RBR's Daily Morning Epaper

Volume 22, Issue 39, Jim Carnegie, Editor & Publisher

Thursday Morning February 24th, 2005

Radio News®

Entercom sees Q1 up 5%
January revenues were up 7% and pacings are about the same for February and March, Entercom officials told Wall Street. But they're being cautious at this point and are predicting that revenues will be up 5% for the quarter. CEO

David Field had a lot to say about strong Q1 pacings, an improvement in ad demand and the impact of industry initiatives to boost radio, along with Clear Channel's "Less is More" (LIM) initiative. Field added that Entercom's gains were not coming as a result of spillover due to LIM, since pacings in Entercom's markets where Clear Channel is not a factor are similar to those where CC Radio is.

Field sees HD Radio
as competitor to satellite
How does terrestrial radio compete with the hundreds of channels being offered by the two satellite radio companies? Entercom CEO David Field says earth-bound broadcasters may well offer lots of niche channels of their own once HD Radio is fully implemented. "It's too early to tell what solution or solutions will be rolled out, but if you would envision a scenario in which a group of radio companies would forma consortium and roll out new channels on a collective national basis," he told analysts in his quarterly conference call. And he hinted that such talks are already in the very early stages. Field said those new channels could be advertising-supported or subscription - - it's too early to tell exactly what the business model would be.

RBR observation: This is obviously a ways down the road, but a real likelihood. Even while running in tandem with analog, HD Radio will offer stations the capacity to offer at least one lower-bit-rate channel and some data along with its main digital channel. But once digital receivers are commonplace and stations begin turning off their analog signals, their digital capacity will expand to several high-quality channels. So, if your local market now has 15 analog stations, there could conceivably be somewhere around 200 channels in an all-digital world. And if you're in New York or LA, we're talking about a digital channel count that makes XM's and Sirius' offerings look measly.

No push for :30s at Cox Radio
Other group heads may be applauding Clear Channel Radio for trying to interest advertisers and agencies in using more 30-second spots, but Cox Radio CEO Bob Neil isn't joining the chorus. In his quarterly conference call

he told an analyst that Cox isn't pushing :30s and won't price them below :60s - - a unit is a unit. Neil also continues to be a contrarian on Arbitron's Portable People Meter and Cox is one of two major groups refusing to encode for this year's PPM test in Houston (the other is Radio One). Neil didn't have much to say about PPM in his Q&A with analysts, except to say that nothing has happened to change his mind.

Cox subpoenaed in payola probe
You can add Cox Radio to the list of radio companies who've acknowledged receiving subpoenas from New York Attorney General Eliot Spitzer in his grand jury probe of independent record promoters (2/21/05 RBR #36). Cox said in an SEC filing that the subpoena requested certain documents and records pertaining to the investigation of "certain promotional practices in the radio industry." The company said it is cooperating with the AG.

Three nabbed in emergency info dragnet
Three San Diego television stations have received significant FCC fines for failing to provide emergency information to the hearing disabled during the wildfire crisis on 10/26-27/03. One station was hit for 25K; the other two have been told to forfeit 20K. Channel 51 of San Diego, which the BIAfn 2004 Television Yearbook identifies as part of the smallish Texas Television group, was hit for the 25K fine. It operates Indy Channel 51 KUSI-TV. Midwest Television's CBS Channel 8 KFMB-TV and McGraw-Hill Broadcasting Company's ABC Channel 10 KGTV-TV were the companies hit for 20K. The findings document numerous instances during which critical information was communicated to the viewing audience aurally, but was not presented in text form for hearing disabled individuals. Closed captioning is one but not the sole option for providing this service. Open captioning, crawls or scrolls are three such options. FCC Chairman Michael Powell commented, "Today's Enforcement Bureau actions are the first in the Commission's history regarding its emergency closed captioning rules. People with hearing disabilities have a right to the same timely emergency information as stations provide to their hearing audiences. The Commission remains committed to strong enforcement in this critical area."

Cox Atlanta is transported
Cox Communications' ABC Channel 2 WSB-TV Atlanta will soon have a captive audience for the news programming. It has inked a 10-year deal with the Metropolitan Atlanta Rapid Transit Authority which will put it on 115 of the system's 300 cars, according to the Associated Press. Soon all 300 will be so equipped. In extending its influence to rapid transit, Cox adds to its impressive portfolio which also the big local newspapers and five radio stations. The audio will be available on any FM radio device. According to MARTA rules, patrons wishing to listen in will have to use headphones. There will be three train-system music channels available in that manner. The TVs are being installed by The Radio Network. Advertising revenue will be split among the principals. Accounts said to be - - literally for once - - on board include MetroPCS, Chevrolet, Cadillac and American InterContinental University.

RBR observation: Will there soon be nowhere to hide from Madison Avenue? We realize that a subway car is hardly virgin territory - - it's long been home to poster advertisements, and the newspapers have a special dominion within each car. Nonetheless, we see cars painted as ads at traffic lights, see floor billboards at the grocery store, and find products woven into the scripts of our favorite movies. Promoters have already blazed the trail into the men's room with those 2-dimensional still ads which fit into urinals Does that mean it is incumbent upon TV to follow there as well? What's next, Commodovision? It could bring a whole new meaning to the word "sensurround."

Conference Calls Q4 2004

Q4 revenues grew 5% at Entercom
Outperforming the overall industry, Entercom reported that its Q4 revenues were up 5% to 110.2 million bucks. That includes some acquisitions, but the revenue gains also beat the industry with 3% on a same station basis - - compared to the 1% gain that the RAB reported for all of radio. Station operating income increased nearly 3% to 46 million and gained 2% on a same station basis. Like so many other broadcasters, CEO David Field complained that Entercom's stock is undervalued on Wall Street, so he said the company will continue to buy back shares of its own stock.

Cox ended 2004 with 4.2% Q4 growth
Beating its own guidance to The Street, Cox Radio reported that Q4 revenues rose 4.2% to 111.2 million. Local rose 3.9% and national 4.2%. The company said its strongest growth was in Orlando, Tampa, Jacksonville, Southern Connecticut, Tulsa, Dayton and Honolulu. Those gains, however, were offset by revenue declines in Houston, San Antonio, Richmond and Birmingham. Station operating income rose 5.1% to 37.7 million. Don't look for Cox to start buying back its own stock or paying a dividend. CEO Bob Neil says the priority now is still to use its free cash flow to build up a war chest for acquisitions.

Adbiz©

Slinky to celebrate 60th anniversary
with first ever national radio effort
Slinky is celebrating its 60th Anniversary with its first ever national network radio campaign, to kick off 2/28. In addition to the 'classic' Slinky, this year's campaign includes a 60th Anniversary 14KT Gold Slinky and a 60th Anniversary Slinky Bank. Slinky is still made in Hollidaysburg, PA, with the original equipment inventor Richard James created in 1945.

Listen to the spot: | More... |

Agency comments on Vodka campaign ad refusals
After yesterday's story on billboard and radio ads for Ivanabitch Russian vodka, being banned by Viacom Outdoor, Clear Channel Outdoor and a number of radio stations (2-23 RBR #38), we asked Empire Communications Group managing partner, Pete Helow, a bit about what went on-and why radio can afford to turn down ad dollars: "On the radio side, we did find channels that would run it, but we weren't able to reach our full demographic. The problem with the radio spots is I can't figure out if the use of the word 'bitch' in the ads was refused because they thought it would offend an older audience or maybe because some of the stations didn't want liquor ads targeting younger demos. They didn't give us specifics, they just said 'we decline to run your spot.' And so we used other radio stations that had no problem with it. Some stations would run one spot, but not the other spot. We're still running on some Clear Channel Radio stations, but a lot turned us down." On the billboard, he tells us they rejected for Q2 a 300,000 outdoor buy. The radio buy for Q2 was 250,000. "I don't think we ended up spending it all because we couldn't get enough stations to run it," he lamented. As our first story said, the entire launch targeted Florida. He also tells us the billboards couldn't be changed to suit CC and Viacom outdoor, because the whole concept was to brand the pickle sticking out of the glass with the Ivanabitch cocktail. When waitresses pass by at a bar with the glass and pickle, it would catch people's eye. If it was cut up in slices or placed on the rim as a lemon wedge, the whole branding execution of pairing a pickle sticking out of a glass with "Ivanabitch cocktail" would fail. The goal is to try to spec the specific vodka with the pickle drink image. And PS, it is the way the Russians drink their vodka. Listen to the spots here. |

Spot 1 |

Spot 2 |

RBR observation: The spots are funny. We can see spot #2 raising some eyebrows, but it's all in fun. This may be a good example of FCC indecency fine fears getting so far out of hand, there's no standard corporate formula to follow that could apply to everything. The FCC's reckless finger-fine pointing is so vague, station managers are left to guess what they should or shouldn't run on the fly. Nevertheless, if there was a reason they turned down the client, they should have made it more specific (referring to what Helow claimed above). Afterall, radio shouldn't be turning down ad dollars these days without a good reason!

Payless names finalists in review
Payless ShoeSource has narrowed to three finalists a review for creative on the account of its flagship Payless ShoeSource footwear chain. Those duties had been handled since 1999 by Barkley Evergreen & Partners Kansas City, which declined to take part. Joanne Davis Consulting NY, which is managing the review, identified finalists as Cramer-Krasselt Chicago; Martin/Williams Advertising Minneapolis and Saatchi & Saatchi NY. A decision is expected in April.

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

Deal will make Mega a Beantown has-been
Adam Lindemann's Mega Communications is spinning off its pair of Boston AMs to WallerSutton 2000 L.P., an investment group that has experience investing in radio and is now buying for a new group that it doesn't yet have a name for. Nor has it said who will be running the new company. The stations, WAMG-AM and WLLH-AM, are being priced at 9M, according to Kalil & Co., which handled brokerage chores on the deal. It will represent significant ROI for Mega - - it acquired WAMG back in 1998 when it was WBPS for 4M, and added WLLH early in 1999 for 936K.

RBR observation: You could call this a three station deal, not just two. That's because of the unusual history of WLLH. It has two synchronized transmitters on 1400 kHz - - one in Lowell and one in Lawrence.

Washington Beat

Going, going....
There has been no official word on Republican Commissioner Kathleen Abernathy's departure from the FCC, but for the second time in a week, a key staffer has announced their own departure. These are jobs generally filled at the discretion of the individual commissioner... Top staff are exiting... What could it mean? (Chin stroke, chin stroke, chin stroke) Hmmmm... Stacy R. Fuller, legal advisor for media issues, is following Jennifer A. Manner, senior counsel, out the door. Both are headed for the private sector, a destination widely believed to be in Abernathy's near future as well.

RBR observation: People change jobs all the time, and this may mean simply that people are changing jobs. However, it also fits right in with all of the speculation, supporting rather than debunking it.

Broadcast flag gets its day in court
The DC Circuit heard arguments about the FCC's 2003 decision to implement a broadcast flag to help prevent digital programming piracy. A court ruling is probably months away, and could go either way, but remarks by at least of three judges were ominous for the FCC. According to reports, one judge said the FCC "crossed the line" into areas over which it did not have jurisdiction. Specifically, it was opined that it was not in the FCC's purview to spell out design specifications and/or limitations for television sets. In this case, it was even more worrisome to the judges, since the implications would also include the design of computers and other devices. The FCC's hopes rest on a technicality - - the very real possibility that the parties challenging the rule do not have legal standing. The case was based on potential harm to consumers, and consumers make up the members of the groups. However, one of the judges noted that this was not enough, and that the petitioners failed to demonstrate any "particularized" damage which they would suffer.

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: | More... |

Transactions

WHIR-FM Danville KY from Vernon R. Baldwin Inc. to Educational Media Foundation.

KJYL-AM & KKWY-AM Cheyenne WY (Cheyenne, Fox Farm WY) from Christus Broadcasting Inc. to La Familia Broadcasting LLC.

| More... |

Stock Talk

Stocks rebound a bit
After Tuesday's big sell-off, it's hardly surprising that bargain hunters moved into the market yesterday. Also, stock prices were helped by a report of only a tiny rise in the government's main gauge of consumer price inflation. The Dow Industrials rose 63 points, or 0.6%, to 10,673.

Radio stocks were barely higher. The Radio Index rose 0.273, or 0.1%, to 217.881. Entercom shot up 5.2% on its strong earnings report. Traders were less impressed with Cox Radio's report, but it still posted a nice 1.8% gain.

Radio Stocks

**Here's how stocks fared on Wednesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		41.05	+0.25	Jeff-Pilot	JP		48.19	+0.08
Beasley	BBGI		16.74	+0.05	Journal Comm.	JRN		16.16	+0.10
Citadel	CDL		13.82	+0.14	Radio One, Cl. A	ROIA		13.88	unch
Clear Channel	CCU		33.90	+0.25	Radio One, Cl. D	ROIAK		13.88	+0.01
Cox Radio	CXR		16.07	+0.29	Regent	RGCI		5.02	-0.18
Cumulus	CMLS		14.57	+0.20	Saga Commun.	SGA		16.15	+0.05
Disney	DIS		28.65	+0.22	Salem Comm.	SALM		22.43	-0.56
Emmis	EMMS		18.70	-0.02	Sirius Sat. Radio	SIRI		5.62	+0.06
Entercom	ETM		34.45	+1.70	Spanish Bcg.	SBSA		10.10	-0.10
Entravision	EVC		7.82	-0.13	Univision	UVN		26.97	-0.03
Fisher	FSCI		50.75	+0.25	Viacom, Cl. A	VIA		36.24	+0.21
Gaylord	GET		42.44	-0.11	Viacom, Cl. B	VIAb		35.81	+0.14
Hearst-Argyle	HTV		25.45	+0.03	Westwood One	WON		23.97	-0.22
Interep	IREP		0.63	+0.01	XM Sat. Radio	XMSR		30.88	-0.84
International Bcg.	IBCS		0.02	unch	-	-	-	-	-

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Bounceback

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Upped & Tapped

Marcus changes gears
Some two decades after becoming one of the first Wall Street analysts to cover radio stocks, Drew Marcus is moving to the investment banking side at Deutsche Bank Securities. He's now joined the firm's Media & Telecom Investment Banking Group as Vice Chairman of Global Banking in the Americas.

Dave Simon tapped by Jones MediaAmerica
He'll be National Account Manager for the Midwest territory. Prior to joining Jones MediaAmerica, Simon was a Senior AE at Continental TV Sales, Chicago. Dave also worked on the agency side of the biz as a radio and TV media buyer at BBDO.

CC Radio ups Sledge to SVP/Programming
Charlie Rahilly, SVP/Clear Channel Radio's Sunbelt region announced the promotion of Alan Sledge to Senior Vice President of Programming for Arizona, Nevada and Texas. Sledge, who will retain his role as VP/Country Programming across CC Radio, will be based in Phoenix and will report to Rahilly.

RBR Radar 2005

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

Cumulus CEO sees
ad demand improving
But has Frustrations with Reps
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. Demand is improving month-over-month - - and that's before seeing any real impact from Clear Channel's "Less is More" initiative. 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 and describes the rep business that has been structured over time to be very reactive and to really take advantage of avails.
RBR observation: Add this to what Radio One boss Al Liggins stated: 'concedes that trying to make the two big rep companies compete for his business by having Radio One's stations split roughly 50/50 between Katz and Interep hasn't worked out as he'd hoped, and may actually be costing Radio One some national business.' - 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. 02/23/05 RBR #38

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. 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. 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.
02/23/05 RBR #38

Sinclair forging its own
path to multicast?
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.
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.
02/23/05 RBR #38

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

Deal Maker
W.B. Grimes & Company is seeking a "deal maker" to head up its Broadcast Brokerage Division. You must have passion for sales, solid broadcast background, and an active rolodex. Commission-based position with exceptional earnings potential. Relocation not required.

News Director
WLPO/WAJK/WKOT, LaSalle, IL - Established stations in the Midwest looking for the journalist of integrity and understands what local means to a news department with experience to encourage others on staff. LaSalle is a great market and excellent company benefits. EOE.

See Radio Careers for more info.

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