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Volume 24, Issue 23, Jim Carnegie, Editor & Publisher

Friday Morning February 2nd, 2007

Radio News ®

Radio revenues:
Local red, overall black
Results for the last month of December closely mirrored results for the year as a whole. Local was down 1%, national was up 6% for the month and 5% for the year, and the combined result for both combinations was neither red nor black, but a flat 0%. The ever-growing and creative non-spot category was up 8% for the month and 10% for the year, enough in both cases to produce a 1% gain for radio revenue overall. Both national and non-spot were strong throughout Q4, picking up 12% apiece to local's flat performance. That combination brought Q4 in a 3% to the good, giving the year as a whole a tow into black ink territory.

RBR observation: We've been pounding away at this just about every time the RAB releases another report, but the fact remains that radio is a local business. The constant refrain, that the Internet is eating away at the advertising revenue pie, should be easily defeated by its relative inability to deliver a decent-sized local audience to advertisers. Many have speculated that advertisers should be realizing the folly for their ways just about now, and will return to the local fold. We suggest that you nudge them back in the firmest possible way, and provide some enticing Internet connections for them on the side, so they don't have to look at their recent online flirtations as a total waste - just another extra benefit from dealing with your friendly, effective, LOCAL radio station.
| View the chart |

Senators put the FCC on notice
Jay Rockefeller (D-WV) came right out and said it. One result of the midterm elections will be "A lot more attention to the FCC about what they are or are not doing." The process kicked off without any further ado at yesterday's face-off between the five FCC Commissioners and assorted members of the Senate Commerce Committee. The first sign of the times was the composition of the panels. At the FCC table, it was three Republicans to two Democrats. The Senate side looked a little different. Attendance was a shifting phenomenon, with many having other claims on their time, but by the time the meeting was gaveled to a close, nine Democrats had checked in to only three Republicans. During the question and answer phase, that left Kevin Martin pretty much playing defense the entire time. Democrat Michael Copps carried the ball for the Democrats with Jonathan Adelstein getting a fair number of carries in a supporting role. Republicans Deborah Taylor Tate spent the entire time on the sidelines, and Robert McDowell, marking the eight-month point in his FCC tenure, only figured in once when he was complimented for, oddly enough, staying on the sidelines, during the AT&T/BellSouth proceeding. As expected, some of the toughest questioning came from Byron Dorgan (D-ND), who kicked off his turn by complaining that his five minutes was not nearly enough - mere surface scratching time - and asked Chairman Daniel Inouye (D-HI) to keep the FCC on the schedule. That looks like a sure thing at this point. Notable no-shows: John McCain (R-AZ), who has made being a thorn in NAB's side a cottage industry at times; Trent Lott (R-MS), who joined with Dorgan earlier in the Resolution of Disapproval of the FCC's 6/2/03 dereg attempt; and John Kerry (D-MA), who had mentioned plans to query Commissioners about a major league baseball/satellite deal which he thought would deprive viewers from access to game coverage.

Senators reveal top issues
Members of the Senate Commerce Committee as a group made it clear to Commissioners what issues weighed heaviest on their minds at yesterday's two-hour session. At first it looked like the Commissioners, particularly Chairman Kevin Martin, would get off fairly easy. Daniel Inouye (D-HI) questioned aspects of the AT&T/BellSouth deal which Martin handled as clarification/point of information. Ted Stevens (R-AK) was worried about universal service, John Sununu (R-NH) had questions about white space utilization, and newcomer Amy Klobuchar (D-MN) wondered about the digital divide. Frank Lautenberg (D-NJ) kicked off the first fireworks when he wondered how Secaucus NJ's own WWOR-TV could get away with calling itself My Nine New York, without seeming to make any particular effort to serve its northern New Jersy base, getting the localism/postcard license renewal debate started. Byron Dorgan (D-ND) was next, asking if free markets are desirable, what's so free market about ownership consolidation, which decreases competition and therefore makes the market less free. He hit on the "spectacular failure" of the 6/2/03 ownership rulemaking, the loss of localism since 1996, and the need to protect Internet neutrality. Barbara Boxer wondered how many more buried reports were going to turn up at the FCC, prompting Chairman Kevin Martin to enumerate all the steps he took to unearth and publish any such reports. Jay Rockefeller (D-WV) hit on indecency, violence and the lack of public affairs programming. Another newcomer, Claire McCaskill (D-MO), complained about the high cost of political advertising time and relative lack of public debate time, although she praised the news coverage of her race. Still, she graciously put in a word for the competitiveness of her own future opponent, who she said should come into the next political contest on a level playing field. What didn't come up? Any mention at all of the boiling-over retransmission battle between Sinclair and Mediacom.

RBR observation: After this performance, we stand by our earlier prediction that the five FCC Commissioners are going to beat their own special path between the FCC's Southwest digs in The Portals across the Mall to the Capitol during the next two years.

Analyst muses on higher CCU bid
By his calculations, based on the increased stock price of Clear Channel Outdoor (CCO), Bear Stearns analyst Victor Miller figures the private equity consortium trying to buy Clear Channel Communications (CCU) could now up their bid to 40 bucks and still pay a lower multiple for Clear Channel Radio than under the original 37.60 bid. Since the buyout deal was announced last November, the CCO stock price has gone up 15.8%. That has some major institutional investors, including mutual fund giant Fidelity Investments, pressuring Thomas H. Lee Partners and Bain Capital to increase their offer for CCU, which owns 90% of CCO. But while the math works for an increased bid, Miller doubts that the equity firms will increase their four billion cash commitment by an additional 1.36 billion. But if the 37.60 bid is voted down by shareholders, after which there will no longer be any break-up fees looming, the Bear Stearns analyst makes the argument that another bidder could then bid more and have an effective lower multiple than the original deal. At 40 per share, he calculates the multiple for the radio assets at 9.2 times estimated 2007 EBITDA, which is lower than the radio multiple of 9.3 times when the original deal was struck.

RBR observation: Will it happen? There are a lot of variables in play here. Miller argues that the Mays family has a lot at stake in getting the current deal approved. He figures that Lowry, Mark and Randall Mays will cash out for nearly 1.2 billion, while Mark and Randall are reinvesting only 20 million of that, or 1.68%, in the new company. If the deal is voted down, there is certain to be a backlash on Wall Street. We agree with Miller, though, that the CCU stock will likely not be punished as badly as Emmis was last year when the buyout bid from CEO Jeff Smulyan was rejected. A recent Wall Street Journal article quoted one shareholder's fears that CCU could drop into the mid-20s. Given the support of the strong CCO stock price, Miller notes that such a scenario would value the radio assets as 3.4 times, which he called "inconceivable." That seems pretty far fetched to us as well.

Journal Broadcast Group realigns management
Journal Broadcast Group announced several management adjustments to heighten its focus on Interactive and New Media opportunities. Carl Gardner, Executive Vice President, Television and Radio Operations and Digital Interactive Media, who has been working with Journal Broadcast Group's Web teams to launch dozens of sites and revenue initiatives over the past few years, now has responsibility for building and leading that business across all Journal Broadcast markets. He also continues to oversee the Milwaukee, Green Bay and Lansing broadcast markets. Jim Thomas becomes Vice President Marketing, Programming and New Media Development and is responsible for developing new programs, new channels and cross-media initiatives to create ratings, revenue and additional reach. Steve Wexler has been promoted to Executive Vice President, Television and Radio Operations and adds responsibility for the Knoxville radio market. Jim Prather, also a Journal Broadcast Executive Vice President, Television and Radio Operations, adds responsibility for Journal's Boise cross-platform television and radio market. "This realignment of several of our key executives should help us take advantage of opportunities in the Interactive and New Media space, while at the same time maintaining a strong focus in our core broadcast business," said Doug Kiel, President of Journal Communications, and Vice Chairman and CEO, Journal Broadcast Group.

A lawyerly look at kiddie sites
Do you think the new rules which kicked in at the beginning of 2007 concerning the juxtaposition of children's programming and associated websites are confusing? As Bob Dylan used to say, "You don't have to feel so all alone." Attorneys Mace Rosenstein and Tarah Grant, with the Telecommunications, Media, and Entertainment practice group at Hogan & Hartson LLP have taken a close look at the rules, and when lawyers analyze requirements using phrases like "seems to" you know we've all been dumped into at least somewhat a regulatory tar pit.
| Walk with them through the finer points here |

Ad Business Report TM

Arbitron, Nielsen to jointly develop
Project Apollo via LLC
Arbitron and The Nielsen Company have signed an agreement that will govern completion of development and testing of the Project Apollo marketing research service and the expansion of the pilot panel to a full national service if the test results meet expectations and generate marketplace support. They've formed a jointly-owned LLC to help make it happen. The proposed Project Apollo service would use the Arbitron Portable People Meter system, ACNielsen Homescan technology and other technologies to provide advertisers with a better understanding of the connection between consumer exposure to advertising on multiple media and their shopping/purchase behavior. The PPM is collecting exposure to broadcast TV, cable networks, and network radio as well as audio-based commercials broadcast on these outlets and on additional media. Consumer exposure to other media such as newspapers, magazines and circulars is being collected through additional survey instruments. Nielsen and Arbitron announced an earlier agreement in May 2005 that allowed the two companies to share the costs of the deployment of a pilot panel for Apollo. The current agreement also encompasses related agreements between the jointly owned LLC, Arbitron and other Nielsen companies for services to be used by the pilot panel and the full national service. Seven advertisers are members of the Apollo Steering Committee, a group of marketers who have signed agreements for Apollo pilot panel data. In aggregate, these seven advertisers-including Kraft, Pfizer, Wal-Mart, Procter & Gamble, Unilever and SC Johnson-spend more than 6.8 billion for advertising on measured media.

RBR observation: Linking the PPM system with ACNielsen Homescan technology will help realize a single-source consumer research service. What some planners and buyers have been looking for with a commercial rollout of Apollo is a la carte options in service. For instance, some advertisers who don't use all forms of media would rather pay less for the service than a P&G which does.

Report: Wal-Mart claims proof
of Julie Roehm affair
NY Magazine reports the battle between Wal-Mart and its fired SVP/marketing communications, Julie Roehm has escalated when Wal-Mart claimed it had "irrefutable and admissible evidence" that she had an affair with Sean Womack, a Veep who reported to her. "Julie Roehm didn't tell the truth about the inappropriate relationship with one of her subordinates," Wal-Mart spokesperson Mona Williams told the magazine. "Despite these denials, Wal-Mart now has irrefutable and admissible evidence of the relationship" between Roehm and Womack. "I would not tell you this if we didn't know it was true." A romantic relationship between employees violates Wal-Mart policy. The company apparently decided to respond after Roehm filed a suit over "false and malicious" statements by Wal-Mart in the press and over money she claims Wal-Mart owed her (1/25/07 RBR #17). In the story, Roehm responded: "I guarantee there is nothing because it didn't happen. I know what they have, and it's not evidence of an affair. It's irrefutable evidence that we're really good friends. He's like a brother to me." Roehm said the evidence in question is personal e-mail exchanged outside of the Wal-Mart system.

IBC signs ad sales deal with Westwood One
Internet Broadcasting, a publisher of local news online, announced an ad sales contract with Westwood One allowing IBC to sell national ads onto key websites managed by the syndicator including Katie Couric, Charles Osgood and Randy Jackson, as well as more than 50 local news and traffic Web sites across the U.S. "As Westwood One/Metro Networks quickly expands our digital assets, we are very excited about our online sales representation relationship with Internet Broadcasting," said Gary Krantz, Chief Digital Media Officer for Westwood One. "We look forward to working closely with them to create impactful marketing campaigns for our growing list of interactive advertisers."

Media Business Report TM

Ernst & Young establishes media audit unit
Ernst & Young has expanded its Marketing and Advertising Risk Services (MARS) practice through the launch of its media performance auditing unit. With the establishment of the unit, Ernst & Young now offers a holistic approach to managing risk in marketing and advertising initiatives by providing advertisers with an objective, independent review of media delivery performance, agency contracts and compliance, review of advertiser business processes and related controls all under one roof. According to Fakler, Ernst & Young created this service after recognizing the need that advertisers have for an independent verification of their media spend and understanding that there are many risks involved, including compliance risk, operational and financial risk and strategic risk. While media performance audits are common in Europe, they have become increasingly prevalent in the US.

Media Markets & Money TM

Close encounter in Wilmington
Beasley Broadcasting has completed its deal which adds Wilmington DE to their market footprint while at the same time extending its cluster in Philadelphia. The station is WJBR-FM, and it came to Beasley for 42M from NextMedia. Peter S. Handy of Star Media Group and Michael Bergner of Bergner & Co. handled brokerage chores.

I wanna be your Sledge buyer
This will be our testimony that this is how Peter Gabriel may have put it, anyway. Jimmy and Gwen Sledge own Pines Broadcasting Inc. and KWRF AM & FM in Warren AR. Those stations will soon form the westernmost outpost in a three-town daisy chain cluster in the southeast quadrant of Arkansas after Pines completes its deal with P.Q. Gardner's Community Radio Network. For 1.05M cash, the Sledges will pick up KHBM AM & FM and KGPQ-FM Monticello AR, which will center the new cluster, and KXSA-FM Dermott AR, which will hold down the eastern flank. The result, using the old contour method of market calculation in the absence of any Arbitron activity in the area, will be three distinct markets of four stations each, with KGPQ-FM and KHBM-FM common to all of them.

Washington Media Business Report TM

What if you're late for a
very important date?
If the date you're late for is the one upon which your license renewal is supposed to be at the FCC in proper order, you can generally expect to pay 1.5K in a notice of apparent liability. A number of these have just been released, as is standard practice as the renewal process works its way though the States. There are some exceptions some have been hit with. For example, would you like to get for the daily double, 3K? Simply file late for an AM-FM combo. These fines are reserved for those who are late for the filing deadline, but do manage to take care of business before the license has expired. For some real fun, miss the expiration date too and watch your fine go up, up, up. This takes the violation up from untimely filing all the way to unauthorized operation, another way of saying spectrum piracy. That carries a 10K fine. In these cases, the FCC generally notes that it is aware that the incumbent did not maliciously commandeer the airwaves without any history of legal operation there, and hits the station for something considerably below that top drawer figure, assuming it has an overall record of compliance with FCC rules and regs.

RBR observation: It is acutely obvious that even paying the minimum 1.5K is an unnecessary expense, so we strongly advise that you are well aware of your obligations to the Commission and handle them carefully and promptly. Your license makes the rest of your business possible, and maintaining it properly is no trivial matter.

Transactions

2.25M KGRN-AM Grinnell IA from Crawford Broadcasting Inc. (Russell Crawford) to Dean Radio.TV Company-Grinnell LLC (Dean Goodman). 150K escrow, balance in cash at closing. Includes non-compete. Duopoly with KRTI-FM Grinnell, KCOB AM & FM Newton IA, coming in a separate concurrent transaction. [File date 1/4/07. [File date 1/5/07.]

2.25M KRTI-FM Grinnell IA, KCOB AM & FM Newton IA from Central Iowa Broadcasting Inc. (Frank Leibl) to Dean Radio.TV Company-Newton LLC (Dean Goodman). 115K escrow, balance in cash at closing. Includes non-compete. Duopoly with KGRN-AM Grinnell, coming in a separate concurrent transaction. [File date 1/4/07. [File date 1/5/07.]

Clear Channel stock transaction,
16B radio, 1B television, filed 12/15/06.
Markets 201-250 (from BIAfn reports filed with contract and other sources)
| Read More... |

Stock Talk

Chutes and ladders on Wall Street
We see in the wire reports that the stock markets had another good day. Will somebody please inform the broadcast issues of this fact? Some of them hitched a ride on the coattails of the general market, but many others went in the other direction. Looking ahead, a positive is that consumer spending is said to be driving stock optimism (stocktimism?), and happy consumers could eventually translate into advertisers looking to take advantage, which could translate in all of the broadcast stocks moving up together...

Radio Stocks

**Here's how stocks fared on Thursday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		47.28	+0.91	Journal Comm.	JRN		13.44	-0.03
Beasley	BBGI		9.25	-0.24	Lincoln Natl.	LNC		68.01	+0.87
CBS CI. B	CBS		31.44	+0.27	Radio One, Cl. A	ROIA		7.46	+0.14
CBS CI. A	CBSa		31.43	+0.27	Radio One, Cl. D	ROIAK		7.50	+0.15
Citadel	CDL		10.50	-0.12	Regent	RGCI		3.09	+0.02
Clear Channel	CCU		36.27	-0.05	Saga Commun.	SGA		9.62	+0.37
Cox Radio	CXR		15.52	-0.14	Salem Comm.	SALM		12.38	+0.11
Cumulus	CMLS		10.31	-0.03	Sirius Sat. Radio	SIRI		3.70	+0.01
Disney	DIS		34.99	-0.18	Spanish Bcg.	SBSA		4.05	-0.01
Emmis	EMMS		8.51	-0.13	SWMX	SMWX		1.50	-0.05
Entercom	ETM		28.15	-0.04	Univision	UVN		35.85	+0.14
Entravision	EVC		7.88	-0.12	Westwood One	WON		6.98	+0.05
Fisher	FSCI		45.07	+0.60	XM Sat. Radio	XMSR		14.15	-0.06
Hearst-Argyle	HTV		25.89	-0.23	-	-	-	-	-

Bounceback

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Below the Fold

Ad Business Report
Arbitron, Nielsen do a deal
To jointly develop Project Apollo via LLC...

Wal-Mart claims proof
Of Julie Roehm affair says it has "irrefutable and admissible evidence"...

Media Business Report
Ernst & Young establishes
Media audit unit called MARS...

Washington Media Business Report
What if you're late
For a very important date like renewing...

Transactions
Clear Channel stock transaction,
16B radio, 1B television, filed 12/15/06 - Markets 201-250

Stations for Sale

Central CA Coast FM: $1.5M
Pacific Northwest FM: $750K
Terms Available
MCH Enterprises: 805.543.3466
www.mchentinc.com

Pacific Northwest
2FM & 1AM
$795K and $650K w/terms
Two markets, discount for all-cash
MCH Enterprises: 805.543.3466
www.mchentinc.com

Market your Stations For Sale
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Contact June Barnes
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Radio Media Moves

Hess on The Team
Clear Channel Washington, DC has promoted Bill Hess to Program Director for SportsTalk 980 WTEM-AM "The Team." He was been with the CC Radio DC cluster since 2003.

New director for CBS
A big name has joined the CBS Corporation board of directors. New member Leonard Goldberg once headed programming for ABC and was President of the 20th Century Fox movie studio, among other accomplishments in a long career.

Lerman exits WW1
Westwood One informed the SEC that Steve Lerman has resigned as a member of the company's board of directors. The resignation was effective January 30th.

Williams upped at AURN
Lenore Williams, Senior Manager of Program Operations for American Urban Radio Networks, has been promoted to Vice President of Affiliate Operations and Compliance. In her new position, Williams will oversee the development and implementation of AURN's new compliance department.

More News Headlines

Kevin O'Neal dead at 46
Veteran radio PD Kevin O'Neal was found dead last weekend in a Nashville hotel room. He was 46. O'Neal had been doing freelance voiceover work since his most recent PD job at KCYE-FM Las Vegas, following several years at WSM-FM Nashville. The MusicRow website reports that a memorial service will be held tomorrow afternoon in Hendersonville, TN.

RBR Radar 2006

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

Big hedge fund likes broadcasting
Earlier this month the giant hedge fund Citadel Investment Group made a bid along with NBC Universal to buy out the public shareholders of Ion Media Networks, formerly Paxson Communications (1/19/07 TVBR #13). Now RBR/TVBR has learned from an SEC filing that Citadel has also been buying up a big block of Radio One stock. As of January 26th, it owned 4,595,989 of the Class D shares of Radio One, which is 5.3% of the Class D shares outstanding. Since the Class D shares are non-voting, the stake should not be attributable at the FCC when the expected transfer of control filing is made for the Ion TV station group.
02/01/07 RBR #22

Clear Channel stock transaction,
If you are following this mega deal here is the latest details of 16B radio, 1B television, filed 12/15/06. Markets Markets 151-200
02/01/07 RBR #22

PPM: Price still the issue
Now that Arbitron has gotten accreditation from the Media Rating Council (MRC) for its first Portable People Meter (PPM) market (1/30/07 RBR #20), will the radio group holdouts be lining up to sign PPM contracts? Don't bet on it.

RBR observation: Those three big holdouts, by the way, are Clear Channel, far and away the biggest, Entercom and Cox Radio. RBR also notes that it is worth a glance RBR bounceback by Patricia Liguori, Vice President of Research, ABC Owned Television Stations as her take on the issue of PPM and Clear Channel. In a nutshell her professional observation is interesting and on taraget. One point made: Given other articles about Clear Channel appearing in RBR, it seems there are more pressing issues than PPM on which they must focus. Read it all in this issue of RBR.
01/31/07 RBR #21

Shining the light on
radio's hottest topics
Spending the bulk of radio's dollars: The agency buyers. For our February SmartMedia Magazine, we asked about four important topics and questions circulating around the industry right now. Here's one: Is satellite and Stern becoming a valid ad vehicle for you? Why or why not? Details here in RBR report.
01/31/07 RBR #21

Clear Channel stock transaction,
If you are following this mega deal here is the latest details of 16B radio, 1B television, filed 12/15/06. Markets Markets 101-150
01/31/07 RBR #21

PPM gets MRC seal of approval
There is jubilation at Arbitron, where word came down that The Media Rating Council (MRC) had accredited the Portable People Meter (PPM) for radio ratings use in Houston, where testing has been going on for many, many months. "Obtaining accreditation of the Houston PPM radio ratings data is a major accomplishment - two years in the making - for the industry and for Arbitron. Also, Buyers encouraged by MRC accreditation in Houston, see RBR Ad Business Report section.

RBR observation: The pressure builds on Clear Channel, which continues to be the only large cluster owner not encoding for PPM in either Philadelphia or Houston. We wait to see whether that actually impacts ad buys - and by how much.
01/30/07 RBR #20

Regional Brokers
American Media Services - Brokerage is expanding and looking to hire Regional Brokers across the country to develop and generate new business. Competitive salary, strong commission plan, benefits, etc. Interested?
See Radio Careers

Hard finding that key person
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