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Volume 24, Issue 38, Jim Carnegie, Editor & Publisher

Friday Morning February 23rd, 2007

Radio News ®

Radio One review not a scandal
Wall Street analysts say the stock option accounting review at Radio One is not the same as the backdating practice that several high tech firms are in trouble for. Rather, they say, it appears to be a bookkeeping issue, not unethical behavior. "After talking with management, we believe Radio One faces an issue with option grant documentation (were minutes adequate, is robust documentation available). The most obvious example; the difference between the date of Radio One's 2001 option grants and the date documentation acceptable to auditors (after having given Radio One's statements a clean opinion for 6 years) proving the grant was recorded. We examined Radio One's option grants from 2001 through 2005 and it appeared that grants were not backdated to the advantage of executives," said Bear Stearns analyst Victor Miller in a note to clients. "We believe inadequate internal controls/poor documentation is Radio One's root problem, not bad intent. Management has not exercised any options and all of management's options are significantly 'out-of-the-money.' Management has made no economic gain from the options in question," Miller noted. Similarly, Bank of America analyst Jonathan Jacoby told clients, "It does not appear that Radio One engaged in any unethical option granting practices. At worst, it seems that the board failed to mind the finer details of option accounting rules."

Judicious look at Sirius/XM in the offing
Don't look now, satcasters, but the House of Representatives is already on your case. House Committee on the Judiciary Chairman John Conyers (D-MI) will unveil his brand new Antitrust Task Force for the occasion of the teeing up the proposed satellite audio merger, with Mel Karmazin as the main course. The hearing is scheduled for Wednesday, 2/28/07 at 3:00 PM Eastern. So far Karmazin, the current Sirius CEO and the surviving operating exec should the merger go through, is the only scheduled guest. Conyers said, "Digital music is at the cutting edge of technology and innovation. We are holding this hearing to allow Members to probe whether this merger will enhance or diminish competition in the digital music distribution industry. Our Members will explore how to define this new marketplace, and whether this merger will lead to increased choices and lower prices for consumers." Ranking Member Lamar Smith (R-TX) was thinking along the same lines, saying, "XM and Sirius provide unique programming options for millions of customers nationwide. Consumer's interests should remain our priority. This hearing will help determine whether customers will get higher or lower prices and more or fewer programming options with the proposed merger. In particular, the Committee will examine whether satellite radio competes against terrestrial radio, the Internet, or other emerging technologies."

RBR observation: The perfect world for Sirius/XM would be for the committee to decide that satellite radio is indeed one small component of the entertainment universe. They must be heartened by the fact that both of the key committee members mentioned the need to accurately define the marketplace. However, the Democrats are in control and the word consolidation does not sit easy on their tongues these days. We expect Karmazin will have his work cut out when he sits before this new panel.

What's Univision got for sale?
Not much
We knew that Univision had to sell a few radio stations as new private equity investors take the company private, having applied to the FCC for six-month waivers to come into compliance with local ownership limits. Notably, the company has to divest one of its five FM stations in Albuquerque, since the grandfathered status of the cluster does not transfer to the new owners. Most of the other markets where waivers have been sought are due to overlaps with other companies in which either Providence Equity Partners or Thomas H. Lee Partners have investment stakes - Freedom Communications and Cumulus Media Partners, respectively. But besides what it has to sell, Univision will be pruning its portfolio a bit. This week's bond offering documentation for the new owners states that they plan to sell the Univision Music Group - a move to dump the underperforming record business is a surprise to no one - and some non-core radio stations. In all, those sales are expected to bring in about a half billion bucks. We don't know how much they are expecting to get for the Music Group, but the remainder of the half billion would not cover very many radio stations - at least not in major markets. Univision says those to be sold include several undeveloped "stick" properties. In all, the divestitures account for about 15 million of Univision's annual EBITDA. That's three million from the Music Group, so it looks like the radio sales will trim about 12 million from Univision Radio's nearly 150 million in cash flow.

Up month for Journal radio
Journal Communications reports a good month for its radio group in January, with revenues up 2.6% to 4.9 million. The news was also good for the TV group, with revenues up 3.8% to 9.1 million. We would note, though, that the company's biggest station, WTMJ-TV Milwaukee, is an NBC affiliate, so it faces tough comps from the Winter Olympics last year for the remainder of Q1. For radio and TV combined, Journal Broadcast Group posted a 3.4% gain for the month to 14 million. It was a different story for the newspaper side. Revenues were down 2.6% to 22.3 million, with ad revenues down 4.2% to 15.3 million.

Burns, PBS will risk
indecency fines
Documentary producer Ken Burns is getting set to unveil another multi-part epic on PBS. This time the subject is World War II, and like Steven Spielberg before him, Burns feels that he needs to use the language used by the soldiers to properly tell the story. It remains to be seen what the FCC will think. PBS is already gearing up a promotional effort for the series, including heavy emphasis on local tie-ins at member stations throughout the country. According to the Hartford Courant, one veteran of the war uses the s-word, and the f-word comes up when the terms SNAFU and FUBAR are explained. Burns noted that worse language was used in his prior series on jazz, and that there was full frontal male nudity in his Civil War series, in both cases without significant complaint. A PBS exec noted that the 325K risk will be at the local station level, not the network level, and that one such hit could put many of those stations out of business - some are said to operate with only 1M a year. The Courant noted complaints from a wide spectrum of non-profit and commercial producers, citing fearful executives and ambiguous rules as stifling.

RBR observation: FCC Commissioner Michael Copps has been advocating a get-tough policy regarding indecent content, and recently said he thought that fines would probably be tailored to a station's ability to pay. But he is in no position to make that guarantee. Can PBS go on precedent, that the same topic, treated in a serious manner, will get a pass? You'd think that the Burns piece is even more serious than "Saving Private Ryan," since it is not a work of fiction.

Advice givers named
Scarborough Researchannounced the election of new members to its Radio Advisory Council. The Scarborough Radio Advisory Council, formed in 1995, brings together research, sales and marketing executives from radio stations and radio networks with senior leadership from Scarborough Research and its parent company, Arbitron. The 2007 Radio Advisory Council Meeting will be held in October in New Orleans.
| The 2007 Radio Advisory Council members are: |

Wall Street Media Business Report TM

Strong quarter for Entravision
Entravision finished 2007 in fine form, with total revenues up 6% to 73.8 million and adjusted EBITDA up 3% to 25.6 million. Television revenues grew 4% to 40.3 million. Radio far outpaced its general market peers, gaining 9% to 23.4 million. And as strong as broadcasting was, the relatively small outdoor division had an even better quarter, with revenues up 12% to 10.2 million. It looks like Q1 is going to be another winner. The company said net revenues are expected to be up in the high single digits. Radio is particularly strong, currently pacing up 13%. "As we enter 2007 we are focused on our core strengths and the execution of our growth strategy. With a unique group of assets positioned in the most dynamic Hispanic growth markets in the US and a sound balance sheet we remain well positioned to generate long-term value for our shareholders," said CEO Walter Ulloa.

Ad Business Report TM

IPG and Spongecell form partnership
Adding fuel to events planning and promotions clients, Interpublic has formed a partnership with web services company Spongecell. The company has developed event management technology allowing promoters and event planners to communicate with and market to new and existing customers. As part of the agreement, IPG will have preferred partner status in implementing Spongecell's solutions for its clients. Interpublic will also obtain a preferred equity share in Spongecell. Spongecell's flagship product, Spongecell Promote, offers web services and tools that allow marketers and web sites to manage events, track audiences, optimize attendance, and enhance on-going customer relationships. "Even the most experienced event promoters struggle with how to get the right word out to the right people. Spongecell Promote has solved this problem, with its exciting distribution platform that enables all types of events to be more successful." explains Ben Kartzman, president of Spongecell. "We're pleased to have the opportunity to collaborate and support IPG agencies and clients with our tools."

Media Markets & Money TM

West Palm AM spins again
WDJA-AM Delray Beach FL is going to a new owner, after being sold by the current seller in a deal filed last summer. Richard and Pablo Vega acquired the station from James Crystal, and for about the same pricetag, they're spinning it to the Betty Ginsburg Revocable Trust. According to brokers John Pierce (seller) and Frank Boyle (buyer), that price is 2.1M in stock. The station is plying the airwaves with a Business Talk format in the West Palm Beach market.

Price revealed along Columbia River
We earlier reported that US Rep Greg Walden (R-OR) is selling his five-station radio group on the Oregon side of the Columbia River (Washington state is on the other bank). And now we know the price. Along with Mylene Walden, he owns M.S.W. Communications, licensee of KMSW-FM The Dalles OR and Columbia Gorge Broadcasters, licensee of KACI AM & FM The Dalles and KIHR-AM/KCGB-FM Hood River. Bicoastal Holdings will pay 2.775M for the cluster. According to documents filed with the FCC, the FMs all overlap one another but the AM contours do not overlap.

Washington Media Business Report TM

FCC names Harrisburg starting lineup
The panel for the FCC's third public forum on media ownership has been announced. There is only one panel this time around - most of these affairs have had at least two - and it is largely made up with people working in the media. PennPIRG's Beth McConnell seems to be the lone watchdog this time around, with the possible exception of American Journalism Review writer Charles Layton. From the print side, there is Jim Haigh of the Mid-Atlantic Community Papers Association, and York Daily Record reporter Lauri Lebo, who also a strong broadcast perspective as owner of Harrisburg's WWII-AM. W. Cody Anderson, President/CEO of ACG Associates, has an extensive background in Urban radio in Philadelphia, and Bill Baldwin is EVP of Hall Communications and GM of its WLPA-AM/WROZ-FM Lancaster and WSJW-FM York properties. The biggest companies represented are from television, including H. Joseph Lewin of Allbritton's WHTM-TV Harrisburg (ABC 27) and Paul Quinn of Hearst-Argyle's WGAL-TV Lancaster (NBC 8).

RBR observation: There will, of course, be plenty of watchdogs in the audience. A wide coalition of interested organizations sounded the alarm last week and are working to make sure their views are well represented.

XM may be fined for repeaters
It looks like XM Satellite Radio is going to be spanked by the FCC for placing terrestrial repeaters willy-nilly. In an SEC filing, the company gave an update on its pending request for Special Temporary Authority to operate its terrestrial repeater network, even though some of the repeaters differ from what was described in the original FCC filing. "On February 15, 2007, we received a letter of inquiry from the FCC relating to this matter. This proceeding may result in the imposition of financial penalties against XM or adverse changes to our repeater network resulting from having repeaters turned off or otherwise modified in a manner that would reduce service quality in the affected areas. There can be no assurance regarding the ultimate outcome of this matter, or its significance to our business, consolidated results of operations or financial position," XM said.

Entertainment Media Business Report TM

Zeo Radio Networks shutters business
Denver-based Zeo Radio Networks, founded in 2002 by CEO Scott Thomas has closed its doors, permanently. Thomas, along with ZEO President Rico Garcia and PD Adam Willis are all out. Zeo's main offering was the Hot Mix/The Department of Mix Shows product.
| This is what's left of the Zeo website |

Internet Media Business Report TM

Fox Interactive Media beefs up with target ad serving tech buy
Fox Interactive Media has completed the acquisition Strategic Data Corporation and its proprietary technology that will enable FIM to deliver highly-targeted, graphical performance-based advertising on its MySpace, IGN, Direct2Drive, AmericanIdol.com, AskMen.com and more. The entire FIM network boasts more than 135 million worldwide unique visitors each month and is the number one most viewed network in the U.S. with over 40 billion pages viewed each month. "SDC will enable us to realize the full potential of our massive online network," said Peter Levinsohn, President, Fox Interactive Media. "SDC's expert team and technologies combined with our own top notch engineers and vast audience will enable us to ensure the optimal performance of our advertising for the benefit of clients and consumers alike."

Transactions

1.125M WEST-AM Allentown-Bethlehem PA (Easton PA) from Maranatha Broadcasting Company Inc. (Barry Fisher) to Lehigh Valley Broadcasting Association (Matthew Braccili, Mary Braccili). 10K escrow, 40K cash at closing, 1.075M note. Buyer agrees to continue simulcast one 30-minute daily newscast from seller's independent WFMZ-TV. Duopoly with WHOL-AM Allentown PA. [File date 1/23/07.]

500K KOMJ-AM Omaha NE from Journal Broadcast Corporation (Doublas G. Kiel) to Cochise Broadcasting LLC (Ted Tucker, Jana Tucker). 50K escrow, balance in cash at closing. [File date 1/23/07.]

Stock Talk

Another mixed day
Higher oil prices and worries about Iran's nuclear program were negatives for stock prices on Thursday. The Dow Industrials fell 52 points, or 0.4%, to 12,867. The S&P 500 was also lower. However, the Nasdaq Composite managed a small gain for the day.

Radio stocks joined the down side. The Radio Index fell 0.779, or 0.5%, to 161.453. Radio One fell 1.5% after announcing that it would restate its financials for several years. Arbitron dropped 1.3%. One of the few gainers was Cumulus, up 1.1%.

Radio Stocks

**Here's how stocks fared on Thursday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		45.62	-0.58	Journal Comm.	JRN		13.38	-0.06
Beasley	BBGI		9.20	unch	Lincoln Natl.	LNC		70.36	+0.06
CBS CI. B	CBS		31.55	-0.15	Radio One, Cl. A	ROIA		7.36	-0.11
CBS CI. A	CBSa		31.56	-0.15	Radio One, Cl. D	ROIAK		7.38	-0.11
Citadel	CDL		10.39	-0.04	Regent	RGCI		3.00	+0.04
Clear Channel	CCU		36.39	+0.01	Saga Commun.	SGA		9.36	-0.06
Cox Radio	CXR		15.59	-0.08	Salem Comm.	SALM		13.33	-0.19
Cumulus	CMLS		10.22	+0.11	Sirius Sat. Radio	SIRI		3.82	-0.10
Disney	DIS		35.13	-0.01	Spanish Bcg.	SBSA		4.50	+0.09
Emmis	EMMS		8.70	-0.01	SWMX	SMWX		1.00	-0.05
Entercom	ETM		30.37	-0.11	Univision	UVN		36.01	unch
Entravision	EVC		8.72	unch	Westwood One	WON		7.05	-0.03
Fisher	FSCI		45.50	+0.22	XM Sat. Radio	XMSR		15.29	+0.04
Hearst-Argyle	HTV		26.35	+0.05	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
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This is your column, so send your comments and
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I don't understand the hub-bub over the merger of XM and Sirius. In every interview I have seen with various radio execs over the last couple of years, they all say they are not worried about the impact of satellite radio on their over the air stations. Judging from the programming I hear out of these same stations, I would say that's true. I still hear the same songs rotated every hour and a half, I hear the same boring "50 minute music sweeps", the same lifeless and jockless air shifts and the same dull "personalities" regardless of which market I travel too. It's very evident that terrestrial radio does not see satellite radio as a threat because they have done nothing to counter program it. They have not changed. And I don't understand the dust up over local inserts from the satcasters on their terrestrial repeaters. I mean, except for spot breaks, terrestrial radio has very little local content in their programming either. I have a choice. I can pay $12 a month for 120 odd channels of programming, or I can pay nothing and get what the broadcasters think I want (as long as it doesn't impact their bottom line too much). What's that old adage again, "you get what you pay for"?

Scott Cason
LaGrange, KY

Below the Fold

Ad Business Report
IPG and Spongecell
Form partnership adding fuel to events planning and promotions...

Media Markets & Money
West Palm AM spins again
WDJA-AM Delray Beach FL is going to a new owner...

Entertainment Media
Business Report
Zeo Radio Networks
Shutters business, permanently...

Internet Media Business Report
Fox looks to summer
Ready with its summer lineup of reality TV and won't be disappointed...

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Radio Media Moves

Bayliss honors Tidd
Brandon Tidd is the 2007 Horizon Award recipient of the John Bayliss Broadcast Foundation, honoring a past Bayliss scholarship recipient who has gone on to success in the radio industry. Tidd has worked for Clear Channel Radio since graduating from Kent State University in 2005 and is an AE at WHLO-AM & WARF-AM Akron-Canton, OH.

Upped in Wichita
Manny Cowzinski has been named director of Marketing and Promotions for the six-station cluster of Journal Broadcast Group in Wichita, KS. Cowzinski has worked in Wichita radio for over 15 years, most recently as morning host for Journal's Mix 92.3 (KMXW) before its recent switch to Classic Country (KFTI-FM).

New gig
for Harper
Former WBLI-FM morning host Steve Harper has joined Long Island Radio Broadcasting to program WBEA-FM "101.7 The Beat." He will also be part of the morning crew on WBEA and host afternoons on WEHM-FM.

Garrison gets NW
Broadcast Electronics has added a new sales office in Portland and has named Lyle Garrison as Northwest Regional Sales Manager there. Effective 2/26, Garrison will handle sales support for BE studio and RF products in the six-state territory of Washington, Montana, Oregon, Idaho, Wyoming and Alaska. Garrison was previously a District Sales Manager for Harris.

RBR Radar 2006

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

The hurdle XM and
Sirius must clear
Back in 1997 when the FCC issued its Report and Order creating the satellite radio service (DARS, the redundantly named Digital Audio Radio Service by satellite), it anticipated the situation we see today with the two licensees seeking to become one. In this RBR report is the language the FCC adopted back then regarding license transfers...

RBR observation: Convincing the FCC and their overseers on Capitol Hill that an XM-Sirius merger should be allowed may hinge on one thing that was around in 1997, indecency, and one that wasn't, the iPod. It was no mere coincidence that Sirius CEO Mel Karmazin spoke of ala carte offerings. The two satellite radio companies don't have any ala carte offering now, although there is nothing to stop them. There is more RBR observation details in
02/22/07 RBR #37

eBay Media Marketplace
set to launch
The much-anticipated eBay Media Marketplace for automated TV buys is set to launch 3/15 in beta. While no networks are officially on board as of yet, agencies and advertisers are. The Q2 cable scatter market will be the first marketplace the system will tackle, assuming networks decide to put some inventory in the fray.

RBR observation: Interesting that this system seems to have so much interest, while the Google electronic offering is still in a general holding pattern for TV. If the eBay system gets off the ground, perhaps it will get the attention of radio broadcasters for this type of transaction-beyond what we've seen for Bid4Spots. Janice Finkel-Greene, EVP/Local Broadcast, Initiative Media (Initiative is testing the system, too), tells us while the system's first test go-around is for national cable, national TV broadcast could be next-assuming no big hurdles with cable. Bottom line, this could make things easier on buyers and sellers. Whether it could drive rates up or down remains to be seen.
02/22/07 RBR #37

General Sales Manager
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