2007: The Need for -- Ideas Working Now
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Welcome to RBR's Daily Epaper
Volume 24, Issue 4, Jim Carnegie, Editor & Publisher
Monday Morning January 8th, 2007

Radio News ®

Changing one's mind on PPM encoding
Arbitron now says Radio One has agreed to encode its radio stations in Philadelphia and Los Angeles for the PPM audience measurement service-six days before Philly goes live with it. It is likely the The Arbitron Advertiser/Agency Advisory Council's resolution last week strongly advising radio stations encode their signals for PPM may have had something to do with it (1/4/07 RBR #2). Remember, encoding is free to all stations, whether they subscribe to the ratings book or not. Clear Channel is the last holdout in the Philly market now for encoding.

RBR observation: We reiterate: Clear Channel is probably still not encoding because now that they're going private, they don't need to bow to Wall Street pressure, so they can afford to gamble for a year (the deal will still be executed at the same price, no matter what), further posturing against Arbitron for lower rates and/or hoping Media Audit gets the RFP recommendation. RBR assumes this issue will hit CC's new owners' (Thomas H. Lee Partners and Bain Capital) RADAR screen soon (pun intended). As PPM gets rolled out in more and more markets, CC Radio will potentially be seeing less and less revenue from agencies like Carat refusing to do business with non-encoding or "unrated" stations. The next, and impending, Electronic Ratings Measurement RFP Committee Meeting may shed some light.

Gates sells Univision shares
Having failed in his bid to acquire all of Univision in partnership with Televisa, Microsoft founder Bill Gates has now sold his stake in the Hispanic media giant. According to an SEC filing, the Bill & Melinda Gates Foundation Trust sold its 100,000 shares of Univision on December 18th at an average price of 35.3398 (over 3.5 million bucks) in the open market. It is not known how much the foundation originally paid for the shares, since the holding was disclosed last year when Gates' personal investment company, Cascade Investments, joined the Televisa bid. Meanwhile, Farallon Capital Management, its related company, Noonday Global Management, and their myriad investment funds still hold a big chunk of the huge stake they accumulated in Univision prior to the completion of the buyout bidding. The funds have filed with the SEC to update their holdings, showing that while they have been slowly selling off shares, they still hold 12,546,000 of the publicly traded Class A shares, currently worth 446.6 million bucks. Those shares were purchased for just under 426.8 million, so there are still profits remaining to be taken, either through continuing sales or being cashed out when the deal closes for the entire company to be bought out by Haim Saban and his equity backers.


XM hits cash flow positive
Adding 442,000 new subscribers in Q4 XM Satellite Radio finished 2006 below even the low end of its subscriber projections for 2006. It closed out the year at 7.625 million subscribers, missing its target range of 7.7-7.9 million. Nevertheless, it achieved the major milestone of turning operating cash flow positive for Q4, so the company was trying to put a positive spin on the numbers. "XM completed another year of significant subscriber growth, despite retail softness, and did so with continued cost controls, achieving positive cash flow from operations during the fourth quarter," said XM CEO Hugh Panero. Wall Street analysts were hardly surprised that XM missed its subscriber target, since it had been well known that retail sales of receivers were soft. At Goldman Sachs, analyst Mark Wienkes said the retail channel will become less and less important as both satellite radio companies see OEM sales by auto dealers ramp up, but he also warned that means that as with the previous report of positive FCF by Sirius, analyst Jonathan Jacoby of Bank of America warned that XM will not be able to immediately repeat its first quarter of positive operating cash flow. "As was the case for Sirius, XM's 4Q cash flow benefited from subscriber prepayments and the ability to defer payment of many sub acquisition costs, like retail commission, until after the quarter ended. This seasonal effect will reverse itself in 1Q," Jacoby warned in a note to clients.

RBR observation: We still want to see the actual numbers, but we are more confident of this being real cash flow than what is being touted by Sirius (1/4/06 RBR #2). XM was not far from positive EBITDA and positive operating cash flow in Q3. Both were supposed to reach operating cash flow break even at four million subscribers. That didn't happen, but it looks like XM finally got there before reaching eight million subs.

NRG energizes its EEO compliance
It's using new software from Litera Consulting, which in turn is working with EEO1Source Inc., which itself in turn is a non-profit organization formed by a consortium of ten state broadcasters associations to take the burden out of EOE compliance. "This was a significant operational decision for us," said Mary Quass, CEO of NRG Media, owner of 84 radio stations in seven states. "In examining our operations for the previous year, it became obvious to us that we needed technology to add efficiency and oversight to our EEO initiatives. Our Omaha stations started using EEO1Source in August 2005, and we were very pleased with the system and support services. Based on this positive experience, NRG Media decided to use EEO1Source for all our markets." Back in December 2003, RBR/TVBR was present at a pre-release demonstration of the system, presented by Womble, Carlyle, Sandridge and Rice attorney Greg Skall, Don Hicks, then-President/CEO of co-sponsor Missouri Broadcasters Association and now President of EEO1Source Inc., and Deepak Massand, Chairman/CEO of software developer Litera. The package was designed to address all of the EEO issues facing broadcasters, and automate as much of the process as possible. That includes handling the actual creation and distribution of recruitment notices to various organizations, to tracking response, to creating reports for both a station's public file and its website. It can't get a report to the FCC, but assists in creating it. "NRG Media's use of EEO1Source sets a new milestone. They joined broadcasters from ten states who have benefited from the use of EEO1Source. Initially, the portal was available only in the ten member states, but due to demand, it has now been made available throughout the country," said Massand.


Thompson fleshes out
presidential project

Former Wisconsin Gov. Tommy Thompson shed more light on both his plans and his reasoning for making a run for the 2008 Republican presidential nomination. He touched on some of his ideas in six different policy areas (health, energy, education, Iraq, foreign policy and defense). What's interesting for broadcasters is that despite the fact that he is currently the nominal head of an expanding radio group, communications issues was not one of them. The group is Armada Media Corp., and its top hands-on exec Jim Coursolle told RBR/TVBR recently that he expected Thompson to eventually exit its board to pursue his campaign. At any rate, since the presidential primary ordeal is more about momentum than ebb and flow, the early going is critical. In what would appear to be a highly logical move, Thompson will be placing his campaign chips on Iowa, which besides being neighbor of the state he governed is less than a hundred miles from his Wisconsin birthplace. "Despite some real challenges, America still enjoys the highest quality of life," he said "There is nowhere in the world where a newborn child will be afforded more opportunity and freedom than the United States of America. We need to rise up to meet the great expectations we have always held for our future generations." With this in mind, he is positioning himself as a common-sense candidate who will use the nation's firm foundation on which to build consensus on the tough problems on the table. As former Secretary of Health and Human Services, he places a special emphasis on those issues.

PEJ set to deliver the news about the news
It seems that more and more the press coverage of an event generates as much controversy as the event itself does. Was the coverage slanted? Was the event over hyped? Was it ignored completely? The Project for Excellence in Journalism is set to debut a weekly study of journalism in action, providing "...a narrative analyzing the twists, turns, and trajectory of the coverage, and a breakdown of the differences among media sectors." Five branches of mainstream media - print, network TV, cable, online and radio - will be monitored. The scope of the weekly report is extensive. PEJ describes it thus: "They include evening and morning network news, several hours of daytime and prime time cable news each day, newspapers from around the country, the top online news sites, and radio, including headlines, long form programs and talk. In all, the Index sample includes 48 outlets (35 each week-day with some rotation), every Sunday through Friday. In the weeks that follow, PEJ will also unveil a series of secondary indices, including People in the News; a Talk Show Index from cable and radio programming; and a Blogger Index examining the content of the blogosphere and analyzing how it compares with that of the mainstream media." And there's more. The Pew Research Center for the People and the Press, led by Andrew Kohut, will follow up the News Coverage Index with a new expanded News Interest Index, tying public perception of the stories and coverage identified by PEJ.


Wall Street Media Business Report TM
What is Ion worth?
At around a half buck a share, is Ion Media Networks a penny stock bargain? The annual appraisal of the stick value of its stations, as required by its bond terms, puts the value of the 57 O&O stations at 2.057 billion. The appraisal a year ago was 2.31 billion, but that included 48.8 million for three LMA'd stations which were not included in the latest calculation. So, our calculator puts the year-ago value at 2.2612 billion. Thus, the stick value estimate decreased 204.2 million over the past year. All this, of course, assumes what the value would be if the Ion stations were all sold off, without adding any value for its program library or other corporate assets. TVBR takes no position, pro or con, on any investment, so we leave it to you to check the latest financial reports from Ion for its net debt, other liabilities and the number of shares outstanding.


Ad Business Report TM

More keynoters for RAB2007
In addition to General Motors advertising honcho Betsy Lazar (12/20/06 RBR #246) and futurist Daniel Burrus, the Radio Advertising Bureau has named two more keynote speakers for RAB2007 in Dallas, February 8-11. Jon Coleman of Coleman Insights will address the effectiveness of radio spots and Mercedes Ramirez Johnson will speak on "Second Chance Living." Who is she? Mercedes Ramirez Johnson is one of only four survivors of American Airlines Flight 965, which crashed into the Andes Mountains near Cali, Colombia in December 1995. Now a professional speaker, she tells her story of the crash, and her recovery against the odds, completing her education and achieving a highly successful career in healthcare software and pharmaceutical sales.


Media Markets & Money TM
Coastal quartet changes hands
Inner Banks Media LLC is set to become the new owner of a Greenville-New Bern-Jacksonville FM foursome. In the market once known by the Arbitron handle of Coastal Carolina, Inner Banks will be getting a pair of CHRs: WRHT-FM Morehead City and WRHD-FM Williamston, and Country outlets WWHA-FM Oriental and WWNK-FM Farmville. According to Snowdon Associates broker Zoph Potts, the pricetag is 4.5M. Inner Banks is headed by Henry Hinton, Hank Hinton and Don Curtis. The seller is Archway Broadcasting Group, headed by Kathy Stinehour.

Oasis triples in Fort Wayne
Art Angotti's Artistic Media has decided to sell its Fort Wayne IN FM twosome to cross town competitor Russ Oasis, creating a three-FM superduopoly. Oasis, who already owns WJFX-FM in the market, will be adding WBTU-FM and WSHY-FM (He also is active in Indianapolis with WKLU-FM). The transaction apparently has been under consideration for some time. Angotti said, "Russ and I have talked about the benefits of combining our stations in Fort Wayne for several years, never deciding who should survive. We have watched Russ successfully program stations in Fort Wayne and Indianapolis, and he will do an excellent job developing these two stations." The price of the deal was not disclosed and according to reports broker Michael Bergner was involved.

Close encounter in Tucson
Another former broadcaster is again a broadcaster, according to brokerage firm Kalil & Co., announcing then return of Jim Slone to the Tucson radio market. He sold an in-market five-pack to Citadel back at the beginning of 2001 for 63M, and now returns as Slone Broadcasting with the 1.5M acquisition of KEVT-AM. The seller is One Mart Corporation, headed by Armando Zamora.


Washington Media Business Report TM
FCC offers emergency close captioning advice
In an emergency situation, your television station may be performing the greatest of all services it performs in the public interest. A station is completely wrapped up tracking the trajectory of whatever the current crisis is, and providing vital safety information to viewers. Sometimes the thank you a station gets for this is: an FCC fine. That happens when the information is not provided in a way that is accessible to the hearing impaired. The FCC has released a series of procedures that may help to avoid this sad eventuality. Note that the goal is not to enforce rules; it is to make sure all citizens have access to emergency information. So, when under extreme duress, the FCC makes allowances for stations that do what they can, including, "...using open captioning, crawls, scrolls that appear on the screen, already prepared signs, charts, or even handwritten information on a whiteboard."

(1) Enter into arrangements or contracts with services that are capable of generating closed captions on very short notice to ensure the prompt availability of these services in the event of an emergency;
(2) Establish internal policies that add the requirement to immediately contact the above closed captioning services to the station's check list of top priorities for exhibiting emergency information;
(3) Maintain visible postings on television sets in the newsroom to remind employees or other designated staff who are responsible for initiating action for the production of emergency programming to contact the designated closed captioning service immediately at the onset of an emergency and include the telephone number for the captioning service on such postings;
(4) Maintain a labeled speed-dial button on telephones in the newsroom with a direct connection to the captioning service;
(5) Distribute an emergency visual presentation policy to all employees on a regular basis;
(6) Train employees regarding visual presentation policies.


Entertainment Media Business Report TM
Smallest market fits Simon to a T
Famed ski resort Aspen, Colorado is primed to enter the world of Arbitron as it's 301st-ranked market, and it will find waiting for it a Top-40 station owed and operated by an ex-Beasley Broadcasting exec with the unlikely name of Simon T (at the risk of breaking the well-known Felix Unger/Tony Randall law about assuming, we assume this is the same Simon T because, well, how many Simon T's can there possibly be?) and the even more unlikely call-letters of KCUF. Put them up to a mirror and you'll see why. According to the Wikipedia, the calls were previously used fictionally in Thomas Pynchon's "The Crying of Lot 49," and are to this day popularly used on attitude-infested Internet-only stations. T owns the FCC-licensed version of KCUF, which technically hails from El Jebel CO as a 100.5 MHz Class A under company name BS&T Wireless. And regardless of what one might think of the calls, they are indeed FCC approved. T told Aspen Daily News that they stand for "Keeping Colorado Uniquely Free."


Monday Morning Makers & Shakers

Transactions: 11/20/06-11/24/06
There were only two transactions of consequence this week, if by consequence you mean exceeding 1M in value, and they're both listed below as the top radio and television transaction for the week. Only nine applications hit the files, and two of them were cash-free donations.

11/20/06-11/24/06

Total

Total Deals

9

AMs

5

FMs

8

TVs

3
Value
69.617M
| Complete Charts |
Radio Transactions of the Week
Fargo not too far to go for Ingstad
| More...
|
TV Transactions of the Week
New Vision gets two nets in Youngstown
| More...
|


Transactions
2.5M KBET-AM Las Vegas (Winchester NV) from AM Radio 790 Inc., related to Legacy Communications Corp. (E. Morgan Skinner Jr.) to KDWN License LP, a subsidiary of Beasley Broadcast Group Inc. (George G. Beasley et al). 50K option payment, 200K escrow, two additional 500K deposits, 190K loan credit, balance in cash at closing. Superduopoly with KDWN-AM, KKLZ-FM, KSTJ-FM, KCYE-FM. [File date 12/15/06.]

150K KNOE-AM Monroe LA from Noe Corporation LLC (Betty S. Noe, George M. Noe) to Holladay Broadcasting of Louisiana LLC (Robert H. Holladay). 7.5K deposit, balance in cash at closing. Superduopoly with KMLB-AM/KRJO-AM, KJLO-FM, KLIP-FM, KRVV-FM and KJMG-FM. KRJO-AM is in expanded band and KMLB-AM is its standard band ancestor and will cease to exist in early 2007. Seller retains KNOE-FM-TV. LMA 12/1/06 at 1K/month plus expenses. [File date 12/14/06.]


Stock Talk
Jobs up, stocks down
The monthly report from the US Labor Department showed an unexpected jump in job creation, along with higher wages - good news for job hunters, but a downer for the stock markets because it might give the Fed reason to raise rates. The Dow Industrials fell 83 points, or 0.7%, to spend the weekend at 12,398.

Almost all radio stocks joined in the retreat. The Radio Index declined 2.029, or 1.3%, to 154.725. Salem plunged 4.2% and Fisher dropped 3.6%.


Radio Stocks

Here's how stocks fared on Friday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

43.02

-1.18

Journal Comm.

JRN

12.55

-0.13

Beasley

BBGI

9.45

-0.05

Lincoln Natl.

LNC

65.17

-0.79

CBS CI. B CBS

30.89

-0.44

Radio One, Cl. A

ROIA

6.88

-0.02

CBS CI. A CBSa

30.91

-0.38

Radio One, Cl. D

ROIAK

6.81

-0.09

Citadel CDL
9.66 -0.24

Regent

RGCI

2.87

+0.02

Clear Channel

CCU

35.43

-0.06

Saga Commun.

SGA

9.78

+0.28

Cox Radio

CXR

15.42

-0.37

Salem Comm.

SALM

11.38

-0.50

Cumulus

CMLS

10.24

-0.05

Sirius Sat. Radio

SIRI

3.80

+0.03

Disney

DIS

34.19

-0.28

Spanish Bcg.

SBSA

4.09

+0.03

Emmis

EMMS

8.37

+0.09

SWMX

SMWX

1.95

unch

Entercom

ETM

27.60

-0.65

Univision

UVN

35.60

-0.04

Entravision

EVC

7.87

-0.24

Westwood One

WON

7.07

-0.18

Fisher

FSCI

42.42

-1.58

XM Sat. Radio

XMSR

15.32

+0.34

Hearst-Argyle

HTV

25.05

-0.16

-

-

-

-

-


Bounceback

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Below the Fold
Wall Street Media Business Report
What is Ion worth?
Around a half buck a share...

Media Markets & Money
Coastal quartet changes hands
Inner Banks Media LLC set to become new owner of a Greenville FM foursome...

Oasis triples in Fort Wayne
Artistic Media has decided to sell its Fort Wayne IN FM twosome...

Washington Media Business Report
FCC offers emergency
Close captioning advice with Six suggestions...

Engineering
Consumer Electronics
Revenue to top 155 billion in 2007...

Stations for Sale

HAWAII - The Big Island
Profitable 3-stn group
Buy 2xFM 1xAM @ 8xbcf
[email protected]
(352) 746-7121


Market your Stations For Sale
in our daily epapers.
Contact June Barnes
[email protected]

Radio Media Moves

Flores to WSUA
Prominent journalist Jaime Florez, one-time News Director of WQBA-AM Miami, is back on the air as host of the morning drive show "Hoy por Hoy" on Carocol Miami's WSUA-AM.

Upped in Miami
Cox Radio announced the promotion of Gary Williams to Program Director of WFLC-FM "97.3 FM The Coast" Miami-Ft. Lauderdale. Williams joined Cox Radio Miami in 2001 as afternoon drive host until his promotion in 2004 to Assistant Program Director/Music Director.

From TV to radio
Joe Avellar has joined WCBS Newsradio 880 in New York as a part time anchor and reporter. He spent the last 12 years as a substitute anchor at WNBC-TV (Ch. 4, NBC) New York.


More News Headlines

CEA: Consumer Electronics revenue to top 155 billion in 2007
Factory-to-dealer sales of consumer electronics are projected to exceed 155 billion in 2007, or 7% growth, according to the semi-annual industry forecast released by the Consumer Electronics Association on the eve of the 2007 International CES. The display category will continue to fuel industry growth in 2007. "The TV market is setting all-time revenue records. CRT-based sets are giving way to flat panel displays. The successful ongoing transition to digital television is driving demand in this market space." CEA projects that display technologies will continue to be the star category in the industry and account for 22 billion in revenues for 2007. All television sets manufactured today with an analog tuner must also contain a digital tuner, which is largely responsible for the vast increase in digital television sales. Unprecedented price declines in plasma and LCD displays are also contributing to growth. For 2007, these flat panel displays are expected to ship a combined 19 million units. Next-generation consoles will make the video game market one to watch in 2007. An analysis of year-end game console sales reports for 2006 indicates that holiday sales will lift revenues in 2007 to 16 billion, a 23% increase. MP3 players continue to drive the audio market. CEA projects that MP3 players will account for 90% of the 6 billion in revenues for the portable entertainment market. 34 million MP3 players shipped in 2006 and an additional 41 million are expected to ship in 2007.


International

MTV Networks announces global
digital media team

MTV Networks announced a new Global Digital Media executive team. The central team will provide strategic guidance to the company's portfolio of multiplatform brands, driving cross-brand initiatives and sharing best practices in operations, technology, and distribution. The team will report to Mika Salmi, President of Global Digital Media for MTV Networks, and partner hand-in-hand with digital leaders at MTVN's brands and business units. MTVN currently has 32 broadband sites and 139 websites globally. The team will work in tight coordination with the digital executives at each of MTV Networks' groups, including Courtney Holt, EVP, Digital Music and Media, MTVN Music, Logo and Films Group; Stephen Youngwood, EVP, Nickelodeon and MTVN Kids & Family Group; Erik Flannigan, SVP, Digital Media, MTVN Entertainment Group; and Gideon Bierer, SVP, Digital Media, MTV Networks International. The team will also collaborate with Nada Stirratt, EVP, Digital Advertising.
| The Global Digital Media team |


RBR Radar 2006
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Arbitron to offer Audio
Matching within a year
In case you haven't heard, while The Arbitron Advertiser/Agency Advisory Council announced a resolution strongly advising radio stations encode their signals for PPM measurement in the face of holdouts Clear Channel and Radio One (1/4/07 RBR #2), Arbitron says within a year there will be a solution within a year, in 2007: "Audio Matching" will allow non-encoding stations' listening to be picked up by the PPM device.

RBR observation: Many stations were afraid of the idea of commercial ratings for radio, but after the Coleman study came out saying radio does a great job of keeping listeners through breaks, the fear is subsiding. The study says on average only 7% of listeners leave stations during commercial breaks. In addition some advertisers like Anheuser-Busch, for instance, may have big issues with buying unrated stations-if their 21+ audience comp. is not proven to be 70% or higher, they are breaking the industry guidelines. If someone is not encoding, they may have no idea (for the time being) what their audience comp. is on that station. It may be taken off the buy altogether. There is more in this issue of RBR
01/05/07 RBR #3

Wall Street beat up
on radio in 2006
At first glance, the tally for radio stock performance in 2006 isn't so bad - 12 of the stocks tracked daily by RBR were up and 16 down. But if you look closer, it was the pure play radio groups (and satellite radio) who constituted almost all of the suffering. With radio revenue growth close to a flat line, 12 pure play radio stocks were down double digits. Also down double digits were both satellite radio companies, with the former Wall Street darlings repeatedly lowering subscriber projections. The big winner for the 06 was Disney. So Wall Street preferred for radio companies to sell themselves rather than operate radio stations. RBR's Radio Index, currently consisting of 13 public companies whose primary business is radio, was down 13.5% for the year. SBS exited the Index in the course of 2006 as its stock price fell into penny stock territory. Our chart spells out the winners and losers in this issue of RBR.
01/05/07 RBR #3

Arbitron Advertiser/
Agency Advisory Council
wants PPM encoding

Look out Radio One and Clear Channel: The Arbitron Advertiser/Agency Advisory Council announced a resolution strongly advising radio stations encode their signals for PPM measurement. We mentioned agencies like Carat are likely to boycott non-PPM encoding stations (12/27/06 RBR #249). Perhaps this is the first agency warning shot over the bow. Kathy Crawford, MindShare President/Local Broadcast "The resolution was written to vocalize what has already been said to the radio industry, which is that accountability is the name of the game..."

RBR observation: People this is one issue you best pay attention to. Suggestion is to read the resolution in RBR.
01/04/07 RBR #2

Show us the cash flow
Its stock price jumped yesterday after Sirius Satellite Radio announced that it turned FCF positive in Q4 and hit its lowered subscriber guidance by ending 2006 with 6,024,000 subscribers. How did Sirius get to that FCF achievement? It is in RBR

RBR observation: Is it really cash flow and is it really free? Calculations by analysts to get to that FCF achievement show major add-backs to negative EBITDA. Can you really have negative EBITDA and also have something that deserves to be called FCF? We are skeptical, so we await the actual numbers so we can check the math.
01/04/07 RBR #2


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