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Welcome to RBR's Daily Epaper
Volume 24, Issue 97, Jim Carnegie, Editor & Publisher
Thursday Morning May 17th, 2007

Radio News ®

Revenues and losses
down for Interep

Cost cutting paid off for Interep in Q1, as commission revenues dropped 11.8%, but the company's operating loss was reduced by 30.2%. The 11.8% drop in commission revenues to 13.4 million was mostly attributable to the termination of the rep contract after Cumulus Media Partners acquired Susquehanna Radio, along with the Q1 broadcast calendar having 12 weeks this year vs. 13 a year ago. Contract termination revenue, which is not something Interep really desires to have, rose to 700K from 100K. Selling expenses were down 9.8% to 13.9 million for the quarter, largely due to previously implemented staff reductions, and general and administrative costs were down as well. So, Interep's operating loss before depreciation and amortization improved to 2.1 million from 3.0 million a year earlier. David Kennedy, formerly head of Susquehanna, took over as CEO in February and 6.4 million in retirement severance costs for Ralph Guild, who remains as Chairman, will be recorded in Q2, even though the actual payout will stretch through February 2012 (when Ralph is likely to still be dancing up a storm at 83).

RBR observation: Things are generally looking better for Interep and when the current quarter is reported in three months we'll see the first full period with David Kennedy at the helm. A little more than a year from now Interep is facing a big event - its 99 million bucks in 10% senior subordinated notes will come due July 1, 2008. We understand that both David Kennedy and Ralph Guild are hard at work to arrange that vital refinancing. So, Ralph isn't exactly free to enjoy retirement just yet.

Oh, woe is March
Since the public radio companies have already reported their Q1 results, you could pretty well figure that the RAB pool numbers for March were not going to be on the plus side. Indeed, local revenues were down 3%, national was off 2% and the combined spot sales total for local and national was down 2%. The only bright spot was non-spot, which was up 8%. But that didn't alter the overall revenue picture much. Total radio revenues were down 2% for the month of March, following gains in both January and February.


Double digit quarter for Liberman
The new equity investors in LBI Media, parent of Liberman Broadcasting, had to like the company's Q1 results. Revenues were up 13% to 25.1 million and adjusted EBITDA ballooned 17.7% to 10.6 million. Radio revenues jumped 22.9% to 12.1 million, due to higher revenues in Los Angeles and the addition of five new stations from Entravision in Dallas. 'The increase in our advertising revenue in Dallas was partially due to the acceptance by advertisers of our newly formatted stations in Dallas," the company noted. Radio EBITDA rose 49.9% to 6.6 million. In television, revenues rose 5.3% to 13.1 million, which was attributed to higher ad revenues in Texas, particularly in Dallas, and in Los Angeles. "We believe television revenues have increased as a result of wider acceptance by viewers and by advertisers of our innovative programming strategy," Liberman said in its filing. TV EBITDA rose 15.2% to 4.0 million for the quarter. Oaktree Capital Management and Tinicum Capital Partners II became major investors in LBI Media as the quarter ended, acquiring a 39% stake for 155 million (4/2/07 RBR #64). Founders Jose and Lenard Liberman continue to be the majority owners.

McSlarrow wants to
rein in the FCC

The Federal Trade Commission is the model that NCTA President/CEO Kyle McSlarrow has in mind for the FCC he'd want rather than the one we have. Under this model, the FCC would intervene only when the market has failed consumers in one way or another, rather than creating an amorphous mass of regulation with different goals, affecting different communications sectors, at different times. He said that the Communications Act of 1934 can be traced back to the Interstate Commerce Act of 1887, when the current state of technology was unimaginable. McSlarrow believes there is plenty of competition in the marketplace right now. Cable is vying with satellite and now telco companies for subscribers. His current gripe is that the new telco entrants are getting special treatment as they break into the market. "Such a technology-specific policy misses the point that the introduction of IP subjects all providers, regardless of technology, to competition." He explained how he wants the FCC to emulate the FTC. "The FCC would have authority to intervene in the marketplace only if it determines that the marketplace competition would not adequately protect consumers against unfair methods of competition or unfair and deceptive practices. There would be a presumption against regulation, and in fact all FCC regulations would sunset in five years." He said an executive order from President George W. Bush directs agencies to "specifically identify the market failure" it is attempting to correct, which he calls the exact opposite of the current approach "...where the trivial metastasizes into the burdensome." McSlarrow made his comments in a speech delivered to the Media Institute in Washington.


Liberman may settle with ex-employees
From the quarterly SEC filing by LBI Media, the parent of Liberman Broadcasting, we find that eight former employees had filed suit in Los Angeles, accusing the company of wage and hour violations relating to overtime pay and wrongful termination. They also sought to have the lawsuit certified as a class action covering numerous current and former Liberman employees. Although Liberman denies the allegations, it says a preliminary settlement was reached in April and the company has set aside a litigation reserve of 350K. However, it notes that "the settlement remains in dispute and may not be approved by the court."

I want my Internet TV...er, Sir
At least two prominent members of Congress are expressing their dismay that the Pentagon is blocking access to certain websites to soldiers stationed overseas in general and in Iraq and Afghanistan in particular. The blocked channels getting the most notice seem to be YouTube and MySpace. Sen. John Warner (R-VA) said, "There is nothing more important to the men and women of the armed forces than to have that connection to home." He has already talked to the Pentagon about the matter, and said, "Believe me, I am going to jump on that like a June bug right now," according to Politico.com. Rep. Ed Markey (D-MA) fired off a letter to Secretary of Defense Robert M. Gates with a similar theme. Markey noted that the Pentagon had cited system efficiency as one of the reasons for cutting service to the dozen or so websites, but added, "I fail to see how blocking these particular sites is consistent with achieving network efficiency," since many sites are still available, and none of the blocked sites are "bandwidth-intensive gaming sites." He concluded, "Given the fact that many of the blocked sites are used by troops overseas to communicate with their family and friends back home, and given that such social support is critical to morale, I urge the Defense Department to reverse its policy of blocking such sites."

RBR observation: Here we have yet another effort by the government to tamper with the First Amendment. No matter how well-intentioned the efforts are, they always seem unworkable, foolish or both when exposed to the light of day. We are glad to see push back from both parties on this one.


Wall Street Media Business Report TM
What's Emmis worth?
Emmis' stock may be trading around 10 bucks a share, but Bank of America analyst Jonathan Jacoby is telling clients the company is wroth twice that. He pegs the breakup value at 20-25 bucks. He figures the US radio stations alone are worth 1.8-2 billion, plus the value of the magazines, the overseas radio investments and the one remaining TV station. But, is CEO Jeff Smulyan likely to do anything to unlock that value? "Mr. Smulyan's control of the company puts him in charge as to any decisions to unlock the spread between the current equity price and the PMV. At the time he submitted his proposal last year, Mr. Smulyan made it clear that he wouldn't consider any outside bids for the company. But, perhaps Mr. Smulyan will look to reward investors through sales of some assets and/or make a 2nd attempt at going private (although, we believe that he might need to either bring in a partner or sell a high-price, low cash flow station to offer what the board will consider a fair price)," the analyst said in a research note. So, Jacoby maintains his neutral rating on the stock and 10 bucks price target.

Cox wants its stock back
The Board of Directors at Cox Radio has authorized an additional stock buyback of up to 100 million bucks worth of its Class A stock. A previous buyback authorization of 100 million bucks from August 2005 has only 15 million remaining.

Cumulus recalls two quarters
Cumulus Media says in an SEC filing that its quarterly 10-Q reports for Q2 and Q3 of 2006 "...should no longer be relied upon due to an error in those financial statements relating to the accounting for certain interest rate swaps..." Cumulus says the error is not material and that there is no need to restate its full-year results for 2006. It does, however, plan to file amended versions of its 10-Qs for those two quarters.


Executive Comment
10 commandments
that radio can live by

Several months ago, Erich "Mancow" Muller started a positive campaign called "The Foundation for Responsible Radio" (1/25/07 RBR #17), where he proposed that we as an industry work together to author and adopt a single set of standards that is good for both the audience and our advertisers. Erich (Mancow) then created his "Commandments for Radio Personalities" (see below).

I think Erich's self- regulating initiative is brilliant, and adopting a common standard (like the one he has put forward) could help our industry move in a positive, proactive direction that could deflect any need for further government interference.
| Erich's "commandments" are as follows: |

Mark Masters, Chief Executive Officer,
Talk Radio Network-FM, Talk Radio Network, Talk Radio Network Enterprises


Ad Business Report TM

Google CEO upbeat on radio
USA Today interviewed Google CEO Eric Schmidt. Here are excerpts from the Q&A section about the company's foray into radio:

Q: You say this will be a "breakout" year for Google and radio. Why?
A: Radio is greatly undermonetized. Look at the time people spend listening to radio, vs. the money currently being spent to advertise on radio - it's out of whack. Radio can be so much bigger.
| Read More... |

RBR observation: Now that they've got the inventory, it should be interesting to see if the network of folks who can produce an ad for 100 dollars will help, hurt or not affect at all, the quality of CCU's on-air sound at those 600 or so stations Google has purchased inventory on.

Sales of local ads for Canadian stations hits one billion
The Canadian Radio-television and Telecommunications Commission (CRTC) released the financial results for the Canadian private commercial radio industry. From 2005 to 2006, total revenues for AM and FM radio stations increased by 5.7%, going from 1.3 billion to 1.4 billion, while sales for local advertising rose by 4.6%, to reach 1.04 billion dollars in 2006, compared with 990.9 million in 2005. Sales of national advertising increased by 9% in one year, rising from 322.6 million to 351.5 million.
| Read More... |


Media Markets & Money TM
Hut one, hut two, Hutton three
Three is how many stations Hutton Broadcasting will have in the Santa Fe NM market once it closes on its acquisition of KWRP-FM from James S. Bumpous. Hutton already owns Sports KVSF-AM and "Outlaw Country" KQBA-FM in the market, and is planning to convert KWRP-FM to "High Altitude Rock," according to The New Mexican. The station is licensed to Pecos NM, in territory just outside the boundaries assigned to the market and according to a coverage map attached to the FCC transaction application, its primary signal serves the area southeast of Santa Fe right up to about the city limits. It will be operated as a Santa Fe station, however. The pricetag is 700K cash.

Close encounter in Valdosta
Educational Media Foundation has officially added another station to its ever-expanding portfolio. This time it's WJYF-FM, which it acquired from Three Trees Communications. According to broker Eddie Esserman from Media Services Group, the price was 1.3M.


Washington Media Business Report TM
Will Bloomberg swell
the political pie?

New York City mayor Michael Bloomberg may mean a lot more to the 2008 presidential campaign than simply the addition of a candidate with electronic credentials (referring, of course, to his Bloomberg financial news empire). According to reports, he may be willing to pump as much as 1B of his own money into a third party candidacy. According to AFP, Bloomberg says he isn't running as often as he is asked, but other reports indicate his peeps have talked to the peeps of former third party candidate H. Ross Perot. The Washington Times made that claim, and it's also saying that Bloomberg might consider a run just to add his voice to the argument. We also noticed interest in the prospect from Sen. Chuck Hagel (R-NE), who has been at odds with many in his party over the conflict in Iraq and other issues. Hagel has himself been said to be considering either entering the Republican primary or launching a third-party effort of his own, and he may be open to forming an alliance with Bloomberg. A Bloomberg candidacy would also offer the possibility of the political equivalent of a baseball subway World Series. If Rudy Giuliani was to get the Republican nomination and Hillary Clinton was to get the Democratic nomination, we'd have a three-way all-NY race.

RBR observation: A Bloomberg candidacy, if indeed it is self-funded, would essentially be found money for the media. It wouldn't be diverted from sources that if not going to one candidate would be going to another. On the down side, there would be no need for him to spend a penny more than is necessary to make his intentions known until the stretch drive in the fall of 2008, which will put even more strain on inventory than is already the case of late. Broadcasters will have to do the best they can to avoid alienating their regular mainstream clients who help pay the bills when the election cycle is dormant.

Broadcasters ask FCC to keep TV zone clean
The NAB and MSTV are asking the FCC to proceed with first things first before throwing the television spectrum open to new devices. They point out that the FCC's own study shows that 80%-87% of the viewers within a DTV signal contour may be subject to interference, and that a separate CRC/University of Kansas study finds that if anything, interference problems could be worse, affecting up to 95% of a station's viewers. They argue that DTV signals must be protected before the first new spectrum device is allowed to begin operating. Such devices should be prohibited from co- or adjacent channels; appropriate D/U ratios must be established; and personal/portable devices should be prohibited from operating within the spectrum. With billions of dollars at stake in the upcoming DTV transition, these safeguards are said to be a must.


Entertainment Media Business Report TM
Rewinding the Big 89
If you grew up in the Midwest and are of a certain age, you no doubt remember these names: Larry Lujack, Fred Winston, John Records Landecker, Jeff Davis, Chris Shebel and Tom Kent. Those voices will all be back on the air on WLS-AM Chicago on Memorial Day (5/28) for "The Big 89 Rewind" airing 5:00 am to midnight. It'll be a day-long flashback to the glory days of Top 40 radio, when the 50kw signal poured out of car dashboards across the Heartland of America, infecting innocent rural teens with Rock 'n' Roll. In addition to the DJs, legendary WLS newscasters Lyle Dean, Catherine Johns and Gil Gross will return to the airwaves, along with Les Grobstein on sports and others. Fellow ABC (soon to be Citadel) O&O WABC-AM New York has been doing its own rewind program each Memorial Day, with the 9th edition coming May 28th. No doubt some fans of that great era of Top 40 radio will have a hard time deciding which Internet stream to listen to this year.

CC launches AAA
"Radio 104.5" in Philly

A new AAA station from Clear Channel has launched in Philly, moving "Rumba 104.5" to 1480 on the AM dial: Says the new "Radio104.5": We are built for ultimate experience of listener....Radio1045 is a Pop Alternative with AAA sensibilities. We have stripped away the "hype". There will be no slogans or produced promotional announcements. The on-air talent's only role will be to convey passion, knowledge of the music and communicate only limited content which must relate to the music listening experience. Limited interruption is also important and limited commercials will be available as well." The station is ready to place biz starting next Monday.... Radio 104.5 yesterday launched a community wide outreach that will allow not only listeners, but businesses throughout Philadelphia the opportunity to "Help build Radio 104.5." It launched a splash page at www.Radio1045.com that allows Listeners to participate in three ways: By telling 104.5 what they want to hear, helping the station find and showcase local bands and allowing them to audition to become part of the station. Here are the details: Play what Listeners want. Whether it's their favorite artist, a great new band they've discovered or a song they haven't heard in a while - Radio 104.5 is looking for their input. Showcase local and Indie bands live. Listeners or the bands themselves will be able to submit music for live weekly performances on the air and potential airplay. Audition to be part of Radio 104.5. The station is giving "real people" the opportunity to serve up the music on 104.5. Listeners can sign up by going to www.Radio1045.com. In addition, a charter group of advertisers will become music sponsor partners and be offered unique advertising opportunities that will allow their businesses to be showcased.

RBR observation: Great idea and gives advertisers a fresh option. Perhaps the Indie suggestions will steer the format away from the typical AAA/Alternative stuff we're hearing so far on the station. It will be a tough road for ratings, however, as heritage, non-comm, full-market signal WXPN has a similar format. The best move would be to adopt a format similar to Entravision's Indie 103.1 in L.A. to differentiate. Remember, WPLY 100.3 in Philly tried Alternative and it failed.


Ratings & Research
Nielsen to launch national Homescan Hispanic Consumer Panel
In a major step to help its clients develop more complete insights about the unique characteristics of the burgeoning Hispanic community in the U.S., The Nielsen Company today announced that it will launch a national Homescan Hispanic Consumer Panel, with a research sample of 11,000 households. Nielsen also said it will expand its existing Homescan Hispanic Panel in LA from 1,500 to 2,500 households to provide Fast-Moving Consumer Goods (FMCG) manufacturers and retailers with more detailed views of the needs, preferences and shopping habits of Hispanic consumers. Critically important to the FMCG market space, the Hispanic population will yield 18% of all U.S. households with children by 2010. Panel expansion activity is already well underway and on track to be completed by 12/31. The first client deliverables will be available by May 2008.


Transactions
900K WRGO-FM Cedar Key FL/WYNY-AM Cross City FL from Jablamo License Holdings LLC (James M. Morrell, Amber L. Morrell) to WRGO Radio LLC ([Richard S. Pope). 25K escrow, 325K cash at closing, 550K note. [File date 4/19/07.]

500K KNSG-FM Mankato-New Ulm-St. Peter MN (Springfield MN) from KMHL Broadcasting Company (John Linder) to Springfield Radio Inc. (Bruce Linder). Cash. [File date 4/19/07.]


Stock Talk
Stocks move up
Wall Street shrugged off more weak housing data and instead focused on a Federal Reserve report of higher than expected industrial output in April. The Dow Industrials rose 104 points, or 0.8%, to 13,488.

Most radio stocks were higher. The Radio Index rose 1.500, or 1%, to 157.087. Journal Communications had the best day, up 2.8%, with no news about the company. Cox Radio announced an increased stock buyback and rose 2.4%.


Radio Stocks

Here's how stocks fared on Wednesday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

48.63

+0.38

Hearst-Argyle

HTV

25.33

-0.02

Beasley

BBGI

9.00

+0.01

Journal Comm.

JRN

13.69

+0.37

CBS CI. B CBS

32.04

+0.31

Lincoln Natl.

LNC

74.42

-0.04

CBS CI. A CBSa

32.05

+0.30

Radio One, Cl. A

ROIA

7.12

+0.09

Citadel CDL
8.24 -0.06

Radio One, Cl. D

ROIAK

7.13

+0.11

Clear Channel

CCU

37.90

+0.09

Regent

RGCI

3.39

+0.01

Cox Radio

CXR

14.29

+0.34

Saga Commun.

SGA

9.36

+0.16

Cumulus

CMLS

9.30

+0.04

Salem Comm.

SALM

11.61

+0.17

Disney

DIS

36.01

+0.07

Sirius Sat. Radio

SIRI

2.69

-0.04

Emmis

EMMS

10.16

unch

Spanish Bcg.

SBSA

4.23

+0.32

Entercom

ETM

26.67

+0.39

SWMX

SMWX

0.25

-0.01

Entravision

EVC

9.60

+0.11

Westwood One

WON

7.30

+0.15

Fisher

FSCI

48.69

+0.27

XM Sat. Radio

XMSR

10.48

-0.14


Bounceback

Send Us Your OpinionsWe want to
hear from you.

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Below the Fold
Ad Business Report
Google CEO upbeat on radio
CEO Eric Schmidt Q&A section about the company's foray into radio...

Media Markets & Money
Hut 1, hut 2, Hutton 3
Three is how many stations Hutton Broadcasting will have...

Washington Media Business Report
Will Bloomberg swell
the political pie?
NTYC mayor Michael Bloomberg may mean a lot more to the 08 presidential campaign...

Entertainment Media
Business Report
Rewinding the Big 89, WLS
Larry Lujack, Fred Winston, John Records Landecker voices will all be back on the air...



Stations for Sale

NE Louisiana FM
Great stand alone market!
Offered at 6 X 2006 BCF
[email protected]
(303)758-6900

CA Coastal Class A
Rated Market $1.5M
CO Rated Market C.P.
Class C1 $400K
Brett Miller - 805.543.3466
[email protected]

OR Coastal Class A FMs
Positive Cashflow $795K
ND Small Market C.P.
Class C1 $150K
Brett Miller - 805.543.3466
[email protected]


Market your Stations For Sale
in our daily epapers.

Contact
June Barnes
[email protected]

Radio Media Moves

Chipman gets the West
Arbitron has named Dave Chipman Radio Station Services (RSS) Western Regional Manager to oversee the LA and Dallas RSS sales offices. A big part of his job will be to lead Arbitron's Western Region in working with clients during the conversion from diary service to the Portable People Meter. PPM is scheduled for introduction next year in LA, San Francisco and Dallas out west.

Boardroom addition
Cox Radio announced the election of Nick W. Evans, Jr. to its Board of Directors as a non-executive, independent director. He will serve as chair of the Audit Committee and as a member of the Compensation Committee. Evans' career includes more than 20 years in the television industry, including 13 years as president and CEO of Spartan Communications. He currently serves as chairman of ECP Benefits LLC. The Cox Radio Board of Directors is composed of nine members.




More News Headlines

Entercom, igourmet.com sign with Liquid Compass
Entercom has selected Liquid Compass as its content delivery network to facilitate its stream-hosting and ad-replacement needs. Liquid Compass provides streaming and interactive media solutions developed specifically for the radio industry, including live and on-demand Internet radio, custom media-player development, web design, Internet/streaming ad sales, and managed ad trafficking and website maintenance services. Utilizing the S.O.S. ad replacement software (Stream Overlay Software and StreamAds) provided by Liquid Compass, Entercom offered seasonal advertiser igourmet.com the ability to run a customized video pre-roll (also called a video gateway), which played each time a listener opened a media player on one of Entercom's participating streaming radio stations. In addition to an in-stream commercial spot, a synchronized banner ad appeared inside each media player. Liquid Compass provides a stream-hosting network for Entercom's 100-plus terrestrial radio stations. This network includes custom media players that work in conjunction with S.O.S. and StreamAds (ad replacement software developed by Spacial Audio) to provide online advertising options for advertisers such as igourmet.com.

XM and Sirius sued
Finisar, a fiber optic company, has filed patent infringement lawsuits against both XM and Sirius, claiming that the satellite radio companies are infringing its patent pertaining to transmitting large data packets using little capacity. Finisar won a similar lawsuit against DirecTV. The other satellite TV company, EchoStar, has filed a lawsuit seeking a federal court ruling that it does not infringe on the Finisar patent. Petitions have also been filed with the US Patent and Trademark Office seeking to have the Finisar patent revoked.




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

Citadel peeved at Peak
Peak Broadcasting CEO Todd Lawley has a court battle on his hands with his former employer, Citadel Broadcasting. Citadel has sued Peak, Lawley, four Peak employees and a series of potential John/Jane Doe defendants, charging that they have engaged in a conspiracy to purloin proprietary information and trade secrets from Citadel. RBR has obtained a copy of the lawsuit. In it, Citadel charges that "At least as early as July 2006, some four months prior to his resignation and while still serving as a Regional President, unbeknownst to Citadel Broadcasting, Defendant Lawley initiated a scheme to raid the ranks of Citadel Broadcasting employees...

RBR note: There is more to this legal battle in RBR.
05/16/07 RBR #96

GoodRadio.TV paperwork filed
Clear Channel and GoodRadio.TV LLC have posted the contract for their massive deal involving numerous small market stations scattered throughout the country. GoodRadio.TV, headed by Dean Goodman and Paul Kasper, is spending 452.1M for the stations. The buyer is backed by American Securities Capital Partners LLC, and a couple of notable names appear on the ownership roster: veteran broadcaster Carl Hirsch and former NAB stalwart Eddie Fritts.

RBR observation: Goodman has already inked deals for six stations in Iowa and 15 in Missouri prior to this blockbuster. And keep an eye on this company. We suspect it doesn't have "TV" in its name for nothing, although it has yet to strike in that portion of the broadcasting spectrum. Complete station list here in this special prepared page report in RBR
05/16/07 RBR #96

2007-08 Pre-Upfront
Programming Report
Fox is currently ranked third in Households and total viewers. It's the top-rated network in Adults18-34 and is pretty much guaranteed a first place finish in Adults 18-49 for the third straight year. The networks occupies second place\ace in Adults 25-54 (behind CBS). More complete insight in this special page report of TVBR.
05/16/07 TVBR #96

Analysts pile on after Emmis miss
The analysts' comments couldn't have been much worse than what Jeff Smulyan had to say about his own company's performance in Friday's quarterly conference call, so it is not surprising that forward revenue estimates for Emmis Communications have been cut after the company came in under expectations for its fiscal Q4 (December-February). As we reported (5/14/07 RBR #94), the big problems for Emmis are in two markets - and those are giant markets, New York and Los Angeles. (Total report on this page of RBR)
05/15/07 RBR #95

Future bleak for paid
video downloads
The paid video download market is a dead end, according to a report from Forrester Research. Forrester estimates that paid video downloads will peak in 2007, generating 279 million bucks in revenue, up from 98 million last year. That sounds like fantastic growth, but the report says it is all over.

RBR note: This study is interesting but more informative of the junkies that buy and use content. For details see RBR's Ratings & Research section in this issue.
05/15/07 RBR #95




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