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Volume 24, Issue 26, Jim Carnegie, Editor & Publisher

Wednesday Morning February 7th, 2007

Radio News ®

More of the same
With radio revenues up only 1% last year, CL King analyst Jim Boyle notes that the string is now six years of nearly flat revenues. He doesn't see that string being broken in 2007, and in fact is looking for a 1% decline. "The sluggish trend is beyond the cyclical vs. secular debate: 2006 was 1% up, 2005 was flat, 2004 was up 3% and 2003 was a 1% increase, along with 2002's 6% increase were not sufficient to offset 2001's plunge of 7%. The last negative year of '01 was assuredly a unique year with a recession, the dot.com bust immediately after its boom and the first attack on American soil in 60 years. The previous negative radio industry revenue drop-off was in 1991, which had another recession and the first Gulf War to decrease overall advertising, too. What used to be a rarity, a down year for radio revenue, may become more frequent than every decade or so," Boyle said in his gloomy assessment. He looks for groups in small to middle markets to do better than their big market brethren, noting that the radio groups outside the biggest markets held to better rate card discipline in 2006 - a scenario he expects to see repeated this year.

RBR observation: Remember when all the talk in radio was about how to get the industry's share of total ad spending to 8%? Well, it has been losing share lately. Boyle notes that radio's ad share fell from 7.8% at the end of 2000 to 7.1% now. Who has been moving up as radio slipped? You no doubt said the Internet first of all. That is correct, but cable TV and direct mail have also gained substantially, according to Boyle. So what does this decline and others gain tell you about the level of confidence the ad clients and agencies have in today's radio business? What and who has to turn this around? Will there be any new developments at this up coming RAB conference to help the entire radio medium get their act together? One thing for sure More leadership is required with Less bull. If radio is smart, and RBR means smarter than others, they will be the first to develop political sales teams as political is a big money category and it is all local.

When 100M looks like an entry fee
Observers are calling 100M the baseline for candidates making a serious run at the White House in 2008 (and right now the number announced, contemplating or potential is over two dozen). The lion's share of an expected 2B cash outlay figures to be funneled to the media. Hillary Rodham Clinton (D-NY) has set the tone by refusing federal matching funds, meaning she will be able to raise just as much as she is able without running into a cap. They're saying that Clinton may have 250M left for the stretch run if she survives the primaries, virtually forcing the winning Republican candidate to do the same. Republican Federal Election Commission member Michael E. Toner III calls it "...a brave new world of presidential fundraising." Capitol Hill paper The Politico estimates that candidates will have to haul in 10M a month for the foreseeable future, and the task should consume the bulk of their time through fall. Politico also took a look at the 2004 expenditures of both the Bush and Kerry campaigns. Of 301.9M total, Bush-Cheney spent 56.7%, or about 171.2M, on media advertising. Kerry-Edwards spend 270.1M total, and 52.3% or 141.3M on media.

RBR observation: Two items may eat into media's share of each candidate's planned expenditures to a minor degree. Those items are costs associated with early establishment of HQ and regional offices. Neither side in the 2004 election broke out office rental, but Kerry-Edwards did note that 2.14% of its expenditures went to fundraising, and that's the other activity which could take a bigger share of total expenditure. However, both are intended but produce a bigger pie, so the media percentage may be down but the gross figures to go up.

Chandlers aren't giving up
The Chandler family is pushing so hard for its plan to split up Tribune Company that the Wall Street Journal says it "borders on bullying." The Chandlers, the largest shareholder of Tribune at roughly 20%, are said to be insistent that the board of directors accept their bid to buy all of Tribune except its television station group for a payment of 19.30 a share to all other shareholders. That would leave the non-Chandler shareholders with shares of a new TV-only company that they claim is worth 12.40 a share. But various Wall Street analysts have said the value for the TV group is overstated and the Chandler bid is not really worth 31.70 per share as they claim. To press their case, the family is now said to be threatening to mount a proxy battle against two Tribune directors who are up for re-election at the next shareholders' meeting. That, however, would require enlisting lots of support from other shareholders, who, though displeased with the value of their Tribune stock, may not be so enamored of the Chandler bid.

Iraq still dominates news coverage
Wrangling over what to do next in Iraq was still the primary focus of the news media 1/28/07-2/2/07, and in a week with no one big attention-grabbing story, the Iraq policy debate had the top to itself as the lone double-digit topic. That said, however, and we note that there was remarkable unanimity in what stories to dwell on, with only 18 separate topics compared to 30 the week before. The early arrival of the 2008 presidential campaign almost edged into double-digit territory in the media overall, and did manage to nose into it on the cable and radio charts, but that was about it. Coverage of the Scooter Libby trial picked up some steam, and a trend toward having at least two weather stories continued. One of them is global warming, which has been joined up until now on the charts with various snowstorm reports. This time, tornadoes in Florida were the accompanying meteorological item. The biggest story to disappear was the State of the Union speech. One ironic note: the death of columnist Molly Ivins tied for third place on the radio chart with 5%, but appeared on none of the other top ten lists, including newspaper, the sector in which she spent her entire career.
| Top ten lists here |

Wall Street Media Business Report TM

Lincoln reports
Lincoln National Corporation, which is primarily an insurance company, reported net income of 381.3 million, or 1.36 per share, for Q4, compared to 225.4 million, or 1.28 per share a year earlier. For the radio and television division, Lincoln Financial Media, income from operations was 17.5 million in Q4, flat compared to the prior year period as reported by Jefferson-Pilot. "The year-over-year variance was negatively impacted by the amortization of intangibles caused by purchase accounting in the 2006 period," Lincoln National Corp. said.

Ad Business Report TM

Sharper Image gets
next phase of HD
Alliance campaign
The HD Digital Radio Alliance and Sharper Image announced the launch of HD digital radio products in over 188 Sharper Image stores nationwide, as well as online and on the cover of the company's celebrated catalogue. The retailer's move will be heavily promoted in the Alliance's 250 million 2007 ad campaign, announced in December. Sharper Image customers can purchase two of the most popular tabletop HD digital radio models: the Boston Acoustics Recepter Radio HD is available in stores and online now. The Sangean receiver is available online and will be in stores beginning in April. Beginning today, a series of :15 and :30 spots will promote products, in-store availability and online availability in all of The Sharper Image's markets. The new ads can be heard online at www.hdradioalliance.com.

RBR observation: 299 dollars is still a lot for a radio, but Sharper Image customers skew upscale. Would have been nice to get this off the ground for the Holiday season last year when the consumer was buying all the new gadgets they could find. They may have even purchased a Table Top HD radio just because it looked cool. HD has a long long way to go. As for Sharper Image, great store to browse around in.

McNew comments on possible Interep network
Patrick McNew, PHD Detroit/Local Media Network EVP, LMN Director of Operations, commented on Interep considering a new radio network that spans all of its affiliates (2/6/07 RBR #25):

"We've had some great success using radio across a broad range of our clients. Over the years the PHD Local Media Network has been involved in everything from Summer Sales Drives to Valentine Day promotions. We are always looking for new and innovative ways to use radio and we'll take a good, hard look at any new product offering from a company such as Interep. Radio is unique in its ability to take a national concept and be able to drive that concept down into the local marketplace."

Spots examined in Chicago, Indy leading to big game
Media Monitors examined what spots ran on Indianapolis and Chicago radio the week leading up to the Big Game: Jewelry is solid as a rock in Indy with 4 of the top 10 advertisers being from that category. Kroger ran hot the week before the big game, ranking second. HD Digital Radio Alliance, Verizon and Comcast held up the Media companies in the Championship city, ranking 4th, 7th and 9th place, respectively. This is the way radio in the windy city stacked up the week before the game: HD Digital Radio Alliance was the #1 Spot in Chicago last week, while AT&T, Sprint and Verizon duke it out in the Top Ten for telecommunications. Big national advertisers: McDonald's (4th) and Wal-Mart (3rd) also had healthy spot loads last week.

Media Business Report TM

Class-action aimed at Smith

Television ads for a TrimSpa weight loss pill, which was touted by Anna Nicole Smith, have resulted in a class action suit filled in Los Angeles. According to the Associated Press, the company and its spokesperson are alleged to have engaged in "deceptive business practices" and are said to have engaged in competitive practices deemed unfair under California law. It was not known how much the plaintiffs were seeking. However, the Federal Trade Commission has struck an agreement with TrimSpa under terms of which it will pay 1.5M.

RBR observation: We have no idea how much headway the lawyers pushing this suit will make. We know for sure that the FTC is extremely skeptical about any weight loss product that does not make it clear that diet and exercise are a must for any product to work, and that there are no magic bullets that will simply melt the pounds away. In all the rulings we've seen from the FTC, broadcast stations airing such ads have never been mentioned, with the burden of defending the veracity of any claims made falling squarely on the shoulders of the manufactures, not the medium. It'll be interesting to see where this goes. All we know for sure is that, although broadcasters cannot be expected to have expert knowledge of the ins and outs of any new product being advertised, and are not licensed by anybody to be umpires of the airwaves, it is a service to your audience to try to head false advertising off at the pass any time you do have a proposed flight cross your desk that just doesn't look right.

Media Markets & Money TM

Tallgrass gets a new Muleshoe
A five station radio group along the Texas-New Mexico border (up the TX panhandle) is changing hands. Tallgrass Broadcasting, headed by Bill Kurtis and Joe Walker, is the buyer, and the seller is Thomas J. Crane's Broadcast Entertainment Corporation. The stations include KMUL-AM/KICA-FM Farwell TX, KMUL-FM Muleshoe TX & KICA-AM/KYCA-FM Clovis NM. The pricetag is 1.25M. Media Services Group brokers Bill Whitley, Tom McKinley, Bill Lytle and Mike Lytle gang-tackled the brokerage chores. For Crane, it marks his exit from radio.

Correction
Yesterday's Media, Markets & Money section incorrectly referred to station buyer Duane Butt as the former CFO of Jim Ingstad's radio company. He is not and has not ever been an employee of Ingstad.

Washington Media Business Report TM

Entravision, others exposed to RFR fines
Excessive levels of radio frequency radiation on a rooftop/penthouse transmitter location in Tampa will cost Entravision 25K, according to an FCC forfeiture order. It's based on a situation with WVEA-LP dating back to 5/25/04. The area where RFR exceed maximum permissible exposure (MPE) was on a rooftop with limited access, and with warning signs at the point of access. The FCC detected MPE on portions of the rooftop where there were no signs, but Entravision argued that it still was impossible for the general public to get there, meaning that occupational MRE levels applied, since an employee knows about the RFR and can take precautions. The FCC disagreed on grounds that the building staff could access the area, and there was no sign that they were adequately informed about the situation. RFR MPE was on the FCC's mind recently. Also hit, for 10K each, were Visionary Related Entertainment's KAOI-FM Wailuku HI, for a 7/19/04 incident, and Infinity Broadcasting's WQYK-FM Tampa, who were on the same building in Tampa as Entravision's LPTV back in 2004.

Internet Media Business Report TM

Online ad spend
to grow 18% this year
Online ad spending in the US will grow 18% this year, faster than in any other media, according to a report by Outsell. Internet search advertising alone will grow 39%, the company is forecasting. Outsell also said concerns about the effectiveness of "pay-per-click" online advertising will lead to a decline of about 1% in 2007. The report was based on a survey of over 1,000 advertisers who collectively control about 6.5 billion in ad spend.

HD Radio 2007

European EQ manufacturer to sign HD Radio license
iBiquity announced that it has licensed R.V.R. Elettronica S.p.A. to develop, manufacture and market HD Radio exciters for AM and FM broadcasters who are converting to digital broadcasting. R.V.R. is the first licensed HD Radio broadcast equipment manufacturer in Europe. The company installed both analog and digital Power Amplifiers and the RF Combiner for the first European HD Radio technology trial, which took place on 88 Radio Sunshine, located near Lucerne, Switzerland. "Opportunities to market HD Radio products directly and through resellers in the Americas, combined with the growing interest in HD Radio technology in Europe, make producing HD Radio equipment a priority," said Stefano Ravagnani, one of R.V.R.'s owners and Technical Director of R.V.R. Valentino Biavati, also owner of R.V.R. and Sales Director, added, "We hope that this agreement will allow us to play a prominent role not only in the Italian and European rollouts of HD Radio technology, but also in other countries around the world where R.V.R. is one of the leaders in radio broadcasting. We look forward to working with all European broadcasters on their conversions to HD Radio technology." The list of countries testing and adopting HD Radio technology now includes Australia, Brazil, Canada, Indonesia, New Zealand, Philippines, Poland, Switzerland, Thailand and Ukraine.

Stock Talk

A little boost from Ben
Fed chief Ben Bernanke spoke to the Omaha Chamber of Commerce and didn't say anything negative about the economy, so stock traders breathed a sigh of relief. The Dow Industrials crept up five points to 12,666.

Radio stocks also rose. The Radio Index gained 0.370, or 0.2%, to 159.380. Citadel had the best day, up 2.7%. Fisher fell 1.6%.

Radio Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		46.99	-0.22	Journal Comm.	JRN		13.31	-0.07
Beasley	BBGI		9.22	unch	Lincoln Natl.	LNC		68.40	+0.29
CBS CI. B	CBS		31.59	+0.03	Radio One, Cl. A	ROIA		7.35	-0.09
CBS CI. A	CBSa		31.56	+0.04	Radio One, Cl. D	ROIAK		7.39	-0.05
Citadel	CDL		10.90	+0.29	Regent	RGCI		3.06	-0.01
Clear Channel	CCU		36.70	+0.17	Saga Commun.	SGA		9.49	-0.03
Cox Radio	CXR		15.77	+0.12	Salem Comm.	SALM		12.39	-0.11
Cumulus	CMLS		10.28	+0.09	Sirius Sat. Radio	SIRI		3.68	+0.04
Disney	DIS		35.19	-0.07	Spanish Bcg.	SBSA		4.11	+0.03
Emmis	EMMS		8.40	+0.06	SWMX	SMWX		1.50	unch
Entercom	ETM		28.75	+0.09	Univision	UVN		35.87	+0.02
Entravision	EVC		7.85	-0.02	Westwood One	WON		7.00	unch
Fisher	FSCI		43.93	-0.72	XM Sat. Radio	XMSR		13.79	-0.38
Hearst-Argyle	HTV		26.10	+0.04	-	-	-	-	-

Bounceback

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Below the Fold

Ad Business Report
Possible Interep network
Patrick McNew, PHD Detroit comments on the network issue...

Next phase of HD Alliance campaign
Sharper Image launch of HD digital radio products in 188 Sharper Image stores...

Media Markets & Money
Tallgrass gets a new Muleshoe
A five station radio group along the Texas-New Mexico border...

Washington Media Business Report
Entravision, other
exposed to RFR fines
Excessive levels of radio frequency radiation will cost Entravision 25K...

Stations for Sale

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

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

Market your Stations For Sale
in our daily epapers.
Contact June Barnes
[email protected]

Radio Media Moves

Sutherland gets Seattle
Bonneville International has named Scott Sutherland to become Market Manager for the three stations it is acquiring in Seattle (KIRO, KBSG, KTTH) in a swap with Entercom. An LMA is expected to begin around March 1st. Sutherland had been serving as Director of Sales for Bonneville's Phoenix radio group.

Keeping it legal
Greater Media announced that Ellen Rubin has been promoted to the position of Vice President and General Counsel. Rubin joined Greater Media as General Counsel in June 2003. Prior to that, she was a corporate attorney with Hill & Barlow, a Boston law firm.

Rising in Phoenix
Mark Waters has been promoted to Senior Vice President/Market Manager of CBS Radio's three stations in Phoenix, KOOL-FM, KMLE-FM and KZON-FM. Waters joined the cluster in November 2006 as Director of Sales and Business Development.

Programmers
on the move
John Dimick, PD of Emmis' hip-hop WQHT-FM NY, will join Lincoln Financial Media as the radio division's VP of programming. It marks his return to the company, having served as OM of LFM's (then Jeff-Pilot) San Diego cluster during 1998-2004. Dimick will oversee programming operations of all LFM radio stations in Atlanta, Miami, San Diego, Denver and Charlotte. He will be based out of Atlanta and report directly to Don Benson, President of LFM's Radio Division. In New York, Emmis announced that WQHT MD/APD Ebro Darden will replace Dimick as PD.

From Motown to DC
Elizabeth Hollidge has been named Director of Sales for WWDC-FM Washington, DC. She transfers in from Clear Channel Detroit, where she was Retail Sales Manager.

AFTRA exit
John P. Connolly will step down as National President of the American Federation of Television and Radio Artists (AFTRA) in March to become National Executive Director of Actors' Equity Association. AFTRA First National Vice President Bob Edwards - host of the "Bob Edwards Show" on XM Satellite Radio - will assume the duties of the President until the next AFTRA National Board meeting.

RBR Radar 2006

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

Interep Radio Network forming?
There may be an unwired "Interep Radio Network" being considered, to be rolled out across all of the 1,630 Interep-affiliated radio stations if it got off the ground. Initial data on the net says: * The Interep Radio Stations deliver 48.7% US Reach of Adults 25-54. * In the top crucial top 10 markets the reach is 62.9% Adults 25-54. * At any one time 6A-7P the Interep stations deliver a 6.1 national rating with an 25-54 AQH of 6,386,000.

RBR observation: 63% reach in Top 10 markets in Adults 25-54 is pretty good, so this may be a network worth forming. The proof will be in the pricing, of course. Also, does this mean Interep might be getting into the network radio business? It's a :30 second medium, but it could be handled by sending piggybacked commercials - :60 second pods with two :30 second spots. This is what many networks currently do.
02/06/07 RBR #25

FCC set to get 303M for 2007,
313M in 2008
President Bush is prepared to allow the FCC 303M to with in his 2007 Budget, but it will have to go out and get almost all of it on its own. 302M will be raised via regulatory fees. If everything goes through as proposed, that number will increase to 313M for FY 2008. The 2008 request came with an FCC-issued laundry list, and includes cash to promote the digital television transition.
02/06/07 RBR #25

General Sales Manager
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Regional Brokers
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