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Volume 22, Issue 251, Jim Carnegie, Editor & Publisher

Wednesday Morning December 28th, 2005

Radio News®

National red ink flattens
radio's November
According to the latest RAB report of Miller Kaplan Arase & Co. figures, November 2005 local revenue registered a modest 1% gain over the same month in 2004, but the month came in flat when a 5% decrease in national revenue and a 1% decrease in non-spot revenue were factored in. Flat is the story for YTD results as well, based on a 1% gain in local balanced by a 2% decrease in national and a 1% decrease in non-spot. Still, it almost looks like a great month compared to the October which preceded it, when a drop-off in the political category was blamed for an overall loss of 7%.

RBR observation: Up until recently, the two- and four-year political cycles were much more obvious in television than radio. It seems to us that the bigger problems were the overall weakness in advertising in general and the growing pains of Clear Channel's LIM initiative. Everyone is looking forward to the natural leveling effect of comparing LIM numbers with new LIM numbers in 2006. Plus political will be working in everyone's advantage. There should be no excuses for continued red ink in 2006, barring the usual force majeure considerations.

Sirius hits 3M with days to spare
Tuesday brought big post-Christmas news at Sirius Satellite Radio. The company had reached its goal of having three million subscribers by the end of 2005. And with a few days of sales remaining, Sirius is still projecting strong sales for this week, so look for a slightly larger subscriber tally to be announced in a few days for the end of Q4. With late 2005 subscription sales spurred by the January premier of Howard Stern, Sirius has been growing a bit faster than larger rival XM. Both companies have been telling Wall Street that they will reach cash flow break even in the latter part of 2006.

RBR observation: We wait with calculator at the ready. Of course, XM was originally supposed to hit break-even in 2005, but had to move that goal back a year. We are still skeptical that either can make the math work in 2006 either, but hey, what do we know? We're apparently not smart enough to make investors want to give us hundreds of millions a year to burn through with promises that there might be a payoff some day in the (ever more distant) future.

CBS ready to roll with Free FM
After being criticized for years for failing to spend anything to promote its stations, it's refreshing that CBS Radio is putting some promotion effort behind the launch of its new morning shows on its "Free FM" stations. Billboards are up and spots are running on TV to alert potential listeners to the new offerings that are set to debut next week on stations that used to feature Howard Stern.
|

Here's a spot airing in LA for Adam Carolla |

S&P TV forecast may hold lesson for radio
Radio dominated the attention of Washington types during its post-1996 Clear Channelization. Lately, though, TV has put radio in the somewhat in the shadows. However, TV events should be of keen interest to radio operators. For example, analysts at Standard & Poor's note that the work of Congress on the DTV transition bill is essentially done and they expect the House will finish it off when members return in 2006 (although a few explosive issues remain to be settle, not the least of which is multicast must-carry). That said, they note that big players on both sides of the broadcast/cable divide stand to benefit the most, while smaller companies may face a squeeze. S&P equity analyst for the Broadcasting, Cable & Satellite Tuna Amobi says that broadcasters will apply more and more pressure for cash for carriage as the transition date approaches, and the bigger the company, the better the cards it will have to play, on both sides. "Local TV broadcasters that are part of media conglomerates such as Disney, Viacom and News Corp.'s Fox TV, mostly with leading O&O stations in major US markets, are well-positioned to negotiate adequate 'in-kind' compensation, including further launches of branded cable networks, or increasingly, forced carriage of multiple digital streams. Furthermore, bigger cable operators such as Comcast, vertically integrated Time Warner or well-clustered Cablevision, with relatively manageable spectrum constraints, are likely to face relatively minimal DTV or retransmission consent exposure." He says that possibly facing troubled times are smaller players like Mediacom, RCN, Insight or Cable One on the cable side and LIN TV, Young Broadcasting and Hearst Argyle on the broadcast side.

RBR observation: On the multicast must-carry front, S&P expects that broadcasters will have ample opportunity in Congress to reverse losses experienced at the FCC - - but it didn't speculate on what will happen to pricing models in a market where seven broadcast television outlets suddenly splits into up to 42 program streams, or where cable operators use new capacity to load up the menu with new basic offerings. Radio should be paying attention - - HD radio is coming with or without a helping hand from Capitol Hill. Presenting a proliferation of new consumer options may well be applying a wedge and sledge hammer to an audience which is already becoming more and more fragmented on a daily basis. Truth be told, the future may favor the big boys if only because they will have the wherewithal to stay at the table longer in the event of a technological shake-down. But they will also have more to lose. All we can say is, keep those seatbelts fastened and those options open.

Clear Channel settles JamSports lawsuit
Along with spinning off its live entertainment business, now known as Live Nation, Clear Channel Communications is now free of the financial overhang of a lawsuit over its former subsidiary. In an SEC filing, Clear Channel said it had reached an out of court settlement with JamSports, which had accused the former Clear Channel Entertainment of antitrust violations in its business dealings in motor bike racing. A jury had awarded JamSports 90 million bucks (3/23/05 RBR #58) but a judge later threw out 73 million in punitive damages and then Clear Channel won a retrial, which had been set for February. Now the whole thing has been settled. The terms of the settlement are being kept confidential, but Clear Channel said in its SEC filing that the settlement is not material to its finances and that it did not admit any wrongdoing or liability.

FCC may look at charity payola
A potentially new form of pay-for-play has been uncovered by the Washington Post. It found that three network-affiliated television stations in the Washington market help advertisers look like the guys in the white hats by featuring them as charitable sponsors - - complete with news coverage of their good deeds. For a price. And the arrangement generally goes undisclosed. An FCC spokesman called the practice a breach of the public trust, and FCC payola point man Jonathan Adelstein promised to look into the matter. "There appears to be a lot of smoke here, and we need to find out if there's a fire beneath it," he told the Post. He later released a statement saying, "A broadcaster's failure to fully disclose to the public that it receives financial benefits from the employer of an on-air 'expert' guest is not just corrupt journalism, it's potentially illegal." Adelstein noted that the practice appears equally suspect for both radio and television stations. Watchdog Free Press has fired off a letter to the FCC adding the charity arrangement to complaints which include the Armstrong Williams pay-for-say arrangement, dissemination of VNRs without proper sourcing, and the use of reviewers to promote a specific product for pay. "Federal regulations clearly prohibit this brand of undisclosed propaganda in the news media," wrote Timothy Karr of Free Press. "It's incumbent on the FCC to enforce existing Payola Rules..."

RBR observation: While all media need to be aware of proper sponsorship disclosure, this developing issue may well have a more severe impact on television than radio. Depending on how it issue plays out, it could well have an impact on the ever-growing use of product placement as an alternative to spot advertising.

Adbiz©

Americans spent 25% more online this holiday season
Internet shopping is increasing with each holiday buying season. As of December 16th, the Holiday eSpending Report from Nielsen-NetRatings, Goldman Sachs and Harris Interactive found that Americans had spent over 25 billion in online holiday shopping. With several days of reports yet to come in, the report says online holiday spending was running about 25% ahead of a year ago. The big draw this year, in terms of total online spending, was clothing and apparel purchases, accounting for about 17% of all buying via the Internet.

Brainsaw nabs Del Taco
California ad agency Brainsaw announced that it had been named agency of record for Del Taco, having created the Mexican food chain's most recent spot highlighting four buck combo meals and free movie rental certificates. The agency is now working on new radio and TV spots for a new (as yet secret) menu item to be introduced in late January. Del Taco is the nation's second-largest Mexican food chain, with more than 450 restaurants in 11 states.

Media Markets & MoneyTM

Finest City gets an Evergreen for the holidays
Mike Glickenhaus has been running a trio of cross-border Mexican FMs in the San Diego market since the summer, when he took over an LMA from the sizable Clear Channel superduopoly under the name Finest City Broadcasting (7/29/05 RBR #148). He now will be heading an ownership rather than an operating company, with financial backing from Evergreen Pacific Partner. EPP co-founders Timothy Bernardez, T. J. McGill, and Michael Nibarger will all sit on the Finest City. The stations are AltRock XETRA-FM, Rhythmic Oldies XHRM-FM and Rhythmic CHR XHITZ-FM. An earlier media investment gave Evergreen a stake in an Arizona cable operation. Terms of the San Diego deal were not disclosed.

Washington Beat

Cancel that cancellation
The communications lawyers at Womble Carlyle Sandridge & Rice have advised their client base, and us, of the FCC's new rule under which it may simply cancel the license for an auxiliary facility if it is unconstructed as of its construction deadline date. For the purposes of cancellation, it will be considered unconstructed regardless of its actual physical condition and despite the fact that it is completed and operating perfectly, if the FCC has not been properly notified of that fact. Depending, proper notification or proper application for a waiver to get a construction extension may be required. Deadline for this is 2/1/06.

RBR observation: Watch those licenses and all other FCC matters. If you snooze, you lose.

Programming

Madonna latest to cut radio promos
Nearly a year after NAB launched the "Radio: You Hear It Here First," the campaign has nabbed its biggest star yet. Madonna is the latest to cut :15 and :30 spots praising radio for having launched her career (never mind that she was actually in a movie before that). The pop idol says in the :30 that "before I was like a prayer, or a virgin" (you knew that line would get in there), and before she "invented MTV"..."you heard me, Madonna, on the radio." While there are plenty of other artists whose spots can be downloaded from the NAB site, the organization is gushing at having landed such a big star. "Madonna is a superstar with an unparalleled following. It would be difficult to find a more effective spokesperson to communicate free, local radio's strengths," said NAB Radio Board Chairman David Field, CEO of Entercom.

TVBR - TV News

Study of local TVs attacks distant owners
In Oklahoma, a pair of Northeastern State University profs did a highly-focused study of local television newcasts in an determine if content was affected by the whereabouts of the station's owners. According to the Muskogee Phoenix, their look at three Tulsa network affiliates showed that there was a correlation. Griffin Communications was the only local owner, and its CBS KOTV-TV 6 seemed to have the most local news items (although its ND freely admitted the station used feeds from CNN and, of course, CBS), based on an analysis of over 2.5K items. It beat out Scripps Howard's NBC KJRH-TV 2 and Allbritton's ABC KTUL-TV 8. A local Clear Channel Fox affiliate was not included in the study because of the difference in time slot and length from the other stations. The professors said their research seemed to lend support those who claim that rules allowing large corporate station groups are detrimental to the FCC's goal of localism.

TVBR observation: To say the scope of this study is limited is an extreme understatement. A look at one market is interesting but essentially meaningless in terms of making national policy, sorta like analyzing a blizzard by looking at a snow flake. Bottom line: It's possible for a national group to invest cash and personnel into a stong local news presence, just as it is possible for a local owner to invest nothing. So until we get the same study for 200 or so other markets, these results are a mere drop in the bucket.

Transactions

12.4M KHKX-FM/KMCM-FM & KQRX-FM Odessa-Midland TX (Odessa, Midland TX) and KGKL AM & FM/KELI-FM, KNRX-FM & KKCN-FM San Angelo TX (San Angelo, Sterling City, Ballinger TX) from Encore Broadcasting I LP/Encore Broadcasting of San Angelo I LP (Tommy R. Vascocu) to Double O Texas Corporation, a subsidiary of Pilot Group GP LLC (Terry Bond). 620K escrow, two 200K non-competes, balance in cash at closing. 7.7M allocated to Odessa-Midland stations, 4.3M allocated to San Angelo stations. Existing superduopolies. [File date 12/7/05.]

3.3M WWXQ-FM & WXQW-FM Huntsville AL (Trinity, Meridianville AL) from Capstar TX LP, a subsidiary of Clear Channel Communications (Mark Mays) to Cumulus Licensing LLC, a subsidiary of Cumulus Media Inc. (Lewis W. Dickey Jr.). Cash. Superduopoly with WHRP-FM, WVNN-AM, WZYP-FM & WUMP-AM. Clear Channel retains WBHP-AM, WHOS-AM, WDRM-FM & WTAK-FM. Further, Cumulus agrees to take no action to prevent CCU from applying for permission to move WLAY-FM Tuscumbia (Florence-Muscle Shoals AL market) to Meridianville (Huntsville market). [File date 12/5/05.]

Stock Talk

No year-end rally in sight
Stock prices fell on Tuesday as traders fretted about the strength of retail sales. The Dow Industrials dropped 106 points, or 1%, to 10,778.

Worries about retailing are also worries about broadcasting. The Radio Index fell 2.173, or 1.2%, to 181.964. Hardest hit were Regent and Saga, down 2.4% each, and SBS and Cumulus, each down 2.3%.

Radio Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		38.50	-0.40	Jeff-Pilot	JP		57.26	-0.20
Beasley	BBGI		13.54	-0.20	Journal Comm.	JRN		13.90	+0.01
Citadel	CDL		13.23	+0.06	Radio One, Cl. A	ROIA		10.84	unch
Clear Channel	CCU		31.99	+0.03	Radio One, Cl. D	ROIAK		10.85	-0.02
Cox Radio	CXR		14.25	-0.23	Regent	RGCI		4.59	-0.11
Cumulus	CMLS		12.59	-0.29	Saga Commun.	SGA		10.79	-0.26
Disney	DIS		24.14	-0.13	Salem Comm.	SALM		17.32	-0.08
Emmis	EMMS		19.59	-0.34	Sirius Sat. Radio	SIRI		6.99	+0.16
Entercom	ETM		29.41	-0.36	Spanish Bcg.	SBSA		5.18	-0.12
Entravision	EVC		7.14	-0.12	Univision	UVN		29.86	-0.28
Fisher	FSCI		43.03	-0.54	Viacom, Cl. A	VIA		32.85	-0.48
Gaylord	GET		43.33	-0.93	Viacom, Cl. B	VIAb		32.81	-0.53
Hearst-Argyle	HTV		23.93	+0.01	Westwood One	WON		16.23	+0.01
Interep	IREP		0.36	unch	XM Sat. Radio	XMSR		28.99	-0.11

Bounceback

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Below the Fold

Ad Biz
Online holiday spending big
Over 25 billion and growing...

Washington Beat
Cancel that cancellation
FCC's new rule under which it may simply cancel the license...

Media Markets & Money
Finest City gets an Evergreen
Mike Glickenhaus will be heading ownership...

RBR Radar 2005

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

Back to the future for Clear Channel
It took most of '05 to complete the process, but the big restructuring that Clear Channel Communications (CCU) announced back in the spring has been completed. A few weeks after the IPO of Clear Channel Outdoor as a 90% owned subsidiary of CCU with its own stock (CCO), CCU divorced itself from Clear Channel Entertainment by passing out shares of a new company, Live Nation (LYV), to shareholders - one share of LYV for each eight shares of CCU owned. RBR observation: Don't look for any more spin-offs from Clear Channel. The TV group and Katz Media Group are too small to be viable as stand-alone public companies (as Katz already proved once). And it would make no sense to create a separate stock for Clear Channel Radio (although the ticker LIM, Less is More, comes to mind), since radio is CCU's main business. Rather, it's time to hunker down and improve operating performance. With the easy comps from 2005 resulting from LIM, there can be no excuses for not delivering growth in 2006.
12/27/05 RBR #250

Publisher Perspective
Where's the media going, TV,
the blogs, Internet, cable?
This is not my question but one that was asked this past Christmas morning by NBC's Washington Bureau Chief Tim Russert to former NBC 'Nightly News' anchor Tom Brokaw and former ABC 'Nightline' host Ted Koppel. Brokaw summed it up by stating it is a new universe in the media or a new frontier like the Oklahoma land rush as it is a new landscape where they (we all in the changing media) are hoping to find land with a pot of oil somewhere. The internet was unknown five years ago and today it is a powerful tool to deliver news or propaganda and as I see it there is a very thin line between the two. There is a new universe of media and media business like planets but only the brightest are gonna survive or support life. I can only say for the record that if you do not have a strong stomach for combat then it is time for a career change as 2006 is going be a wild ride.
12/27/05 RBR #250

Presidential changes at Arbitron
Designed to speed up commercialization of the PPM. Owen Charlebois, President of Operations, Technology, Research and Development, charged with continuing efforts to "enhance the quality of the diary based radio ratings as Arbitron begins the transition to electronic measurement. Pierre Bouvard now President of Sales and Marketing, overseeing sales and marketing efforts for both the PPM and the company's core businesses. Linda Dupree, Sr. VP of PPM, will continue to oversee development of market research services based on PPM and to head up Project Apollo. "In 2006.
RBR observation: Good moves as Arbitron boss Steve Morris is not waiting for a hand up from Clear Channel and their biblical results from a recent call for alternatives to Arbitron's PPM. Radio must move into technology now not at the end of 2006.
12/22/05 RBR #249

SBS Los Angeles hit with EEO fine
A quartet of FMs in Los Angeles owned by Spanish Broadcasting System - - two of which are in an LMA/pending sale with Styles Media Group - - have been hit with a 20K FCC fine for EEO violations.
RBR observation: It's interesting that an outfit which should naturally attract a workforce containing a high percentage of minorities of the Hispanic variety is still subject to strict enforcement of the EEO rules. A word to the wise keep up your commitments and your public file. 12/21/05 RBR #248

Moody's downgrades VNU
There's more financial pressure on the management of Nielsen parent VNU. Moody's Investors Service has downgraded its long-term debt and that of its Nielsen Media Ratings Inc. subsidiary - - and kept them under review for a possible further downgrade. Unless VNU is sold (and the company has acknowledged getting takeover bids), Moody's says VNU is likely to focus on its core assets, particularly! its media ratings and data businesses, while suggesting that divestitures are likely in its B-to-B businesses (trade publications and trade shows). Publisher Courtesy: Any reader to a VNU trade such as Billboard, Ad or Media Week are welcome here at RBR, TVBR, Media Mix and our monthly Solutions Magazine - Independently owned for 23 years and dependable. We are going to grow again in 2006.
12/21/05 RBR #248

Eight more nabbed in
public file dragnet
FCC veteran Roy Stewart warned those assembled at the NAB Radio Show 2005 in Philadelphia that a lot of the upcoming fining action would be in the public file area. Eight more licensees, all on television side, will be contributing between 3K-10K to Uncle Sam because they inadequately contributed documents to the file for public inspection. 12/21/05 RBR #248

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