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Welcome to RBR's Daily Epaper
Volume 23, Issue 219, Jim Carnegie, Editor & Publisher
Thursday Morning November 9th, 2006

Radio News ®

Peter Smyth:
We have no deal with Google

While the Wall Street Journal reported yesterday that Google had signed deals with Emmis and Greater Media, Greater Media CEO Peter Smyth says they have no group-wide deal for his inventory. Greater Media has had a local relationship with dMarc prior to its acquisition by Google, and has been working with them on an evaluation basis at their Detroit stations. An Emmis spokesperson told us the same thing: "We had a deal with dMarc since January, before the purchase by Google. So there's not a new deal with Google. Some people have concluded that we must have sold inventory to Google, but we haven't had any kind of discussion like that." Smyth tells RBR Google wants their excess inventory: "But what's remnant? If we do our job properly and kind of reinvent our selling process ourselves, what do we need that for? What are you bringing to the table that makes the unique selling proposition different? What you're trying to do is get a piece of our inventory. And I'm glad that we waited and saw what this was all about - in them hiring local sales departments, etc. That's not what this is all about...I am not going to go into competition with myself, nor am I going to do anything to go against Katz or the people that nationally represent me...or compromise our own sales departments across the country -that's ridiculous."
| Read the full story here |

RBR observation: Seems odd that Google would talk up their dMarc deals as if they were larger, Google Audio deals with more inventory. Seems WSJ bought it hook, line and sinker. In fact, there has been a lot of misinformation lately on exactly what Google has in mind for traditional media - everything from buying Clear Channel to selling streaming audio ads. Before they get more folks like Smyth angry at them for this misinformation, they should just spell it out - What is your plan and what are you offering to our industry? Also, Google's pitch is to advertisers around the country typically ignored by radio sales teams. Small businesses could get their products or service on the airwaves by uploading an audio file or slotting their name into generic, prerecorded ads. We have to wonder what that will do for clutter and the industry-wide mission to make ads more creative. The less clutter and the more creative the ads, the less likely folks will turn the dial or abandon the medium. It's a tough call. Yes, we could use more ad dollars, but airing generic ads could be risky. We'll have to see what these ads sound like before making any conclusions. Last, we totally agree with Smyth, do not overlook hiring away local radio sales people. Bad move, as it reminds some in the radio business of Cable hiring away radio sales to do a job locally.

The Media Audit/Ipsos
sets first test

The challenger to Arbitron's PPM will get its first tryout in Houston next month, with dozens of "expert witnesses" carrying Smart Cell Phones and several local radio stations encoding audio. The expert witness test by The Media Audit/Ipsos is designed to find out how different methods of tracking radio listening compare by collecting three levels of data. Participants will have a Smart Cell Phone to electronically record encoded audio signals from radio station broadcasts, they will also keep radio listening diaries and TMA/Ipsos will call them by phone to question them about their radio listening. Due to the nature of the test, the participants will include volunteers from some ad agencies, TMA employees and friends of employees. "We're asking people to do a fair amount of work here," noted TMA Exec. VP Phil Beswick. Around seven stations owned by various radio groups in the Houston market will be encoding for the test. TMA/Ipsos plans to conduct the expert witness test for 10-11 days (another objective is to see how one Monday or Tuesday compares to another, so it will run for more than a week) in early December and provide results to the Next-Generation Electronic Ratings Evaluation Team, led by Clear Channel Radio, and the Media Rating Council before Christmas. Noting that rival Arbitron has never done a side-by-side test of PPM vs. diarykeeping, Beswick says his company's test will provide the radio and advertising industries with the first data to explain the differences in the different methodologies. "What we need to do is work with the industry and say here are the differences between these - how you handle them is your business," Beswick said, predicting that industry committees will be formed to evaluate whether and how to fill in "listening holes" where radio listening will not be picked up by a passive electronic device. By the way, TMA/Ipsos is paying all of the costs for the expert witness test, but Beswick says they are still in talks with major radio groups about funding for a full field test. Although they are being sued by Arbitron for alleged patent infringement (10/12/06 RBR #199), TMA President Bob Jordan and Ipsos CEO Richard Silman issued a joint statement declaring themselves "fully committed" to the US radio ratings venture.


Surprise bid for Tribune Company
Los Angeles billionaires Eli Broad and Ron Burkle had been talking publicly about bidding to acquire the LA Times from Tribune Company and return the paper to local ownership, but they surprised everyone yesterday by bidding for all of Tribune Company. That would include the LA Times, of course, but also a bunch of other newspapers, a string of TV stations, including VHFs in all of the top three markets, the Chicago Cubs and the company's lone radio station, WGN-AM Chicago. No terms of the buyout bid are yet known, but the LA Times itself said a source familiar with the offer had confirmed that the two had made a "competitive bid" for the entire company. Tribune Company recently began taking bids for pieces of the company after initial bids for the whole thing by private equity groups came up short of expectations.

RBR observation: Neither Broad nor Burkle appear to have any media experience, but it seems they see value in so-called "old media" assets. We would suggest that buying just the LA Times would have been pretty risky as a business proposition, but the entire multi-media platform is a much better idea. Broad was the co-founder of both SunAmerica Inc. and KB Home, but has lately devoted himself primarily to philanthropy. Burkle made his billions from the Dominick's supermarket chain, now manages his own investment company and recently had a run-in with a media outlet, wearing an FBI wire to gather evidence of an extortion attempt by a New York Post gossip columnist.

Less is more, all right - more clutter
Cox Radio President/CEO Bob Neil took the occasion of the company's Q3 2006 performance conference to reiterate his skepticism toward shorter radio spots. He said he has no problem with shorter spots, including 0:30s and 0:15s, if that's what the customer wants. But he emphasized that Less is More was not devised in response to customer demand. "It was created by a radio company to meet specific needs that it had." He explained his belief that ultimately, businesses that respond to the customers do better than those that push things on them. That said, he had significant problems with shorter spots. He thinks listeners hear a commercial as a commercial, regardless of length. More of them means more clutter, which is negative for listeners, and also negative for advertisers whose message gets lost in that clutter. Further, he argued that discounting to force this on advertising puts negative pressure on pricing. Looking at pacing, Neil sees mid-single digit improvement ahead for Q4, although December can be tricky to predict. Somewhat disappointing political results during the primaries and the early portion of the general election may be a benefit for Q4, he said, when an "avalanche" of late business came in. He noted that anything that puts pressure on inventory in the first week of November is a good thing, since that week tends to fall just ahead of the onset of holiday advertising. He does not expect Democratic control of Congress to have a significant effect on the regulatory side of radio.


Senate: 99 seats filled, one to go
The two Republican members of the Senate Committee on Commerce, Science and Transportation took their re-election battles through the night and into Wednesday. Although one result is in, the other may not be known until sometime in December. In the first case, a razor-thin margin held by challenger Jon Tester (D) over incumbent Conrad Jones (R-MT) was amplified enough that he was declared victorious. That result temporarily puts the Democrats in control of the Senate 50-49, and they have clinched a mostly useless tie, since Vice President Dick Cheney will be able to cruise down Pennsylvania Avenue to cast a tie-breaking vote whenever necessary. The final race is in Virginia, where at last look challenger Jim Webb (D) has an advantage over incumbent George Allen (R-VA) of fewer than 9K votes. And this one could drag out. According to the New York Times, the process in Virginia is this: The vote isn't scheduled to be certified until 11/27/06. At that point, there is a 10 day window to file for a recount in court. The Virginia Supreme Court will decide if there are grounds for one and set out guidelines. NYT notes that a close race for state AG last year involved a recount and wasn't decided until 12/20/06.

RBR observation: The House of Representatives under Dennis Hastert (R-IL) and Tom DeLay (R-TX), and the Energy and Commerce Committee under Joe Barton (R-TX) and Fred Upton (R-MI) was resolutely against anything which could have been perceived as anti-business when it came to broadcasting, with the possible exception of indecency legislation. If a measure was designed to add regulation, they were almost always against it. If it eliminated regulation, they were almost always for it. With the Democrats calling the shots in the House, the level of uncertainty on such matters skyrockets. There was always a level of uncertainty in the Senate, and broadcast issues are where Commerce Committee Republicans often tried to score maverick points. By far the champ at this has been John McCain (R-AZ), but also on the list were Olympia Snowe (R-ME), and on occasion, Kay Bailey Hutchison (R-TX) and Trent Lott (R-MS). Radio dereg happened in 1996, and is unlikely to be rolled back. If the FCC tries for significant dereg for television and broadcast/newspaper cross-ownership, it may find tough sledding getting it past the Hill. Other issues, like multicast must-carry, could go either way. Stay tuned.

Broadcaster downplays
Dems win impact on dereg

The wide-spread victories by Democrats in this week's election change who will be controlling the House committee overseeing broadcasting - and possibly the Senate committee as well. But in his quarterly conference call, Nexstar Broadcasting CEO Perry Sook said he didn't think the election results will change the climate much as far as the ownership rules changes being sought by broadcasters are concerned. "For the last six years the Republicans have controlled the legislative and the executive branches of government and I would ask how much deregulatory help has the industry received? I think the answer is virtually zero, so in my view, with a bi-partisan split among the branches of government, I think it is hard to assume there will be more deregulatory help under that scenario, but I think it's also hard to assume less than zero. My personal opinion is that I don't imagine a Republican executive branch and a Democratic legislative branch will agree on much over the next two years. Furthermore, I'm really not sure how much the House and Senate are going to agree on anything. The FCC will still have a 3-2 Republican majority for the rest of the Bush presidency and I think as it relates to the pending ownership proceeding at the FCC, the broadcasters are pretty much united in their comments on the need to relax ownership restrictions on television stations, specifically in the medium and smaller markets, and I would say that even some staffers at the FCC have acknowledged that fact to me," Sook said. He also noted that Nexstar has launched a website, www.preservelocaltv.com, urging viewers to contact the FCC and Congress to support dereg. The site claims that allowing local duopolies will make it possible for stations to air more news, not less, and provide more local jobs.


Wall Street Media Business Report TM
Analyst demotes Arbitron stock
Back when CL King analyst Jim Boyle initiated coverage of Arbitron with a "buy" rating (9/1/06 RBR #171) the stock was trading at 36.47. Since then it has run up nearly 19% in price, so Boyle thinks it is time to call a buying halt. He still likes the company, but he has lowered his rating to "neutral," saying the near-term catalysts for Arbitron are now built into the stock price.

Q3 Conference Calls
Cox: Revenue slips
but net income is up

Cox Radio brought in 112.7M in Q3 2006, which compared slightly unfavorably to the 113.2M it plunked into the cash register during the same period in 2005, amounting to a drop of half a percent. A 1.8% loss in local revenue was boosted slightly by an 0.3% increase in national business. Other revenue sources gained 9.9% to 800K, thanks to a big, 47.1% increase in cash from Internet operations. Despite the slightly less than flat overall performance, however, favorable tax circumstances and cost containment contributed to an 11.6% increase in net income, rising to 24M from 21.5M a year ago. Net income per diluted share was up 19%, from 21 cents to 25 cents. The group's market performance was a mixed bag, with Orlando, Tampa, Southern Connecticut and Birmingham on the black side of the ledger and Long Island, Richmond, Dayton and Louisville on the red.

Sirius Q3 revenue up 150%
For Q3, Sirius Satellite Radio had revenues of 167.1 million compared with 66.8 million for Q3 '05. This 150% gain was primarily driven by a 91.1 million increase in subscriber revenue resulting from the net increase in subscribers of 2,945,388, or 135%, from Q3 '05 and a 5.6 million increase in net ad revenue. Sirius reported a net loss of (162.9) million, or (0.12) per share, for Q3 compared with a net loss of (180.4) million last year, or (0.14) per share, for Q3 '05.
| Read More... |


Ad Business Report TM

Zubi Advertising signs for PPM
Arbitron announced Zubi Advertising, the one of the largest, independently owned and operated Hispanic advertising agencies in the US, has signed an agreement for Arbitron's Portable People Meter radio ratings services in Houston. Zubi, with billings of $175 million, serves advertisers that include American Airlines, Ford Motor Company, Lincoln Mercury, SC Johnson and Winn-Dixie. Lula Olmedo, vice president of Media, stated: "At Zubi Advertising, we developed the concept of 'Mediativity,' a planning discipline that uses a 360 degree approach to intercept the consumer at every possible touch point. The Portable People Meter system will provide more reliable and more actionable information that will help us better integrate radio into our clients' media plans. As one of the leading independent Hispanic agencies, we are pleased to support Arbitron and the PPM." Arbitron plans to launch the PPM system as its radio ratings service in the top 50 markets by Fall 2010, beginning with Houston (pending Media Rating Council accreditation).

SWMX placed several million in ads
for 2006 campaign season

SoftWave Media Exchange was used by many political advertisers, with several million of television and radio ads placed over 15 weeks ahead of Election Day 2006. Launched in mid-July, SoftWave's political interface was used by candidates and issue groups to place ads in 14 states across the U.S. this campaign season. We believe SWMX is the first electronic marketplace to be used as a primary vehicle for political advertising. "Nowhere is the ability to act quickly and tailor messaging for the greatest audience impact more important than in a political campaign," said Mike Caprio, Executive Vice President, SWMX. "The response we have received so quickly after introducing the political interface is a tremendous validation of SWMX's ability to maximize campaign budget and deliver quantifiable results. Radio, broadcast TV, cable television and print all have tremendous potential for SWMX Political, and we intend to be the number one e-marketplace for political and issue advertising leading up to the 2008 presidential election." Using SWMX, campaign teams can plan and execute targeted ad buys across a customized network of leading radio and television stations reaching the precise demographic audience they select, and have their ads on the air in a matter of hours. Using traditional methods, a similar buy could take a team of personnel several days/weeks to implement.


Media Business Report TM
Decaux eying
Clear Channel Outdoor

Once we know which private equity group wins the bidding for Clear Channel Communications, the winner can expect to be hearing from JC Decaux. The Paris-based outdoor giant's CEO, Jean-Francois Decaux, told the Wall Street Journal he is interested in acquiring Clear Channel Outdoor. Such a move would create a true giant in the billboard/street furniture advertising business, since CC Outdoor is already the largest outdoor company in the world and Decaux is #2. Decaux has long sought to expand its US operations, which currently account for less than 7% of its worldwide revenues. Clear Channel Outdoor is 90% owned by Clear Channel Communications, but has its own stock which trades on the NYSE.

RBR observation: Many observers see CC Outdoor as the main attraction for the private equity guys bidding on Clear Channel Communications, rather than the larger radio group. Don't rule out a deal with Decaux even if the group aligned with the Mays family is the winning bidder for Clear Channel. They like big growth opportunities as well as the next guy, even if it means teaming up with a partner. There might be some antitrust hurdles to clear in Europe, but such a merger of billboard companies should have smooth sailing with US authorities. Decaux just isn't a big player here - but it would sure like to be.


Media Markets & Money TM
Saga spins one in Ithaca
Ed Christian's Saga Communications is going to settle for a tax benefit as it spins one of the Cortland NY stations it is acquiring from Citadel. WKRT-AM will go to Lowell P. Davey's non-profit Bible Broadcasting Network. BIA Financial Market will be brought in to perform a fair-market evaluation, and BBN will use that as a basis for a tax certificate benefiting Sage and provided at closing.


Washington Media Business Report TM
What's the multiple for file violations?
Failure to properly maintain the public file at a broadcast station is one of the most common offenses, and the 10K fine that goes with it is sent to the FCC during just about every license renewal cycle. No class of licensee, from the largest mega-group down to the tiniest non-com, is immune from actionable oversights. But problems at four stations licensed to Sheridan Broadcasting and related McL/McM-Inc. have resulted in a consent decree. Sheridan admits no wrongdoing, but will pay 40K into the US Treasury and take several corrective steps. These include training all employees in file management and other FCC rules and regulations and will include quarterly audits by either the FCC or a designated authority from the Pennsylvania Broadcasters Association for a period of three years. Why this unusual course of action? The FCC and Sheridan agreed that utilizing the normal fine and objection course "...would be time consuming and require substantial expenditure of public and private resources." The consent decree will "conserve" these resources.

RBR observation: If there are no other problems, in addition to sparing Sheridan a blot on its record, this decree also greases the wheels for Sheridan to get necessary license renewals. We'd also be willing to bet that their staff will pay a great more attention to keeping the files maintained properly. We would notice suddenly our wallet was 40K lighter.


Transactions
467.5K WBJX-AM Milwaukee-Racine WI (Racine WI) from WBJX Inc. (Robert Jeffers) to El Sol Broadcasting LLC (John Torres, Tom Balasteri). Sale pursuant to court order. Cash. 15K already paid for purchase option will count toward purchase price. [File date 10/27/06.]

150K WWLA-FM CP Charleston WV (South Charleston WV) from Broadcasting for the Challenged Inc. (George S. Flinn Jr.) to Educational Media Foundation (Richard Jenkins). 75K cash at closing, 75K note. [File date 10/26/06.]


Stock Talk
Stocks recover from election
Concern about Democratic election gains sent stocks lower in early trading, but they recovered and closed higher as investors apparently decided that gridlock in DC would be good for business. The Dow Industrials rose 20 points, or 0.2%, to 12,177.

Radio stocks joined in the advance. The Radio Index rose 2.174, or 1.4%, to 155.827. Emmis rose 3.6%. Was that due to the Wall Street Journal story of a deal with Google, which proved to be incorrect? Westwood One, which reports its Q3 numbers this morning, was up 3.7%. Cox Radio gained 2.8% after reporting Q3 results.


Radio Stocks

Here's how stocks fared on Wednesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

43.55

+0.38

Hearst-Argyle

HTV

25.70

+0.11

Beasley

BBGI

6.93

-0.16

Journal Comm.

JRN

11.70

+0.08

CBS CI. B CBS

29.60

+0.20

Lincoln Natl.

LNC

64.93

-0.07

CBS CI. A CBSa

29.56

+0.18

Radio One, Cl. A

ROIA

7.17

+0.11

Citadel CDL
10.51 +0.12

Radio One, Cl. D

ROIAK

7.15

+0.10

Clear Channel

CCU

34.89

+0.35

Regent

RGCI

3.63

+0.01

Cox Radio

CXR

17.41

+0.47

Saga Commun.

SGA

8.94

+0.20

Cumulus

CMLS

11.45

+0.15

Salem Comm.

SALM

11.50

-0.27

Disney

DIS

33.10

+0.25

Sirius Sat. Radio

SIRI

4.12

+0.03

Emmis

EMMS

12.94

+0.45

Spanish Bcg.

SBSA

4.37

-0.15

Entercom

ETM

29.17

+0.67

Univision

UVN

35.13

-0.03

Entravision

EVC

7.16

+0.16

Westwood One

WON

8.40

+0.30

Fisher

FSCI

42.86

+1.01

XM Sat. Radio

XMSR

13.65

+0.16

Gaylord

GET

48.93

+0.67

-

-

-

-

-


Bounceback

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Below the Fold
Wall Street Media Business Report
Analyst demotes Arbitron stock
Boyle says a 19% run-up is enough.

Ad business Report
Zubi Advertising signs for PPM
The big Hispanic agency will get PPM data in Houston.

Media Business Report
Decaux eying Clear
Channel Outdoor

Such a deal would create a world-wide billboard giant.

Media, Markets & Money
Saga spins one in Ithaca
WKRT-AM jumps from Christian to Bible.

Radio Media Moves

Throw him
a Loveline

Stryker, afternoon driver for CBS Radio's KROQ-FM LA, has been named permanent co-host of "Lovelines," the daily call-in show syndicated nationally by Westwood One. After filling in for some time, Stryker now officially joins Dr. Drew Pinsky, who has been advising callers on relationships since the show's launch over 20 years ago.


More News Headlines

IAB elects 10 new members to board
The Interactive Advertising Bureau (IAB) has elected ten new members, including some with broadcast ties, and re-elected six sitting members to its Board of Directors. The terms begin immediately and extend for three-years. Jim Spanfeller, President and CEO, Forbes.com, remains as Chairman of the IAB for 2007. The total number of Board Members is now 33. The new members on the IAB Board of Directors for 2007 include: Jeremy Allaire, Brightcove; Michael Barrett, Fox Interactive Media/ MySpace; John Battelle, Federated Media; Bob Carrigan, IDG Communications, Inc.; Randy Kilgore, Tremor Media; Leon Levitt, Cox Newspapers; Riley McDonough, WebMD Health; Dave Morgan, Tacoda; David Payne, CNN.com; Lance Podell, Seevast.


October RBR/TVBR
Digital Magazine

In October's RBR/TVBR Solutions Magazine:
* Our Executive Comment series continues, asking television execs what the medium needs to address for success in 2007.
* The network radio upfront special continues, taking a look at new and unconventional ideas, shorter spot units and more.
* We go OneonOne with The Weather Channel's SVP/Cable Ad Sales Liz Janneman.
* We ask TV GMs and Program Directors what's working in syndication and network programming.
* Ronning-Lipset's Andy Lipset says, "It's a great day to be in radio"
* We review Q2 trading and deals for Television and Radio.


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




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

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.

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.
11/08/06 RBR #218

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.

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.
11/08/06 RBR #218

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


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