Welcome to RBR's Daily Epaper
Volume 25, Issue 9, Jim Carnegie, Editor & Publisher
Tuesday Morning January 15th, 2008

Radio News ®


Penny stocks proliferate
Radio stocks continue to take a beating on Wall Street. Both Beasley and Salem last week fell into penny stock territory, joining quite a few other radio companies. Who else is in danger of doing the same? 2007 may have been the year of penny stocks for the radio sector, as we noted in the Intelligence Brief on last year's stock market activity released on Friday, but the "year of woe," as we described it, is certainly continuing into 2008. Regent, Emmis, Radio One, Westwood One and Citadel all saw their stock prices fall below the five bucks mark over the course of 2007. Many pension managers and mutual funds aren't permitted to own penny stocks, so when a stock dips below that barrier, a round of selling often follows, just accelerating the stock price decline. Salem crossed the magic barrier last Wednesday and Beasley followed on Thursday. Despite the pending 11.50 per share bid to take the company private, Cumulus Media is the radio stock next closest to the line, recently trading below six bucks. Saga Communications, likewise, has been below six of late.

RBR observation: Expectations of a flat revenue year, at best, doesn't do much to put a floor under radio stock prices. Growing indications that the US economy is about to fall into recession, or already has, will continue to put pressure on all stock prices. Anyone who thinks they are snapping up bargain stocks right now could well be right, but they may have to hold on for a bumpy ride before realizing profits.

Motley analyst comes Fool circle
Last year Wall Street watcher Motley Fool had the XM/Sirius merger pegged as a go. This despite the fact that one of its own analysts had picked one of the components, XM, as one of the worst portfolio picks of the year. As the sun rises on 2008, the merger still hasn't been approved, and the stock is back on the worst pick pedestal. Analyst Philip Durell says that the numbers that are rising are the wrong ones for the most part, and that the positive growth in revenue is deceptive, since it comes at a steep cost. Subscribership is up, too, but that has been somewhat deceptive: Durell noted a gross increase of 952K subs for Q3, but that translated into a mere 315K net subscriber additions as many sampled the service for free as part of a new car acquisition and then returned to local radio once the trial subscription ran out. He says it costs the company about 116 dollars to add a subscriber, up from 94 dollars a year ago. Durell notes that the merger, if it goes through, would certainly help the two satcasters with administrative costs, and would prevent "car companies and one-air talent" from playing "one satellite company off against the other." He concludes, "Yet joining one value destroyer to another isn't likely to bring the enterprise to the promised land of profitability."

RBR observation: We can't help noting that one of the big benefits touted for the merged companies is stripping talent and auto manufacturers of the ability to negotiate with two competing companies. Sure, it WOULD be nice if satellite audio became a monopoly with dictatorial powers over those it does business with, including subscribers. If one or the other company, or both, are in danger of going under, they should come clean and say so. Otherwise, they should buckle down and compete with one another as is clearly specified in their charters.


Slime time in South Carolina
The looming primary battle in South Carolina has candidates and their staffs on their toes. When it comes to political advertising, the state has an anything-goes reputation, and despite pledges from several candidates, this year is expected to be no exception. Republicans head to the polls Saturday, 1/19/08, with Democrats following suit a week later, 1/26/08. According to Time magazine, negative mailers are flying into mailboxes throughout the state already on the Republican side. Official campaign activity is only part of the picture. 527 organizations and other political groups are mounting campaigns of their own. These flights may not be coordinated with official campaign organizations, and often leave the candidate apologizing for ad that do not have the standard "I'm J. Doe, and I approved this message" disclaimer. According to Time, some activity in the state hasn't even been tracked to its source yet, in particular those flooding the state with messages from phone banks and robocalls.

RBR observation: We like to remember this every time some politician stands up and says the public airwaves should be put at their disposal for free political advertising. We're sure that a sizable percentage of the electorate would agree that such ads are among the worst and least-informative elements of modern political campaigning, and the last thing we need is more of it. We note further that the calls for free airtime invariably come from federal office-holders, who greedily propose to allocate every last second to themselves -- state and local politicians never seem to be considered for a piece of this boondoggle/windfall.

Central FL pirates shut down
A "gangsta rap" pirate station was shut down late last week in Winter haven, FL. Wesley Williams, 21, of Winter Haven worked as the station's DJ; Jimessia Spillman, 23, operated the station in the absence of Williams; and Calvin Thompson, 24, of Dundee was the operator, according to Polk County Sheriff's Office. Thompson also got 300 bucks for on-air ad and "shout-outs," The Orlando Sentinel reported. The three were booked into the Polk County Jail, accused of one count each of unauthorized transmission/interference with a licensed radio station. The offense is a third-degree felony under Florida's pirate radio law.


Media Business Report TM
Don't shoot the messenger, buy them
Broadcaster/evangelist Pat Robertson has had his run-ins over the years with the Virginian-Pilot, the major daily newspaper in the Norfolk area, including his home base of Virginia Beach. But now that Landmark Communications has put all of its media properties up for possible sale, Robertson sees an opportunity. "Although the price for The Weather Channel is a little rich for my blood, I am considering a potential bid for the Pilot and have asked my attorneys to look into it. It would be particularly helpful to provide internships for Regent University journalism students," Robertson said in an email that his personal assistant sent to the newspaper. Robertson is the founder and President of Regent University in Virginia Beach, in addition to founding the Christian Broadcasting Network and hosting the daily "700 Club." Price speculation for Landmark's crown jewel, The Weather Channel and its Internet site, has been in the five billion range. There hasn't been much price speculation yet on the Norfolk market newspaper's value.

RBR observation: Is Robertson serious, or did he just want to scare the living daylights out of the newspaper staff? We wait to see what happens.

Americans slam news media
on believability

A Sacred Heart University Poll found significantly declining percentages of Americans saying they believe all or most of media news reporting. In the current national poll, just 19.6% of those surveyed could say they believe all or most news media reporting. This is down from 27.4% in 2003. Just under one-quarter, 23.9%, in 2007 said they believe little or none of reporting while 55.3% suggested they believe some media news reporting. The perception is growing among Americans that the news media attempts to influence public opinion - from 79.3% strongly or somewhat agreeing in 2003 to 87.6% in 2007. And, 86.0% agreed (strongly or somewhat) that the news media attempts to influence public policies - up from 76.7% in 2003. Other low positive ratings included: fairness (31.3%), presenting an even balance of views (30.4%) and presenting negative and positive news equally (27.5%).

"Americans know bias and imbalance when they see it and they don't like it. When most service organizations strive for consumer satisfaction ratings in the high eighties to low nineties, an overall positive rating of 40.7% is dismal," said Jerry Lindsley, director of the Sacred Heart University Polling Institute. He added, "Americans know that it's just not that hard to present both sides and keep personal bias at home." The most trusted national TV news organizations, for accurate reporting, in declining order included: Fox News (27.0%), CNN (14.6%), and NBC News (10.90%). These were followed by ABC News (7.0%), local news (6.9%), CBS News (6.8%) MSNBC (4.0%), PBS News (3.0%), CNBC (0.6%) and CBN (0.5%).

RBR observation: Of course, alternative media has led to much of the skepticism. A lot of the complaining from alternative media sources seems to be an overall propaganda-like reporting on critical issues, where news organizations report the news too often in a lock step fashion, rather than raising critical questions and giving their own take. Of course, Lou Dobbs would be an example to the contrary.


Ad Business Report TM

Rick Dees taps Ronning Lipset Radio for online
Rick Dees announced that Rick.com has retained Ronning Lipset Radio as its exclusive online ad rep. Ronning Lipset Radio takes the reins for selling not only the audio and video ads that are inserted into Rick.com's internet broadcast streams which include the three streaming versions of the Rick Dees Weekly Top 40, but also the visual inventory found on the Rick.com website. Dees joins the family of the nation's largest online broadcasters that include AOL Radio, Yahoo's LAUNCHcast and Live 365. "Rick Dees embodies the transition from traditional media to online media. He brings name brand recognition, comfort and professionalism to the listeners and the advertisers in a way that is reassuring to both," said Eric Ronning, co-managing partner at Ronning Lipset Radio. "Rick.com not only offers unique programming and content, but leverages the powerful brand name of one of radio's most well-respected figures. We are proud to add Rick.com to our strong network of affiliates, and we look forward to bringing these new visual and audio advertising opportunities to the ad community."


Media Markets & Money TM
Mammoth FM's AM partner is over Thayer
Robert and Rebecca Eckman are getting a border-straddling AM-FM combo from Ozark Radio Network for 830K. The AM sits in the southern extremity of Missouri, while the FM hails from the northernmost portion of Arkansas.


Entertainment Business Report TM
MTV Radio Network presents "Mi TRL Weekend"
MTV Radio Network, distributed by Westwood One, launched of a new two-hour weekly Latino Countdown Radio program, "Mi TRL Weekend Countdown," which replaced TRL Latino. Mi TRL VJ Carlos Santos is joined by former MTV VJ, and former Miss USA, Susie Castillo to count down the top 20 Latin pop songs, present Mi TRL exclusive interviews with Latino artists and keep listeners informed with the latest MTV Tr3s music and entertainment news. In addition, MTV Radio Network will provide behind the scenes access to big MTV Tr3's events such as the annual Mi TRL Awards and Premios MTV. It is all delivered in a bilingual blend on MTV Tr3s' Mi TRL Weekend Countdown.

JRN to offer Jones Standards format
Jones Radio Networks announced the addition of the Jones Standards format launching 1/19. It's dubbed a fresh mix of classic songs performed by the great singers of yesterday and today's top vocalists, familiar instruments and top hits. The format will feature singing legends such as Frank Sinatra, Harry Connick Jr., Tony Bennett, Rod Stewart, Neil Diamond and Ella Fitzgerald. JRN will also handle both ad sales via Jones MediaAmerica and affiliate sales for the format.

United Stations expands
Legends of Jazz with Ramsey Lewis

United Stations Radio Networks has extended its agreement with recording artist and radio host Ramsey Lewis to continue to produce and distribute The Legends of Jazz radio program. The multi-year renewal also calls for the expansion of the weekly program from two-hours to three-hours per week. USRN will continue to handle affiliate marketing, distribution and advertising sales.

Perry Broadcasting Augusta launches new formats
Perry Broadcasting of Augusta has realigned its station formats (bought from Radio One in December) yesterday with The Doug Banks Show returning to the Augusta airways with his new URBAN/AC show on WAKB-FM, which becomes the new "MAGIC 100.9 Today's Southern Soul & R&B" station. Gospel listeners will get the same great genre of music on WTHB 96.9 "Your Praise and Inspiration Station" moving down the dial from 100.9. Last month, Perry's Alternative station switched to "Smooth Jazz 92.3 The Jazz Station." Additionally, Perry's hip hop station - "Foxie 103 WFXA-FM"- now becomes "103 JAMZ...The Fox" and "The Voice 1550 AM, Radio for the Mind and Soul" will focus on talk. Interep's McGavren Guild Radio Sales announced representation for the stations last week.


Washington Business Report TM
House back in session, Senate on the way
By the time you read this, members of the US House of Representatives will be back on their way to work. The first day of business on the schedule for 2008 is 1/15/08. The Senate is scheduled to kick off the second session of the 110th Congress next week, Tuesday 1/22/08. Both chambers will have the usual truncated sessions typical of election years, which usually include a great deal of pressure to conclude as much official business by the end of July or earlier as those facing re-election challenges turn their attention to their home districts or states. The good news, and it's usually the news, is that broadcast issues are not on the radar as far as the mainstream press is concerned. Iraq and the economy will as usual be front-line issues, and any issue which either party thinks it can highlight for election purposes will come to the fore whether or not it has any chance whatsoever of actually becoming a law. Both houses have pending legislation to shoot down the FCC's split-vote approval of easing restrictions on media cross-ownership in the top 20 DMAs. That, and the ever-mounting pressure to tie up all loose ends in advance of the 2/17/09 DTV conversion should be the hottest items of business on the broadcast agenda this session.


Ratings & Research
Half of US consumers reduce spending
to combat gas prices
A new study from The Nielsen Company finds 49% of US consumers are reducing their spending to compensate for rising gas prices, up four points from June 2007. Consumers are also battling high gas prices by combining shopping trips and errands (70%), eating out less (41%) and staying home more often (39%). The study said 2008 will likely be a challenging year for U.S. consumers and the economy as a whole as we grapple with growing inflation, credit card debt, declining house values - - as well as expectations for gasoline to hit 3.40 by spring. Nielsen's survey finds that record-high gas prices likely contributed to 2007's less-than-stellar holiday sales season. 60% of consumers surveyed said they had less money to spend during the holidays due to increased gas prices, and 44% of consumers reported they planned on spending less money on holiday gifts in 2007 as compared to the year prior. Nielsen finds that gas prices are impacting where consumers shop, with 27% of consumers reacting to gas prices by shopping more at supercenters, or megastores and big-box stores, where more items needed are in one store. Increased fuel prices are resulting in more coupon clipping, with 25% of consumers using coupons to save money, up from 20% in June 2007. 23% of consumers indicate they will buy less expensive grocery brands to deal with higher gas prices, signaling a possible boost for private label or store-brand products and lower-priced branded products.


Transactions
250K KRSC-AM Othello WA from Alexandra Communications Inc. (Thomas R. Hodgins) to Centro Familia Cristiano (Arturo Gonzalex, Rosario Alberts, Marta Lilian Hernandez). 50K escrow, 200K note. Buyer is non-profit entity. [File date 12/19/07.]


Stock Talk
Big Blue makes 'em happy
IBM issued preliminary results for Q4 and they were better than Wall Street had expected. That ignited a stock rally. The Dow Industrials rose 172 points, or 1.4%, to close at 12,778.

Radio stocks finally had an up day. For the first time this year the RBR Radio Index moved up, rising 0.905, or 1.1%, to 80.208. Spanish Broadcasting System was the champion, up 9.3%. Regent gained 3.8%.


Radio Stocks

Here's how stocks fared on Monday

Company Symbol Close Change Company Symbol Close Change

Arbitron*

ARB

40.50

-0.50

Google

GOOG

653.82

+15.57

Beasley*

BBGI

4.83

+0.10

Hearst-Argyle

HTV

19.89

-0.01

CBS CI. B CBS

24.27

+0.17

Journal Comm.

JRN

7.51

+0.15

CBS CI. A CBSa

24.26

+0.19

Lincoln Natl.

LNC

56.35

+0.57

Citadel* CDL
1.52 -0.04

Radio One, Cl. A

ROIA

1.85

+0.03

Clear Channel*

CCU

34.69

+0.22

Radio One, Cl. D*

ROIAK

1.85

+0.05

Cox Radio*

CXR

11.10

+0.14

Regent*

RGCI

1.36

+0.05

Cumulus*

CMLS

5.66

+0.01

Saga Commun.*

SGA

5.99

+0.06

Debut Bcg.

DBTB

0.97

unch

Salem Comm.*

SALM

4.11

-0.09

Disney

DIS

30.35

+0.03

Sirius Sat. Radio

SIRI

2.85

-0.08

Emmis*

EMMS

2.80

+0.06

Spanish Bcg.*

SBSA

1.65

+0.14

Entercom*

ETM

11.09

-0.12

Westwood One*

WON

1.51

unch

Entravision

EVC

6.94

-0.03

XM Sat. Radio

XMSR

10.67

-0.36

Fisher

FSCI

34.01

-0.55

-

-

-

-

-

*Component of the RBR Radio Index


Bounceback

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Below the Fold
Ad Business Report
Rick Dees taps
Ronning Lipset Radio for online...

Media Business Report
Don't shoot the messenger
Buy them as broadcaster/evangelist Robertson has had his run-ins...

Ratings & Research
Half of US consumers
Reduce spending to combat prices...

Media Markets & Money
Mammoth FM's
AM partner is over Thayer...




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TVBR - TV News

Buy one, get one free
Bear Stearns analyst Vic Miller has been studying the Belo split into two companies. At the current share price, he figures the newspaper company stock (A.H. Belo, which will trade as AHC) is basically being thrown in for free if you buy Belo stock (BLC) for the TV company. "At Friday's 15.04 price, we believe the implied multiple for newspaper for AHC, if the TV assets traded at 9.0 times 2008 EBITDA, approximates minus 4.5 times EBITDA. BSC analyst Alexia Quadrani has an Underweight rating on newspapers, but we think AHC has a strong newspaper franchise. The price also implies a 6.8x multiple for BLC's TV station group, which is too low given the quality of BLC's TV station group," Miller wrote, approaching the valuation from both directions. "If BLC's newspapers and TV stations trade in-line with comps, at 6.5x and 9.0x 2008 EBITDA, respectively, the stock(s) should trade more closely to 22.00 (combined)," Miller concludes.




RBR Radar 2008
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Young demo showing
interest in 2008

After developing a reputation for lack of interest in political affairs, members of the 18-29 demographic are turning that perception on its head. In fact, a trend toward more participation in the electoral process began in 2004, and it seems to be gathering more steam this year. The Washington Post quotes a survey from the Center for Information and Research on Civic Learning and Engagement which demonstrated upticks for the age group in 2004, further growth in 2006 and which projects even greater participation in 2008. A new website, VoteGopher, is attracting a crowd, providing information on candidates and their positions on a wide variety of key issues (unfortunately, media consolidation is not one of them).

RBR observation: When you think political advertising, you think of formats such as News-Talk and news and public affairs programming on the television side. The burgeoning interest of younger citizens would seem to open the category to music-formatted stations and shows targeted to this group. For broadcast stations that have never seriously considered tapping into the political category, this may be the time to make a play. Remember that if there is a constituency among this demo for Paul and Obama, then there are also candidates who don't want to lose votes to either of them. Hey, Huck! Hey, Hillary! Wanna piece of our demo? Spots are going fast -- better rock on over here immediately.
01/14/08 RBR #8

WGA Strike Central, Day 71
ABC Studios axes 30 producer deals

The next wave of destruction wrought by the WGA strike has just begun: ABC Studios on Friday became the first TV studio to terminate overall deals under the force majeure provision in its producers' deals. Close to 30 writing and nonwriting producers without active projects have been fired.

TVBR observation: If any local TV operator thinks this is going to end and get your life back to the way it was - forget it. TVBR recommends local operators start searching for content because some of the new reality programming being pumped out by the networks smells like a rotten egg. Ever step on a rotten egg? Can't get rid of the smell and that smell will spread through out your program line up. Localism now takes on an entire new meaning this year.
01/14/08 TVBR #8

Commissioners said to have
five thumbs up for CCU
Although Democratic FCC commissioners seem to have developed zero tolerance for even the slightest amount of additional media consolidation, Wall Street analysts are reporting that the long-pending deal to take radio giant Clear Channel private has unofficial backing from all five 8th Floor honchos. Of course, rather than create additional consolidation, this transaction would actually force spin-offs, and indeed, CCU has been selling off properties in any case.

RBR observation: Most of the activity swirling around this transaction diminishes broadcast consolidation. We can think of no possible reason why any regulatory body would stand in its way. Now, whether the buyers want to go through with the deal is another matter entirely.
01/11/08 RBR #7

Disgruntled investor
throws in the towel
Remember Arnhold and S. Bleichroeder Advisers LLC, one of the big shareholders pressing Emmis to do a buyout deal to cash out public shareholders? (10/26/07 RBR #210) Well, the investment group says it no longer owns over 5% of Emmis' stock and may sell more, due to its disappointment that nothing has happened to enhance shareholder value. Bleichroeder Advisers still owns 1,434,000 Emmis shares, but no longer has to file reports on how large (or small) its stake is. It is playing close to its vest on whether or not it will sell off the rest of the shares right away.
01/11/08 RBR #7

TV station revenues
expected to rise 11% this year
Typical of the odd-even cycle of years with and without federal elections, BIA Financial Network reports that 2007 television station revenues fell 2% to 22.2 billion. But with record political spending expected this year, the firm forecasts that 2008 TV station revenues will rise as much as 11%.
01/11/08 TVBR #7



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