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Welcome to RBR's Daily Epaper
Volume 24, Issue 52, Jim Carnegie, Editor & Publisher
Thursday Morning March 15th, 2007

Radio News ®

CCU strategy depends on arbs
By delaying its buyout vote by about a month, Clear Channel is banking on a heavy "yes" vote by arbitrageurs who have bought shares for short-term profits. Ironically, CCU management could also build support if the company performs poorly in Q1. Trading activity since the original record date for voting on the buyout, January 22nd, has amounted to more than 50% of the outstanding shares of the company. Of course, some of those shares changed hands more than once, so there is no way to know how many are currently in the hands of the arbs, who typically buy large blocks to turn quick profits on narrow margins. They are banking on a quick sale at 37.60 so they can move on to the next opportunity. By moving the record date to March 23rd, the arbs will constitute a larger voting block. Conversely, some mutual funds and other large institutions may have already reduced their exposure to CCU, leaving them with fewer votes even if they believe they are being shortchanged by the buyout price. But the new vote date, April 19th, will likely be after CCU reports its Q1 results. The Q1 guidance the company gave when it reported its Q4 results (2/26/07 RBR #39) was less than robust - with radio pacings still soft and outdoor no longer as red-hot as it had been. If the actual results for this quarter are below Wall Street expectations, there will be even more pressure on the institutional holders to take their chips off the table and let Thomas H. Lee Partners, Bain Capital Partners, Mark Mays, Randall Mays and John Hogan deal with fixing the problems as a private company.

RBR observation: Still not a slam-dunk, by any means. If only a majority vote was needed, it would probably pass easily. But CCU is a Texas company and Texas law requires two-thirds approval of all outstanding shares for acceptance of a total buyout. That means that shares not voted count as "no" votes. Bear Stearns analyst Victor Miller, who has been beating the drum all along for rejection of any offer below 40 bucks a share, is now thumping 44 bucks as the real value of CCU. Similarly, Jonathan Jacoby at Bank of America says that even if the buyout is rejected, the stock price "could exceed 40 within 12-18 months as large shareholders push management to look at value creating alternatives." Both analysts point to such things as selling more assets, spinning out Clear Channel Outdoor (or at least selling the international division), and boosting leverage for a bigger cash payout to shareholders. We would offer a note of caution. There could be quite a roller coaster ride ahead. If the buyout is voted down, the stock will fall - and fall dramatically - as the arbs dump and run. We would not dare to predict how much it will fall or how quickly it will recover as fundamentals regain control over panic, but it will not be a pleasant ride for the squeamish.


Questions and answers
Look for the FCC to get a little more serious about the obligations of broadcasters in the digital era. Kevin Martin promised Ed Markey (D-MA) that he would get the Commission to shed more light on a notice of inquiry on the topic that has been pending since 1999. He also said the FCC was no more able to investigate the NSA wiretapping program than was Markey's subcommittee, since the NSA invokes the same national security privilege when batting away inquiries from either entity. Fred Upton (R-MI) confirmed that the auction of analog spectrum returned by television broadcasters is on track, and may even kick off earlier than mandated, by this fall, with proceeds banked by mid-2008. Upton and Martin agreed that net neutrality provisions might be a deterrent to broadband providers to upgrade internet infrastructure. Martin is proposing a 30% national ownership cap on cable to guard against too few customers for content, and Chip Pickering (R-MS) found under questioning that it was not just cable, but all MVPDs, including telcos, who would be subject. Real-life broadcaster Greg Walden (R-OR) wondered why small television operators, the ones who are most in need of duopoly rights for financial reasons, are precisely the ones precluded from it. Martin noted the tough balancing act, since small markets are also where there are a dearth of independent voices, and Michael Copps (D) said he would be open to examining individual proposals on a case-by-case basis. Nathan Deal (R-GA) noted in opening remarks that the retransmission consent negotiations are not a free market transaction, and that the playing field is not level. Jonathan Adelstein (D) noted that the rules were designed to allow broadcasters to get fair compensation for their content but that consumers did not seem to be factored into the equation. Copps noted that smaller companies on both sides, both cable and broadcast, seem to suffer from a lack of leverage, and Martin used the controversy to advocate putting a price on all content, broadcast and basic cable, so consumers can see what they pay for what they get (sounding like a pitch for a la carte program menus without actually mentioning that term).

RBR observation: The session featured a little of everything but not much of anything. Expect Markey to be as good as his word, and to have the Commissioners back frequently, most likely with a more focused topic on the agenda. The Democratic leadership seemed was particularly incensed about the video franchising decision, not in small measure because it was voted on by the Commissioners about two months before it was ready to be released to Congress and the public. We'd expect them to be more than incensed - they sound like they're ready to do something about it. We'll note here that the issue of streamlining the franchising process has been in progress on a state-by-state basis, but Hill staffers told those gathered at an FCC event recently that there still may be differences in approach that warrant some national guidelines.


Moody's downgrades
Entercom debt

Completing a review that it began last August, Moody's Investors Service announced that it has downgraded Entercom Radio's corporate family rating to Ba2 from Ba1 and downgraded its 7.625% senior subordinated notes from Ba2 to B1. The outlook for the company has been revised to "stable." Moody's said the corporate family rating "reflects the company's increased leverage, propensity for returning capital to shareholders, concentration of revenues in a few markets (5 markets accounted for more than 50% of revenues during the year ended 12/31/2006) and the highly competitive nature of the larger markets. The rating also reflects the inherent cyclicality of the advertising market and Moody's belief that radio is a mature industry with modest growth prospects," the ratings agency said. "Entercom's rating is supported by its geographic and format diversity and strong EBITDA margins. The rating is further supported by its local market focus (approximately 77% of net revenues in 2006 were from local advertising)," Moody's added in its statement. Here is a summary of the rating actions. Ratings Downgraded: Entercom Radio, LLC; Corporate Family Rating, Ba1 to Ba2; Probability-of-default rating, Ba1 to Ba2; 7.625% senior subordinated notes, Ba2 (LGD 6, 92%) to B1 (LGD 6, 92%). The outlook is stable.

Commissioners headed for Tampa
The fourth of six public forums on media ownership is now on the books. It'll be held in the Tampa-St. Petersburg FL market, at a venue to be determined, on 4/30/07. As in the other forums held thus far, the FCC says it is interested in exploring issues particular to the Tampa-St. Pete market. Other hearings have been held in Los Angeles CA, Nashville TN and Harrisburg PA. FCC Chairman Kevin Martin has also promised that he will hold two geographically disparate hearings on the localism proceeding which has been pending since it was kicked off by former chairman Michael Powell several years ago.

RBR observation: If Martin can get one local hearing in every two months, as was his stated goal when he appeared before the Senate earlier this year, the forums will take the Commission through the end of the year, meaning the chances for any firm action on the court-remanded media ownership proceeding during 2007 is squarely in the slim-to-none category.


Ad Business Report TM

NY Radio ad sales up 4.1 % for February
New York Market Radio advertising revenues for the second month of 2007 increased 4.1% over the comparable period of 2006 to $38.9 million, according to the New York Market Revenue Report, prepared by Miller, Kaplan, Arase and Co., CPAs. For the two months ended in February 2007, market growth was up 3.8% locally, up 8.3% nationally, total spot was up 4.6% and total revenues were up 4.1%. New York Market Radio Association (NYMRAD) is in the midst of a campaign to increase the use of radio in the NY Metro area. NYMRAD, through an outdoor campaign, advertises the value and power radio has to reach individuals, with taglines touting "We Wake Up 93% of New Yorkers Every Morning" and "We Reach 2.4 Million New Yorkers Every 15 Minutes." You'll find NYMRAD's campaign on major access roads throughout the tri-state area including Westchester, Rockland, Nassau & Suffolk counties; New York's five boroughs and nine counties in New Jersey. Executive Director Deborah Beagan says, "There has been an outstanding response to the new creative and it's our mission to connect these advertisers to their customers."

Casanova Pendrill signs for PPM in three markets
Arbitron announced Casanova Pendrill, an agency specializing in integrated Hispanic communications, has signed an agreement for its PPM ratings services in Houston, New York and LA. With high-profile clientele including U.S. Army, Nestle, General Mills, Kohl's, Johnson & Johnson, Corona Beer, and GlaxoSmithKline, among others, Casanova Pendrill delivers consistent client branding messages to Hispanic consumers across a variety of channels. "Our team of Hispanic consumer experts and integrated communications specialists provides insightful, breakthrough creative solutions which drive measurable business results for our clients. The Arbitron Portable People Meter system will provide audience intelligence that will help us enhance our radio services in reaching Hispanic consumers," said Dan Nance, President and Chief Executive Officer, Casanova Pendrill.


Media Markets & Money TM
FM CP goes to Goad
That's Marion Load, and Robert Gourley will also get a piece of an unbuilt FM destined for Del Norte CO. The 96.5 MHz Class C3 is going to their San Luis Valley Broadcasting Inc. for 145K cash, coming from Chris Devine's College Creek Media. The FM will have 930 w @ 1,591' when constructed. The buyers own KSLV AM & FM Monte Vista CO, which is in the general area, but the FM will overlap only the AM.


Washington Media Business Report TM
FCC Commissioners make a House Call
The five FCC Commissioners were the guests of Ed Markey (D-MA) and the Subcommittee on Telecommunications and the Internet. The fact that the session was wide-ranging prohibited delving deeply into any one topic, but the Commissioners did get a lesson on governmental jurisdiction from Energy and Commerce Chairman John Dingell (D-MI). Markey indicated that this would be the first of many sessions, after a long FCC absence from the House. For the two junior Republicans, Deborah Taylor Tate and Robert McDowell, it was the first formal visit to the Rayburn Building in their capacity as Commissioner. Markey laid out concerns, including increasing broadband penetration while protecting net neutrality, and general concerns about media ownership, particularly by minorities. Ranking Member Fred Upton (R-MI) voiced the other side of the coin - he too thinks broadband penetration needs to be increased, but decreased regulation and no net neutrality provisions are the way he wants to go. He also wants broadcast ownership caps relaxed. Dingell had the strongest statement, saying that the FCC has strayed from its duty. He pointed out that it's not a legislative body, and it's an arm of Congress, not the administration. He particularly criticized the video franchising ruling, saying Congress gave that responsibility specifically to local government, and it was not the FCC's prerogative to overrule Congress.

Commissioners get their say
We've noted that the Commissioners have been in public enough of late that they are well on the way to having their own stump speeches, and yesterday's session bore witness to that statement. We heard pretty much what we heard when the same five were before the Senate Commerce Committee in February. Chairman Kevin Martin (R) noted that rapid pace of technological change, and the need for the FCC to encourage competition and investment while protecting consumer rights. He noted that broadband availability going up while its price is coming down. Michael Copps (D) repeated his wish to reinstate older media ownership rules, codifying public interest obligations and putting teeth into the license renewal process. Deborah Taylor Tate (R) brought her interest in children to light, noting FCC efforts to curb indecent and violent programming, and to address childhood obesity and advertising directed at children. Jonathan Adelstein (D) said the Commission needs to do a better job enforcing regulations already on the books, noting areas such as the do-not-call list, payola, sponsor identification and VNRs as areas of concern. Robert McDowell (R) made another pitch for the free market, saying that government intervention should be a last resort and narrowly-tailored.


Entertainment Media Business Report TM
Rick Dees named to
2007 NAB Hall of Fame

After spending the last 25 years making a mark in the entertainment world, internationally syndicated radio personality Rick Dees is being honored next month with an induction into the 2007 National Association of Broadcaster's Hall of Fame at the annual NAB conference in Las Vegas. Dees tells RBR: "To be inducted into the NAB Hall of Fame is truly an honor. It represents the respect of my peers and nothing means more to me ...if you don't count money, fame and a great table at Tony Roma's!" Dee's #1 internationally syndicated radio show from Dial-Global, "Rick Dees Weekly Top 40," is heard each weekend by more than 70 million people around the world, including virtually every city in the US, 125 countries around the world, 27 big ships at sea, and on the Armed Forces Radio Network. In July of 1981, Rick began hosting the top-rated morning show on KIIS FM LA. During his years at the station, he turned KIIS-FM into the #1 revenue generating radio station in the nation. With unprecedented Arbitrons and many accolades to his name, including the Marconi Award, many say Dees set the standard for success in morning radio. Currently Rick can be heard on weekday mornings on Movin 93.9 FM LA.


Internet Media Business Report TM
NPR to file petition for reconsideration
with the CRB panel

Tomorrow, on behalf of the public radio system, NPR is taking the first step in its plans to pursue all possible action to reverse the decision by Copyright Royalty Board to drastically increase steaming fees (3/7/07 RBR #46). NPR will begin on Friday, March 16 by filing a petition for reconsideration with the CRB panel, the first step in this process. Says Andi Sporkin, NPR VP/Communications: "This is a stunning, damaging decision for public radio and its commitment to music discovery and education, which has been part of our tradition for more than half a century. Public radio's agreements on royalties with all such organizations, including the RIAA, have always taken into account our public service mission and non-profit status. These new rates, at least 20 times more than what stations have paid in the past, treat us as if we were commercial radio-although by its nature, public radio cannot increase revenue from more listeners or more content, the factors that set this new rate. Also, we are being required to pay an internet royalty fee that is vastly more expensive than what we pay for over-the-air use of music, although for a fraction of the over-the-air audience. This decision penalizes public radio stations for fulfilling their mandate, it penalizes emerging and non-mainstream musical artists who have always relied on public radio for visibility and ultimately it penalizes the American public, whose local station memberships and taxes will be necessary to cover the millions of dollars that will now be required as payment. On behalf of the public radio system, NPR will pursue all possible action to reverse this decision, which threatens to severely reduce local stations' public service and limit the reach of the entire music community...We ask that the online royalties be returned to their historic arrangement and that public radio can continue to provide its vital service to music discovery."


Transactions
2.1M WDJA-AM West Palm Beach FL (Delray FL). 100% of Professional Broadcasting LLC from Richard Vega (52% to 0%), Pablo Vega (48% to 0%) to The Betty Ginsburg Revocable Trust (Betty Ginsburg) (0% to 100%). 210K escrow, balance in cash at closing. [File date 2/22/07.]

615K WRXZ-FM Albany GA (Sylvester GA) and WFFM-FM Ashburn GA from On Top Communications of Georgia LLC DIP (Bryan C. Rice, Chief Restructuring Officer) to Educational Media Foundations (Richard Jenkins). 61.5K escrow, balance in cash at closing. 500K allocated to WRXZ-FM; 115K allocated to WFFM-FM. If latter is stripped from seller or is off air it may be dropped from this transaction, which has been approved by the US Bankruptcy Court for the District of Maryland. [File date 2/22/07.]


Stock Talk
Stocks recover a bit
At one point yesterday the Dow dipped back below the 12K mark, but stock prices recovered as bargain hunters swept in looking for cheap stocks following the market pummeling by the mortgage industry's problems. In the end, the Dow Industrials were up 57 points, or 0.5%, at 12,133.

Radio stocks also recovered. The Radio Index gained 0.470, or 0.3%, to 152.140. Arbitron had the best day, up 3.4%. Westwood One rose 2.3%.


Radio Stocks

Here's how stocks fared on Wednesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

46.53

+1.52

Journal Comm.

JRN

12.83

+0.12

Beasley

BBGI

9.00

-0.20

Lincoln Natl.

LNC

65.85

+0.11

CBS CI. B CBS

30.50

-0.06

Radio One, Cl. A

ROIA

6.88

-0.04

CBS CI. A CBSa

30.51

-0.05

Radio One, Cl. D

ROIAK

6.85

-0.05

Citadel CDL
9.62 +0.01

Regent

RGCI

2.86

-0.07

Clear Channel

CCU

35.02

+0.27

Saga Commun.

SGA

9.88

-0.01

Cox Radio

CXR

13.36

-0.04

Salem Comm.

SALM

11.80

+0.23

Cumulus

CMLS

9.20

-0.04

Sirius Sat. Radio

SIRI

3.23

-0.06

Disney

DIS

33.73

+0.11

Spanish Bcg.

SBSA

4.36

+0.11

Emmis

EMMS

7.90

-0.04

SWMX

SMWX

0.90

unch

Entercom

ETM

27.44

-0.11

Univision

UVN

36.02

+0.03

Entravision

EVC

8.91

unch

Westwood One

WON

6.31

+0.14

Fisher

FSCI

46.94

+0.69

XM Sat. Radio

XMSR

13.02

-0.33

Hearst-Argyle

HTV

25.89

-0.07

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments and
a photo to [email protected]

In regards to increased royalty fees, I believe the RIAA and artists need to realize the shoe also goes on the other foot. If it were not for we broadcasters airing their material, they would have little to no exposure to gain any fame. Don't price broadcasters out of business!

Wayne E. Watkins
Lagniappe Broadcast Network
RocknOldies.com


Below the Fold
Ad Business Report
NY Radio ad sales
Up 4.1 % for February...

Casanova Pendrill signs
For PPM in 3 markets, Casanova an agency specializing in integrated Hispanic...

Washington Media Business Report
NAB continues pressure
On the proposed XM/Sirius merger & buying space to make their point...

Media Markets & Money
FM CP goes to Goad
Marion Load, & Robert Gourley will also get a piece of an unbuilt FM...

Arbitrends

Arbitron
Market Results
| Charleston |
| Chattanooga |
| Columbia |
| Knoxville |
| Raleigh |
| Tulsa |




Stations for Sale

NorthEast FM's For Sale
Clusters, standalones, sticks
8x - 12x BCF, 950K - 7.2M
[email protected] or
781-848-4201

10 TX, AZ, NC, and GA
FM radio stations at an exceptional value offered for sale. Broker cooperation encouraged. Please visit www.toweritrust.com for complete information including pricing.


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Contact
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[email protected]

Radio Media Moves

Bernstein to
Air America

Air America Radio announced its first new major hire since being purchased by the Green Family Media - David Bernstein will join the network as Vice President of Programming. Bernstein is a 32-year radio veteran; having held programming and news management positions at leading stations such as WOR, WBZ, WRKO, WHDH, WPRO, WDBO, WAAF, and WTIC. He is currently the owner/president of Bernstein Talent, a consulting firm for radio talk show hosts.

Mandel on the move
Interep's CBS Radio Sales announced that Lori Mandel has joined the rep firm as its Research Director. Before joining Interep, Mandel was National Research Analyst for Katz Media's Clear Channel Radio Sales - Hispanic.

Boardroom changes
James W. Cannon, Carol H. Fratt and Donald G. Graham Jr. informed the Board of Directors of Fisher Communications that each has decided to retire from the board. Fratt and Graham will complete their current terms, which expire as of the annual shareholders meeting on April 26th, and will not stand for re-election. Cannon plans to retire from the board following its regularly scheduled meeting on July 26, 2007. Graham, 78, was CEO of the company until his retirement in 1993. Cannon is retired from SAFECO Insurance and Fratt from Hummingbird Gardens Ltd.


More News Headlines

NAB continues
pressure v. XM/Sirius

The National Association of Broadcasters continued its micro-targeted advertising campaign, purchasing space in three top Capitol Hill newspapers to oppose the proposed merger between XM and Sirius. This time, the NAB presented a fictional XM/Sirius credit card, and listed some of its more allegedly egregious charges - 500M for five years of Howard Stern, 650M for 11 years of Major League Baseball, 220M for seven years of the NFL, 55M for three years of Oprah Winfrey, and 30M for four years of Martha Stewart, and then adds the tagline: "Asking for a government bailout after making bad business decisions: Priceless." It opposes allowing the two companies to form a monopoly.

AOL Music Sessions performances to
air on XM

AOL Music and XM announced that tracks from AOL Music's Sessions series are airing on select XM music channels. Included among the AOL Music Sessions performances XM subscribers will hear are Al Green's "Let's Stay Together," Fleetwood Mac's "Landslide," REM's "Man on the Moon," The Cure's "Just Like Heaven," and Sheryl Crow's "Every Day Is a Winding Road." Additional performances will be added periodically.


RBR Radar 2007
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Clear Channel delays buyout vote
Amid increasing indications that the proposed 26.7 billion bucks buyout of the company will not win the required two-thirds support from shareholders, Clear Channel Communications announced that the vote has been rescheduled to April 19th, rather than (March 21). The official reason given is that the independent directors on the CCU board determined that so many shares have changed owners recently that the roster of shareholders as of the original record date no longer reflects the actual ownership.

RBR observation: It is pretty easy to see that the real reason for the delay is to give the board and management time to try to turn this around. What is hard to see is how they can accomplish that, since the momentum is clearly moving against acceptance of the 37.60 per share offer. The obvious way to reverse that trend is to raise the bid, but it doesn't appear that Thomas H. Lee Partners and Bain Capital Partners have any intention of doing so.
03/14/07 RBR #51

How stations will work with
Wal-Mart to promote HD Radio
iBiquity spokesperson Vicki Stearn tells RBR some of the details of how stations will work with Wal-Mart locally in promoting HD Radio sales in-store (3/6/06 RBR #45). HD digital radio receivers are launching in 1,989 Wal-Mart stores in 85 markets. HD digital radio receivers are launching in 1,989 Wal-Mart stores in 85 markets. In response to anticipated high consumer demand for in-vehicle HD radios, Wal-Mart stores will initially stock the JVC HD-W10 Mobile HD Radio receiver, which retails for less than 190 bucks. Along with the ad campaign via HD Digital Radio Alliance stations.

RBR observation: Most Wal-Mart stores don't allow branding, so this is a pretty big deal. Getting the receivers hooked up to an outdoor antenna may be easy in some stores, harder in others. Most TVs at Wal-Marts are hooked into centralized DVD players; the radios usually just use their own pull-out antennas. In many suburban and urban Wal-Marts, they will be able to use a simple antenna mounted near the display, as signal strength will be sufficient near the broadcast towers. However, some of the more rural stores may need to look into quick outdoor installations. We're sure an engineering consultancy could quickly do nationwide signal strength maps and plot the appropriate Wal-Mart stores as a guide.
03/14/07 RBR #51

Rehr underscores
XM/Sirius testimony
In case House Judiciary Committee Chairman John Conyers (D-MI) wasn't taking notes, NAB President/CEO David Rehr underscored his forceful testimony in opposition to the proposed merger between XM and Sirius with a letter. He has six reasons why the wedding should be annulled before it ever gets started. Read it in this RBR report page.
03/14/07 RBR #51


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