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Welcome to RBR's Daily Epaper
Volume 24, Issue 53, Jim Carnegie, Editor & Publisher
Friday Morning March 16th, 2007

Radio News ®

Zell bid for Trib losing steam
The flagship Chicago Tribune reports that the effort by Sam Zell to buy Tribune Company is losing momentum. That would apparently leave only one possibility - rebuilding from within. Sources cited by the newspaper say the Zell proposal may have too little equity - 300 million bucks - and two much debt - 12.7 billion - to win the endorsement of Tribune's independent directors. The plan to use an ESOP (employee stock ownership plan) in the financing structure is also seen as risky. If the Zell plan is rejected, the board is likely to go ahead with the "self-help" plan put together by CEO Dennis FitzSimons and his management team. It would reportedly have the TV group spun off to shareholders as a separate company and then increase leverage at the remaining Tribune Company (newspaper/radio/Chicago Cubs) to pay shareholders a one-time dividend of about 20 bucks per share.

RBR observation: The remaining problem with the management plan is that it doesn't cash out the dissident Chandler family, who were pressing for the company to be sold or broken up. They would continue to be the largest shareholder - and likely continue to be a pain in the derriere for FitzSimons.

Is the media biased? Yes and yes
According to Zogby International, Americans think the media plays it right down the middle, favoring neither liberals nor conservatives, Democrats nor Republicans. Well, 11% think that, anyway. 64% think it leans left/Democratic, vastly outweighing the 28% that thinks it leans right/Republican. The tilt all depends on which camp a citizen identifies with. The overall leftward perception comes from the fact that Republicans almost universally see the media that way, and a strong plurality of independents say the same thing. Democrats see a rightward slant, but with out the universality of Republicans. How solid are Republican voters on the leftward perception? Try 97%. 67% of independents say the media leans left to 23% who see conservative bias. Only 17% of Democrats see only a leftward tilt, and 67% see a rightward tilt.

Baseball/DBS deal headed for the Hill
It looks like just as threatened, John Kerry (D-MA) is putting the Senatorial spotlight on a deal between Major League Baseball and DirecTV that threatens to take MLB's "Extra Innings" play-by-play service off of cable and limit its viewership to the satellite service's subscribers. The program, which allows out-of-market fans to follow a favorite baseball team not generally available where they live, is going to the 15M-strong DBS for 700M, leaving millions of potential subscribers out in the cold unless they switch their MVPD service to DirecTV. MLB has stated that the deal is not 100% exclusive to DirecTV - cable operators may present the channel under the same basic terms - at least one cable operator said those terms are far beyond its means. Kerry has a personal stake in the deal - he is apparently a member in good standing of New England's Red Sox Nation, but spends much of his professional time in Washington DC. The following item just appeared on the Senate Commerce Committee schedule: "Exclusive Sports Programming: Examining Competiton and Consumer Choice." It's set for 10:00 AM on Tuesday, 3/27/07.

RBR observation: What is it about sports programming? When we were kids, they almost never televised a home baseball game, there might by one or two on TV if our team was away, and there was just one national TV game a week on NBC. Now, it seems all three branches of government are willing to move heaven and earth to make sure everybody has access to every game. Regional sports channels were a big part of the decision in the buzzard feast over Adelphia a few years back; the FCC intervened in the telerights battle between the Baltimore Orioles/MASN and Comcast over the Washington Nationals, with FCC free-market apostle Robert McDowell completely in favor of the governmental intrusion; and the actual date of the DTV return-your-analog-spectrum deadline is widely believed to have been set with an eye to the date of the Super Bowl, after an attempt to make it even later so as to come after NCAA March Madness.

Pittman booked for Super Session
When it comes to understanding both old media and new media, you couldn't find anyone with more experience in both than Bob Pittman. In fact, he is deeply involved in both to this very day. The NAB has scored quite in coup in landing Pittman as a keynote speaker for NAB2007 next month in Las Vegas. The radio programmer, turned MTV co-founder, turned Time Warner Enterprises President/CEO, turned AOL President/COO, turned Pilot Group (venture capital) co-founder will address the Super Session "Venture Capital - Where the Innovators are Investing Dollars" on Wednesday, April 18th. Pilot Group currently has investments in radio, TV and a variety of new media ventures. After Pittman's keynote, the session will feature a panel moderated by Peter Daley, equity research analyst of digital media at Rutberg & Company. Panelists include: Ping Li, general partner, Accel; Dennis Miller, general partner, Spark Capital; and Jake Seid, general partner, Lightspeed Venture Partners.

Sabotage blamed for hard core Phoenix air
An airing of a Tom Brokaw special called "State of U.S. Health Care" was in progress at KPPX-TV Tolleson AZ, a Channel 51 Ion Media Network O&O serving the Phoenix market on Monday, 3/12/07. Suddenly without warning it segued into some hard core pornography, according to numerous reports. According to the East Valley Tribune, the station's engineer, Ken Sell, immediately reported to the station, but found no evidence of the illicit programming on the station's aircheck tape. Cox Cable has been cleared as a source, and Ion is blaming human intervention. "We are aware that regularly scheduled programming on our local Phoenix station, KPPX appears to have been briefly interrupted last night by inappropriate content during the 9 PM hour," said Ion in a statement. "Early evidence suggests that this may have been an act of human sabotage at the station. We have launched a rigorous investigation, and any implicated employees will face strict disciplinary action and termination. We apologize to our viewers for this regretful incident. Incidents of unauthorized programming on our stations are taken very seriously, and we will take decisive action to prevent future occurrences."

RBR observation: It will be interesting to see if this goes anywhere. Ion's raison d'etre has been family-friendly programming since its founding days as the PAX Network. But will the FCC hold it responsible for what travels into citizens homes over its airspace anyway? Can Ion be fined for not monitoring its operation closely enough to prevent the saboteur from disrupting the station's schedule? Stay tuned.

Ad Business Report TM

BofA Securities looks at Internet royalty rates
Banc of America Securities Entertainment & Broadcast Research Analyst Jonathan Jacoby hosted a conference call Wednesday, "Where Will the Dust Settle from Higher Internet Music Royalty Rates?," that included Joe Kennedy, CEO & President, and Kurt Hanson, CEO, RAIN/

Highlights from the call:
Pandora uses the Internet to enable consumers to have a much more personalized music radio experience. You can go to Pandora, type in the name of a favorite artist or song and Pandora will launch a station that explores that part of the music universe. Users can create up to 100 stations and do a variety of interesting things with them, rate songs, find out about the artists and songs that are playing, buy the songs from iTunes or Amazon, mix the stations together in kind of a shuffle mode etc.

Said Kennedy: "In terms of business model we believe this category is predominately about ad supported, free to the consumer. Our ad model has been well received by advertisers and our revenues have been growing nicely fueled really by a strong interest by major national brands, players like Toyota, Verizon, Apple, Nike etc. The Internet opportunity is really about national advertising at this point for a player like us...At the royalty rates that were in effect prior to this decision making money in Internet radio was certainly no lay-up it required highly affective monetization and tremendous scale both of which we have been track to achieve but at the proposed new rates as we get into it's pretty simply there is no radio Internet service large or small that can sustain itself at these rates."

Said Hanson: "AccuRadio is aimed primarily at 25-54 year old at work listeners and we think we are maybe the leader in the space that's specifically targeting that one demo. We have for those people 320 channels of rock, jazz, classical, pop standards, Broadway, blues, Celtic music, cabaret music. We have American music, Chinese pop and a variety of other genres and sub-genres. Like Pandora we believe that the opportunity here if for all webcasting is really primarily as afforded. We have three or four different rep firms out trying to sell our inventory and did last year. With an audience of almost a million unique listeners a month and lots of rep firms selling it we were able to bring in, this is kind of a bootstrap operation not pc funded, we were able to bring in about 400 grand in revenues. Under our old royalty rates there was a small commercial web caster rate where we were paying about 12% of revenues. Under the copyright royalty board decision that we're here to talk about today our retroactive royalty for 2006 is 600,000 dollars; which is 150% of our total revenues and 10,000% of our profit for the year. It certainly holds concerns for not only for us but I think for the whole industry that there are virtually no firms with a business model that can survive this new royalty rate decision if it stands."
| Read More... |

Washington Media Business Report TM
Big radio issues on FCC agenda
Next Thursday's (March 22) FCC meeting will be heavy on radio. The Commission will issue rules for digital radio, although it is clear that its work on IBOC is not yet finished. There will be a 2nd Report and Order, a ruling on a reconsideration request and a 2nd Further Notice of Proposed Rulemaking - so get ready for another round of comments on digital radio rules. And the FCC will rule on the long-pending deal to have Citadel Broadcasting acquire ABC Radio from Disney. From the wording of the item in the Commission agenda, the best guess is that the FCC is going to approve the license transfers, but also slap Citadel with a fine. It has been one of the radio groups caught up in the so-called payola investigation, sparked by former New York Attorney General (now Governor) Eliot Spitzer, and the subject of numerous allegations of wrongdoing filed by a competitor in Connecticut, Red Wolf Broadcasting.

Get in line request found out of line
The FCC has shot down a Petition for Reconsideration coming from Great Scott Broadcasting concerning a CP for its WKDB-FM Laurel DE, part of the Salisbury-Ocean City MD Arbitron market. The petition dates to 9/30/04, the CP to 2/8/01. The Commission noted that it was unable to get an FAA report on the CP proposal, which involved a new tower location with a higher HAAT, and it eventually, on 4/13/04, dismissed the CP. An initial petition for reconsideration was filed 9/26/04 and denied, followed swiftly by the immediate petition. Great Scott argues that it has not yet exhausted its appeal options, and has now been precluded from doing so since a CP for Clear Channel's WOSC-FM Bethany Beach DE was "improperly plucked...from the queue" and granted, effectively blocking Great Scott's proposal. The FCC said a precedent quoted by Great Scott as germane to this issue was actually narrowly tailored and did not apply here, and that the second reconsideration petition could simply be swept away as "repetitious." It commented further, nevertheless. Among other things, the FCC noted that WOSC did not butt in line in front of WKDB, since WKDB was no longer part of the line. It also noted that Great Scott had been free to pursue the matter up until the Clear Channel CP becomes a final order - any work CC did prior to that would be at its own risk in full knowledge that subsequent maneuverings could lead to its reversal. With that, the second petition was dismissed.

Media Markets & Money TM
EMF wheels into Wheeling
K-LOVE Network operator Educational Media Foundation has yet again demonstrated its insatiable appetite for radio stations. This time it's found one in Wheeling WV. It's buying WRKP-FM from RKP International, headed by Ron King. According to Greg Guy of Patrick Communications, the pricetag is 1M. EMF is noncommercial but is perfectly content to operate on either side of the commercial/noncommercial divide. This station is to the north of the line, putting out 1.9 kw from a 594' tower on 96.5 MHz.

Internet Media Business Report TM launches Christian
online Alternative station
Ezra Publications, creators of Christian online community, announced the launch of a new Christian Alternative Internet radio station and website, "The addition of internet-based Christian radio is an exciting and vital component of our overall internet ministry," says Craig Schneider, CEO. "By providing this station, we are taking yet another step in our digital outreach ministry. We are thrilled to be able to leverage these incredible technical resources to reach our youth with a positive message." broadcasts around-the-clock, CD-quality music and programming to its listeners. The launch of occurs in the wake of last week's announcement of the Copyright Royalty Board's (CRB) decision to uphold substantial rate increases for internet broadcasters. "We are joining forces with the Digital Media Association and internet broadcasters worldwide to petition for an appeal to this unfair ruling," states Schneider. "We are confident that an agreement will be reached that is substantially more practical and mutually beneficial than what has been proposed."

KCRW upset by Copyright Royalty Board rate increases
KCRW- FM LA is the public radio station most affected by the new higher royalty rates for Internet music stations that were announced last week by the Copyright Royalty Board (CRB). KCRW's General Manager Ruth Seymour released the following statement: "The CRB decision is truly egregious in that it treats successful non-commercial online music webcasters as if they were commercial stations. We support NPR's plans for a reconsideration of the CRB decision. KCRW believes that the record companies and artists whose music we champion deserve fair recompense. We trust that the music industry is open to good-faith negotiations. KCRW has promoted many independent artists and introduced new musicians on-air and online. The station has also benefited greatly from their work. We therefore support reasonable royalty payments that rightly reward both artists and labels and hope that we will be able to reach an accommodation for public stations online and for other non-commercial webcasters, as well. Many of KCRW's most devoted subscribers and supporters are people who work in the entertainment industry. We understand their concern for intellectual property rights in the new digital media. Many federal agencies recognize the difference between for-profit and non-profit businesses - including the IRS, the FCC and the US Congress. And we believe the CRB must honor that distinction."

Ratings & Research
Record ratings for NPR
After crunching the Fall ratings info from Arbitron, NPR says it has been gaining a million listeners a year since 2000. The Fall book showed a record 26.5 million people listening to the non-commercial network, up 2% from a year earlier and 4% from then Spring book. Additionally, NPR said, listenership has increased for public radio stations overall around the country. For Fall 2006, 30.9 million weekly listeners tuned into NPR Member stations - which independently schedule their own local programming as well as shows from NPR and other public radio producers. This is a 2% increase vs. a year ago, Fall 2005, and a 4% increase vs Spring 2006. They note that over the past three years, commercial News/Talk radio has dropped 7%, while listening to public radio News-Talk stations has risen 3%. "Morning Edition," which remains the most listened to morning program on radio, posted 13.2 million listeners weekly, growing 1% vs. Fall 2005 and 3% vs. last Spring.

Engineering Business Report TM
Polk Audio launches
"Polk Audio Designs"

Polk Audio, a Directed Electronics Brand, announced a new brand entity called "Polk Audio Designs." The new mark will be used for products aimed at the general population, such as iPod accessories, radios, audio systems and other mass-appeal products. Polk Audio Designs products will be distributed through existing Polk Audio dealers and/or a wider network of retailers. Products designed for the audio enthusiast market will continue to be branded Polk Audio and distributed through Polk's network of value-added retailers. The first product to bear the mark is the MiDock10, a portable iPod audio system that is being sold exclusively through RadioShack stores at a Suggested Retail Price of 199. A similar but slightly larger and differently styled Polk Audio Designs iPod portable audio system called the MiDock Studio will debut in April and will be sold by Polk Audio's existing retailers, select big-box retailers and on Polk Audio's website. Due in May 2007 is an HD radio/CD audio shelf system called the HDX3 that will be sold in RadioShack stores for 299. Additional Polk Audio Designs products will be announced later in the year.

500K KFIR-AM Sweet Home OR from Shae Enterprises Inc. (Robert F. Ratter) to Radio Fiesta Network LLC (Michael Astalis). 50K escrow, balance in cash at closing. Holds CP to increase day power from 1 kw to 10kw, night power remaining at 184 w. [File date 2/22/07.]

150K WJIG-AM Tullahoma TN from NRS Enterprises Inc. (Roy Woods) to The Woods Group Inc. (Roy Woods, Joyce Woods). Cash. [File date 2/22/07.]

Stock Talk
A day of modest gains
Continued concerns about the mortgage market kept a lid on Wall Street trading, but bargain hunters were still in the market and stocks rose a bit. The Dow Industrials rose 26 points, or 0.2%, to 12,160.

Radio stocks were slightly higher. The Radio Index rose 0.216, or 0.1%, to 152.356. The biggest move was to the downside, as CBS slipped 1.5%. Journal Communications rose 1.1%.

Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change





Journal Comm.








Lincoln Natl.







Radio One, Cl. A







Radio One, Cl. D




Citadel CDL
9.71 +0.09





Clear Channel




Saga Commun.




Cox Radio




Salem Comm.








Sirius Sat. Radio








Spanish Bcg.
























Westwood One








XM Sat. Radio














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Below the Fold
Ad Business Report
BofA Securities
Looks at Internet royalty rates...

Media Markets & Money
EMF wheels into Wheeling
Educational Media Foundation buys again...

Internet Media Business Report launches
Christian online Alternative station...

Upset by Copyright increases
KCRW- FM LA is the public station most affected...


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Radio Media Moves

From TNS to Arbitron
Pat Pellegrini has joined Arbitron in the new position of Vice President, Research, New Product Development, where he will apply his expertise in media research to Arbitron's new services and initiatives, including Project Apollo and custom research projects using the PPM technology to gain new insights about television and retail media audiences, along with other types of new media. Pellegrini comes to Arbitron from his role as Sr. VP of Research at TNS Media Research in New York.

Space honors
Robert Briskman, co-founder of Sirius Satellite Radio, has been awarded the 2007 American Institute of Aeronautics and Astronautics Aerospace Communications Award. Briskman was honored for his pioneering efforts in developing the Satellite Digital Audio Radio Service. Briskman retired from Sirius as Executive Vice President, Engineering, and a director in March, 2001.

New Hall of Fame
The Connecticut Business Hall of Fame holds its first induction ceremony today. Among the four inductees are Barry Berman, President, and S. Richard Kalt, Exec. VP, of CRN International, the radio marketing company based in Hamden, CT.

Sirius taps Jeff Smith
After being let go by Nassau Broadcasting in December after nearly 10 years, Jeff Smith has accepted the position of Manager of Broadcast Maintenance Engineering for Sirius Satellite Radio. He will start on Monday March 19th and be based out their NYC facility.

TVBR - TV News

Political carried TV to blockbuster Q4
You knew that television advertising was amazingly strong in Q4 and now the Television Bureau of Advertising (TVB) has the numbers to prove it. The final tally for TVB by TNS Media Intelligence/CMR, based on estimates for the top 100 markets, shows that local broadcast television ad revenues were up 21.5% in the fourth quarter of 2006, compared to the same period in 2005. For the year, revenues were up 11.5% over 2005. And it wasn't just surging political spending in an election year that drove the growth - revenues were up in all of the top ten categories for the quarter and the year. Yes, despite all of the complaining about softness in the auto category, the largest TV advertising category for local stations was still up 13.1% in Q4. Government & Organizations (which includes political advertising), was the #2 category, up 267.6%. The gains for local stations were not duplicated at the network level in Q4. Network TV posted a 6.1% decline for the quarter (and a 2.0% gain for the year); syndicated TV declined by 7.7% for the quarter (and increased by 0.3% for the year). Taken together with local broadcast television revenues, total broadcast TV thus posted a 3.8% increase for the quarter and a 5.3% increase for the year.
| Here are the figures |

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

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.

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. 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. (more RBR analysis in)
03/15/07 RBR #52

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.
03/14/07 RBR #51


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