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Volume 23, Issue 88, Jim Carnegie, Editor & Publisher

Thursday Morning May 4th, 2006

Radio News ®

At long last, Clear Channel leads the industry
The painful transition of Less is More is complete and Clear Channel reported that Q1 radio revenues were up 5% to 808.9 million, with Q2 pacing ahead 3.4%. In total, revenues for Clear Channel Communications rose 4% to 1.5 billion, in line with Street expectations. While most radio groups have been suffering from weakness at their larger market stations, Clear Channel reported that its biggest markets were its best performers for the quarter, prompting one analyst to ask whether that was due to taking listeners and advertising from stations that formerly carried Howard Stern. "It's a little too early to tell if we're getting revenue from that," Clear Channel Radio CEO John Hogan responded, although he noted proudly that Clear Channel's stations had picked up three share points in the New York ratings and 1.5 in LA. Hogan declined to make any comment on CBS Radio signing a deal to air Opie and Anthony in mornings on several stations that carried Stern last year, but noted "I'm really sorry to see David Lee Roth go." Hogan said growth in Q1 was driven by improved ratings and better systems to manage inventory and pricing.

Bizarre comment in CCU conference call
As he reported Q1 results yesterday and painted an improving picture for the future, Clear Channel Communications CEO Mark Mays insisted that future growth prospects for the radio industry don't pertain to his company because Clear Channel Radio is not the same as the rest of radio. "Why are we different from the radio industry? First, we're in the content creation business. We find, develop, produce and promote content like no other radio or audio entertainment company. We've invested in unprecedented programming initiatives to provide compelling and unique entertainment and information products to local and national audiences through current and future distribution platforms. Some of the investments we've initiated that differentiate us, starting with our Clear Channel Radio content and development unit and our format lab. These diverse creative teams are conclusively engaged in developing innovative new formats, talent and programs for all distribution formats for all distribution platforms, including for HD and HD-2, Internet, MP3 devices and even cell phones. We've developed a Clear Channel Radio programming farm team, actively developing on-air personalities, shows and programming specialists in smaller markets, where they graduate to larger markets as their talent is honed and developed," Mays told analysts on his conference call, then went on to describe newly launched shows by Clear Channel's Premiere Radio Networks and the 24/7 formats it distributes to other broadcasters. And he noted the "exclusive new content" developed by Clear Channel's new Spanish radio outlets.

RBR observation: Huh? What's new about all this? It sounds to us like what all good radio companies do and have been doing for decades. Anyone who'd actually worked at radio stations would know that. As for any expectations that Clear Channel can consistently outperform the radio industry, simple mathematics would make it unlikely that the largest player in a sector could run more than slightly ahead of (or behind) the sector over the long haul, since it plays such a large role in setting the average. Clear Channel was a drag on that average last year as it tried to correct past mistakes with Less is More and it's now playing catch-up and running ahead of the average. Check out the numbers in today's Wall Street Media Business Report section and you'll see that Clear Channel still isn't back even with where it was before Less is More.

Frist picks up indecency baton
With anti-indecency groups up in arms over tougher indecency fines being left out of Sen. Ted Stevens' (R-AK) omnibus telecom bill (5/3/06 RBR #87), Senate Majority Leader Bill Frist (R-TN) has stepped into the breech. While Stevens is sidestepping the indecency hot potato, with a high risk of being torpedoed in the federal courts, The Hollywood Reporter first reported that Frist has agreed to comply with pleas from the American Family Association, Parents Television Council and other smut-fighting groups to press for a Senate vote on a bill the House passed in February which would increase the maximum broadcast indecency fine from 32.5K to 500K per incident. Stevens, who chairs the relevant committee, has been willing to wait and judge the effectiveness of an effort led by former MPAA chief Jack Valenti, with the support of major broadcasters, to educate parents about the controls that already exist to control what shows their children can see. Also, the NAB and major networks have been somewhat effective in pressing their case on Capitol Hill that the FCC has been all over the road on indecency enforcement. The major nets and Hearst-Argyle recently filed a slew of lawsuits seeking to set aside some FCC indecency rulings, which could result in the federal courts stepping in to require the Commission to clarify its indecency standard.

RBR observation: Frist really has nothing to lose. He's already announced his retirement from the Senate this year and his 2008 presidential campaign is registering near zero on the political power meter. His most recent effort to jump-start his bid for the White House, a 100 bucks gas tax rebate, was a disaster, uniting conservatives, liberals and many of his fellow GOP Senators in ridiculing it as being simply silly. But while the Majority Leader controls the agenda in the Senate, that power is not unlimited. If a single Senator decides to put a "hold" on the bill, it is unlikely that Frist will be able to bring it to the floor. There was late word yesterday that multiple Senators from both parties had told Frist they don't want him to schedule a vote on the bill.

Smulyan left in Nationals dugout?
Jeff Smulyan insists that a minority stake in the Washington Nationals baseball team, should his group win the bidding, would be a good investment for Emmis Communications, but Wall Street investors have been pretty uniformly opposed to the idea. So, Emmis' stock rose yesterday on reports by local media in Washington, DC that real estate mogul Ted Lerner is nailing down a deal to buy the team, knocking out other bids, including that by the Smulyan group, which included an investment by Radio One (which actually has stations in the market). Meanwhile, former DC Mayor Marion Barry and another City Council member are pushing for Major League Baseball (MLB) to go with Smulyan's group or one led by two local businessmen, accusing Lerner of "renting blacks" for his group. That tactic has backfired, according to the Washington Post. Rather, a news conference Monday by Barry and fellow Councilman Vincent Orange Sr. so outraged MLB Commissioner Bud Selig that he and other league officials are more committed than ever to going with the Lerner bid. Barry and Orange also failed to win much support from their fellow lawmakers. The DC Council voted 10-3 against an "emergency resolution" supporting a sale to either of the other two bidding groups, rather than to Lerner.

RBR observation: Arguing over baseball inside the beltway by local politicians makes complete sense to us as that is Washington, DC. Now that it seems Jeff is not getting the Nationals here is the next best thing (bugle please) - The fans cheer and the excitement builds, it is Play Radio.

Dickering over digital
Terrestrial radio and satellite radio got a chance to go toe-to-toe on Capitol Hill yesterday as a House subcommittee held a hearing on "Digital content and enabling technology: Satisfying the 21st Century consumer." XM Satellite Radio CEO Hugh Panero, pictured, was under attack from all sides, as representatives of the music industry complained about the company's new device, which permits listeners to keep songs for playback. Sirius has already reached agreements with the record industry on payments for saved songs, but XM hasn't and the record folks claim that the XM device is more sophisticated and that they deserve to be paid more for what they claim is a "distribution device" for digital music, much like iPod downloads. For his part, Panero said his company already pays twice for music, to BMI/ASCAP and a performance royalty to the record company, while terrestrial radio pays only the BMI/ASCAP royalty, and denied that his company's device is like an iPod, since people can only record songs that are played on an XM channel, can't transfer it to any other device and can only listen to it again so long as they continue their XM subscription. Relishing the opportunity to jump on the satellite radio witness, Susquehanna Radio Sr. VP Dan Halyburton, representing the NAB, used the opportunity to press for congressional passage of pending legislation to make it clear that XM and Sirius are to be exclusively national services and prohibit them from inserting any local content. Halyburton also said there was no need to change the long-established relationship between radio stations and the music industry by adding a performance royalty for terrestrial radio. With XM as their main target for the day, the music industry witnesses didn't press that issue.

A non-PR protest
One of the biggest problems encountered by an entity or individual wishing to protest something in the media is that the protest itself tends to raise the profile of the thing being attacked. The phrase "there's no such thing as bad publicity" does not ever go away for a reason. Sometimes, a spirited attack can actually be a hitmaker for what would have otherwise been an obscure item in a cultural backwater or cul de sac. That is not the case with the soon-to-be released movie "The Da Vinci Code," which is not likely to run low on publicity any time soon. Nevertheless, according to the Associated Press, a church in Australia has found the perfect way to make its opinion of the movie known without the counterproductive result of contributing to its total box office take. It's putting its ad on the screen in-theater, where it'll only be seen by those who have already purchased their ticket. It can't be called a rebuttal - - the ad will be seen ahead of the movie - - so let's call it a prebuttal. The church gets to say its piece, and the movie doesn't get a penny extra...that is, unless someone reading this article about the strategy is motivated to go see the flick.

RBR observation: Pssssstttt - - hey, gang, keep this one under your hat. No money here for us.

Wall Street Media Business Report TM

Q1 2006 Conference Calls
CCU: The gain after pain
Clear Channel Communications executives are making much of outperforming the radio industry in Q1 after the full effects of Less is More had kicked in. But that gain came after trailing the industry throughout 2005 as the company cut back on advertising inventory, pushed 30-second spots and focused on raising ratings. So, radio revenues for Q1, while up 5% from a year ago, are still below where they were in 2004. Q1 2006: 808,896,000; Q1 2005: 773,562,000; Q1 2004: 832,944,000.

Cox boosts earnings, despite lower revenues
Cox Radio CEO Bob Neil made note of the fact that Clear Channel Radio's revenues were still down from two years ago in Q1 as he reported that his company's revenues were down 1% to 97.6 million after rising 6% a year ago. He noted, though that Cox was still able to grow station operating income, FCF and net income. In fact, net income per share beat the Thomson/First Call consensus by three cents, coming in at 14 cents. Speaking shortly after Clear Channel executives were touting their success in moving advertisers to 30-second spots, Neil insisted that "the jury is still out on shorter spots." In his view, listeners hear units and are put off by two many spots in a break, regardless of their length. Neil also said his company just doesn't get a lot of requests from advertisers for :30s.

Ad Business Report TM

Ford to boost ad spending
for new campaign
Ford announced it will increase ad spending on marketing by double-digits this year and next as it rolls out its new campaign, "Bold Moves" (4/28/06 RBR #84). The campaign, expected to have an initial budget of 50 million (according to Reuters), includes a reality television show and mini-documentaries that will chronicle life at Ford. Mark Kaline, Ford Motor Company's Global Media Manager, tells RBR/TVBR: "This effort demonstrates Ford's willingness to take risks in order to break through the clutter and make a meaningful impact with today's consumer in an increasingly saturated media world. As for any additional efforts with respect to Bold Moves, I'd only say, 'stay tuned'." The new Ford commercials, developed by JWT debuted on "American Idol" Tuesday evening and feature the newly-recorded "Go" song from Kelly Clarkson, winner of the first "American Idol." "The new campaign is part of Ford's "Way Forward" turnaround efforts, which includes closing 14 plants and cutting up to 30,000 factory jobs in North America. As part of the campaign, Ford plans to make 2- to 3-minute long videos that will chronicle life at Ford, including real-life footage of design meetings, engineers working on cars and even top management meetings," said Reuters. Ford is also developing and producing a new reality TV show in which contestants work with Ford designers to produce a new concept car.

Progressive Direct launches review
The Progressive Direct Group of Insurance Companies announced it has begun a search for a primary advertising agency. Progressive Direct, the second largest direct seller of auto insurance in the U.S., has grown an average of 19 percent over the last three years to 4.2 billion. Doner Detroit has been the primary AOR for Progressive Direct since 1999. "As one of the largest and most recognized U.S. insurance brands, we are constantly seeking compelling ways to help consumers understand our superior value proposition," said Alex Ho, brand development director. "We want to review all of our options to ensure future advertising success."

USRN restructures ad sales
United Stations Radio Networks announced a restructuring of its ad sales department. Richard Baum, pictured, has been named EVP/Sales for the company and Susan Moore, Dan Weisenberg and Rob Ellis have added VP stripes in various capacities. Additionally, Jeremy Park has joined the radio network's Los Angeles Sales office and all of these announcements come from the office of USRN's President/COO, Jim Higgins.
| Read More... |

Media Markets & Money TM

Last ditch effort to salvage VNU buyout
Since the US dollar has been weakening against the euro, VNU Supervisory Board Chairman Aad Jacobs is jumping on that disparity as a reason for VNU shareholders to tender their shares for a nine billion bucks buyout offer that's set to expire on Friday (5/5). In an interview with the Wall Street Journal, Jacobs noted that most of VNU's revenues come in US currency - - its biggest operations are in the US, including Nielsen Media Research and magazines such as Billboard and The Hollywood Reporter. Since the buyout bid by a group of equity firms is in euros, at 28.75 euros per share, the offer has gotten better as the value of the euro vs. the buck increased. Despite public declarations of opposition by a number of VNU's largest shareholders, Jacobs, retired CEO of financial giant ING, insisted that many investors wait until the last minute to decide whether or not to accept a tender offer. The pending buyout of VNU requires 95% shareholder acceptance.

RBR observation: There had been speculation that the VNU tender would fall short of 50%, so even a massive shift in shareholder sentiment could leave the tender well shy of the required 95% mark. Leading dissident Eric Knight, head of Knight Vinke Asset Management, has been pressing his own plan to cash out some 30% of shareholders who want out and then restructure the company. Talks have been going on behind the scenes to involve the equity buyout group in that. We hear they could end up owning 30-60% of VNU, while the large shareholders who think the current bid undervalues the company would stay in to participate in the expected upside as a new CEO is brought in to build up the company, which we also hear won't be called VNU much longer.

Washington Media Business Report TM

Stevens racing for telecom bill vote
Having introduced his omnibus telecommunications bill just this week (5/2/06 RBR #86), Sen. Ted Stevens (R-AK) is pushing for a quick vote on his bill, S. 2686, the Communications, Consumers' choice and Broadband Deployment Act of 2006. As Chairman of the Senate Commerce, Science and Transportation Committee, Stevens has put his bill on a fast track. He's scheduled a full committee hearing on the bill for Thursday, May 18th, a second hearing a week later, May 25th, and a full committee markup two weeks later, June 8th - - all beginning at 10:00 am.

Ratings & Research

Email databases:
The road to loyalty
The Jacobs Media 2006 Technology Poll confirms the power and value of radio station databases. These aggregations of mostly core listeners are the "secret sauce," enabling stations to closely communicate with their active audiences. And there are strong indicators that database members are generally open to receiving information, discounts, and offers from advertisers - provided they do not jeopardize the trust that stations already earn from these listeners.
| Read More... |

Transactions

63M KWWL-TV Cedar Rapids-Waterloo-Dubuque IA (Waterloo IA) from KWWL License Subsidiary LLC, a subsidiary of Raycom Media Inc. (Paul H. McTear Jr.) to KWWL Television Inc., a subsidiary of Quincy Newspapers Inc. (Ralph M. Oakley). 6.3M escrow, balance in cash at closing. Station is an NBC affiliate on Channel 7. [File date 4/12/06.]

2.5M WBTZ-FM Burlington VT-Plattsburgh NY (Plattsburgh NY) from Plattsburgh Broadcasting Corp. (Judith A. Bissell) to Hall Communications Inc. (Bonnie H. Rowbotham, Arthur J. Rowbotham). Cash. Superduopoly with WJOY-AM/WOKO-FM Burlington VT, WIZN-FM Vergennes VT, WLOK-FM Plattsburgh NY. LMA originally began 7/28/96. [File date 4/20/06.]

670K KZGX-AM Watertown MN from WM Broadcasting Inc. (Pedro Zamora) to Self Retire Inc. (Peter Phia Xiong). 32.5K escrow, balance in cash at closing. [File date 4/20/06.]

Stock Talk

Radio stocks beat a down market
Wall Street traders clearly liked the Q1 reports yesterday from Clear Channel and Cox Radio and bid radio stocks up as the broader market fell on a disappointing forecast by Procter & Gamble. The Dow Industrials fell 16 points, or 0.1%, to 11,400.

But the Radio Index shot up 3.461, or 2.3%, to finish at 153.980. The big gainers were Emmis, up 9.5%, Cox Radio, up 8%, and Entercom, up 4.3%. For its part, Clear Channel gained 1%. Emmis, we should note, also got a boost from new indications that CEO Jeff Smulyan won't win the bidding for the Washington Nationals baseball team.

Radio Stocks

**Here's how stocks fared on Wednesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		35.32	-0.18	Hearst-Argyle	HTV		22.64	-0.03
Beasley	BBGI		8.34	-0.31	Journal Comm.	JRN		11.29	-0.10
CBS CI. B	CBS		25.75	+0.20	Lincoln Natl.	LNC		58.35	+0.66
CBS CI. A	CBSa		25.71	+0.16	Radio One, Cl. A	ROIA		7.07	+0.12
Citadel	CDL		10.07	+0.42	Radio One, Cl. D	ROIAK		7.10	+0.17
Clear Channel	CCU		29.36	+0.28	Regent	RGCI		4.25	-0.07
Cox Radio	CXR		14.05	+1.04	Saga Commun.	SGA		9.13	+0.03
Cumulus	CMLS		11.01	+0.42	Salem Comm.	SALM		15.21	-0.01
Disney	DIS		28.11	+0.22	Sirius Sat. Radio	SIRI		4.72	-0.16
Emmis	EMMS		13.55	+1.18	Spanish Bcg.	SBSA		5.21	+0.09
Entercom	ETM		27.43	+1.12	Univision	UVN		35.69	-0.05
Entravision	EVC		8.50	+0.01	Westwood One	WON		9.06	+0.12
Fisher	FSCI		43.11	-0.51	XM Sat. Radio	XMSR		17.51	-0.94
Gaylord	GET		45.50	+1.60	-	-	-	-	-

Bounceback

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Below the Fold

Wall Street Media Business Report
CCU: The gain after pain
But that gain came after trailing the industry...

Ad Business Report
Ford to boost spending
On marketing by double-digits rolling, "Bold Moves"...

Media Markets & Money
Salvage of VNU buyout
Last ditch effort and jumping on that disparity to take the deal...

Washington Media Business Report
Racing for telecom bill vote
Stevens (R-AK) is pushing for a quick vote...

Ratings & Research
Email databases
The road to loyalty...

Radio Media Moves

Web exec for Genesis
Sarah Maduri has joined Tampa-based Genesis Communications in the newly created position of overseeing web development including podcasting, video, marketing and interactive digital platforms for all radio stations. Maduri began her career at Westwood One as Affiliates Manager in New York and later was Director of Sales for Townhall.com in Washington, DC.

Klotz names Larry Howard VP/Sales
Klotz Digital Audio Systems has introduced Larry Howard, the company's new Vice President Sales for South, Central and North America. Howard brings extensive knowledge of the audio market to his new role, having over 20 years of experience in the Commercial Electronics field.

Stations for Sale

25,000w FM Station
Low price opportunity, profitable station w. huge upside. Small town, NEast by interstate, county seat.
595K. Lv. msg. @ 781-848-4201 or
email [email protected]

More News Headlines

Lawyers race to sue XM
Those class action lawyers sure know how to smell a wounded animal and join the chase. XM Satellite Radio's revelation last week that its marketing practices are being investigated by the Federal Trade Commission (4/28/06 RBR #84) sent the class action lawyers racing to be first to the courthouse with a lawsuit. At least three firms filed purported class action lawsuits yesterday in the US District Court for the District of Columbia claiming that XM issued "materially false and misleading statement" about its subscriber numbers and acquisition costs.

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RBR Radar 2006

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

Sirius loss widens over Stern salary
Reported its Q1 loss more than doubled, due largely to expenses of 225 million in stock-based compensation to Howard Stern. But CEO Mel Karmazin was happy to pay Stern, since revenue nearly tripled to 126.7 million with an influx of 761,000 new subscribers. "Based upon our growth we are pleased to be raising our subscriber guidance for 2006 to over 6.2 million and we continue to believe we could be free cash flow positive as early as the fourth quarter of 2006 and for the full year 2007," Karmazin declared. "We are also very excited about the launch of our first live wearable radio this summer and our plans to stream The Howard Stern Show via the Internet to Sirius subscribers by Father's Day," he said.

RBR observation: While we have speculated the Opie and Anthony move to air on both XM and Sirius would possibly mean Stern may move back to radio as well with a "Stern Light" version, Karmazin said no. Sirius does not intend to follow the lead of XM in syndicating some of its programming to terrestrial radio. "It was a great deal for Opie and Anthony, but we're in the business of getting subscribers to satellite radio," Mel said. Well, in this business we all know - Never Say Never.
05/03/06 RBR #87

Revenues March toward the red
Latest RAB revenue report shows that radio was down slightly in March, and for the third time in three months, local was the sore spot. On the bright side, national eked out its third consecutive trip to the black inkwell, and non-spot results proved once again that hard times are bringing out the creativity in those radio staffers charged with bringing in the bread. Local was down 2%, national managed to gain 1% and non-spot was up 5%. The three streams combined for a 1% loss over results for March 2005. YTD, the numbers are -2% for local, +3% for national and +9% for non-spot. That makes 2006 even-steven with 2005.

RBR observation: You would think that radio sales staffs have only so many rabbits to pull out of their hats, and at some point building up non-spot is not going to be enough to produce the sales flatline we're getting now. As the summer heats up, politicians may well be the cavalry that comes to the rescue. A pitched battle for the House of Representatives should do two good things. It should put the focus clearly on the local rather than national category, and radio's pure local attributes along with its competitive price structure - - Congressional campaigns will have only so much money to place in television - - should help pump up comps even if traditional customers remain air-shy.
05/02/06 RBR #86

RBR News Analysis
The Digital Train has left the station
Digital is everywhere it dominated NAB 2006 - Digital television, digital video, digital audio, digital editing, digital tools to deliver text and photos to cell, digital tools to deliver audio and video on the Internet, backroom software to deal with TV's move to multiple DTV channels, HD, Ultra HD...digital everything. Somewhere in the midst of all of that was HD Radio.

RBR observation: The Digital Train has left the station. As radio is in early Spring as you read below in our Special News Analysis entitled 'The Digital Train' that if anyone is in denial that 'Technology Waits for No One' then change careers or sell your business and go to Naples, FL. Radio has one last effort to Bootstrap and Re-Build into the platform business of Digital - Electronic - Internet - Mobile - and total Media Cross Platforms and it is time to bring in from the outside this new breed of people. They are there coming out of college but they do not want to work in 'Old Traditional Media' as they want 'New Media' which is still being determined what new is from our recent travels to the 4A's, TVB, and NAB. Radio you still have a shot if you get on 'The Digital Train'. Read complete analysis in
05/01/06 RBR #85

Director of Sales
Step Up to a Great Cluster and Market with NextMedia's top-rated 9-station cluster in Coastal Carolina, Greenville/New Bern/Jacksonville looking for an outstanding DOS. If you're a proven leader with a solid track record, we want to talk to you.
See Radio Careers

Affiliate Relations
Talk Radio Network is expanding and we are looking for someone with great phone techniques who is enthusiastic about joining our successful team.
See Radio Careers

Account Executive
KUVN-TV Univision Dallas is seeking an experienced AE with 4-yr college degree and minimum 3 years experience in electronic media sales. Proven success records & excellent new business development skills.
See TV Careers

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