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Welcome to TVBR's Daily Epaper
Volume 22, Issue 227, Jim Carnegie, Editor & Publisher
Friday Morning November 18th, 2005

TV News®

VNU scuttles IMS merger;
CEO hitting the road

VNU CEO Rob van den Bergh didn't really have any good options as he sought to get out of a proposed seven billion bucks takeover of IMS Health, which had united VNU's biggest shareholders against him (11/14/05 TVBR #223). He's now made his choice, but it's also cost van den Bergh his job. VNU won't have to pay IMS the 125 million bucks breakup fee from their merger contract, but it is paying IMS 15 million for its costs related to the abandoned merger. In addition, it must pay IMS an additional 45 million if VNU is acquired within the next 12 months. On the other hand, IMS will return the 15 million if it is acquired by someone else within the next 12 months. To placate angry shareholders, in addition to his own resignation once a new CEO is recruited, van den Bergh and the VNU board have voted to return approximately one billion euros (1.17 billion US) to shareholders in addition to the company's regular dividends. Even as he announced his own pending departure, van den Bergh defended the ill-fated IMS deal. "We believe there was a compelling business rationale for combining VNU and IMS that would have resulted in a stronger company and increased shareholder value over the longer term. However, having heard the views of our shareholders, it became clear that it would not be possible for us to proceed with the proposed merger. Nonetheless, [IMS CEO] Dave Carlucci and I are committed to having our two companies work together cooperatively to develop the many joint revenue initiatives that came out of our integration planning process," he said.

TVBR observation: There was not a lot of wiggle room here. Carlucci, who was to have become Deputy CEO & COO of the merged company, and van den Bergh, who would have continued as CEO, saw synergies that were not apparent to others. The connection was that both IMS Health and Nielsen Media Research were once related companies, both long ago owned by Dunn & Bradstreet. But while both are in the data/research business, outside observers didn't see any advantage in combining a media/consumer data/research business with a pharmaceutical data/research business. In the end, the botched merger just brought together VNU's big shareholders, who weren't too pleased with the company's recent performance to begin with, and put them in the driver's seat to demand changes at VNU.

What now for VNU?
Having awakened the sleeping giants who own most of its stock, VNU now has to prove to the shareholders that it can generate good returns and run its businesses well - - or sell them to someone who can. In announcing termination of its ill-fated seven billion bucks stock-swap acquisition of IMS Health, VNU said it would focus on growth of its existing businesses and explore additional steps to maximize shareholder value. It named four:

- - "Initiating, in the near future, a program to return approximately EUR 1 billion to shareholders, on top of the regular dividend now in place;
- - Expanding current cost-management initiatives to all areas of the company worldwide, possibly including some restructuring;
- - Optimizing VNU's portfolio by continuing to evaluate targeted changes that will enhance existing lines of business; and,
- - Pursuing a listing on the New York Stock Exchange, to raise the company's public profile and expand its shareholder base."

TVBR observation: It's not that difficult to get listed on the NYSE, so VNU hardly needed a 7B acquisition to do so. The obvious play - - and one we've heard suggested more times than we can count - - is to buy Arbitron, already on the NYSE, which would cost only about 1.25-1.5 billion. That becomes especially attractive if Nielsen Media Research decides it does want to use Arbitron's Portable People Meter (PPM) for TV ratings. Not included in that list from VNU is anything about spin-offs - - something else that big VNU shareholders have been urging the company to consider. In a conference call with European analysts yesterday, van den Bergh insisted that VNU is not planning any divestitures. But then, he won't be involved in such decisions for much longer. Clearly, some of those big institutional investors don't think the publishing group at VNU fits with its main data collection and research businesses, so pressure is likely to continue for van den Bergh's successor to sell off the group, whose better known titles include Adweek, Billboard, Brandweek, Editor & Publisher, Mediaweek and The Hollywood Reporter. And, of course, don't rule out a sale of all of VNU to a private equity buyer, who would streamline the cumbersome VNU management structure, sell off unwanted assets like the publishing division, and pump up financial performance for an IPO or resale. Or in other words - Waiting for the other shoe to drop.


Abernathy makes a date with the door
Republican FCC Commissioner Kathleen Abernathy has sent her resignation to President George W. Bush, effective 12/9/05. Exiting with her will be her reliable Republican vote - - she has largely supported the initiatives of both Michael Powell and Kevin Martin. The announcement brings renewed urgency for Republicans to find a replacement. Until Debi Tate is sworn in, that would give the Democrats a 2-1 advantage on the five-member Commission. The White House has already nominated Debi Tate to fill the seat vacated by former Chairman Michael Powell - - something it was rumored to have had contemplated back during the summer (8/1/05 TVBR #149).
| Abernathy's full statement |

TVBR observation: More recently, Senate Commerce Committee Chair Ted Stevens (R-AK) had sent out signals that he wanted to find a candidate (11/9/05 TVBR #220) - - an opportunity that remains open to him with Abernathy's announcement.

Iger explains iPod thinking: Mum on radio
For months now in quarterly conference calls and Wall Street investor conferences, new Disney CEO Bob Iger and CFO Tom Staggs have been discussing their current thinking on whether or not the company would divest its ABC Radio division. Amazingly, with the final bids now being scrutinized, not a single analyst asked a question in yesterday's conference call that might elicit an indication of whether they are currently leaning toward a sale or not. There was, however, a question about whether Disney might want to sell the ABC O&O TV stations as it focuses on content, rather than delivery mechanisms. "We believe in the local television business," Iger responded. Rather than being just a delivery pipe, he said local TV news brands have real value. There was a lot of interest in the company's recent deal to distribute shows from ABC and Disney's cable channels via Apple's iPod download service. Asked to compare pricing per download to the revenue Disney gets from ad sales per viewer, Iger said he doesn't look at it that way. In his view, iPod downloads of "Desperate Housewives" or other shows are "incremental consumption." Rather than cannibalizing the broadcast audience, he says it allows fans to catch-up with shows they weren't able to see at their regular broadcast time. Iger also noted that Disney would likely want higher payments for big screen downloads than the 99 cents being charged to view shows on tiny iPod screens.

Wildcat's Kitten forced to the Internet
Lexington KY Rocker WKQQ-FM has been trying inspire the local college football team. As an incentive for the University of Kentucky Wildcats, the station has been maintaining a billboard featuring air talent Kitten, with the promise of removing an article of clothing whenever the team produces a win. That promise will no longer be fulfilled outdoors. The Wildcats, through incompetence, seem to have largely been protecting Kitten's virtue, but in collecting their third win against six losses, the team brought the Clear Channel station to the point of removing her tee shirt, revealing a bra underneath. She appears to have already lost a button-down shirt and her shoes. The billboard company, which a photo reveals to be Lamar, decided that the station will not be able to go through with the tee shirt removal - - instead, a box reading "censored" will be placed in the offending area, with the shirtless picture at the stations WKQQ.com website. She will be wearing jeans in both versions.

TVBR observation: Bikini top. OK on a billboard. Bra. Not OK. We're still not sure what difference is between one and the other. One thing is for sure - - the incident has "exposed" yet another broadcaster use for the World Wide Web.

San Francisco Board to vote on O'Reilly
Chris Daly, a member of San Francisco Board of Supervisors, is introducing legislation which would formally request that Bill O'Reilly be fired from both Fox News Network and Westwood One. At issue are O'Reilly's recent remarks, following voter passage of a ballot initiative discouraging on-campus military recruitment in the city, to the effect that Al Qaeda should feel free to blow up the city without retaliation. On MSNBC, Daly told Keith Olberman that Fox and WW1 "need to take some accountability for this and terminate Bill O'Reilly's employment." O'Reilly has defended the remarks as satire, but Daly found them to be in "flagrant disregard for the safety and welfare of San Franciscans."

TVBR observation: It's not every day that an on-air talent becomes the target of a municipal ordinance calling for his scalp. However, we don't see that it'll carry any more weight than the paper it's printed on. And if the old saw is correct, that there's no such thing as bad publicity, then the San Francisco Board of Supervisors may succeed only in providing O'Reilly with some free advertising.


Conference Calls 2005
Movie biz soft for Disney
Revenues for the final quarter of its fiscal year (ended 10/1/05) came in a bit below expectations at The Walt Disney Company at 7.7 billion bucks - - a gain of 3%, rather than the 4% that had been expected by analysts polled by Thomson/First Call. But earnings per share, while down 24% from a year ago, were 20 cents - - beating the consensus by two cents. The soft spot for the quarter was the film studio, where revenues fell 13% for a quarter lacking in blockbusters. "Chicken Little," now in theaters, should improve things this quarter. Revenues for the Media Networks segment rose 16.1% in the quarter to 3.4 billion and the segment's operating income jumped 41% to 632 million. Within the unit, broadcasting was the big gainer, with revenues up 23.9% to 1.5 billion. Operating income went from a negative 75 million a year ago to a positive 48 million as CFO Tom Staggs proudly noted that the ABC Television Network had returned to profitability in the just completed fiscal year. He also noted that revenues for the O&O TV stations were up 2% in fiscal Q4 and that radio revenues were up 1% - - adding that pacings are about the same for the current quarter. In cable, revenues gained 10.8% to 1.9 billion and operating income rose 11.7% to 584. Disney is projecting that its big cable cash cow, ESPN, will continue to enjoy double digit growth - - not just next year, but through 2009.


Adbiz©

Mediaedge:cia looks at
in-game ad effectiveness - - Part I

The launch of Microsoft's Xbox 360 kick-starts the next phase of in-game advertising with online capabilities that enable marketers to continually update ads in real time - - on a daily, even hourly, basis. In a very short period of time, in-game ads have evolved into a viable, highly effective platform for the ad industry. Not to be confused with advergaming - - a form of promotion-driven video game production, in-game advertising has the distinct advantage of enhancing the reality of gameplay. Mediaedge:cia examines how in-game advertising can best be used to create meaningful relationships between brands and consumers in "Playing with Brands," a new study commissioned from Telenation and designed to help advertisers better understand the optimum role for their brands within computer and video games.
| The study looked at: |

Infinity listens to the buyers?
Isn't it ironic-days after buyers commented on Infinity's 800,000-dollar ad buy in Ad Age to promote its new lineup of Stern replacements, a simple, inexpensive suggestion by Rich Russo, JL Media's SVP/Director of Broadcast Services, was likely considered sage advice and employed as well. Twelve days after Russo's comments ran (11/3 RBR #216), the promotional MP3s have already began to surface. Maybe it's coincidence, but we think this is just more evidence how much the radio companies value the buyers' advice. We asked Infinity for more samples, but haven't heard back yet.
| Here's one for David Lee Roth on WXRK-FM NY - - give it a listen |


Media Business Report
Tribune newspapers cutting staffs
Faced with a continued soft advertising market, at least five Tribune Company newspapers - - including its two larges - - have announced staff cutbacks. The company's namesake Chicago Tribune has told employees that fewer than 100 positions are being eliminated, with cuts across all departments. The Los Angeles Times told staffers that it is cutting about 85 newsroom jobs by the end of this year. (Happy Holidays!) Smaller cuts are in the works at Tribune Company's Orlando Sentinel, Newport News, VA Daily Press and Allentown, PA Morning Call.


Washington Beat
More time for CC comments
The FCC is looking at a notice of proposed rulemaking (NPRM) called "Closed Captioning of Video Programming" with a comment deadline of 11/25/05. The NAB has asked for more time, citing a large volume of commentary which it is trying to wade through, along with the fact that the deadline day is the day after Thanksgiving - - a day when most US citizens are not at work. The FCC has agreed to move the date back to 12/16/05.

TVBR observation: Closed captioning requirements are supposed to kick in big time at the beginning of 2006. This may be tough to pull off, however, due to a lack of closed captioning professionals. It takes almost three years to train someone to do this job. There are technological solutions which can get captioners up to speed much more efficiently - - but we'd say the there is a strong possibility that more time will be needed before closed captioning will be as ubiquitous as the FCC wants it to be.


Programming
Miss America heads to Vegas
There had been a lot of speculation that the Miss America Pageant would move to Nashville with new TV partner CMT, but in the end the pageant organizers and CMT opted to stick with slot machines and neon - - just in a different town. Seeking to restore some excitement to the aging and ratings challenged Miss America franchise, they've decided to move the show from its historic site in Atlantic City, NJ to the Las Vegas strip. The 2006 pageant will air live on CMT on Saturday, January 21st from the Aladdin Resort and Casino.


Ratings & Research
Look out Judy; Here comes Jerry
Sony-syndicated "Seinfeld" tied with Paramount's "Judge Judy" for 4th place in the latest week's Nielsen ratings, supplied by the Syndicated Network Television Association (SNTA). As usual, KingWorld claimed the top three spots, with "Raymond" tying "Wheel" for first, then "Oprah."
| View the List |


Stock Talk
"Cheap" oil helps stocks
The lowest oil prices in months gave a boost to stock prices, along with some good news from the Philadelphia Federal Reserve Bank on the inflation front. The Dow Industrials rose 45 points, or 0.4%, to 10,720.

TV stocks benefited from the general upswing. Sinclair led the way with a 3.4% gain. Saga reversed the previous day's decline and rose 3.1%.


Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Acme

ACME

3.90

+0.01

Media General

MEG

51.34

+0.22

Belo

BLC

21.77

-0.03

Meredith

MDP

49.84

+0.34

Clear Channel

CCU

32.14

+0.64

News Corp.

NWS

15.09

-0.08

Disney

DIS

25.99

+0.14

Nexstar

NXST

4.25

-0.15

Emmis

EMMS

19.34

+0.26

NY Times

NYT

28.10

+0.21

Entravision

EVC

7.53

+0.10

Paxson

PAX

0.91

+0.02

Fisher

FSCI

45.57

+0.34

Saga Commun.

SGA

11.45

+0.34

Gannett

GCI

62.77

+0.19

SBS

SBSA

5.36

-0.23

Gen. Electric

GE

34.66

+0.12

Scripps

SSP

46.27

+0.17

Granite

GBTVK

0.28

-0.02

Sinclair

SBGI

9.08

+0.30

Gray

GTN

8.95

+0.03

Time Warner

TWX

17.82

+0.22

Gray, C1. A

GTNa

8.70

-0.04

Tribune

TRB

32.49

+0.05

Hearst-Argyle

HTV

23.49

+0.16

Univision

UVN

28.55

+0.21

Jeff-Pilot

JP

54.92

+0.39

Viacom, Cl. A

VIA

33.67

+0.93

Journal Comm.

JRN

14.00

+0.23

Viacom, Cl. B

VIAb

33.64

+0.96

Liberty Corp

LC

46.55

+0.05

Wash. Post

WPO

720.50

+3.50

LIN TV

TVL

12.62

+0.13

Young

YBTVA

2.42

+0.02

McGraw-Hill

MHP

52.53

+0.85

-

-

-

-

-


Bounceback

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a photo to [email protected]


TV Media Moves

Tech experts to
focus on media trends

Two technology experts have taken new positions in the Global Media & Communications unit of GE Commercial Finance (GECF) to provide clients with insights into technological trends in the media and communications sector. Robert Raciti was previously VP of Risk for GECF and Ron Stevenson was VP of Technology Advisory Services for the Media & Communications lending unit.

Gemstar-TV Guide names Richard Cusick SVP/GM, Digital Media
Gemstar-TV Guide International has promoted Richard Cusick to the newly created position of senior vice president and general manager, Digital Media. Cusick, who has been SVP/Business Development and Strategic Planning for Gemstar-TV Guide since 2/04, will be responsible for the digital media development for the company, including the oversight of the TVGuide.com and TV Guide Mobile businesses. He will report to Rich Battista, Gemstar-TV Guide CEO.


Below the Fold

Media Business Report
Tribune newspapers cutting staffs
fewer than 100 positions are being eliminated, with cuts across all departments....

Ad Biz
Mediaedge:cia looks at
in-game ad effectiveness
Microsoft's Xbox 360 kick-starts the next phase of in-game advertising...

Washington Beat
More time for CC comments
TVBR observation: Closed captioning requirements to kick
in big time...

Rating & Research
Look out Judy; Here comes Jerry
syndicated "Seinfeld" tied with Paramount's "Judge Judy" for 4th...


November RBR/TVBR Digital Magazine

Engineering
Cumulus VP Engineering Gary Kline tells us how his Mobile and Beaumont, TX stations fared in Hurricane Katrina--the good, the bad and the ugly, along with how they prepared.


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TVBR Radar 2005
Television News you won't read any where else. TVBR--First, Accurate, and Independently Owned.

Network ad sales plunged in Q3
BCFM) calculates that ad revenues for ABC, CBS & NBC combined were down 21.5% in Q3. Prime time was up modestly, but the big hit was a nearly 69% drop in sports revenues, due to the lack of the Olympics. Total net revenues were down 605 million in Q3 to 2.2 billion, compared to a year ago. TVBR observation: Reminds TVBR when asked back in January how TV is going to shape up in 06 and the reply was - Wait until Next Year. Guess TVBR forecast was correct without having an MBA. TA-DUM.
11/17/05 TVBR #226

Nielsen getting down
to the PPM nitty-gritty
Getting closer to making a go or no go decision on whether to enter into a joint venture with Arbitron to use Arbitron's Portable People Meter (PPM) technology to measure TV and cable, as well as radio says it has expanded its internal due diligence team working on PPM to include additional experts in all areas. Pres/CEO Susan Whiting says "We are committed to moving with all deliberate speed..."
TVBR observation: Radio groups have been cautious about moving from Arbitron's diaries to PPM, several major TV groups have been pressing Nielsen to jump on the PPM bandwagon especially groups such as Tribune and the Fox O&Os who really dislike LPM. Many want to see passive measurement. Plus, out-of-home viewing counted. Advertiser/agency community is pushing hard for PPM and not just for radio wanting passive measurement for radio, TV and cable and would love to see a common ratings currency for all three. Meanwhile, TA-DUM, Whiting is having to make a decision at a time when her parent company is in upheaval. Who knows who will even own Nielsen a year from now? 11/15/05 TVBR #224

Advertiser/Agency Advisory
Council Pushing for PPM

Arbitron's first-ever council meeting brought a familiar refrain from the agency folks in a face-to-face forum with radio executives: Agencies want Portable People Meters (PPM) and they want them as fast as possible. 11/14/05 RBR #223

CBS's Poltrack:
VOD market worth 5 billion
It pretty much happened all at once - - VOD content deals everywhere and more mainstream media channels going online. AOL.com will feature CBSnews.com content and video on its home page. Microsoft's MSN and the Associated Press announced a partnership to develop an online video network that will stream video news feeds to sites that subscribe to AP's wire service. TVBR observation: May '04 we warned of iPods and now look at the new iPod video. Also warned this past January when we covered the NATPE that VOD was coming fast and again here it is in your face. So, now what are Radio and TV head honchos going to do about it at the local level? It is like the oxygen is being sucked out of the room.
11/11/05 TVBR #222

AOL cuts content deal with CBS.com
The latest in series of recent moves by companies to increase access to digital video programming. Nary a day after the deal with The AP and MSN was cut for news content, America Online's news channel, AOL.com, announced it will feature CBSnews.com content/video on its home page. AOL.com, which has 3 million daily users, already offers video content from CNN, ABC, AP and Reuters.
11/11/05 TVBR #222

Interep jumps into TV...Spanish TV
Making its first foray into television in a deal with Una Vez Mas (UVM), the largest affiliate group for the Azteca America network. Azteca America Television Sales (AATS), will handle the 12 existing UVM stations and another dozen to be added in the next 18 months. Interep veteran Bob Turner, is in charge. TVBR observation: This deal should be good for both companies. We understand that UVM had talks with other potential reps, but saw Interep as being hungry to open a new growth avenue - - something that's been lacking at the radio rep firm in recent years.
11/10/05 TVBR #221

Microsoft and AP team for "AP Online Video Network"
The deal is the first time MSN Video player technology will be syndicated to sites outside its network. MSNBC.com will continue to be the exclusive video news content partner for MSN's network of sites. AP will provide approximately 50 video clips per day covering national, international, entertainment, technology and business news. TVBR observation: Think bad news? Maybe for the Network dinner hour evening news but - No, this will open local sales opportunities for TV as local advertising is used to hit the consumer when they are ready to make key purchases. Re-read the above as no place does it mention - Local news Content.
11/10/05 TVBR #221

Alarcon skewered for move into TV
One irate money manager suggested that SBS should walk away from the 37.5 million bucks purchase, saying it had cost the company some 300 million in market capitalization on Wall Street. "You've gone in my book from a free cash flow generator after your refinancing really to an entity with unknown spending habits and potentially more spending down the road - - a real black hole,"
11/09/05 TVBR #220


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