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Volume 23, Issue 35, Jim Carnegie, Editor & Publisher
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Monday Morning February 20th, 2006
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Radio News ®
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 RBR Close-Up
Upton wants to loosen radio caps
Rep. Fred Upton, chair of the key House Subcommittee on Telecommunications and the Internet, not only believes its time to loosen the local caps on radio station ownership, he's written a letter the FCC Chairman Kevin Martin to make his point. He also delivered substantially the same message in an address before the Media Institute last week. Essentially, Upton would take the local limit up from eight stations to 10 in markets with 60 stations or more total and from eight to 12 in markets with 75 stations or more total. Upton explained his position to the Media Institute, "In a market of 45 stations, the most a single company can own is 8 stations. In a market with 145 stations, a single company can own 8 stations.
Where is the logic?
Even setting aside for just a moment the competition from other media, especially satellite radio, there is absolutely no public policy good to justify the same local radio ownership cap for Cincinnati as for New York City, Chicago and Los Angeles. Let's remember that ownership diversity is only a proxy for viewpoint diversity. America's largest markets are certainly not lacking in diversity of perspective and entertainment. Indeed, one of the few lessons of the '96 Act is that relaxing ownership limits increases diversity. In 1993, there were only 31 formats. Today, there are more than 70. Easing the caps has allowed one company to offer both conservative and liberal talk shows to its audiences in the same market. We need to reintroduce a little common sense to ownership rules." Upton pointed out in his letter to Martin that only 17 media markets would be affected.
But wait, there's more
Rep. Fred Upton (R-MI) also wants the FCC to try again to get barriers to broadcast and newspaper cross-ownership lifted. Along with his letter on local radio caps, Upton also sent a letter to FCC Chairman Kevin Martin on this topic. He noted that the Third Circuit remand of the 6/2/03 media ownership rulemaking actually supported the FCC's move to kill the ban on such cross-ownership combinations (that part of the ruling was remanded because the courts questioned the local caps that the FCC tied to it). Upton also explained his thoughts on this topic to the Media Institute. "Common sense tells us that this explosion of media sources should eliminate any concern over a lack of diversity of views in the marketplace and competition, which have been the principal justifications for the rule. This growth remains unabated and more than makes the case for regulatory relief in the broadcast sector. Yet from the enactment of the '96 Act to the present, the FCC's ban on common ownership of a newspaper and broadcast facility remains in place. The perverse net effect is that although a cable system can own a local broadcast station, or a national television network can own two stations in most markets, the newspaper, which has First Amendment protection, is precluded from local broadcast ownership. It further means that a newspaper, with its enormous investment in local newsgathering, is limited in how it can reach local citizens, which diminishes the news and information available in the marketplace."
RBR overview: It is no wonder that analyst after analyst forecasts anemic growth for broadcast radio for the foreseeable future. Now read, learn, comprehend and
| Read Upton's full Media Institute address here |
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Ratings: Lehman lays it on the line
Spanish broadcasters, enjoying the benefit of a fast-growing constituency and a media environment that is still catching up, were the best performers in 2005 in terms of growing ratings, according to Wall Street watchdog Lehman Brothers. Right behind, enjoying the benefit of LIM, was Clear Channel. In the case of Hispanic broadcasters, however, the catching up process seems to have begun as ratings growth for two key radio operators slowed in the face of increasing competition - - Lehman says they grew 7% in share over the year, but only 3% during Q4. Who were the top companies? Will let Lehman's Anthony J. DiClemente do the honors (so drum roll) The envelope please: "Based on a weighted-performance ratings over the past four ratings periods, Spanish Broadcasting (#1), Univision (#2), and Clear Channel are ranked the top three radio broadcasters." Clear Channel rode its LIM initiative to a 3% gain in the fall. Hot fall formats included Hispanic, benefitting Entravision along with the two broadcasters mentioned above, and Sports, a trend favorable to Beasley Broadcasting, Entercom and ABC Radio. On the down side were News, dragging with it ABC Radio and CBS; Talk, negatively impacting format the same duo; and CHR, which put a hurt on Beasley, Emmis and Clear Channel.
Consumer confidence
 headed in wrong direction
The experts thought that consumer sentiments were headed onward, and at least slightly upward. They were looking for a modest gain on January's 91.2 Index on the University of Michigan chart. Instead, the restless herd went astray, significantly, in the other direction. According to a Reuters report, Wall Street's gurus gazed into their crystal balls and saw the index nosing up to about 91.5. Instead, it fell to 87.4. The current conditions barometer also fell, from 110.3 at the end of January to 107.7.
RBR observation: Advertisers are all about reaching consumers who want to buy, and if their numbers dwindle, so to do the number of businesses willing to shell out cash for one of their debit sheet's more ephemeral categories. It's been widely reported that the economic recovery taking place, such as it is, is very top-heavy. Average workers are seeing increased workloads, increased outlays for necessities and stagnant pay. It's not a good sign for a business that's been hoping for a turnaround year for several years in a row. But consumer confidence is also an ephemeral thing. Bottom line - - if things do go south for a little while, don't forget to remind your clients that the one who stays in the public eye while other hibernate is the one who snags market share and wins in the end.
 Hedge funds are making
broadcast lenders more flexible
The addition of hedge funds to the radio and TV lending market appears to be good news for borrowers. "All the new money coming is making the money cheaper," said Brian Pryor, Vice President of Media Venture Partners. And, he added, the hedge funds are more creative and flexible in terms of how they structure loans. "We'll get development deals where they lend you an industry reserve to service that day while you actually evolve the property it gets to the point where the cluster or group is generating its own cash flow," Pryor told RBR/TVBR. Another plus for many borrowers is that the hedge funds don't look for amortization of the principle. "When you go do a bank deal you basically, at some point in your projection, have to show how you pay this back," said Widroe, but the hedge funds are willing to go without any principle paydown over the life of the loan. "The third impact they have added is that competition from the hedge funds has made the traditional broadcast lenders do things they wouldn't have done in the past. It's forcing them to get more flexible and creative on their own. We've done a couple of deals now with broadcast lenders that are probably more traditionally know for extending credit on a multiple of cash flow. A number of those folks, like the CITs and the GEs of the world, now will look at those stick deals and development deals. It really pushes them from a structural perspective and it also pushes them on a pricing perspective," said Pryor.
RBR note: For more, see the February issue of Radio and Television Business Report page 20. If you did not receive the February issue you can down load the entire magazine via pdf format.
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| Cable Media Business Report TM |
Cable-friendly study not so friendly
Retransmission consent is just one facet of the ongoing battle between broadcast and cable. Broadcast Investment Analysts (BIA) has 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 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."
CBR observation: Radio executives stay aware of all competition around you not just satellite radio. Other media are moving at a forward pace and not without controversy. RBR delivers media intelligence you need to know.
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| Wall Street Media Business Report TM |
Sirius posts wider loss, higher revenue
After the "crisis" at XM last week over a larger-than-expected loss (2/17/06 RBR #34), Sirius shares fell 5% early Friday after the satcaster posted a wider-than-expected loss and warned that it will lose more customers this year via monthly churn. Part of that loss was due to the company recording 6.9 million for its share of Sirius Canada's net loss. Nonetheless, Sirius had record Q4 and FY 2005 results, driven by better-than-expected subscriber growth across its distribution channels.
| Read More... |
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Ad Business Report TM
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 Wal-Mart expanding
marketing department
We reported on former Chrysler Group Director of Marketing Communications Julie Roehm's move to Wal-Mart as SVP/Marketing Communications (1/19/06 RBR #13), but didn't realize her hire was just the beginning of an anticipated 30% increase in the retailer's marketing and advertising staff. Part of the reason is Target's blitz of recent ads focused on designer-focused lines of merchandise, and generally effective advertising that has given Target a hip, sophisticated edge. While Wal-Mart roster agency GSD&M Chicago and Austin is significantly ramping up its efforts in both television and print, AdAge reported last week the company only has a 200-person marketing and ad staff, vs. Target's 900. "Wal-Mart's CMO, John Fleming oversees a budget nearing the 1 billion mark, and, in unprecedented hiring spree, he plans to grow the marketing team as much as 30% this year, adding up to 60 people. In doing so, he's looking to build from scratch three new departments -- brand management, a category marketing group and an insight and customer strategy group." Stephen Quinn, SVP/marketing, will oversee the build-up of the three new departments. Robert Atencio is the VP/Insight and Customer Strategy, who is conducting a thorough analysis of Wal-Mart's entire marketing mix to "free up on what is not as productive," Luring top-brass marketers is Fred Ley, who joined Wal-Mart as head of staffing in March 2005. (quotes, source AdAge)
 AutoTrader.com
title sponsor for DRIVE
AutoTrader.com is the new title sponsor for the highly-rated "DRIVE" series (formerly "Road Trip to the Auto Shows"), produced for ESPN and now in its fourth season. The shows will feature highlights of the 2006 LA, Detroit, Chicago and New York auto shows and began airing on ESPN 2/18. The show has taken on a new moniker to represent the exciting changes in this season's coverage. With a combined 132 new vehicle introductions at the four shows, "AutoTrader.com DRIVE" will serve as television's premier automotive showcase. Produced by High Impact Television (HIT), "AutoTrader.com DRIVE" will capture all the excitement at each of the auto shows, giving ESPN viewers an inside look into the nation's most important auto show events, including sneak peeks at the newest vehicles, expert test drives and custom aftermarket products.
Starcom scores Macy's
Starcom has reportedly won Macy's 200 million dollar media account after a review. Starcom bested Initiative and MPG in the review's final round.
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| Media Markets & Money TM |
WATZ up, doc?
One good spin deserves another. Xavier University decided last spring to spin its big Cincinnati FM and a flotilla of affiliates to Cincinnati Public Radio for 15M. Now CPR has decided to spin one of the spinners. WVXA-FM is in Rogers City MI, which is not on the Upper Peninsula of the state, but it is way up on the upper part of the lower peninsula on the Lake Huron or eastern side. Hardly Cincinnati territory. It is within the area that Ross Biederman's Midwestern Broadcasting Co. likes to operate. In fact, it will double up with his WATZ AM & FM in Alpena. Biederman is taking the distant outpost off CPR's hands for 411K under the licensee name WATZ Radio Inc.
RBR observation: Like Pinochio achieving real boyhood, WXVA-FM will now likely achieve the real commercialhood (if we may be so bold as to coin a new word) to which most stations sharing its 96.7 mHz frequency are entitled.
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| Washington Media Business Report TM |
 Day of reckoning for
DTV orphans approaching
30 television licensees have been informed by the FCC that their proposal for DTV operation will either be an interference source or failed to comply with the rules of the Negotiated Channel Agreement (NCA) road. That throws them into the Second Round Conflict Decision process, which has ready and waiting electronically, the Second Round Conflict Decision Form 385. A new proposed resolution must be sent in to the FCC by 4/3/06. If the proposal involves a technical downgrade, it will require appendage of Schedule B to Form 385. If you have an NCA under which you plan to increase your coverage area that needs to get to the FCC a full month earlier, by 3/3/06. Failure in the SRCD process can be resolved by the identification and request of a contingent destination channel - - otherwise, it's off to the Third Round.
RBR observation: Gentlemen, start your engineers. And attorneys, for those of you headed to an attempt at an NCA.
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| Monday Morning Makers & Shakers |
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Transactions: 1/9/06-1/13/06
Can you say slow? For the second week in a row, one transaction accounted for the vast bulk of station trading value. This time it was a 30M Houston noncom television station, compared to 2.97M spent on 10 other sticks of various types. It's been a sleepy beginning to the new year, to say the least.
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Total
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Total Deals
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9
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AMs
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6
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FMs
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3
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TVs
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2
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| Value |
32.97M
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| Complete Charts |
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Radio Transactions of the Week
NRG finds a friend for Wayne combo
| More... |
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TV Transactions of the Week
New TV net gets into ownership
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| Transactions |
9M KDXU-AM/KSNN-FM, KREC-FM & KUNF-AM St. George-Cedar City UT (St. George, Brian Head, Washington UT) from Bonneville Holding Co., a subsidiary of Bonneville International Corp. (Bruce Reese) to CCR-St. George IV LLC, a subsidiary of Cherry Creek Radio LLC (Joseph Schwartz). 450K escrow, balance in cash at closing. Includes non-compete. Superduopoly with KSUB-AM/KXFF-FM & KXBN-FM Cedar City UT, KMXM-FM Colorado City AZ & KDXU-AM St. George UT, forming three 3-AM/3-FM clusters. Buyer will withdraw upgrade CPs for KSNN-FM and KXFF-FM. Buyer also has pending deal to acquire KNNZ-FM Cedar City from MB Media. At closing, it will LMA the station back to MB and re-sell the station to a third party. [File date 2/2/06.]
1.4M KROL-FM Las Cruces NM from Rio Grande Christian Broadcasting Co. (Andrew McClatchey) to Bravo Mic Communications LLC (Ned W. Bennett, Sandra G. Zane). 150K escrow, balance in cash at closing. Duopoly with KVLC-FM Hatch NM. [File date 2/2/06.]
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| Stock Talk |
XM takes the hit again
XM was the loss leader again, falling 2.41 on the quarterly loss that had a board member resign last week. Sirius lost 0.39. The big winner on Friday was CBS, up 0.68
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| Radio Stocks |
Here's how stocks fared on Friday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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38.62
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-0.13
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Hearst-Argyle
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HTV
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24.16
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+0.39
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Beasley
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BBGI
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13.99
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+0.26
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Interep
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IREP
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0.24
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+0.09
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| CBS CI. B |
CBS |
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25.83
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+0.68
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Jeff-Pilot
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JP
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59.37
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-0.18
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| CBS CI. A |
CBSa |
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25.78
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+0.64
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Journal Comm.
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JRN
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12.77
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+0.32
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| Citadel |
CDL |
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11.67 |
-0.13 |
Radio One, Cl. A
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ROIA
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9.95
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-0.25
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Clear Channel
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CCU
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28.10
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-0.09
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Radio One, Cl. D
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ROIAK
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10.05
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-0.14
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Cox Radio
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CXR
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13.73
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-0.01
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Regent
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RGCI
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4.60
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-0.05
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Cumulus
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CMLS
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11.81
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+0.09
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Saga Commun.
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SGA
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9.98
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-0.02
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Disney
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DIS
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26.89
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-0.16
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Salem Comm.
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SALM
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14.20
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-0.02
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Emmis
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EMMS
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17.01
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+0.05
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Sirius Sat. Radio
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SIRI
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5.26
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-0.39
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| Entercom |
ETM
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28.28
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-0.22
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Spanish Bcg.
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SBSA
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5.88
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-0.03
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Entravision
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EVC
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7.22
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-0.03
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Univision
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UVN
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33.66
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-0.19
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Fisher
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FSCI
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42.99
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-0.26
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Westwood One
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WON
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14.32
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+0.01
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Gaylord
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GET
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43.95
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-0.09
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XM Sat. Radio
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XMSR
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21.57
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-2.41
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Bounceback
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 We want to
hear from you.
This is your column, so send your comments and
a photo to [email protected]
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Below the Fold
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Cable Business Report
Cable-friendly study
Well, not so friendly says...
Ad Business Report
Wal-Mart expanding
Their marketing department Julie Roehm not wasting time...
Media Markets & Money
WATZ up, doc?
1 good spin deserves another Xavier University decided...
Washington Media Business Report
Day of reckoning
For DTV orphans approaching...
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Radio Media Moves
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Antes upped to
GSM at 'MMR
Greater Media announced Jim Antes has been promoted from LSM to General Sales Manager of WMMR in Philadelphia. In his new role, he will continue to explore new and innovative ways to grow WMMR's revenue and customer base.
CC Radio names
Til Levesque MM
for Detroit
Radio Senior Vice President Mid West Region Dave Crowl announced the promotion of Til Levesque to Market Manager for the company's Detroit cluster. Levesque will oversee day-to-day operations of WDFN-AM, WDTW-FM, WDTW-AM, WJLB-FM, WKQI-FM, WMXD-FM and WNIC-FM.
 Watchdog searches
high and Lowenstein
Civil rights activist David Lowenstein has signed on as the new Managing Director of watchdog Minority Media & Telecommunications Council. He will handle "financial, staffing, programming and fundraising activities...." MMTC is a fixture on the Washington scene, and lately has been pushing for re-adoption of a tax credit to boost minority ownership of broadcast facilities. It has also been know to broker a deal here and there.
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More News Headlines
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MN broadcaster Howard Bill passes
Former Rochester, Minnesota owner/broadcaster Howard G. Bill (formerly with KOLM/KWWK Rochester and several other markets including La Crosse and Eau Claire, WI) passed away 2/16 at the age of 85. KOLM was the classic mom & pop station, we hear. He sold to KOLM/KWWK and KLCX-FM St. Charles, MN to Cumulus in 2004.
KNXR (FM) Rochester owner/GM Tom Jones tells RBR: "Howard G. Bill came to Rochester to the Mayo Clinic in the early 60s for consultation and was attracted to Rochester's market to start another radio station (KOLM). He came from Eau Claire, where he owned WBIZ. Howard's dad was the very first manager of WLS Chicago. Howard had told me about his dad taking him down to the station on weekends as a boy, maybe that's where the radio seed got planted."
Sirius to bring back
Fox News Radio
Bringing back Fox to its lineup 3/14 under a new long-term deal, Sirius said Friday. Fox News and Fox News Talk will rejoin with new agreement that replaces the previous one which expired at the end of 2005.
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TVBR - TV News
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EchoStar launches Chicago stations in HD
Chicago's big four network O&Os, WLS-TV (Ch. 7, ABC), WBBM-TV (Ch. 2, CBS), WMAQ-TV (Ch. 5, NBC) and WFLD-TV (Ch. 32, Fox), are now available in HD to subscribers of EchoStar's Dish Network in 16 counties - - 11 in Illinois and five in Indiana. EchoStar kicked off its DishHD promotion in the Chicago market yesterday with a press demo. DishHD is offering more than 23 national HD channels and more than 70 standard definition digital channels for 49.99, with local-to-local, including both standard def and the four HD channels, for an additional five bucks. Dish HD launched its HD local-to-local service in New York and LA a few weeks ago and will add Boston and Nashville in the next few days. An EchoStar spokesman tells TVBR that the company plans to offer local-to-local HD channels in 50% of the country by the end of this year. Not all of that will be by satellite delivery. In some places, Dish will install antennas to receive local HD channels off! air. The antenna will feed into the company's newest generation digital set-top box and the spokesman says "it's seamless for the customer inside."
TVBR observation: It's kind of ironic that EchoStar is now installing traditional broadcast antennas to supplement its satellite dishes, but at least there's no A/B switch for the consumer to worry about. And stations are no doubt happy to accept the retransmission consent payments, even where the "retransmission" is all taking place inside the consumer's home.
RBR note: Radio - Key for all to be consistently aware of - HD is moving forward at a solid consistent pace to reach consumers. Remember this process of getting TV Stations into a consistent HD compliance started four (4) years ago at the NAB 2002 annual conference. Now compare Radio HD progress in the last four years. Radio CEO's best stop and think.
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RBR Radar 2005
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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XM director quits,
warns of "crisis" looming
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.
RBR observation: RBR has forecasted consistently that word 'Churn' and seems 'Jack' Roberts agrees. Churn has to get under control as being a public company has responsibilities to the public not just a free ticket to do as they please. RBR means all public media companies - Period.
02/17/06 RBR #34
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.
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.
02/170/6 RBR #34
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...
02/15/6 RBR #33
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Companies Looking
1. Clear Channel RSM in Twin Cities
2. Arbitron Account Manager
3. Sales Rep in Washington, DC
4. Sales Manager for Reno Reps
See Radio Careers
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