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Welcome to RBR's Daily Epaper
Volume 23, Issue 34, Jim Carnegie, Editor & Publisher
Friday Morning February 17th, 2006

Radio News ®

XM director quits,
warns of "crisis" looming
XM Satellite Radio saw its stock take a hit yesterday on Wall Street. It wasn't because of any surprise in the company's Q4 numbers, which were pretty much what analysts had expected, but because the company announced the resignation of a member of its board of directors who disagrees with how the company is being run. In his letter of resignation, Pierce J. "Jack" Roberts Jr., a former Bear Stearns official, said he did not believe XM was being run in the best interests of the company's shareholders and that he had decided to resign rather than "just go along" with the current course. "Given current course and speed there is, in my view, a significant chance of a crisis on the horizon," he wrote. As it filed the letter with the SEC, XM said Roberts had pressed for the company to cut spending on marketing, programming and promotion to get XM more quickly to positive cash flow generation. The other directors, it said, believe that it is better to sustain XM's subscriber growth and that the company will still achieve positive cash flow by the end of this year. "Frankly, this is a balancing act for management - - and for the board - - that we take very seriously," XM Chairman Gary Parsons said in the Q&A portion of the company's conference call. "We clearly understand that the company can turn strongly positive on a cash basis as soon as we pull back on the accelerator," he added, saying that the company is adding value for shareholders with each subscriber addition, "as long as we do so on economically rational terms."
| Read the resignation letter |

Howard Stern tipped
XM's hand on spending

XM CEO Hugh Panero says the company spent more on promotion than it had planned in Q4 to counter the media blitz surrounding Howard Stern as he prepared to launch in early January on rival Sirius. But that wasn't a negative, Panero insisted, because Stern focused public attention on the entire satellite radio industry. XM's strategy, he said, was to raise brand awareness and offer economically priced receivers. As a result of that strategy, XM's direct cost for each added subscriber rose to 89 bucks from 64 a year earlier. But Panero noted that the average cost for all of 2005 was 64 bucks and he said he expects competition to return to more normal levels across 2006.

RBR observation: The number we're most focused on is EBITDA. If XM is really going to achieve cash flow break even sometime in 2006, you'd think that its EBITDA loss would be decreasing. But, just as in the previous quarter, the EBITDA loss increased in Q4 - - from 139.7 million a year ago to 199.4 million in Q4 of 2005. We wait to see whether XM can actually achieve cash flow break-even this year.

The gripes of wrath, Q4 2005
We guess that one good uptick deserves another. Anyway, public indecency complaints to the FCC weighed in at a miniscule 6.2K in Q2 of 2005 and burgeoned to over 26K in Q3. From that still less-than-lofty point, they rose again, up to 44.3K in Q4. Still, the totals for the last three quarters of the year failed to match activity in the first quarter, which alone accounted for 157.7K FCC contacts. Even that number was down from Q4 2004, which totalled 317.8K. The vast bulk of the Q4 2005 total came in December, when 42.2K or 96% of them rolled in.

RBR observation: 2005 represented a significant decrease in complaints filed in the broadcast content wars, and it further represented a black hole on the enforcement end. The FCC did not issue a single NAL all year, although it made noises that there would be some action in December. December and now January have come and gone, and still nothing. It will be extremely interesting, to say the least, if and when anything comes to light.


More sniping on the video side of the fence
Retransmission consent is just one facet of the ongoing battle between broadcast and cable. Broadcast Investment Analysts (BIA) have entered the fray with a study of a report on the topic from Arlen Communications which was entered in to the Congressional record by the American Cable Association. BIA's take? "Simply put, many of the arguments and analyses presented in the Arlen Study either omit or mischaracterize true broadcast industry conditions and lack sound economic reasoning." BIA notes that local broadcast stations are considered to be "must-have" programming by cable operators. How, then, can one come to the conclusion that broadcasters need cable more than cable needs broadcasters, and force broadcasters to pay for carriage? Further, how can it say on the one hand that broadcasters are losing audience but at the same time increasing their market power? On the topic of market exclusivity, the Arlen study fails to acknowledge that such an arrangement is common across a wide spectrum of industries. It notes growth in television station revenues, but ignores the must faster growth being enjoyed by cable. Finally, it notes increased costs and competition coming to the cable industry, but fails to explain why these costs should be dumped on broadcasters. BIA's Mark Fratrik wrote in conclusion, "The Arlen Study is so rife with mischaracterizations, omissions, contradictions and flawed analyses that it is of little value in any meaningful discussions about the retransmission consent marketplace. Its conclusions that broadcasters should pay cable operators for carriage of their signals ignores marketplace realities, the enormous economic benefits carriage of local television stations provides to cable, and the intent of Congress in creating retransmission consent rights."

Chicago out of the running for RNC 2008?
That's what the Illinois Family Institute is saying, and the group is none too happy about it. Chicago was one of 31 cities in 30 media markets invited by the Republican National Committee to submit bids to host the Republican National Convention in 2008. Apparently, Mayor Richard Daley has indicated that the Windy City will be making no such bid. IFI is angry that this comes after the city hosted the DNC in 1996, and more to the point, is enthusiastically welcoming a 2006 event put together by the homosexual community. "To not even bid on the Republican convention after having a Howard Dean moment celebrating Chicago's landing of the 2006 'Gay Games' says a lot about the Mayor's confused priorities," said IFI Executive Director Peter LaBarbera. "Perhaps if this were a convention of homosexual Republicans, he would be showing some interest."

RBR observation: There is a homosexual Republican group, the Log Cabin Republicans. We have no idea what their convention plans are. Anyway, we suggest that perhaps Daley read our remarks yesterday, and came down on the side of broadcasters. Although the city may reap financial rewards as convention host (although IFI complained about money spent to welcome Democrats), broadcasters are not likely to reap significant financial rewards, and we, tongue in cheek, suggested that broadcast news rosters may have the negative effect of exposing themselves to airstaff defections.

Jerry Lee to be honored in Vegas
WBEB-FM Philadelphia owner Jerry Lee will be honored with the 2006 Hugh Malcom Beville Jr. Award at the Broadcast Education Association (BEA) welcome reception April 26th during NAB2006 in Las Vegas. The award from NAB and BEA is presented annually to recognize the memory and life's work of Beville, a broadcast research pioneer. Lee, who is currently a director of NAB, RAB and the Broadcasters' Foundation, has long been known as one of broadcasting's leading proponents of quality research.

RBR observation: Certainly a well-deserved award if there ever was one. If you know Jerry, as we do, you know that it was research that convinced him to flip his station from Beautiful Music to Adult Contemporary, even though it was still hugely profitable in Beautiful Music. The research was right. Beautiful Music (or Easy Listening) faded as a format, but WBEB remains one of Philadelphia's top rated and top billing stations - - and far and away the #1 standalone FM in the nation.


Wall Street Media Business Report TM
Q4 Conference Calls
XM grows revenues, subscribers and losses
Despite weaker than expected auto dealer sales in Q4, since car sales were soft, XM Satellite Radio still reported sharp gains in subscribers and revenues. The company had already reported its subscriber numbers for year end (1/6/06 RBR #4) had fallen just shy of its six million target, so there was nothing surprising in yesterday's quarterly report. Revenues were up 113% to 177 million, slightly exceeding analysts' expectations, even as heavy spending on promotion pushed the net loss per share to 1.22. In his conference call with analysts, CEO Hugh Panero said General Motors sales have improved in Q1, which is good news for XM's biggest auto dealer network. XM is projecting that it will top nine million subscribers by the end of this year.

Soft quarter for Fisher
New CEO Colleen Brown is looking forward after reporting on her first quarter (minus 10 days) running Fisher Communications. "From the softer ad market and the organizational changes in 2005, Fisher is poised in 2006 to capitalize on an attractive business structure going forward as well as other opportunities such as the recent Seattle Super Bowl carried on our Seattle and Portland ABC affiliates," Brown said as she reported soft results for Q4 2005. Revenues fell 18% to 34.6 million and income from operations plunged to 255K from 7.6 million a year earlier. However, those figures included a 4.3 million non-cash charge because Fisher switched its national TV rep from Katz to Petry in December. Q4 also included 1.4 million in separation-related expenses as Fisher realigned its management. On the revenue line, not including the non-cash charge, broadcast revenues were down 10% for the quarter. The decrease was all on the TV side, largely due to the lack of political advertising. Radio revenue was up 5% for the quarter.


Ad Business Report TM

Disney taps Michelle Kwan as spokesperson
Even though she has dropped out of the competition at the 2006 Winter Olympics due to injury, Michelle Kwan, the most decorated figure skater in U.S. history, will serve as a celebrity representative and spokesperson for businesses across the entire range of The Walt Disney Company. As part of the multiyear agreement, Kwan may participate in advertising, promotions or PSAs involving all of Disney's businesses, make guest appearances on original programming and personal appearances at live Disney events, and take part in Disney's company-wide initiatives. Kwan authored the motivational book "The Winning Attitude! What It Takes To Be A Champion" and contributed to the fictional book series "Michelle Kwan Presents Skating Dreams," published by Disney Publishing Worldwide, and has appeared in Disney and ABC television specials. Michelle starred in the primetime TV special "Reflections on Ice: Michelle Skates to the Music of Disney's Mulan," which was selected as the best-produced skating special of 1998-99.

Ford's Mark Kaline to
deliver keynote at radio forum

Mark Kaline, Global Media Manager for the Ford Motor Company, will deliver the opening keynote address for New Rules For Radio: What's The Frequency, a one-day advertising summit at the Grand Hyatt on 3/15. The first-ever event of its type in New York, the day also features special appearances by Elvis Duran, host of Elvis Duran and the Z Morning Zoo, New York, and Wendy Williams, Queen of All Media and host of The Wendy Williams Experience, nationally syndicated from WBLS, New York. Presented by the RAB and the Advertising Club of New York, the agenda will highlight marketing and media experts who will share their proven strategies for building brands and increasing sales with Radio advertising. Kaline will set the tone for the day by discussing Radio's role in Ford's marketing and media plans. Be sure to catch our interview with Kaline in RBR/TVBR's March Solutions Magazine.

The User-Friendly Phone Book launches new campaign
The User-Friendly Phone Book (UFPB), a leading independent yellow pages directory publisher, today unveiled its new advertising campaign, "Your Fingers Will Do Less Walking." The new campaign highlights its most unique product feature, die-cut tabs, which allow users to easily find information they need quickly, effortlessly and directly. "The campaign brings the signature yellow page walking fingers to life," said Bruce Howard, User-Friendly Phone Book CEO. "The television vignettes focus on fingers walking less. Some are exercising, others are shoe shopping. The whole point is to demonstrate that fingers will do less work by utilizing our user-friendly directories." Cleveland-based Melamed Riley Advertising developed the campaign. UFPB will utilize a mixture of television, radio, outdoor and print to educate consumers about the distinct features that make the phone book "user-friendly." UFPB research has shown that tab-cut directories expose elements in the directory that people might have missed, and the directories are organized in such a manner that allows users to find listings quicker.

ZenithOptimedia commits to PPM
Arbitron announced ZenithOptimedia has signed a commitment to use radio audience estimates based on the PPM when Arbitron deploys its new audience measurement service. The agreement is part of the agency's renewal of a multi-year Arbitron data and software services contract. The agreement covers the US-based radio planning and buying activities of ZenithOptimedia companies: Zenith, Optimedia, Conill, Saatchi & Saatchi and Team One. In aggregate, these media planning and buying units of Zenith place advertising for such national advertisers as Toyota, Sprint, General Mills, JP Morgan Chase and Verizon Wireless.


Media Markets & Money TM
Wheelin' and dealin'
Entercom is extending the tentacles of its Boston Sports WEEI-AM into a third additional market with the acquisition of WBEC-FM in Springfield - - the Boston institution is already being heard in Providence and Worcester. According to broker Dick Forman, who handled the deal, seller Great Northern Radio will get 5.75M for the station. Great Northern is part of the Bruce Danziger/Jeffrey Shapiro/Vox Radio family of license companies. The WEEI Sports-Talk lineup will be supplemented with play-by-play and syndicated programming.

A stick and a stack means another market for EMF
The stick is KWDF-AM Alexandria LA and the stack is a pile of US currency (or its equivalent) worth 2.85M. The inexorable expansion of Educational Media Foundation continues with a cash/swap deal which will give it KYLA-FM Shreveport. The deal was handled by broker John Pierce, who pegged the price at 3M, roughly estimating a 150K pricetag on the Alexandria AM. The seller of KYLA (and receiver of KWDF) is Al Moore's NWLA Broadcasting.

RBR observation: EMF, which is spreading its noncommercial K-LOVE Contempory Christian format from coast to coast, has never had much use for AM stations. This deal breaks it into a new market on its preferred band while getting back value and cleaning out the portfolio with the swap of the AM.


Washington Media Business Report TM
File away another file fine
Lebanon Educational Broadcasting Foundation (LEBF) was hit with a 4K fine on the public file front - - this one's been kicking around since 1/31/03, when the file omissions were discovered by an FCC field agent at the licensee's noncommercial KTTK-FM Lebanon MO. LEBF argued for reduction or, even better, elimination of the fine, on a number of counts. First, the allegedly missing contour maps and manual "Public and Broadcasting" weren't missing at all - - the person working with the agent was simply unaware that the items were in the file in the first place. The second omission, missing program/issues info, wasn't there because the person in charge of maintaining that part of the file, from Q3 2001 through the end of 2002, simply didn't do it. You all know where this is going - - the licensee is responsible to make sure its employees handle the file properly. The fact that the FCC agent did not go on a file fishing expedition to turn up the non-missing portions of the file was no excuse, and more than it would have been had the station employee failed to provide the requested documents to a curious citizen. LEBF did wind up getting a reduction down to 3.2K for its past good behavior.


Entertainment Media Business Report TM
USRN signs Crook & Chase
to long-form show

United Stations Radio Networks announced the Country broadcasting team of Lorianne Crook and Charlie Chase, professionally known as Crook & Chase, have agreed to do a daily five-hour radio broadcast for national distribution via the auspices of USRN. This adds to USRN's weekly, four-hour Crook & Chase Countdown show launched in 1989. Launching 3/27, "Crook & Chase" will be available via satellite. The primary feed will occur Monday through Friday from 10am until 3pm Eastern time and the broadcast will be re-fed. The music for the show will be programmed in a way to make it a natural fit for any Contemporary Country radio station. The broadcasts will originate in Nashville where Crook and Chase are based, and will emanate from the new Music Row offices and studios of Jim Owens Entertainment, who will co-produce the program with United Stations. Crook & Chase also teamed up for sixteen years as hosts of "Crook & Chase" on TNN (The Nashville Network) and in syndication.


Internet Media Business Report TM
Salem expands again on the web
Salem Communications announced another acquisition to expand its presence on the Internet. The Religious broadcasting specialist is paying 2.3 million bucks for CrossDaily.com, an online provider of Christian content, graphics and online community resources. "The acquisition of CrossDaily.com is another important step forward in Salem's online strategy," said Rick Killingsworth, vice president of Salem Web Network. "This acquisition further diversifies our Internet revenue streams and adds an established web business to our growing online portfolio. By leveraging the operational and marketing infrastructure of our existing Internet businesses, which target the same church audience, we believe the acquisition of CrossDaily.com will be immediately profitable," he added. Salem says its Internet sites attract more than four million unique visitors and more than 50 million page views each month. Those sites include Crosswalk.com, OnePlace.com, Christianity.com. ChristianJobs.com, ChurchStaffing.com, TheFish.com and CCMmagazine.com, as well as more than 60 radio station websites.

Sponsored link advertising on Google and Yahoo! grows 16% in six months
Billion Nielsen//NetRatings announced that the number of sponsored link advertising impressions on the Google and Yahoo! ad platforms grew 16%, from 55.4 billion to 64.3 billion, between August 2005 and January 2006. This accounts for sponsored link impressions not only on the Google and Yahoo! Web sites, but also in their respective search and contextual advertising networks. "Despite the overwhelming market share that Google and Yahoo! search enjoy, they continue to see strong growth in the volume of sponsored links," said Ken Cassar, chief analyst, Nielsen//NetRatings. "While Google, in particular, seeks to diversify its revenue, it is a positive sign that its core search advertising business remains robust." Although Google had more sponsored link impressions in January, Yahoo! is gaining ground. During the last six months, Yahoo's sponsored links have grown 21% to 23.2 billion, while Google's have grown 14% to 41.1 billion. eBay is the primary sponsored link advertiser on both sites. eBay's Shopping.com is Google's No. 2 sponsored link advertiser, followed by Local.com, Target Stores and Expedia, respectively. Shopping.com is also Yahoo's No. 2 sponsored link advertiser, followed by University of Phoenix, Lending Tree and Target Stores, respectively. "E-commerce advertisers, eBay chief among them, represent the top advertisers on both Yahoo! and Google. It is becoming increasingly clear that sponsored link advertising is a necessary cost of doing business for e-commerce companies," Cassar continued.


Ratings & Research
Arbitron presents cell phone study findings;
to begin measuring in 2008

As an update on Arbitron's "Better Measurement" initiatives - - an ongoing series of enhancements to the Arbitron service - - the company has completed its fourth study of cell phone consumers who don't have a landline phone at home. As part the ongoing effort to sample more young listeners, Arbitron VP/Domestic Radio Research Dr. Ed Cohen presented the findings of the study yesterday and discussed Arbitron's plans to recruit cell phone respondents.
| Read More... |

Salem Radio listeners more likely to be
affluent, educated families

Listeners to Salem Communication's Christian Teaching and Talk-formatted radio stations are affluent, educated, married families who spend time enjoying family activities, home improvement and are net-savvy shoppers. These are some of the findings in a recent analysis of Salem listeners from Scarborough Research.
| Read More... |


Engineering Business Report TM
Broadcast Electronics
acquired by Audax Group

Audax Group, based in Boston, has acquired Broadcast Electronics from Thompson Street Capital Partners. BE manufactures HD Radio transmission products and a complete studio suite integrating on-air production and automation activities with over-the-Internet and HD Radio data delivery. "This acquisition is a vote of confidence in BE and the future of the radio market," commented BE CEO John Pedlow. "Our partnership with Audax will fuel our development and support of HD Radio as our market base continues to expand." "BE's strong market position makes it an attractive platform in broadcast radio equipment," said Geoffrey Rehnert, Co-CEO of Audax Group. "We look forward to working with existing management to build on its historical success and continue its growth in HD Radio and other emerging market segments."


Transactions
705K WHEL-FM Helen GA from Radio Seoul Georgia LLC (Earl Kim) to Sorenson Southeast Radio LLC (Dean Sorenson). Buyer will make 620K payment to close seller's acquisition of station from Clear Channel, and pay 85K to seller. Provides for LMA at buyer's discretion. [File date 1/30/06.]

50K WEBO-AM Binghamton NY (Owego NY) from Tioga Media Inc. (Terry R. Coleman) to Radigan Broadcasting Group LLC (David M. Radigan, Michael J. Radigan, Eileen E. Radigan, Christopher M. Radigan). 10K deposit, balance in cash at closing. [File date 2/1/06.]


Stock Talk
Building numbers look good
A jump in new home construction and a positive earnings report from Hewlett-Packard put Wall Street traders in a good mood. The Dow Industrials rose 62 points, or 0.6%, to 11,121.

Radio stocks were a mixed bag. The Radio Index moved up 0.570, or 0.3%, to 172.962. The big movers to the up side were some radio stocks that had taken some hits lately. Westwood One gained 3.3%, Citadel was up 2.4% and Beasley rose 2.2%. CBS fell 1.8% and Clear Channel dropped 1.3%. The big drops, though, were for the satellite radio stocks as XM reported the resignation of a director. XM fell 5% and Sirius was down 3%.


Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.75

-0.41

Hearst-Argyle

HTV

23.77

-0.07

Beasley

BBGI

13.73

+0.29

Interep

IREP

0.15

-0.10

CBS CI. B CBS

25.15

-0.46

Jeff-Pilot

JP

59.55

+0.29

CBS CI. A CBSa

25.14

-0.45

Journal Comm.

JRN

12.45

+0.10

Citadel CDL
11.80 +0.28

Radio One, Cl. A

ROIA

10.20

+0.02

Clear Channel

CCU

28.19

-0.38

Radio One, Cl. D

ROIAK

10.19

-0.02

Cox Radio

CXR

13.74

-0.07

Regent

RGCI

4.65

+0.03

Cumulus

CMLS

11.72

+0.03

Saga Commun.

SGA

10.00

+0.06

Disney

DIS

27.05

+0.17

Salem Comm.

SALM

14.22

+0.08

Emmis

EMMS

16.96

-0.19

Sirius Sat. Radio

SIRI

5.65

-0.17

Entercom

ETM

28.50

-0.09

Spanish Bcg.

SBSA

5.91

-0.05

Entravision

EVC

7.25

unch

Univision

UVN

33.85

+0.01

Fisher

FSCI

43.25

+0.23

Westwood One

WON

14.31

+0.45

Gaylord

GET

44.04

-0.66

XM Sat. Radio

XMSR

23.98

-1.27



Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments and
a photo to [email protected]

I have just come from www.HDradio.com and listening to the demo. My old Sony Beta machine plays circles of superior sound around my VHS. It was content that mattered back then. VHS had it. It will be content that makes the difference today. Radio, you had a day when movie houses delayed starting film until your content - - "Amos N' Andy" - - was finished airing. Amos N' Andy's audio sucked. It's still about content folks.

Bob Botik
Austin, Texas




Below the Fold

Ad Business Report
ZenithOptimedia
On board with PPM...

Wall Street Media Business Report
XM grows revenues
Both in subscribers and losses...

Media Markets & Money
Wheelin' and dealin'
Entercom is extending the tentacles...

Washington Media Business Report
Nothing could be finer
Than an unfilled file as a fine hits a foundation...


Radio Media Moves

Two join Interep
Christian Blaya, formerly a Sr. AE at Radio Unica in LA, has joined Interep's McGavren guild as Director of Sales in Miami. Marylin Guzman, who was a Media Planner at Wing Latino, has joined the rep firm as an Account Executive in New York.


Stations for Sale

Houston 50,000 kW AM
New transmitter site
& transmitting equipment
John W. Saunders
(713) 789-4222 or e-mail
[email protected]


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February '06 RBR/TVBR Solutions Magazine


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RBR Radar 2005
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

K Street runs two ways
Lobbyists have found themselves in an unwelcome spotlight lately, joining the ranks of professions often held in disdain by the general public. But a recent article in (BWO) points out that oftentimes it is not a case of lobbyists tossing cash at politicians in return for some favor; rather it is politicians passing the hat amongst the lobbyists...

RBR observation: The news here, ladies and gentlemen, is that we can expect free airtime for politicians to rear its ugly head once again as the lobbyist issue wends its slimy way through the halls of Congress....At any rate, NAB needs to stay alert - - there's a good chance that we'll have to defend against a bevy of hungry politicians making yet another attempt to pick broadcaster pockets this year.
02/15/6 RBR #33

Shareholders said to favor
bust-up of VNU
As VNU management continues to evaluate a buyout bid from a consortium of private equity firms, the Wall Street Journal reports that several of the company's biggest institutional shareholders aren't satisfied with the 8.8 billion bucks offer. Instead, they're said to favor breaking VNU up into three companies and then selling the pieces.

RBR observation: Having already derailed VNU's proposed seven billion bucks acquisition of IMS Health, causing VNU CEO Rob van den Bergh to announce his resignation, VNU's big shareholders obviously have a lot of clout. The company's directors aren't likely to cross them again and approve a buyout bid that they won't like. After all, they might well have the votes to reject it anyway. Selling three companies will be more difficult than selling one, but then that's essentially what the equity consortium plans to do - - selling off unwanted pieces and then building up the remainder of VNU for a sale or IPO. The big shareholders apparently think they might as well do that themselves and eventually pocket the profits.
02/15/06 RBR #32

HDRadio.com launches
Complementing the new HD2 multicast formats launching in 28 markets, the HD Digital Radio Alliance announced the launch of HDRadio.com (www.hdradio.com) the new consumer info site for HD Radio. The site helps consumers. - But, this reader has been checking out the new website to promote HD Radio, I just listened to the demo on hdradio.com. I wonder who the genius was who decided to promote current AM and FM analog as mediums that sound terrible.

RBR note: For first reaction and comment read....
02/14/06 RBR #31

Feingold seeks
Senate hearing on payola
Has asked both Chairman Stevens (R-AK) Dan Inouye (D-HI) to put one of his pet issues on the committee's agenda. He cited his bill, the Radio and Concert Disclosure Act of 2005 (S.2058) as a starting point.

RBR observation: They say that the most common flaw of military leaders throughout the centuries is the use of tactics appropriate for the last war in the books, rather than new tactics appropriate for the war in front of them. Feingold seems guilty of fighting the last war. It is the observation of RBR to raise a flag of victory over the carcass of the old pay-for-play system and start looking ahead to the newer concerns - - pay-for-say, un-attributed fake news releases, undisclosed product placements, and false product endorsements from allegedly independent expert reviewers.
02/13/06 RBR #30

RBR First
GM share deals to be cancelled
Stations to monitor pod violations as GM Planworks SVP/Local Investment Director Kevin Gallagher made the announcement to all in the Television Business. Reps were called to a meeting and told that GM share deals would all be cancelled from Q2 on and that stations, not buyers, would then monitor pod violations. Said one industry source: "These moves lose GM multiple millions of ad time at a time when they need every dime they can get. In the local community the reps are out celebrating as are the stations."

RBR observation: This is good for radio so read the details
02/10/06 RBR #29

RBR First
CBS Radio may
dump
all RCS systems

It is an RBR First because we certainly voiced the concern after Clear Channel bought RCS last month that this could happen. RBR confirmed through two high-level sources independently at CBS Radio there have been meetings about pulling RCS systems company-wide. Source #2: "It's true. ! If you were running CBS Radio, would you want your number one competitor having inventory on your radio stations?" RBR, through our investigation, has also confirmed that while CBS Radio will honor their current contracts, the source stated, "We will be honoring our contracts, but we aren't going to do business with RCS." In an email response to CBS's issues Philippe Generali, President/CEO RCS wrote: "Confidentiality has been, and will always be the cornerstone of the RCS business. For more than 27 years, radio stations around the world have trusted RCS with their databases, format changes, and music libraries.

RBR observation: This is a hurdle RCS will have to overcome--the image that Clear Channel may have access to clients' proprietary databases. But all should just calm down and breathe into a brown paper bag and not put the cart before the horse. For more see
02/08/06 RBR #27

Citadel + ABC: Done
Here's how the deal will work
The merger of Citadel and ABC Radio will be a complicated one. Because its tax basis in the radio assets is essentially zero, Disney insisted on a "reverse Morris Trust" so it (and its shareholders) will not have to pay capital gains taxes on the transaction....ABC's O&Os, 22 stations in nine markets, will become part of Citadel Communications, as will ABC Radio Networks. Citadel will have an exclusive 10-year licensing agreement to deliver ABC News Radio programming to terrestrial radio stations.

RBR observation: 13.2 times. Amazing. Even after you add in about two and a half turns for the tax savings to Disney, the effective multiple is only 15.7 times. Just a couple of years ago such primo radio assets would have brought at least 20. Is Bob Iger correct in betting that radio multiples will continue to fall? For now, it looks like an incredibly cheap purchase for Farid Suleman. There is more see
02/07/06 RBR #26

Analyst worried by radio trends
Wachovia Securities analyst Marci Ryvicker says the 1% radio revenue decline was worse than expected and early evidence is that the softness has continued into 2006. Q1 may be further impacted by the Winter Olympics, as TV historically tends to drain some of radio's ad dollars during this competition. How much growth? Ryvicker is looking for an anemic 1% gain in January and 2% for most months this year - - with 3% in June and November and 4% in October. For all of 2006 forecasting that radio revenues will be up a mere 2.3%.

RBR observation: Only two radio companies have reported their quarterly results so far and given guidance for early 2006. But both Emmis and Journal Communications indicated that the year is starting out soft for radio. That's not encouraging for a year that is supposed to feature easy comps. Add to injury radio still has many issues to face this year that revolve around investing money into their stations around technology - HD and PPM are just two that are now becoming a reality. Radio's perception is not strong and will have to fight for its place in the total media world this year as 'Time with Technology will not wait for no one'.
02/06/06 RBR #25

Radio industry must
Embrace Change

Speaking to his last RAB annual management conference as President and CEO of the organization, Gary Fries urged his audience of radio executives to look to the future and embrace change. "The biggest threat to our industry is wanting to stay the same. If you stay the same, you will have no success,...What are advertisers trying to do? They're trying to get ROI. The challenge to radio is to constantly move and progress. When my successor comes, that person will take the RAB to a new level. Constantly look for being part of the future - - part of the change. Do not get locked in the comfort zone."
02/03/06 RBR #24



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