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Kick Off RAB 2007--with Interep

Interep is proud to sponsor the

Opening Keynote BreakfastFriday, 7:30-9:15AMFeaturing Futurist Daniel BurrusPresenting...Future view: Creating andSustaining Competitive Advantage

Immediately following the keynote, pleasestop by the Interep-sponsored panel

Radio 2.0: Interactive,Measurable and SexySilicon Valley By the Dashboard Light

Friday, 9:30-10:45AMA host of technology companies arescrambling to produce the killer appthat will allow radio to share in themillions of ad dollars pouring intothe interactive space.Who are they? 41 .

41)What's available now? And what's in the pipelinejetthat Twocould usher in the next phaseof radio's growth?

Moderator:Jim Mazzarella,Independent Consultant/Emerging Media Technologies

,

PanelistsBob Scannell, CEO TagNow MediaJosh Wexler, CEO SoftwaveYork Eggleston, CEO Crave TechnologiesDavid Russek, CEO SevenEcho

Preparing for theNext Phase ofRadio's Growth...

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1-800-INTElicr www.interep.com

SMARTPLblisher & Editor Jim Carnegie

Managing Director Carl Marcucd

RBRITVBRIMBR StaffExecutive Editor Jack Messmer

Managing Editor Dave Seyler

Senior Editor Cad Marcucci

Production Manager Michael Whalen

VP Administration Cathy Carnegie

Acministrative Assistant Apnl McLynnMarketing/Sales Director June Barnes

Corporate Office

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Main Phone: 703/492-8191Editorial Fax 703/997-8601Subscription Phone: 703/492-8191Subscription Fax 703/997-2677

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ci")2007 Radio Business Report. Inc All contentmay not be reproduced, photocopied and/or

transmitted without written prior consent. Anyviolations will be dealt with legally. Printed inUSA. SMART MEDIA is published monthly by

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Cover Art Credit:

Chick Alcorn900 911.110104 Rd.Tuiunga, CA 91042

0194514901chlekskorread.con,

February 2007 Volume 24, Issue 2

contents2i Radio Outlook for 2007

Brokers take a look at theradio deals marketplace.

Four gurus gaze into their crystal balls

and tell us what is ahead in 2007 for

radio industry revenues, station sales

and multiples. An active year awaits!

Cover Art (top to bottom): Elliott Evers, Broker,Media Venture Partners; Larry Patrick, President,Patrick Communications

46812

1618

2224262728

DEPARTMENTSMedia MixMinority buyers want CC spins.Executive CommentArbitron PPM President Pierre Bouvard on the whys of encoding.SalesWOR's Rich Awn looks at the synergistic approach to ad sales.AdbizRadio buyers pow -wow on monetizing HD multicast chamois; GoogleRadio's viability and satellite radio advertising.New MediaRadio Sales' Jennifer Lane on developing interactive dollars.RAB 2007RAB President Jeff Haley and Steve Newberry, RAB2007 planning com-mittee Chairman/President of Commonwealth Broadcasting.News/TalkABCRN's Mark Levin defends the Constitution.EngineeringEddie Fritts presents new technology to help inform listeners of emergencies.ResearchCarat's Shari Ann Brill on Commercial Minute RatingsBrandingDetroit Auto Dealers Association's Rod Alberts.Q3 TradingDeals, deals, deals

SMARTMEDIA FEBT-2UARY 20n7 3

MEDIA MIX

Minority buyers interested in CCspins, but where do they get funding?Minority Media & Communications Council (MMTC) Executive Director DavidHonig was happy that about 120 people turned out last month for a three-dayconference in Washington for minority and women entrepreneurs to find outhow they can best position themselves to buy the radio and TV assets thatClear Channel has up for sale. Some 60 potential bidders were represented,with lots of station brokers, lenders and such also on hand.

Finding financing, though, is an issue. One broker who attended the gatheringcomplained that without seller financing from Clear Channel itself, the effort to at-tract first-time minority buyers is an exercise in futility, since there is almost nolending available for broadcast deals under five million bucks. Clear Channel hasruled out the idea of providing any financing itself, but Chief Communications OfficerLisa Dollinger noted that "many financing sources attended the conference."

A Nielsen stock in 2007?That would be a pretty good bet. New VNU CEO David Calhoun has begunreconfiguring the company to create a payoff for its new private equity own-ers. In fact, it is no longer VNU. Calhoun jettisoned the old name and rebrandedit as The Nielsen Company, as had been predicted by RBR/TVBR. Also as wepredicted Nielsen Media Research boss Susan Whiting has been promotedto Executive Vice President of the entire company.

The European business -to -business magazines, mostly computer titles, arebeing sold to 3i, a European private equity company, and a company -widepayroll reduction to eliminate 10% of the workforce is underway.

In doubt, though, is the bid by VNU to buy out the public shareholders who ownthe 39.5% of NetRatings not already owned by VNU. The independent directorsat the web ratings service rejected the $16 per share offer by VNU as too low, andadded that VNU had not returned to negotiations after the rejection.

What's next? Job one for Calhoun, recruited from the upper echelons of GE, is toimprove profitability and prepare VNU for an IPO. Look for a reincorporation in the USfrom The Netherlands and an IPO filing. All of that could well happen this year.

Biggest retransmission fights aheadIn 2005 it was Nexstar and in 2006 Sinclair stepped to the forefront in battlingfor retransmission consent payments from cable MSOs. Sinclair's fight contin-ues, with Mediacom trying to enlist Congress to sidestep the FCC and federalcourts and force Sinclair to restore its 22 network affiliate signals to Mediacomcable systems serving over 700,000 households.

As this issue goes to press, Sinclair is also going down to the wire in talkswith the two cable giants, Comcast and Time Warner Cable. Comcast hasbeen adamant that it will not pay anything to anyone for the right to carrybroadcast TV stations on its cable systems.

But the skirmishes by Nexstar and Sinclair are just the opening acts, withthe biggest battles yet to come. CBS Corporation CEO Les Moonves has saidrepeatedly that he will be demanding payment when his O&O retransmissiondeals come up for renewal. Fortunately for the MSOs, there is still some timeremaining on the old deals struck when the CBS and (then) UPN O&Os nego-tiated alongside their Viacom cable stablemates, MTV, BET & etc., for a pack-age that allowed the MSOs to insist that they were refusing to pay for broad-cast TV signals, even though they really were. Thus, CBS currently receives aportion of those payments, even though it is now separate from Viacom.

Moonves said last month that negotiations are underway with three smallerMSOs. Those bargaining sessions will just be a warm-up for the CBS negotiat-ing team, with the big contracts coming up in 2009-2010.

What could Googledeals do to rates?While Google will likely not get into the TV inven-tory space until they accomplish their likely immi-nent major radio deals, the television industry (localaffiliates to rep firms) may want to educate early onsome of the issues circulating around Google Ra-dio/Audio and potential inventory deals. One reasonwe speculated there was no CBS Radio deal (ru-mored to be imminent) announced by deadline isover ongoing issues that may be going on betweenWestwood One and CBS Radio over inventory. Theproblem is if CBS Radio, WW1's management com-pany, does a deal with Google, they may be creat-ing a new competitor for WW1 in the marketplacewhich could put further downside value on its stock.Kosann and the board may be worried about share-holder lawsuits and liabilities.

The same could be said for local or national/net-work television station inventory scooped up byGoogle-what would that mean for rep firms likeBlair and Petry, which may find their inventorysuddenly devalued? If big blocks of inventorybought by Google ahead of time becomecommoditized and priced less than Blair or Petryare pitching, it could spell trouble. Just as in ra-dio, Google's entry into the broadcast inventorybiz could get pretty complicated.

So far other radio groups have been hesitant to doa deal for similar reasons. Greater Media CEO PeterSmyth tells SmartMedia recently: "I am not going togo into competition with myself, nor am I going to doanything to go against Katz or the people that nation-ally represent me...or compromise our own sales de-partments across the country-that's ridiculous."

Kim Vasey, Senior Partner and Director of Ra-dio, Mediaedge, CIA, also questioned the rep is-sue at a recent Bear Stearns conference call: "Ithink also it's a bigger mix of complication in thesense of the national rep firms being involved. Wedo a great deal of business and want to protectthat partnership there as well. We want to pro-tect the partnership with the stations, the repfirms, but also we want to be opened to allowinga client to have inventory that can be obtained ona remnant basis at the last minute."

On the other hand, of course, Google may suc-ceed in bringing in a vast array of local advertisersthat have never used radio (or television), and adver-tisers that enjoy the convenience and ease of onlineadvertising. The entire broadcast industry could ben-efit. It's really all about what kind of inventory dealsGoogle scores and what they do with the pricing. Ifbroadcasters and their rep firms do their homeworkproperly and understand just what and how muchinventory to offer up to Google, perhaps its entry intothe market could be workable.

4 / FEBRUARY 2007 SMARTMEDIA

The Nielsen Company

Anytime AnywhereMedia Measurement

Integrating InternetUsage into televisionsamples .

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A2/M2 nielsenMedia Measurement Copyright 0 2007 The Nielsen Company.

BRIM COMMENT PIERRE BOUVARD

As Clear Channel Radio remains virtually the lone holdouton encoding for PPM, Pierre Bouvard, President, Sales &Marketing, Arbitron, provided the top reasons the rest ofthe industry and agency world have gotten on board withthis new ratings technology currently being rolled out inPhiladelphia.

Eight things PPM can tell youabout radio audiences

The Portable People Meter service ushersin a new era of radio audience measurementand provides exciting new insights on radiolistening. Here are eight key conclusionsfrom our analysis of the PPM data.

1. Radio is a reach medium! PPM revealsthat the average station's cume doublesversus the diary. The cumes of radio clus-ters soar to the size of TV station audiences.

Erwin Ephron, the father of

modern media planning says,

"Reach and television is where

national advertiser dollars go

today. Radio is largely ignored

because it is thought of as a

frequency medium. When

radio is planned differently,

especially with the help of the

new Arbitron PPM data it is an

ideal reach medium. In today's

planning, reach trumps fre-

quency. It is media's gift to

advertising and, radio with

new PPM measurement can

deliver it by the carload."

2. Know what works and what does notwork. See cause and effect. Promotionsthat work. Marketing that drives audience.Special programming that pops. When Ra-dio One Houston switched from Spanish toGospel over the summer, PPM showedaudience shifts occurring within days. WhenMix 96.5 Houston implemented a TV sched-ule, the positive results were clear. Con-versely, we saw the new morning show thattanked fast. On a week by week basis, wesaw the fast downwards spiral of the morn-ing audience.

3. With PPM, Audience trends will now bevery stable with little bounce. No one likesbounce. With a panel and fewer of the "ultracore" long span radio entries prevalent in adiary, PPM audiences are much more stable.This stability is a major plus for agencies.

4. Faster data make radio more relevant toadvertisers. On December 24th, 2005,KOVE-FM Houston changed formats andthe impact was immediate and significant.Having more current and up to date datawill make radio appear more vital and im-portant to advertisers. Kraig Kitchin, CEOof Premiere Radio told me about a majorpitch to a huge, well known advertiser.

The client asked about the personality be-ing pitched, "What were their overnights?"The prospect was stunned to learn that notonly did radio not have overnight electronicratings; they were amazed to learn how longit took to get new radio data.

5. In PPM, younger stations get older. Olderstations get younger. In Houston, the diarydepicts young skewing Hip Hop KBXX with40% of its audience aged 25-54. KBXX's 25-54 audience composition soars to 52% inPPM. In Houston, the diary indicates that

the major AM stations have 27% of theirAQH audience over the age of 65. In PPMthe 65+ audience composition of these AMstations is only 9%. The 25-44 audiencecomposition for the AM stations in Houstonjumps from 25% in the diary to 34% in PPM.

6. Radio can quantify ROI with retail storeencoding. PPM is encoding nearly 300 re-tail locations in the Houston market. Showthe impact of the ad flight and the promo-tions on your stations with verified storevisits according to PPM.

7. Quantify audiences on radio's new distri-bution platforms of HD, cellular, HDmultiCast, satellite and streaming. A sepa-rate PPM encoder on each of your audiopaths will show exactly how much audienceis listening to each your distribution paths.

8. Radio's commercial audiences are muchhigher than anyone imagined! Agencies andstations perceive that radio commercial au-diences are about 40% less than the leadin audience. The reality? A Coleman/MediaMonitors study of 90,000+ commercial stopsets in Houston reveals that radio retains92% of its lead in audience!

Thanks to PPM electronic measurement,we are now seeing radio audiences in awhole new light. We look forward to shar-ing more insights as we launch new PPMmarkets over the next year.


this just in...

(*IDIRCSmmofleWSTM

www.WriteBetterNews.com

SALES

The intrepid journey into the heart ofwhat our industry deems "synergy" hasproven a wholly enlightening experience,drawing from the cerebral and dabblingin the mystical. By way of seeking itsmeaning and application, the world nowappears like a conjunction of distinct el-ements whirling toward a mutually ad-vantageous end! The objective question,then, is how to mark these elements todirect an individual's path so that the ad-vantage is to your benefit - and profit.This is the spiritual path upon which I em-barked, ignited by an ad agency buzzword turned scripture.

Synergism stems from the 1657 theo-logical doctrine that humans will cooper-ate with the divine grace in regeneration.The term began to be used in thebroader, non -theological, sense by 1925.(Wikipedia.org, Synergy). While theword's etymology morphed mysteriouslyfrom the theological to the scientific overthe 17" -20th Centuries, it has only beenrecently employed as a media term in thelast few decades. We can only assumethe fragmentation and proliferation of"mutually advantageous elements," (i.e.media forms), have contributed to thisevolution of meaning. It would logicallyfollow that the answer to finding your waythrough the clutter must come from ahigher power - or in this case, your localAccount Executive.

Peering deeper into this phenomenon,it seemed only fair that I walk the path ofrighteousness and submit myself to thedivine powers of synergistic marketingmyself. What else could I do but use a

RICH AWN

Sounding thegong of synergy:Religion, retail, andsummoning the spiritualthrough media

star to light my path? The star was red;the red star of Federated DepartmentStores, Inc.'s big bad brand, Macy's.Since going national, north wasn't the onlydirection I needed to look to find my blaz-ing red guide. I merely had to open myawareness and receive messages fromanywhere - newspapers, magazines, ra-dio, TV, internet, outdoor, direct mail, andcoffee cozies! All elements were con-verging, drawing me closer, and searingthe red-hot star -shaped branding iron per-manently into the top of my mind.

Visualize Christmastime in New York:balmy evenings saturated with sweat -soaked scarf -toting strap hangers; tumultand tinsel infused with nutmeggy estersof eggnog lattes. As I ricocheted like apinball trapped in the bumpers throughthe valleys of the urban canyons, I foundmyself reciting the litany over and overagain, "The Way to Shop... The Way toShop...," Macy's familiar slogan echoedlike the voice of an Imam harmoniouslydroning his prayer from the minarets ofthe Great Mosque of Yemen. The whirof the retail machine grew dim as mymantra became the only audible com-mand in my mind's ear. Suddenly I wastranscended! My actual ear picked up asignal common to what was going on inmy self-induced trance! A radio! A ra-dio! Blasting in a car brought me clarityof vision and cheer... brought me clarityof vision and cheer.

The music was poppy, upbeat; strangelyfamiliar... it was The Vandellas! Thesweet sounds of "Dancing in the Streets"surged through my body and induced a

state of ecstatic motion I likened to thelong hours of dance -trance meditationpracticed by the Whirling Dervishes ofTurkey. Why had this song triggered thisparticular effect? (And how was it that aNew York FM radio station was playinganything other than Christmas musicaround the holidays?) My synapses firedwildly and like sunlight breaking throughthe clouds after a squall, I had a revela-tion: this was Macy's song! Licensed bythe company and worked into a remixedTV spot by (get this) Starcom USA (howironic), my previous at-home homage tothe cable TV gods allowed the omnipres-ent Macy's commercial to imbibe my spiritwith visions of fancy CG images flyingaround the country and stopping off at oneof the 800 Macy's stores now dottedthroughout the land. This was the endresult of a massive $11 billion buyout ofMay Department Stores executed flaw-lessly by FDS last year. (Wall Street Jour-nal Online, Federated to Dress Up Macy'sIn National TV -Ad Campaign)

Upon returning to my stable, I was com-pelled to go online and preach to my dis-ciples of where the Red Star commandedme. Logging onto my Yahoo Mail I waselated by what seemed to confirm myfated path. There it was, floating ethere-ally atop my most personal of dialogues;the Red Star of Macy's shining high andproud at the leaderboard position of myInbox, verifying that I had indeed found"The Way to Shop."

The next morning, I felt refreshed andempowered with a renewed sense of 00

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fulfillment that I was now one with themessage flow from the Great Red Star. I

stopped in on my local coffee cart toshock my system into ultra -awareness.Shelling out a hard-earned $2.25 for alarge regular coffee and croissant, my jawdropped at what looked back at me frommy coffee cup. Crimson as the eveningsky, Macy's Red Star was there protect-ing me! Well, protecting my palm fleshfrom the molten bean juice seething inthat flimsy paper cup. There, upon a re-inforced trapezoidal sleeve of cardboard,beamed my sign, my savior, and my sal-vation. Caffeinated and confident, I strodetriumphantly into my office feeling myjourney had truly come full circle, that thedivine wisdom of the universe had beenbestowed upon me.

Upon my return to reality I realized theone major problem with a sense of well-being is that you can't take it to the bankand use it as equity toward a loan. Bythis I mean logistical concerns still remainfor any successful synergistic media cam-paign. Mainly, there are specific concernsabout advantages, disadvantages, theright combination of media, and cost. Allof this combines to reveal yet anotherimportant question: How can I make thishappen for real?

Take a look at cable TV: The reach isenormous. Cable TV now reaches some85% of U.S. television households.(Cabletelevision Advertising Bureau,2006) Within this massive audience,cable TV breaks up its programming totarget specific demographics and inter-ests through specialized programmingand channels. In turn, larger audiencesyield lower CPMs for a bigger bang foryour buck.

Before you fire up your emails to startthrashing me for touting cable TV, re-member there are some major disadvan-tages to putting all your eggs into onebasket. That huge reach they have canbe viewed as only 85% of U.S. televisionhouseholds, leaving behind 15% of thepopulation that may never see the ad atall. Accumulatively the overall audiencenumber is large but when broken downby channel and by region, the numbersdiminish considerably. Consider also thatproduction of a TV commercial, accord-ing to the American Association of Ad-vertising Agencies (AAAA), costs on av-erage $400,000. To create a spot thathas the quality and appeal to create a last-ing result can be a budget soaker withdiminishing returns. Cable tends to be

the dumping ground for poorly madecommercials, in turn, tarnishing its im-age as a viable platform. Don't forgetabout ad clutter!

Let's zero in on what it would be like touse your budget intelligently and includea hearty helping of delicious radio on yoursynergy plate. For one, radio's reach isnot only enormous, it's excellent! Radioreaches 94% of all Americans 12 yearsand older every week where cablereaches only 61 % of Americans in an av-erage week. (Arbitron/Edison 2006). Con-trary to the ever-expanding roster of cable

quency is limited to an acceptable, andlistenable, level. This power can also beattributed by the increase in unaided brandrecall a radio/cable TV campaign delivers.Adding radio to a TV campaign can in-crease a consumer's brand preference inrelation to purchase intent. (RAEL Synergystudy, 2005)

It's not only evident that synergyworks in media and that the term appliesin both meaning and execution, it'sdownright blinding! The processes ofmy daily life became seamlessly inter-twined with benign and joyful messages

The Power of RadioJust Including Radio can be more powerful than

television -only or newspaper -only campaigns280

Swapping out oneof two TV ads for

250 two radio adsincreasedunaided brandrecall by 34%.

200

ISO

100

134

100 100

TV Radio Newspaper & Radio

Replacing one oftwo newspaperexposures with tworadio ads almostTRIPLED unaidedbrand recall.

No Radio

With Radio

Source RAEL Radio Ad Effectiveness Lab. The Benefits of Synergy

channels, radio's finite tuning band maywork to its advantage. Smaller, morestable numbers of radio channels offermore concentrated and even larger au-diences than cable in most markets. Thedisadvantages of media proliferation andfragmentation were never so evidentthan in the comparison of cable versusradio; radio emerges the clear winner inthis battle of stability, audience loyalty,and results.

Additionally, radio stations nationwidehave taken the problem of ad clutter toheart and reduced the amount of commer-cial time they allow in a given hour. CableTV airs on average twice as many com-mercials per hour. (RAB.com, Cable TV)Decidedly, commercials yield a muchmore powerful response when their fre-

of shopping. With a star to guide me,the work of navigation was done for me.There was no other choice than for meto engage, retain, and react. Outside ofbeing slightly over -dramatic about thewhole thing, I saw through to an impact-ing strategy that can be replicated withboundless degrees of efficacy. Logisti-cal concerns can be addressed throughthe weighing of pros and cons, not tomention a reasonable assessment ofyour budget threshold. In sum, our newworld of seemingly infinite informationcan, in fact, be tagged with markers,guiding the consumer effortlessly to amutually advantageous conclusion.

Rich Awn, AE, WOR-AM [email protected]

10 I FEBRUARY 2007 SMARTMEDIA

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Shining the light on radio's hottest topicsMany of the topics hashed out at RAB 2007 in Dallas will require the knowledge and par-ticipation of those that spend the bulk of radio's dollars: The agency buyers. We askedabout four important topics and questions circulating around the industry right now.

The Participants

Matthew Warnecke,VP Mgr Network & Local Radio, MediaCom

Kathy Crawford,MindShare President/Local Broadcast

Peter Ferrara,HD Digital Radio Alliance President

Kim Vasey,Senior Partner/Director of Radio, mediaedge:cia

Pearl Kim,Supervisor, National Broadcast, Carat

Patrick McNew,PHD Detroit/Local Media Network EVP, LMN Director of Operations

Natalie Swed Stone,US Director, National Radio Investment, OMD

Rich Russo,JL Media's SVP/Director of Broadcast Services

Matt Feinberg,SVP/National Radio, SVP/Director, Interactive Broadcast, Zenith Me-dia Services

The first questions revolve around monetizing the HD multicast chan-nels. As has been speculated, some multicast channels may havesponsorship hours; some may be brokered out or branded ("TheStarbucks Channel" or "Circuit City Channel") to start pulling ROI.

We asked if it would it make sense to begin "HD multicast net-works," where these new formats with their sharply -targeted demoswould be present in multiple markets (ie "Techno/dub" network).

As well, we think most larger markets have enough stations, whereif all were multicasting, the end result could be a very competitiveformat offering to satellite. If the main formats folks (especially the18-34 group) have jumped over to satellite are replicated for free inmany markets, it may make them reconsider paying $12.95 a monthfor what they could get for free. Good format examples we've al-ready seen include WIYY-FM Baltimore's HD -3 Indie Rock format;WCSX-FM Detroit's Deep Classic Rock HD -2 format and WXKB-FMFt. Myers' Reggae Hits HD -2 format. There are plenty of good ex-amples out there, they just all need to be in the Top 50 markets. Asimulcast of an AM sister station is not going to cut it.

When should ads begin in HD multicasts?How do you think the HD multicast advertising

model(s) should be formed?Warnecke: They should have begun already. It should have beenad -supported from the beginning, because listeners who go there

for the innovation and sound quality and all of that will come toexpect what it is from the beginning. If it's commercial -free fromthe beginning then what happens when you get to hearing spots?From a media standpoint we start paying for them at whateverpoint the model can pay for itself, or it's efficient. Whatever themetric is, we can flip that switch as an industry. But for the con-sumer, they don't care about that stuff. All they know is, "I didn'tused to hear spots, and now I'm hearing spots."

They ought to just run 5% of their units on their HD streams sothat people are ready.

I think these channels will automatically be a real low spot load,and it's a place where there can be innovation that's connected toa traditional terrestrial schedule so that the pitch can be, "We'rebringing you terrestrial radio with 225 million weekly listeners andsome groovy niche -y great qualitative, psychographic audiences."Crawford: HD radio is costing the consumer $2-300 per set. Weare beginning to see ads for them from Radio Shack and othersbut we don't have enough of them out there to warrant major adcampaigns today. However, one might note that HD TV has animmediate impact on the viewer while HD radio is probably lesscompelling and considering the price point it may take a bit to getout there into the general population.Ferrara: The opportunity to advertise on HD multicast channelswill come at a point in time when a meaningful audience is reachedand value is created for the advertiser. I doubt if that is anytime inthe next year.

One of the most exciting things about HD Radio for both the adver-tiser and the broadcaster is the opportunity to create new and uniqueways to reach the target audience. Certainly, some broadcasters willlook at the current "spot" model, but I suspect most will look at thingslike advertiser featured hours, programs and even full-fledged spon-sored branded channels. As HD Radio's interactive features expandin the coming years, the opportunity for on -screen display advertis-ing, logo identification, coupons and even a "more information" or"buy -now" button will create yet other ways to reach the consumer.Vasey: When consumer acceptance of HD reaches critical mass.The benefit to having all of these additional side channels is that itopens the door to several avenues of revenue for the station.For example, through the traditional "spot" sales, through brandednames for an entire channel or for just an hourly segment. There isno reason to put any "restrictions" or limitations on the mannerit can be/should be sold.McNew: Who cares? How about when cars are equipped with HDreceivers? How about when Arbitron starts showing some num-bers? As reported in your publication, didn't Trish MacDonald,famed Traverse City radio broadcaster, just try to buy an HD re-ceiver while vacationing in Florida and the salesperson at Best Buylooked stymied and bewildered? Advertising models for HD radioshould be formed about the same time that TV stations and localcable operators start charging for TV broadcasts in color.Swed Stone: They should begin immediately. The ad model should


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be formed with fewer ads-I am a proponent of targeted ads in anuncluttered environment across all forms of radio.Russo: Like we discussed last year, there should be and should havebeen the main station's ads and clocks running on the HD channelfrom the get go. It would have conditioned the listener as well asgenerating some goodwill and added value for the existing clients.

Since the PPMs will pick up these channels itshould be sold as any other radio station.Feinberg: I was under the impression broadcast-ers were waiting for FCC approval before ads couldofficially run on their side bands. As far as whenadvertisers will be ready...as soon as someone pre-sents us with something we'll consider it. As faras what the HD ad model should be?, I don't know.I would imagine similar to existing broadcast admodel, commercials in program and variationsthereof, i.e. billboards, sponsorships, content in-tegration, vignettes, etc. Hopefully, though, thesidebands won't be as cluttered.

Should multiple markets form adnetworks with HD multicast formats?

Why or why not?Warnecke: Absolutely. All of that stuff is possible.And that won't be the only reason or way weuse it. But it seems to me the advent of all thistechnology means that the possibilities of howyou use it are, if not infinite, certainly more var-ied than the traditional structure.Crawford: You're really talking about an unwirednetwork of a niche format. I think it's fine. I woulddo that in a heartbeat. The world of the rep needsto evolve and this is certainly one of the reallysmart ways to go about it.Ferrara: Simple answer - whatever will deliverthe best results for the advertiser.Vasey: I think it makes sense for the broadcastgroups to consider doing that. It will expand theirproduct offering to include local and network pack-aging which will help drive revenue for them.Russo: Sure. It's another unwired network op-tion, just like most networks. Maybe they canreally demo target these. It would be interestingto see if these networks are created by the groupsonly selling their stations or farmed out (Google,perhaps?) selling all of them regardless of own-ership. Either way, we are a few years away fromthis being viable.Feinberg: Sounds like an interesting idea, don'tsee why it couldn't happen.

Next topic, of course, was the biggest non -

story of the last six months-Google Radio/Google Audio. The trade press, including us,has been speculating and chasing rumors ontheir entry into radio. Right now (as of press time), there arenot enough inventory deals to make them a major player inthe radio inventory biz. However, with big inventory deals sup-posedly being negotiated with just about every radio groupout there, the game may soon change.

What's your take on the Google Audio product forradio? Are you planning on using it?

Warnecke: I'm fascinated by the repurpose of all this, but I'm stillnot seeing how it becomes an everyday part of negotiations andaudience delivery. It still, in my mind, falls into the innovation/

wouldn't this be interesting category rather thanthese are the big -gun reach builders yet. I like it, I

just don't know that it's standard yet.Crawford: They don't have any one total marketfor me to test. They have stations in marketsbut they don't have a total market. I told themthat I would be happy to test it if they had a totalmarket.Vasey: It is not really a platform for our currentnational avails.McNew: Now let me get this right. Since PhiloT. Farnsworth first sketched his idea for televi-sion in 1922 for his science teacher, radio sales-people have been saying they are smarter, taller,faster, and better than anybody selling TV. In factthey say they are the best of the best when itcomes to selling any media. To listen to these"giants of industry," selling radio is a special call-ing. Why? Creativity so they say. According toradio salesfolk every person selling newspapers,magazines, cable, satellite radio, TV, and cellphones could benefit from a course in selling ra-dio. And, guess what? According to these sameradio leaders only a small percentage of thoseapplying for a sales job could even make it sell-ing radio. So, if we were talking about the GoogleTelevision Product we might logically ask: What'swrong with this picture? But we're not, we'retalking about the Google Audio product for radio.So what's wrong with the sound?

If you're a professional product mover in radiowhy would you want an internet company sellingyour medium? Can they do it better? Can they writescripts for local advertisers? Can they help in theproduction of spots? Can they package all the ele-ments of a campaign better than an actual salesper-son? Can they come up with national campaign ideasthat drive an advertiser's message right down to thelocal market? In short, if you're the world's greatestprofessional product movers why would you evengive an internet company access to your inventory?

All of that said, yes, we've seen the Googleproduct. It certainly has some benefit forsmaller advertisers who may have less restric-tive media plans, and who can benefit fromremnant inventory. It's kind of interesting thatGoogle's first forays into the business weremagazines and newspapers, the only two me-diums where you can add a page. Their nextpush is radio. Do they assume that radio has

excess inventory? Or that radio broadcasters value their inven-tory so lightly they are willing to allow it to be sold as a com-modity? The Google product and those like it are here to stayparticularly if media companies provide the keys to the king-dom, which is their inventory.

Kathy Crawford, MindSharePresident/Local Broadcast

Patrick McNew, PHD Detroit/Local Media Network EVP, LMNDirector of Operations

Rich Russo, JL Media's SVP/Director of Broadcast Services


Swed Stone. The product and its target has yetto be defined in its entirety-we have used it al-ready to a small degree. Not sure if the largeragencies will ultimately be their business model-if so, we will evaluate.Russo: There is no take on it yet, they haven'tbeen able to secure enough inventory. If it is ad-vantageous to our clients, we'll treat it as anyother radio vehicle.Feinberg: It has potential, but ultimately will relyon the total numbers of affiliates they have andthe quality of the impressions they can sell. I thinkthe bigger play for them is to incorporate theGoogle search technology into a radio campaign.That could be powerful.

Is satellite and Stern becoming a validad vehicle for you? Why or why not?

Warnecke It is. The degree to which we use itvaries, but we've been using it almost from thebeginning for our clients. We see the value inthose audiences. Are you going to tell me some-body buys Runner's World because it's a big reachmagazine? No, they buy it because they recog-nize that's their consumer. The difficulty lies infitting that lower audience figure into a traditionalmedia metric. You're used to having lots and lotsof listeners and now you're not.Vasey: We have purchased satellite radio for sev-eral clients. However, our investment in thatarena is minimal. We currently do not purchaseHoward Stern for any of our clients.Kim: Satellite radio has become an integral partof our radio buys as we try to extend reach withthe newer forms of radio like satellite andInternet. Some of our clients bought HowardStern when he was on terrestrial radio and wantto continue the relationship now that he's on sat-ellite radio. They like the way Stern can createchatter with his live reads.McNew: We've certainly looked closely at satel-lite and we've dabbled in it. There's no questionthat satellite has a very loyal, but small, following.We may have to wait for Howard Stern to get an-other $83 million dollar bonus for creating an in-crease in subscribers before satellite becomes abig part of our radio plans. We were also thrilledto see in an article in the January 9, 2007 NY Timesthat Howard Stern is now censoring himself.Swed Stone: Yes. Satellite radio offers some veryattractive programming and sponsorships acrossvarious genres-some of our clients listen.Russo: Stern is his own entity, if a client wantshim he's valid, but of course there are contentconcerns for some. As for XM or Sirius, it's nottruly valid yet and won't be until they release in-dividual channel info on listenership. Hopefullywith PPMs maybe the channels will get pickedup and we'll get some data.Feinberg: It's valid in that it's real. However, thesame challenges face us with Howard on Siriusas they did when he was on terrestrially....contentand price, plus with Sirius there is the issue ofaudience confirmation. I think for marketers whobelieve Howard works for them no matter whathe's as valid as ever.

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NEW MEDIA JENNIFER LANE

Developing interactivedollars for broadcasters

There are several reasonswhy Internet radio is the ra-dio industry's best bet forrevenue growth for the nextfive years. First, Internetradio's audience is growingfast. According to BridgeRatings, it will top 72 millionthis year, which is almost50% growth in 12 months!

This rapid growth trenu is not new, and is projected to continue foryears. Driven initially by the penetration of broadband, the secondwave of online radio audience growth will be driven by the expan-sion of wifi which will bring ubiquitous access to the internet. We'realready seeing growing availability of in -car and handheld devicesthat are music capable. According to recently published researchfrom Telephia, there are now 23.5 million mobile subscribers in theUSA who have phones with music players. The number of consum-ers with music -enabled phones is up five times from the same pe-riod in 2005 and nearly 20 percent of the new phones purchased inQ3 2006 were music capable. Apple's music enabled iphone prom-ises to increase those figures still more. And last week Avis an-nounced a partnership with a company called Autonet - they makewifi access units that work with a car lighter to make cars wifi en-abled. All these things point to huge continued growth for onlineradio for years to come.

That will lead to growth in revenues related to Internet radio ad-vertising as more and more advertisers follow the audience. Internetradio advertising is in its infancy. Advertisers and agencies are learn-ing more about this new advertising medium and its assets. Terres-trial radio companies have begun devoting resources to Internet ra-dio and are now streaming many of their stations. "Streaming is akey focus for Entercom in 2007; our most passionate listeners spendhours a week listening and interacting with our stations online, andwe are creating stream -only content to lengthen their engagementwith our brands," says Entercom's Sandy Smallens, SVP, Digital.Currently, terrestrial radio's audience on the internet is small and isdwarfed by online only brands. As broadcasters begin to utilize theirstrengths to build an online audience, terrestrial radio's audience onthe internet will continue to expand and surpass many online brandsdue to better content and greater resources.

The second reason broadcasters should put their eggs in theInternet radio basket is that internet radio is precisely what advertis-ers are looking for. Engagement and accountability are big words inthe advertising world these days. Advertisers want to communi-cate with consumers via channels that provide consumers the chanceto interact with their brand. Ideally they want to utilize channels thatconsumers strongly identify with. Wow! Radio stations already knowhow to build an emotional bond with their listeners. Online radiotakes it one step further and puts it online where the listener canclick, choose, look, and send, making online radio an ultimate en-gagement communication channel.

Internet radio's featured unit is the audio with synchronized ban-ner on the media player. "The synchronized banner is a huge asset

that Internet radio stations need to universally adopt. When adver-tisers tie the banner into their audio message-'Click on the bannernow'-they can create a fantastic, truly interactive opportunity." SaysKurt Hanson, CEO of Accuradio.com, one of the country's leadingmultichannel internet based radio stations. One of the first Internetradio campaigns to do this was one for the United States PostalService, which encouraged listeners to notice and click on the ban-ner on their media player to buy stamps online.

To realize the revenue opportunity that Internet radio offers, broad-casters need to resist the urge to sell it as another form of radio andinstead persist in pursuing dollars dedicated to online ad budgets.Internet radio is not just radio, and should not be analyzed, boughtor sold against standard market cost per points for several reasons.First, a standard comparison with broadcast networks or stationsdoes not acknowledge that the audience is fully concentrated onlineand can be immediately motivated to interact online. Second, thebanner needs to have a separate value assigned to it. Since radiobuyers are not equipped with the tools to provide analysis for inte-grated campaigns, the seller is forced to sell the banner as "addedvalue." Thirdly, from a strategic standpoint, selling internet radio aspart of a radio buy does nothing to increase radio's share of theadvertising pie. To avoid simply slicing and dicing the same dollarsin different directions, it's important to position Internet radio as anonline media component. This requires a strategy that includes adedicated sales effort, and the right audience measurement tools.

The world of interactive agencies is very different than that of tradi-tional agencies. Planners and buyers are focused on results. Cam-paign planning is fluid based on those results. Interactive agencieswere born and bred on banner campaigns which provide an extremelyhigh level of accountability. Campaign analysis is sophisticated, in or-der to play in the online advertising world, Internet radio sellers needto be similarly equipped with tracking solutions and planning toolsthat are based on actual data. "With Internet Radio, advertisers canobtain the same impression measurement they have been accus-tomed to with other forms of interactive advertising. This world doesnot rely on estimates," states Robert Maccini, COO of Ando Media,LLC a leading Internet radio audience measurement and ad insertionfirm. Plans must include data on the website and streaming impres-sion capabilities of the station or network. Tracking methods must beused to track the delivery of audio impressions as well as the deliveryof banner impressions. Reporting must include actual delivery datadocumenting real impressions on the audio as well as the bannerunits to establish separate value for each.

The Internet is a favored access point for media, particularly mu-sic, and that has driven the rapid growth of the online radio audi-ence. More devices mean more ways to listen in more places. Onlinebroadcasters can offer audiences interactivity, selection, and infor-mation. They can offer advertisers excellent communications chan-nels for actively engaging consumers. It's a new media world, onethat Internet radio can maximize by focusing on providing opportu-nities and analytics focused on engagement and accountability.

Jennifer Lane is President of Net Radio Sales. She can be reachedat [email protected]

16 / FEBRUARY 2007SMARTMEDIA

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RAB 2007 JACK MESSMER

Debut RAB conference for HaleyJeff Haley became President and CEO of the Radio Advertising Bureau (RAB) last September 18th, so the RAB ManagementLeadership Conference in Dallas February 8-11 will be his first. Prior to being recruited for the RAB position last year, Haley wasSr. VP of Global Marketing for Time Warner. He was initially recruited to Time Inc. to be part of the launch team for EntertainmentWeekly, which RAB described as "perhaps the most successful new magazine launch of the last 20 years." He also served asSales Development Manager for Time Inc. and Midwest Marketing Manager, both corporate roles designed to package thecompany's products in multi -title buys to its largest clients. In 1992, Haley joined Time Warner's Six Flags Theme Parks as VicePresident of Sponsorships responsible for sales and promotions. He later worked at AOL in a business development role beforejoining the Global Marketing group in 2001. In his last position at Time Warner, Haley managed a team of sales, account andcreative services staff and was responsible for creating and marketing advertising based programs (built using the media assetsof AOL, Time Inc. Turner, Time Warner Cable, Warner Brothers Entertainment, HBO and New Line Cinema) to some of thelargest advertisers in the US.

Steve Newberry is President and CEO of Commonwealth Broadcasting Corp., a small -market radio group based in Glasgow, KY.He is chairing the planning committee for the RAB Management Leadership Conference for the second straight year, becoming thefirst person ever to do so.

Q. Jeff, you've now had a few months onthe job. Have you gotten your armsaround the radio business?Jeff: Well I don't know that anyone everycompletely gets their arms around the radiobusiness. It's a dynamic enough industry thatI'm fascinated by it still and it continues toevolve and my perspective on it continuesto evolve over time. After 100 days or so Ido feel at least capable of carrying on a con-versation and getting engaged and that'swhat we're really starting to do this monthand this year and really engage in a lot ofdifferent areas across our three main func-tions which are: sharing knowledge; facili-tating consensus and driving revenue.

Q. What are the most important thingsyou plan to focus on in 2007?Jeff: I think in those three areas it's the ideaof sharing knowledge, which is kind of en-hancing our training-looking at our mix ofboth on site and online resources for folkswith regard to training-it's going to be im-portant. I think looking to the one true thingwe can say about the most divergent issuesout there facing radio today, and that's stillreally in development, finding those commontruths that we can all get behind on a con-sensus standpoint. Then lastly, I think mostimportantly, we're going to focus on a roll upthe sleeves advertiser -by -advertiser approachto develop new experiences with radio. That'sreally the driving revenue piece in what wedo and that's going to be key for us in '07.

Q How important is electronic audiencemeasurement to the future of radio?Jeff. I don't necessarily look at it as lust anissue of electronic audio measurement. Theway I answer that question is as it reflects

across the whole landscape in media andlooking across all media choices that are outthere for marketers today. Media is movingfrom a perception -based measurement to aperformance basis, so we're actually mov-ing from what people think they watched,read or listened to, to actually behaviorallywhat they've done. We're going from per-ception -based to behaviorally -based measureand how we measure it in most cases is anelectronic solution, but it's that real shift thatwe have to be on the bus for, which is whereno longer media will be measured on a per-ception basis-it will be measured on anactual behaviorally basis. It's important thatwe are part of that shift. Which vendors weuse and which time frame and how that allworks, I don't think we're at a point we canreally say just yet, but I think we need to besure and certain that as an industry we arebehind behavioral -based measurement.

Q. It seems that RAB has two main fo-cuses: providing resources for localsales that primarily helps smaller sta-tions who may not have the corporateresources of the big groups; and pitch-ing radio to potential national advertis-ers which, when successful, primarilybenefits big market stations and the biggroups. Does that work well in servingthe entire radio industry?Jeff: To me that approach seems a little morebifurcated than I would like. As an ideal, whatI would like to shoot for in sharing knowl-edge, facilitating consensus and driving rev-enue, that all of our activities benefit all ofour members all of the time. I think you couldargue that online services with regardto information and trading, that if they areeasily accessible, I think you could argue 0


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RAB 2007

that that serves a large market seller as wellas a small market seller. I think you couldalso argue that if one of the leading nationaladvertisers, whether it be a big box retaileror a package goods company, comes out andmakes a very transformative bet on radio,and it's well known and it's out there, thatthat is going to have an impact on everysingle advertiser in radio because, one, it'smore revenue and takes up limited amountof air -time and, two, it sets the course forwhat all advertisers do. Like any industry,advertising benefits from those bellwetherleaders and I think we can target those lead-ing national advertisers. I think all advertis-ers will look to that whether they be a localjewelry store or a local supermarket or a na-tional advertiser, they'll look to how the folkswho are on the cutting edge are doing andthat's going to benefit all.Steve: I would have to think that the majornational advertisers demonstrating interest ingood radio advertising, that is something that,while we may not get direct dollars back insmall markets from the national accounts, itis hugely important for the small market guysto be able to demonstrate that our media iseffective and we can translate that into localsales with our client strategy.Jeff: I think if you look at the opposite of that,radio has, I think, been on the receiving end ofa lot of grumpy investor stories because of someof the hype that has been out there in earlieryears. That leads into the general opinions ofwhat people think about radio and what we'dlike to do is create success stories in advertis-ing that just start to get into the national pressthat really shows what radio is; which is a tre-mendous reach media with tremendous localimpact and that works for everybody.

G. What is the thing you have learnedabout radio that has most surprised you?Jeff: To me it's the diversity of how peoplecan be successful in this business. Radio isa tremendously profitable business and itcan be tremendously profitable for folks-you know, operators like Steve Newberry.It can be tremendously profitable for bigcompanies like Bain Capital, which is a bil-lion dollar investment fund. The fact remainsthat you can build a very strong, lucrativebusiness in a variety of ways, in a tremen-dous variety of ways in radio, and that'sexciting to me because it shows real vital-ity for us as an industry. I think the otherthing that I feel very confident about is thestrength of our listenership. It has not beendiluted to the point of many other mediumswho are out there. It's still strong, still grow-ing and the engagement of our listener withthe commercials is strong. I think the

Coleman Research on the 92% of radio au-dience that stays tuned during commercialbreaks is phenomenal. Its things like thatthat I continually learn and take a new per-spective on.

G. Aside from Jeff Haley, what's new at the2007 Management Leadership Conference?Jeff: Oh I think the number one ground break-ing news about Dallas is that for the first timein the history of our 27 annual conferenceswe have a returning leader, Steve Newberry.He succeeds a long list of folks who have ledthis conference like Jeff Smulyan, PeterSmyth and Skip Finley. We are very, very ap-preciative and very, very rich to have some-one like Steve to agree to do this a secondyear and that's our big, big news.

0. How did that happen Steve? Did youstep off to take a phone call when theyvoted or something?Steve: That's exactly what happened. I wentdown the hallway and the next thing youknow I'm doing it twice.Jeff: It's really great. He's been a real part-ner in this process of me getting started hereand I'm looking forward to this three-dayevent. We're calling this meeting high tech,high touch, high ROI and I think what we'rereally hoping to do out of this is really, this iskind of an interesting year with a lot of newtechnology and a lot of the issues that, interms of the money, are starting to get real.The audience is starting to get real and themoney is starting to get real with regard tothe interactive aspects of our businesses anddistribution for our content. How we inte-grate that into our day-to-day station salesprocessing is really an interesting piece.

0. Radio has to deal with iPods, satelliteradio, the Internet and other new tech-nologies. Should those be viewed as com-petitors or opportunities, and what canpeople expect to learn at the conferenceto deal with those new technologies?Steve: I would call them both competitorsand opportunities. Competitors, not so muchfor the ad dollars, they are competitors fortime that people spend listening to audio andI think they provide a very fertile groundwhere if we put really good content out I

think it will become important for people todownload it on portable devices. So it's aworld of opportunity. We were joking aminute ago about how did I end up doing ittwo years in a row and the serious answeris that a year ago they wanted someone froma small market to get involved and then inthe transition year Gary Fries asked me if I

would do it again and I told him I'd be glad

to. I think there is so much opportunity there,whether it's Glasgow, Kentucky or New YorkCity. People are still walking up and downthe streets with new technology; new de-vices and I think we can really capitalize onthat for our future.

(7) Why should people come especially thisyear? What's special about 2007 Conference?Steve: I think that we're coming from a yearthat as an industry, we saw challenges lastyear. I think those are indicative not somuch of the radio industry, but probably theoverall economy changing. I think 2007 haspotential to be a great year and the reasonthat I would say for people to come to thisconference is to get a good solid under-standing of what the landscape is and getthe tools and the knowledge that you needto be able to adapt to the changing land-scape. Keep doing the same thing you'vealways done and you can get the same re-sults, but I think there is so much upsidefor us and I'm sending people this year be-cause I think we are facing new challengeswhere you really have to invest in educa-tion and knowledge.Jeff: Yes it's a very fresh conference withnew ideas and new faces. More than half ofthis year's sessions feature topic and pre-senters that have never been heard frombefore at an RAB Conference.

Q. What are you going to learn at the con-ference from Betsy Lazar from GM that'sgoing to help people understand the autoindustry and figure out how it's going torelate to radio in future years?Jeff: The automotive industry may be theonly industry that's changing faster ina more dynamic way than radio. I thinkwhat Betsy was maybe going to say to-day is going to be different than what sheis going to say in three to four weeks.We're in kind of a dramatic change thereand I think she'll give us the latest andalso how radio might play across the land-scape of those changes.

Q What about the human side? We hear alot of times how difficult it is to hire and keepgood sales people. How is the conferencegoing to tackle any of those challenges?Jeff: Well that's our focus on High Touch andbringing sessions such as Leading Top Bill-ers To Higher Performance and Proving YourClosings Percentage. All of those aspectsof things are still a key part of radio. Youknow, you've got the influence of technol-ogy but it still has to be translated by humanpeople and that's the reason for the HighTouch element in this conference.


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NEWSTALKCARL MARCUCCI

Mark Levin:Sounding the alarm for our freedoms

ABC Radio Networks' Mark Levin has become one of the hot-test properties in Talk radio, via his top -rated show on WABCNYC. He's one of America's preeminent conservative commen-tators and constitutional lawyers, and has appeared on hundredsof television and radio programs. Levin is also a contributingeditor for National Review Online, and writes frequently for otherpublications. His book "Men in Black" was released February2005 and quickly climbed to Number 3 in the nation on the NYTimes Best -Seller list.

Levin also served as a top advisor to several members ofPresident Ronald Reagan's Cabinet. In 2001, the AmericanConservative Union named Levin the recipient of the presti-gious Ronald Reagan Award. He currently practices law inthe private sector, heading up the Landmark Legal Founda-tion in DC.

Levin took over the WABC 6:00 PM slot on September 2,2003. Before that, he hosted a popular Sunday afternoon pro-gram. Mark has been a frequent guest and substitute hoston The Sean Hannity Show, and has also been an advisor toRush Limbaugh, who frequently refers to him on the air withthe nickname "F. Lee Levin."

In the Fall 2006 ratings Levin is #1 on the AM band across theboard, in virtually all demos in The Big Apple: Monday -Friday, 6pmto 8pm: AM news, talk and sports stations: 12+ #1 WABC 4.1;Adults 25-54 #1 WABC 2.9; Adults 18-49 #1 WABC 2.4; Men 25-54 #2 WABC 3.7; Women 25-54 #1 WABC 2.0; and Men 18-34 #1WABC 2.2.

Here, Mark talks a bit about his love for Talk Radio and few thingswe need to be aware of when it comes to that very importantdocument from our Founding Fathers.

Tell us how your Landmark Legal Foundation is fighting un-constitutional rulings such as the 2005 Eminent Domain case(Kelo vs. New London) where private property may now betaken for non-public development (for greater tax revenue)locally. What are its other big fights right now?Landmark has been involved in school choice, propertyrights, unconstitutional taxation, free speech, and free en-terprise cases since 1976. One of the biggest cases wewere involved in several years ago dealt with over 20,000farmers and ranchers who owned land along the Platt Riverin Nebraska. A couple hundred environmental groups de-cided that they wanted to change the flow of the river. Ba-sically they wanted to eliminate all the irrigation activity along200 miles of that river which would obviously destroy allthe land in many cases that have been in families for sev-eral generations.

They did the same thing in Oregon, too.They've done it in Oregon they do it all over the country. Theytarget these areas. Anything to destroy property rights, prop-erty ownership, in the name of the children of course. So any-way we got involved in that case and spent many, many yearson that as lead counsel. We had a deal with the federal bureau-cracy at many levels-the Fish and Wildlife Service, Environ-mental Protection Agency and so forth. The result was a com-promise in which the landowners were in fact able to maintaintheir land and irrigate their properties. So we called it a com-promise but in fact it was a victory.

Kelo was such an extraordinarily important case that a num-ber of groups were involved in providing advice and counselto the litigants. We were not a named party. The Institutefor Justice, as well as private counsel, did an absolutely su-perb job. The problem is when you have five activists on theSupreme Court who do not respect the original meaning andtext of the Constitution, no matter what you argue will beunpersuasive to them. This is the problem with our judiciarytoday-especially the Supreme Court. That majority of five,in my view, acts as an American Politburo and they rule inways that are tyrannical. If you're not going to comply withthe Constitution then your're undermining the rule of law. Ifthey're undermining the rule of law what in the world are theseJustices doing? It's no different than any other committeethat would be sitting there and making decisions about howthe rest of us are going to live.


Tell us about your book "Men in Black."I'm pleased to say we sold 200,000 copies of a book about theSupreme Court, which is unheard of. The impetus behind writingthat book was to give a plain English explanation of how our liber-ties are being stolen from us and how our system of govern-ment is being undermined by a handful of individuals who serveon the Supreme Court; and how this has actually been going onnow for decades. We have a Supreme Court that continues toseize power from the people; continues to deny them their fran-chise. Yes, we vote, but if five lawyers on the Supreme Courtcan continually and repeatedly neutralize our votes then just howfree are we? The court is constantly legislating, constantlymaking decisions that belong in the Executive Branch-evennow about the war and illegal immigration. What I wanted tolay out was that these are not exceptional human beings in thesense that they are smarter or better or more wise than therest of us. They are not supposed to be making these deci-sions. They have a job. It's a limited job, it's an important jobbut it's not the job to run the country and impose their personalpolicy preferences on the rest of us.

How do you differentiate your program from the other con-servative radio hosts out there?It depends who the hosts are. I just do my show regardless ofwhat the other hosts do. My mentors are Rush Limbaugh andSean Hannity. They are dear, close friends of mine. WheneverI need advice I seek their advice and they are extremely willing ingiving it to me. So I'm blessed by that but I am who I am. I have

my own personality. I bring my own background to the air and Ithink it's unique. I served in the Reagan Administration, cam-paigned for Ronald Reagan when the Republican establishmentopposed him. I served in the Reagan Administration including asChief of Staff to the Attorney General, Attorney General [Ed]Meese. So I have an experience that some hosts don't have.

I was never a professional radio talk show host, although I wouldlike to underscore that I've always been a professional talk radiolistener. I've listened to talk radio since I was 12 years old. I

listened to the Talk talent in Philadelphia and New York, BobGrant, Gene Shepherd, Dominic Quinn, Bernie Herman-names people may not remember but I certainly do. I was a talkshow fanatic when it came to listening to it. I went to bed with itand I woke up to it. That's where my interest came although Ididn't pursue it originally.

My show in many ways is unpredictable but I like to have a goodtime. If there are major issues of the day I will deal with them butwhat I view as a major issue others may not. I am well aware thatI'm hitting cleanup in the evening and at night after a full day of talkradio so I have to bring something unique to the microphone. Theaudience is extremely smart, particularly in talk radio. I don't takethem for granted. They can go elsewhere. In New York they have47 flavors. I want them to come back to me every single night. Myshow, whether it's different or not, what I try to do is bring solidsubstance on the issues. I bring my own strong opinions. I like tohave a good time so I'll joke around and play around as well. WhenI decide to do one thing or another is unpredictable.

You are known to love the radio medium. Any advice to itsoperators, some of who are struggling a bit right now in theface of new media?My advice would be as in any other business, you want to hirethe very best talent you can. A radio station means nothingwithout top notch talent. I wouldn't try to be too clever. Youdon't have to go with any particular fad. I know it works, they

know it works and the ratings tell us what works. I'll give youan example in talk radio-why in the world would you want toprogram 18 or 24 months out from a major Presidential elec-tion, shows that don't take advantage of that? For instance youwouldn't program a food show when you're coming on a majorelection or necessarily a business show, because it's out of syncwith that the public's interested in. Also why would you try andforce a liberal agenda into a market that is largely a conserva-tive market?

You're now close to 100 affiliates in just a year. What's thesecret to clearing so many, so soon?Well our competition likes to pretend that the only reason we'reable to break out from the crowd is because we're on the sevenABC stations. We're on over 20 Clear Channel stations. We're onEntercom, Emmis, Salem, Cox and Cumulus stations. Let me putit to you this way, if you don't have ratings you're not going to geton other stations. It's really that critical, so the product has to besaleable. Then you need a team that's going to help market theproduct and I have, I feel, a terrific affiliate team lead by DarionMelito. I also have a terrific boss in Phil Boyce who is Vice Presi-dent News/Talk at the ABC Radio Network and also the ProgramDirector at WABC, and he was the one who found me. He wasthe one who tried my talents and he's the one who urged alongwith Mitch Dolan, the President of ABC Radio and a good man,that I be syndicated.

To be honest with you, the syndication field is very cluttered.There is a weeding out that's going on now and that's good for thebusiness. You want voices that don't all sound alike. You wantpersonalities that aren't all alike and there is a separation takingplace right now and that's been helpful to me because I just thinkour show is different in terms of content and entertainment andapparently so do other people.

What are the most important topics you're tackling right now?What are you hearing from listeners?There are really two things that sum it all up-liberty and security.Liberty, whether it's a rogue Supreme Court or taxes or spendingor congress conducting itself in a way in which it denies us certainrights. Security, and that would include the border and illegal im-migration as well as terrorism and homeland security such as thevarious efforts we're undertaking to protect our citizens with inter-cepts of enemy communications and so forth. This is what tiepublic is upset about. The public is engaged, intelligent, wantsanswers and wants to discuss these things. They want to be en-tertained too and that's my job to entertain them. They don't wanta bunch of superficial platitudes. They don't want a bunch of phonysnows that may make sense to a few executives sitting in someoffice somewhere. We're in the middle of a war for God sakesand if you're not going to discuss things like that on talk radio thenwhere are you going to discuss them?

By the way let me just add this. I hear it said that political talkis on the way out. Well what's meant by this? What is politicaltalk? Political talk is talk about culture and society and currentevents. Political talk is talk about liberty and national security.In other words, political talk is about how we as a people wantto shape our futures. So people who make a statement I kethat don't even understand what political talk is all about. Typi-cally you hear that from people who are programming music orbusiness talk or trying to find some kind of niche to advancetheir own careers or business agendas. The fact of the matteris political talk covers the full horizon of issues that most Ameri-cans face every single day.


ENGINEERINGEDDIE FRITTS

GSSNet extends utility of FM networksHistorically speaking, broadcast stations havebeen at the front lines in providing emergencyinformation to their audiences. For example,the EAS (emergency alert system) with whichAmericans are so familiar - "This is a test ofthe Emergency Alert System. This is only atest .... " - has been used for decades to warncitizens of emergency conditions, and it wasin 1963 that the president permitted state andlocal emergency information to be transmit-ted using the system. In more recent years,local emergency management personnel haveused broadcast stations, cable and wirelesscable systems along with radio and cellular dis-patches to distribute information to local re-sponders.

However, when the tragedy of Sept. 11,2001, occurred, it became clear that the com-munications measures in place were inad-equate and that there were fundamental flawsin emergency responders' ability to exchangeor receive information during a crisis.Firefighters working within the World TradeCenter towers were unaware of police radiowarnings to exit the quickly failing buildings. Infact, many firefighters in the remaining towerhad no idea the first tower had fallen. The prob-lem wasn't that they didn't have communica-tions systems in place; the issue was that thosesystems simply didn't hold up under cata-strophic conditions. Different responder groups- NYPD, FDNY, EMS, Port Authority - used dif-ferent UHF -based and VHF -based radio sys-tems with varying degrees of success.

With 9/11 and other national crises under-scoring the need for a better plaform for com-prehensive and complete emergency alertmessaging, Global Security Systems (GSS)developed a solution that takes the role ofbroadcaters to a new and more sophisticatedlevel. The GSS single -point to multipoint mes-saging system uses the FM RDS (radio datasystem) frequency, the standard for sendingdigital text information along with an analogFM signal.

The "GSSNet" alert and notification systemuses the existing nationwide FM broadcast in-frastructure to provide Target Area Coveragemessaging and a proprietary messaging sys-tem that allows secured and encrypted datawith layered and targeted messaging to"need -to -know" personnel. Command andcontrol centers (message point -of -origination)are installed with full redundancy, and mes-sages are transmitted from a typical FM radiotower (a single point) to multiple receivers inthe coverage area.

Fixed -wireless substation receivers andwireless receivers are made available to bedistributed to all counties and other jurisdic-

tions throughout the state as defined by theauthorities. GSS uses a standard commercialFM receiver chip that can be inserted into pag-ers, smoke detectors, cell phones, PDAs, andother like devices to alert responders and pro-vide vital information as a situation develops.

The potential of this emergency commu-nications platform for public safety workers,first -responders and the general public is veryexciting. It's also an exciting opportunity forFM radio broadcasters, who will also find thatthis network offers new options for revenuegeneration. Emergency alertstake priority on the system andare facilitated by the country,state or federal officials con-trolling and subsidizing thesystem. However, at timeswhen there is no emergency,which is most of the time, thesystem can be used by FMstations as a private networkto communicate encryptedand non encrypted data to avariety of audiences.

Private use of the systemcould include networks of phar-macies, or a network connect-ing university students andother types of schools with re-ceivers in their classrooms.Companies relying on a nation-wide fleet of trucks could takeadvantage of the nationwidecoverage to connect with all ofits units, or just those in a par-ticular geographic region. Inmore serious circumstances,the network could be used bya nuclear power plant to alertpeople in the immediate areaof the possibility of a melt-down, or it could be used similarly by a majorplant to notify the surrounding community ofa chemical spill.

Because this network is established as partof a nationwide emergency communicationsvehicle, messages are encrypted and directedonly toward intended users. Furthermore, con-trol over the system is limited to authorizedadministrators and official government enter-prises at the county, state or federal level. Asa result, the risk of abuse is very low.

Among the reasons the GSS solution is sopowerful is that the broadcast signal is somuch more robust than cellular signals. Over-lapping signals from different stations helpsto ensure that there is always a signal thatcan be received.

The national emergency communications in-

frastructure has not been improved greatlyuntil now, but GSSNet represents a significantenhancement to officials' ability to transmitcritical information to those who need it. Wefeel this concept is an excellent proposition,and the technology already is tested andproven through a real -world pilot test incorpo-rating over 50 FM radio stations across thestate of Mississippi.

The Mississippi statewide emergency alertnetwork was designed and delivered by GSSunder contract to the Mississippi Office of

Homeland Security. During a test of the FEMADEAS (Digital Emergency Alert System),driven out of Virginia, the GSS system dem-onstrated live interoperability by delivering EAStext messages via FM radio signals (throughMississippi Public Broadcasting and privateFM stations) to the cell phones of test partici-pants in Jackson.

Americans have become all too aware thatrapid response to crisis situations can save lives.With continued deployment of GSSNet acrossthe United States, broadcasters can play aneven more vital role in the safeguarding of thepublic safety and help first -responders providethe type of aid required in times of turmoil.

Eddie Fritts, former NAB CEO, is founder ofThe Fritts Group consultancy.


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RESEARCHSHARI ANN BRILL & RONNIE BEASON

The great ad ratings debateNew metrics needed, is Nielsen's plan is the answer?On January 16, Nielsen Media Research

formalized its plans for the measure-ment as well as the reporting details forits new service that produces averageratings for commercial minutes. If youhave been keeping up with the ongoingmedia coverage that has been followingNielsen's initial announcement since lastsummer (including an article in The NewYork Times back in the fall), you mighthave gotten the impression thatNielsen's plans to produce commercialratings via their existing People Metermethodology is the tool the industry isclamoring for. Youmight also have cometo the conclusion thatvarious vested -interestgroups such as cablenetworks, syndicators,and-last but notleast-media agencies,had been standing inthe way of progress.

Everyone agreesthat better televisionresearch is needed.Advertisers, whospend about $70 billioneach year on TV ads,are justifiably con-cerned about the re-turn on their invest-ment. Their questionshave taken on justifi-able urgency as TiVoand other DVRs allowAmericans to zip through ads. Thequestion at hand, however, is this: doNielsen's Commercial Minute Ratings.Answer the questions advertisers needanswered? Many think not.

The Nielsen People Meter is designedto measure national program audiences.A continuous measure, it has the capa-bility of reporting individual tuning atminute -by -minute increments. It ac-counts for program minutes containingnational ad breaks only, not local breaks;so all local commercials are treated asprogramming, not commercials.

Additionally, the Commercial MinuteMedia information tape (MIT) is ham-

strung by the fact that it doesn't returna pure commercial rating measurement.Rather, it rolls up program minutes thatinclude one or more seconds of nationalcommercial time. Since pods often over-lap minutes, a more realistic measure ofpotential ad exposure would requireNielsen to report viewing on a second-

by -second basis, not minute -by -minute.Nielsen cannot currently attain that levelof resolution, and has no plans toachieve that in the near future.

Recently, TNS Media Intelligence

forwarding or any other form of commer-cial avoidance, this data is of question-able value in today's environment.

Understanding commercial viewershipis much more complex than the NielsenPeople Meter and other existing meth-odologies can measure. Many would ar-gue (and some could prove) that variousfactors affect viewership: the length ofa pod and its position; the program thatthe commercial airs in; the brand and thecategory that it competes in; the com-mercial itself; frequency of exposure to

the commercial; targetaudience, multitaskingactivities, etc. Our ownviewing habits can giveus insights into whatmay or may not be hap-pening during commer-cials-we are indeedconsumers ourselves.

The push for theNielsen CommercialMinute Ratings now isabout recycling oldnumbers, not an accu-rate metric to deter-mine the number ofviewers who saw a par-ticular commercial.Good research is ex-pensive and up-to-dateresearch design is criti-cal in getting the an-swers to the questionswe need. Nielsen and

other companies already possess bettermethods of more accurately measuringcommercial ratings. As an industry, weshould urge that these to be exploredand more fully developed. We owe it toour advertisers. Perhaps it's time to re-visit the Passive People Meter.

made the case to the Advertising Re-search Foundation that it can providemore accurate data than Nielsen MediaResearch alone. The networks appear in-terested, however TNS has only the abil-ity to measure set tuning, not individualpersons' tuning-an advantage Nielsencurrently has.

Quoted in The New York Times article(October 2006) is the 2005 American As-sociation of Advertising Agencies' andthe Association of National Advertisers'finding that on average only 5.6 percentof adults 18 to 49 years old actually skipcommercials. Since it is solely based onchannel -switching behavior, not fast -

Ronnie Beason is executive vice presi-dent, director of planning, Carat USA.Shari Anne Brill is vice president, direc-tor of programming, Carat USA. Sharialso co-chairs a Nielsen subcommitteeof The Council for Research Excellence.The subcommittee is called Media Con-sumption and Engagement.


CARL MARCUCCI

BRANDING

Striking a balance between dealersand manufacturersRod Alberts is EVP of The Detroit Auto Dealers Association (DADA),which organizes and runs the yearly North American International AutoShow. Their most recent show (100th Anniversary-Jan 13-21), drewmore than 700,000 attendees. Since its inception in 1907, the showhas grown from a regional event featuring 17 exhibitors to an interna-tionally -sanctioned show with over 90 exhibitors, adding more than500 million to the metro Detroit region in 2006. With the support ofDetroit area auto dealers, the NAIAS features more new vehicle de-buts and garners more media coverage thanany show in North America.

Automotive is still the single biggestcategory for radio advertising, with lo-cal dealers taking the lion's share. Whatdo you recommend radio do more andless of to keep the business at currentlevels or to increase it?From my standpoint, watching from theoutside and the competitive nature ofwhat's out there to purchase from on theInternet, radio, TV and newspaper, it's prob-ably the age old, very aggressive relation-ship side that you have to have with thepeople that make the decisions-within theline group or the dealership. It's such asubjective area because it's very difficult tomeasure after the fact any kind of advertis-ing you do. You have to be a believer in itand I think you have to be sold continuallyon the idea of the strength of what you haveto offer. I know everybody is taking a bit ofa hit with the Internet and the economy tooat times but radio has always been kind ofa strong, age old survivor in understandingwhat the capability and power of the medium is.

Radio has a great commodity and I think you have to be havethat customer relationship, you have to be out there all the timeselling it-kind of like [Detroit Radio Advertising Group President]Bill Burton does.

I'm a big believer in radio personally, we buy a lot of it for theauto show. I think dealers understand that if you're going to bespecific to buyers of what kind of car and products you have tooffer (which are very style driven now-it reflects people and whothey are more than it did 20 or 30 years ago), I think it's easier toofor radio to get in there and divide those demographics up andreally pinpoint who they want to sell to. It's a great strength thatyou guys have that not everybody has in other areas.

What are local dealer groups such as your own asking theautomakers for more and less of, especially in these challeng-ing times for some?I think everybody is looking to figure out who should take the bur-den. Here you are out there selling vehicles and one manufacturerwill say you're out there to sell our product, and the dealer is say-ing well give me the right product to sell. I think at times the

dealers, in my opinion, are looking for a better partnership with themanufacturers. They feel the manufacturer should take a greaterpart of the load to help them sell the product. Don't get me wrong,they are good partners, but I think at times, especially when theyare challenged, you have to really step up, sit down and talk itthrough between dealer and manufacturer. When you start hav-ing inventories that are bloated everybody is unhappy. It isn't aneasy task to try to figure how many cars are selling, what kind of

cars to build-the kind and volume.I don't get directly involved between the

dealer and the manufacturer as much but Ican tell you that it can be very challenging inthe relationship. It's kind of just like a mar-riage at times-when the times get toughthat's when you've got to sit down and talkit through and figure out how we both getthrough it because one way or the other theyneed each other. The franchise system hasworked for a long time. It's somewhat tra-ditional, but they've tried so many differentways to do it otherwise there is no doubtthat's the way to sell a car.

Now that you are really serving a worldmarket for automobiles, yet you're iithe domestic capital of auto manufac-turing, how do you strike a balance ofservice between foreign dealers and do-mestic dealers?We don't have that many challenges in-ternally because believe it or not from aDADA standpoint all the line groups (andwe have 13 of them from Toyota to Mazaato Nissan) work independently but collec-

tively when we meet every month. We have the leadership of eachof those line groups and there are a lot of common interests in theneeds and challenges we have as franchise car dealers, so wework very, very closely together. We are confident in keeping ev-erything on an even keel for all dealers because it's a bond wehave. Now when they walk out of the room and they've donetheir work here at the DADA, trust me that they are very competi-tive. The dealers are competitive between brands but also be-tween dealer and that's why it works. It's kind of like a footballgame. You have to have a little healthy competition to make thegame exciting and also to make it truthful for all.

Our strength (unlike shows around the world like in Frankfort,Tokyo, and Paris) our show in Detroit and other shows in the US areall run by dealer associations. That means that from Kia to GMeverybody is represented and equally balanced in what you do withfloor space allocation, press conference scheduling or whatever itmay be. If you go to another place where it's driven by the manu-facturing association (typically it's going to be that manufacturingcountry like Germany or France), they will have a bit of a strongholdon how the show will be laid out. So for dealer involvement, I thinkwe have a balance that makes for good decision -making.


Q3 TRADING

Three words:Univision, Univision and UnivisionThe third quarter of 2006 marked a continuation of a slow slide,from $3.365B in Q4 2005 to $3.28B, then $2.15B, and 03's $2.08B.Oh, but wait. There was that little $13.78 matter of the Univisionsale. That sort of changes everything, taking the quarter to $15.58B.So instead of a slow slide, what we have is a huge bulge in thesales chart we've been keeping since 03 2003. That $3.365B fromQ4 2005 was the highest total we've recorded thus far, so obvi-ously it has been blown out of the water. The Univision deal skewedheavily to the television side, accounting for $10.4B in value, com-pared to the radio estimate of $3.3B. What is most interestingabout this record, however, is how short of a life span it has. Whenwe repeat this little exercise for Q4 2006, the Clear Channel dealis going to blow Univision out of the water.

Station tradingQuarter Deals AMs FMs We Value

Q3 2005 151 75 87 42 $2,483,326,054

04 2005 113 88 143 19 $3,365,567,974

Q12006 139 105 121 10 $3,282,445,811

Q2 2006 144 93 132 33 $2,150,615,819

Q3 2006 136 94 183 96 $15,579,141,844

Univision puts urban skew on tradingSince the high water mark of radio trading after Telecom 1996came to an end, and in the face of ongoing television ownershipcaps affecting both local and national portfolio size, most of theaction has been in the boondocks. It has remained active. Radioratings services Arbitron and Eastlan are both adding territory totheir areas of operation, and there is a new group cottage industryfueled by returning veteran broadcasters who have either waitedout non -competes or simply become itchy for some action. Whilesmall market action was flat -to -slightly down, Univision fueled thetop numbers. The total of 144 in the top 50 markets is more thandouble Q3 2005, the highest total in this series.

Quarterly station trading by market size

Total Mkts Mkts Mkts Unrated

Quarter Stns 1-50 51-100 >100 Mkts

Q32005 204 37 37 55 75:

Q4 2005 250 69 34 54 93

Q12006 236 56 27 63 90

02 2006 258 32 30 97 99

Q3 2006 373 144 62 97 70

DAVE SEYLER

Radio was reasonably hot anywaySince we started doing this (after the ill-fated FCC owner-ship rulemaking and subsequent transaction freeze), quar-terly radio trading has only topped $1 B three times. Thiswould have been the fourth even without Univision. Add inUnivision, and it chases the $2.7B ABC -to -Citadel deal, fromQ1 2006, off the top of the chart. Again, it won't be for long,as the Clear Channel deal sits just off stage ready to claimthe high ground.

Radio only transactions

Quarter Deals Stns Value

Q3 2005 132 162 $481,196,053

Q4 2005 105 231 $2,301,767,974

Q1 2006 129 226 $3,103,495,811

00;0)2 2006 126 225 $358,665,819

03 2006 112 277 $4,351,951,344

TV dealing remains relatively hotTelevision trading would be well on its way to setting anew record without Univision, with about $827M in Q3value added on to almost $2B already recorded. Some largegroups have spent the year weeding the garden, while oth-ers have decided to exit altogether. The $10.4B value ofthe Univision properties puts the TV -only total way overthe previous high, when in 03 2005 total trading nosed past$2B. And no, Clear Channel is NOT going to blast this num-ber out of the water.

TV only transactions

Quarter Deals Stns Value

Q3 2005 19 42 $2,002,130,001

Q4 2005 8 19 $1,063,800,000

01 2006 10 10 $178,950,000

02 2006 18 33 $1,791,950,000

Q3 2006 24 96 $11,227,190,500

All charts © 2007 Radio Business Report, Inc.

28 / FEBRUARY 2007 SMART''

MEDIA MARKETS & MONEYJACK MESSMER

Gurus forecast the '07 outlook for radioWhat should radio operators expect for 2007? We asked a few in-dustry observers-analysts and station brokers-for their views onwhat to expect for both radio revenues this year and where stationprices/multiples are heading.

Larry Patrick, President, Patrick Communications2007 station trading will be dominated by the Clear Channel spin-offs. With so much inventory comingonto the market, owners and investors will want to see what pricing CC achieves for its stations,whether those stations go in one or several big blocks or trades and whether there are duopoly oppor-tunities that may fit their plans. This is the single largest group of stations hitting the middle andsmaller markets ever. This sale will tell the industry a lot about pricing for these sized markets.

Business overall in a non -election year will face some tough comparables from 2006 in selectmarkets. In those battleground states, like Missouri and Tennessee, for example, political revenueswere tremendous in 2006. Just replacing those revenues to stay even with 2006 will be a big job forsome owners. Overall, most projections seem to put revenue growth for the industry at the lowsingle -digit level in 2007. Despite this less than joyous forecast, Wall Street has regained someconfidence in radio and public stocks traded up 20 percent during the last half of 2006.

Private equity, in the form of both equity and debt, has moved strongly into broadcasting in the last year or so. I continue to believethat there is another round of consolidation ahead for the medium and smaller group owners and private equity may fuel that effort.

Many regional owners are carving out interesting niches for themselves while producing revenue growth and returns that faroutstrip the news from the larger market operators. Cherry Creek, Mapleton and others have consistently delivered 10 percentplus revenue growth at a time when most larger operators are struggling to hit half of that number. Of course, the smaller marketoperators are more immune to the shifting winds of agencies as those shops explore "new media" advertising opportunities andreduce their commitment to traditional broadcasting. For the smaller market operators, local radio is still direct business and basicblocking and tackling for their clients. And these owners know that you cannot expense -cut yourself into a profit.

My forecast is for steady pricing levels in 2007, robust trading led by the Clear Channel deals and a real dichotomy between theperformance of the bigger market groups (2-3% growth) and the rest of the industry (5-7% plus growth). These owners operatemore on Main Street than Wall Street. Our industry's focus is all too -often on the mega -operators. There is a whole differentdynamic in medium and smaller markets that remains far brighter.

Robin Flynn, Senior Analyst, Kagan ResearchRadio revenues ended 2006 on a weaker -than -expected note, with the anticipated pick-up in Q3 notmaterializing to any great extent. We expect revenue growth will remain modest in 2007 after lessthan 1 % growth in 2006, as groups still work to overcome the weak pricing environment that pre-dominated in 2006. Indications are that 01 pacings are not robust.

Our projections call for radio spot revenues to increase 1.7% in 2007 as larger operators work throughinventory and pricing issues. Local should be up a little over 2% (after a flat -to -down 2006) and nat onaldown 1% after a relatively strong 2006. While the data reflect industry -wide growth, certain indiv dualoperators may do much better, benefiting from recently stronger fundamentals in mid -to -small markets.

In 2007, radio operators should benefit from easier comps due to the weak start to 2006. Butthat won't be as true toward the end of 2007, since some individual station operators repertedmuch stronger growth rates in Q4 2006, in the mid -single -digit range. While political dio not

contribute heavily to operator Q4 results, it resulted in a tightening of inventory, which helps their pricing power. ClearChannel's "Less is More" initiative brought more inventory into the market via the parsing out of previous 60 -second spotsinto smaller units, and that has limited the ability of operators in those markets to raise rates.

The bright spot for operators remains the growth in non-traditional revenue streams, such as Internet and other non -spot rev-enues, but these are coming off a much lower base vs. radio's $20 billion spot revenue. Operators do not expect to derivesignificant revenues from digital radio streams for some time, although they expect digital radio's spread will stem erosion inlistening trends and maintain increases in spot revenues.

Radio operators should be able to benefit from less noise in 2007 vs. prior years over satellite radio, and also from advertiserstaking advantage of radio's local Web presence. Certain trends that have worked against radio-such as migration of ad dollErs tcthe Internet-may soon start to swing slowly in radio's favor.

SMARTMEDIA FEBRUARY 2007 ' 29

MEDIA MARKETS & MONEY

Elliot Evers and Brian Pryor, Media Venture PartnersWe expect 2007 to be an extremely active year for station trading. The combination of unprec-edented levels of station inventory and extraordinary liquidity in the capital markets will create morevelocity in the trading environment than we have seen for several years.

We see opportunities coming from the following sources:Public Companies: After the consolidation phase that began in 1992 and continued at a dizzying

pace well into this decade, 2006 marked the beginning of the disaggregation phase, i.e. where largercompanies sell off stations they consider no longer relevant to their core strategy. Historically, sta-tions purchased by public companies were "off the table," and we would never expect them to besold again.

Now, large operators are realizing they cannot effectively manage huge portfolios of stations, andthey are bringing non -core stations to market. Media Venture Partner's sale of Entravision's cluster

in Dallas for $92.5 million is a perfect example. This realization creates a tremendous opportunity for entrepreneurial buyers whocan bring focus to small and medium-sized markets. We believe Clear Channel's proposed sale of almost 450 stations in 90markets will be one of several such sales, although the scale of the CCU sale will dwarf others that may follow.

Private Companies: Private equity sponsors who bought earlier this decade often ran financial models based on historicalgrowth rates of 7% or more per year. They also expected to see a premium on their exit for having assembled multiple markets. Asrevenue growth has slowed and the benefits of consolidation have become less clear, many equity sponsors are moving morequickly to exit their investments-sometimes selling at a profit, if they bought right and ran the properties well; sometimes not.Going forward, we will see an ever-growing emphasis on day-to-day execution and quality of management.

New "Sticks", Move -ins and, Upgrades : These sources of inventory are nothing new, but more stations from FM Auctions 37and 62 will be constructed and some sold in 2007, and the New Year will also bring Auctions 68 and 70.

Capital Availability: We are standing at the edge of what the Wall Street Journalcalls 'The River of Cash"-unprecedented amountsof debt and equity capital are sloshing around the world. This capital stands ready to fund the buyers of newly -purchased inventory.

To date, we have seen quality assets trade for solid multiples (the ten -market CBS deals averaged 13-14x cash flow). With somuch capital available, we expect multiples to hold for quality stations and clusters. However, with this much inventory available,buyers will be selective and will discount underperforming clusters and sub -standard signals.

Overall, we think 2007 will be a very busy time for buyers and sellers.

t

Mark Fratrik, Vice President, BIA Financial NetworkContradiction reigns in the radio industry! The industry suffers through another lackluster year in 2006and the prospects for 2007 are only marginally better while there is increased interest in selling andbuying radio stations. Do these new prospective owners see weak revenue growth as an opportunityto acquire underperforming stations and are willing to pay strong prices for that opportunity? Clearly,yes and only time will tell whether they are correct.

In the immediate future, the radio industry will continue along its path of weaker revenue growth.The industry ekes out a less than 1% growth for 2006, the third year of growth lower than the growthin the national economy and the growth in prices. For 2007, growth should increase only slightly to arate of 2.0%, still noticeably below the growth in the economy and near the expected growth in prices.

The U.S. economy growth provides the foundation for this slight uptick in revenue growth alongwith certain industry factors. First, inventory level adjustments negatively affecting revenues in prior

years should not be as severe this year. Second, stations that felt the effect of no longer having Howard Stern in the morning haveadapted and will not see the same large drop off in that daypart revenues. Third, the full positive impact of more Hispanic formattedstations has not been realized as many of these newly formatted stations still have room to grow.

Finally, the recent spurt of station trading activity, and the promise for more, could lead to an added boost to revenues. New ownershave ideas on improving the revenue performance of their new stations. While all of these ideas will not be successful, some will,boosting the overall performance of their local radio markets and the industry in general.

There are many new owners as the number of stations sold showed a noticeable improvement in 2006. Over 2,100 stations weresold for nearly $23 billion in 2006 including those in the Clear Channel privatization. Even if you remove those stations, almost 1,000radio stations were sold, nearly 12% more than the previous year's total. As for the value, removing an estimated $16.7 billion for thevalue of all the Clear Channel radios stations, a 130% increase in the total value of radio stations sold in 2006.

This increase was the result of many radio groups deciding to exit part or all of the radio industry. Prices paid for many of these radiostations were solid, as the acquiring groups see opportunities for either revenue growth and/or managerial efficiencies (e.g., regionalmanagement). Strategic acquisitions should continue in 2007 as the vast numbers of stations that are for sale get sold. The totalvolume of sales for this year should be at a strong level of around $5-7 billion.

Hence, the contradiction will continue with prospective buyers planning for stronger growth in the stations they acquire than theoverall radio industry.


Entravision Communications

Five Station Radio Cluster

Liberman Broadcasting, Inc.

$92,500,000

Radio Fargo -Moorhead, Inc.

Seven Station Radio Cluster

Clear Channel Communications

$14,000,000

WCS Wireless, Inc.

Next Wave Wireless, LLC

$160,500,000

Denver RadioCompany, LLC

$27,500,000in WM loan financing from

Gumenhein Corporate Funding

TCP Communications, LLC

213 Towers

Global Tower Partnersrar an undisclosed amount

Pendrell Sound

800,000 Popsm s,

Veri:on Wirelessfur avt waist lined amount

Tribune BroadcastingCompany

Bniadeasting TowerE.1 Atiun. NY

Bradford Realtyfor an muliselmed amount

SAN FRANCISCO (415) 391-4877

Trusted relationships.

Daystar Television Network

KnIP. ry

NBC/GEfor cm undin LOA.' 11,I1.11011

David and Mel Winters

Two 8.1.1, l'Its.ver

Armada Media Corporation

$8,500,000

National GridWireless Holdings, Inc.

I ClearShot Communications

235 Towers

Laser Broadcasting

$2 5,000,000tenn loan am) tetolt ing credit

pow. tog pm.

GE Capital

RadioVisa, LLC

IVNIXF. (AM)

LAA I, LLC

'41.000,000

Lake, xxi Oitirtii

KM I\USFR Media Group

$30,000,000

p

Results Radio, LLC

KRPQ (FM)

Maverick Media

$7,700,000

Highland Cellular

Dobson CommunicationsCorporation

$95,000,000

NewComm Wireless

$60,000,000in senior linaneinX ITO"

D.B. Zwim

Results Radio, LLC

KMHX (FM) and KSRT (FM)

Lazer Brodcasting Corp.

$6,850,000

Riviera BroadcastGroup LLC

$60,000,000III NMI. and debt calnial

National GridWireless Holdings, Inc.

Beacon BroadcastingCorporation $12,700,000

A.L.B.S. WirelessServices II, LLC

32 Towers

Global Tower Partners

TX -1 I Acquisition, LLCha.

18 towers I.

SBA CommunicationsCorporation

for an undisclosed amount

Summit Wireless, ITC

e,97.000

Sprint Nextel

Towers of Texas

157 Tower..

Global Tower Partnersfor an undisclosed amount

Summit Wireless, LLC

I 91,0tX) Pops

Nick,,h0 ,1111411111,i Lord an6101111

BFT Tower Co.,

10 Towers

Global Tower Partnerstin an undi, lined amount

Endless MountainsWireless, LLC

Dobson CommunicationsCorporation

for an uvuli.tlined amount

AAA Entertainment, LLC

Four Station Radio Cluster.1 -"xi hmtu1,1.Ilo.,

RadioStar Inc.

$3,500,000

AAA Entertainment, LLC

WXCL (FM) and WDQX (FM)

Triad Broadcasting Company

$5,200,000

MEDIA VENTURE PARTNERSTelevision Radio Telecom

www.mediaventurepartners.com

BOSTON (617) 345-7316 KANSAS Cm (816) 523-8566

IDEAS WORKING NOW

ARTMedia competition for business, ideas and profits is no longer a black & white world.

We will no longer be controlled by Wall Street in 2007.This is the year to work SMARTER - not harder.

411.1111M60.1

Mr Radio Business Rennet

..

.1!!! Television Businesslieporl

id'bg, ingSUCCE.Y.

as"--------.......

0 .r. da . 1 ,..,....-..,_ ."- -.. A_ -'..L. . . .4 .-.- .

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Any Questi

TT4ieNews with

MIMI%Miura! Asand rts-ns

24 Years and Independently Owned4111111at UM"

Your need to succeed in 2007 just became affordable and easy.

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