WHKN-FM Millen GA, for an FM duopoly in an unrated portion of the state.

Washington Media Business Report TM

Pre-auction freeze kicks in now
Auction No. 70, which will put 121 FM CPs on the block, is approaching the application filing window, and as is customary, that will signal a freeze on petitions to amend the FM Table of Allotments, not to mention couterproposals, for any of the 121 sticks-to-be in question. This includes applications which would threaten the contour of any of the allotments. The filing window is open from 12/6/06 through 12/19/06, and the actual auction is scheduled to begin 3/7/07. The freeze is effective immediately.

Internet Media Business Report TM

Yahoo expanding
mobile ad network test
As advertisers are increasingly targeting the mobile phone market, Yahoo will expand a test this week of its mobile telephone ad network to include more visually appealing messages, according to an AP story. The addition of graphical ads comes a month after Yahoo began delivering SMS messages to mobile phones, also as a test.

Transactions

650K KTIB-AM Houma-Thibodaux-Morgan City LA (Thibodaux LA) from La Terr Broadcasting Corp. (Michael Chiasson, trustee) to Gap Broadcasting LLC (George Laughlin). 30K escrow, balance in cash at closing. Station is silent and in Chapter 7 bankruptcy. [File date 10/25/06.]

450K KAGT-FM Abilene TX from Gospel Radio Network (Tim L. Walker) to Educational Media Foundation (Richard Jenkins). 22.5K escrow, 202.5K cash at closing, 225K note. Includes non-compete. [File date 10/26/06.]

Stock Talk

Radio stocks give back gains
After jumping on Monday, radio stocks retreated a bit on Tuesday. Meanwhile, the broader market rose as investors bet that election results would bring gridlock to Washington - effectively keeping Congress from adopting any anti-business laws. The Dow Industrials rose 51 points, or 0.4%, to 12,157.

The Radio Index dropped 0.426, or 0.3%, to 153.653. Salem fell 3.7% a day after reporting earnings. Cumulus reported its Q3 results and rose 2%.

Radio Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		43.17	+0.47	Hearst-Argyle	HTV		25.59	-0.31
Beasley	BBGI		7.09	+0.12	Journal Comm.	JRN		11.62	+0.11
CBS CI. B	CBS		29.40	+0.25	Lincoln Natl.	LNC		65.00	+0.54
CBS CI. A	CBSa		29.38	+0.27	Radio One, Cl. A	ROIA		7.06	+0.16
Citadel	CDL		10.39	-0.01	Radio One, Cl. D	ROIAK		7.05	+0.12
Clear Channel	CCU		34.54	+0.09	Regent	RGCI		3.62	-0.12
Cox Radio	CXR		16.94	-0.05	Saga Commun.	SGA		8.74	-0.25
Cumulus	CMLS		11.30	+0.22	Salem Comm.	SALM		11.77	-0.45
Disney	DIS		32.85	+0.39	Sirius Sat. Radio	SIRI		4.09	+0.07
Emmis	EMMS		12.49	-0.02	Spanish Bcg.	SBSA		4.52	-0.22
Entercom	ETM		28.50	-0.49	Univision	UVN		35.16	+0.06
Entravision	EVC		7.00	-0.20	Westwood One	WON		8.10	+0.04
Fisher	FSCI		41.85	+0.23	XM Sat. Radio	XMSR		13.49	+0.32
Gaylord	GET		48.26	+1.11	-	-	-	-	-

Bounceback

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Below the Fold

Ad business Report
25 advertisers run 24,000
radio spots in one week
Radio advertising by political candidates and those who support their causes was at a fever pace.

Washington Media Business Report
Pre-auction freeze kicks in now
Freeze! We're the FCC!

Media, Markets & Money
Georgia Eagle swoops down again
It grabs WNNG-AM in the Macon market.

Radio Media Moves

New Lite crew
WLTW-FM "Lite FM" New York has named Karen Carson and Christine Nagy as its new morning team, debuting on Monday, November 12th. They will be joined by Nick Gregory with weather reports.

A Jewel for Matthews
John Matthews, who was already Program Director and morning host for Salem's KGMZ-FM Honolulu, adds PD duties for KHUI-FM "The Jewel" as well.

Sirius taps a Pabst
Two radio veterans have joined Sirius Satellite Radio as Executive Producers of Sirius NASCAR Radio, launching in 2007. Daniel Norwood comes from WFNZ-AM Charlotte and Paul Pabst from ESPN Radio.

Upped at Arbitron
Dottye Gould-Smith has been appointed Sr. Vice President, Respondent Acquisition & Compliance Operations, for Arbitron, a promotion from her role as VP of Data Collection Operations.

Two make
Smooth move
Greater Media Philadelphia announced that Margo Marano has been named Music Director of Smooth Jazz WJJZ-FM and that Christina Sirianni has rejoined the station as Promotion Director. Both had previously worked at the former WSNI-FM in Philly.

Heebsh to Jones
Jones Inc., a subsidiary of Jones Media Group, announced Tanya Heebsh has been hired as a regional sales manager for the company. Heebsh spent 10 years at ABC News Networks working in its affiliate relations and operations department before joining Jones.

More News Headlines

Ken Wyker dead at 45
Former Clear Channel General Counsel Ken Wyker died Saturday, November 4th, at age 45. He had been battling pancreatic cancer for three years. Wyker had worked for Greater Media before joining Clear Channel.

RBR Radar 2006

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

Sure, Google can have my inventory
An analyst wanted to know yesterday what it would take for Citadel Broadcasting CEO Farid Suleman to turn his inventory over to Google. Suleman says he would be happy to do that, with a few conditions: Google has to pay his price, guarantee revenues for 15 years and demonstrate that it has a better sales force than Citadel's own. "Until that happens, I think it's just a lot of noise,"

RBR observation: Farid Suleman did provide one tidbit of additional information in a recent interview with RBR. He indicated that Citadel is no longer seeking to get Disney to change any of the terms of the agreement. "The agreement is in place and so all we will do is comply with whatever is in the agreement," Suleman said in an interview which will appear in the December issue of RBR/TVBR Solutions Magazine. There had been speculation on Wall Street that Citadel had been seeking to get out of providing more stock to Disney shareholders because of a drop in Citadel's stock price. In a previous conference call, Suleman had claimed that the stock price decline was due to underperformance by the ABC stations, while his own stations had done better.
11/07/06 RBR #217

Google targets daily newspapers, too
It's not just about radio - WSJ reports Google this week plans to let businesses start buying ads in more than 50 daily newspapers through its website, a move that could potentially help the currently struggling industry: "Under the three-month test effort, a group of more than 100 Google advertisers will be able to place bids for space in newspapers including the New York Times, Washington Post, Boston Globe and Philadelphia Inquirer.

RBR observation: One way or another Google is going after your inventory and newspaper is a logical pick as they too need help real bad. Recommend to read again RBR as we further look at Google and Clear Channel dealings.
11/07/06 RBR #217

Understanding change
in the media economy
Brian Wieser, MAGNA Global's Director of Industry Analysis, has issued his latest issue of Madison and Wall. It establishes an approach for studying change in the ad-supported media economy, which recognizes that investments of time and money are the important drivers of change.

RBR observation: Worth a read twice as you will not find this analysis in any other Radio Trade publication. Why? It deals with Business your Business.
11/06/06 RBR #216

Account Executive
KUVN TV 23 Univision Dallas looking for a bright and dynamic advertising executive. Must have Bachelor's deg. in Marketing or related field and at least 3 years of experience in electronic sales. EOE.
See TV Careers

Account Executive
KSTR TV 49 TeleFutura Dallas Join a fast growing sales force. Ideal executive will have Bachelor's degree in Marketing/related field and or at least 1 year's experience in advertising electronic sales. Spanish-English is preferred, but not req. EOE.
See TV Careers

Manager/Sales Manager
Palm Beaches newest signal AM 960. Strong sales, promotional, and community service skills essential.
See Radio Careers

Program Director
WCJK-FM/Nashville, candidates will have experience, proven track record, solid leadership skills, a true flair for creativity, oh yeah, a JACK attitude. EOE.
See Radio Careers

Hard finding that key person
to fill the important position at your organization? Media HeadHunters is the place that key media firms use to get results. See Media HeadHunters and get results with service--Period.

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