Welcome to RBR's Daily Epaper
Volume 22, Issue 37, Jim Carnegie, Editor & Publisher
Tuesday Morning February 22nd, 2005

Radio News®

Q4 reports shift into high gear
A few radio companies reported their Q4 2004 results earlier this month, but the reporting season really accelerates this week. Cumulus Media is on deck this morning. Analysts surveyed by Thomson First Call expect Lew Dickey's company to report revenues up 12% from a year ago - - but that's only a 3% pro forma gain after adjusting for changes to its station portfolio. At SG Cowen & Co., analyst James Marsh notes that its focus on small and mid-sized markets helped Cumulus outperform the radio industry in Q2 and Q3 - - "however, we believe this smaller market focus did not have the same positive impact in Q4, as national was a much stronger performer than local." Over all, Marsh is expecting most radio groups to report results at the low end of their guidance to Wall Street. Also reporting this week: Wednesday, Entercom (consensus revenues +6%) and Cox Radio (+2%); Thursday, Viacom (-15% for the entire company, apparently due to the Blockbuster spinoff), Citadel (+6%) and Saga (+7% radio & TV combined); and Friday, Clear Channel (+3% for the entire company).

3% gain fails to impress
Radio's 3% revenue gain in January (2/21/05 RBR #36) was an improvement over the full-year gain of 2% in 2004, but don't count on it continuing. Wachovia Securities analyst Jim Boyle had expected even a bit more in January. He'd forecast a 4% boost, while the consensus of his peers was 2% - - so the actual outcome was in the middle. But Boyle says the gain just continues radio's "seesaw-like behavior" dating back to August of 2004. "One month has 3-4% growth and the next is flattish," he said, and noted that January was up against easy comps from a year ago and is traditionally the lightest advertising month of the year for radio. "According to anecdotal evidence and bookings data, Q1 2005 should end in the same flattish are that the prior two quarters had. We forecast a 1% drop while the Street sees a flat Q1. A looming difficulty is March's 10% comp," Boyle said. Even so, he said the real issue is what happens beyond Q1 - - how soon Clear Channel's Less is More initiative and similar efforts by other groups to cut clutter and put some pressure on pricing will pay off. "How much 'pain' will occur before the 'gain' has sufficient traction to revive pricing power?" Boyle asked. He thinks the demand-supply equation should shift back in radio's favor by mid year, but he adds, "there are no guarantees."

GAO puts the brakes on government PR campaigns
The comptroller general of the Government Accountability Office has said in no uncertain terms that branches of the government must clearly identity themselves as the source of any material put forth in the media. The Department of Health and Human Services was famously involved in creating pseudo news stories to promote the controversial new Medicare program (3/16/04 RBR #52) and the No Child Left Behind program (10/12/04 RBR #199) in which actors pretended to be television reporters. DHHS was not identified as the source of the report. According to the New York Times, comptroller general David M. Walker has fired off a letter to the heads of all federal agencies warning them off the practice. While it is appropriate for the agencies to publicize their activities and disseminate information to the public, it must identify itself as the source no matter how seemingly innocuous the material being presented.


News/Talk dominates fall airwaves
The dominant format in the 92 continuously-measured Arbitron radio markets is the News/Talk/Sports family, which far and away leads all comers and significantly improved on its own performance over the course of a year, aided greatly by another hotly-contested election. According to a study released by Interep, stations in the format group claimed 18% of the audience in the Fall 2004 Arbitron books, compared to 16.6% in Fall 2003, and well ahead of the 12.3% of listening which went to Hispanic stations. Urban and CHR had 10.9% and 10.6% for third and fourth place, repectively, followed by AC at 9.9%. If Hot AC's 3.3% is added to the mainstream variety, however, its share would jump to 13.2%, good for second place. Here are totals for all format groups. The chart is from Interep based on Arbitron Fall 2003 and 2004 12+ results. | More... |

Smulyan bidding on the DC Nationals
Apparently he didn't learn his lesson with the Seattle Mariners! Emmis CEO
Jeff Smulyan has given Major League Baseball a 100,000 bucks deposit to bid on the Washington Nationals. He joins at least six other groups or individuals who have expressed interest in buying the team and have made the same deposit. Smulyan told us he's in preliminary discussions with other possible investors and may be interested in joining an existing group or helping create a newly formed group. | More... |

Who holds the cards at Univision?
As the most publicity shy CEO in broadcasting, if not all of corporate America,
Jerry Perenchio has to be mortified at having the Wall Street Journal writing about the boardroom battling at Univision. The company's big foreign investors, Mexico's Grupo Televisa and Venezuela's Cisneros Group of Companies, were apparently caught by surprise when Perenchio promoted Ray Rodriguez to President and COO (2/10/05 RBR #29) and complained loudly about not being consulted. But with only two board seats, they were easily outvoted. To express his displeasure, Televisa CEO Emilio Azcarraga barred stars from Televisa shows from appearing on a Univision awards show this month. But both Televisa and Cisneros' Venevision have contracts which give Univision exclusive US rights to their programming through 2017, so they can't shop their shows to Telemundo or anyone else. Also, they're not likely to do anything that would reduce the value of their investments in Univision - - more than a billion bucks in the case of Televisa and about half that for Cisneros.

RBR observation: If you read our profile of Univision last June (6/1/04 RBR #106), you knew that Rodriguez was already Univision's highest paid employee as head of its TV networks (Perenchio takes no salary for himself), so it was not all that surprising that he was moved up to run the entire company. With Mac Tichenor, who had already run a company listed on the New York Stock Exchange, deciding to step down as President of Univision Radio a few months ago, Rodriguez was the only insider who appeared to be a strong candidate for the COO job. Azcarraga and the Cisneros family appear not to be really opposed to the man selected, but to being excluded from the selection process. It's even spurred Azcarraga, whose wife is an American, to speak publicly of following the course taken by Rupert Murdoch - - becoming a US citizen so he can own FCC licenses. But while Azcarraga can see the advantages of merging Televisa and Univision, he's not likely to interest Perenchio in the idea so long as the former boxing promoter is healthy and active. Perenchio is 74 and Azcarraga is 36, so time may be in the younger man's favor - - but then, we would note that Perenchio's 48-year-old son, John, is also a Univision director.


Adbiz©

UPS kicks off international
advertising initiative

Airing for the first this week is an aggressive new campaign designed to demonstrate the expanded capabilities beyond package delivery that UPS is bringing to the global marketplace. UPS's "Deliver More" campaign will launch in selected countries starting this week and will eventually appear in 104 countries. The biggest focus is in China, where UPS continues to rapidly expand its services after recently tripling the number of flights from the United States and expanding its supply chain capabilities. Created by McCann Erickson, the campaign is rolling out in 23 countries with a total of five commercials: two 60-second spots ads and three 20-second commercials. The campaign also includes print, outdoor and online advertising as well as additional television commercials planned later this year. The first 60-second commercial features French film star
Jean Reno, best known for leading roles in acclaimed movies including, The Professional. The second 60-second commercial shows the traditional UPS brown package car making deliveries all around the world. The 20-second spots will run simultaneously and show UPS's expanded capabilities, from ocean freight to express air delivery. The Jean Reno commercial will air in Belgium, France, Germany, Italy, the Netherlands, Sweden, Austria, the United Kingdom, Hong Kong, Taiwan, Singapore and Mexico. The commercial featuring the UPS package cars will air in China, India, Japan, Korea, Malaysia, Philippines, Taiwan, Thailand, Hungary, Poland, Turkey, Mexico, South Africa and Nigeria. A complete list of production credits is available at the end of this release.

Russo to be Kagan panelist;
co-chair Power of Urban session
Rich Russo, JL Media's SVP/Director of Broadcast Services, will be Co-Chairing the Group Head Discussion at Interep's 7th annual "Power of Urban Radio" conference 4/27 at the Grand Hyatt in New York. As well, Russo will be a panelist 3/16 at the Kagan Radio Summit in NYC. The panel, "Radio/TV Ad Sales: The Next Three Years," will be held at 4:00 pm - 5:00 pm.


April Radio & Television Business Report

Be sure to catch our blockbuster April NAB issue:

One on One: We interview outgoing NAB CEO Eddie Fritts.

Feature: What kind of individual would industry leaders like to see head the NAB?

AdBiz: But will they buy it?
We ask agencies and the industry about support for new, unproven formats.

Media, Markets and Money: We check the financing climate: Is financing still readily available for radio and TV deals?

Advertisers: Don't miss this opportunity to appear in Eddie Fritts' farewell interview!
Call Today, space is limited.

June Barnes at 803-731-5951 or
Jim Carnegie at 813-909-2916

Don't miss your copy!


Media Markets & MoneyTM
Exporting the Horton from HBC
Horton Broadcasting Company is preparing to go Hortonless in a 950K stock for stick deal which also includes an ancillary payment of 250K. The upshot will be a significant other for two FMs on Florida's Gold Coast. The station being traded is Horton Broadcasting Company's WHLG-FM, which serves the Fort Pierce-Stuart-Vero Beach market from its perch in Port St. Lucie. When the dust clears, Helen B. Horton will have sold her stake, which includes 100% of voting rights and 20% of equity, to Vernon D. Smith, who will wind up with 100% of both. The deal includes a 100K deposit, 250K cash at closing and a 600K note. 100K of this total will be allocated to a non-compete. In addition, Smith will see to it that the soon-to-be-Hortonless Horton Broadcasting repays 250K which Ms. Horton has loaned to it. Smith has a 62.5% stake in another Fort Pierce station, WFLM-FM White City, which will make this the better part of a duopoly deal.


Washington Beat
Elections law set for review
Both the sponsors of the Bipartisan Campaign Reform Act and the Bush administration were not happy with the decision of the Federal Election Commission not to intervene in the high-priced media campaigns of 527 organizations in the 2004 election year. Both have challenged the decision in court, and both cases will be combined into one, according to the Associated Press. The US District Court for the District of Columbia is going to consider the issue. At issue is the ability of the 527s to use soft money to finance the advertising. The BCRA's sponsors have vowed to shut down the 527s one way or another.


Engineering
New tower standards coming: are you ready?
Did you know existing standards for broadcast and communications towers are currently in the midst of the biggest revision, some say, since their inception in 1949? The structural engineers in our field are very aware of this, but many Chief Engineers are not. The new standards have been in the works for six years. The standards committee, made up of members from TIA and EIA, is labeled "TR-14.7." The number of the standard is 222 and we're on revision F right now - - our existing standard. The last major revision was revision D in the late 80s. The next revision of the ANSI/TIA/EIA standard "Structural Standards for Steel Antenna Towers and Antenna Supporting Structures" will change the loads and design criteria for communication towers including broadcast structures. It will also have an impact on the load carrying capacity of existing structures. | More... |


Transactions
KCGR-FM Eugene-Springfield OR (Cottage Grove OR) from Thornton Pfleger Inc. to Diamond Peak Investments Inc.

KDBX-FM Clear Lake SD from Waitt Media Inc. to Three Eagles of Joliet Inc.

| More... |


Stock Talk

US stock markets were closed Monday in observance of Presidents Day.



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Bounceback

Send Us Your OpinionsWe want to
hear from you.

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

This reader thinks Sen.
John McCain needs an education.

In reference to articles in your paper, Senator McCain doesn't know much about rural radio broadcasting. We own 2 stations in Southwest Montana. We run many local community programs every day. We have a high school coach on right now, as I am writing to you. He's talking about the basketball teams in our area. Why don't you do an article on what REAL community broadcasting is? Small market radio is nothing like the large corporations who own many, many stations.

Just a thought. I'm tired of hearing about the bad things that go on at some stations. Perhaps you could write about all the good we do. There are a lot of broadcasters who go out of their way every day to keep the community advised. It's not ALL about the bottom line in small markets. I have e-mailed Senator McCain about our stations. I haven't heard back

Thank you,

Jo Ann Juliano
Dead Air Broadcasting
Company, Inc.

Publisher note: Jo Ann you probably won't hear back from Sen. John 'Wayne' McCain but I most certainly appreciate you taking the time to remind us all how valuable local is no matter what size the market. Like High School sports and community involvement. Jo Ann you are the real broadcaster serving local. Thanks.


More News Headlines

TVBR - TV News

Retransmission fight heads to court
You probably figured that Nexstar Broadcasting's move to pull its network affiliate TV stations off cable systems in four markets would lead to a court battle - - but the nature of the lawsuit may be surprising. It's not Nexstar or either cable company who's filed suit. Rather, as threatened early this month (2/7/05 TVBR #26), the municipal government of Bossier City, LA has sued Cox Communications, charging that the cable company is in violation of its franchise agreement by not carrying Nexstar's KTAL-TV (Ch. 6, NBC) Shreveport on its local system - - and Bossier Parish has also joined in the lawsuit. According to the Bossier Press-Tribune, some 33,000 Cox subscribers in Bossier City and surrounding areas of Bossier Parish have been without KTAL since February 1st. Cox's franchise agreements with the city and parish require it to carry the ABC, CBS and NBC networks. Cox has refused to pay a retransmission consent fee to Nexstar and had to drop carriage of the NBC affiliate when their previous retransmission agreement (which did not include payment) expired at the end of January.

TVBR Observation: Get ready for a war between broadcasters and cable MSOs that's going to expand far beyond the four markets where Nexstar has begun the battle as retransmission agreements expire in hundreds, if not thousands of markets next year. The March issue of Radio & Television Business Report features an in-depth One On One interview with Nexstar CEO Perry Sook - - must reading if your station is going to be renegotiating its retransmission rights with cable systems in the coming months!






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

Spitzer subpoenas radio groups
The probe of independent record promoters that New York Attorney General Eliot Spitzer began last fall by serving subpoenas on the big record labels has now led to subpoenas being issued to several radio groups. It was already known that Spitzer's office was looking at Entercom, after WKSE-FM Buffalo fired its Program Director in a company probe of whether he improperly accepted travel packages and other gifts. Clear Channel confirms that it received one and Reuters reported that Infinity was also a recipient. There is no specific state statute in New York relating to the practice. A spokeswoman for Spitzer's office wouldn't discuss specifics of the ongoing investigation, but she told RBR/TVBR that the AG is trying to build a case that payments and gifts from indies to radio stations or their employees violate New York state statutes on deceptive business practices. RBR observation: We're all for putting the indies out of business - - a position we've advocated for years. But the credit for doing that goes to Sen. Russ Feingold (D-WI), who pushed and pushed the issue on Capitol Hill long before Spitzer took notice. It seems to us that Spitzer is late to the game. A few indies are holding on, but their dubious business as the "don't ask, don't tell" cover for the big record labels has been virtually obliterated.! And good riddance, we might add. Whatever scraps are left for Spitzer to probe may help fuel his publicity machine as he campaigns for Governor of New York, but the cleanup had already taken place before he got involved.
02/21/05 RBR #36


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