Welcome to RBR's Daily Epaper
Volume 22, Issue 38, Jim Carnegie, Editor & Publisher
Wednesday Morning February 23rd, 2005

Radio News®

Cumulus CEO sees ad demand improving
After beating expectations in Q4, Cumulus Media CEO Lew Dickey is promising Wall Street more of the same in Q1 - - revenues gaining 3-4% on a same station basis. In answer to a question from Deutsche Bank analyst Drew Marcus during the company's quarterly conference call, Dickey said demand is improving month-over-month - - and that's before seeing any real impact from Clear Channel's "Less is More" initiative. Dickey did say, however, that his company is seeing more advertiser demand for 30-second spots. "It's pretty intuitive. When Clear Channel is out there talking about the value of 30-second announcements, and working very hard with their sales staff to create demand for them, naturally they're going to gain traction on that front," he said. But with local sales powering growth at Cumulus, the CEO expressed some frustration that the national rep firms aren't as aggressive in going after new business as his own local sales teams. "It's a business that has been structured over time to be very reactive and to really take advantage of avails - - and new business is defined as when an agency goes out and lands a new account and we call on that agency, that becomes new business," he quipped. Dickey said his comments weren't intended as an indictment of the rep business, but rather something that needs to be changed. "It's a behavioral change that needs to take place inside of these organizations to go out and aggressively call on new business and it's just not something, quite frankly, that they're set up for," he said.

RBR observation: Lew is 100% correct that the rep business has not changed or improved its pulling engine of their train of groups and stations in many moons. Sales people at the reps do as any sales person does, try and sell but on a much larger scale with more fragmentation. Radio and in many cases TV also have not got into the 21st century as it is called redeploying of assets with technology. But it is not up to us to fix their problems.

NASCAR will move to Sirius in 2007
Sirius Satellite Radio announced it has signed satellite broadcast rights for NASCAR away from XM beginning in 2007. Sirius will then air all NASCAR Nextel Cup Series, NASCAR Busch Series and NASCAR Craftsman Truck Series races live on a new 24/7 NASCAR channel, and will be exclusive satellite radio provider of NASCAR programming. Sirius will pay NASCAR rights fees totaling 107.5 million over the term of the five-year deal, with the highest payments in the final years of the term. NASCAR adds to Sirius' sports programming that includes play-by-play broadcast of all NFL games, up to 40 NBA games each week, NCAA sports, the NHL (when they're actually playing) and Barclays English Premier League Soccer.

RBR observation: Here we go: another huge investment against a very limited existing revenue stream. It seems XM and Sirius are just pissing on each other at this point. Yes, Sirius is securing a lot of content deals these days to counter XM, but at what cost? Perhaps this is what it takes to lift the company where it needs to be, but 20 million a year for NASCAR is a bit lofty, we think. It's hard enough to get ROI for NASCAR on the radio in general, much less satellite radio - - people WATCH NASCAR. Maybe this goes with the already announced intention for Sirius to work on offering a video satellite service? It could make some sense in that case. But for now, we wonder if Mel Karmazin was just looking for a headline to deflect the SEC news with Howard Stern. Why else announce something that starts in 2007, now? We do note, though, that NASCAR will not be commercial-free on Sirius. With Mel at the helm, look for Sirius to find more opportunities to sell advertising, even though listeners have to pay for the service.


Indecency challenges in the works?
NAB Joint Board Chairman Phil Lombardo recently issued a ringing call to arms, asking broadcasters to stand up to the ill-defined indecency rules, not to mention the inconsistent enforcement of them (2/4/05 RBR #25). And although nobody's talking on the record, the Los Angeles Times says efforts may be afoot to take the FCC to court over the matter. Lombardo already has hinted that the National Association of Broadcasters is putting together a defense fund. The LA Times takes speculation a bit further, saying that test cases may focus on the Bono Golden Globes incident, which resulted in a fine-free admonishment of NBC, and the "Married by America" whipped cream incident, which resulted in fines to Fox Television Network affiliates totally almost 1.2M. As RBR has pointed out many times, the way the FCC guidelines are written, and the examples contained therein, seem to clearly exonerate NBC for the Bono incident. As for the Fox incident, there was no inherently bad language used during the segment in question, and the activity on the screen was scrambled, making it suggestive rather than explicit. LA Times says that some think the FCC is particularly vulnerable to court challenge on these two cases. Additionally, since numerous non-O&O affiliates are involved in each, it is believed they may encourage pooling of resources to mount a legal challenge.

RBR observation: Review your copy of the January issue of Radio & Television Business Report Magazine where we point out the top 10 issues facing radio and television this year - Point 6: Indecency - Judging by equally outraged watchdogs on both sides of the issue, this issue is hotter than ever. Will broadcasters who make big-time voluntary contributions to the US Treasury in 2004 find themselves in trouble again anyway in 2005? - We can answer part of this now - Yes.
Ps: Now the NAB executive committee has to get on the stick and find the best President/CEO to provide the leadership for your NAB because you are going to need one hell of a fighter that can go the full fifteen rounds or years.


Falcón flies higher at Univision
Now that Ray Rodriguez has moved up to President and COO at Univision Communications (2/10/05 RBR #29), he's begun to assemble his own executive team. His first big move is to name Alina Falcón Executive Vice President and Operating Manager of the Univision Network. She had been running the newer and smaller TeleFutura Network, while Rodriguez had personally run the flagship network as head of all three TV/cable nets. Still to be filled is the position of President of Univision Radio, vacant since Mac Tichenor's departure at the end of 2004 (12/9/04 RBR #239) and, of course, the TeleFutura post previously held by Falcón. "Alina is an extremely gifted leader with a vast understanding of our business and our audience. At TeleFutura, she has orchestrated the development of one of America's fastest growing broadcast networks. I am confident her creativity and deep knowledge of the industry will bolster Univision to new levels of success in Spanish-language media," Rodriguez said in announcing the promotion. Prior to being put in charge of Telefutura in 2002, Falcón had been VP/News Director of Univision.

Foreign-born population continues to rise
34.2M people now living in the United States were born somewhere else. Over 18M (53%) came here from Latin America, with another 25% hailing from Asia and 14% from Europe, according to the latest US Census figures for 2004. This represents a 2.3% increase over the level of foreign-born residents at the end of 2003. 34.2M represents a 12% chunk of the total US population. Add to that another 11% - - first generation residents. This group, who were born in the US but have either one or two foreign-born parents, totals 30.4M.

RBR observation: The media is making a strong effort to reach the burgeoning Hispanic population. It remains to be seen if it can find spectrum to serve the smaller but still significant influx of Asians, not to mention even smaller groups from numerous and disparate points of origin. The introduction of increased channel capacity through digital technology may be just the ticket for taking on the increasing number of demographic niches clamoring for service.


Conference Calls Q4 2004
Cumulus outperformed in Q4
Cumulus Media gave Wall Street what it had promised for Q4 - - and then some. Same station revenue growth was well ahead of the overall industry at 4.9%, boosting actual net revenues (including acquisitions) by 13.5% to 84.4 million. Station operating income rose 12.8% to 51.9 million, or 9.8% on a same station basis. CEO Lew Dickey noted that 14 markets posted double-digit revenue gains for the quarter. Top growth categories were political, financial services, health care, and entertainment & recreation, while the weakest were telecommunications, grocery stores and food services. With free cash flow up 36% to 20.9 million for Q4, analysts wanted to know whether Cumulus is likely to use that for acquisitions or to buy back stock. Dickey said the bid-ask spread between potential buyers and sellers "seems to be narrowing a bit and with the proper amount of patience I believe we can continue to make accretive acquisitions." But he said the company is under no pressure to acquire additional stations and that Cumulus will continue to buy back shares of its own stock.


Adbiz©

Ivanabitch Vodka ads banned
by Viacom and CC Outdoor

Billboard and radio ads for Ivanabitch, a new premium Russian vodka, have been banned by Viacom Outdoor, Clear Channel Outdoor, and a number of radio stations. But it's not the name or the product that is taboo... it's the pickle. Ivanabitch says it is introducing America to the traditional way of consuming vodka in Russia, served straight and garnished with a pickle. The billboards which depict a cocktail glass containing vodka and a pickle were turned down by Viacom and Clear Channel; radio spots in which a female states that she likes her vodka "with a pickle," were banned by a number of radio stations. "These companies interpreted the pickle to be phallic," said
Pete Helow, managing partner of Empire Communications Group, Jacksonville - - the advertising and marketing firm for Ivanabitch. "We were told that they would approve the outdoor advertising if the pickle was removed, chopped up, or placed on its side. They had no problem with the name, no problem with vodka, but a big problem with the pickle." Florida is Ivanabitch Vodka's launch state. Although the vodka was market-tested in North Florida in 2004, this month marks the official launch with statewide distribution, events and marketing. The 2 million marketing campaign will include mobile outdoor advertising, print ads, radio ads on alternative rock and hip hop/R&B stations, public relations, point of purchase materials, in-club and in-store promotions, and event sponsorships.

NJ Attorney General files suit
against Blockbuster for deceptive ads
Blockbuster's "No More Late Fees" campaign has been called deceptive by New Jersey Attorney General Peter Harvey, who filed a suit last Friday claiming the company didn't disclose the reality of its new program. In a statement outlining his complaint, Harvey accused Blockbuster of failing to disclose key terms of the policy and said that some of its stores did not participate in the policy and continued to charge late fees. "Blockbuster boldly announced its 'No More Late Fees' policy, but has not told customers about the big fees they are charged if they keep videos or games for more than a week after they are due," said Harvey in the statement. "Blockbuster's ads are fraudulent and deceptive" Blockbuster unveiled its "No More Late Fees" policy in December in an attempt to jump-start its business as competition escalates. Blockbuster at the time had said that under the new plan customers would have a one-week grace period after a rental due date. If a movie or game were not returned during that week, the customer would be charged for the purchase of the item. If the item was then returned within 30 days, the customer would be able to receive an account credit, but be charged a restocking fee of 1.25. Harvey said the state is seeking restitution for Blockbuster customers whose overdue rentals were converted to sales, were charged restocking fees and/or charged late fees by a non-participating store. The state also seeks civil penalties of up to 10,000 for each violation of the Consumer Fraud Act. Blockbuster has been facing increasing competition from discount retailer Wal-Mart and online companies like Netflix. Blockbuster Online in October had cut its fee for online DVD rentals, in response to a similar move by Netflix.

Ex-Ogilvy execs convicted on all charges
of ONDCP overbilling
Two former execs of Ogilvy & Mather were found guilty yesterday of participating in a scheme to overbill the government for an ONDCP (Office of National Drug Control Policy) campaign. Thomas Early, a former senior partner and director of finance of Ogilvy & Mather and Shona Seifert, a former senior partner and executive group director, were found guilty of one count of conspiracy and nine counts of false claims. Each charge carries a maximum prison term of five years, but it is unlikely that either defendant would be sentenced to 50 years in prison if convicted. A Manhattan federal jury began deliberating on Friday. ONDCP said Ogilvy's labor charges for work performed in 1999 and 2000 were based on inaccurate time sheets that overestimated the amount of work its employees spent on the campaign. Ogilvy paid 1.8 million in 2002 to end the government's civil investigation into overbilling for advertising work done on the campaign. The company settled the investigation without admitting any wrongdoing and cooperated with the government's probe of the former executives. It was not hit with criminal charges. However, Early and Seifert were indicted 1/04 for conspiring to defraud the government by inflating labor costs while working on the campaign. The indictment charged that in the summer of 1999, Early and Seifert learned the labor billings were far below what Ogilvy & Mather had anticipated. They then directed certain employees to revise already completed time sheets to inflate the amount of time they had worked on the contract, the indictment said.

Pepsi wins 2004 Brandcameo Award
for product placement

What could "I, Robot," "Spider-Man 2," "Sideways," "Seed of Chucky," "Collateral," "Dawn of the Dead," and "Million Dollar Baby" have in common? Product placement. Going back to January 2002, Brandcameo has tracked brands appearing in top films, as well as those in numerous other independent, main stream and foreign language productions. Its cross-referenced database contains nearly 120 films and the brands that appeared in them. 2004's awards include: Brandcameo's 2004 Award for Overall Product Placement: Pepsi. In almost 20% of all #1 films like "Alien vs. Predator" and "Dodgeball," Pepsi finished just one placement ahead of Coke, Motorola and Nike, which all tied for second place. Pepsi's reach included many smaller films like "Cody Banks 2," "Surviving Christmas" and "The Cookout." Pepsi's other brand properties, such as Aquafina and Mountain Dew, had stellar years as well.


Media Markets & MoneyTM
Ready, Amer, fire
Vision Communications, owned by R.C. and Karen Amer, is doing a deal in the Springfield MO market just like you might have seen back in the 80s. When it completes its 375K acquisition of KIDS-AM, it will have constructed an old-fashioned AM-FM combo. The Amers aleady own KADI-FM, which is licensed to nearby Republic MO. The seller, Gary Snadon's Thirteen Forty Productions, will receive cash for the station. An LMA begins 3/1/05.


Washington Beat
Another state looking to tax advertising
Revenue-starved states are everywhere, and even when revenue is relatively plentiful, it seems that the temptation to tax advertising sales is often too much to resist. The legislature of Arkansas is the latest to consider the proposition. Advertising-dependent businesses are resisting, as usual, citing failed examples of advertising tax programs in Arizona, Florida and Iowa. Opponents of the tax note that it ends up being a tax on virtually every form of business that exists in the state, which in turn makes it a drag on the state's economy. At the moment, according to the Arkansas Democrat-Gazette, the bill is written but sitting dormant. Opponents will attempt to make sure it stays on the inactive list.


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. We continue from yesterday, with more of the specific details: | More... |


Transactions
WJSE-FM Atlantic City-Cape May NJ (Petersburg MJ) from Parinello Enterprises Inc. to Access.1 New Jersey

WACK-AM Rochester NY (Newark NY) from Pembrook Pines Inc. to Waynco Radio Inc.

| More... |


Stock Talk
Oil price hike sinks stocks
A jump in oil prices was bad news for the stock market as traders returned from a three-day weekend. The Dow Industrials tumbled 174 points, or 1.6%, to 10,611.

Radio stocks were nearly unanimous in joining the retreat - - only Regent (up 1%) and SBS (up 0.2%) had an up day. Cumulus fell 3% despite reporting better than expected earnings and giving The Street strong guidance for the current quarter. The biggest loser, though, was Entravision, which plunged 5.5%. The Radio Index was down 3.305, or 1.5%, to 217.608.


Radio Stocks

Here's how stocks fared on Tuesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

40.80

-0.56

Jeff-Pilot

JP

48.11

-0.69

Beasley

BBGI

16.69

-0.42

Journal Comm.

JRN

16.06

-0.32

Citadel CDL
13.68 -0.19

Radio One, Cl. A

ROIA

13.88

-0.04

Clear Channel

CCU

33.65

-0.55

Radio One, Cl. D

ROIAK

13.87

-0.01

Cox Radio

CXR

15.78

-0.22

Regent

RGCI

5.20

+0.05

Cumulus

CMLS

14.37

-0.44

Saga Commun.

SGA

16.10

-0.07

Disney

DIS

28.43

-0.63

Salem Comm.

SALM

22.99

-0.16

Emmis

EMMS

18.72

-0.33

Sirius Sat. Radio

SIRI

5.56

-0.31

Entercom

ETM

32.75

-0.52

Spanish Bcg.

SBSA

10.20

+0.02

Entravision

EVC

7.95

-0.46

Univision

UVN

27.00

-0.54

Fisher

FSCI

50.50

-0.02

Viacom, Cl. A

VIA

36.03

-0.55

Gaylord

GET

42.55

-0.25

Viacom, Cl. B

VIAb

35.67

-0.52

Hearst-Argyle

HTV

25.42

-0.37

Westwood One

WON

24.19

-0.57

Interep

IREP

0.62

-0.03

XM Sat. Radio

XMSR

31.72

-0.90

International Bcg.

IBCS

0.01

unch

-

-

-

-

-



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Send Us Your OpinionsWe want to
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This is your column, so send your comments to [email protected]

This reader thinks the SEC needs to pay attention to the real world.

Anyone who pays even a tiny bit of attention to the world of shock jocks could have figured out the Stern move to Sirius a month before it happened. How? All they had to do is read the news about his arch-enemies Opie & Anthony. When they signed with XM, it was just a matter of time before Howard would go to their competition. And, it isn't insider trading if eight million people hear about it on Stern's show! SEC: go have lunch with Sarbanes and Oxley, will you?

Cary Pall
Columbus, Ohio

RBR update: Chaunce Hayden's appearance before the SEC (2/21/05 RBR #36) has been postponed one day until tomorrow.


Upped & Tapped

Dawn of New Biz
in Fayetteville
Beasley Broadcast Group has promoted Dawn Jones to the position of Sales Manager of New Business and Non-Traditional Revenue and Training for its six-station cluster in Fayetteville, NC. She had been Local Sales Manager for two of the stations, WZFX-FM & WUKS-FM.


More News Headlines

TVBR - TV News

News Corp./Comcast partnership reworked
Two media giants have reworked their joint ownership of six regional sports networks and other assets. News Corporation will end up with 100% ownership of Fox Sports Net, FSN Ohio and FSN Florida, while Comcast will own 100% of Madison Square Garden and its properties, FSN New York and FSN Chicago. As it stands now, Regional Programming Partners (RPP) is owned 60% by Cablevision and 40% by News Corporation. The unwinding will simplify the financial and accounting structure of Cablevision, which appears to be the main purpose, since many on Wall Street expect the cable MSO to soon hang out a "for sale" sign. Also, the restructuring results in Cablevision having full control of the high-profile New York assets - - Madison Square Garden, the MSG Network, FSN New York, the NBA New York Knicks, the WNBA's New York Liberty, the NHL Rangers and Radio City Entertainment. It will also own 100% of FSN Chicago and 50% of FSN New England. Cablevision already manages all of those businesses. For its part, News Corporation will own 100% of Fox Sports Net as well as FSN Ohio, FSN Florida and National Advertising Partners. Following the restructuring, News Corporation will assume management of both FSN Ohio and FSN Florida and continue its management of Fox Sports Net and National Advertising Partners.

Sinclair forging its own path to multicast?
According to an article published by AlterNet, controversial television operator Sinclair Broadcast Group is working on establishing a platform for multicast operation, despite the recent FCC decision requiring only single-stream broadcast carriage by cable companies. AlterNet says SBG is negotiating with Comcast for multicast carriage. AlterNet says SBG's David Smith, while avoiding details, discussed the plan during a conference call with investors last week. The FCC on 2/10/05 voted 4-1 in favor of cable companies, who do not wish to be forced to carry multicast streams, which could increase one broadcast television station's program streams from one to as many as six in the same bandwidth required for one analog or one digital high-definition program stream. Organizations representing cable and public television have agreed to a four-stream carriage plan. As yet, commercial broadcasters and cable have come to no such understanding. In remarks made a C-SPAN broadcast last week, Rep. Fred Upton (R-MI) noted the FCC vote and said he would prefer that cable and commercial broadcasters also hammer out an agreement. Failing that, he said Congress may step in, implying that the single-stream vote by the FCC may not be the final word on the subject.

TVBR observation: Should the FCC vote stand, look for a flurry of activity between big players on both sides of the table, such as that reported between Sinclair and Comcast. We must note that if it does go down this way, with big groups using their clout to negotiate their own deals, while small broadcasters are left out in the cold, it will precisely confirm Commissioner Kevin Martin's expressed fears when he cast the lone dissenting vote in favor of forcing multicast carriage. That would make things extremely interesting if Martin is indeed the one chosen to replace outgoing Chairman Michael Powell. The only thing clear at the moment is that nothing is clear.






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

Radio's 3% gain fails to impress
In January 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. RBR Observation: This is the year of either you - Win or Go Home.02/22/05 RBR #37

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, 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. 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. 02/22/05 TVBR #37

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. 02/21/05 RBR #36


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