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Welcome to TVBR's Daily Epaper
Volume 24, Issue 190, Jim Carnegie, Editor & Publisher
Friday Morning September 28th, 2007

TV News ®

Independent directors say no
to Hearst-Argyle buyout

The offer from Hearst Corporation to buy out other shareholders of Hearst-Argyle Television has been rejected by the special committee of independent directors at Hearst-Argyle. They say the offer of 23.50 per share (8/27/07 TVBR #167) is not enough. The statement released after the market closed yesterday states that the special committee unanimously determined that the offer is "inadequate and not in the best interests of Hearst-Argyle Television stockholders, other than The Hearst Corporation and its affiliates." The independent directors advised public shareholders to reject the offer and not tender their shares. "The Special Committee made its determination and recommendation based upon various factors, including, among other things, the belief that the offer undervalues the shares of Series A Common Stock of Hearst-Argyle Television, and does not adequately reflect the prospects and value of the Company," the statement said. Hearst-Argyle Television owns 26 television stations and manages three others. It also manages two radio stations which are owned by Hearst Corporation.

TVBR observation: Hardly a surprise. Investors had been pressing for a higher price since the Hearst Corp. offer was made and the stock has consistently traded well above the 23.50 offer since the day it was issued. Hearst-Argyle closed yesterday at 26.05.Now we wait to see if Hearst Corp. comes up with a better offer to acquire the 27% of Hearst-Argyle that it doesn't already own.

US tries to take Fox case to Supreme Court
The Second Circuit Court in New York shot down the FCC's attempt to reverse its own long-standing policy and penalize broadcasters for allowing fleeting expletives over their airspace. Solicitor General Paul D. Clement, on behalf of the Bush administration and the FCC, is going to try for a Supreme Court appeal. The battle was between the FCC and Fox over incidents occurring on live awards programs. FCC Chairman Kevin Martin reacted swiftly, saying, "I am pleased that the Solicitor General will be seeking Supreme Court review of the Second Circuit's decision. I continue to support the Commission's efforts to protect families from indecent language on television and radio when children are likely to be in the audience."

The Solicitor General's decision follows an attempt led by Rep. Chip Pickering (R-MS) to use legislative instruments to make fleeting expletives actionable, an effort that was opposed recently by the ACLU. Discussing Pickering's effort, First Amendment Legislative Counsel Marvin Johnson said, "Now is the time for common sense not new unworkable regulations. It is likely that any regulations will violate the First Amendment rights of adults who watch television. If Uncle Sam wants a role in America's living rooms, then Congress should consider funding media literacy education for parents and not go down this path that will only lead to more lawsuits. No children will be helped by this legislation."

TVBR observation: This case represents a very narrow lane in the entire broadcast indecency issue. At the beginning of his chairmanship, Michael Powell put out indecency guidelines that clearly reaffirmed the fleeting and inadvertent standard. The Bono incident at the heart of the Fox case was dismissed by the FCC Enforcement Bureau on fleeting grounds. Then came Nipplegate, and Powell suddenly changed the rule for certain words, including the "f-bomb." Part of the problem is that the FCC did it without going through the usual procedure of 8th Floor debate and the accumulation of public comment. Pickering is trying to get around that by making it legal to punish certain fleeting expletives regardless of circumstances. The problem is that it makes any live broadcast a risk. It'll be interesting to see how the relatively new Supreme Court lineup looks at this, if they decide to take the case.


Martin opposes public
interest time requirements

Democrats on the FCC have been pushing the idea of spelling out specific public interest programming requirements for broadcasters, tying it to the addition of DTV multicast channels, but perhaps including minimum time requirements for all radio and television licensees. But FCC Chairman Kevin Martin was having none of it yesterday at the NAB Radio Show in Charlotte. "I actually believe they are doing a lot," Martin said of the service broadcasters already provide to their local communities. He suggested that the FCC needs to modify its survey forms to better quantify the public service efforts of broadcasters. "I don't think people are aware of how much the broadcasters are doing," Martin said. As for any time requirement, he warned that any regulatory minimum might not be just a floor, but also a ceiling, discouraging stations from doing even more. So while he does support the children's television rules enacted in recent years, the Chairman said he does not see the need to impose any additional program time requirements on broadcasters.

NAB kicks of DTV education program
"DTV Action" spots have been distributed throughout the US in both English and Spanish as the NAB kicks off its DTV transition consumer awareness program. The package sent to television stations includes ready-made spots and ample material for use by local news departments. NAB says this is just the first salvo in a program that will continue right up until the transition deadline of 2/17/09. The current program is designed to promote the following points: * Digital television provides numerous benefits to viewers; * All broadcast television will be digital in 2009; * Some consumers will need to upgrade or they will lose their TV signals; * More information is available by visiting www.dtvanswers.com or calling 1-888-DTV-2009.

The news package includes * Footage of a DTV converter box, including a consumer hooking up her analog television to a box; * Footage of transmission towers and antennas; * Interviews with FCC Robert McDowell and U.S. Secretary of Commerce Carlos Gutierrez; * An additional interview with Secretary Gutierrez in Spanish. The spots can be viewed at www.dtvanswers.com/30secspot. "This video package is only the first step in NAB's multifaceted media plan to educate consumers about the DTV transition," said NAB President/CEO David K. Rehr. "Our spots are informational and drive general awareness that the DTV transition is a good thing for consumers, but that they may need to take action to upgrade. Our stations have already received and will continue to receive educational materials from NAB by February 2009 to educate consumers about DTV."

TVBR observation: The news package is a prime example of a video news release (VNR), and is further an excellent demonstration of the benevolent use of such PR devices. They are not necessarily a tool of the devil. They aren't all about getting us to try a certain product or service on the sly, or a product of an under-the-table compact between broadcaster and advertiser. Many times their intent is purely educational, as in this instance.


Hearst arrives at retrans accord with Cox
If there's one big cable operator you'd expect to grasp both sides of the broadcast retransmission issue, its Cox, which also includes significant television and radio properties in its portfolio. Cox Cable has agreed to carriage terms with Hearst-Argyle, including eight stations in six markets. Although full terms were not released, the agreement does call for HDTV and multicast carriage along with continued carriage of the stations' analog signals (a requirement recently codified by the FCC regardless). The stations include NBC WESH-TV and CW WKCF-TV in Orlando FL; ABC KMBC-TV in Kansas City MO, Missouri; ABC KOCO-TV, Oklahoma City OK; NBC WDSU-TV New Orleans LA; ABC KETV-TV in Omaha NE; and ABC KHBS-TV/KHOG-TV, Fort Smith/Fayetteville AR. Meanwhile, Hearst-Argyle announced a dividend for Series A and B common stock shareholders of record as of 10/5/07. On 10/15/07 these shareholders will receive a payout of seven cents per share.

One man's view of America's TV history
It may be presumptuous of Lawrence H. Rogers II to title his book "History of U.S. Television," but he certainly was present to personally report on a good bit of that history. His personal account includes many of the details behind the FCC "freeze" on any new TV license grants in 1948 until the implementation of the Sixth Order & Report, which transformed TV transmission standards in 1953. That may not have begun a wild west-type shootout between the established TV powers and the new licensees, but it was certainly not the clearly regulated environment that we have today. Rogers, having previously been an artillery captain in Patton's Third Army, was on the front lines of the battle, openly challenging the TV industry titans to sign on the first station in West Virginia, despite the refusal of some established stations to obey FCC orders to change channel assignments.

After heading WSAZ-TV Huntington, WV from its sign-on until 1956, Rogers became President and COO of Taft Broadcasting, taking it from being a troubled family-owned company to the largest single group operator - along the way moving most of its stations from CBS to ABC, which played a role in the firing of a CBS president. Following his Taft days, Rogers was later President and CEO of Omega Communications, which owned WOFL-TV Orlando, FL. (He's writing a book about that Florida media battle as well.) "History of U.S. Television: A Personal Reminiscence" is self-published by Rogers via AuthorHouse. It is available on AuthorHouse.com in both print and electronic form.


Wall Street Media Business Report TM
Moody's upgrades Block
Moody's Investors Service upgraded Block Communications' corporate family rating to Ba3 from B1 and revised its outlook to stable. In addition, Moody's upgraded Block's 150 million in senior notes due 2015 to B1 from B2. Ratings on other issues were confirmed. In all, Moody's has ratings on 340 million of Block's debt. "The upgrade reflects Moody's expectation that Block's favorable union contract resolution at both The Blade (Toledo, OH) and Pittsburgh Post-Gazette will result in significant cost savings and substantial improvement in the company's credit metrics," Moody's said. Privately owned Block has operations in cable television, telecommunications, newspaper publishing and television broadcasting.


Ad Business Report TM

Brand experience and loyalty leaders
Advertising and marketing are all about moving products and services, but the ideal is to build a relationship between provider and consumer that is measured in terms of decades rather than single transactions. RTC Relationship marketing has surveyed companies in a number of categories to determine which brands are doing the best job of this. "This study clearly demonstrates how brand experience can be leveraged as a major differentiator, even among leading brands," said RTCRM CEO Barry Kessel. "While marketers spend billions on brand awareness and acquiring new customers, it's equally important and highly profitable to keep customers happy and committed by delivering a positive experience. It just makes good business sense," said Kessel. Financial services giant ING and automaker Honda were awarded the top slots under this criterion. The top three in a selection of industries are:

* Airlines: Southwest, JetBlue and Continental
* Auto: Honda, Toyota and General Motors
* Banking: ING, Wachovia and Wells Fargo
* Internet: Verizon, Google and AT&T
* Hotel: Radisson, Hyatt and Westin
* Specialty Retail: Home Depot, Bath & Body Works and Best Buy
* TV Programming: Sesame Street, Wonderful World of Disney and Oprah
* Mobile: Verizon Wireless, AT&T and Motorola
* Honorable mentions not ranked due to low base sizes included: Mercedes, BMW, Lexus, Volkswagen, Apple iPhone, Virgin Atlantic Airlines and Four Seasons Hotels and Resorts.

The survey was based on Young & Rubicam's BrandAsset Valuator(TM) and was conducted over the internet by Penn, Schoen and Berland Associates.


Washington Media Business Report TM
Senate moving to
extend Do Not Call

Byron Dorgan (D-ND) has noted that membership on the Do Not Call registry is scheduled to expire 9/30/08, an automatic expiration date built into the rules when the FCC and FTC implemented the program in 2003. "That was not what Congress intended," said Dorgan. "As things stand today, 52M Americans will either have to re-register on 10/1/08, or get ready to hear their telephones ringing during supper time again with unwanted, commercial solicitation calls." Dorgan proposes instead the mechanism should work in the opposite, so that consumers are removed from the registry by the FCC/FTC if, and only if, they specifically request removal. His call was quickly echoed from across the aisle by Ted Stevens (R-AK), who said, "The federal 'Do-Not-Call' registry is a tool used by millions of people who do not want to constantly receive unwanted telemarketing calls. Consumers should not have to mark their calendars every five years to remind them to re-register their numbers on the 'Do-Not-Call' list." Dorgan has introduced the "Do-Not-Call Improvement Act of 2007" (S. 2096), with a co-sponsor roster which in addition to Stevens includes Charles Schumer (D-NY), John Ensign (R-NV), John Kerry (D-MA), Herb Kohl (D-WI), Russell Feingold (D-WI), Hillary Clinton (D-NY), Dianne Feinstein (D-CA) and Bill Nelson (D-FL).

TVBR observation: It's impossible to predict the trajectory of any bill in Congress. No matter how popular or sensible it may be, you never know when someone will attach a poison pill or put an anonymous hold on a piece of legislation for reasons which are completely irrelevant to the thrust of the legislation. However, we suspect this bill to have a better than even chance of moving forward, and even though the co-sponsor list may be currently a little light on the Republican side, we doubt that Stevens' colleagues will want to allow Democrats to produce an ad for 2008 saying "This dinnertime telemarketing interruption was brought to you by the Republican caucus of the US Senate."

Station hops EEO violation charge
License renewal challenges continue to roll in to the FCC. This time the subject is noncommercial KUYI-FM Hotevilla AZ, licensed to The Hopi Foundation, which found itself subject to an informal objection from Rosanda Suetopka Thayer. She charged that the station engaged in discriminatory hiring and management practices, and failed to issue issue-responsive programming. She claimed the station hired a station manager without consulting the Hopi community and treated volunteer DJs abusively, among other things. The Hopi Foundation pointed out that as an entity with less than five employees, it is not subject to EEO regulations. Since the other charges were submitted without substantiation, the objection was denied.

TVBR observation: We've seen a steady trickle of these cases of late, and most are being shot down easily due to utterly inadequate challenges. The mystery in some cases, though, is why it seems to take so long to filter through the bureaucracy. This case dates back to 9/29/05. Is there any way to build in a mechanism in which an appropriate FCC staffer opens the challenge, sees its obvious deficiencies and sends it on its merry way to the rejected pile without letting months and years slip by?


Entertainment Media Business Report TM
Historic first for "Everybody Hates Chris"
CW's successful sitcom "Everybody Hates Chris" is all about the childhood of comedian Chris Rock, but one of the things that the show has never had is an appearance by Chris Rock. That will change Monday 10/1/07 when he shows up on screen playing the role of guidance counselor to the actor playing his fictional youthful self. The episode will run from 8:00-8:30 PM Eastern.


Ratings & Research
It's not easy being green
American consumers may be accused of being jaded, or perhaps they have learned over many, many years to take whatever they hear in advertisements with a very large helping of salt. For example, in the case of products or services marketed as being "green," consumers might not disagree that "green" is the ultimate goal of the marketing campaign, but they would be thinking of green in terms of dollars, not the beneficial environmental effects the campaign is striving to promote. This cynical result was turned up by researcher Ipsos Reid, which found that 70% of Americans believe that green is more a marketing tactic than it is a genuine attempt to be environmentally friendly. That number is comprised of those who hold the belief either strongly or somewhat. On the flip side, only 4% strongly believe that the green efforts are completely altruistic efforts to save the environment. The survey respondents appear to have much in common with the marketers they disparage, however. Only 10% of Americans would be willing to ante up more cash for green building supplies. 46% would consider it, at least, giving the strong/wishy-washy greens in the country a plurality over the 44% who would either be unlikely to pay more or who would flat out refuse to pay more for environmentally-sound building products.

TVBR observation: In certain categories, a 10% share of the market might be a very good thing, and if going green provides that kind of edge, then go for it. And over half the country is at least mildly receptive to green promotional arguments. In general, it would appear that special care must be taking with such marketing messages to make sure the sincerity of the advertiser is strong enough to cut though America's natural in-born skepticism.


Stock Talk
Mixed data yields mixed results
Wall Street analysts noted that buyers and sellers were having a tough time sifting through economic info that seemed to point in many different directions. But nobody seems to doubt the trouble in housing and credit. The end result was a mixed day of trading, and broadcasting stocks fell right in line with that.


Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Acme

ACME

3.90

unch

Lincoln Natl.

LNC

65.48

+0.74

Belo

BLC

17.33

+0.19

LIN TV

TVL

12.98

+0.30

CBS CI. B CBS

31.01

-0.10

McGraw-Hill

MHP

52.09

+2.36

CBS CI. A CBSa

31.00

-0.10

Media General

MEG

27.56

+0.29

Clear Channel

CCU

37.35

+0.17

Meredith

MDP

56.23

+0.29

Disney

DIS

34.23

-0.29

News Corp.

NWS

23.53

unch

Emmis

EMMS

5.02

+0.19

Nexstar

NXST

10.63

-0.19

Entravision

EVC

9.48

-0.05

Ion Media

ION

1.30

-0.02

Equity Media EMDA 2.93 -0.06

Saga Commun.

SGA

7.16

-0.24

Fisher

FSCI

49.97

+0.17

SBS

SBSA

2.53

-0.03

Gannett

GCI

44.94

+0.41

Scripps

SSP

41.99

-0.32

Gen. Electric

GE

41.39

+0.12

Sinclair

SBGI

12.27

+0.20

Google GOOG

567.50

-0.66

SWMX

SWMX

0.07

-0.01

Gray

GTN

8.60

+0.37

Time Warner

TWX

18.20

+0.15

Gray, C1. A

GTNa

8.70

+0.35

Tribune

TRB

27.17

-0.25

Hearst-Argyle

HTV

26.05

+0.17

Wash. Post

WPO

804.01

+4.01

Journal Comm.

JRN

9.42

-0.11

Young

YBTVA

2.21

+0.05


Bounceback

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Below the Fold

Ad Business Report
Brand experience
And loyalty leaders but the ideal is to build a relationship between...

Washington Media Business Report
Senate moving to extend
Do Not Call registry is scheduled to expire 9/30/08, but That was not what Congress intended...

Station hops EEO violation charge
License renewal challenges continue to roll in to the FCC. This time the subject is noncommercial KUYI-FM...

Ratings & Research
It's not easy being green
American consumers may be accused of being jaded...


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More News Headlines

GM/UAW pact
seen as template

There is even more good news tied to the agreement between General Motors and United Auto Workers after a very brief strike. That is the observation of industry analysts that the pact will likely inform the union's negotiations with Ford and Chrylser. Negotiations were suspended 9/13/07 to focus on the GM contract, but are expected to resume at the beginning of October and are further expected to follow the trail blazed by the GM agreement.

RBR observation: The happier the automotive industry is, the happier broadcasters are likely to be.


RBR - Radio News

An open letter
to David Rehr
Rock (or is it Roll)
to (NAB President)
David Rehr:

It's about broadcast radio remaining the Dashboard Dominator. True NAB will be forced to repudiate all the hyperbolic praise related to the HD radio roll-out. After all, unlike Sirius and XM, Ibiquity didn't do such a great job of super-charging market penetration by cutting lucrative equity deals with OEM's.

And why when offered the opportunity, didn't Bob Struble and his many radio company investors just give Steve Jobs a fee-free license to include HD radio reception to the latest version of the iPod (Touch)? Doesn't the value of "hip-ness" factor resonate as a result of your years in the beer-marketing business? Instead of fearing the thin white wires, exploit the opportunity to bask in the cache for heaven's sake...
| Read More |


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

2008 looking very different
for TV and radio
Is 2008 "a year in the balance" for radio? Bear Stearns analyst Victor Miller asked that question at the financing session that kicked off the NAB Radio Show in Charlotte. For the first time since radio deregulation in 1996, TV stocks now trade at a higher average EBITDA multiple than radio stocks. That's come about because the average pure-play TV stock is up 35% this year, while the average radio stock (excluding Clear Channel and Cumulus, who have buyout deals to go private) is down 30%. The best Miller could say for radio, though, is that it may have to deal with fewer negatives in 2008. Satellite radio is dealing with its own problems. Mainstream operators who have seen ratings and revenues shift to radio groups focused on Hispanic and Urban formats stand to bounce back as PPM rolls out to more markets.
09/27/07 TVBR #189

No immediate return to easy credit
There was optimism at the financing session in Charlotte that the current credit crunch will moderate, but no one was predicting a quick return to the type of market that we saw a few months ago before problems in the sub-prime mortgage market spread out and made credit tighter for everyone.

TVBR observation: For those of who were around for the HLT credit crunch in the early 1990s, this credit tightening, though painful for many, is nowhere near as devastating as what happened then. No one is rushing to sell radio and TV stations for deeply discounted prices. Lenders aren't fleeing the broadcasting business. There are differences of opinion on how quickly investor money will flow back into the market to back mega deals, but for routine deals it's business as usual, with perhaps less generous terms. Life goes on.
09/27/07 TVBR #189

Ford to offer HD Radio
across most product lines

Ford became the first automaker to offer HD Digital Radio across multiple product lines. The dealer-installed HD radio option is now available nationwide on nearly all 2008 model year Ford, Lincoln and Mercury vehicles. Additionally, HD Digital Radio can be installed on many earlier models from 2005, 2006 and 2007. As with SYNC, the extensive availability of HD Digital Radio furthers the company's ongoing efforts to deliver new entertainment technologies to automotive consumers....Beginning immediately, HD Digital Radio will be available as a dealer-installed option on new, pre-owned and currently-owned vehicles. Price points will vary by dealership. Phil Cowdell, WPP's Global Media Director CEO of Ford Media Services, tells TVBR about Ford's SYNC in an upcoming interview in our SmartMedia magazine: "...it will allow you to use your mobile phone through the car's hi-fi system. You can drive hands free. SYNC basically provides a software operating platform in the car that means whatever devices you've got as a consumer, when you get in your car you can use them seamlessly. (For the full report on HD and Ford see TVBR)

RBR observation: This is what we've all been waiting for-the last piece of the HD Radio puzzle. Hopefully the dominoes will start falling as well with GM and Chrysler. Now the real push begins against satellite's 12.95 a month price tag. Now AM stations can offer music again as well. Congratulations Radio-this is some real icing on the cake for the NAB in Charlotte.
09/27/07 TVBR #189

VNR fine leaves
questions in its wake

The 4K assessment against cable giant Comcast levied by the FCC over use of material contained in an video news release without sourcing has Comcast scratching its head and a watchdog barking in triumph and looking for more of the same. And at least one FCC commissioner was pleased. For its part, Comcast is still unconvinced that it did anything wrong.

TVBR observation: As we noted yesterday, at 4K this is a relatively inexpensive warning shot. But we cannot help but note that both sides are not fully satisfied, and we also know that this issue has an FCC 8th Floor sponsor in Jonathan Adelstein. It will be very interesting to see if this FCC VNR action is an isolated incident or the Act One of an ongoing serial.
09/26/07 TVBR #188

Gloomy forecast for Charlotte
That's not the weather outlook, which is pretty sunny for this NAB Radio Show week, but Bank of America analyst Jonathan Jacoby sees "no sunny days for radio." The data he has gathered indicates that August sales were worse than expected in large markets, so he's expected the month industry-wide to come in down 1%. CL King analyst Jim Boyle is even more pessimistic. He thinks August will be down 2%. Boyle at CL King is seeing a continuation of the trend he's tracked for months of small markets generally doing better than large ones. But he notes in his latest report that the long-time weakness in the top 25 markets seems to be spreading to mid-markets as well.
09/26/07 TVBR #188


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