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Volume 23, Issue 224, Jim Carnegie, Editor & Publisher
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Thursday Morning November 16th, 2006
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Radio News ®
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 Is Q4 boost sustainable?
Three Wall Street analysts are out with warnings that the Q4 improvement in radio revenue growth is not likely to continue into 2007. "Don't believe the Q4 hype," warns Anthony DiClemente of Lehman Brothers. He notes that radio has easy comps in Q4, with a flat November 2005 the best showing of the three months last year. "Despite management optimism for the Q4 supported by a modest addition of political dollars, we do not foresee meaningful potential catalysts or signs of relief in secular challenges beyond Q4, which explains our expectations for industry revenue declines for both 2006 and 2007 of about 1% year-over-year," DiClemente told clients. At Goldman Sachs, Mark Wienkes also warned against thinking that a turnaround has begun. "We think 'situational growth, ' that is, growth aided either by political dollars or political crowd-out, easier comps, better station ratings or other one-time items, is masking the weak underlying trends for this group and that as we approach Q1 2007, a truer picture of the likely still soft core ad trends will become clearer," Wienkes said in a research note. Citing easy comps and political ads, analyst Jim Boyle at CL King thinks October could be up 5% when all of the radio numbers are tallied, which will top the 3% consensus of analysts. So Boyle thinks October broke a 22-month string of little growth or negative growth, "but we anticipate it as a one-time jump." He sees November coming in up 3% and December back to 1% growth.
RBR observation: Radio CEOs sounded a lot more optimistic in their Q3 conference calls than we have heard in a long time. If Q4 gains prove to be just a fluke, 2007 is going to be another long, tough year for radio. The operators insist that advertiser demand is improving noticeably, so the proof will be in pacings for January and beyond. We wait to see if the long drought is really over.
Looking at the future of political
Analysts Victor Miller and Tracy Young from Bear Stearns hosted Evan Tracey from TNS Media Intelligence. Yesterday we looked at Tracey's look at 2006. Today, we focus forward. Statewide races in 2007 are limited to Kentucky, Louisiana and Mississippi. Other states to watch for the next two years include Florida, Maine, Montana, Nebraska, New Mexico, Pennsylvania and Virginia, and top topics for issue advertising figure to be healthcare/Medicare/drugs, energy, telecom/cable, asbestos claims, trade, taxes and lobbying reform. Tracey figures the new crop of red state Democrats in the House will be worrying about survival during their upcoming first defense of their seat. Then the presidential year kicks in. In fact, the lack of an incumbent Republican or a sitting veep in the field could make for two crowded primary battlefields, and lead to an especially early kick-off of the presidential campaign season. AS usual, a third of the Senate will be on the ballot, and the Republican party is going to be defending 21 seats to the Democrats' 12. Tracey said he won't be surprised to see the Democratic Congress try to put in more campaign reform over the next two years, probably with significant aid from likely Republican presidential candidate John McCain (R-AZ). Lessons learned from 2004 and 2006 will be refined and applied to the next one. In particular, Democrats have thrived using the Howard Dean Internet-based fundraising model, and Republicans have also made good use of it, tapping a new flow of hard cash. Further, the late pressure put in broadcast inventory may inspire political consultants to open fire over the airwaves sooner, to take advantage of lower rates and less political clutter. But don't expect the tone to change. Tracey said negative advertising is bad advertising, whether it be for a candidate of a soft drink. Unfortunately, the people who put together political ads don't necessarily understand that.
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 Mid-term aftermath:
Rush getting it from both sides
Radio talk icon Rush Limbaugh has said that he feels liberated after mid-term elections restored Democrats to power in both houses of Congress. Many would argue that it will be good for business. It's much easier to go after Democrats when they're in power than not; conversely, it's much harder to defend Republicans when they have it than when they don't. But Limbaugh said it went farther than that. He claimed to be liberated by having no longer to "carry the water" for a Republican party that had abandoned some core principles, particularly when it comes to running a small government, rather than a big-spending one. At least on conservative writer, Chip McLean, has criticized Limbaugh as being part of the problem for not taking the Republicans in Washington to task beforehand, saying that with his stature, he perhaps "...could have used his influence to affect change within the Republican party." But that's not the half of it. Missouri senator-elect Claire McCaskill actually included Limbaugh on her public thank-you list, for his attack on ads featuring Michael J. Fox aired on her behalf, on the topic of embryonic stem cell research. Given the razor thin margin of her victory over Jim Talent (R-MO) and the positive affect Limbaugh's attack had on her campaign, MarketWatch writer Jon Friedman said that perhaps Limbaugh help hand the Senate over to the Democrats.
RBR observation: Limbaugh got a lot of credit during the Republican Contract With America Congressional takeover in 1994. He's getting to see the other side of the coin now. It's certainly true, as any baseball manager or football coach, or anyone else significantly on the sideline will tell you, that you never deserve as much credit as you get when you win, nor as much blame as you get when you lose. And a lot of elements had to fall in place for the Democrats to get their new slim hold on the Senate. For just one example, the margin for the race in Virginia, where we're based, was also razor-thin, and Limbaugh had no discernible presence in this one. In any case, it is at once a tribute the Limbaugh that he has the kind of power to affect a political race (if indeed he has as much as he is being credited with), and, we would suspect, ample reason for Limbaugh to reflect on how that influence is best wielded.
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Serious trouble for satellite radio
Not just for Sirius, but for XM as well. Citing data from NPD Group, Bank of America analyst Jonathan Jacoby says the year-over-year decline in retail sales of satellite radio receivers is accelerating. XM sales were down 23% in October and Sirius sales were down 26% - the first month since April 2005 that Sirius had a worse month than XM. For the entire US satellite radio industry - two companies - unit sales were down 25% in October, following drops of 12% in September and 3% in August. Jacoby is now projecting that Q4 retail sales of satellite radio receivers will be down 20% from a year ago. The analyst says Sirius will now be struggling to make its year-end target of 6.3 million subscribers and that both companies are moving increasingly to an OEM-driven model, where XM is better positioned for receiver sales in new cars. Jacoby maintains a buy rating on XM, saying the stock valuation gap with Sirius should narrow over the next 6-12 months.
 Industry groups attack
the attack on VNRs
The Radio-Television News Directors Association and the National Association of Broadcast Communicators have responded to the latest watchdog study on the alleged abuse of video news releases. NABC charged that many if not all of the charges were false, and RTNDA said that the FCC has no place in the dispute in any case. NABC, which is an organization made up of VNR producers and distributors, said that in this case and in the earlier study from the Center for Media and Democracy charges are empty. NABC President Kevin Foley said, "The new report appears to contain the same unsupported allegations and baseless charges made in the first one. We reviewed the applicable rules and we presented a compelling legal case to the FCC showing that none of the CMD cases appeared to violate any FCC rules. The CMD has not contradicted our legal arguments. At this late date, after all of their allegations, they still can point to no FCC rule that appears to have been violated." According to NABC, attribution of VNRs is only required if it concerns "(1) controversial issues of public importance, (2) political matters or (3) matters for which stations receive payment or other consideration for broadcasting pre-packaged materials." RTNDA, noting that it hadn't fully studied the latest allegations yet, said some incidents appeared to be minor errors. It said, "Even if the allegations made about VNR use by stations in this latest report are true, however, it provides no credible basis upon which the FCC can justify the extraordinary step of inserting itself into broadcast newsrooms and questioning their exercise of editorial discretion."
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| Wall Street Media Business Report TM |
Q3 Conference Calls
TV leads Liberman growth
Q3 net revenues shot up 11.8% to 28.9 million at LBI Media, the parent company of Liberman Broadcasting. That was due primarily to growth at the company's TV stations in California and Texas and the radio stations in Houston, offset by lower performance at the Los Angeles radio stations. TV division revenues were up 24.3% to 15.1 million. Adjusted TV EBITDA gained 47.9% to 7.0 million. Radio revenues rose only 0.7% to 13.8 million. Radio EBITDA dropped 5.5% to 7.6 million. Liberman recently expanded its operations in Dallas, adding five radio stations from Entravision to take its cluster to six radio stations and one TV station. Liberman officials were still talking about their long-pending IPO in their quarterly conference calls, but Lenard Liberman also indicated that he is talking with private equity investors as an alternative. LBI has had public bonds for several years.
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Ad Business Report TM
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 Interep signs for PPM
Interep has signed an agreement for Arbitron's Portable People Meter ratings services in the top 50 radio markets when Arbitron commercializes it. Said Ralph Guild, Interep CEO: "The advertising community has made it clear that radio must adopt an electronic measurement system in order to effectively compete in the current media environment. As a result, we are delighted that we can begin to offer this service to our customers - the agencies and advertisers - on behalf of our client radio stations that have subscribed to the Arbitron PPM ratings service." He added, "Interep is committed to making radio more accountable and measurable. We were one of the first contributors to the RAB's Radio Effectiveness Lab - which continues to produce tremendous work - and we look forward to similar success with our support of the PPM." To date, Arbitron has announced contracts for PPM ratings services with a dozen broadcasting companies. Arbitron also has signed contracts the leading advertising agencies that place more than 90% of the national and regional radio ad dollars.
Radio-Mercury Awards celebrate Spanish-language category with online compilation
To commemorate the 10th Anniversary of the Spanish-Language Category of the Radio-Mercury Awards, a special section has been posted on the website, www.RadioMercuryAwards.com, to showcase a compilation of all the winning and finalist spots since the category's inception ten years ago. Special compilations CD's were also produced in a limited quantity and distributed at the Association of National Advertisers Masters of Multicultural Marketing Conference. In addition, the CDs were sent to Hispanic and multicultural advertising agencies.
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| Media Markets & Money TM |
Close encounter in Las Vegas
BusinessTalkRadio Net Inc. is the proud new owner of KNUU-AM in Las Vegas. Michael Metter's group acquired the station from CRC Broadcasting. According to brokerage firm Kalil & Company, the price was 3.9M. The move constitutes a major westward expansion for the buyer, which is otherwise active as an owner in Massachusetts and New York and provides programming to over a thousand other stations. CRC retains KFNN-AM Phoenix.
Close encounter in Greenville
This is the Mississippi Greenville, where Ricky Salyer's WDMS Inc. is now in the driver's seat at WGVM-AM/WDMS-FM, in a reference appropriate to the expansion of his local business holdings which also include an automobile dealership. Brokerage firm Satterfield & Perry, who represented seller Mid-America Broadcasting Company, tell us the price was 780K.
Complicated Philly-Boston deal closes
Greater Media, Nassau Broadcasting Partners, and Charles River Broadcasting Company jointly announced that they have closed their previously announced transactions by which Greater Media acquired Charles River's 102.5 FM frequency, licensed to Waltham, MA (Boston), and Nassau's 97.5 FM frequency, licensed to Burlington, NJ (Philadelphia), and Nassau acquired Greater Media's 99.5 FM frequency, licensed to Lowell, MA (Boston). Nassau also received cash and classical music assets, including the format of WCRB FM in Boston (8/1/06 RBR #148). This gets confusing, so you may want to hold onto this scorecard. Beginning at noon on December 1st, country station WKLB will begin broadcasting on the 102.5 FM frequency and classical WCRB will begin broadcasting on the 99.5 FM frequency in the Boston market. As of 6:00 pm on November 17th, listeners can tune in to Greater Media's Smooth Jazz WJJZ-FM at its new address on the 97.5 FM frequency in the Philadelphia market, formerly home of Nassau's WTHK "The Hawk." Beginning today, WTHK listeners will have an opportunity to sample Greater Media's Classic Rock 102.9 WMGK, which will be simulcast on the 97.5 frequency until Smooth Jazz debuts Friday evening. Brokers Tom McKinley and George Reed from Media Services Group represented Charles River Broadcasting in the sale of WCRB and then Greater Media in the swap deal, while Glenn Serafin of Serafin Bros. was at the bargaining table for Nassau.
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| Washington Media Business Report TM |
 Two freshmen Democrats named to Commerce
Senate Majority Leader-to-be Harry Reid was busy handing out committee assignments to his colleagues, and two of the rookies coming into the Senate for the first time made the roster of the Commerce Committee. Amy Klobuchar (D-MN), who held a seat left vacant by outgoing Democrat Mark Dayton, and Clair McCaskill (D-MO), who defeated incumbent Jim Talent (R-MO), will join Chairman (D-HI) Dan Inouye's lineup of senators. Also coming in is Tom Carper (D-DE), who was just re-elected to a second term. The trio will join Inouye and Committee veterans Jay Rockefeller (D-WV), John Kerry (D-MA), Byron Dorgan (D-ND), Barbara Boxer (D-CA), Bill Nelson (D-FL), Maria Cantwell (D-WA), Frank Lautenberg (D-NJ) and Mark Pryor (D-AR). Exiting is Ben Nelson (D-NE). We have not seen any announcements from the Republicans at this point. Two of their number, Conrad Burns (R-MT) and George Allen (R-VA), failed to hold their seats.
RBR observation: It is typical that despite the intense passion that broadcast issues seem to generate when they take center stage in Washington, they rarely if ever seem to make much of a difference during political campaigns. Klobuchar's issue statements on her campaign website mention only her concern about the culture of sex and violence over the airwaves (and her support for parental blocking tools). Neither the McCaskill campaign site nor the Carper senatorial site mention even that much. No doubt that is partly because there is a certain degree of party-line blurring on many broadcast issues, and partly because some of them are extremely technical and convoluted. Perhaps of more interest is an semi-related item. Dorgan, who has made media ownership one of his pet issues, has been re-upped as Chairman of the Democratic Policy Committee. He held the same post in the 109th Congress and led some Democratic-only hearings. As a member of the majority now, he will have a whole new set of teeth with which to chew on his pet issues.
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| Entertainment Media Business Report TM |
 WTHZ-FM Greensboro goes Oldies
WTHZ "HITZ94" made a format change yesterday at noon with the slogan "The New Majic 94.1 .. The Station for the Oldies." The word Oldies will be replaced shortly after the market has had time to adjust to include the words "Classic Hitz". The door opened when crosstown WMQX had abandoned the Oldies audience to become county... The Wolf. The staff at the 100,000 watt station will consist of Bob Campbell and Lesley Nash in the mornings, veteran broadcaster Pat Garrett (formerly of WMQX) in the midday, The Shark in afternoon drive, Tom Kent will be trucking through the nights, and over nights will be filled by Mary Kelly.
Music of Your Life back in the Nation's Capital
WMET-AM Washington, DC is a News/Talk station by day, but now it has brought the Music of Your Life format back to DC from 8 pm to 6 am daily. And for listeners who want more, WMET is streaming Music of Your Life on the Internet around the clock.
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| Ratings & Research |
Nielsen measures impact of product placement
Nielsen Media Research announced the completion of its first ever Product Placement Valuation Study, and the availability of those findings to clients. Most interestingly, the study found that 57.5% of viewers recognized a brand when viewing a product placement in combo with a commercial as compared to 46.6% of those viewers exposed only to a commercial for that brand. Overall, the study demonstrates and quantifies the value that product placement contributes to traditional television advertising.
| Read More... |
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| Transactions |
525K WOCV-AM/WBNT-FM Oneida TN. 70% of Oneida Broadcasters Inc. from Keith Purkey, executor for the Estate of George Guertin (70% to 0%) to Hillard Mattie (30% to 100%). Cash. [File date 10/31/06.]
135K KBFZ-FM Kimball NE from Tracy Broadcasting Corporation (Michael J. Tracy) to Legacy Communications LLC (Joseph Jay Vavricek). 27K escrow, balance in cash at closing. Combo with KIMB-AM. [File date 10/30/06.]
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| Stock Talk |
Another record day
Investors felt more confident about rates and inflation after reading the minutes of the last Fed meeting, so they bid stock prices up. The Dow Industrials hit another record, rising 34 points, or 0.3%, to 12,252.
Radio stocks rode the wave. The Radio Index gained 0.691, or 0.5%, to 153.638.
Cox Radio gained 1.3%, recovering from the previous day's sell recommendation by Goldman Sachs. Westwood One moved up 1.5%.
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| Radio Stocks |
Here's how stocks fared on Wednesday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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45.35
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+0.45
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Hearst-Argyle
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HTV
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25.55
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-0.17
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Beasley
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BBGI
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6.96
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+0.03
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Journal Comm.
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JRN
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11.90
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-0.06
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| CBS CI. B |
CBS |
 |
29.64
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+0.06
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Lincoln Natl.
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LNC
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65.16
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+0.11
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| CBS CI. A |
CBSa |
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29.69
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+0.10
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Radio One, Cl. A
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ROIA
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7.14
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+0.09
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| Citadel |
CDL |
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10.52 |
+0.03 |
Radio One, Cl. D
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ROIAK
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7.15
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+0.09
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Clear Channel
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CCU
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34.12
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+0.01
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Regent
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RGCI
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3.41
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-0.16
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Cox Radio
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CXR
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17.39
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+0.23
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Saga Commun.
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SGA
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8.55
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+0.03
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Cumulus
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CMLS
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11.55
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+0.12
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Salem Comm.
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SALM
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11.47
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-0.07
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Disney
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DIS
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32.69
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+0.16
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Sirius Sat. Radio
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SIRI
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4.13
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+0.03
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Emmis
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EMMS
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12.77
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-0.09
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Spanish Bcg.
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SBSA
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4.01
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-0.02
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| Entercom |
ETM
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29.93
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-0.15
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Univision
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UVN
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35.31
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-0.08
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Entravision
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EVC
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7.32
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+0.03
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Westwood One
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WON
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6.76
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+0.10
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Fisher
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FSCI
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44.19
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+0.19
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XM Sat. Radio
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XMSR
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14.85
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+0.86
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Gaylord
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GET
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50.35
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+0.39
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-
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-
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-
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-
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-
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Bounceback
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 We want to
hear from you.
This is your column, so send your comments and
a photo to [email protected]
 John Snyder's comments in today's RBR regarding Radio's need to take chances (11/15/06 RBR #223) brought a chill to my bones, and that's hard to do here in sunny Arizona! He's certainly correct that the PPM will give programmers and owners the type of instant feedback that television has long enjoyed(?). I wonder, though, how this will help radio make better programming decisions. Television offers what could be called "destination programming." Take any 4 hour period outside of sports programming and you will have a mixture of half hour and hour shows offering everything from comedy to mystery to reality. Take the same 4 hours on radio and you get a mixture of the particular format's music. People react to changes in television programming and radio programming in different ways. It's a basic rule of thumb in radio programming that it takes time for a morning show to gain acceptance and build a fan base, for instance. There are certainly special programs like sporting events that can be judged immediately, but not everyday programming. Jerry Lee's station is a prime example of how radio changes work. If you look at his station's evolution since the beautiful music days there were times when it appeared he was evolving in the wrong direction. But, patience and good programming eventually paid off. Radio does need to take chances if we are going to remain a viable entity, but I wonder about using the PPM to gauge in a few weeks, or even months whether those risks were justified.
Bob Glasco
Rusty Walker Programming
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Below the Fold
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Ad Business Report
Interep signs for PPM
In the top 50 radio markets when Arbitron commercializes it...
Media Markets & Money
Close encounter in Las Vegas
KNUU-AM has a proud new owner...
Washington Media Business Report
Two freshmen Democrats
Named to Commerce and both are rookies...
Ratings & Research
Nielsen measures Impact of Product
Placement & interestingly, the study found 57.5% of viewers recognized a brand...
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Stations for Sale
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South Georgia
AM-FM-LPTV Combo
Includes 25kw FM
Zoph Potts @ (252) 940-1680
[email protected]
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More News Headlines
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Promo Only
fires up videos
You read in RBR last month that Promo Only was preparing to begin offering full video downloads to users of its system for delivering new record releases to radio stations (10/16/06 RBR #201). The video downloads officially launched today as the company released its latest software upgrade, Promo Only MPE 3.0 for both Mac and PC users.
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RBR Radar 2006
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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Time to bail on Cox stock?
Analyst Mark Wienkes has put Cox Radio on the Goldman Sachs "America's Conviction Sell List." He thinks the stock is overpriced, based on overstated expectations that Cox Enterprises will buy out the public shareholders. More importantly, while several radio groups have indicated a pickup in business for Q4, Wienkes is not impressed. (More see)
11/15/06 RBR #223
2006 political pegged at 2.1B
And that's just the total for Television. Analysts from Bear Stearns and TNS Media Intelligence said the 2.1B total amounted to a near doubling of political spending compared to the last midterm in 2002. And that's just election cash. Another 344M was dropped into issue ads.
RBR observation: The positive in all this for Radio is that intense pressure on television inventory can send spillover business to the audio-only medium. It will be incumbent on radio to make itself better known to the people who make political buys before the 2008 season kicks into gear, which this process is already begun.
Publisher note: Said it before and will say it again, hire a Political Sales Manager one who understands this process.
11/15/06 RBR #223
Bidding heats up for Tribune
It seems that once the initial bids from private equity firms came in on the soft side, other suitors decided to take a fresh look at Tribune Company. So while the company is busy soliciting bids for the pieces, new bidders are emerging for the entire thing. The latest rumor, first reported by the Wall Street Journal, has Gannett Company in line.
RBR observation: Should Gannett emerge the winner, we would not expect it to get back into the radio business. Rather, it would likely sell WGN-AM to whoever buys the Chicago Cubs. We also don't see Gannett wanting to be a sports team owner. The newspaper giant most likely is primarily interested in the Chicago Tribune, Los Angeles Times and New York/Long Island Newsday.
11/14/06 RBR #222
Sirius wants satellite radio
without satellites
Sirius Satellite Radio now wants to extend its service to Alaska and Hawaii. What is different about this is that the company has no plans to launch any satellites that would provide the service. Rather, it has applied to the FCC to extend its existing special temporary authority to operate terrestrial repeaters
RBR observation: Can you say slippery slope?
11/14/06 RBR #222
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October '06 RBR/TVBR Solutions Magazine
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