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Volume 24, Issue 83, Jim Carnegie, Editor & Publisher

Friday Morning April 27th, 2007

Radio News ®

Pacings soft for Clear Channel Radio
After delivering what CEO Mark Mays, pictured, called "solid first quarter results," with radio revenues up 3% to 819.7 million, Clear Channel Communications warned that radio is pacing down 1.6% for Q2. How will that affect the May 8th vote on the going private buyout? Bank of America analyst Jonathan Jacoby said the Q2 outlook was worse than he had expected for radio, but he said the market had already likely anticipated a soft Q2. Meanwhile, business at Clear Channel Outdoor (a 90% owned subsidiary) remains robust. "Our view is that nothing in today's release will change the minds of those who want more than 39," Jacoby said, so he thinks it is a "coin toss" whether the 39 bucks per share buyout bid will be accepted on May 8th. At Lehman Brothers, analyst Anthony DiClemente called the company's guidance "unimpressive." Should the 39 bucks bid be voted down, he sees the stock trading down to the 33-35 range.

RBR observation: Less is still less. While Q1 radio revenues were up from a year ago, they were still down from before Clear Channel launched its Less is More initiative. That target was 832.9 million in radio revenues set in Q1 of 2004 - three years ago. Clear Channel has sold a few small market stations in the interim, but that hardly accounts for the 13.2 million shortfall. Clear Channel's main business is radio, not outdoor, so it doesn't make a lot of sense to depend on a bailout from the #2 business line if #1 is still ailing. All in all, Clear Channel's Q1 results appear to argue for the "take the money and run" side as far as the May 8th vote is concerned.

XM on target in Q1
XM Satellite Radio reported Q1 financial results right in line with Wall Street expectations. Revenues increased 27% to 264 million bucks. The quarterly operating loss improved to 27 million from 49 million a year ago. For this year, XM is projecting that it will end 2007 with 9.0-9.2 million subscribers and book about a billion bucks in subscriber revenues. There were no surprises in the quarterly conference call, although some analysts are concerned about the rate at which the company is converting OEM receiver sales to paying subscribers. There was no new news about the pending merger with Sirius, since the company had already stated that it had received a request for additional information from the Antitrust Division of the Department of Justice.

Watchdogs unholster responses
to violence report
The FCC's open-ended recommendation to Congress that it go ahead and write up some laws concerning broadcast violence did not go unnoticed among the megaphone holders. For starters, both the NAB and NCTA would prefer that parental controls be given a chance to work. Indianapolis Mayor Bart Peterson, who doubles as President of the National League of Cities (NLC) praised the effort, but at least called for his municipal colleagues to take on the issue themselves rather than wait for Washington to get around to doing anything. Cheryl A. Leanza of the United Church of Christ endorsed the FCC's effort, saying parents face the choice of exposing their children to harmful material or withdrawing them from the culture entirely. Jim Dyke of industry-sponsored watchdog TV Watch countered that most parents want to control content in their own home, not cede the task to the government, and that V-Chips and blocking technologies are widely available to enable parents. Caroline Fredrickson, Director of the ACLU Washington Legislative Office made no bones about it, saying the government should stay out of our living rooms, and labeling the current attempt "political pandering."

RBR observation: Apparently the Founding Fathers somehow telegraphed that speech regulation powers are right there in the Constitution, if only you have the will and ability to find them between the lines, or somewhere. Evidently, the actual text seen by those so gifted is something along these lines: "First Amendment excerpt, 2007 edition: Congress shall make no law...abridging the freedom of speech, unless urged to do so by a group of five unelected self-appointed national nannies installed in a federal bureaucracy that doesn't even exist yet, and that includes the power to eliminate all the times Daffy Duck's bill gets shot to the back of his head by Elmer Fudd, so there."
| Watchdog statements here |

Latest buyout: Harman International
Private equity is snapping up another public company. Harman International Industries, which manufactures professional and high-end consumer audio equipment, announced that it had agreed to a buyout for eight billion bucks by KKR and GS Capital. Shareholders are being offered 120 bucks per share (the stock closed at 102.56 before the announcement) or they may chose to exchange them for a stake in the new company that is being created to acquire Harman. Those new shares will be registered with the SEC, but not listed on any stock exchange. Founder and Executive Chairman Sidney Harman intends to cash out half of his 5% stake.

2008 committee war chests filling up
The 2008 presidential campaign is off to an unusually early start, with hungry candidates soaking up as much cash as they possibly can. And underneath that, the politician's own campaign committees, including the RNC, the DNC and both party's Senate and House committees, also are digging into the campaign contribution pie. According to CQ Politics.com, the Republican National Committee (RNC) has opened an advantage over its opposite number, but the two Democratic congressional committees are outdrawing their respective opposite numbers. What's also interesting is that they all seem to be spending money already. The RNC is sitting on 12.8M and is debt free, a sizable lead over the Democratic National Committee which has only 6.8M and owes 3M. Over in the House of Representatives, the Democratic Congressional Campaign Committee (DCCC) has opened a big lead, with 9.9M on hand and 5M owed; the National Republican Congressional Committee, by contrast, is in the red, with 2.6M on hand against 7.9M in debt. On the Senate side, the Democratic Senatorial Campaign Committee (DSCC) is well bringing money in much faster than the National Republican Senatorial Committee (NRSC), but after pulling out all the stops toward the end of the midterms, 9.5M on hand against 6M in debt. The NRSC stands almost even, with 3.5M on hand against 262K in debt. And here's what they spent in March alone: DCCC (6.5M); RNC (5.8M); NRCC (5.7M); DNC (5.6M); DSCC (1.7M); and RNSC (1.5M).

RBR observation: Although much of the early spending may be going to organization building, it's a given that a great deal of this cash will wind up in the hands of broadcasters before all is said and done. There is every indication that the 2008 cycle will blow all others out of the water.
| More color on financials |

Wall Street Media Business Report TM

Revenues up at Fisher
Fisher Communications reported that Q1 revenues rose 10% to 34.2 million bucks. "We gained solid revenue and net operating results in the first quarter of 2007 -- especially in our large-market Univision-affiliated television stations and our Seattle radio stations. Though the first quarter of the year is generally seasonally lower in the broadcasting industry, we are very encouraged by our first quarter 2007 results and the launch of our Seattle Univision television station, KUNS," said President and CEO Colleen Brown. TV revenue was up 8% and radio gained 13%. Fisher's net loss for the quarter improved to 1.2 million from 1.7 million a year ago.

Clear Channel revenues up in Q1
As management waits to see if shareholders will approve a buyout next month to take the company private, Clear Channel Communications reported that Q1 revenues rose 8% to 1.61 billion bucks. Radio revenues rose 3% to 819.7 million and outdoor advertising revenues jumped 15% to 690.9 million. In the "other" category, which includes Clear Channel Television (sale pending) and the Katz Media rep firm, revenues for the quarter were flat at 129.7 million.

Ad Business Report TM

Kathy Crawford: Nothing to
fear on PPM in Philly
Well, the first PPM numbers are coming out today for the City of Brotherly Love and there's a bit of apprehension from the radio stations. We will be asking for opinion on those numbers, but for now we asked Kathy Crawford, MindShare President/Local Broadcast, about fears that there will be lower AQH numbers and therefore less dollars for radio in the market.

Will buyers increase the CPP value to compensate? How will it pan out in negotiations?
"The same way that it happened with the LPM [Local People Meter-for TV]. The bottom line was the pricing didn't change, the CPP changed," says Crawford. "Now, that is not to say that station 'A' in early news or late news went up and somebody else went down. But the average CPP remained what it was with a new number. It wasn't about price; it wasn't about CPP. It was about the numbers being lower and a change in currency. That's what's going to happen with the PPM-it's already happened in Houston. So why would it be any different in Philadelphia?"

So the CPPs went higher because the numbers were lower? They compensated?
"Let me put it this way. A few years ago we went from the Franc to The Euro. Does that mean that the value of the product changed? No, it's just how it was priced. And it was priced in a different currency. It doesn't mean that the same item had a lower or higher value. It just changed. And that's really what this is all about. It's just a currency change."

So stations shouldn't be alarmed?
"No, but there are going to be individual changes-especially in demographics that were harder to measure in the diary. Those demographics will have a potential of being a greater change because they were do difficult to measure. But that doesn't mean that that overall there's going to be a whole heck of a lot of difference. It's a very simple situation."

Is it that easy to just establish a new currency? Buyers and sellers just sit down and go over it all?
"Yes, to some degree. Buyer 'A' will say to Station 'A', 'But you went down exponentially greater than so and so, so I'm going to come after you for make up/make goods later.' That will happen, but overall, it is what it is. It's much closer to reality in the PPM than it was in the diary."

Washington Media Business Report TM

Tampa ownership forum
casting call complete
We now know who the panelists are for the upcoming 4/30/07 FCC Public Forum on media ownership. Broadcasters will be well-represented on Panel One, which will provide a Tampa-St. Petersburg market overview. The panelist include: Dan Bradley, Media General Vice President of News for Broadcast; Bill Carey, General Manager of WFTS-TV and Incoming President of the Florida Association of Broadcasters; Robert Dardenne, Associate Professor in Journalism and Media Studies at Univ. of South Florida-St. Petersburg; Steve Erlanger, President, Hometown News; Ronald Gordon, President of ZGS Broadcast Holdings; Jim Johnson, Publisher of State of Sunshine, a political blog covering the state of Florida; Eric Klinenberg, Associate Professor of Sociology at New York University; Patrick Manteiga, Editor and Publisher of La Gaceta; Pat Roberts, President of the Florida Association of Broadcasters; Art Rowbotham, President of Hall Communications; and Steve Wilson, Investigative Journalist. That will be followed by Panel Two, "Perspectives on Media Ownership," again with broadcasters well-represented. The panelists will be: Gerardo Reyes-Chavez, Coalition of Immokalee Workers; Glenn Cherry, President/CEO and Chairman of the Board of Tama Broadcasting; Roswell Clarke, Director of Technical Operations and System Admin., Cox Radio-Tampa; Bob D'Andrea, President of the Christian Television Network; Dr. Karen Brown Dunlap, President of The Poynter Institute; Bob Gremillion, President, CEO and Publisher of the South Florida Sentinel; Carol Jenkins, President of The Women's Media Center; Larry Lee, Jr., Owner of WFLM-FM/WIRA(AM), Port St. Lucie, Florida; Luis Lopez, Director of Public Relations, Hispanic Alliance of Tampa Bay; Carlina Rodriguez, Director of Organizing Spanish Language, Screen Actors Guild of America; Sam Rosenwasser, President and General Manager of WTSP(TV); and Rich Templin, Communications Director, Florida AFL-CIO.

Media Markets & Money TM

Sometimes it's all in the translation
Edgewater Broadcasting is picking up a noncom DIY project earmarked for Grand Island NE. The CP, for a Class A on 91.5 MHz with 1.5 kw @ 148", is coming from Stockton Christian Life College Inc.. The parties reported the value of the deal at 45K in documents filed with the FCC. What's interesting is how that figure will be attained. There's 45K in cash, which will be paid at closing. The rest will come in the form of "one or more additional FM translator construction permits" which must reach 130K citizens. It will either come in the form of translators already owned by Edgewater, or may be effected by transferring an El Paso translator (good for 100K in served population) and/or a Hobbs NM translator (good for 30K in served population), if the "may become available to the buyer or its affiliate." The parties agreed to mutually process any paperwork necessary to fulfill the transactional portions of the compensation package.

Ratings & Research

A look at cell phone usage
Of all the tech gadgets and innovations available to consumers, a survey from Jacobs Media clearly shows the growing influence and importance of the cell phone. Technology Poll III finds that overall, 92% of the entire sample own one - up from 90% in '06. And in the past year, nearly half (48%) say they're using cell phones a little or a lot more. This is a gadget that women are especially comfortable with. They use cell phones more often than men, and they are more apt to enjoy and use many of the features that are becoming standard equipment on these devices. Cell phones are also a dominant player in the lives of America's youth. When given a choice of devices and technologies, ranging from television to the Internet to FM Radio, 18-34 year-olds say that cell phones are the one thing they cannot live without. Three in ten (28%) 18-34's chose the cell phone - tied with the Internet - as the most indispensable of devices. 76% of those who own a cell phone say they have utilized texting - especially 18-34 year olds and Alternative fans. Additionally, nearly two-thirds say they have used the built-in calculator (or tip calculator) on their phones. About six in ten have both taken/shared pictures and used the address book feature. Finally, half also indicate they download ringtones and have played games utilizing their cell phones.

Texting is exhibiting strong growth. Overall, more than four in ten (44%) cell phone owners text message at least weekly. From the 2006 study, this is an increase of 25%. During this same period, IMing on a computer has dropped 13%, suggesting that cell phone texting has become the dominant "thumb communication" medium. Many people text with great regularity. One-third of those who text (32%) do so daily, while 5% report texting on an hourly basis. Women and Alternative fans are more likely to communicate via text messaging. And one in ten (11%) of the 18-34 year-olds in this sample reports texting hourly. During the past three surveys, "Cell Phone Only" levels have increased from 17% to 21% to 23% in this new '07 survey. More than four in ten (42%) Alternative fans now fall into this category, as do half (50%) of 18-29s year-olds.

Engineering Business Report TM

Americans spend 1,200 bucks annually
on consumer electronics
The average U.S. household owns 25 consumer electronics (CE) products and the average adult spends 1,200 annually on these products according to a study released today by the Consumer Electronics Association. The top five growth sectors were DVRs, network routers or hubs, MP3 players, cable modems and digital cameras. DVR ownership and network/routers in U.S. households grew eight percentage points since 2006 to 25 and 30% respectively. 32% of households now own an MP3 player, up seven percentage points since last year. Cable modem ownership grew six percentage points and digital camera ownership rose to 62% of all U.S. households. Other categories with significant growth include HDTV with penetration reaching a quarter of U.S. homes. More than three-quarters of U.S homes have at least one cell phone; CEA estimates 178.5 million wireless phones are in use. DVD players have reached 84% household penetration and have surpassed VCRs, partially because of the availability of portable DVD players. In addition to identifying top growth categories, the study reveals the five most owned products beginning with the television (92%), DVD player or recorder, VCR (82%), cordless phone (82%) and the cellular phone (76%).

Transactions

150K WHAP-AM Richmond VA (Hopewell VA) from MainQuad Communications Inc. (Daniel Berman) to P.T. Brown Broadcast Company Inc. (Preston T. Brown). 2K down payment, 148K note. Duopoly with WCLM-AM Highland Springs VA. [File date 4/3/07.]

Stock Talk

Small gains, but another record
Good earnings reports from Ford, 3M and Apple didn't do much to light a fire under stock traders. Still, the Dow Industrials inched up 16 points to another record high close of 13,106.

Radio stocks were mixed. The Radio Index declined 0.289, or 0.2%, to 164.656. Westwood One had the best day, up 2.9%. The worst performer was Fisher, down 1.9%.

Radio Stocks

**Here's how stocks fared on Thursday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		49.47	-0.10	Hearst-Argyle	HTV		27.10	-0.41
Beasley	BBGI		8.96	-0.05	Journal Comm.	JRN		13.39	+0.22
CBS CI. B	CBS		32.05	+0.05	Lincoln Natl.	LNC		71.75	+0.57
CBS CI. A	CBSa		32.04	+0.07	Radio One, Cl. A	ROIA		7.50	+0.02
Citadel	CDL		9.81	unch	Radio One, Cl. D	ROIAK		7.51	+0.01
Clear Channel	CCU		35.80	-0.09	Regent	RGCI		3.50	unch
Cox Radio	CXR		14.94	-0.25	Saga Commun.	SGA		10.10	-0.09
Cumulus	CMLS		10.05	+0.04	Salem Comm.	SALM		13.60	+0.10
Disney	DIS		35.17	-0.15	Sirius Sat. Radio	SIRI		2.96	+0.13
Emmis	EMMS		10.27	-0.07	Spanish Bcg.	SBSA		3.70	+0.01
Entercom	ETM		28.63	-0.22	SWMX	SMWX		0.60	-0.05
Entravision	EVC		10.14	-0.17	Westwood One	WON		7.01	+0.20
Fisher	FSCI		49.02	-0.94	XM Sat. Radio	XMSR		11.78	+0.77

Bounceback

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Below the Fold

Ad Business Report
Nothing to fear on PPM in Philly
Kathy Crawford, MindShare: Same way that it happened with the LPM - the pricing didn't change, the CPP changed...

Media Markets & Money
Sometimes it's all in the translation
Edgewater Broadcasting is picking up a noncom DIY project earmarked for...

Washington Media Business Report
Casting call complete
The Tampa ownership forum we now know who the panelists are...

Engineering Business Report
Spending on consumer electronics
Americans spend 1,200 bucks annually top five growth sectors were...

Stations for Sale

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Radio Media Moves

Manning has Power
Beasley Broadcast Group announced that Thomas Manning has been named General Manger of WPOW-FM "Power 96" Miami, reporting to Market Manager Joe Bell. Manning was most recently Director of Sales for Clear Channel's Raleigh cluster.

More News Headlines

New paradigm
for PTP music?
If you can't beat 'em, accommodate 'em is the attitude of a new music distribution experiment that has several companies wearing lab coats. The music industry is still reeling from the sudden emergence of peer-to-peer music sharing several years ago. Even though the sale of music online a tune at a time has helped pick up some of the slack, the retail product currency of the past, the compact disk, seems to be on its way out. But purchased downloads are not cutting it. The new idea, according to the New York Times, is to make the music available for free just as if it came from a peer, with the funding coming from advertising sales. Participating music producers will make their wares available to such a service, and in exchange for watching an advertisement, the consumer will get the song. Nettwerk Music Group's Terry McBride told NYT, "My philosophy is, don't try to get people to consume the way you want them to. Figure out how they're consuming music, market to that and monetize their behavior."

RBR observation: Clever. Radio stations are currently trying to find ways to make their websites into a profit center. McBride is a music guy, and cannot be expected to have any particular advice. But that thought process - figure out how the site is being used, and figure out a way to tie some income to it - is priceless.

Lincoln group for sale?
There's no confirmation from the company, nor is there likely to be, but the Wall Street Journal reports that Lincoln National Corporation is considering whether to put its radio and TV properties, Lincoln Financial Media, up for sale. Lincoln National Corporation is primarily an insurance company and acquired the broadcast group when it bought Jefferson-Pilot Corporation in 2005. Lincoln Financial Media owns 18 radio stations, all in top 50 markets; three television stations in major southeastern markets; and Lincoln Financial Sports, a TV production company that facilitates the broadcast of Atlantic Coast Conference and Southeastern Conference football and basketball.

Correction: Which owner in Wichita?
Several alert readers noticed an error in our 4/26/07 story on gun ads on KWCH-TV in Wichita, the station's owner should have been noted as Schurz Communications, who bought the station from Media General in a deal announced last summer. Thanks for the catch.

RBR Radar 2007

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

39 bucks is all they have to give
If you are a Clear Channel shareholder waiting for Thomas H. Lee Partners and Bain Capital to raise their bid a second time, you may be waiting forever.

RBR observation: We are inclined to believe him. Sperling was reluctant to raise the original 37.60 bid (4/12/07 RBR #72) and did not get to the 40 bucks mark that would have probably guaranteed acceptance. Now we wait to see if 39 bucks will get the job done - or not.
04/26/07 RBR #82

AM/FM radio listening
still dominates
use of digital audio platforms Arbitron and Edison Media Research say AM/FM radio listening still dominates use of digital audio platforms. The study, "The Infinite Dial 2007: Radio's Digital Platforms," found average time spend listening to AM/FM radio by persons 12+ was 2 hours, 37 minutes per day -- but those who use digital platforms listen a full to 2 hours, 45 minutes per day among those who use radio's digital platforms. (Complete details see Ratings & Research in RBR)
04/26/07 RBR #82

FCC weighs in on DTV
It you're a retailer, and you want to sell an analog-only television receiver, you must make sure that the buyer knows that it possibly will become no more than a paperweight on 2/17/09. Second, even though most broadcast television stations are now operating with some form of side-by-side digital platform, the problem child, the issue of forcing cable to provide dual digital/analog must-carry after 2/17/09.
04/26/07 TVBR #82

Shareholders revolt at Gray Lady
In what appears to be a record for a US public company, 42% of Class A shareholders withheld their votes for the four New York Times Co. directors up for election at yesterday's annual meeting. All directors, however, vowed to keep their seats. Dissident shareholders, led by Hassan Elmasry, who manages an investment portfolio for Morgan Stanley clients, have demanded stronger performance by the company and an end to the two-tiered stock structure that gives the Ochs-Sulzberger family voting control of the company via their Class B shares. (more on the Gray Lady see TVBR)
04/25/07 TVBR #81

New listing
Web Content Director
RBR/TVBR is looking for an aggressive and progressive Media Website Director. Will be working side by side with all aspects of our editorial, sales, marketing and production staff. RBR/TVBR is moving forward with a Pro-Active Strategy see what is required as we begin our 25th year in the media business. See Radio Careers

Hard finding that key person
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Need assistance
contact Cathy Carnegie

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