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Welcome to TVBR's Daily Epaper
Volume 24, Issue 153, Jim Carnegie, Editor & Publisher
Tuesday Morning August 7th, 2007

TV News ®

How much is credit tightening?
The Federal Reserve's policy makers announce their latest move - or lack of movement - on rates this afternoon. Despite the recent roiling of the credit markets, the Wall Street consensus is that Chairman Ben Bernanke and his fellow Fed members won't change rates today. And, unless there are more drastic changes in the economy, they are viewed as likely to stay the course for many, many months to come. But while tightening credit has pulled Nexstar off the auction block - and possibly LIN Television as well - it appears there is still financing available for most radio and TV deals...at least for now. Those two TV groups are mega-size deals in the broadcasting transaction world - both over a billion bucks and LIN perhaps over two. Deals of that sort require major financing commitments and the lenders who do those big deals (and who typically work with the very large private equity funds) are the ones now moving first to tighten terms or pull back on lending commitments. "Maybe the money center banks are indeed tightening up, but we haven't seen it yet," broker Larry Patrick of Patrick Communications told RBR/TVBR. He said there are still a lot of lenders wanting to finance radio and television deals and he hasn't seen any dramatic change in terms. The big issue, said broker Brian Pryor of Media Venture Partners, is that lenders have to syndicate those loans of hundreds of millions or billions of bucks and the institutional investors who generally supply the cash have pulled away, so liquidity has dried up. But he said for the more normal transaction, the bank itself will hold a loan of up to 20 or 30 million. But while the credit tightening hasn't trickled down just yet, "you certainly hear about it from lenders and buyers - they're going to use whatever negotiating leverage they can - but we haven't really seen it run through pricing for certain smaller and medium deals," Pryor said. "That's not to say that banks won't get more cautious," he noted, but in his view it is too early to say whether a general credit tightening is underway.

TVBR observation: Not today, maybe not next month, but if credit gets tighter and threatens to slow down the economy, Bernanke and the Fed will need to lower rates and keep economic growth from flat-lining. If he stays too focused on inflation, to the exclusion of all other economic factors, he runs the very real risk of repeating the foolish policies of his predecessor who ran the US into an unnecessary recession back at the start of this decade.

Gray hits low end of guidance
"It wasn't great, but it wasn't bad," said President Bob Prather as he reported Q2 results for Gray Television. Revenues were down 2% to 79.8 million, at the low end of what the company had promised Wall Street, due primarily to political advertising dropping 44% to 2.6 million. Gray had one more station this year than a year ago, but pro forma revenues were also down 2%, with local up 2%, national down 6% and political down 43%. Prather told analysts that his GMs are mostly optimistic about Q3 and the company is hoping that early primaries will yield political revenues in Q4. Gray's official guidance for Q3 is that local non-political advertising should be up 7-10%. Combined with the lack of political and continued softness in national, the company is looking for revenues to be down 6-8%. Gray completed a refinancing of its senior credit facility in Q2 - March 19th to be exact - and Prather was happy about the timing, given the current tightening in the credit markets. "It's clearly a different world than it was a month ago. I think it'll be interesting to see after Labor Day how people's attitudes are and how much shakeout is still going on from all this sub-prime stuff and Bear Sterns' problems in that area which have probably been in the forefront. I think valuations are clearly less than they were a month ago," the CEO told analysts.


Rite of passage?
The presidential campaign season seems to have expanded to fill all of the time between Election Day completed and Election Day on the horizon. Prospective candidates waste no time positioning and posturing. Increasingly, a way station along the road is the late-night talk show circuit. As part of that phenomenon, four current candidates are headed to Comedy Central this month. The destination is, of course, "The Daily Show," where two Democrats and two Republicans will chew the fat with Jon Stewart. According to the Associated Press, the quartet will be led off by Joe Biden (D-DE) on 8/8/07, followed by John McCain (R-AZ) on 8/16/07, Tommy Thompson (R-WI) on 8/20/07, and then Barack Obama (D-IL) on 8/22/07. Comedy Central EVP/GM Michele Ganeless told AP that Stewart both makes the candidates feel comfortable, and provides them access to the often difficult to reach young male demo.

Dorgan tells regulators
to say no to monopoly

Byron Dorgan (D-ND) expressed his misgivings about the merger of XM and Sirius back in April. After attending hearings, receiving written answers from the companies to some of his questions and following developments in the news, he wrote the DOJ and the FCC to state that his opposition to the merger remains as strong as ever. Addressing Assistant AG Thomas Barnett and FCC Chairman Kevin Martin, Dorgan noted that the licenses were granted "...under the strict condition that there must be at least two companies in the market." He continued, "Little has changed since their initial licensing in 1997. While other forms of audio have sprouted up around the country, such as terrestrial radio, webcasting or mp3 players, the companies have not proven beyond a doubt that these forms amount to competition...There can be no price check similar to that of two companies with national platforms competing against one another." Dorgan noted that the companies were beneficiaries of a limited pool of competitors to begin with. Only four companies were even allowed to bid on the satellite audio licenses. "There may have been other bidders who could have performed this service, but who were shut out of the bidding. The two companies who prevailed now have to honor the responsibility that comes with a national media platform." He concluded, "I cannot believe that this merger will result in lower prices or increase diversity. And I cannot believe the public will be better served by this merger."

TVBR observation: Many broadcasters operating on the AM and/or FM band have objected to the use of the phrase "terrestrial radio." We think they, like us, will be even more surprised to see the medium on a list of audio services which have "sprouted up" since 1997. Perhaps the Senator was referring to HD radio. But the bottom line is that Dorgan is one of the most attentive legislators to communications matters on Capitol Hill, and we can chalk him up as one more legislator standing against the creation of a government-sanctioned monopoly.


Ad Business Report TM

Cerberus picks Robert Nardelli to run Chrysler
Cerberus Capital Management has named former Home Depot CEO Robert Nardelli to lead its newly acquired Chrysler unit. Nardelli, who left Home Depot earlier this year, will become chairman and CEO of Chrysler, making him the second outsider recently named to lead one of Detroit's struggling Big Three. He follows former top Boeing exec Alan Mulally, who was tapped last fall to take over Ford. Nardelli's appointment puts him above Chrysler President Thomas LaSorda, an industry vet who had been CEO and will remain president. "The arrival of two CEOs who aren't part of or beholden to the U.S. auto industry's culture and traditions is as potent a symbol of the change buffeting the U.S. auto sector as the news last week that the Big Three's combined share of the U.S. market fell below 50% for the first time," reported The Wall Street Journal. "Both will play key roles in what are expected to be tough negotiations over a new national labor agreement with the United Auto Workers union, in which the auto makers want big concessions to narrow a 30-an-hour labor-cost gap with the U.S. operations of Japanese auto power Toyota Motor Corp." Nardelli's pay will be tied to Chrysler's performance and based on the equity value of the auto maker, the story added. In addition, COO Eric Ridenour has elected to leave the new company to pursue other opportunities. The COO position will not be filled going forward.

NBC teams with DoubleClick
again for Fall lineup

DoubleClick announced that it is working with NBC on new online ad campaigns to support the promotion of NBC's upcoming fall line-up. These new campaigns represent an extension of the three-year relationship between DoubleClick and NBC. For the Fall Launch, which kicked off at the end of July and runs into October, NBC is once again exploring Alpha Channel Video capabilities as well as some other innovations such as Full Screen Video and Video Sweetspotting, both of which are being utilized for the current launch of the "Bionic Woman." The ad unit functions as a micro-site giving the audience an arsenal of interactive options to further engage in the pre-show excitement. With Video Sweetspotting, the audience has the ability to interact with and dynamically alter the actual video content through various trigger points that when clicked upon will deliver more detailed information about the show. With The Full-Screen Experience, the audience gets a true TV-like feeling. There's also access to Behind the Scenes footage. For example, last February's launch of NBC's "Black Donnellys," DoubleClick implemented its Video Button. When the audience engages with the ad, there is an instant video experience that leaps onto the page. The Video Button can be customized into unusual, nontraditional shapes. The "Black Donnellys" Video Button was presented in the shape of a four-leaf clover that expanded dramatically upon interaction and immediately played the show's trailer. To promote the launch of "Grease," NBC employed DoubleClick's Alpha Channel Video. Utilizing the latest version of flash, video content appeared transparently over a website's content. NBC shot original video of two people dancing to "You're The One That I Want" for the campaign which was showcased on the site through the Alpha Channel Video technology.


Media Markets & Money TM
Fisher moves into California with 55M duop deal
Fisher Communications is moving down the West Coast from its base in the Northwest to make its first acquisition in California. It will acquire KBAK-TV (Ch. 29, CBS) and KBFX-CA (Ch. 58, Fox) Bakersfield from Westwind Communications LLC for approximately 55 million bucks. "We are delighted to enter the Bakersfield market by purchasing two excellent stations that have tremendous potential. At Fisher, our mission is to make each of our communities better by providing outstanding local news and content. We're committed to bringing viewers of KBAK and KBFX more local news coverage, more in-depth news coverage and increased and enhanced online content. In the coming months, viewers will find compelling reasons to make them their first stop for local news. We look forward to serving the people of Bakersfield," said Fisher CEO Colleen Brown. Following finalization of the purchase, Fisher intends to expand offerings for both stations. Currently, both share a single Web site; Fisher will support separate sites for each station and enhance both sites with the company's online format, which includes such features as its user-generated YouNewsTV, expanded weather and event coverage, and enhanced sports coverage. "We were determined to ensure that the stations remained in the hands of a long-term broadcaster dedicated to continuing and improving upon our 21-year commitment to the market," said Westwind President Wayne Lansche.

Price revealed in New Vision deal
Jason Elkin's New Vision Television recently announced it was picking up television stations in four markets, which not too long ago were part of Emmis Communications and then segued to Montecito Broadcast Group. Paperwork on the transaction has finally hit the FCC database, revealing the sticker price. The stations include CBS KOIN-TV in Portland; Fox/CW KHON-TV and satellites KHAW-TV & KAII-TV in Honolulu; NBC KSNW-TV and satellites KSNC-TV, KSNG-TV & KSNK-TV in Wichita; and NBC KSNT-TV in Topeka KS. Montecito, which paid 259M for them in a deal filed 10/7/05, will earn a tidy profit, selling them to New Vision for 330M.


Washington Media Business Report TM
FCC holds August Open Meeting
Today. After holding meetings the past few months at just about the last possible minute, Chairman Kevin Martin is getting the monthly chore out of the way early this time around. The lonely, one-and-only topic is a title under the jurisdiction of the Wireless Telecommunications Bureau: "Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers." This means that broadcasters have no particular reason to tune in, except for frequently-roaming group executives and consultants who may be interested in this topic for personal reasons.

TVBR observation: August is get-out-of-town month in Washington. Congress is already gone, and this move by the FCC falls right in with inside-the-Beltway tradition. A statute on this isn't written down anywhere that we know of, but if there was one, it would read "August business, if business there must be, shall be short, sweet and over."


Internet Media Business Report TM
SoundExchange role in royalty debate questioned
Eliot Van Buskirk has written a commentary available at wired.com which links royalty disbursing organization SoundExchange to the Music First Coalition, which is lobbying to extend performance royalties from the internet and satellite audio services to AM and FM radio. While it's not surprising that the organization would like to find another source of cash to collect and disburse, Van Buskirk says the lobbying appears to be in conflict with the organization's charter. He says "...the Copyright Act explicitly limits how the nonprofit can spend the money it collects," and lobbying activities are not on the short list of approved expenditures. It's not that Van Buskirk has taken sides in this dispute - he says that in his opinion musicians and recording labels deserve compensation for over-the-air spins. But SoundExchange's lobbying creates at the very least the appearance of a conflict of interest. "In keeping with the spirit of the law," he concluded, "SoundExchange should immediately sever its ties to musicFirst and any other lobbying group it funds or assists, and fulfill its role as a neutral administrator of fees."


Stock Talk
A recovery, but will it stick?
Wall Street recovered from Friday's sell-off, with the Dow Industrials surging 287 points, or 2.2%, on Monday to 13,469. There was, however, little news, so it was apparently some bargain hunting after last week's wild market ride.

TV stocks were mixed. Emmis, which has only one TV station remaining along with its radio stations and magazines, plunged 15.7% and is approaching penny stock territory. Nexstar fell another 9.9% after pulling itself off the auction block. LIN, which may do the same, was down 9.1%. Fisher was the best performer, up 6%.


Stocks

Here's how stocks fared on Monday

Company Symbol Close Change Company Symbol Close Change

Acme

ACME

3.95

-0.05

Lincoln Natl.

LNC

59.97

+2.67

Belo

BLC

17.35

+0.09

LIN TV

TVL

13.00

-1.30

CBS CI. B CBS

32.05

+0.48

McGraw-Hill

MHP

57.10

+0.76

CBS CI. A CBSa

32.07

+0.56

Media General

MEG

27.49

+0.29

Clear Channel

CCU

36.78

+0.03

Meredith

MDP

54.58

+0.09

Disney

DIS

34.30

+0.40

News Corp.

NWS

22.56

+0.16

Emmis

EMMS

5.49

-1.02

Nexstar

NXST

8.26

-0.91

Entravision

EVC

8.81

-0.30

Ion Media

ION

1.39

-0.01

Equity Media EMDA 3.73 -0.07

Saga Commun.

SGA

6.87

-0.10

Fisher

FSCI

48.51

+2.75

SBS

SBSA

2.96

+0.04

Gannett

GCI

49.79

+0.70

Scripps

SSP

40.43

+0.11

Gen. Electric

GE

39.10

+1.04

Sinclair

SBGI

12.06

-0.01

Google GOOG

510.00

+7.00

SWMX

SWMX

0.10

-0.01

Gray

GTN

7.15

-0.47

Time Warner

TWX

18.48

-0.13

Gray, C1. A

GTNa

7.13

-0.67

Tribune

TRB

27.09

-0.40

Hearst-Argyle

HTV

20.73

+0.33

Wash. Post

WPO

794.50

-31.00

Journal Comm.

JRN

9.92

-0.21

Young

YBTVA

2.15

-0.14


Bounceback

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Below the Fold

Ad Business Report
NBC teams with DoubleClick
Again for Fall lineup.Campaigns represent an extension of the 3-year relationship

Media Markets & Money
Price revealed
In New Vision deal recently picking up stations in 4 markets...

Washington Media Business Report
FCC Open Meeting
It is August, meeting early as Martin is getting the chore out of the way early...

Internet Media Business Report
SoundExchange
Their role in royalty debate questioned...


Stations for Sale

Market your Stations For Sale
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[email protected]


TV Media Moves

Nesto to CNBC
Matt Nesto is joining CNBC as a general assignment reporter for CNBC's Business Day programming. Nesto joins CNBC from Bloomberg Television, where he spent nine years, most recently as anchor of its "Morning Call" program.

Darnell staying put
Reality TV pioneer Mike Darnell has signed a new contract to stay with Fox and has been elevated to the new position of President of Alternative Entertainment.


More News Headlines

National Geographic expands
It's known for its magazine. But the iconic publishing outfit has long been involved in television and film enterprises, and has been active online. It's been active on radio as well, with "Radio Expeditions" on NPR. It is now expanding into music and radio. The goal of the new music recording, music publishing and syndicated radio program ventures is to reach people who care about the planet, according to Reuters. Musicians Peter Gabriel, Jack Johnson and Ben Harper as mentioned as collaborators, and along with NPR, Clear Channel and Salem Communications are said to be in the mix. Details are expected this fall.

Busted!
"Dateline NBC" producer Michelle Madigan tried to do some undercover reporting at last week's DefCon hacker convention in Las Vegas. Instead she ended up on YouTube as she was exposed and ejected. Reporters are not unwelcome at the annual gathering, but Madigan was apparently trying to get some attendees to reveal things they might not tell someone with a press badge.


SmartMedia Magazine


Coming in September
FALL NAB ISSUE
SPECIAL DISTRIBUTION:
NAB RADIO SHOW

Media Markets and Money:
What's attractive to equity capital these days?

Ad Biz:
Gennele Niblack, Katz Political President

New Media:
Gary Arlen: YouTube, Joost and the emerging Fox-NBC website are just the start of big bandwidth video via the Internet.

For advertising
information, contact:

June Barnes
[email protected] 803-731-5951;
Jim Carnegie
[email protected] 813-909-2916 or
Carl Marcucci
[email protected] 703-492-8191.


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

Nexstar no longer in sales talks
Citing "difficult conditions in the financing markets" Nexstar announced that it has decided to suspend discussions with potential buyers of the company. CEO Perry Sook tells TVBR that a "hiatus" is an accurate description and it is likely that sale talks will resume when the markets improve.

TVBR observation: The rumblings in the financing markets have become louder in recent weeks. Tribune allayed fears when it declared that all of the financing is committed for its buyout. And KKR drew headlines in the financial press for holding its bankers feet to the fire for financing commitments they'd made to its deal to buy Dollar General. But for deals not yet done, terms are tightening and financing is becoming harder to get.
08/06/07 TVBR #152

Not Bull No Longer Bear
Slew of upgrades from BofA analyst Jonathan Jacoby isn't a bull, but at least he's no longer a bear when it comes to radio stocks. Stock prices have fallen to what Jacoby says reflects his slow growth long-term view, so he's upgraded Citadel, Cox Radio and Entercom from "sell" to "neutral." Jacoby had downgraded the trio to sell back in November, when the Wall Street consensus was that 2007 radio revenue growth would be in the 2-3% range. "We argued that persistent audience erosion would cap average top-line growth at approximately 1% over next five years and at less than 2% over the next ten years. Seven months into '07, it is evident that radio's best hope is for flat revenue this year. And investors seem to have responded to the continued malaise by revaluing the sector, which now reflects our tempered long-term view," Jacoby said in his update to clients.
08/06/07 RBR #152

A legal eagle eye's view
of DTV outreach
Congress has instructed the FCC to educate the people about the upcoming transition to digital television, to forestall a massive case of blank screens after analog switches are set to the off position for good on 2/17/09. In fact, John Dingell (D-MI) and Ed Markey (D-MA) would like the FCC to throw its weight around to the extent it is legally entitled. Review the entire report in TVBR special section.
08/06/07 TVBR #152


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