Welcome to RBR's Daily Epaper
Volume 25, Issue 44, Jim Carnegie, Editor & Publisher
Tuesday Morning March 4th, 2008

Radio News ®

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Where is the bottom?
Radio stocks ended February at an all-time low. But with the US economy teetering on recession and not much enthusiasm about the advertising marketplace, the question now is whether we've even seen the worst. More and more radio stocks fell into double-digit percentage losses year-to-date in February - 23 of them, up from 11 at the end of January. The RBR Radio Index, which had been down 14.77% for 2008 at the end of January, was down 21.41% YTD at the end of February. Citadel closed at an all-time low of 1.09 (it actually hit 1.00 in trading) on 2/29, a YTD drop of 47.09%. Only Salem was worse, off 49.92% this year. The news wasn't much better for television stocks, despite the coming election year windfall of political ad cash.
| See all the dismal data |

Supremes stall on fleeting indecency
The anticipated decision from the Supreme Court whether or not to hear the FCC's appeal of a circuit court decision striking down its ability to enforce penalties for fleeting, non-repetitive incidents of broadcast indiscretion was a non-starter. The court did not turn down the case; nor did it agree to hear it. It simply remained silent on the matter. According to the Los Angeles Times, the next opportunity for the justices to remove their thumbs from their pockets and point them either up or down on the case will be 3/17/08. If they do decide to take the case, oral arguments likely wouldn't occur until fall.

RBR observation: Conventional wisdom has it that the only reason the FCC recently trotted out cases from 2003 involving borderline visual indecency, in which actionable nudity was strongly hinted at if not actually shown, was that the statute of limitations was about to run out. The two cases are nothing if not textbook examples of arbitrariness. In one, all ABC affiliates airing an episode of "NYPD Blue" in the Central and Mountain time zones are being hit with 27.5K fine. In the other, only a select handful of Fox affiliates -- the 13 that were specifically named in citizen complaints out of a total of 169 airing "Married by America" -- are being fined, and only 7K apiece at that. The difference we're talking about here is not peanuts. ABC affils are being hit for 1.43M; Fox affils are being hit for 91K. If we were ABC, we would be arguing that this alone constitutes 1,339,000 reasons to throw the fine out on grounds of selective enforcement.

Time to rebuild Citadel
Bear Stearns analyst Victor Miller isn't calling for the head of Farid Suleman, but he has developed a list of things he says must be done to rebuild Citadel Broadcasting: "a) rebuild its sales effort in the Disney markets, b) create cash flow from non-cash-flowing stations (NY, LA, Atlanta), c) improve 'core' Citadel stations in five markets (Birmingham, Providence, Tucson, Boise, New Orleans and Allentown), d) grow the radio network business to scale more akin to Westwood One and Premiere, e) make cost cuts, sell 75-175 million in assets, g) use free cash flow and asset sales to pay down debt and h) give Citadel the possibility to repurchase shares between the end of 2008 and the middle of 2009." Miller has lowered his 2008 estimates for Citadel after looking at the 2007 results. He notes that management, led by CEO Suleman, is looking to 2010 for delivering on its rebuilding plans. "Citadel hopes to deliver 200 million in station operating income (SOI) from the Disney stations by 2010; deliver 40 million in SOI from the radio network and 200 million in SOI from the CDL stations. This would translate to 400 in EBITDA by 2010, two years behind plan. Part of Citadel's streamlining efforts (15-20 million in ultimate cost savings) and format changes were already announced late Friday," Miller noted in his note to clients.
| Read more of what he had to say |


Bouvard touts PPM improvement
Back from vacation, Arbitron President, Sales & Marketing Pierre Bouvard was working the phones yesterday, pointing out to journalists that they had overlooked the good news from Friday's Portable People Meter update while focusing their stories on the Media Rating Council rejecting accreditation for PPM in Philadelphia and New York. Stories such as this one from RBR/TVBR. "Look at the progress in four months on these metrics," Bouvard said of the progress that has been made on 18-34 demo stats since Arbitron received a letter in November from the heads of four of the largest radio groups demanding action on in-tab underperformance by the key demo (11/16/07 RBR #225). Bouvard noted that New York and Philadelphia have already surpassed the 70% DDI benchmark (which moves to 80% next year) nearly 12 months before the date that Arbitron had promised to the Radio Advisory Council. Bouvard credits "seismic 18-24 improvement." He said 2007 was the year of 18-24 and the company is now working to use the same participation improvement efforts to boost 25-34 in 2008. Meanwhile, Bouvard says the next markets where PPM is being deployed - Los Angeles, Chicago and Riverside-San Bernardino - are looking as good as New York and Philly already on hitting demo benchmarks. According to Bouvard, though, the ratings are accurate everywhere that PPM has been deployed. Hitting the benchmarks just adds credibility. "The message for programmer is that the ratings are not going to go up, but your confidence will," he concluded.

Small markets are the big place to be
From Citadel and other companies we have been hearing the woes of big market radio stations. But there is a very different story to be told about small markets as overall radio revenues plunged 6% in January (2/21/08 RBR #36). "We have been banging the drum for several quarters that small-mid markets have been consistently and sometimes dramatically outpacing their top 25 market brethren. We would note that the biggest gap is actually the recently widening one between the top 25 and markets smaller than #75. In January 2008, adjusting for 300 basis points [3%] harder comps for the smaller radio markets' revenue in January 2007, the small markets flat out thrashed the top 25 markets revenue performance by 1,300 basis points. It reminds us of the apocryphal remark that President Lincoln was claimed to have uttered when critics of General Ulysses S. Grant complained that he was a hard drinker, ignoring that he was the only Union general attacking and consistently winning, 'Whatever He's Drinking, I'd Like to Send a Case to My Other Generals'," said CL King analyst Jim Boyle in a note to clients. Boyle repeated some advice he's been giving radio group heads - not that we've seen much evidence that they've been paying attention.

"Radio's rebound could be selling non-musical product to listeners, onetizing the P-1 listener: Radio groups fetch about 2%-3% of revenue from rapidly growing internet initiatives, but that hasn't stopped 2007 from being a down revenue year or halted newspapers' erosion, whom have done it longer than radio. We would strongly recommend that radio look to the second of its two constituencies, its audience. Radio's most loyal, engaged listeners are dubbed P-1 listeners. We believe radio should sell local audio/video/on-line content and small, branded items to its biggest fans. Consumers have become highly trained by eBay, iTunes, Amazon and others to make impulse buys or purchase planned items via the ease of well-established micro-payments. Most people forget that the cable network that allowed cable to garner non-subscription revenue from subscribers, Home Shopping Channel, started as a Florida AM radio show. We believe station personnel and younger employees are more likely to come up with successes than the older, top executives. Finally, we bet you that no P-1 would ask 'what is the cost-per-point' of a daily e-mail of the best jokes (on-air/off-air) of the Morning Zoo DJs? Nor would they whine about the 'cost-per-thousand' of a station logo baseball cap or ask the 'AQH rating' of a mobile flash alert of the latest club event. If they like it, they'll buy it. Radio should establish a second revenue stream or resign itself to being the 'new Newspapers.' A second consumer-fee revenue stream would bolster the industry and excite investors, and it could even make radio a creative and fun business again, in our opinion," Boyle wrote.

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The Blog Log
Change Central, Winds from Naples Blowing
We are not talking Groundhog Day but there are weather financial fronts moving in and the forecast predicts a lot of cold weather. RBR reported (3/3/08 RBR #43), Talk is over Time to Walk, that CEO Farid Suleman for Citadel Broadcasting was looking to the future as 2007 ended badly.

RBR observation: When it comes to talking about losing your job for underperformance, we have to wonder how secure Suleman is in his own job. How long can this under performing by CEO's go on before one of them is shown the door?

Checking the bloggers to read their forecast:
RBR checks in with blogger Jerry DelColliano at Inside Music Media. His view - Citadel's Farid Suleman Must Go, "In sports, when you lose, they fire the manager. In radio, when you lose, they fire the team. To borrow some Donald Trump imagery, 'Farid, you're fired'."
| Fire is hotter, read the heat here |


Wall Street Business Report TM
Separation complete - Westwood One stands alone
Westwood One announced after the stock markets closed Monday that it had closed its transactions with CBS Radio to end CBS management of WW1, but continue WW1's rights to distribute CBS Radio programming and have access to ad inventory on CBS Radio stations through March 2017 (10/3/07 RBR #193). Simultaneously, WW1 announced closing on the first 12.5 million bucks investment by The Gores Group LLC and issued 7,142,857 shares of WW1 stock to Gores Radio Holdings LLC. Gores will eventually invest up to 100 million.


Ad Business Report TM

RPA wins several new accounts
RPA Los Angeles has been named buying AOR for Reily Foods, a Louisiana-based food and beverage company, three Honda Dealer Advertising Associations, six Acura Dealer Advertising Associations and Haggman Advertising, Design and PR in Manchester, Mass. The accrued billings are in excess of 7 million. For Reily Foods, RPA's initial effort will be to oversee all local market broadcast buying. The account was previously handled by Zenith Media NY. RPA will oversee localized dealer association media planning and buying for the Hawaii Acura Association, Houston Acura Association, New England Acura Association, Portland, OR, Acura Association, Puget Sound Acura Association, St. Louis Acura Association, Central PA Honda Association, Jackson, MS, Honda Association and Western PA Honda Association. These newly formed groups can choose to create local market advertising programs and elect to participate in manufacturer-produced sales events that run through the year. American Honda eliminated its Honda Dealer Advertising Associations in 1994. Earlier last year, Honda revamped its advertising strategies, again allowing associations to form.

Initiative launches Amphibian unit
Initiative USA has launched Amphibian, a new unit that personifies the agency's mission to successfully straddle and meld the worlds of traditional and interactive media, Tim Spengler, Initiative USA President, announced. Drew Corry will lead the unit as manager. "The Amphibians will proactively pursue ideas and promotions integrated across all of the exploding interactive offerings from traditional media outlets including; online, mobile, digital video and internet television," says Spengler. "While of course we want everyone at Initiative to be comfortable in both analog and digital communications, Amphibian will be a specialized wing of our successful Activation discipline." An evolution and expansion of the agency's earlier digital extensions division, Corry's group is composed of Initiative team members with a diverse cross-section of experience with blue chip clients across a wide range of categories. The Amphibian unit's expertise has already touched numerous Initiative clients, including S.C. Johnson, Las Vegas Convention and Visitor Authority, Bayer, and Big Lots! In the past year, the agency has parlayed innovative thinking into new business and organic growth with clients including Hyundai and KIA, Cadbury Schweppes, Bayer, Coors, Big Lots! and Kao Brands.
| See examples of Amphibian activation |


Media Business Report TM
AT&T targeting digital media
Make no mistake about it, telephone companies see themselves becoming more and more players in media, not just connecting people who want to talk to each other. AT&T, which is already building out a broadband competitor to cable operators, has signed up with some key players in Silicon Valley to invest in digital media startups. In addition to AT&T, the consortium includes the William Morris Agency (WMA) and leading Silicon Valley venture capital firms Accel Partners and Venrock. Accel, WMA and Venrock will form a Joint Fund that will focus on discovering, funding and building small, high-impact companies focused on innovation in the consumer media technology arena. AT&T will participate in selected investment opportunities with the Joint Fund as a Limited Participant. The Joint Fund will be managed by Los Angeles-area angel investor Richard Wolpert, who has previously served as president of Disney Online and chief strategy officer of RealNetworks. "AT&T is focused on driving innovation that enables people to do more and get more from their connectivity. We are excited about working with this venture to accelerate the pace of innovation so that consumers can benefit from next-generation services and capabilities," said Susan Johnson, Sr. Vice President of Business Development for AT&T.


Media Markets & Money TM
NRG sublets SD group
The right to handle certain operations for stations in Yankton SD, Mitchell SD and Pierre SD, all owned by Sorenson Broadcasting licensing companies, is being transferred from one renter to another. NRG will ship its rights to Riverfront Broadcasting. The transfer, which includes an option to purchase the stations, was handled by brokerage firm Kalil & Co. The stations include KYNT-AM/KKYA-FM Yankton SD, KORN-AM/KQRN-FM Mitchell SD and KCCR-AM/KLXS-FM Pierre SD. For Riverfront, headed by Carolyn & Doyle Becker, the agreement expands its radio empire beyond the borders of Nebraska.

Univision Music price revealed
Univision Communications revealed in an SEC filing that Universal Music Group is paying 153 million for Univision Music Group. Here is how the money will change hands: "The total consideration due to Univision under the Purchase Agreement is 153 million (including approximately 13 million for working capital), payable in cash as follows: (i) approximately 113 million upon the closing, (ii) 11.5 million upon the first anniversary of the closing, (iii) 12.5 million upon the second anniversary of the closing, (iv) 6 million upon the third anniversary of the closing, and (v) 10 million upon the fourth anniversary of the closing, subject to purchase price adjustments. Univision is expected to incur fees and certain obligations of approximately 10 million in connection with the transaction.

RBR observation: A far cry from the asking price which we had heard was well in excess of 300 million. The sale of the record label division was supposed to provide the lion's share of the 500 million in asset sales that the private equity buyers of Univision hoped to complete, with the rest coming from sales of some non-core radio stations. It now appears doubtful they will come anywhere close to that half-billion goal.

Close encounter in Nebraska
A pair of CPs in the Scottsbluff area have officially changed hands. According to Media Services Group broker Jody McCoy, Joseph Jay Vavricek's Legacy Communications LLC now has control of KETT-FM CP Mitchell NE, a Class C2 on 99.3 MHz, and KHYY-FM CP Minatare NE, a Class C2 on 106.9 MHz. 200K. Legacy's holdings in the area include KOLT-AM Scottsbluff, KMOR-FM Bridgeport, KOAQ-AM Terrytown & KOZY-FM Gehring.


Washington Business Report TM
It pays to have good faith
Informed on 2/20/07 of a hole in the fence around the tower for KRAE-AM Cheyenne WY, owned by Brahmin Broadcasting Corporation, the staff felt pretty good. It had just repaired a hole in the fence, and assumed the warning, which came from the station's former owner, had been dealt with. But when FCC field agents visited the site on 3/6/07, they found an entire segment of the six-foot tall wooden barrier was down. Brahmin fixed it that very same day. It just wasn't soon enough to avoid a 7K fine for the infraction. But wait. Since the company thought it had indeed fixed the fence just before the FCC inspection, constituting a good faith effort to comply with the rules, the FCC granted a 1.4K reduction to 5.6K. And the company's overall good faith record of compliance inspired the FCC to grant another 1.4K reduction, down to 4.2K.

RBR observation: It's not every day that a little candor can help 2.8K from disappearing from your bank account. There are few things that tick off the FCC more than a lack of candor. It's good to know that the Commission is equally prepared to reward it in cases such as this.

FCC upholds Smith's Mission with Nexstar
A complex and comprehensive series of agreements amounting to an LMA between Nexstar Broadcasting and Mission Broadcasting has been upheld by the FCC in the face of a challenge from an in-market competitor. The stations involved are Nexstar's KNWA-TV Rogers AR and Mission's KFTA-TV Ft. Smith AR. Nexstar is headed by Perry Sook, Mission by David Smith. Nexstar bought both stations from J.D.G. Television Inc. for 10M in a deal filed with the FCC 10/30/03. It then spun KFTA to Mission for 5.6M and put the LMA elements in place in a deal filed 4/18/06.
| Read more here |


Entertainment Business Report TM
Billy Bush signs with Westwood One
Westwood One announced the launch of The Billy Bush Show featuring Access Hollywood's co-host, Billy Bush. The evening talk and music show, produced by Bush and Access Hollywood Executive Producer, Rob Silverstein, will focus on the top entertainment stories and personalities in the news and will feature celebrity guests and listener calls. The show will air evenings Monday-Friday with refeeds available. It debuts in April. In conjunction with the launch, Westwood One will simultaneously debut the official Billy Bush website, an enhanced online interactive listener experience featuring exclusive content, Billy's Blog and more.


Ratings & Research
Public reaction to digital billboards is positive
According to the Arbitron Digital Billboard Report: Cleveland Case Study, viewers feel strongly that digital billboards provide helpful information about their community and drive traffic to local businesses; More than 80% of viewers recalled at least one ad. The report illustrates motorists' attitudes about digital billboards in the Cleveland market, where seven have been operating along Interstate highways since 2005. Nine out of 10 motorists notice digital billboard advertising messages at least some of the time. More than four out of five surveyed said digital billboards display timely news, traffic, weather, and emergency info important to the public. Digital billboards display timely news, traffic, weather advisories and Amber Alert notices, providing an important community service according to more than 80% travelers.

Of the nine ads that ran on the digital billboards, 83% of commuters were able to recall at least one ad and 65% could recall at least two. A majority (64%) of commuters agree digital billboards are a cool way to advertise. After seeing a business' ad on the digital displays, nearly one in five viewers were motivated to visit the featured store and fifteen% later visited a featured restaurant. 39% of travelers who noticed the billboards learned about an event that they were interested in attending. Local media gained the most recognition from brand-aided recall with local radio stations reaching 50% of travelers. The local Fox TV affiliate ads reached 41% of commuters. In addition to recall, digital ads help to generate audiences for other media. 35% noted a radio station to listen to and 28% noted a television program to watch.


Transactions
N/A WKCJ-FM Ronceverte WV & WSLW-AM White Sulphur Springs WV from WVJT LLC (Todd P. Robinson) to Radio Greenbrier LLC (Todd P. Robinson, Michael J. Kidd). Merger with Greenbrier Radio's WRON-AM Ronceverte WV & WRON-FM Lewisburg WV. Duopoly. [File date 2/4/08.]

N/A WRON-AM Ronceverte WV & WRON-FM Lewisburg WV from Michael J. Kidd d/b/a Greenbrier Radio to Radio Greenbrier LLC (Todd P. Robinson, Michael J. Kidd). Merger with WVJT LLC's WKCJ-FM Ronceverte WV & WSLW-AM White Sulphur Springs WV. Duopoly. [File date 2/4/08.]


Stock Talk
A mixed day all around
There wasn't much news to move the markets on Monday and what news there was tilted slightly to the negative side. The result was a mixed close. The Dow Industrials were down seven points to 12,259, the S&P 500 was up slightly and the Nasdaq Composite was down slightly.

Radio stocks recovered somewhat. The RBR Radio Index came back from Friday's all-time low and gained 1.507, or 2%, to 76.730. Citadel gained 18.2%, but that still only brought the stock up to a buck-30. SBS gained 6%. Downers were Radio One Class A, off 4.7%, and Westwood One, losing 4.5% before announcing after the close that it had completed its management separation from CBS.


Radio Stocks

Here's how stocks fared on Tuesday

Company Symbol Close Change Company Symbol Close Change

Arbitron*

ARB

41.96

+0.04

Google

GOOG

457.02

-14.16

Beasley*

BBGI

5.56

+0.16

Hearst-Argyle

HTV

21.92

-0.08

CBS CI. B CBS

22.92

+0.10

Journal Comm.

JRN

6.73

-0.16

CBS CI. A CBSa

22.86

+0.06

Lincoln Natl.

LNC

50.27

-0.84

Citadel* CDL
1.30 +0.20

Radio One, Cl. A

ROIA

1.21

-0.06

Clear Channel*

CCU

31.65

-0.35

Radio One, Cl. D*

ROIAK

1.22

-0.04

Cox Radio*

CXR

11.16

+0.17

Regent*

RGCI

0.91

unch

Cumulus*

CMLS

5.79

+0.29

Saga Commun.*

SGA

5.88

+0.06

Debut Bcg.

DBTB

1.02

unch

Salem Comm.*

SALM

3.32

+0.02

Disney

DIS

32.41

unch

Sirius Sat. Radio

SIRI

2.77

-0.07

Emmis*

EMMS

3.00

+0.04

Spanish Bcg.*

SBSA

1.59

+0.09

Entercom*

ETM

11.20

+0.03

Westwood One*

WON

1.69

-0.08

Entravision

EVC

5.82

+0.02

XM Sat. Radio

XMSR

11.26

-0.54

Fisher

FSCI

30.92

-0.40

-

-

-

-

-

*Component of the RBR Radio Index


Bounceback

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More on Ed Christian's anger

For so many years as a buyer of radio time, I was reminded repeatedly by stations and reps about the "laws of supply and demand" when rates were being increased exponentially as during the so-called dot.com boom, or politicals, or TV sweep months, or the Olympics, or whatever else they could come up with to justify what we regarded as inordinate rate increases. My standard response as a buyer was that I would buy that argument if just once a station or rep called and said they were going to lower a previous rate because the demand was down. Of course, I never got such a call. I didn't really expect to. I just used that as an illustration that the laws of supply and demand seemed only to work one way and that the buyer had no real way of knowing what the real demand was except from what stations told us. Stations can't have it both ways. Now that it's widely evident that radio demand is down in most markets, it is only reasonable that operators acknowledge once and for all that the laws of supply and demand work both ways. At Unity Media, we're still big supporters of radio. When our clients entrust their budget to us, they expect us to get as much for their stressed budgets as the stations want for theirs. That's not abuse. It's economic reality. And it's the law of supply and demand working as it should -- both ways.

Respectfully,
Jim La Marca
Unity Media, Inc.
New York, NY


Below the Fold
Ad Business Report
Initiative launches
Amphibian unit that personifies the agency's mission to successfully straddle and meld the worlds of traditional and interactive media...

Media Business Report
AT&T targeting digital media
Make no mistake about it, telephone companies see themselves becoming more and more players in media...

Media Markets & Money
Univision Music price revealed
In an SEC filing that Universal Music Group is paying 153 million...

Washington Business Report
It pays to have good faith
Informed on 2/20/07 of a hole in the fence around the tower...

Dload - Powering Interactive Marketing




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Radio Media Moves

KSPN adds Roggin
Known as the "Dean of LA Sports," Fred Roggin is joining KSPN-AM "710 ESPN" Los Angeles as a regular contributor to the Steve Mason Show. Roggin is a Southern California fixture as a sports anchor on KNBC-TV. He also appears on NBC and MSNBC.

Fusion Innovative Marketing adds four
Fusion announced the following new key positions to its team: VP of National East Coast Sales and Marketing, Ed Gershman. His background includes 12 years experience with CC Radio Philadelphia as Director of Sponsorship Sales and Market Development, CBS/Infinity Promotions Group and Senior Marketing Manager for Caesar's Atlantic City Hotel and Casino. VP of Integrated Marketing, Stephanie Donovan brings 12 years of sales and marketing background to our team which includes recent stops at Cumulus Houston and CC Radio Houston where she focused on leading the cluster's sales teams in Integrated Marketing. VP of National West Coast Sales and Marketing, Cynthia White brings over 15 years of experience at events and promotion agencies. Affiliate Marketing Manager - West Coast, Rebecca Steinkamp brings 7 years of experience with recent stops at CC Radio Sales as Promotions Manager and 3 years at Katz Media Sales.




More News Headlines

YouTube to launch its own live channels
YouTube is preparing to challenge established television broadcasters by offering its own live channels, reported The UK Observer. Millions who use the site will be able to produce chat shows from their bedrooms, perform music or report on a breaking news story under the new plans. Parties or weddings could be transmitted live so family and friends unable to attend can still join in. Dedicated users may even set up 24-hour "lifecasts" of their daily activities.




RBR Radar 2008
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Talk is over Time to Walk
CEO Farid Suleman for Citadel Broadcasting looks to the future as 2007 ended badly, with pro forma revenues down 5.1% in Q4 to 245.3 million, so Suleman focused in his quarterly conference call on his plan to get the company back on track in 2008 and beyond. "The time for talk is over and it's time for the walk," he said, with a restructuring now underway in major markets and people put on notice that if they underperform they may lose their jobs. In response to an analyst's question, Suleman said overall he feels "really good" about the team of managers in Citadel's markets, although there will be some changes made.

RBR observation: RBR observation: When it comes to talking about losing your job for underperformance, we have to wonder how secure Suleman is in his own job. How long can this under performing by CEO's go on before one of them is shown the door? For the complete report and RBR observation see
03/03/08 RBR #43

PPM denied accreditation
in New York & Philly
RBR predicted and Arbitron confirms that the Media Rating Council denied accreditation of its PPM local ratings service in both New York and Philadelphia in January. What's next?

RBR observation: The accreditation denials took place in January, but Arbitron didn't disclose them until making an SEC filing late Thursday and then publicly discussing it on Friday. The company said that was because nothing was actually final until Thursday, after it notified MRC that it would not appeal the denials and instead focus on re-audits. We have searched the 10-K filing with the SEC for any confirmation that PPM failed a re-audit in Houston, but Arbitron succeeded in its appeal and PPM remains accredited in Houston. For the complete report and RBR observation see
03/03/08 RBR #43


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