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Volume 24, Issue 33, Jim Carnegie, Editor & Publisher

Friday Morning February 16th, 2007

Radio News ®

Arbitron downplays challenger to PPM
Discussion of the test announcement by The Media Audit/Ipsos, with funding from five radio groups (2/12/07 RBR #29), dominated the Q&A portion of yesterday's quarterly conference call by Arbitron, as analysts sought to find out if the revived competitor poses a threat to the rollout of PPM. With Philadelphia, Houston and New York all scheduled to get PPM ratings this year, one analyst asked whether holdouts, including giant Clear Channel, might put off signing PPM contracts with Arbitron until they see the results of the TMA/Ipsos test early next year. "Always possible, but I really believe that the industry is at a moment of truth here, and they know it. The buyers are quite strident in their position that it is time to move forward. The rest of the competing media are moving forward in leaps and bounds in terms of innovation that they're bringing to the market, both in terms of product and in terms of measurement. And for radio to simply sit out and take a pass on the hope that something useful might come out of this three-month test and to delay making a decision that would drive the industry, I find that just very unlikely," said Arbitron CEO Steve Morris (pictured). At another point in the conference call, Arbitron CFO Sean Creamer was dismissive of the coming TMA/Ipsos test in Houston, saying "This is where we were in 1999." But with no way to know for sure that holdouts will be signing PPM contracts in 2007, Arbitron gave Wall Street a wide range of financial guidance for the coming year. Revenues are expected to grow 5.5-7.5%, with the tough times for radio ad sales keeping a lid on sales of ancillary products and the higher price tag for PPM ratings beginning to phase in. Earnings per share for 2007 are expected to be 1.30-1.50, with the low end scenario kicking in if the PPM holdouts remain holdouts all year.

RBR observation: Real threat or merely an annoyance? Investors are trying to sort out whether PPM has clear sailing ahead or if Arbitron really faces the possibility of the radio industry adopting the TMA/Ipsos alternative and abandoning Arbitron in its bread and butter business, US radio ratings. In his note to investors following the conference call, CL King analyst Jim Boyle noted that Arbitron has resumed negotiations with the major holdouts, but with "no color on seriousness." Boyle tried and failed during the call to get Morris to reveal whether Clear Channel had returned to the bargaining table now that PPM has MRC accreditation in Houston. In his call, Morris noted that there is no charge to encode for PPM, even if you don't buy the data, so the contract holdouts can still have ratings seen by agency buyers, if not by their own sales staffs. So Boyle said there are no immediate catalysts to force the holdouts' hand, even those about to lose ratings currency for their sales efforts in Philadelphia.

Pittsburgh columnist finds a DARS flaw
Satellite radio services like XM and Sirius (and are there any others?) have been trying to get around the prohibition on local programming by offering local weather and traffic by basically making it available nationally, even though it's only of interest to subscribers in a relatively narrow portion of its nationwide territory. Pittsburgh Tribune-Review columnist Mike Seate wrote about the practice, and described the channel as a "missing rivet in satellite radio's otherwise impenetrable armor." Although he first praised his XM traffic/weather channel for its lack of distracting news programming, he noted that the individuals voicing the reports appear not to know much about Pittsburgh. He headlined their inability to correctly pronounce the name of local baseball icon Bill Mazeroski (it came out "maze-a-rooskey) and then noted several other errors.

RBR observation: And therein lies a serious flaw that a pair of US Reps are trying to address, as we reported earlier this week. Seate will be less than enthused about XM's coverage of the Pittsburgh market the next time there is, say, or we don't know, maybe a major tornado strike? XM will not have anybody in town to provide the kind of indispensable information he and his fellow citizens will need. The lack of local news WILL be distracting at such a time. On the other hand, it is incumbent on radio to address his perception that the programming gap he an others perceive is not as big as he thinks. HD can help to that end, but may not. Radio must amass significant numbers of listeners at one spot on the dial in a local area. A radio station does not have the luxury of picking up a few listeners from each market until it reaches critical mass. The comparative handful of listeners who are willing to pay for DARS services should be written off, with focus remaining where it belongs - local, local, local.

Radio giants
wrangle over Dorks
It's Clear Channel v. Cumulus in Iowa. According to local media outlets, the "Two Dorks," otherwise known as Dwyer and Michaels, left a Clear Channel Quad Cities station for a Cumulus station in Cedar Rapids. But their six-month non-compete hasn't run out and the Cedar Rapids station makes it into portions of Quad Cities. The duo is said to be operating out of Cumulus Quad Cities studios, even though they are hitting the air on KRNA-FM in the Cedar Rapids market, and are planning to return to Cumulus Quad Cities outlet WXLP-FM this summer. Clear Channel objects to the duo's physical presence in the market. Further, it objects to print promos, Internet material and interviews with the local media trumpeting their imminent return to the market, arguing that all these things constitute "radio services" to the benefit of Cumulus and the harm of Clear Channel.

RBR observation: It's in the courts. And at least it's not a case of a giant corporation finding some busy-work for its in-house legal division in the form of beating up on some small mom-and-pop operation. Clear Channel may argue that Dorks are benefiting from all the cash it invested promoting them in the market, and if its attorneys are really good may even tack time onto the non-compete's back end to make up for current breaches, if indeed it can prove there are any. Cumulus can defend or concede, but in either case, it won't have all that long to wait to put the Dorks where it wants them, behind the mic of WXLP.

SF pirate appeals case
InsideBayArea dot com reports a San Francisco FM pirate station, San Francisco Liberation Radio, should have had its day in court before federal officials seized its equipment and shut it down in 2003, its lawyer told a panel of appeals judges Wednesday. The station, which aired music, local news and public affairs programming for a decade and "interfered with no one," attorney Mark Vermeulen argued, even earning an August 2003 resolution of support from the San Francisco Board of Supervisors. But federal agents raided the station's studio in October 2003, seizing its gear. Federal prosecutors had obtained an arrest warrant for the equipment and then had persuaded a federal judge to sign a writ of entry allowing them to go in to get the equipment. "Both documents were obtained without the presence or knowledge of the station's lawyers," the story said.
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Broadcaster makes it official
There will be no question about the fairness of running for public office while having a daily broadcast forum. Al Franken has added to his collection of exes, and is now an ex-air personality at liberal radio network Air America. He is also famously an ex-cast member of NBC's iconic Saturday Night Live. These former activities have been supplanted by his current officially announced status as candidate for the Democratic nomination to run for the Minnesota senate seat currently occupied by Norm Coleman (R-MN). Reports note that Franken will likely have to face other Democratic contenders in the primaries before earning the right to a face-off with Coleman.

Norville signs for NABEF rerun
"Inside Edition" host Deborah Norville will return as emcee of the 9th annual Service to America Awards gala June 11th in Washington, DC. The annual awards presented by the NAB Education Foundation recognize outstanding community service by local broadcasters and other leading citizens. Norville hosted the ceremonies last year, when the Leadership Award went to former President Bill Clinton. This year's recipient will be Sir Elton John.

Wall Street Media Business Report TM

Rising costs hit Arbitron
Arbitron managed to hit its guidance to Wall Street for Q4, but the costs of rolling out PPM and its ongoing Project Apollo pilot took their toll. While revenues rose 5.2% to 79.3 million, higher costs took earnings before interest and income tax down 35.7% to 10.9 million. Earnings per share fell to 17 cents, compared to 36 cents a year earlier. In their conference call with analysts, Arbitron execs said 2007 will be a trough year for the company, with double digit revenue gains in 2008 and beyond as PPM rolls out to the top 50 markets. Revenues are expected to rise 5.5-7.5% in 2007 with the first three PPM markets coming on line.

Dissident a no-show for Emmis showdown
With snow and ice snarling traffic in Indiana, the Indianapolis Star reports that no one from Elkhart-based Martin Capital Management made it to Indy this week to make a pitch at the Emmis Communications annual shareholders meeting for a proposal by Frank Martin to eliminate classes of voting stock at the company (1/9/07 RBR #5). That probably did not make a difference, since almost all votes for shareholders meetings are cast in advance by mail. Anyway, the Martin proposal was defeated. The measure was not binding anyway and Emmis CEO Jeff Smulyan has made it clear he is not interested in giving up the super-voting power of his Class B shares. Smulyan, who failed in a bid to take the company private last year, was modestly upbeat about prospects for this year. Will he try again to buy out the public shareholders? The local paper says he artfully dodged that question.

S&P negative on Univision bonds
Public shareholders may like private equity buyouts of public stock companies at premium prices, but bondholders are not so fond of the trend. In many cases, the bonds are left intact as the company's new private equity owners load up on new debt to finance the purchase. Such is the case at Univision, where Standard & Poor's has dropped the company's corporate debt rating two notches because of the pending buyout by private equity firms aligned with Haim Saban. Including the 1.4 billion of existing debt to be assumed, the private Univision will be carrying 10 billion of debt.

Ad Business Report TM

Second Annual NY Radio Advertising Forum set
"Radio: On-Air, On-Line & On-Site," the second annual one-day advertising forum presented by the RAB and the Advertising Club of New York takes place 3/15, 8am-2pm at the Westin New York, Times Square. Providing a glimpse into how radio fits into today's consumer-centric media landscape, marketing and media experts will share insights into how they use radio to passionately connect with listeners. Tony Ponturo, VP/Global Media and Sports Marketing, Anheuser-Busch, and President and CEO of Busch Media Group, will deliver the luncheon keynote featuring an exclusive, and surprising, Real Men of Genius audio spot produced specifically for this event. Steve Harvey, "The King of Comedy," syndicated from WBLS, New York, will provide a special introduction with his signature brand of humor. Radio continues to be a significant part of Anheuser-Busch's marketing effort, and Ponturo will reveal how radio provides the brewing company with the opportunity to work closely with wholesale distributors in their individual markets, integrating brand traits with local market Radio personalities. Ponturo will highlight the strengths of radio compared to other media, including Radio's targeted audience demographics and lifestyles, and the medium's ability to tie in with local retail promotions. In addition, he will provide the Radio industry with suggestions on how to work with advertisers like Anheuser-Busch to create added value and make both parties winners. The forum also will present the following panel sessions with marketing, media, music, and broadcasting experts: "Music To Your Ears," "Radio In The Consumer's Mind," "Driving Forces," and "What's the Big Idea?"

Goldstein Named GroupM N.A CEO;
Neslund becomes MindShare CEO

Seems GroupM CEO Irwin Gotlieb is pretty busy these days promoting folks into the WPP division that manages its media services operating units: MAXUS, MediaCom, Mediaedge:cia, and MindShare. Only a day after naming Rupert Day COO, Marc Goldstein (pictured left) has been named GroupM North America CEO, where he will share management responsibilities for the parent unit with current GroupM CIO Rino Scanzoni. Since 2002, Goldstein has served as president-CEO of MindShare North America. At GroupM, he will be responsible for overseeing general management as well as strategic and administrative activities at each of the unit's networks. He also will have operational responsibilities covering group development, synergies across the four operating agencies, and financial performance. Scanzoni, meanwhile, retains responsibility for media negotiation strategy, media research, marketplace analytics, and media content investments. Both Goldstein and Scanzoni report to Gotlieb.At MindShare, Goldstein will be succeeded as president-CEO of MindShare North America by Scott Neslund (pictured right), currently managing director of the Chicago office. Neslund will be responsible for all MindShare activities in 10 U.S. cities and Canada, overseeing an agency operation with 1,100 employees and an estimated 11.3 billion in billings. In MindShare's Chicago office, Neslund will be replaced by Lisa Weinstein, currently senior partner, strategic planning director, whose responsibilities include acting as global media director on the BP account, where she manages a worldwide staff of more than 100 MindShare employees and more than 200 million in media spend.

Editor's note: Be sure to read our interview with Irwin Gotlieb in the March issue of RBR/TVBR's SmartMedia Magazine.

Media Markets & Money TM

Close encounter in Roseau
Summer Foust of Patrick Communications reports that the deal sending KCAJ-FM Roseau MN from Jack Swanson's Jax Broadcasting to Joseph McBain's North Country Media is closed. The pricetag was 380K. The 50 kW 102.1 MHz facility serves an unrated area in the upper northwestern reaches of Minnesota, not far from Manitoba, Canada.

Washington Media Business Report TM

Are red lights for the birds?
There seems to be some evidence that when mounted on a tower, they decidedly are not. That has prompted a wide variety of interested parties to jointly petition the Federal Aviation Administration for a study and opinion on the matter as part of the ongoing FCC proceeding on towers and bird migration. The FAA has a long-standing rule requiring steady red lighting, but this type of lighting seems to coincide with evidence of increased avian mortality. The groups ask for a conspicuity study on the safety of eliminating side-mounted red lighting posing a danger to airplane traffic. The National Association of Broadcasters joined wireless, tower and environmental groups in making the request.

Ratings & Research

Nielsen: affluent shoppers enjoy value, variety
While affluent consumers appreciate a good value just like lower income shoppers, they can afford to be more selective about product quality, variety, fresh foods and store choice. According to a Nielsen study, households with 100,000+ annual incomes patronize club stores like Costco and Sam's Club and upscale mass merchandisers like Target in search of a deal, as well as national and higher-end grocery chains that meet their need for fresh produce, meat, poultry and seafood, along with a great deli section and alcoholic beverage aisle. "Affluent shopper DNA is all about product quality and variety, with value as an added bonus," said Todd Hale, Senior Vice President, Consumer & Shopper Insights for Nielsen Homescan & Spectra, an operating unit of The Nielsen Company. "Strong fresh food sections act like a magnet for affluent shoppers who make 56% more trips to purchase fresh produce, but the quality and selection have got to be there."
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Transactions

1.3M WJYF-FM Valdosta GA (Nashville GA) from Three Trees Communications Inc. (James Andrew Howard) to Educational Media Foundation (Richard Jenkins). 65K escrow, 535K cash at closing, 700K note. Network affiliation agreement 11/1/06. [File date 1/22/07.]

N/A WQEL-FM Bucyrus OH from Franklin Communications Inc., a subsidiary of Saga Communications Inc. (Edward K. Christian) to Bible Broadcasting Network Inc. (Lowell L. Davey et al). Donation, contingent on seller obtaining permission to move WJZK-FM Richwood OH to Grandview Hgts. OH or some other city of license closer to Columbus OH, moving WQEL-FM to Richwood to continue FM service to that community. [File date 1/22/07.]

Stock Talk

Ben or Barney?
If you were listing Congressmen beloved by Wall Street, Barney Frank (D-MA) would not likely be high on that list, but there he was yesterday pressuring the Chairman of the Fed, Ben Bernanke, to at least consider the possibility of cutting rates this year. Bernanke demurred, mostly repeating his comments that the economy appears to be on track and hinting that the Fed will leave rates alone for a while. Investors took that as a plus, so the Dow Industrials rose 23 points to 12,765.

Radio stocks were down a bit. The Radio Index slipped 0.350, or 0.2%, to 160.711. Fisher jumped 2.7% after reporting Q4 results late the previous day. Arbitron fell 0.9% as investors tried to assess the threat from a PPM challenger after the ratings company reported Q4 results.

Radio Stocks

**Here's how stocks fared on Thursday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		46.20	-0.44	Journal Comm.	JRN		13.19	-0.09
Beasley	BBGI		9.14	-0.06	Lincoln Natl.	LNC		70.35	-0.51
CBS CI. B	CBS		31.88	-0.11	Radio One, Cl. A	ROIA		7.41	-0.09
CBS CI. A	CBSa		31.88	-0.12	Radio One, Cl. D	ROIAK		7.43	-0.08
Citadel	CDL		10.46	-0.10	Regent	RGCI		2.99	-0.01
Clear Channel	CCU		36.57	+0.02	Saga Commun.	SGA		9.65	-0.02
Cox Radio	CXR		15.57	-0.16	Salem Comm.	SALM		12.33	+0.06
Cumulus	CMLS		10.26	-0.05	Sirius Sat. Radio	SIRI		3.60	+0.01
Disney	DIS		34.67	-0.08	Spanish Bcg.	SBSA		4.17	+0.01
Emmis	EMMS		8.71	-0.02	SWMX	SMWX		0.90	-0.05
Entercom	ETM		30.61	+0.21	Univision	UVN		35.93	+0.04
Entravision	EVC		8.31	+0.04	Westwood One	WON		7.09	+0.08
Fisher	FSCI		45.01	+1.16	XM Sat. Radio	XMSR		12.98	-0.24
Hearst-Argyle	HTV		26.38	+0.13	-	-	-	-	-

Bounceback

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Below the Fold

Wall Street Media Business Report
Rising costs hit Arbitron
hit its guidance but the costs of rolling out PPM took their toll...

Dissident a no-show
For Emmis showdown as no one from
Martin Capital Management made it...

S&P negative on Univision bonds
Public shareholders may like private equity buyouts but bondholders not fond of the trend...

Media Markets & Money
Close encounter in Roseau
Deal sending KCAJ-FM closed...

Ratings & Research
Affluent shoppers enjoy value
Affluent shopper DNA is all about product Quality, Variety, with Value as an added bonus...

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Radio Media Moves

Yeager takes Pappas financial reins
Pappas Telecasting has appointed Bruce M. Yeager to the role of EVP/CFO, giving him control of a laundry list of corporate functions, including "financing, capital sourcing, treasury, accounting and compliance activities." His resume includes a long stint with Credit Lyonnais Americas, and most recently he headed his own company, B. Yeager & Associates.

Boyne upped
at Coleman
After seven years with the firm, Coleman Reseach's John Boyne has been awarded VP stripes. He will prepare studies for clients in the areas of music tests, perceptual studies and focus group work.

Pollack reorganizes
Pollack Media Group CEO Jeff Pollack annunced a reorganization of the executive staff. Tommy Hadges will add global responsibilities to become President of Worldwide Video & Radio. Dave Brewer is upped to Executive Vice President of U.S. Radio, while Pat Welsh is named Senior Vice President of Digital Content. Working out of PMG's Dallas office, Jim Kerr becomes VP of New Media. Back in Los Angeles, Celina Sanchez is now Executive Director of Music & Artist Relations, while Tim Lyne becomes Director of Brand Marketing.

Lawson to GreenStone
GreenStone Media, LLC, announced that Sam Lawson has joined the company as West Coast Chief Engineer, effective immediately. Lawson joins GreenStone from his most recent seven-year post as a network engineer with Premiere. Sam began his career in the Pacific Northwest where he worked as an announcer, Program Director, and Chief Engineer. He has also held engineering positions with KFI, KOST, KBIG, KLAC, and the former KZLA.

Kerr to AMS-I
American Media Services-Internet President/CEO Reed Bunzel announced that the company has named Scott Kerr Director of Affiliate Sales. Kerr most recently was a senior account executive at Citadel Broadcasting in Charleston, SC.

New board member
Journal Communications announced that Ellen Siminoff has been elected to it board of directors, increasing the board to nine members. Siminoff is President and CEO of Efficient Frontier, a search engine marketing firm.

TVBR - TV News

Digital? What digital?
The significance of 2/17/09 is no secret to broadcasters and television manufacturers, but for the average consumer, it likely doesn't mean anything at all. However, they're interest may be piqued when their analog television suddenly goes blank. 2/17/09 is the day that analog broadcast television becomes a thing of the past. Consumers who have not acquired a digital receiver or digital-to-analog down-converter, or who do not subscribe to an MVPD that down-converts to analog, will not be able to see broadcast television. According to the Association of Public Television Stations (APTS), 61% have no clue that the change is coming, and only 25% are either somewhat or fully aware. Out of the aware minority, over half - 53% - are clueless as to when the change will occur.

TVBR observation: The big educational push from the government and various stakeholders seems poised to get to work remedying this situation. Sales of digital receivers have been driving business at retailers, and as the public becomes more aware, the price of the receivers figures to come down. We sincerely doubt that there are going to be all that many shocked consumers on 2/17/09. In conjunction with radio's push for HD, consumers are likely going to hear the word digital in their sleep.

RBR Radar 2006

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Radio's use of video
Radio may be in a stagnant period. It certainly is in no danger of going away, but neither is it growing very much, not a happy situation for a business which used to crank out high-single digit black ink comps on a regular basis. The New York Times notes devoted a significant amount of ink to take a look at radio's use of one of the tools of the enemy: video. As with most other modern aspects of business, the key is the Internet.

RBR observation: One obvious use of video on radio is to fill the gap left by MTV's virtual abandonment of such content on basic cable. But there's much more to it. One of the keys to maximizing a station's website is to bring your core audience in as a member of the family, and what better way than to elevate them to a participant in the station's community and make them a contributor to its content. Perhaps best of all, it's a great way to demonstrate community service and public interest at renewal time. Note: RBR web 2.0 is coming and membership has it privilege. (More details in this RBR)
02/15/07 RBR #32

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