RBR's Daily Morning Epaper

Volume 23, Issue 78, Jim Carnegie, Editor & Publisher

Thursday Morning April 20th, 2006

Radio News ®

CCU suffers in CalPERS calculus
Influential institutional investor California Public Employees' Retirement System (CalPERS) listed six companies - - out of over 1.8K which it reviewed - - that it says are underperforming due to corporate governance issues. One name very familiar to these pages suffered a mention - - multimedia giant Clear Channel. Explaining its general purpose, CalPERS Board President Rob Feckner said, "The stock performance and governance of these companies is unacceptable to us and other shareowners. We are urging them to make such improvements as requiring majority voting for directors, removing excessive takeover defenses that prevent shareowners from amending company bylaws, and accounting for their performance." It looks to "...to identify companies where poor market performance is due to underlying company specific operating performance problems as opposed to industry or extraneous factors alone." Here's the rap on Clear Channel: "Clear Channel Communications, a diversified media company that owns hundreds of radio stations, has excessive executive compensation and severance agreements, and lost 42% in stock value over the past five years compared with a 26% decline for industry peers." The other companies on the list were Brocade Communications, Cardinal Health, Mellon Financial, OfficeMax and Sovereign Bancorp. Chair of the CalPERS Investment Committee Charles P. Valdes said, "In the coming months, we will continue to work with these companies to find ways to turn them around. We know that this kind of engagement leads to higher returns, positive leadership changes, more transparency, and much better accountability to shareowners and regulators." According to Reuters, most of the companies were declining to comment on the study.

RBR observation: This is the quote that will be tattooed on the forehead of CCU - "Clear Channel Communications, a diversified media company that owns hundreds of radio stations, has excessive executive compensation and severance agreements, and lost 42% in stock value over the past five years compared with a 26% decline for industry peers." The key - excessive and the lost of value over the past five years, which RBR has also documented, is surely to make the balance of this year interesting to say the least.

Strong majority of Americans
believes radio still important
Americans rate the importance and relevance of local commercial radio very highly, despite the entry of high-technology competition, a national survey commissioned by American Media Services shows. The survey found that 78% said radio is important in their everyday lives, and 91% said radio is important in American life in general. Nearly three-quarters (74%) said they listen to radio at least once a day. The telephone survey of 1,004 American adults was conducted April 13-15. The new findings complement those in AMS' initial survey in January: 64% said they were listening to radio as much as, or more than, they were five years ago.In the AMS survey, 57% of men and 49% of women said they listen to radio at least daily.
| Other findings of the survey include: |

SEC doubles down on Cox exec
Back in 2004, former Cox Enterprise CEO Garner Anthony bought 10K shares in subsidiary Cox Communications. He later sold the shares at a 50.9K profit. The problem is that in between, Cox Enterprises announced a tender offer to Cox Communications, boosting the latter's stock by some 20%, which is where the 509K profit came from. That, according to the Securities and Exchange Commission (SEC), is insider trading. In what amounts to a consent decree, Anthony will disgorge the 50.9K profit plus pre-judgment interest, and pay another 50.9K as a civil penalty, all without the inconvenience of admitting (or denying) any guilt in the matter.

A quick look at the Cox set-up:
* Garner Anthony was the former CEO of Cox Enterprises, the parent company for all Cox family businesses.
* Cox Communications is the cable TV MSO. It used to be public, but Cox Enterprises took it private again by buying out the public shareholders.
* Cox Radio is still public, with Cox Enterprises as its majority shareholder.
* The newspaper and TV groups are all part of Cox Enterprises via various wholly owned subsidiaries.

Analysts wary of Emmis near-term
Goldman Sachs analyst Mark Wienkes had some kind words for Emmis Communications following this week's conference call. "Historically and in spite of near-term challenges, Emmis has built a consistent track record of ratings and revenue outperformance relative to its markets that along with higher private market values, should reward long-term shareholders," he wrote. However, current uncertainties like the sale of its last handful of television stations, its still-pending bid for the MLB Washington Nationals and the apparently persistent weakness in the radio advertising environment have him recommending "staying on the sidelines" near-term. The situation is such that one of the company's greatest strengths, a radio portfolio based around solid large market beachfont properties, is currently a weakness, particularly Los Angeles. He further thinks the Nationals bid could set up a buying or a selling opportunity, depending. If the bid is successful, he expects the stock to be devalued, opening up a great opportunity to take a position. If unsuccessful, he thinks the stock price will jump, giving existing shareholders an opportunity to bail out. Over at Bear Stearns, Victor Miller and his associates are also watching TV sales and the Nats bid. They have rated the company "peer perform." With 60% of radio revenues coming out of Los Angles and New York, it will be helped greatly when those two markets rebound, and will continue to have difficulty if they do not.

It's a borrower's market
for radio and TV financing
RBR/TVBR assembled a group of lenders active in radio and TV financing and asked them about the current climate for borrowing money in broadcasting. After hearing that competition is growing in the field, we asked Steve Healey of CapitalSource Finance LLC, is this a good time for broadcasters to borrow money?

"Yes, absolutely Jack. The markets are very aggressive; capital markets are very plentiful right now. If you're a borrower now is a good time to come to market for capital. Structures are pretty favorable, pricing is very aggressive. I think the only question for the borrowers is what's the best deal I can get and if you talk to three, four, five lenders, who you can easily find, I think you're going to get the best deal in this market," Healey said. "I'm struck by the optimism; I'm encouraged by the optimism that all three of you have said this, which sort of is in contrast with the less than great performance of radio in recent years," said Mark Fratrik of BIA Financial Network, who joined RBR/TVBR's Jack Messmer in questioning the three lenders. Fratrik asked, "Why is so much capital available for radio stations where the industry hadn't really shown a great performance in the last two or three years?" "I was speaking to the general backdrop that we're operating in, which is a very favorable market place for borrowers, as to what is this particular situation for radio. I would agree with you that it is A slightly more challenging time period for radio and TV operators, given some of the changes in their industries, like lower revenue growth. In revenue growth, maybe we're talking of zero to 5% for a lot of properties. What that means is that we as lenders have to take a position on the growth trends that we think are reasonable and appropriate for these companies and to put the appropriate amount of leverage on these companies. That's the way I look at the business and I think that's what our view is," Healey said. This is an excerpt from part one of a roundtable discussion with four lenders that appeared in the March issue of RBR/TVBR Solutions Magazine.
| Read it here |

Wall Street Media Business Report TM

Sinclair on tap for Q1 results
Are you interested in what's going on over on the other side of the radio/TV divide? Television owner and operator Sinclair Broadcast Group, Inc. is gearing up for its Q1 2006 quarterly conference call. It'll be held Wednesday, 5/3/06. Financials will be released at 7:30 AM Eastern, followed closely by the call-in session at 8:45 AM. As usual, TVBR will tune in so you don't have to.

Ad Business Report TM

Radio ads promote foods and fitness plans
Here are this week's observations on radio advertising in the US, based on monitored data from Media Monitors:
| Read More... |

Salem Communications honors top ad reps
Salem Communications announced that 57 men and women have been inducted into the President's Club, a select group of advertising sales representatives who exceeded their collective sales goals by 3 million. 11 of the winners made it into the club for the third year in a row, 21 were second-year winners and 25 won for the first time. Ed Atsinger, Salem CEO, presented the awards last month.

Media Markets & Money TM

But what to do
with a half penny?
Those shareholders of record with a stake in the New York Times - - the ones who own an odd number of shares - - will have to deal with that question, but they had to deal with it anyway, as the company announced a 6.1% increase in the regular quarterly dividend from 16 and a half cents to 17 and a half for holders of Class A and Class B common stock. If you're a shareholder of record by 6/1/06 you'll get your payoff 6/13/06. "We are pleased that in a challenging advertising environment, the Company has remained committed to improving shareholder return through annual increases in our dividend," said Chairman Arthur Sulzberger, Jr.

Barry to Barry is a fifth of the story
William O. Barry represents 20% of the seller and all of the buyer for WAMB-AM in Nashville, according to paperwork filed with the FCC. If that fraction holds true for value exchanged, he'll be paying 400K of the 2M pricetag to himself. On a licensee to licensee basis, the station is going from Radio Nashville Inc. to Great Southern Broadcasting Co. Inc. It'll be entering into a duopoly with WCOR-AM Lebanon TN. The 1200 kHz daytimer has a CP to upgrade from 10 kw to 50 kw during the day, and to go fulltime by adding 90 watts of service at night off a four-tower directional array.

Washington Media Business Report TM

Tome time: FCC unmasked by college Profs
Communication teacher Kimberly A. Zarkin and Political Science instructor Michael J. Zarkin have authored a new book taking an in-depth look at the FCC. Entitled "The Federal Communications Commission: Front Line in the Culture and Regulation Wars," it takes a close look at what they call "...one of the most important and controversial agencies in the United States government." It's 400 pages, published by Greenwood Publishing Group, are aimed at students, teachers and general readers. In addition to general overviews of the FCC's responsibilities - - including how to renew a broadcast license, it goes into areas like "The Political Environment," "Notable Controversies in Mass Media Regulation," and an appendix called "Policy Statement on Indecency." And yes, they say the Michael Powell - - who personally is gone but whose legacy aftermath continues to lurch forward - - is a prominent topic. The authors are based at Westminster College in Salt Lake City.

NAB Day Time Planner

	The following will be attending the NAB. Call or email to make your appointment in advance.

EQUIPMENT Les Kutasi, Sales Manager; Stainless, Booth #C2447, 215-631-1313, [email protected] BROKERS Todd Fowler/David Reeder/Gene Ferry, American Media Services, Bellagio, 843-972-2200, [email protected], [email protected], [email protected] Cliff Gardiner, Clifton Gardiner & Company, 303-758-6900, The Wynn Hotel, [email protected] Andy McClure/Dean LeGras, The Exline Company, The Wynn Hotel, 415-479-3484, [email protected] Frank Boyle, Frank Boyle & Co., LLC, Hilton Grand Vacations Villa, 702/765-8300, [email protected] Gordon Rice, Gordon Rice Associates, 843-884-3590, Treasure Island, [email protected] John L. Pierce, John Pierce & Company LLC, Mirage Hotel, 859-647-0101, cell 859-512-3015, [email protected] Jamie Rasnick, John Pierce & Company LLC, Mirage Hotel, 859-647-0101, cell 513-252-1186, [email protected]	Dick Kozacko/George Kimble, Kozacko Media Services, The Wynn Hotel, office 607-733-7138, cell 607-738-1219, [email protected] Elliot Evers/Brian Pryor/ Adam Altsuler/Tim Beach Media Venture Partners, LLC, 415-391-4877, [email protected], [email protected] Larry Patrick/Greg Guy/Susan Patrick Patrick Communications, Bellagio, 410-740-0250, [email protected] Glenn Serafin, Serafin Bros., Aladdin Hotel, office 813-885-6060, cell 813-494-6875, [email protected] Larry C. Wood, Wood & Company, Inc., Alexis Park, office 513-528-7373, cell 513-225-5100, [email protected]. LAWYERS Gregg P. Skall Womble Carlyle Sandridge & Rice, PLLC 202-857-4441, Wynn Hotel [email protected] SALES Regional Reps Corp., Broadcast Sales Representatives, Stuart J. Sharpe, 216.535.3975, [email protected], Gail F. Lawing, 404.504.7030 [email protected],

Engineering Business Report TM

Staco Energy at NAB 2006
Staco Energy, in Booth C107, will be showing their new ServiStar protection maintenance plan for existing voltage regulators. They will also show the latest in power protection for transmitters, studio and mobile applications, including FirstLine, a transformerless double conversion UPS with the smallest foot-print in the industry that provides data center level protection.

Transactions

17M KDWN-AM Las Vegas NV from Radio Nevada Corp. (Clair Benezra-Reis) to Beasley FM Acquisition Corp., a subsidiary of Beasley Broadcast Group Inc. (George G. Beasley et al). 850K escrow, balance in cash at closing. Includes non-compete. Superduopoly with KKLZ-FM, KSTJ-FM, KCYE-FM. [File date 4/3/06.]

3.1M WRYV-FM Huntington WV-Ashland KY (Gallipolis OH) from Legend Communications of Ohio LLC (W. Lawrence Patrick, Susan K. Patrick) to Connoisseur Media of WV-OH LLC, a subsidiary of Connoisseur Media LLC (Jeffrey D. Warshaw, Michael O. Driscoll). 200K escrow, balance in cash at closing. Duopoly with WMGA-FM Kenova WV. [File date 4/3/06.]

Stock Talk

Another mixed bag for broadcasters
Fisher picked up a dollar and a quarter yesterday; ABC dropped, but only about half that much. On a broadcast stock chart with a healthy dose of both gainers and losers, the gainers look to have the edge - - but not by much.

Radio Stocks

**Here's how stocks fared on Wednesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		33.64	+0.34	Hearst-Argyle	HTV		23.35	+0.13
Beasley	BBGI		11.78	-0.17	Journal Comm.	JRN		11.50	-0.14
CBS CI. B	CBS		24.56	-0.24	Lincoln Natl.	LNC		57.18	+0.78
CBS CI. A	CBSa		24.60	-0.26	Radio One, Cl. A	ROIA		7.61	-0.05
Citadel	CDL		10.25	-0.12	Radio One, Cl. D	ROIAK		7.58	-0.08
Clear Channel	CCU		28.11	-0.06	Regent	RGCI		4.44	+0.10
Cox Radio	CXR		13.14	+0.16	Saga Commun.	SGA		9.20	+0.14
Cumulus	CMLS		10.81	+0.01	Salem Comm.	SALM		14.70	-0.06
Disney	DIS		27.48	-0.61	Sirius Sat. Radio	SIRI		5.13	-0.04
Emmis	EMMS		13.23	-0.05	Spanish Bcg.	SBSA		5.12	+0.02
Entercom	ETM		26.59	-0.06	Univision	UVN		34.49	-0.36
Entravision	EVC		8.48	-0.02	Westwood One	WON		9.55	-0.40
Fisher	FSCI		44.08	+1.25	XM Sat. Radio	XMSR		23.28	+0.25
Gaylord	GET		44.45	+0.27	-	-	-	-	-

Bounceback

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Below the Fold

Wall Street Media Business Report
Sinclair on tap for Q1 results

Ad Business Report
Foods and fitness plans
This week's observations advertising in the US...

Media Markets & Money
Barry to Barry
Is a fifth of the story...

Washington Media Business Report
FCC unmasked
By college Profs...

Radio Media Moves

ABC puts
up its Duke
Karen Duke has been named Vice President, Affiliate Operations and Accountability by ABC Radio Networks. She upgrades her business card from former title Senior Director of Affiliate Relations Operations and from her business digs in New York reports to Senior Vice President of Affiliate Relations and Business Administration John Rosso.

Genesis adds one, promotes another
Radio group Genesis Communications has hired Kelley McGrath as an Executive VP and promoted Brad James to Senior VP Of Programming and Marketing. They will operate out of Orlando and Tampa, respectively.

Demographics

Blue collar workforce changing: 35% Female, 22% Hispanic
The participation of females and Hispanics in the blue collar workforce is increasing dramatically in the metropolitan markets surveyed regularly by The Media Audit.
| Read More... |

TVBR TV News

VCI Launches Orion
Video Communications, Inc. (VCI), supplier of integrated media solutions to the broadcast and cable industry, announced today the introduction of Orion. Orion, the next generation of the industry's leading STARS II+ sales, traffic, and accounting software, includes all of the standard functions and modules of STARS II+ and adds dynamic new features that provide greater efficiency and enhanced profitability. Orion drives the use of VCI software beyond basic sales and traffic; allowing users to draw on traffic data as a resource tool for increasing profits and expanding business intelligence. Orion also addresses many of the needs placed on managers and back-office technologies brought about by the consolidation of the industry. Orion includes the following newly developed features:
| Read More... |

RBR Radar 2006

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

Big market anchors cause
Emmis to miss target
In a word - Weakness in the two largest markets are on the books to hit Emmis with their Q4. Emmis's domestic radio business, was a big factor in a drop in station operating income from 24.4M to 19.5M; additionally, the company blamed increased promotional costs in Chicago and an unexpected bankruptcy from a core advertiser which by itself resulted in a 1.3M hit. Plus loss of auto business and Ford being their key did not help their results.

RBR observation: The canary in the mine reported its Q4 and closed out their year and it did not end on an up note, see below. So this tells all of us what radio can anticipate as the rest begin to roll out their Q1's. RBR suspects it will not be a pretty site for the medium as a whole. What radio needs more than ever is strong united leadership front attack. RBR is not talking lip service but it is time the top guns hit the streets themselves and start making calls talking about the radio business as a complete business. RBR agrees with Smulyan that radio is a rock solid business but one must work a business to make it successful.
04/19/06 RBR #77

Indecency wars still front and center
The FCC noted late last week that it had received further opposition from CBS regarding indecency forfeitures assessed for a broadcast of "Without a Trace." It indicated it would, as usual and as a matter of course, review the broadcaster's remarks, but also said it believed its rulings were correct.

RBR observation: We always thought that the whole thing about the Janet Jackson episode was that it was pretty much unprecedented. Frankly, we've seen hundreds of wardrobe malfunctions on those blooper and home video shows where the malfunction is not fleeting at all. We wish CBS and the other networks well in their battle for some kind of indecency policy that makes sense - - we sure don't have one now.
04/18/06 RBR #76

Finally! An Ad guy saying it
HD Radio isn't ready for prime time. Rich Russo's comments are right on the mark. Even if we ignore the technical issues, there need to be receivers of the type people actually use (battery operated) and programming that's taken as seriously as the main/analog channels. We need showbiz on HD2. Otherwise, the one chance we'll have to sell a receiver will be lost to dull programming. Bounce Back
04/17/06 RBR #75

Fighting back on indecency
The FCC is finally going to have to defend its indecency standard in court. ABC, CBS, Fox, NBC, Hearst-Argyle and the various network affiliate associations filed a slew of appeals in federal courts all over the country challenging several of the indecency rulings the FCC issued last month.

RBR observation: It has been nearly three decades since the US federal courts have ruled in a broadcast indecency case and there can be no doubt that the FCC's standards for what is or is not indecent has been all over the road during that time. In recent years, the trend has been toward an ever more schoolmarms approach - We see two possible outcomes: review them in
04/17/06 RBR #75

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