adio Business ReportVoice Of The Radio Broadcasting Industry®

July 9, 2001 -Volume 18, Issue 28

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RADIO NEWS

Hooked on a teeing: FCC rate card released 2

The FCC is one government agency which, for the most part, pays its

own way-rather. your regulatory fees provide the bulk of its funding.

Analysis: Something indecent this way comes 4

May revs hold loss to single (albeit biggest possible) digit 4

CCU begins to bring traffic news in-house 4

Citadel gets lawyers to clean up Eminem mess 8

RADIO OPERATIONS

A double take on radio's largest groups 7

41111.311i1f01156

Arbitron/RADAR reactions: Agencies & nets 8-9

RBR INTERVIEW

What's the Dille at the NAB? 10-11

MEDIA MARKETS g MONEY

RADAR will require bigger piggy bank at Arbitron 12

Arbitron's new network measuring unit is expected to bring an

additional $9M in annual revenues, first impacting next year.

CCU's straight & narrow Stratemeyer deal soups up Springfield H. 13

Cohn heads for ownership ranks with Blue Chip spin-off 13

Sabrecom's hard WERI( results in IN superduopoly 13

Arbitron buys RADAR

Arbitron (N:ARB) is extend-ing its ratings service to ra-dio networks with a $25Mdeal to buy RADAR fromStatistical Research Inc. Thebuyout terms call for SRI tobe paid over two years.

Reaction from the adver-tising world was mixed atbest (see page 8), while net-work executives were a bitmore upbeat (see page 9).Wall Street seemed to takeno notice at all, althoughthe acquisition will increaseArbitron's revenue base(see page 12).

In a news conference af-ter the deal was announced7/2, Arbitron CEO SteveMorris said his company hadbeen looking at the radionetwork ratings business forthree or four years. "The thingthat caused us to want to dothat was that customers weresaying, 'We would reallylike to get Arbitron diariesinto this system'-thatwould be the perfect solu-tion so that all of radiowould have one database,we would have this verylarge sample size and all ofthe numbers would agree."

Twenty-one SRI employ-ees will join Arbitron, but

Dille is the top pickle inthe NAB jar.

Page 10

Not all network buyers arepositive about Arbitron/RADAR deal.Page 8

Reyn Leutz.111111

RldinMillintg` PrsitATIP.Voice Of Tho Radio Broadcasting Industry Radio News®

July 9 2001, Volume 18, Issue 28

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continue to operate out ofRADAR's current offices inWestfield, NJ. SRI principals GaleMetzger and Gerald Glasserwill assist in the transition.

"Initially, we will maintainthe RADAR service as it is to-day," said David Lapovsky,Exec. VP, Worldwide Research,in Arbitron's announcement."At the same time, we willwork with the networks, agen-cies and advertisers to enhancethe RADAR service by takingadvantage of Arbitron's enor-mous diary database."

Morris also insisted thatArbitron will move cautiouslyon changing RADAR. "We rec-ognize that anytime you changeanything in methodology, youdon't want.to just do that uni-laterally. Our plan is to work-and Gale Metzger is going tobe part of this process-we'regoing to be sitting down withour customers and talking

through with them the pros andcons of the service as it is nowand what would happen in theevent of a switch to a diarydatabase-and we'll certainlyhave a lot of input and conver-sations before we go ahead withanything," the CEO said.

Morris may know more thanhe's telling. An RBR source in-side the network radio businesssays the change to diaries willtake place next year, with RA-DAR making use of 36,000 dia-ries. The source says the RADARsoftware packages will stay thesame-including RADAR Plusand SOS/Optimiser. The clear-ance components networks haveto provide to RADAR will also staythe same. RBR's source saysArbitron will make some adjust-ments to RADAR's qualitative re-porting that include more occu-pation information-adding, "Thatpart is still in development."

RADAR , which stands for "Ra-

clio's All Dimension Audience Re-search," is a national radio ratingsservice that measures audiencesto radio commercials aired on 29radio networks operated byDisney's (N:DIS) ABC, AmericanUrban Radio Networks, ClearChannel's (N:CCU) Premiere andWestwood One (N:WON). Theservice produces its estimatesusing a 12 -month, 12K -persontelephone survey in combinationwith the industry -standard com-mercial clearance system.

Both the Arbitron 'neat Marke'Radio Ratings Service and the RA-DAR Radio Network Ratings service

are accredited by the Media RatingCouncil (MRC). Arbitron said it in-tends to maintain the MRC accredi-tation for the RADAR service through-

out the transition from a telephone -based survey to a diary -based sur-vey. In the short term, SRI willconduct telephone interviewing for

the RADAR service under contractto Arbitron.-JM, CM

FCC fee for all

The new fee chart for FY 2001 is out, and the FCC will be reaching a bit deeper into broadcaster -pockets to fund itself. As directed by Congress, it expects to raise $200.146M from regulatory fees.Chairman Michael Powell is planning another hike for FY 2002, when he expects to raise $218.757M

But back to FY 2001. Stations in all categories in markets with a population of 125,000 or less havebeen bumped up $50 over FY 2000 rates; they've been bumped up $100 in the 125,001-400,000 range;the increase is either $100 or $125 in the 400,001-1,000,000 range; and in million -plus markets therates have gone up $175. The final fees for radio were unchanged from the Commission's proposedrates, although there were a few changes for other industries regulated by the FCC.

The FCC is expecting to rake in $14.225M from radio (counting going concerns and CPs). Thisamounts to just over 7% of its target. If interstate telephone service providers seem to be walkingwith a stooped back, that may be because they are being hit to the tune of $93M+, which isapproaching 50% of the FCC's regulatory fee target.

The payment period runs from 9/10 through 9/21, but early payments are allowed. Below is a chartlisting this year's damages.-DS

Radio station FY 2001 regulatory fees

Population

AMClass

A

AMClass

B

AMClass

C

AMClass

D

FMCls A -B1 -C3

FM ClsB -C -

C1 -C220,000 or less $450 $350 $250 $300 $350 $45020,001-50,000 $850 $675 $350 $475 $675 $85050,001-125,000 $1,375 $900 $475 $700 $900 $1,375125,001-400,000 $2,050 $1,450 $725 $875 $1,450 $2,050400,001-1,000,000 $2,850 $2,300 $1,300 $1,550 $2,300 $2,8501,000,000 or more $4,550 $3,750 $1,900 $2,400 $3,750 $4,550

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May: The tippity top ofthe tough -comp iceberg

Local business w down S%fur the month of Max'. Thal,ladies and gentlemen, is slmhbv.But it's nowhere near as shabbyas the 22% pothole that nationalbusiness disappeared into. Thenational anchor dragged totalbusiness down to the 9% losslevel. Combined business in May2000 was up 2500, which meansthat radio only gave back abouta third of its gains for the month.We can only look forward tonext May, when year-to-yearcomparisons promise to bemuch morc fun.-DS

CCU begins to wean off ofMetro/Shadow

Clear Channel's (N:CCU) NewYork and Chicago market clus-ters severed ties (7/2) withWestwood One's Metro/ShadowTraffic unit for The PremiereTraffic Network and Traffic.comservices.

According to a source withinClear Channel: "It's part of thecompany -wide initiative to mon-etize the traffic product. Andwe're taking in-house the Traf-fic and other content that Metrowas providing-in some casesthey do sports in others they donews or weather for us also. Soanything they do, we're takingin-house. New York and Chi-cago rolled in-house on the sec-ond. The primary target is Top -30 markets."

No other Clear Channel mar-kets are expected to transitionuntil January 1st 2002. On thatday, a large contingency willfollow suit according to oursources: at least four Floridamarkets (Tampa has alreadytransitioned), at least four Texasmarkets and several other mar-kets scattered throughout thecountry. The strategy is to fol-low expiring contracts withMetro/Shadow as they as fall.

RBR observation: Themodel is different with PremiereTraffic Network. Notice the softlaunch-no logo, no press re-leases, no announcements. Thiscompany is truly interested, for

Radio News°

RBR News Analysis

Mancow walks, Tristani squawks; Bob & Madison escape from the Copps

Citizen complaints about indecent broadcasts involvirin MancowMuller (WKQX-FM Chicago, 2/23/00) and Bob and Madison (WDCG-FM Raleigh, 2/5/01) have been dismissed by the FCC EnforcementBureau. In both cases, the lack of a recording or transcript left theagency without enough evidence to take any action.

The Muller incident allegedly concerned adult -child intercourse;Bob and Madison's alleged topic was masturbation.

Both Democratic Commissioners, Gloria Tristani and MichaelCopps, attacked the dismissals. Tristani reiterated her position thatthe FCC places an unfair burden on citizen complainants who are leftwith no recourse unless they happened to have been taping a programwhen an alleged indecency incident takes place. She feels the theEnforcement Bureau should not stop there, but do some investigatingof its own.

Copps went even further. He expressed his belief that broadcast-ers "...already retain recordings of their broadcasts, for a variety ofreasons...I am interested in looking at how the Commission couldencourage universal retention of recordings of broadcast program-ming to aid in its indecency enforcement."-DS

KBOO K -BOOM! FCC hits noncom for $7K indecency fine

This time the complainant had a tape of the broadcast, and the FCC is sticking noncommercial KB00-FM Portland OR with a $7K fine for airing a Rap song "Your Revolution" by Sarah Jones.

The material in question is a fine example of the slippery slope that exists on the edges of programcontent regulation for both the programmer and the regulator. KBOO argues that the song, whichaired sometime between 7P -9P 10/20/99, is a feminist attack on other songs which use sexuallanguage to demean women. It quotes some of those lyrics in making its point.

Still, the FCC said, "..considering the entire song, the sexual references appear to be designed topander and shock, and are patently offensive." The FCC further rejected KBOO's argument that thesong has artistic merit, and is therefore not indecent, saying, "The contemporary social commentary...isa relevant contextual consideration, but is not in itself dispositive."

RBR observation We've read the lyrics. Only Ms. Jones knows if she was trying to shockher listeners. However, the intent of the song clearly is not to pander, nor is that the apparentintent of KBOO, which was trying to address an important social issue. This editor feels that theFCC cannot justify a fine based on pandering. We do not believe that the station was out totitillate its audience.

We question the FCC's comment that social commentary is a relevant consideration, but that is doesnot apply. If the agency is not willing to delve into the true intent of the song, why even mention thatit could do so if it so decided?

On the other hand, the station could have waited a couple of hours and aired "Your Revolution" tentimes in a row with no danger of government action.

Perhaps we need to build a new mechanism into the indecency enforcement system. "YourRevolution" could be labeled as a gray area case. A panel or jury made up of broadcasters, citizensand regulators could be formed, where arguments for both sides could be presented with the goalbeing a label of indecent or not. The results disseminated to further illuminate where the indecencyline is for all broadcasters. This should be done without the threat of punitive action against the station.The goal should be guidance, not punishment.

Finally, it is ironic that of the three examples of alleged indecency cited in these two stories, the casewhich to our mind was least objectionable and most defensible drew a fine while the others got off scottfree. Further, the station least able to pay a fine was the only one to receive one. It holds in stark profilethe unfairness inherent in this system, and hints at how difficult it is to have indecency rules and freespeech at the same time.-DS

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the time being, only intransitioning its own stations,Going forward, it is believedthat the PTN in )del will notinvolve writing upwards of $1 Min annual compensation checksto other groups' market clustersas is the current Metro/Shadowplay. Eventually, we hear PTNwill offer a revenue sharingmodel to non -CCU group affili-ates for the beginning stages ofhead -to -head competition withmighty Metro "Shadow.-CM

KKMG fightsindecency rap

Citadel Communications is nottaking the $7K fine levied againstits KKMG-FM Ft. Collins lyingdown. Represented byKathleen A. Kirby of law firmWiley, Rein & Fielding LLP, thegroup holds that it did not vio-late indecency standards whenit broadcast a radio -edit of Rap-per Eminem's "The Real SlimShady" in 6/00. (See related sto-ries, RBR News Analysis, p. 4.)

Among many arguments pre-sented in the group's filing isthe fact that the exact sameversion of the song in questionhas been broadcast 125,089times (as of 6/25/01, according

, to Mediabase 24/7). As if thatisn't enough, Eminem tookhome a Grammy for it. With allof this exposure, it drew one,and only one complaint filedwith the Commission.

RBR observation: The FCCcan cut Congress out of thefiscal loop. A $7K fine for eachairing of the tune would cometo $875.6M, good for roughlyfour years of funding for theCommission at current levels.Clear Channel (N:CCU)-at$241.2M-would fund over ayear by itself!-DS

FCC gets Martinized

Kevin Martin has finally takenhis seat as Commissioner at theFCC. The Republican was swornin 7/3. His presence tilts thebalance in favor of fellow Re-publicans Michael Powell(Chairman) and KathleenAbernathy. The two Demo -

6

Radio News

crats are Gloria Tristani andMichael Copps. Furtherchange looms in the relativelynear future, as Tristani has an-nounced her intention to re-sign to pursue a Senate seat inher native New Mexico.

Martin followed a stint atcommunications law firmWiley, Rein & Fielding withstops on the staff of recently -departed Commission HaroldFurchtgott-Roth and variouspositions with the campaignand administration of GeorgeW. Bush.-DS

Rice on the auction menu

Five active stations and two FMCPs are going on the block.Michael Rice's ContemporaryGroup has long been in fluxsince he was convicted ofcharges involving sex with mi-nors. He was subsequently im-prisoned and found by the FCCto be wanting in the characterdepartment, and hence unfit toremain a licensee.

Contemporary is ordered tocease operations 7/13. How-ever, they have been given spe-cial permission to continue op-eration for up to 90 days afterthat. The licenses will be of-fered first to interim operators(applications due by 7/24), thento permanent licensees oncethe auction process is completedthrough the Fall.

The active stations areWBOW-AM, WBUZ-AM and

WZZQ-FM in the Terre I lameIN market; KFMZ-FM in theColumbia, MO; and KIIMX-FMEldon MO, which is some 40miles southeast of Columbia.KROW-FM CP Huntsville MO is35 miles or so northeast ofColumbia, and the other CP,KFXE-FM Cuba MO is roughlyhalfway between St. Louis andSpringfield MO, which puts it,in Arbitron terms, in themiddle of nowhere.

RBR observation: The RBR

Source Guide and Directoryshows Terre Haute as one of thevery few markets with ten ormore stations which is withouta superduopoly cluster.Contemporary's stations werethird in the Fall Arbitron with acombined 9.2 share 12+. It

would fit in with any ownerexcept perhaps Emmis, whoseold-fashioned AM -FM comboknocked down a 34.5 share 12+and for whom a bid wouldpossibly raise red flags at theFCC. Judging strictly by numberof stations, Emmis has plenty ofroom for them.

In Columbia, Premier andZimmer clusters appear to bemaxed out. KFMZ-FM would bea nice shot in the arm for one ofthree other local owners. How-ever, any consolidators will havea slight disadvantage compet-ing with the currently unli-censed, to whom the FCC offersbidding credit.-DS

Public broadcasters winauction suit

A panel of Federal judges ruled7/3 that public broadcasters arenot required to bid for newchannels, even when commer-cial operators are competing forthe same frequencies. The deci-sion may complicate theCommission's plans to conductbidding for four pending televi-sion stations and two batches or

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radio li< eases. 35n racliomits are scheduled for author12/5; another 250 haven't beenyet scheduled. The TV ()wickinclude Pittsfield, MA, Columbia, SC, Magee, Ms :IndScottsbluff, NR. No datebeen set.-CM

Vista Media suesWestwood for $2.7

National ad placement I irm VistaMedia has filed suit againstWestwood One (specific :illyMetro/Shadow) for $2.7M (7/2). The suit alleges non-pay-ment of over $200K in credits(from the mid -1990s) owed toVista and a resulting $2.5M inresulting damages that includesMetro/Shadow's "poor treat-ment" of Vista clients trying touse the claimed $200K credit.

Vista says those damagesspecifically resulted from MetroNetworks' "failure to air 50-75%of previously accepted sched-ules without timely notices,"citing delays in delivery of per-formance affidavits to sched-uled buyers from 3-12 monthsafter airing. Vista PresidentMitchell Schultz says thecompany's reputation andgoodwill in the biz havegreatly suffered.-CM

Detroit latest in RhythmicOldies farewell

Tie long -rumored foni 'at switchon Greater Media's WGRV-FM ("The

Groove") from Rhythmic Oldiesoccurred 6/30. The new station,"Magic 105.1," takes a MainstreamAC format, a new moniker, "Today's

Hits, Yesterday's Favorites," and issoon to get new calls: WMGC. Theswitch makes room for the formerWNIC-FM Detroit #1 morning show

of Jim Harper and Cyndy.Canty.Jones radio Networks' Delilah getsnights. Gary Berkowitz consultsthe station.-CM

7/9/01 RBR

A binocular look atthe top 50 owners Radio Operations

Okay, group owners. Hereis your once -in -a -lifetimechance to find out howmuch money your groupmade in the year 2000-twice! This charts show rev-enue estimates for the top50 radio owners, used bykind permission of Broad-cast Investment Analysts andDuncan's American Radio(RBR has taken the libertyof rounding out some of therevenue numbers to fit thechart format). Althoughthere is much that is differ-ent, there is significantagreement between the twosets of numbers. (Note: BIAnumbers are listed first onlybecause they were receivedby RBR first.)

What the two lists showbeyond contradiction is thatthe recent Hollings -Dorgandiatribe ascribing 90% of allradio revenues to four largegroups is only so much hog-wash. BIA credits the topfour with 38.4%; Duncanwith 42.2%. The top 50 claim62.5% per BIA, 65.8% perDuncan. Duncan estimatesit would take perhaps 500owners to reach 90%.

Methodology is one factorin explaining some of the dif-ferences between the two. Forexample, Duncan countsLMAs and JSAs toward eachowner's totals, .whereas BIAlimits it strictly to licensedO&Os. Both companies toldRBR that they count pendingacquisitions as owned for thepurposes of the chart.

The biggest differences:Pamal, ranked #30 by BIA,did not make the Duncanlist. Conversely, Nassau,Duncan's #29, is absentfrom BIA.

Revenue estimates are inmillions. Other estimates fortotal industry 2000 revenueinclude the RAB's $19.819Band Bob Coen of Universal-McCann's estimate of$19.585B. -DS

7/9/01 RBR

I

Owner SymbolBIA

RankBIArev

DuncanRank

Duncanrev

Clear Channel N:CCU 1 3,528.1 1 3,794.0Infinity (Viacom) N:VIA 2 2,354.7 2 2,495.0Cox N:CXR 3 453.7 3 482.0ABC (Disney) N:DIS 4 436.4 4 457.0Entercom N:ETM 5 423.5 5 392.0Citadel 6 349.7 6 368.0Radio One O:ROIA 7 299.8 8 282.0Emmis O:EMMS 8 289.6 7 285.0HBC N:HSP 9 254.3 9 258.0Susquehanna 10 235.3 10 250.0Cumulus O:CMLS 11 228.6 11 235.0Bonneville 12 203.3 12 193.0Greater Media 13 152.5 13 145.0SBS O:SBSA 14 149.0 16 115.0Jeff -Pilot N:JP 15 142.1 14 142.0Beasley O:BBGI 16 130.2 15 126.0Saga A:SGA 17 99.8 17 81.0Journal 18 77.5 18 74.0Entravision O:EVC 19 68.7 20 65.9Salem O:SALM 20 65.7 23 61.0Sandusky 21 64.2 22 64.6Inner City 22 63.8 21 65.4Tribune N:TRB 23 62.1 19 66.0Regent O:RGCI 24 57.9 27 41.1NextMedia 25 54.8 24 49.0Fisher O:FSCI 26 53.8 26 46.0Buckley 27 46.5 30 38.3Barnstable 28 45.8 25 47.5Lotus 29 38.9 28 41.0Pamal 30 36.6Renda 31 35.1 32 32.9Aurora 32 34.4Liberman 33 32.7 36 27.8Big City A:YFM 34 30.7 31 33.0South Central 35 29.4 33 30.1Millennium 36 28.6Service 37 28.1 35 27.9Simmons 38 27.8 39 26.0Triad 39 27.5Arso 40 27.3Midwest Comm. 41 27.3 47 16.4WEAZ-FM 42 26.1 40 26.0Hearst -Argyle N:HTV 43 26.0 42 20.8Mid -West Fam. 44 25.5 46 16.9Midwest TV 45 24.4 41 25.1LBJS 46 24.1 38 27.1Ackerley N:AK 47 23.5 34 30.8Curtis 48 23.4 43 20.7Mega 49 23.0Brill 50 22.9Nassau 29 39.0Chase 37 27.4Hubbard 44 20.4NY Times N:NYT 45 17.2Bahakel 48 16.4James Crystal 49 16.3Rubber City - 50 14.9Top 50 revenue 11,014.7 11,272.6All radio revenue 17,627.0 17,124.5Revenue share, top 50 62.5% 65.8%

Sources: Broadcast Investment Analysts, Duncan's American Radio

www rbr corn

r

Agency buyers speak outon Arbitron's

RADAR acquisition

First there were tw now the' uone. Arbitron's purchase of SIn sRADAR Network Radio ratingsservice (see cover) certainly raised

a tew eyebrows in the buyingfiekl-Arbitron now holds a vir-tual monopoly of the biz. Butwhat seemed to be the kicker, asyou will read, is Arbitron's statedintention to transition RADAR'ssurvey methodology from tele-phone to diaries. Here, they vent.

Reyn Leutz, SW, Di-rector of Radio Nego-tiations, Mindshare USA

It's a sad thing. I al-ways thought maybe they weregoing to incorporate the knowl-edge and improve what Gale'sdone. But [moving it to the dairy]that's awful. If that's the case, nolonger will we ever know whatthe ratings are specifically for aprogram. The clearances now forpeople will be 6A -Midnight.

As one of the research directorsof my company has often said, thediary is an excellent research toolfor the 18th century. Wheneverthere is innovation, there will al-ways be self-appointed guardiansof the past. I think that Arbitron isone of those guardians.

There isn't a research directorin America that doesn't think thatthe phone gives better researchthan a diary. We would be reallydisappointed if that's the case.Arbitron numbers have alwaysbeen overstated, relative to RA-DAR, because they don't haveclearance information. RADARspecifically told us what the rat-ing of a show was at six o'clock,'seven o'clock, eight o'clock, nineo'clock. Now, more syndicatorswill give us ratings that are from6A -Midnight. They will give us arating of a 1. If it airs at Midnight,who will ever know? No one.

We will probably be using ourown numbers from now on. Ifwe're going to move backwardsin the way we calculate ratings,then maybe what we really oughtto do is move clients away fromthe medium. If we are going to

8

Radio AdBittake steps backward in terms ofresearch...hey, we live in a worldwhere television ratings are dis-tributed every day. If we are noteven going to use the phonenow, maybe it's really time to sitdown with our clients and say,"You know what, let's move awayfrom this."

INatalie Swed Stone,Managing Partner/Di-rector of National Ra-dio Services, OMD USA

My initial thoughts are that I'mpleased. Lately neither servicehas really done everything for usthat we needed it to do. So nowwe will have one service thathopefully will give us all theinformation on network radio thatwe need. So that's a positive.How and what we lose in theprocess remains to be seen. Willwe lose anything, or is it all gain?It never is all gain, so let's pointabout going from telephone todiary-it is disappointing. But Ifeel that things do have to change.Perhaps we're getting more outof this than we're losing.

I basically concur with ev-erything that Roby said, andwith Joel as well [see page 9].We have to take a wait -and -see. RADAR couldn't move anyfurther without having accessto local data and we neededthat desperately. On the otherhand, Arbitron could only pro-vide so much without the re-sources and the accountabilitymeasures that RADAR was sogood at. So, I see that as apositive also.

AMatt Feinberg, VP/Manager of Radio, Na-tional Broadcast, Ze-nith Media Services

Well, first of all, it's beyond mycontrol. So what can I do? It willtake about a year for transition.For years we were told that the

telephone medloch )1( >gy w st

perior to the diary. '1.11;11 seemed

to be the general consensus, andI have no reason to disagree. I'vegot to believe that telephone re-sponse rate is pretty low nowa-days. I don't know how thatimpacts into the which -is -betterscenario. If Arbitron increases their

sample size quite a bit, it wouldbe a good thing. I don't thinkdiaries are great, but if they can atleast expand their sample base orsomething...If and when PeopleMeters ever come to fruition, thatwill be helpful, but it will be awhole new scenario.

I think SRI sold RADAR formoney, obviously. Arbitron boughtit to eliminate the competition. Atfirst, I thought they would be de-buting some kind of best of bothworlds scenario where they're cross-

referencing diaries and telephoneresponse. Now that it has beenclear that they are going to lose the

telephone, that's not great. If theyincrease their sample size, doubleit or something, that could be atleast a step in the right direction.

But this doesn't bode well in mymind. Arbitron ratings have alwaysbeen, well, people felt they wereinflated. So does that mean we aregoing to see these artificial increases

from all the networks? And whatabout Arbitron's Nationwide?That's

been a pretty useless tool for mostof the years. People get it, we lookat it, but because it's based onpotential, once you really get intothis business, you realize it's kind ofsilly. I was wondering-a companylike say MediaAmerica who appears

in the Nationwide book, but isn't inRADAR. Are they now going tobecome, by default, part of the RA-DAR scenario? That will actually begood for the business-for planners

and clients-to look at one source.The downside is for people like

myself and Reyn and Natalie whohave been around and know thenuts and bolts of this and knowwhere the skeletons are buried andhow to look at numbers. We're

www rbr corn

By Carl Marcucci

pn rablygoing to l hive to-Iapply a factor, unix up with tirsoil Of Medi( idol( 4,7y. I k lieln11\ we

can do it as one entity-I drink weshould all meet and talk al Eta as an

indusuy how we want to handlethese numbers. wliat kind of factorwe want to put agui-Lst diem. if we all

do it separately, it's going to he all

messed up. Salespeople will just

scream and yell.

Marianne BusseCohn, Supervisorof National Radio,Initiative Media

I just think that any-time that you take a competitorout...it's a monopoly situation thatArbitron has. I mean who else isthere-Bruskin? I hate to see it. Ihave known Gale Metzger andMiriam Murphy from RADARpretty well since my days at Mu-tual Broadcasting in the 80s. AndI hate to see it go to this. Justbecause everything they've al-ways told us and sold us aboutthe great things that RADARdoes-the audience to commer-cials and how they monitor clear-ances-is now gone. The net-works' numbers I would thinkare going to go up. I think thebest -case scenario is if they some-

how combine their two servicesand get the best of both.

But the diary method is alwaysup for question, it's always sort ofiffy to me. I've been out to RADARand the way they train the people,it seems so clear rather than send-ing somebody a diary in the mailand hoping they send it back.People want to be smart. Theydon't want to admit stupidity sothey will just fill it out to whatever.

I'm a little hit upset by this, alittle unnerved that this is the wayit's going to go. With all the

technology...it seems like we aretaking a step backwards. It's al-most scary to think that maybe the

most solid numbers are going tobe from the streaming people!

7/9/01 RBR

Ir

[K

Net reaction toArbitron/RADARdeal is cautious

In the wake of the just -announced Arbitron-RA-DAR purchase deal, radionetwork executives hadthese observations.

Roby Wiener, EVP/Mar-keting, Premiere RadioNetworks: "One of thethings that [PremierePresident/COO] Kraig[Kitchinl and I had al-ready discussed this morn-ing [7/2] was the fact thatone of the positives thatwe see about this is thatthis is the first acquisitionArbitron has made as a

standalone company, anacquisition in the networkradio services arena. So wethink that's a real impor-tant sign about how im-portant network radio isin the marketplace, and itsfuture. That's very posi-tive for us."

"Right now, we believetopline, with not havingmuch detailed information,that being able to create asynergy between networksand syndication and localradio, would be good inthe marketplace. Wehaven't gotten any feed-back from our clients yet,but we feel that's a goodthing. We'd like to hold onto a lot of the .benefits thatRADAR brought us, whichof course is the qualitativeinformation as well as theservice it provides to di-

! ents by making sure thatthey monitor clearances."

"RADAR was a network-' driven piece of research that

was started by the networksmany years ago. But, wethink again with the size ofArbitron and the servicesbehind them, that we lookforward to watching thisevolve and being involvedin that process, as one oftheir larger clients."

"There needs to he more7/9/01 RBR

information about what theirplans are for the future andhow it's going to affect theproduct before any of canmake any decisions."

Joel Hollander, CEO,Westwood One: "Basically,they claim that their infra-

structure at Arbitron will im-prove the servicesand I say let's wait and see.I want to wait and see whatthey are going to do beforeI give any other comments,like anything else. We've gotto let some time lapse andthen we will be able to saywhat it is going to look like."

Jay Williams, CEO, Ameri-can Urban Radio Networks:"On moving over to dairies, Ithink that's going to happengradually over a long periodof time. I don't think that'sgoing to turn around here

www rbr corn

tomorrow. They certainlyconfirmed to me that they aregoing to keep that viable andimportant process of clear-ances going. It remains keyfor most of our clients and issomething we would con-tinue to still want in there."

"I think this deal has thepotential for furthering thedevelopment of radio as amedium, for allowing a uni-form approach to thelanguaging on radio, consis-tency across all platforms.So it has the potential to bea one voice for radio. I wouldhope that in their growththey would have some inno-vative new techniques addedto enhance their capacity."

"Gale Metzger's continuedinvolvement on a long-termbasis has been assured. He'sassured me that certainly thetransition period and prob-ably for some time beyondhe will be available to con-sult them. I think MiriamMurphy, one of their keyliaison people, her role issomething that's going tostrengthen radio."

"The only negative, andsome of my guys have al-ready written me about it, isthe pricing. That's a seriousquestion. So we're hopefulthat until the productchanges dramatically or anyenhancements are broughtto bear, that pricing wouldstay in the present range."

Ron Hartenbaum, Presi-dent, Jones Radio Network[Editor's note: JRN is cur-rently measured byArbitron's Nationwide ser-vice, not RADAR]: "NurriberOne, we are believers andhave utilized Arbitron. Andbillions of dollars have ex-changed hands in terms ofbuyers and sellers based onArbitron information. RADAR

By Carl Marcucci

is not the end all, be all fornetwork radio. It was de-signed to measure a certaintype of network audience.And Arbitron measures anenormous amount of othernetwork audience. Sportsdollars in network radio arenot exchanged because ofRADAR. Long -form program-ming dollars are not ex-changed because of RADAR."

"Our feeling is that this isa consolidating universe, pe-riod. Agencies consolidate,clients consolidate, stationgroups consolidate. Itshouldn't be a surprise-people shouldn't beshocked-that researchcompanies are going to con-solidate. One of the reasonsthose research companiesmay have consolidated isbecause of all of the otherconsolidation that happenedat ad agencies and broad-cast groups. So if you lookat it from the research com-panies vantage point, theirbase of different customershas been reduced becauseof consolidation."

"These were both greatcompanies, I'm happy forthe guys at Arbitron, they'regrowing their business, I'mhappy for the guys at RA-DAR, because God willing,the shareholders madesome money there. At theend of the day, we will allmove forward; at the endof the day, radio is as vi-brant as it has been andwill continue to be."

Will Jones be transitionedover to the new RADAR,RBR asked? "I think all ofthis is going to unfold overthe next couple of weeks,"said Hartenbaum. "Whenour research directorsays this is what we'rethinking, we will be ableto go from there."

Clear Channel nails bigdeals overseas

Clear Channel's (N:CCUinternational division halanded the biggest outdoadvertising contract ever inEurope-a 1B Euro ($846.1M)1 -year contract for CCU'Adshel subsidiary to install bitboards in parking lots at storeof the Carrefour retail chain. Itapparently beat out rival bidsfrom units of Viacom (N:VIA)and JC Decaux (Parisexchange:JCDX).

CCU is making its first einto the South African advertis-ing market with a 468M Rand($58.3M) deal to buy theCorpcom Ltd. outdoor adver-tising company. CCU's part-ner in the venture will beIndependent News & MediaPLC, a newspaper groupwhich is based in Ireland(and is CCU's partner issome other ventures).

Media Markets a MoneyRADAR will add $9M to

Arbitron revenues

Arbitron (N:ARB) CEO SteveMorris says RADAR, whichArbitron is buying for $25Mover two years, will addabout $9M in annual bill-ings to Arbitron. The im-pact on Arbitron's bottomline will be neutral for thisyear, but accretive in 2002,he told reporters in a tele-phone news conference(7/2). Morris said Arbitronhad been looking for sev-eral years at how to get intomeasuring network radio,but couldn't make the num-bers work to launch its own

competitor to RADAR-sonow it's buying the servicefrom Statistical Research Inc.It's the first major acquisi-tion since Arbitron was spunfree from Ceridian (N:CEN)and began trading as a sepa-rate company on 4/2.

Wall Street greeted thenews with a yawn.Arbitron's stock closed 7/2(the day the deal was an-nounced) at $23.85, off 25cents for the day.

With the acquisition of RA-DAR, Arbitron is getting Pre-miere Radio Networks as anew customer, while it con-tinues difficult negotiationswith Premiere's parent, Clear

:44...

gib

Radio One, Inc.has agreed to purchase the assets of radio station

WPEZ-FMMacon, GA

from

U.S. BroadcastingLimited Partnership

$55.0 MillionGeorge R. Reed and Tom McKinleyof Media Services Group represented

the Seller in this transaction.

George R. ReedTel: (904) 285-3239 Fax:(904) 285-5618

E-mail: REEDmsconsulting@cs.com

Tom McKinleyTel: (415) 924-2515 Fax: (415) 924-2649

E-mail: RTMcK2515@aol.com

Media Services Groupwww.mediaservicesgroup.com

12 www rbr corn

by Jack Messmer

Channel (N:CCU), over localradio ratings contracts. Mor-ris said he doesn't see thatas a problem. "They are allover the industry, as we are,so I can't imagine any stepwe would take in radiowhere we would not be hav-ing a lot of conversationswith Clear Channel." Morrisnoted that Premiere had beenone of the networks whichhad wanted to get Arbitron'sdiary database, which islarger than RADAR's tele-phone sample, into networkradio. "At an operating level,we are bringing them a ben-efit," Morris said, althoughhe acknowledged that theongoing contract negotia-tions with Clear Channel area separate issue.

RBR observation:Bringing RADAR intoArbitron could be a win -

win, but only if Arbitronplays its cards right. Usinga single database for allradio ratings could make iteasier for more syndicatedprogramming to becomeRADAR -rated and enlargethe network radio business.But as the agency folks note(see p. 8), the new producthad better have more of theattributes of the old RADARthan of Arbitron's Nation-wide to gain acceptancefrom the people who spendthe money. If Arbitronwants to move away fromtelephone canvassing, itwill have to convince thenetwork time buyers thatthe replacement system hastough data standards, realaccountability and accu-rately links clearances toreal listening. Otherwise, itmight to be more prudentto stick with a separate tele-phone sample until PortablePeople Meters are ready fornationwide deployment.

7/9/01 RBR

1

Clear Channel expandsin Springfield

Which Springfield. That's a goodquestion, since there are threeSpringfield Arbitron markets andClear Channel (N:C.C.1.1 is in each ofthem. In this case, the mega -groupof all mega -groups is adding a thirdFM and fourth station in Spring-field, II.. It's paying BenjaminStratemeyer's Union BroadcastingS2-.8\1 lot. \\ \ AJ-1:N1 Hillsboro, II..

RBR observation: WNAl doesn'tquite reach Springfield with its city -grade contour and it can't moe muchfarther north and still city -grade itscity of license. That shouldn't reallybe a problem. though. since it's .1

full 4;0kw Class and the terrain inthis market features neither moun-tains nor skyscraper.,

WLXO gets Clarity for futureIt on't he Cumulus (c):C NILS), butrather a new market entrant buyingW\1.0 -FM in the Lexington. NV mar-ket. Clarity Com Ill 11 11 C:1 I (1 11 .

headed by Charles Cohn (0.Charleston. SC. is buying the sta-tion from Blue Chip for SaitON Thestation is now in .i 1S:\ I \ICommunications. Lynn Martin'sLNI had planned to buy both \\-1,x0and WIITF-I'M from Blue Chip. hutdropped WLNO front the deal whenMartin got a chance to buy a morepowerful signal. WSTI.- . fromMortenson Broadcasting.

RBR observation: Lynn Martincan't own both \\ ST1. and VINO.hut he still gets the next -bestthing-the inventory of \\'L\0 tosell. This deal shows once againhow a smaller. privately -ow nedcompany can compete toe -to -toewith the Wall Street mega-groups-in this case. both Clear Channel

L' mulus.

Sabrecom expandsin Hoosierlandalready owns a combo in

Muncie. IN and is now expanding withthe SS\I purchase of five other stations111 the Muncie -Anderson. 1\ area. Theseller is the Indiana branch of the RadioPartners group. comprised of MichaelSchwartz, Aaron Daniels, MonteLang, Ed Argow, Abe Moses and BillBurns Sahrecom. headed by PaulRothfuss and Joel Hartstone, will add\\ I K-FNI Muncie. IN, WHBV-AMAnderson. IN, WIITI-FM Alexandria. IN.

\\ I RN -FM Elwood. IN and \\Ilarttord City. IV creating a

superduopolv xrs,_Am \\, I BC -

FM Muncie. I iiroker: MichaelBergner. Bergner Co.

Sirius seeking serious cashsinus satellite Radio i t ):NIKI has hied

tilt the NH It/ sell up to a hall-billumdollars in new s securities-eitherstock. bonds. preferred stock or war-rants. as market conditions allow.However. the company insists that theshelf registration is lust preparationfor the future and that no sale of newsecurities Is imminent

"Currently e ha\ e more thanenough cash to take us through thethird quarter of 2002 e filed thisshelf registration statement to allow usthe ile\ibilm to access the capitalmarkets in the future; however. thecompany does not intend to issue se-

cuntte.it this time. said John Scelfo.CFO in Sirius' announcement.

According to an SF(' filing. Sirius hadS19 -M in cash on hand .is of 3 31. plusS2o3N1 in marketable securities.

Tower companies facewireless troubles

Leasing tower space is an easy businesswith virtually automatl. " "

The RadioIndex -

he Radio Index"surged to a year-to-date high of 249.142on Friday (6 29), thenheld onto most of thegain to close - 3 at

241.238. up 29.312from a week earlier.

250

240

230

220

210

200

RadiotDsieRuesinessReporttttiin. tithe r. ttttittlsfh

-

6/12 6/19 6/26

RBR

-- --

long as your tenants have money topay. Tower companies are now assess-ing the impact of one wireless datacommunications company, MetricomInc. (0:N1COM), filing for Chapter 11bankruptcy reorganization.

Crown Castle International (N:CCA),

the largest tower company of all. wasquick to issue a statement thatMetricom accounts for only about11.2;°0 of its revenues and thatMetricom currently owes Crown Castleabout S2M. Crown Castle noted that ithas a total had debt reserve of S19M,so it could easily absorb the Metricomloss even if it gets nothing out of thebankruptcy proceeding.

American Tower N:AMT ) thenchimed in that it gets only 1% of itsre\ enues front Metricom and that the

treless company's Chapter 11 filings-w ill not be material- to AmericanTower's financial results.

Did Mel blink or not?

Reports lifter on w het 1i \t( I k.ialimuinstuck to his guns or relented and cut CPMsin the lust completed upfront sale of TV'stall season. Three accounts agree that

\ booked about S LIBstill has about 3.-i" of its inventor to

sell in the atter market later this year-when Mel is betting that advertising de-mand will impri ie

According to Reuters. CBS held the lineon discounting. Broadcasting C: Cab/c.however. says CBS saw dollars fleeing toother networks and eventualk startingcutting rates-just not as much as otherswere doing-discounts of 3 -inn, ratherthan Falling somewhere betweenthose reports is Media Week. which quotesa CBS insider as insisting that the networkaveraged CPIs of 1-21'i, above last year.while acknowledging that CPMs werediscounted for some less attractive pro-grams. Media Week also quoted an un-named executive from another networkas thanking Mel for holding the line for afew days before caving in-allowing othernetworks to book dollars that CBS. at leastat first, said no to.

All three reports agree that all of thenetworks sold less of their inventory thana year ago. although CBS held back morethan the others. All three say CBS sold65')0 for S1.4B. NBC 67% for S 2B. ABC 72%for S1.6B and Fox 76% for S1.3B.

A fourth account by The Myers Reportnotes that CBS and ad buyers were tellingconflicting stories about upfront sales.

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andThe Daily Newscast

Read about thesetransactions and more

at our websiterbr.com

Transaction Digestby ()ay(' (;itylm h Lir k Mi I

The deals listed below were taken from recent FCC filings.RBR's Transaction Digest reports on all deals that involve assignment of a station license (FCC Form 314)and substantial transfers of control of a licensee via a stock sale (FCC Form 315), but not internal corporaterestructurings (FCC Form 316). All deals are listed in descending order of sales price. Broker credits arebased on contracts filed with the FCC.

$55,000,000 WI'EZ-FM .111,1111,i \1.1((n GA)horn 11.S. Broadcasting L.P. (I )oug Grimm et alto Radio One Licenses Inc. (Catherine I lughes.Alfred Liggirts), a subsidiary of Radio One In((O:ROIA). $2.75M escrow, balance in cash at

closing. Superduopoly with WI ITA-F:\1, :IZZ-

FM. CP held by station will change as city oflicense from Macon GA to Hampton GA, ellec-tively moving it to the Atlanta market. LMA uponcommencement of program testing at new trans-mitter site. Broker: Media Services Group (seller).

$2,200,000 WENY AM & FM Elmira -ComingNY (Elmira) from White Broadcasting LLC(Kevin Lilly) to Eolin Broadcasting Inc. (RobertW. Eolin Jr., John T. Home). Cash. Seller willalso receive up to $160K under terms of LMAwhich began 11/10/00. Superduopoly withWCBA AM & FM, WCLI-AM & WGMM-FM.Seller retains WENY-TV and its two translators.Broker: Kozacko Media Service (seller).

$650,000 KVLT-FM Victoria TX from PaisanoCommunications LLC (Gerald Benavides) toCapstar TX LP (Lowry Mays), a subsidiary ofClear Channel Communications (N:CCU).Cash. Superduopoly with KIXS-FM & KLUB-FM. Broker: Media Services Group (seller).

ti450,000 KOTT-FM Otterville MO from Don Lc..(iok to Lake Ai -ea Educational Broadcasting Foun-

dation (James J. McDermott, Lany E. 011ison, Alice

J. McDennott, Don Neuharth, James Freeburger).$50K escrow, balance in cash at closing. Buyer is a

d Luta )1t. trust. I 1 \ sine (, 8 Al t ree nfic (4 1 forday.I I iegli fling ( I MA, all advertising and

)grai t Vnow( irk o sunk ts will I diet!,tl le seller it-si x n t in )1e k ir all wall wilts :inchrel I in( Is. seller is las( NI)IiIritecl xi ( rending :mystiti«o with Lit in the K(I Mt XldlIttil 1111_-.1 111 )(iglu a I1( /11-t /I I II SCIICI LS lilt'

static /11 will I any ( ruler I( ill I LII

$400,000 WLXO-FM hexingt( )11 -layette KY(Stamping (,n ,unc111rom likie( :hip lin rackastingLicenses II Ltd., a subsidtm 1)1 I ( 1in xkl-

casting Inc. (14 kiti li)Vc /1( )( 11111) (;011111111111C.ItIC 111S

Inc. (Charles Cohn). ti.2( x 1K ( ash up( in FCC ap-proval (or $100K on 6 25 ( not approved bythen, and :mother $ 100K if still Unapm wec I I ry 12

25/02), $200K cash at dosing. Station is in.ISA with

L.M. Communications (WGKS-FM et al).

$125,000 WKFL-AM Bushnell Fl. Irom MorayFehnuann to WK1-1 Inc. (Keith Walker). $1Kescrow, additional $19K Gish at di S105K

N/AWWVII-FMN1olgank mn-Clarksbutg-1:ainnont

WV (Morgantown) fit m \X'est Vin.Onia I high ler Edu-

cation Interim G( werning13( xud (J. Michael McMullen,

Chancellor) to West Virginia L1nneisity B. )(al ofGovernors (Vaughn L Ki);er, (hair). Transfer is aresult of 14slatim passed by the 14slattue :.utdsigned into law by the g( )vent( (>f the state fWeslVirginia which worglutiziAl the entily system ofgovernance ( )f the institutions of higher learning and

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Analyst: Radio One isradio's number one

tillobertson Stephens analystajames Marsh (newly trans-it planted from Prudential Securi-.. ties) is out with an analysis of themanagement teams of the 13public radio groups he's follow-ing for the Wall Street firm. Hisconclusion: "Radio One (O:ROIA& ROIAK) blew away the field.The Radio One managementteam scored in the first quintileof every category we tested, win-ning three categories outright,and tying for tops in two others."

Marsh and his team atRobertson Stephens analyzedeach company by margins, rat-ings and whether they met orbeat Wall Street expectationswith their financial results. Theyalso sent out a survey to stationmanagers across the country toget their take on the reputationof each company's managementteam within the industry.

The chart below shows howthe 13 stacked up.

What do the managementrankings mean? The RobertsonStephens analyst says the surpris-ingly strong rankings for a coupleof companies that usually operatebelow the radar screen of many

Marsh

Wall Street traders means that theycould carry a lot of upside. Thosetwo are Regent (O:RGCI) andSalem (O:SALM).

"At the current price ($7.60when Marsh wrote after the 6/27close) the RGCI shares clearly donot reflect Regent's performancein our Management Report Card,currently trading at an 18% dis-count to the group," he said ofTerryJacobs' and BillStakelin'ssmall market company.

As for Ed Atsinger and StuEpperson's Religious group,Marsh said, "The SALM shares,like RGCI, do not reflect the per-formance of management in ourview. Trading at only 11.7 times

estimated 2002 BCF, the SALMshares trade at a 21% discount tothe group. Just getting to an in-dustry average multiple points toa 37% upside for theSALM shares."

Based on his analysis, Marshpassed out grades to the groupsfor management quality. "A"grades went to Radio One,Entercom (N:ETM) and Regent.Receiving "B" grades were Sa-lem, Emmis (O:EMMS) and ClearChannel (N:CCU).

"In our opinion, investorswould not place a significantamount of emphasis onmanagement's reputation withinthe industry when awarding atrading multiple to a given stock,"Marsh wrote in explaining whyhe gave the industry giant amuch higher grade than the D orF awarded by 58% of the respon-dents to his survey of industryinsiders. "We believe investorswould be more concerned withfundamental, quantifiable per-formance measures. In addition,we have not yet determinedhow relevant management'sreputation within the industry isto the financial health of a radiocompany and would expect in-vestors to feel the same way."

Grades of "C" went to Saga(A:SGA), Cox Radio (N:CXR)

and Beasley (O:BBGI). Cumu-lus (O:CMLS) received a "D,"although Marsh said thecompany's stock price alreadyreflects past problems and thecompany's management ap-pears to be improving.

All three Spanish radio spe-cialists did poorly and Marshwarned that the price run-up formedia companies targeting His-panics may be overdone. Heawarded a "D" to Hispanic Broad-casting Corp. (N:HSP) and a fail-ing grade of "F" to both SpanishBroadcasting System (O:SBSA)and Entravision (N:EVC), althoughhe pointed out that the gradereferred only to the company'sradio division. Entravision alsoowns TV, outdoor and print.

Management isn't everything,though. Marsh also issued hisfirst stock recommendations inhis new job. He rated Clear Chan-nel a "Strong Buy" with a pricetarget of $83. Salem also got a"Strong Buy" with a $35 target.Marsh gave "Buy" ratings to CoxRadio at a $33 target, Cumuluswith a $16 target, Emmis with a$38 target, Radio One with a $25target and Regent with an $11target. His target for HBC is $23,below the current market price,so he rates it "Market Perform."

Overall ranking Margins

(trend -weighted)

Ratings Meet/Beat expectations Mgt. Reputation

1 Radio One 1 Radio One 1 Entravision 1 Clear Channel 1 Radio One

2 Entercom 2 Entercom 1 Radio One (tie) 1 Radio One (tie) 2 Saga

3 Regent 2 Clear Channel (tie) 1 Regent (tie) 1 Beasley (tie) 2 Salem (tie)

4 Salem 4 Regent 4 Cumulus 4 Salem 4 Emmis

4 Emmis (tie) 4 Emmis (tie) 4 SBS (tie) 4 Entercom (tie) 5 HBC

6 Clear Channel 6 Cumulus 4 Saga (tie) 4 Regent (tie) 6 Cox Radio

7 Saga 6 Cox Radio (tie) 7 Entercom 7 Cox Radio 6 Entercom (tie)

8 Cox Radio 6 Saga (tie) 7 Clear Channel (tie) 7 Cumulus (tie) 8 Regent

9 Beasley 9 Beasley 9 Emmis 7 Emmis (tie) 8 SBS (tie)

10 HBC 9 HBC (tie) 9 Cox Radio (tie) 10 Entravision 10 Beasley

10 Cumulus (tie) 9 Salem (tie) 9 HBC (tie) 10 HBC (tie) 10 Cumulus (tie)

12 SBS 9 SBS (tie) 12 Salem 10 Saga (tie) 12 Entravision

13 Entravision 13 Entravision 12 Beasley (tie) 13 SBS 13 Clear Channel

Source: Robertson Stephens

7/9/01 RBR www.rbr.com 15

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