Saturday, September 26, 2009

Media Moguls

 Who's responsible for the decline of old media? Many are quick to cite the lousy economy or fast growth of the internet. But this Atlantic Monthly article lays the blame at the feet of the media moguls, who  relentlessly pursued mergers and acquisitions with little thought about what do to with all the acquired companies. Check it out:

Wednesday, September 23, 2009

News about L.A. Radio

From LA Observed: The return of Peter Tilden

Longtime local radio talker Doug McIntyre is leaving the morning slot at KABC 790 after tomorrow. Peter Tilden will take over for now. Orange County Register radio columnist Gary Lycan says that McIntrye is heading to New York to do a show leading in to Don Imus. Here's the email memo from KABC boss David G. Hall:
From: "David G Hall"
Date: September 23, 2009 11:16:36 AM PDT
To: "All_Los_Angeles"
Subject: KABC Morning Drive
Doug McIntyre’s last morning show on KABC will be tomorrow morning.
Doug has been a huge part of KABC for nearly a decade. He will still be involved with both this radio station and Citadel in general, doing some work for WABC in New York in the short term, and working on a very exciting future project on KABC.
Peter Tilden will take over the KABC morning show starting Friday. Peter has been involved with this station in many different ways for the last 20 years, and has always had great ratings success and popularity with the KABC audience. Award winning news anchor Dave Williams will continue to do KABC’s morning news in the Peter Tilden show, and of course Capt. Jorge will do traffic and sports.
Please join me in thanking Doug for his effort and success in morning drive, and wishing Peter all the best as he starts his new role at TalkRadio 790 KABC!

Latest from the NAB Radio Show

Thanks to for this post. Doesn't sound like radio's fortunes are improving a whole lot:

The NAB RADIO SHOW in PHILADELPHIA opened WEDNESDAY with the annual DICKSTEIN SHAPIRO conference on broadcast financing, this year subtitled "Surviving the Meltdown."

Marcus: Industry Rallying

SUGARLOAF ROCK CAPITAL Managing Partner and former DEUTSCHE BANK analyst DREW MARCUS opened the conference by noting that 2009 will be the worst year in the advertising market since 1975 and down to a new low in share of the ad pie, but that the industry is seeing an "incredible rally" in media equities and debt and is the second most profitable medium despite shrinking margins. He noted that radio, projected by GOLDMAN SACHS to be off 23% in ad revenue this year, will be off 5% next year.

MARCUS said that the industry, presently leveraged at a multiple of 7.6 times, needs to get that number down to 4 times, but even so has seen equities rebound, up over 158% year-to-date, and debt bonds have risen 68%. Nevertheless, MARCUS said that radio "is out of favor" with capital markets despite its multiples recovering. He credited a belief in a cyclical recovery, signs of improvement in the second derivative, and increased likelihood of refinancing in recent weeks for the rally in radio, although he noted the "jury is still out on the secular recovery."

He said radio's private market values are likely to decline, with bid prices well below asking prices, and that radio stocks are likely to be "orphaned and volatile" in 2010, with next year's growth dependent on a recovery in the auto industry and on the performance royalties fight. He suggested that companies will look to recapitalize before capitulating, and said that the industry remains a "great free cash flow business."

Financial Panel Looks At Coping With Debt

On a panel of financial industry leaders and analysts, JIM KUSTER of RBS SECURITIES blamed some of radio's decline in ad share not only on shifts to new media but CLEAR CHANNEL's "Less is More" campaign. He said that most analysts see radio has having "stabilized" in EBITDA although margins have been "crushed." On the other hand, KUSTER noted, radio remains the highest free cash flow medium and is likely to remain ahead of other media in that category. And he noted that radio's market capitalization has dropped 95.3% since 2003. Looking ahead, KUSTER said that the key is that radio stocks are still covering interest expense on average despite the decline of the market value of their debt.

ATALYA CAPITAL MANAGEMENT's MICHAEL BOGDAN noted that most companies in the industry are either in default or close to it, but "the good news is that we're all in this together." He suggested that companies either try to work with lenders to rework debt or "kick the can forward" and just keep going and hope lenders let the company operate as usual while in technical default without any amendments or extensions on paper.

GOLDMAN SACHS' JEFF FERRY said that continuity in management is important to drive revenues and rates to increase the value of stations in local markets, while GE CAPITAL's RAYMOND SHU said that the decline in revenue has hindered the availability of capital in radio and all other industries, calling the last 24 months a "perfect storm" of problems that have plagued the media sector. SHU said that top-line and cash flow "have to stabilize" for the radio industry to recover.

WACHOVIA's BISHOP CHEEN, in the audience, asked if the "incredible shrinking market cap" means that someone would emerge to consolidate and take over the industry; KUSTER said it is "still a bit early" to tell whether that might happen; BOGDAN said that radio's status as a regulated market and a "long, hard fight with equity players" would mitigate against the ability of a single party coming in to take over. Asked by moderator LEW PAPER whether the takeover by lenders like GOLDMAN SACHS of NASSAU BROADCASTING is the start of a trend, FERRY said that lenders don't really want to be in that position and that in "a lot of situations" management is remaining in place. KEVIN SHEA of LAUGHLIN MEGHJI said that lenders are "not terribly shy about stepping up and taking an equity position in these companies in exchange for debt," waiting for a recovery.

Group Heads: Time To Grow Revenue

NRG MEDIA's Pres./CEO MARY QUASS opened the panel of radio group heads at the DICKSTEIN SHAPIRO conference by saying that the recession has hit some of her smaller and medium Midwest markets later than larger markets ("we sucked less"), but all markets are feeling the effects of the downturn. She said that her company is "hopeful that it'll balance itself out."

CHERRY CREEK RADIO CEO JOE SCHWARTZ, another operator in smaller markets, said that "what we've done ... is diversify away from big categories like auto and have gone for much smaller categories," helping the company through the downturn. Nevertheless, he said that his auto revenue is considerably off and that it has been "difficult" to make up the difference. "This is and always has been an operator's business," he said, noting that everyone at the table had to painfully cut good employees this year, and with expenses now at the bottom, the industry needs to focus on driving revenue. He said that "we just can't keep" cutting expenses to show growth. QUASS agreed that revenue growth should be the focus, saying that "we've done everything else," adding that "radio is unquely positioned to be able to offer the best of both worlds," delivering mass audiences as well as Internet-like one-on-one relationships ("radio was the first social network ... we lost our way").

DAVID FIELD, President/CEO of ENTERCOM, asserted that the industry's problems are a "cyclical issue," comparing radio's ad revenue drop to similar or greater drops in other media. With signs of a recovery being observed, FIELD said, the question remains whether radio will participate in the recovery of advertising; "My fear is that we're shell-shocked and myopic ... and not thinking forward" to a recovery, which he predicted will show double-digit growth in revenues for next year ("I know I'm an outlier on that").

CBS RADIO Pres./CEO DAN MASON agreed with FIELD and noted that through the worst recession in memory, the industry is still performing well. "This is still a great business," MASON said. "We have stations and clusters now pacing positive." He said that his largest markets took the brunt of the downturn in FEBRUARY, but he is optimistic for 2010 despite the problems in the automotive category, on which MASON said CBS concentrated with some success last week.

CUMULUS Chairman/CEO LEW DICKEY joked that "there has been no pressure from lenders" on companies like his, then got serious about the "Maalox moments" faced by his and other companies, discussing the problems of restructuring that could be too early and end up with "Chapter 22, which is Chapter 11 twice." He said that lenders have to "equitize" -- convert debt to equity -- once it has been determined that the business has hit bottom, thus betting on the industry's recovery.

The panel discussed an audience question on "price wars," with DICKEY blaming the industry's reaction to buyers low-balling them on spot prices and asserting that radio needs to take the lead on keeping rates from falling further. He noted that despite perceptions, the medium continues to reach audiences, including 18-34 year olds ("my hat's off to our programmers" for reaching listeners); "we have to realize the true value of what we have ... and teach the buyers how to buy us," he insisted. SCHWARTZ added that he believes "the new normal" will be that all advertising money is up for grabs, noting that the ad revenue lost by newspapers, radio, and TV "didn't go anywhere," and "the opportunity is there" to grab more of the overall ad pie.

On a question about how radio has reduced itself to irrelevance by firing people and damaging the product, FIELD said that radio "is not bare-bone" and that there remains "more innovation than ever," with the industry "winnowing back" less compelling content. He disagreed that the radio product has been diminished and said that more people are listening than ever before while other media like newspapers have lost audience. "The pundits are wrong," FIELD insisted. Noting that other businesses like PANDORA have promoted themselves as "the new radio," MASON asked, "If radio's such a darn bad business, why does everybody else want to be radio?"

From the audience, AC WBEB (B101)/PHILADELPHIA owner JERRY LEE touted a PHILADELPHIA market campaign starting MONDAY touting a study showing radio commercials as eight times more effective than other forms of ads in return on investment. The campaign will be available at

Talent Gets A Forum

A panel of on-air personalities included GREATER MEDIA Rock WMMR/PHILADELPHIA morning co-hosts PRESTON ELLIOT and STEVE MORRISON, CITADEL MEDIA syndicated talker CURTIS SLIWA, CLEAR CHANNEL Top 40 WHTZ (Z100)/NEW YORK and PREMIERE RADIO NETWORKS morning host ELVIS DURAN, and GREATER MEDIA Talk WLNK (107.9 THE LINK)/CHARLOTTE and syndicated morning "BOB AND SHERI" co-host SHERI LYNCH.

The hosts, prompted by moderator and WMMR PD BILL WESTON, discussed show prep (SLIWA and LYNCH called it a "24/7" process, all credited their production staff and "living your life"), their "100% slam-dunk" regular material (MORRISON, joking that the "scatological stuff" works, said that the "little" things from real life connect best; DURAN's go-tos are the prank phone call "phone tap" bit and topics on cheating, a topic LYNCH also uses with the specific angle of "cheating with your blood relatives"), politics (LYNCH eschews voicing her personal views, DURAN lets staffers talk politics but seeks balance, MORRISON (echoed by LYNCH) said his audience isn't coming to the show for politics), vacations (SLIWA joked that he never takes off because he knows too many radio people who have "gotten the call" while on vacation; DURAN said that "best of" shows perform well, and LYNCH, ELLIOT, and MORRISON said that their show staffs try to coordinate vacations and air "best of" segments), and the importance of cooperating and participating in sales.

DURAN discussed how syndication has changed his show, saying that "I hate" having to change the show for new markets. "That was a tough decision to make," he said of the changes. "Do I miss being local? Absolutely." MORRISON said that he and ELLIOT like their local content and that the Internet has changed the nature of syndication, allowing people to listen to the local version of the show anywhere.

Anti-Performance-Fee Spot Winner Announced

The winner of the "Don't Tax That Dial!" contest soliciting anti-performance-fee PSAs was ANDY BEROKOWITZ of FOREVER COMMUNICATIONS WWOT (HOT 92 AND 100)/ALTOONA-STATE COLLEGE, PA for a spot depicting a station that can't play music due to the "performance tax."

Today's Schedule

This Morning :

8-9a Operating Under Emergency Conditions
8-11a Dickstein Shapiro LLP Presents Broadcast Financing 2009: Surviving the Meltdown
9-10a Tower Failures - How to Prevent Them
9-10:15a So You Think You Can Rate
9-10:15a Modern Management: Old School Principles Meet New School Techniques
9-10:15a Getting a Symphony Out of a One-Man Band
9-10:15a How Radio Can Do Video Economically and Profitably
9-2p Career Day
10-12p Planning, Building and Maintaining an IP-based Radio Facility
10:30a-11:45a Learning and Earning: From the Final Edition to Online Juggernaut(s)
10:30-11:45a Great Client Marketing Strategies with Small Budgets
10:30-11:45a How to Use Twitter to Increase Your Station’s Ratings and Revenue
11a-12p Michael Harrison’s Annual Report on the State of Talk Radio
11a-12p Combining Text Messaging & Social Networking To Drive Revenue & Listenership

This Afternoon:

12-2p NRSC Meetings
1-2p Tools to Help Sell Radio to "Main Street" Advertisers
1-2:15p I Saw It on the Radio: Our New Multimedia Reality
1-2:15p Radio’s Entrepreneurs: Starting Your Own Business and Networking Opportunities in 2009
1-2:15p Make Yourself Fireproof
1-2:15p Integrated Media Marketing: Leading Your Radio Sellers through the Transition
1-2:15p East Coast Super Talent
2-2:30p Electronic Program Guide Update
2:30-3:45p Opening Address & Digital Think Tank Super Session
4-6p Opening Reception (Exhibit Floor)
4-7p Exhibit Floor Open

Wednesday, September 16, 2009

Radio's fortune is improving


CBS gets an upgrade to “out-perform” from Wells Fargo – which forecasts additional cost-cutting.

Wells has a notably upbeat report on CBS Corporation stock and notes the $160 million in expenses “removed” from CBS radio and TV “during this recession.” The firm sees “room for another $50 million in cost savings post-2009.” That will, of course, improve the bottom line and position CBS to come back quickly once advertising picks up strength (if it has the talent and infrastructure to handle it). But the cost situation is the way Les Moonves indicated several weeks ago – when revenues are rejuvenated, CBS won’t be re-hiring and returning to the previous staffing and spending levels. CBS Radio has undergone a particularly painful pattern of rolling cuts, and those won’t be restored in Dan Mason’s division. (Wells says that after talking with management, it believes the majority of the cuts are “permanent.”) Managers are going to have to make do with what they’ve got, and probably to identify further cuts. But the good news – investor-wise – from Wells Fargo is that “parts of local advertising are bouncing off the bottom.” And with the fateful month of October fast approaching, the “comps” get far easier, as the slide off the edge of the world that occurred last Fall leaves some puny numbers to compare against. Sure enough, CBS stock was up 5% yesterday to $12.43.

From the same publication, a look at other radio companies:

Radio company stocks hit historic depths in the last 12 months on Wall Street, but the recovery is certainly underway. In just the last 90 days, shares of SiriusXM (SIRI) went from 32 cents to 68 cents a share, a more than 100% gain. Radio One (ROIAK) quadrupled in value, from 22 cents to 87 cents. CBS Radio (CBS) went from $5.78 to $12.46 in just over two months, while Cumulus (CMLS) has nearly tripled (50 cents to $1.42), and Emmis Communications (EMMS) has more than tripled (25 cents to 84 cents) in that same time. The stocks of Spanish Broadcasting (SBSA), Entercom (ETM) and Regent Communications (RGCI) have all tripled in value in the past 90 days, while Journal Communications (JRN) and Salem Communications (SALM) have quadrupled. You can check the latest quotes for these stocks by clicking here.

Saturday, September 12, 2009

Moonves on Radio

CBS chief Les Moonves says his radio group is up 10-15% from early 2009, but –

The CBS Radio division is still in negative territory. So says Wells Fargo analyst Marci Ryvicker, reporting on Moonves’ Thursday appearance at an investors’ conference. Moonves indicates that CBS is open to selling off more assets. On his recent Q2 call, the only kind of assets he mentioned in that regard were radio stations. As for possible expansion at CBS, that won’t happen in the radio group, but it might in other business segments. (When you get right down to it, Moonves is still basically a TV guy who’s also jazzed about making movies.) Moonves says Super Bowl TV ad sales are pacing ahead of the last time CBS had the big game, three years ago. Moonves should have pretty good visibility on his third quarter numbers, since Q3 ends in less than three weeks.

Moonves on Radio

CBS chief Les Moonves says his radio group is up 10-15% from early 2009, but –

The CBS Radio division is still in negative territory. So says Wells Fargo analyst Marci Ryvicker, reporting on Moonves’ Thursday appearance at an investors’ conference. Moonves indicates that CBS is open to selling off more assets. On his recent Q2 call, the only kind of assets he mentioned in that regard were radio stations. As for possible expansion at CBS, that won’t happen in the radio group, but it might in other business segments. (When you get right down to it, Moonves is still basically a TV guy who’s also jazzed about making movies.) Moonves says Super Bowl TV ad sales are pacing ahead of the last time CBS had the big game, three years ago. Moonves should have pretty good visibility on his third quarter numbers, since Q3 ends in less than three weeks.

Fan Letter

It's been heart-warming to read all the letters of support from fans, since the format change. Here is one example:

Hi Steve,

I am a loyal KFWB listener and I just wanted to thank you and Tracie Savage for bringing KFWB fans the news in the afternoon. My afternoon drive will no longer be the same. It is still hard for me to believe the major changes that have happened to the station and that after 41 years, KFWB no longer has the slogan, "You give us 22 minutes, We'll give you the world." I wanted you and the KFWB news team to know that all of your hard work was not left unnoticed. Thanks again.

Best of Luck,

Fayez Khoury
KFWB listener