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by Tom Taylor | tom@in3media.com | 609.883.3321
Thursday, April 2nd 2009
The check’s not in the mail…
 Some radio companies missed their March 31 cash payment to lenders.
As one expert told me at yesterday’s SNL Kagan Finance Seminar in New York City – “There’s technical default and then there’s payment default.” He says “you can handle a technical default with an amendment and some kind of fee. But payment default – that’s a different matter.” He knows of one company “for sure” that missed its end-of-quarter payment and thinks there were a couple of others. We do know what just happened at Citadel –
Citadel needed help from its lenders and got it.
Last Thursday, it bought some time. Its lender group agrees to amend terms of its senior credit and term loan. That would be its “fourth amendment” of the facility on which it owed $2 billion at year-end. It was okay through December 31. But it said “the expected continuing decline in radio revenues in the first half of 2009 and the projected decline in operating profits created uncertainty” about this year. Thus the strict new terms – and the requirement that it have $150 million in available cash on January 15, 2010. Citadel must get its leverage down to 7.25 by June 30, 2010 and to 6.75 by December 31, 2010. And talk about strict – “if the company’s cash exceeds $30 million at any time, then the company must put the amount in excess of $30 million into a cash collateral account for the benefit of the company’s lenders.” That’s a short leash.
Radio One’s company-wide pay cuts are as high as 7%.
Sounds like the range was 3-7%, and the gravity of the situation was emphasized by the fact that both company founder Cathy Hughes and CEO Alfred Liggins were on Tuesday’s call along with radio division president Barry Mayo. But it sounds pretty humanely done. One T-R-I reader says that employees making between $30,000 and $50,000 take a 3% reduction in pay and get a bonus personal day each quarter. Those in the $50,000-$100,000 salary range take a 5% hit and get two extra personal days each quarter. Those earning more than $100,000 must accept a 7% reduction and can take off three personal days each quarter. The new regime begins with the pay period that ends April 30.
The 5% pay-cut Grinch visited ABC Radio Networks, too.
So it wasn’t just the former ABC Radio stations, as T-R-I reported a few days back – it was Citadel-owned ABCRN, too. At least some “legacy” Citadel stations faced the same cutbacks earlier this year.
 Emmis saves money by asking two top execs to go part-time – Rick Cummings, and Gary Kaseff.
Call it a planned retirement for Rick. On March 3, President of Programming Rick Cummings signed a new one-year employment agreement that gives him $470,000 in base salary and up to 60% of that figure as his “annual incentive compensation target.” But then later in the SEC filing there’s talk about Rick’s eventual “switch from full-time to part-time employment” under which he’ll “be offered a four-year part-time programming role with total payments over the four years of $530,000.” As for Executive VP/General Counsel Gary Kaseff – “On May 2, 2009, we reached an agreement under which Mr. Kaseff will resign from his position…and terminate his employment agreement dated March 1, 2008.” He’ll get “a lump sum payment of $1.2 million and will immediately transition to the post-term, part-time employment” under the terms of his 2008 deal. He’ll get a stock option grant and remain a director of Indianapolis-based Emmis. The point of these unusual maneuvers? To conserve money in “a deteriorating economic environment.” Read the SEC filing here.
Ed Schultz wins the 6pm weekday slot on MSNBC.
He starts Monday - precious little time for production meetings and wardrobe selection. The New York Times breaks the news that Schultz will anchor "The Ed Show", the newest link in the liberal-leaning lineup. Current 6pm host David Shuster will co-host the 3pm and 4pm hours with Tamron Hall. And of course "Big Eddie" will continue doing the three-hour daily syndicated radio show that earned him the MSNBC shot in the first place.
“Postpone the next FCC auction”, says the Minority Media & Telecommunications Council.
David Honig – who was visible at yesterday’s SNL Kagan seminar – petitions the FCC to “postpone the auction until the economic recovery takes hold – at least six months.” When I asked him for further comments in New York yesterday, a nearby group exec immediately nodded – “there’s just no point in doing it now.” The MMTC has some other ideas for the FCC to improve the auction of 122 new commercial-band FMs, currently scheduled for September 1. It says the FCC “should increase the discounts to new entrants”, to improve the chances for diversity. Those currently stand at 35%. It asks that bidders who intend to bid for “an excessive proportion of the available allotments – 10% or more – place on deposit a minimum opening bid for all the allotments.” That might give the little guys some more room. MMTC also has some other proposals, for the auction which it hopes won’t go off as scheduled on September 1.
Lessons from this year’s SNL Kagan – People with money are #1, urging radio to use digital and #2, waiting for “the bottom.”
Jim Kuster of RBS Greenwich Capital sums it up – “Private equity is on the sidelines because of the economy…it’s looking with interest [at industries like radio and TV]…and wondering where the bottom is.” The financial-side panelists yesterday are waiting for radio’s balance sheets to get cleaned up of the debt that’s dogging them, so the big companies have value again. Or as Drew Marcus of Sugarloaf Rock Capital says – “the asset values are below the debt…[but] once we get through this period…there will be upside.” While private equity is sitting on its assets, it’s encouraging radio to go digital and to leverage its relationship with the audience to make money on websites, streaming, mobile and other new media. Just as you might’ve heard at the recent RAB 2009 conference in Orlando, there was lots of talk about making money on digital –
 “Advertisers are embracing online radio a lot faster than some folks thought they would.”
TargetSpot’s Doug Perlson was a last-minute addition to the SNL Kagan panel, but he came loaded with information – “Advertisers are looking to hyper-target – not just to match up geographically, but match up by demographics.” While Westwood’s Chief Digital Office Richard Kosinski shows a slide with the numbers about weekly media consumption by adults - it’s an 18% share for online, 21% for radio, 52% for TV, 4% for newspapers, 2% for magazines (based on SRI Knowledge Networks research). And he says “Chief marketing officers are noticing that 18%” figure for online. You probably saw the latest Interactive Advertising Bureau revenue numbers - $23.4 billion for 2008, up 10.8%, with a predicted 4.5% growth rate in 2009 and a total of $24.5 billion. Kosinski says “I’ve got some good news and some bad news – the good news is, the current relationships with advertisers are working for broadcasters.” The bad news? The dollars radio’s getting are going to be split more and more with online and digital, because “marketers expect and demand more accountability.” (I’m hearing the ghost of onetime RAB head Gary Fries in my head, preaching about accountability. And current RAB chief Jeff Haley is backing initiatives like the ad-tracking “AD-ID.”) One morning panel member was doing his usual shake-up-the-crowd stuff –
“1997 and 1998 are not coming back”, when it comes to advertising revenue.
Bill Figenshu says “We’re not going to be doing spots and dots again”, because the game has changed, forever. Fig delivered dire warnings and funny quips – “We’ve had a charisma bypass operation in radio…the number of people doing creative radio is at an all-time low. But the opportunities are at an all-time high”, if only radio can see them and seize them. Bill says “we have an 80-90-100 year head start. We have a sales staff that local portals would love to have….but if we don’t put the effort into programming”, there’s going to be more trouble. He says “We’re a very provincial business.” But if radio snaps out of it, “we have a chance to come out of this malaise we have today.”
“The hotel told me, this is the largest gathering they’ve had this year of non-profits.”
Trust Bishop Cheen, Wachovia Securities analyst and savant, to start off with a funny line yesterday, and it got a knowing laugh from the room of financial professionals, dealmakers and operators. Of course radio is still profitable, by and large – very profitable, as several group guys told me during breaks at the SNL Kagan sessions. And panelist Perry Steiner of Arlington Capital says “We own two radio companies that still operate at 30-35% cash flow margins. This is a fundamentally very sound industry in a terrible economy.” But the black-humor talk of “non-profits” led to more somber stuff –
Not just bankruptcies in radio but “repetitive bankruptcies”, like the airlines?
Scary look-down-the-deep-well stuff from Halyard Capital’s Bob Nolan, who started off blasting the FCC’s “antiquated cross-ownership rules” and soon raised the specter of successive bankruptcies by the same companies. He and Arlington Capital Partners’ Perry Steiner then entered a spirited dialogue about radio’s future. Steiner sees the coffee cup as half-full – “If this economy does stabilize, this industry is going to be phenomenally profitable…these companies are now running very, very lean.” But Bob Nolan responds that radio’s ideas of cash flow margins were “formed under a very different rubric” – and they’re not coming back. And Jim Kuster of RBS Greenwich Capital predicts “you’ll see quite a few groups that are in the single digits for margins” – very unusual by historical standards for radio. One thing everybody agrees on – the automotive business isn’t coming back to previous levels (ever), and financial institutions are in a vise, which hurts both their flexibility as lenders and their ability to advertise. But GE Capital’s Ray Shu says “I don’t think there’s any doubt that when GDP bounces back, there will be increases in radio and TV advertising.” But how much? More play-by-play and Big-Theme stuff from this year’s SNL Kagan conference in tomorrow's T-R-I.
The CBS-Clear Channel Great Station Swap closes, and everyone’s happy.
CBS positions this as “moving forward in its strategy of divesting mid-size markets to focus on large markets.” Which is true. It’s also what CBS has been doing on the TV side. While Clear Channel satisfies an obligation it made to the Department of Justice in February 2008 – which is what really motivated this deal. It’s not a coincidence that on one side of the scales you’ve got two Clear Channel FMs in Houston (Spanish “Mega 101” KLOL and “Mix 96.5” KHMX). While on the other, perfectly balanced, is a grab-bag of five CBS FMs scattered across four markets. This was a no-cash deal, which is the only way these groups were going to do any buying or selling at the moment. So CBS now owns two more Houston stations. While Clear Channel has the deeds to “Kiss 106.1” KBKS-FM, Seattle. “Jack 102.7” WQSR, Baltimore. “Jack 93.7” KQJK, Sacramento. And “Jammin’ 107.5” KXJM-FM and “K-Hits 106.7” KLTH-FM in Portland, Oregon. Would CBS and Clear Channel like to offload more stations? But nobody’s really too sure about what stations are worth today.
Arbitron says it’s on-target with its cell phone only campaign in 151 diary markets.
It promised to aggressively expand its CPO base as of this Spring book and to include all the diary-based markets by this Fall. Arbitron’s “Dr. Ed” (Ed Cohen) says “more than a third of a million households have already been contacted, to build the address-based sample frame” that supplements the phone-based methodology. He also says “We’re seeing that the cell phone only penetration varies significantly by market.” And that the early results “track very closely with state-level estimates recently issued by the National Center for Health Statistics.” It’s interesting to #1, watch Arbitron respond to its customers and to some governmental pressure, and #2 watch Arbitron and Nielsen talk in detail about how they’re building – and improving – their samples.
Beasley’s “Fresh” and Tesh in Las Vegas gives way to a CHR named “Now 102.7.”
It was 18 months ago that Beasley shelved the “Star 102.7” brand at hot AC KSTJ and turned it into “Fresh”, using the syndicated John Tesh for one daypart. Now – they’re going even younger and pursuing the CHR hole in Vegas using the name “Now.” (Of course rhythmic CHRs KLUC and KVEG are already top 5 players.) Beasley says it’s mining its company experience doing CHR in Miami (Power 96 WPOW) and Philadelphia (Wired 96.5 WRDW). In fact it’s employing Power 96 founding father Bill Tanner as a consultant with Now, along with RadioCrunch. Beasley helpfully provides more information about the new station (hint-hint to other companies doing new-format press releases). Imaging is by The Mix Group and Beasley says "the voice of Now is Joe Cruise." The Las Vegas board saw this one coming a couple of days ago. 
Phase II Arbitrends for Phoenix, Tampa, Columbus…
In Phoenix, Clear Channel talker KFYI (5.7-6.2) is tops again, with “La Nueva” KHOT/KHOV up in second place (4.7-5.4). In Tampa, Cox-run soft AC “Dove” WDUV has no trouble maintaining a big 12+ lead (9.8-10.4). In Columbus – there’s a new #1, and it’s CHR WNCI, 7.9-9.3. Study the Phase II diary-based markets on the Ratings Page of Radio-Info.com, here.
» Buzzing on the Boards
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Rush Limbaugh threatens to leave the high-tax city of New York, and the New York board at Radio-Info.com has some thoughts about the mostly Florida-based El Rushbo.
» Wheeling & Dealing
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Looks like 10 more years for New York City’s “Pulse 87” dance CHR format, thanks to Mega Media Group’s Echo Broadcasting Group subsidiary announcing a new 10-year lease deal for the underlying frequency. That’s actually a TV station – the low power Channel 6 WNYZ, whose audio Mega re-purposes as a radio station named Pulse 87. Mega says “advertising revenues less commission expense will be split by the parties, with minimum annual revenue guarantees by Mega Media Group.” Mega’s Alex Shvarts mentions something very material in his situation – Arbitron’s recent policy change, allowing Mega and similar stations to be listed along with everybody else on the AM and FM dial.
In Little Rock, 50-kw (daytime) KGHT is sold for $250,000. The buyer is a surprise, geographically – longtime Tampa station owner Dave Wagonvoord. But he bit on the offer to acquire Metropolitan Radio Group’s KGHT, Sheridan, Arkansas. The station’s got a potent 50,000 watts daytime at 880 – but just 220 watts when the artificial lights go on. Broker – John Pierce of John Pierce & Co. for the seller, Metropolitan’s Mark Acker.
In Red Deer, Alberta, Canada, there’s a followup application for a new Class C1 station at 101.3 by L.A. Radio Group. Last year it applied for a different frequency, but was told by the CRTC to locate an acceptable one – and now it’s proposing 101.3.
» Sound Bites
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Who are talk radio’s “Local Limbaughs”? NewsMax commissioned consultant John Mainelli to create a top-25 list of the most influential non-syndicated talkshow acts and to write a thumbnail for each. It’s highly entertaining. Mainelli starts with KABC, Los Angeles’ Al Rantel - “Rantel is a conservative with a twist. He’s openly gay. There’s another twist. He’s critical of same-sex marriages.” And KOGO, San Diego’s Roger Hedgecock – “He’s been a high-profile talk-show host about 10 times longer than the two scandal-filled years that he was the city’s mayor in the mid-’80s.” And WGN, Chicago’s Kathy and Judy, for whom John cites a “typical comment” – Kathy: “We’re doing ‘Your sex life in eight words.’” Judy: “Here’s one by e-mail: ‘Wife says don’t touch. Right hand’s my friend.’” Kathy: “Vince in Indiana says: ‘Missionary position. Let me know when you’re done.’” Both: “Oh . . . my . . . God!” See the Mainelli/NewsMax list of the top 25 here.
That L.A. rumor about a Mexican company LMAing a current Anglo FM station is back. T-R-I reported several weeks ago that a group of non-U.S. executives was touring a Los Angeles station (a big Class B) with an eye toward leasing it. Now I’m hearing that the date for a takeover might be April 15. These Mexican operators presumably feel they have a better idea about doing Spanish-language radio in the city originally named El Pueblo de Nuestra Señora la Reina de los Angeles de Porciuncula. But are they ready for the Arbitron PPM?
So Clear Channel’s WINZ, Miami (940) is finally, finally going sports, after enough rumors to fill a hot air balloon. The progressive talk format is being junked to make way for a mostly syndicated sports lineup, according to the Sun-Sentinel’s Tom Jicha. Jicha (“JICK-uh”) says wryly, “The only local presence on the station will be Miami Heat basketball. Also Florida Gators football and basketball, if you consider that local.” Other than that, it’s ESPN’s Mike & Mike in mornings, Dan Patrick, Premiere’s Jim Rome, Chris Myers, Petros & Money, and J.T. the Brick. The flip happens at 6pm Friday, and it ends an odd recent arrangement where WINZ has been running Air America’s Rachel Maddow show in mornings – over and over, since she only does a one-hour radio show.
Denver-area CHR “One FM” KONN (107.1) has had a tough life lately – going through debtor-in-possession legal stuff and going silent last year because of overloading problems at the tower it shares with another station. Now it’s being re-imaged as “Hot 107.1”, as Max Media takes over the operation. Alan Burns is consulting “Hot”, a full Class C licensed to Bennett, Colorado, east of Denver.
San Diego’s “Monique and the Man” morning show on “Jack 100.7” has shrunk to just 30 minutes. And the least-heard 30 minutes of their previous 5-9am show, at that – 5 to 5:30am. As you might guess, they’ve got contracts through 2010, and are still being paid. KFMB-FM otherwise aims to be playing music in mornings, says the San Diego Union Tribune. Cast member Greg Simms says “management is making changes”, which means putting Monique Marvez, Sara Kiani and him into a very tiny corner of the broadcast day. The team will continue to do off-air promotional work, like next week’s Girls with Goals event.
“HD radio needs to be in cars and portables”, says iBiquity President/CEO Bob Struble, in his new online column titled “The Barbell Strategy: Bulking up for Radio’s Growth.” Struble’s thoughts are here.
“To stream or not to stream – is it even a question?” That’s the question Greater Media’s Peter Smyth examines in his April “Corner Office” column – and he’s firmly in the pro-streaming camp. He recalls an overheard conversation at the recent RAB in Orlando about the cost of streaming and warns “we are in danger of cost-cutting ourselves right out of business…These broadcasters appeared to have no worries that their audience is being seduced by the personalization and convenience of the digital entertainment world.” More from Smyth here.
» Faces on the Radio
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Scott Meier will be managing the Toledo market for Cumulus – on top of his duties overseeing Ann Arbor and Monroe, Michigan. Thanks for the newstip on that one – to tom@in3media.com.
Bob McKay leaves for retirement earlier than planned – next week – and will leave Beasley’s country WXTU, Philadelphia (92.3) to unfurl the flag of his own consultancy. It was only last month that Bob was inducted into the Country Music Radio Hall of Fame. WXTU will acquire a non-country PD in Leo Baldwin, who’ll double up with ‘XTU and his current charge of rhythmic “Wired 96.5” WRDW. Beasley will now have one PD for its two FMs in Philadelphia, and a single GM. Lynn Bruder left as the manager at “Wired” last month, succeeded by WXTU manager Natalie Connor. Bob McKay’s news wasn’t all that surprising. But this lineup deletion at WXTU was – Scott Evans is “no longer at ‘XTU and this is not an April Fool’s joke”, says his Facebook profile. Scott had long been teamed with Andie Summers on the WXTU morning show. The Philadelphia Inquirer says 10-year staffer Evans gets a 6-month severance check because of his AFTRA contract, and that Andie will probably get a new sidekick from the current staff. As of last night, there were no pictures or names on the website's "morning show" tab.
Eleanor Mondale explains to fans of her show on news/talk WCCO, Minneapolis (830) why she's been absent recently - her brain cancer has returned. She was given a six-months-to-live prognosis in 2005 and had surgery. Now she'll try a new drug treatment.
Roe Conn, as T-R-I reported on March 23, has occupied the late-morning 11:45am former-Paul Harvey slot on Citadel’s WABC, New York (770). The Roe Report is based at sister WLS, Chicago (890), where Roe has worked since it went talk in 1989.
Lew Dickey, David Field and Marc Morgan all join the NAB Radio Board by appointment. Lew is the Chairman, President and CEO of Cumulus, David Field is the President/CEO of Entercom and Marc is the Executive VP/COO of Cox Radio.
» Radio-Info Conference Planner: NAB Show, April 18-23, Las Vegas
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BROKERS
Andy McClure, Erick Steinberg; The Exline Company, Bellagio; office 415-479-3484; Andy cell 415-497-3855, Erick cell 415-209-4890; Exline@pacbell.net, ericks@esteinberg.com; www.ExlineCompany.com
Frank Boyle; Frank Boyle & Co.; Bellagio; 203-377-3030; cell 203-249-7818; fboylebrkr@aol.com
John L. Pierce; John Pierce & Company LLC; office 859-647-0101, John cell 859-512-3015; Bellagio; jpierce@johnpierceco.com; www.johnpierceco.com
Dick Kozacko, George Kimble; Kozacko Media Services; office 607-733-7138; Kozacko cell 607-738-1219, Kimble cell 520-465-4302; Bellagio; rkozacko@stny.rr.com, GeorgeWKimble@aol.com; www.radio4sale.com
Elliot Evers, Brian Pryor, Bill Fanning, Jason Nicolay; Media Venture Partners; Bellagio; 415-391-4877; pch@mediaventurepartners.com; www.mediaventurepartners.com
Larry Patrick, Susan Patrick, Greg Guy; Patrick Communications; 410-799-1740; Bellagio; jaime@patcomm.com; www.patcomm.com
Glenn Serafin; Serafin Bros., Inc.; office 813-885-6060; cell 813-494-6875; Planet Hollywood; gserafin@tampabay.rr.com
Bill Schutz; Schutz & Company; Bellagio; office 757-258-8740, cell 757-880-9251; wbschutz@aol.com
CONSULTING ENGINEERS
Garrison Cavell, Richard Mertz, Dan Ryson; Cavell, Mertz & Associates, Inc.; Bellagio; office 703-392-9090; NABTeam@cavellmertz.com; www.cavellmertz.com
NEW BUSINESS DEVELOPMENT
Half Off America; J. Davis; Suite, Bellagio Hotel; Cell: 518-469-5595; jdavis6986@aol.com; www.halfoffamerica.com
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