RBR's Daily Morning Epaper

Volume 23, Issue 52, Jim Carnegie, Editor & Publisher

Wednesday Morning March 15th, 2006

Radio News ®

Analyst sees 2006 as tough year for radio
The quarterly round of radio company conference calls is complete, and Goldman Sachs analyst Mark Wienkes didn't find much that sounded encouraging for 2006. "Subpar fundamentals and uncompelling valuations keep us on radio's sidelines, as stronger pricing power is needed to lift revenue growth, investor perception, and valuations. Of terrestrial radio operators, we rate only Clear Channel outperform, on superior fundamentals and discount valuation," he told investors. Wienkes sees five challenges facing radio in 2006. After Clear Channel's Less is More initiative cut inventories over the course of 2005 - - Wienkes thinks by 1% industry-wide - - he expects overall spotloads to be flat in 2006. With increasing competition from iPods and other "new media" options, he's looking for a 2% audience erosion this year. Given radio's "anemic revenue growth," the analyst thinks pricing increases will be held to 3% in 2006. On the M&A front, he says to look for only a few private groups to sell - - with the obvious big exception of Univision. Radio valuations on Wall Street, Wienkes says, "seem fair, but not compelling, and they lack visible catalysts." Noting that the current consensus of Wall Street analysts is that radio revenues will grow 2% this year, the Goldman Sachs analyst thinks even that is too high. He's looking for only 1%.

Arbitron hits the radio-only accelerator
With a Nielsen joint venture off the table, Arbitron says it will begin commercial deployment of its Portable People Meter (PPM) for radio in Houston this July, converting the current test into a real ratings currency. The plan then is to roll out PPM into all top 10 markets by fall 2008 and all top 50 markets by late 2010. "The termination of the Nielsen Media Research option for the PPM earlier this month (3/2/06 RBR #43) has given Arbitron the freedom to introduce the Portable People Meter as a local market, radio audience ratings system in the United States," said Arbitron CEO Steve Morris, president and chief executive officer, Arbitron Inc. "Now that we are finally able to make a commitment to roll out the PPM for radio, we anticipate that our customers will be more willing to make a commitment to the PPM as well," he said.

RBR observation: Which comes first, the chicken or the egg? Arbitron has decided to give the radio industry a nudge by beginning its transition to electronic ratings. As it stands today, PPM could become the only radio ratings currency that Arbitron offers in Houston without a single radio station as a subscriber. The company has a long list of ad agencies who have signed up for PPM, but a very short list of radio groups - - you can count them on one hand and have three fingers left over. As far as the top 10 markets are concerned, Beasley Broadcast Group has six stations in two markets and Spanish Broadcasting System has six stations in four markets. That's a dozen stations currently signed up for PPM in the top 10 markets, with not one of them in Houston. The breakthrough will come if Arbitron's PPM is selected as the winner from the Next-Generation Electronics Ratings Evaluation Team, which has narrowed its list to three (3/10/06 RBR #49). While it's possible to envision all kinds of scenarios with competing radio ratings services rolling out in various markets, we really doubt that's going to happen. The big radio groups are almost certain to settle on one system and then support a rapid rollout.

Bye, bye diaries! Here's the PPM rollout schedule
Arbitron's schedule to convert all of the top 50 markets to Portable People Meter (PPM) measurement by late 2010 means that many radio station operators will soon be facing a decision. An Arbitron spokesman tells RBR that the company's contracts allow it to change methodologies and to raise prices when it does so. The catch is that it triggers an out for the station, which can cancel its Arbitron service. Early on, markets will generally have a one book overlap with both diary and PPM measurement. But then, Arbitron assures us, it will be PPM or nothing - - at least nothing with the Arbitron stamp of approval on it.
| Here's the roll-out schedule |

DOJ clears Clear Channel
Clear Channel, in addition to being the world's largest radio company, is also often the world's largest radio target. It just informed the Securities and Exchange Commission that two proceedings against it have been wrapped up by the DOJ with no action taken. The first was an antitrust inquiry related to a specific radio market; the other, an investigation as to whether the company was using its radio, concert venue and concert promotion businesses in violation of antitrust law. The DOJ closed both inquiries last month. Clear Channel further states that it is cooperating with two current inquiries. One involves a subpoena from the Eastern District of Missouri for testimony and evidence regarding offshore and on-line gambling advertising, and the other involves Eliot Spitzer's ongoing look into payola practices in New York.

RBR observation: It's pretty easy to see how Clear Channel dodged those two antitrust bullets. The radio market in question was San Diego, where Clear Channel last year relinquished its rights to program stations across the border in Tijuana (7/29/05 RBR #148). As for the concert business, if owning both radio stations and a concert company gives you monopolistic pricing power, you sure couldn't prove it by Clear Channel's experience. The concert business proved to be such a bad investment that Clear Channel simply cut it loose last year by spinning it off to shareholders.

Twister Saga
in Springfield
While covering the major tornado that tore through Springfield, IL on Sunday, Saga's News/Talk WTAX-AM became part of the story as its own 450-foot self-supporting tower hit the ground. The tower also carried the antenna for WDBR-FM and the STL hop to WYMG-FM. While not able to broadcast on its own 1240 kHz position, WTAX's news programming was moved over to WQQL-FM and WABZ-FM, and later to WYMG via a tuner at the transmitter. Saga CEO Ed Christian tells RBR that some syndicated programming will resume today on WTAX, although actually on the FM outlets. The plan is to have the three FMs resume regular programming on Thursday and to return WTAX to the AM band via a long wire. As for WDBR-FM, Saga is working on placing a 1 bay/1kw transmitter on the roof of a 14-story hotel to get the station back on the air.

Religious watchdogs target Ford
The American Family Association is heading a coalition of organizations which are boycotting the products of Ford Motor Company, in part because it continues to purchase advertising in gay-oriented media outlets. AFA says Ford reneged on an 11/28/05 agreement which included the promise that "Ford would cease all advertising in homosexual websites and media outlets (magazines, television, radio) in the U.S. with the exception of 100K to be used by Volvo. The Volvo ads would be the same ads used in the general media and not aimed at the homosexual community specifically." AFA says, "Ford could have easily avoided this boycott had they desired to do so by simply remaining neutral in the cultural battles."

Ad Business Report TM

Emerald snack sales
up 22% after campaign
Here's a very good example of measuring ROI with modern technology: Fueled by an aggressive consumer campaign that included an ad on the 2006 Super Bowl, retail sales of Emerald snack products manufactured by Diamond Foods increased 22% during the four weeks ending 2/19 as compared to the prior four-week period. For the week of the Super Bowl promotion (Jan. 30 - Feb. 5), Emerald retail sales grew 36% in the U.S. Food channel versus the prior week. Cornerstone of the campaign, which also included print and online components, was the release of three new 30-second television commercials. The first two aired during the national telecast of the Emerald Bowl in late December, a third debuted during the Super Bowl on February 5 and all three aired later in February during telecasts of the Winter Olympic Games. All featured acrostics that spelled out "Emerald Nuts."
| Read More... |

Soda advertising on radio revealed
There was almost an even split on radio between Pepsi products and Coca-Cola products last week, according to an analysis by MediaMonitors. Pepsi topped the Spot Ten Soda/Pop chart this week with just under 2,500 radio spots for Diet Mountain Dew (#1), but also aired 700 spots for regular Pepsi (#5) and around a hundred spots each nationally for their regular Mountain Dew and Mountain Dew DMX, totaling about 3,400 spots. Meanwhile, Coke won the week in radio spots with about 50 more spots overall than Pepsi. Coke ran 2,000 spots for it's Vault (#2), a thousand more for regular Coke (#3) and another thousand for Coca-Cola Zero (#4) to total 4,046. To put those drinks into perspective, though Diet Mt. Dew ranked #1 among soda/pop advertisers, but that placed it at #9 on CHR (Contemporary Pop and Contemporary Rhythmic) stations and #85 overall nationally. Dr. Pepper/Seven Up came in a distant 3rd nationally among Soda/Pop advertisers on radio with about 400 spots total for it's Diet Dr. Pepper (#6), regular Dr. Pepper (#7) and 7-Up Plus (#10).

Massive to provide
in-game advertising
for "Auto Assault"
NCsoft North America, a leading developer and publisher of online computer games, and Massive Inc. announced a strategic partnership to integrate dynamic in-game advertising into the North American and European versions of Auto Assault, an action-oriented online role-playing game to be released Next month. The addition of NCsoft to the Massive Network bolsters Massive's roster of partners to more than 34 publishers and developers with a total pipeline of over 100 games, representing the single largest video game advertising network. Massive pioneered dynamic in-game advertising with the launch of the Massive Network in October 2004, and has since partnered with more than 60 blue-chip advertisers to seamlessly deliver ads into more than 45 million game sessions. Massive enables publishers and developers to capture significant new revenues through the aggregation of the video game audience which can be more effectively marketed to advertisers. Developers are able to integrate real-world ad campaigns that are timely and enhance the game environment with more realism.

Media Business Report TM

Meredith launching
companywide video unit
Meredith Corp. announced the creation of Meredith Video So|utions, a new venture that will work across Meredith's media platforms to develop and distribute original and existing video content for use by consumers and advertisers. "Meredith's Publishing and Broadcasting Groups are creating rich content every day," said Paul Karpowicz, Meredith Broadcasting President. "Meredith Video So|utions will help develop video content and secure outlets for its distribution, including the Internet, as well as cable, satellite, network and syndicated television. We possess some of the most recognizable brands in consumer media, and we will expand initiatives to create content that can be used across multiple platforms." The new business unit will be overseen by Karpowicz, with vice presidents Mark Berryhill and J.R. McCabe reporting to him. Berryhill will be responsible for production and programming, and McCabe will have sales and new business development duties. Both will be based in Meredith's NYC offices. Berryhill moves from VP/News and Marketing for the Meredith Broadcasting Group. McCabe is joining Meredith from Paramount Pictures Television, where he was Eastern Regional Sales Manager. Meredith's current video initiatives include a just-introduced series of six 30-minute shows based on magazine content that is being syndicated to more than 85 percent of U.S. television markets; American Baby-branded VOD being distributed by Comcast cable; Better Homes and Gardens branded streaming video on Meredith websites; custom how-to DVDs created for The Home Depot; and news and feature vignettes based on Meredith magazine content shown on all 14 Meredith TV stations and others across the country. "We have an excellent base from which to build," said Karpowicz. "We are currently evaluating a number of either cable or syndicated distribution channels for Meredith video programming."

Media Markets & Money TM

Colonial expands into NY market with PA station
Jeffrey Andrulonis and his Colonial Radio Group have a 366,689 deal to acquire WLMN-FM from Beech Tree Broadcasting. The Kane PA station is considered to be part of the Olean NY market. It will by Colonial's fifth market and sixth station. It's also established a presence in Williamsport PA, Fayetteville NC, Florence SC and Camden SC.

Washington Media Business Report TM

Meet the press some other day
We were going to report that Debi Tate, who for the moment is the FCC Commissioner with the least seniority (a condition which does not figure to have much remaining shelf life), was planning to meet with the Washington trade press corps this week. Thursday, 3/16/06 was going to be the day in she planned to make herself available to field questions. However, due to "a conflict with a congressional event," the meeting has been rescheduled for the end of the month, 3/31/06.

RBR observation: Hmmmmm...the Senate Commerce Committee plans to look at the impact of volcanic activity on aviation on Thursday morning. That doesn't sound like an event of interest to the FCC. Maybe it's that afternoon markup featuring, among other things, the nomination of Robert McDowell to become the fifth and least-senior FCC Commissioner...

Internet Media Business Report TM

Isobar ups Gordy Abel to VP/Marketing
for Carat Fusion and Freestyle Interactive
Isobar, the global full-service digital network created by U.K. firm Aegis Group, announced the promotion of Gordy Abel to Vice President of Marketing for the Carat Fusion and Freestyle Interactive agencies, effective immediately.
| Read More... |

VoIP slowly gaining ground
VoIP penetration as a home phone service solution is slowly gaining traction within U.S. households, reports Telephia. Overall penetration for VoIP (voice over Internet protocol) increased to 3.5% or nearly 3.9 million households in January 2006, up from 2.9% in June 2005. Vonage led the VoIP market, which includes all pure-play VoIP companies and providers who actively promote their VoIP service as Internet telephony. Vonage secured a 47.5% market share or nearly 1.9 million households in January 2006, up from a 40% share in June 2005.
| Read More... |

Engineering Business Report TM

Audio Design Associates launches
HD Radio module home tuner products
Audio Design Associates (ADA), a leader in custom-installed, multi-room systems and advanced home theater components, announced the company's first HD Radio tuner module (HDM-1) will be available in April. The module is compatible with both new and existing ADA products including: TSS-1 single tuner, Duo Tuner, Tune Suite Quadritune, S

uite 8100 multi-room receiver (due out in May 2006), and the HD PRO tuner (pictured, due out in May 2006). "One of the ways that ADA differentiates itself from the competition is through our revolutionary system architecture. Much like the modular design found inside the PC, ADA's simple 'building block' approach makes it possible to quickly incorporate new technologies such as HD Radio as they become available," said Philip Nubile, Engineer, Audio Design Associates. "Our customers demand great audio fidelity across a variety of musical styles, and we feel the ability of HD Radio technology to improve the sound quality and content offerings of AM and FM radio will generate strong interest from current and future owners of ADA products."

Transactions

1M WTMT-AM Louisville KY from Jefferson Broadcasting Company Inc. (A. Lee Stinton Jr.) to Davidson Media Station WTMT Licensee LLC, a subsidiary of Davidson Media Group LLC (Peter Davidson). 25K option payment, balance in cash at closing. Also include option acquire tower site for 350K within two years, with price increasing incrementally thereafter. Superduopoly with pending acquisitions of WLOU-AM, WLLV-AM & WTSZ-FM. Station was in an LMA/option with LB Radio of Louisville (8/23/03), as was WTSZ-FM. [File date 2/23/06.]

725K KMAS-AM Shelton WA from Sound Broadcasting Inc. (Harold S. Greenberg) to Olympic Broadcasting Inc. (Dale J. Hubbard, Jerry R. Eckenrode). 10K earnest money, 90K cash at closing, 50K non-compete, 575K note. [File date 2/23/06.]

Stock Talk

Finally, an up day
Optimism that the Fed will soon stop its string of rate hikes sent bond yields lower and stock prices higher on Tuesday. The Dow Industrials rose 75 points, or 0.7%, to 11,151.

Radio stocks went along for the ride. The Radio Index rose 0.568, or 0.4%, to 161.092. Traders beat up on Arbitron for announcing an aggressive (and expensive) plan to deploy PPM, sending its stock down 1.2%. Most of its customers had a good day. Salem rose 2.2%, Saga gained 1.5% and Radio One's Class A gained 1.3%, although its Class D gained only 0.9%.

Radio Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		33.93	-0.42	Hearst-Argyle	HTV		23.46	-0.10
Beasley	BBGI		11.03	+0.03	Interep	IREP		0.20	-0.05
CBS CI. B	CBS		23.96	-0.06	Jeff-Pilot	JP		58.97	+0.98
CBS CI. A	CBSa		23.98	-0.06	Journal Comm.	JRN		12.25	+0.05
Citadel	CDL		11.50	-0.09	Radio One, Cl. A	ROIA		7.78	+0.10
Clear Channel	CCU		29.00	+0.14	Radio One, Cl. D	ROIAK		7.79	+0.07
Cox Radio	CXR		13.16	+0.06	Regent	RGCI		4.27	+0.09
Cumulus	CMLS		11.59	unch	Saga Commun.	SGA		9.23	+0.14
Disney	DIS		28.66	+0.10	Salem Comm.	SALM		13.56	+0.29
Emmis	EMMS		17.16	+0.18	Sirius Sat. Radio	SIRI		4.45	-0.15
Entercom	ETM		29.06	+0.25	Spanish Bcg.	SBSA		4.97	-0.05
Entravision	EVC		7.77	+0.03	Univision	UVN		34.28	+0.21
Fisher	FSCI		43.10	+0.05	Westwood One	WON		11.41	-0.07
Gaylord	GET		44.78	-0.82	XM Sat. Radio	XMSR		20.50	-0.51

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments and
a photo to [email protected]

Regarding multiple encoding schemes (3/14/06 RBR #51).

The industry urgently needs to push for and establish a universal encoding standard that would apply to all electronic media for measurement and verification purposes. The universal code would be device and media neutral, thus allowing for easier cross-media measurement (a la Apollo) and ongoing testing and improvement of existing or new measurement approaches. As an advertiser, I shouldn't have to make a conscious decision about what codes I'm going to put on what creative, or content, because of where it might run. It should be a seamless part of the production and distribution process.

Mark A. Kaline
Global Media Manager
Ford Motor Company

Below the Fold

Ad Business Report
Soda advertising revealed
This is always a good stat Pepsi vs Coke...

Media Business Report
New companywide video unit
Launched by Meredith Corp. venture working across their media platforms...

Media Markets & Money
Colonial Radio Group
Expands into NY market with PA station...

Washington Media Business Report
Meet the press some other day
Debi Tate was but now is not for the time being because...

Radio Media Moves

From Big D to
the Granite State
Abby Goldstein has been name the new Program Director for New Hampshire Public Radio, effective May 22nd, succeeding Michael Arnold, who left last October for a position with Public Radio International. Goldstein is currently PD of KERA-FM Dallas.

Stations for Sale

Exclusive Listing
FM Radio Station in South
Florida. Great start-up opportunity
for a radio entrepreneur or a great addition for a radio group.
Please contact Joel B. Day
202-478-3737 (x3)

March RBR/TVBR
Digital Magazine

Where Do We
Go From Here?
In this issue, we take a look at the broadcast financing market in '06; hear from OMD's Natalie Swed Stone how radio is reinventing itself; interview Publicis Groupe Media CEO Jack Klues and Ford's Global Media Manager Mark Kaline; talk with Dial-Global Co-CEO David Landau and find out how radio can "Do what an iPod can't.

Read RBR/TVBR in 2 simple steps:
1.Create a simple account with Zinio and download the Zinio Reader.
2. You can then download the
March Issue of RBR/TVBR

RBR Radar 2006

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

Radio One OKs
Smart Cell Phone test
Which has refused to encode for Arbitron's PPM test in Houston, has become the first radio company to agree to encode for a test of the Smart Cell Phone-based ratings system proposed by Media Audit/Ipsos. As it happens, Media Audit is based in Houston.

RBR observation: We wondered, will stations be able to encode for both PPM and Media Audit/Ipsos at the same time? That's not an issue for Radio One, which isn't encoding for PPM, but would be for most other Houston stations. An Arbitron spokesman assures us there's no problem from his company's point of view. Nielsen has already done tests to make sure that TV stations could encode at the some time for both its Active/Passive set-top meters and PPM. Editor's note: Bottom line - Radio better have the top 10 markets rolling by years end as the radio clock is ticking away.
03/14/06 RBR #51

WBAL Baltimore dumps Limbaugh
Hearst's Baltimore News Talker cancelled El Rushbo effective at the end of May. WBAL's commission research project told them the local Baltimore audience likes local. As for El Rushbo he will get another affiliate.

RBR observation: Good for Hearst with their stand alone legend station of WBAL recognizing local is better by listening to your audience and grow with them. FYI, many in radio today may not remember but CEO David Barrett roots are in radio going back to a company called Doubleday Broadcasting.
03/14/06 RBR #51

Corporate payola: Is it even possible?
New York Attorney General Eliot Spitzer has accused Entercom and other major radio groups, not yet named, of accepting "corporate payola." The "payola" is explained on the FCC's website.

RBR observation: Gee, maybe Entercom should think about suing Spitzer for slander, since he has publicly accused the company of a specific criminal act, payola, which it could not possibly have committed.
03/13/06 RBR #50

What in the
name of God
Is Cumulus Media CEO Lew Dickey smoking? The radio diary system isn't broken. OK, to paraphrase Billy Crystal as kvetching Miracle Max in the movie "Princess Bride," it's only slightly broken. But it's still broken, it's archaic and there is technology available now to provide better, more accurate data. So please Lew, give me a break. By - John Maher, Sr. VP, Director of Planning US International Media
03/13/06 RBR #50

3 advance for CC radio ratings
The Next-Generation Electronics Ratings Evaluation Team - - the new name for the multi-company team evaluating responses to Clear Channel's RFP - - has selected three finalists for a new, electronic radio ratings system....Cumulus Media CEO Lew Dickey was asked about the process said he wants to make sure the industry selects the optimal technology, but he also warned that the diary system isn't broken and is more accurate than the audience measurement systems used by some other major media.

RBR observation: Not really any surprises here. The three finalists were the ones known last year to already have a working portable measurement device, so no one has made it through to the finals with some new wizbang proposal that no one had seen before. Bottom line seems it is just going through the process like reading a book and someone has already told you the ending first. It all comes down to Technology, Marketing, Acceptability by the end user meaning where the ad bucks come from and Money to do the measurement. Last - More Money to keep it going. Radio has tired before and RBR means this topic of another ratings service has been on going for 30 years. Radio should fix all its problems first.
03/10/06 RBR #49

Spitzer hits Entercom
with payola lawsuit
NY-AG Eliot Spitzer has filed his 1st lawsuit alleging corporate payola, resulting from his probe of record companies and radio stations in NY State. Entercom accused of: Trading air time for gifts and other payments, trading air time for promotional items and operating corporate programs directed by senior management to sell air time to labels in order to manipulate music charts.

RBR observation: This suit is a bunch of Bull.The Beat Goes On like an American Popular Song. Hold on as if Entercom can take any more bad news.
03/09/06 RBR #48

Second shareholder revolt
threatens 8.9B buyout of VNU
It looks like VNU CEO Rob van den Bergh won't be able to leave the company without enduring a second shareholder revolt. Trouble maker in this pot - Fidelity International which owns over 15% of VNU.
03/09/06 RBR #48

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