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Welcome to RBR's Daily Epaper
Volume 24, Issue 78, Jim Carnegie, Editor & Publisher
Friday Morning April 20th, 2007

Radio News ®

CCU bidders say offer is final
Don't go saying "please, sir, may I have some more" to Bain Capital Partners and Thomas H. Lee Partners. They upped their offer for Clear Channel to 39 dollars a share, and that's as high as they're going to do. But it looks like two big stakeholders aren't going to budge from their opposition to the offer. In a joint statement, the two investment firms said, "In response to inquiries from various parties, and to avoid any doubt, we want to clarify that the amended merger agreement announced today, which has been recommended by the Board of Directors of Clear Channel Communications, Inc., is our best and final offer. We believe our offer provides shareholders with certainty and a very attractive premium of approximately 33.3 percent over the average closing share price during the 60 trading days ended October 24, 2006. We will respectfully submit to the decision of shareholders on May 8, 2007." Clear Channel's board of directors said they, minus conflicted and therefore recused members, said it has "...unanimously approved the amended merger agreement and recommends that the shareholders approve the amended merger agreement and the merger." The new vote among shareholders of record as of 3/23/07 will be 5/8/07. Shareholders will receive proxy materials that morning. According to reports, Fidelity Investments and Highfield Capital Management, still intend to vote to nix the deal. They hold about 15% of all outstanding shares, putting the ceiling of potential yes votes at 85%. The partners need 67% to gain approval.

Kilgore was here
It's not just the National Association of Broadcasters that is trying to put the kibosh on the proposed merger between XM Satellite Radio and Sirius Satellite Radio. According to the Center for Public Integrity, a group called the Consumer Coalition for Competition in Satellite Radio (C3SR) is actively lobbying the FCC to oppose the merger, and it has a relatively high profile individual knocking on doors on the FCC's 8th Floor. That would be former Virginia Attorney General and recent gubernatorial candidate Jerry Kilgore (R). Kilgore has had a meeting with Deborah Taylor Tate (R) on behalf of the organization, which claims to be the only one representing the interests of the two DARS companies' subscribers.

RBR observation: It seems as if it is not hard to find attorneys and economists to testify against the merger. The NAB will no doubt be happy to add consumers to its list of allies.

Arbitron Q1 revenue up 7.9%
Arbitron announced its Q1 results with revenue of 91.8 million, an increase of 7.9% over revenue of 85.1 million during Q1 '06. Arbitron CEO Steve Morris was proud to contribute some of the growth to equipment sales in the quarter related to its PPM licensing business. Excluding the impact of these sales, revenue grew 7.1%. However, costs and expenses for the quarter increased by 18%, from 53.7 million in Q1 of 2006 to 63.3 million in Q1 of 2007, due primarily to planned spending on the rollout of the PPM service. The proportionate share of net loss of affiliates in Q1 increased to $(3.8) million from $(2.4) million in Q1 2006. The increase was due primarily to Arbitron's $(1.1) million share of the net losses for the Project Apollo, the joint effort to develop a national marketing research service with Nielsen. On PPM progress for the quarter, Morris mentioned Cox's decision to encode in Houston and CC Radio's decision to encode and subscribe in Philly-which gets its first PPM currency release on 4/27. Houston's release comes in late July. All Houston stations are encoding, but many subscriptions are yet to be signed. "In the meantime, we're building the panel for New York. We're about 40% complete and we expect currently delivery in December." 52% of the stations in the Big Apple have so far been contracted as well for encoding. Net income for the quarter was 15.5 million, a decrease of 14.8% from 18.2 million for Q1 2006. Net income per share for Q1 2007 was 0.52 (diluted), compared with 0.58 (diluted) for the comparable period last year, a decrease of 10.3%. For the full year, Arbitron continues to expect that revenue will increase between 5.5% and 7.5% in 2007 compared to last year. Earnings per share (diluted) for FY '07 is expected to be between 1.30 and 1.50 versus 1.68 in 2006. When asked about PPM rollout in 2008, Morris said they can contemplate spending for rollout markets 6-9 months ahead of commercialization. With Chicago and LA commercializing in January, there are significant costs associated with getting that panel up in place. As to the Philadelphia PPM data, Morris said there's currently a lot of intense screening going on from Arbitron and a lot of conversations going on between the buyers and sellers. "We're not directly a part of those conversations, so it's too early to tell specifically the outcome, but I can attest to the great intensity there in terms of dialogue."

RBR observation: A lot of those conversations are likely to center on morning drive numbers-they're usually lower with PPM readings, as folks tune away often during their favorite show's commercial breaks. That tune-away often doesn't get registered on diaries. Needless to say, morning drive is the cash cow for most stations.

Congress may put leash
on new drug ads

The Senate Committee on Health, Education, Labor and Pensions has forwarded a bill to the full Senate which would impose a two-year waiting period on manufacturers of new prescription drugs before they can begin advertising them. The language is in the FDA Revitalization Act, which passed the committee in a 15-5 vote. The goal of the bill, which Committee Chairman Ted Kennedy (D-MA) and Ranking Member Michael Enzi (R-WY) have been working on since 2004 when Vioxx was linked to a number of user deaths, is to give the FDA more power to promote and increase drug safety. The two-year advertising ban is intended to provide time for any hitherto undiscovered problems with a new drug to come to light. According to reports, new drugs are part of an annual 5B-a-year direct-to-consumer pharmaceutical advertising budget. Similar legislation is making its way through the House of Representatives under the care and feeding of Maurice Hinchey (D-NY). At least one Republican there, Richard Burr (R-NC), expressed opposition to the plank, saying it deprived consumers of information, and that they should be protected from abusing any such new drugs because of the need for a prescription. The pharmaceutical industry has been attempting to head off such legislation through voluntary guidelines, and according to the Washington Post, the Advertising Council is already putting together a First Amendment argument for a possible court challenge if the bill makes it into law.

RBR observation: As consumers, we cannot imagine the circumstances under which we would suggest to our personal physician what drugs he should be prescribing for us. But apparently the number out there support the notion that advertising medicine to people who cannot go out and buy it does bump up sales. There are probably a lot of twists and turns ahead for this one. Stay tuned.

Roberts cleans up its playlist
If it's deemed to be violent, sexist or racist, you will no longer hear it on Hip Hop WRBJ-FM Jackson MS. In the wake of the events that led to the firing of Don Imus, at least one broadcaster has responded to the charges that Imus was only echoing what can be heard on Urban radio stations throughout the country any day of the week. Roberts Broadcasting owns the FM, along with a television stations there and three more, in St. Louis, Columbia SC and Evansville IN. The owners are African American. Steven Roberts told the Associated Press in St. Louis, "We take tremendous pride in being African-American and refuse to let anyone, white or black, strip us of that pride." It is not going to be a matter of bleeping out words in songs deemed to have crossed the line, according to the company. Songs with offensive material simply won't make it onto the playlist. The company will consider a similar policy for its television stations (three CW affiliates and one MNT affiliate) but thus far none have received any relevant complaints.

Wall Street Media Business Report TM
Tribune posts losses
The company that Zell is buying had a rough first quarter. Challenging conditions in the newspaper business and the odd-year cyclical drop in the television business contributed to red 15.6M number at the bottom of the Q1 2007 profit column, compared to a 102.8M net gain in Q1 2006. However, balance sheet one-timers had a large effect on results. The company owns and operates large market newspapers, television stations and one legendary AM station. The one-time debits were associated with the sale of newspapers in New England, a charge associated with new union contracts at Newsday, extra debt traced to stock buybacks and other non-operating charges. Publishing suffered from weak, Internet-challenged classified advertising and dropped 6% in ad sales overall. The television stations had a slight drop in revenue to 264M, but dropped 6% in operating cash flow to 78M and 8% in operating profit to 67M - not a bad result in a non-political year.

RBR observation: The big challenge in moving the company into the Sam Zell era is getting it there in one piece. The failure to liberalize broadcast/newspaper crossownership rules in 2003, coupled with the pending nature of the court-ordered review of those rules, has led the FCC to grant waivers to allow such combinations to continue. But so far, we've been talking about companies with consistent ownership. When it comes to ownership changes, it may be a different story. In both the sale of ABC Radio properties to Citadel and the proposed sale of Clear Channel to an investor group, grandfathered radio clusters that were not really affected in any way were simply broken up by the dealing parties. The FCC may view the Tribune sale as an excuse to put an end to the TV/print waivers. Democratic Michael Copps has been promising close scrutiny of the Zell deal, and that will no doubt be one of his key focus points. Stay tuned.

Adieu, NYT
Like a lot of newspaper companies, the New York Times Company is having a difficult time managing the early stages of the new millennium. Classified advertising is being damaged by the Internet, and print advertising remains weak. NYT, until recently, had the opportunity to buoy its earnings with results from its television group, but its sale to Oak Hill Capital Partners has caused it to be left out of the latest quarterly results. The company has also sold one of its two New York City radio stations to ABC, leaving it with only one remaining broadcast property, Classical WQXR-FM. That may not be enough of a tipping point for continued coverage of this company in this space. So New York Times, it's been fun. And we're sure we'll see you around every single day as we troll the media universe for broadcast news.

Ad Business Report TM

Best Buy adds HD Radio;
new focus of ad campaign

Best Buy has joined forces with the HD Digital Radio Alliance and iBiquity Digital to now offer HD radios at all its 832 stores nationally. The HD Radio launch is supported by a marketing communications program that includes the latest phase of the Alliance's previously announced 250 million radio campaign. Best Buy is the first national retailer to make HD Radio technology available to customers throughout its national chain. Customers will find a premium HD Radio experience in their cars with the JVC HD-W10 receiver and the Visteon Zoom. Throughout 2007, the HD Radio line-up will expand to home products and more mobile offerings. The retailer's broadened HD Radio product emphasis also is supported by a consumer education effort that includes advertising in its weekly newspaper inserts and a comprehensive in-store point-of-sale program featuring in-store branding and product displays. In addition, interactive HD Radio listening stations will enable customers to experience the technology's diverse content and clear sound. The retailer's in-store program is further reinforced in all markets by the Alliance's ad campaign, with spots running on all Alliance-member stations.

Media Markets & Money TM
EMF stays hot
This time, the seemingly unquenchable thirst for FM stations has brought Religious noncom Educational Media Foundation to Hot Springs AR, where it is buying KALR-FM. According to Greg Guy and Summer Foust of Patrick Communications, seller Applied Life Ministries will pick up 275K for the station. It operates in the reserved band at 91.5 MHz.

Close encounter in Pueblo
Kansas City Catholic Radio Network has completed its deal to acquire KFEL-AM in Pueblo CO. Broker Jamie Rasnick of John Pierce and Company tells us the price was 450K, and adds the station to KCCRN properties in Kansas City and Wichita. Jim O'Laughlin heads the buyer; the seller is Allen Bickle's Wellspring Harvest Ministries Inc.

A towering investment
You can't broadcast without towers - and that holds true for cellular telephones and other wide-coverage wireless technologies. Horvath Towers, based in South Bend, IN, announced that it has secured a new eight million bucks private equity investment commitment, which it intends to use to acquire sites and build more towers. Horvath Towers is a relatively new company formed by CEO Jackie Horvath in partnership with Peppertree Capital, which led the initial funding round. Horvath was advised by Media Venture Partners.

Washington Media Business Report TM
FCC set to take up
post-deadline dual carriage

The FCC has let the sun shine on its next open meeting agenda, scheduled for Wednesday 4/25/07 next week. For the second time in a row, Chairman Kevin Martin has his item broom out, taking on nine items. One is a proposal to require dual digital/analog broadcast carriage on cable systems after the DTV deadline has passed. The problem lies with the fate of households relying on analog equipment after the 2/17/09 DTV deadline, who are also not subscribed to a cable system's digital tier. To make sure they continue to receive service, cable systems may be required to offer dual analog/digital carriage to in-market broadcast television services or otherwise get the stations to the affected households. Other agenda planks include a Second and Third Periodic Review of the DTV conversion. The Second will look at retailer television receiver labeling requirements, and the Third will look at "procedures and rule changes" to bring the conversion to completion. Other broadcast items include an look at comparative standards in a noncom LPTV auction and an FM Table of Allotments issue in Puerto Rico.

Entertainment Media Business Report TM
Bonneville to up HD multicast ante in DC
Bonneville DC market engineer Dave Garner confirms Bonneville plans to add its unsigned bands channel to the WTOP outlet, likely as an HD-3 format. That adds to WTOP's HD-2 channel featuring classic and current adult hits "George" format (lost to a Radio One LMA of 104.1 earlier this month). He also confirmed a country music format on 107.7 in the market as an HD-2. The main signal is Washington Post Radio. iChannel music HD multicast channels are currently being rolled out nationwide with Bonneville.

Ratings & Research
Digital platforms continue to
extend radio beyond the AM/FM dial

According to the latest study by Arbitron and Edison Media Research, The Infinite Dial 2007: Radio's Digital Platforms, consumers are continuing to explore radio in all its digital platforms -- Online Radio, Satellite Radio, HD Radio, and audio podcasting -- while maintaining a broad use of AM/FM radio.

Key findings include:
* AM/FM radio continues to have a big impact on people's lives. The study asked consumers to rate the impact different digital audio platforms has on their lives. Nearly one in five (19%) consumers said radio has a big impact on their lives; ranking second only to mobile phones (35%) as the audio platform/device that has the biggest impact on the lives of its users.

* Those who listen to digital radio platforms do not spend less time listening to AM/FM radio. Among all persons 12 and older who participated in the study, the average time spent listening per day to AM/FM radio was 2 hours, 37 minutes compared with 2 hours, 45 minutes a day among those who use radio's newer digital platforms (listened to online radio in the last month, or subscribe to satellite radio, or have ever listened to an audio podcast).

* The weekly Internet radio audience remains steady over the past year at an estimated 29 million. 11% of the U.S. population age 12 and older have listened to Internet radio in the past week; 16% of persons age 18-34 and 14% of persons 18-49 have done so.
* iPod/Portable MP3 player ownership continues to rise. Thirty% of Americans age 12 and older own an iPod or other brand of portable MP3 player; this figure has risen from 22% in 2006 and 14% in 2005. More than half (54%) of those age 12-17 own a digital audio player.

* Fewer than 10% report less time with over-the-air radio specifically due to time spent with their iPod/portable MP3 player. 70% of Americans age 12 and older do not own an iPod/portable MP3 player, and an additional 15% report the device has had no impact on radio listening. 9% say they are listening less to over-the-air radio due to time spent with their iPod/portable MP3 player.

* Awareness of HD Radio nearly doubled in the past year, but that has not yet translated into high interest. In January 2007, 26% said they had heard or read about HD Radio recently, compared to 14% in January 2006; however, only 6% said they were "very" interested in HD Radio.

* While awareness of podcasting is up significantly, usage of audio podcasting is only up slightly. Awareness of podcasting has jumped from 22% in 2006 to 37% in 2007. In that time, those having ever listened to an audio podcast have risen from 11% to 13%.

800K WLCK-AM/WVLE-FM Bowling Green KY (Scottsville KY) from Sherandon Broadcasting Company Inc. (Danny Tabor) to Skytower Communications Group LLC (Darrin Evans, Melissa Evans). 125K cash at closing, 675K note. Duopoly with WGGC-FM Bowling Green KY. [File date 3/30/07.]

356,250 FM CP Holualoa HI from Marquee Broadcasting Inc. (Patricia Lane) to Parrot Broadcasting LP (Scott D. Parker). 18.5K escrow, 71,562.50 cash at closing, 67,178.50 on one-year anniversary, 200K note. CP is for Class C1 on 92.1 MHz with 4.5 kw @ 2,930'. [File date 3/30/07.]

Stock Talk
Radio stocks down
While there was another record-breaking Dow close yesterday, radio stocks were largely down. Arbitron lost 69 cents; Clear Channel lost 27 cents.

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




Citadel CDL
9.66 -0.03

Radio One, Cl. D




Clear Channel








Cox Radio




Saga Commun.








Salem Comm.








Sirius Sat. Radio








Spanish Bcg.
















Westwood One








XM Sat. Radio





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Below the Fold
Ad Business Report
Best Buy adds HD Radio;
new focus of ad campaign
Best Buy has joined forces with the HD Digital Radio Alliance and iBiquity Digital to now offer HD radios at all its 832 stores nationally...

Media Markets & Money
EMF stays hot
This time, the seemingly unquenchable thirst for FM stations has brought Religious noncom Educational Media Foundation to Hot Springs AR...

Washington Media Business Report
FCC set to take up
post-deadline dual carriage
The FCC has let the sun shine on its next open meeting agenda, scheduled for Wednesday 4/25/07 next week...

Ratings & Research
Digital platforms continue to extend radio beyond the AM/FM dial
According to the latest study by Arbitron and Edison Media Research, consumers are continuing to explore radio in all its digital platforms...

Stations for Sale

Philadelphia and Pittsburgh
Newly Upgraded Daytime AM’s
Each covers over 2 mil pop
As package or alone
[email protected]

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NEast, very profitable w. T site.
8.5x trailing CF. Price 950K
Inquiries 781-848-4201
email: [email protected]

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June Barnes
[email protected]

Radio Media Moves

RTNDA baton passed
The new chairman of the Radio-Television News Directors Association is KYW-AM Philadelphia's Bill Roswell, taking over for Angie Kucharski of WBZ-TV/WSBK-TV Boston. Also new is Chairman-elect Ed Esposite from WAKR/WONE/WQMX Akron OH.

More News Headlines

Gannett Q1 profit falls 10% on weaker ad sales
Gannett said Q1 profit fell 10% after ad sales declined at USA Today. Net income fell to 210.6 million, or 90 cents a share, from 235.3 million, or 99 cents, a year earlier. The company was expected to earn 89 cents, the average estimate of 13 analysts surveyed by Bloomberg. Gannett CEO Craig Dubow plans to counter the decline by creating regional groups of newspapers to share resources and save money. Q1 ad revenue at Gannett newspapers declined 1.9%; classified-ad sales fell 3%. At USA Today, revenue dropped 7.9%. Gannett blamed the ad declines on severe weather in March and a drop in real estate sales. "Results for the quarter were in line with expectations. On the positive side, our operations in the UK contributed to our results as did online revenue company wide," said Dubow. "Our broadcasting segment posted positive revenue growth. The acquisition of the additional television stations in Denver and Atlanta, and strong results for Captivate and online, offset the absence of over 22 million of Olympic-related ad spending." Total operating revenues for the quarter were flat at 1.87 billion in the first quarter compared to 1.88 billion in Q1 '06. Broadcast results for the quarter include WATL-TV (acquired in August 2006) and KTVD-TV (acquired in June 2006). Broadcast revenues (which include Captivate) increased slightly to 183.1 million in Q1. This reflected revenue from the acquired television stations, a 16.7% increase in Captivate revenues and strong revenue gains for our television stations' online operations, offset by the absence of significant ad demand related to the Olympics. Broadcasting revs would have been 6.3% lower if Gannett had owned the same group of stations in both the first quarters of 2007 and 2006. Reported broadcasting expenses increased 7.3% in the quarter. However, on a pro forma basis, broadcasting costs would have been less than 1% higher. Operating cash flow was 72.9 million in Q1. Television revenues were 176.8 million in Q1 compared to 177.2 million in the same quarter a year ago.

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

NAB 2007 From Vegas
Pittman: Follow the consumer
Forget about radio and TV being on the way out In a speech to NAB2007 on where to invest venture capital, MTV founder and former AOL President Bob Pittman, now heading the Pilot Group investment fund, noted the "continuing dominance of TV and radio" in consumer media usage. The three venture capital fund partners in the panel that followed Pittman on the same stage did not fully endorse his upbeat view of radio and TV investments. (more from Pittman and NAB in RBR)
04/19/07 RBR #77

On a Clear day,
you can see more money
Thomas H. Lee Partners and Bain Capital Partners have adopted a new tactic in their battle to take media giant Clear Channel private. Apparently, the addition of non-monetary incentives to the deal has done little to erode shareholder opposition to the buy-out, so the bidders have elected to up the ante. The new offer is for 39 dollars a share, up from 37.60, taking the total value of the deal by about half a billion dollars to 19.5B.

RBR observation: Is it enough? We reported a few days ago that the magic number was 40 bucks. This offer doesn't quite get there, but is much closer. Still, it is a huge hurdle to get the two-thirds approval required by Texas law, especially since unvoted shares count as no votes. Vic Miller at Bear Stearns and Jonathan Jacoby at Bank of America continue to tell clients that 39 is just not full value for Clear Channel. Highfields Capital, and the Fidelity mutual fund group quickly repeated their opposition to the buyout. Attentive Clear Channel watcher Victor Miller of Bear Stearns wondered if the bidders were playing "bump and run," hoping that investors will simply go for the increased bid. He speculated that the offer still was on the low side and RBR happens to agree.
04/19/07 RBR #77

NAB 2007 From Vegas
FM translators for
AM stations an idea on a roll
One AM station in Rock Hill, SC already has an FM translator under Special Temporary Authority and the two FCC Commissioners speaking at NAB2007 in Las Vegas indicated that action may come quickly on making it possible for many other AMs to do the same. - More from NAB in this report
04/18/07 RBR #75

Confusion for clients at
CC Radio over Google deal?
We're hearing from sources off the record that there's a bit of confusion in the client community and CC sales folks over the CC Radio-Google inventory deal yesterday (4/17/07 RBR #75). It could have been handled better internally: "A client just told me that she tried to get an update from Premiere yesterday but everyone was in the dark. The salespeople are looking for an answer but Kraig [Kitchin-Premiere Radio Networks President] hasn't had any sort of sales meeting. .. ." We also heard the rank and file sales folks at CC Radio aren't necessarily taking it well, at least just yet: The salespeople and some executives are upset about it for three reasons..." To review the 3 reasons see RBR Ad Business Report section in this issue.

RBR observation: Again and again the classic example of upper management not informing the key players involved on what is going on or, putting the Cart before the Horse. When will they ever learn.
04/18/07 RBR #75


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