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RAIN
Friday, August 23, 2013 Volume 2   |   Issue 163
 
Challenging the rules
Patrick Communications
Questioning the FCCEven though it will own the top five stations, Wheeler can buy another FM in Roanoke-Lynchburg.

With yesterday’s decision, the FCC clearly signals that it’s going to stay out of analyzing market concentration on the basis of either ratings or revenue. In this southwestern Virginia market, the local Mel Wheeler group would not only own five FMs, it would bill more than 50% of the revenue. But the FCC says its “bright-line, geography-based rule for rated markets” is enough to “protect against excessive concentration levels” in “virtually all cases.” So Gary Burns, who competes with Wheeler, loses this round, as the Commission lets Wheeler add Centennial’s “Talk Radio 105.9” WLNI. Burns protested on several grounds (January 9 NOW). But the Commission says he faces a “high hurdle” in proving the deal’s against the public interest. It says “ad revenue share is ‘of decreasing relevance…as a barometer of competition.’” On Burns’ second big point, about whether the sprawling compound Arbitron market of Roanoke-Lynchburg has at least 45 signals, the FCC sides with its data supplier, BIA. Burns argued that three stations were improperly included in the count, stations that have frequently been silent. Read the FCC decision clearing Wheeler’s $1,025,000 pickup of “Line” WLNI here.

Gary Burns – “I haven’t decided whether to appeal.”

He means appealing at the FCC, via a petition for reconsideration. (He’d also objected to another federal agency about the market-concentration danger of Mel Wheeler adding yet another station in Roanoke-Lynchburg.) Burns tells this NOW Newsletter that “I do think the FCC decision shines a glaring light on its policy to out-source to Arbitron and BIA the definitions of radio markets. I hope the Commissioners will give consideration to my request to return market definitions to SMSA’s, as defined by the Census Bureau.” He still thinks he’s right about there being fewer than 45 signals in Roanoke-Lynchburg, meaning that Mel Wheeler Inc. – an operator he admires – couldn’t add another FM. Burns also says “I think they booted the call on WVBB, which is clearly the sixth FM for Wheeler, and is already adding significant share to [urban AC 'Vibe'] WVBE due to the Arbitron Total Line Reporting policy.” Burns did get the FCC to agree that he has standing to file his objection – which positions him to go further, possibly to challenge the signal count-based market definitions the FCC established in the 1990s. You get the feeling this one’s not over, despite yesterday’s ruling. So far, Burns of 3 Daughters Media has been filing his own legal paperwork, “pro se” – without an attorney.

HootersA Wichita station called the agency to check on an odd-looking buy for Hooters…

Which is one of the events that led the agency to sue the restaurant chain for breaching the contract that made it Hooters’ sole agency of record for Hispanic media. (For the corporate-owned restaurants.) Florida-based The Group Creative Communications says it had been the chain’s Hispanic agency since 2009 and they’d just renewed their deal last December. But the lawsuit filed in Orlando says that “in 2012, the account manager of [Journal-owned regional Mexican “Radio Lobo 106.5” KYQQ] contacted The Group about a media buy for a Spanish-language Human Relations campaign.” The station rep must have thought the buy looked unfamiliar, for Hooters, and made the extra call. And indeed, The Group alleges that Hooters was employing MP Media to run this campaign, and that when it questioned the deal, it was told to “just let it go.” Then last month, Hooters told the agency it “would not be spending any dollars on Hispanic marketing” after September 8. The suit gives us a peek inside the financial arrangements between an advertiser and its agency. The papers say that “Hooters agreed to pay The Group a $10,000 monthly fee for 110 hours of creative and account management services, with additional services billed at $100 an hour.” The Group also got the traditional 15% commission for all media buys that it placed.

SparkNet
“The disruption of terrestrial radio is just starting”– Pandora.

CFO Mike Herring – taking a large role on yesterday’s conference call, as CEO Joe Kennedy eases toward his announced departure – says Pandora is “effectively the #1 station in most markets.” Also that Pandora’s local sales jumped four-fold in the latest fiscal quarter, nearly matching in that single quarter what it did for the entire previous year in local. Analysts were almost impatient about how fast Pandora can staff up with local sellers, asking whether the non-competes those new hires have with terrestrial operators are a problem. (Pandora says no, and that it’s trying to respect everybody’s non-competes, typically six months in length.) Joe Kennedy says “mobile drove the quarter,” and the company now believes it can monetize listening on the smartphones, etc. as efficiently as it’s done on desktops. “Mobile and “Local” were two key words during the hour-long call, which the Wall Street analyst corps kept filling up with questions until the 6pm cutoff. (They clearly could’ve gone on for at least another 30 or 40 minutes.) The company also cites better backroom integration with agencies via Mediaocean and Strata. And guess what? Pandora’s modifying some long-held ad policies and music programming tactics –

PandoraPandora to start running back-to-back ads, creating more music sweeps.

The company cites internal research suggesting that listeners prefer music sweeps, but that’s something almost any terrestrial PD would give a “Duh” to. Double-spotting is just now beginning, and that will also allow for somewhat higher spotloads. How high? CFO Mike Herring says they’d previously run a maximum of about 3.5 to 4 ads per hour, and that could increase to as many as five units per hour. In terms of commercial minutes, they could get to 2.5 or even 3 minutes per hour. Herring says “we haven’t seen any negative” reaction from listeners where they’ve tried that. He says that’s “the beauty of connected radio,” that it can test out a wide variety of spot-placement and music strategies, and watch the response, listener by listener. Something else will change, and it got a lot of attention from the analysts –

Point to Point
The 40-hour monthly cap on free mobile listening is lifted.

Pandora instituted it back in March, and it knew its total listening metrics would drop – but it didn’t care, because it said at the time that those weren’t profitable extra hours. Now it says it’s learned how to monetize the “41-plus” hours of listeners using the advertising-supported tier. And it’s removing the cap as of September 1. One of the ways Pandora can control costs for those listeners is the “skip limit,” so listeners can’t keep flipping through songs like somebody at a diner jukebox. Though CFO Mike Herring tells analyst Jordan Rohan of Stifel Nicolaus not to expect a spike in listener hours because of the cap removal. He says listening dropped about 10% when they drew the line for listeners, but they “don’t expect that to step back up again,” in the monthly Webcast Metrics we’ll be seeing from Triton Digital. More notable points from the call – Pandora spent $8 million to buy the portfolio of patents from Yahoo that undergirded the former Launch Media service, bolstering its legal position in future patent fights. Pandora’s content costs are dropping from near 60% to near 50%, and they’re hopeful about the next set of royalty negotiations coming up. (Though CEO Joe Kennedy didn’t address one analyst’s question about how things are looking in DC.) Number-wise, revenue from mobile was $116 million, with total revenue up 58% to $162 million. The net loss got bigger, up 44% to $7.8 million – but right now, the company’s focused on growth.

The September 2014 “Media Outlook 2014” is for financial pros who are planning ahead.

MFM-Media Financial Management Association is the sponsor, and the day-long event at New York City’s Hearst Tower will look at the macro issues (where’s the economy going and how is Obamacare going to affect business?). Plus more media-specific topics, like digital and other royalty payments, M&A, and emerging technologies that financial pros should be aware of Greater Media CFO Edward Nolan is co-chairing this year’s Media Outlook, along with Scott Moody of Bonten Media. More about Media Outlook 2014 here.

AustraliaThe latest Nielsen radio ratings from Australia –

Arbitron has long bid for the right to deliver the ratings down Under, and it never could oust Nielsen. If their merger goes through, that will become a moot point. As for the latest numbers - We’re probably somewhere near the end of worrying about the blowback from last December’s “royal prank” call made by two former Sydney jocks on Austereo’s top 40 2Day FM, but here’s the latest – 2Day FM slid 8.7 to 7.7 with the age 10+ topline shares, to its lowest number since late 2004. Even so, 2Day is still the most popular music station in the country’s largest market of Sydney (metro population about 4.7 million). Macquarie’s news/talk 2GB is the overall #1, up 13.0-13.5. Melbourne is Australia’s second largest market with nearly 4.3 million, and a 13.5 share there is good enough to win for Fairfax-owned news/talk 3AW (up from a 12.8). Interesting trend in both Melbourne and Perth – big gains for the state-owned alternative and Australian music national service named “Triple J.” It’s up 5.4 to 6.3 in Melbourne, and it makes history in Perth, market #4 – Triple J is #1 overall, rising 10.8-13.0. No Triple J outlet has ever been #1 in Australia, until this survey (covering May 19-June 22). Take a cheap trip to Australia and the new Nielsen ratings here.

Smarts
Triton winds up “Simulcasting Debunked” today with “Part 5.”

Triton Digital COO Mike Agovino believes that broadcast radio would be better off opening new advertising doors and exploiting its online digital audience, instead of striving to add in those relatively small amounts of listening to qualify for Arbitron’s Total Line status. Read all five parts of Mike’s weeklong “Simulcasting debunked” series here -

• Mike Agovino responds to a Soap Box opinion from a major-market PD in yesterday’s NOW. That PD said “Broadcasters might benefit from adding quarter hours that are currently going to waste on their streams, because the cume [of the stream] fails to qualify the station as its own entity.” Mike’s answer goes to his methodology – “Nothing in my numbers has anything to do with Arbitron. I simply take the exact digital audience and divide it by market population to see what the Rtg would be. It’s certainly true that whatever the number is, it might result in an extra 0.1 once combined with the over-the-air estimate. And furthermore, it could be enough to tip someone over the minimum reporting standard. But each of these scenarios would be major exceptions, not norms.” Agovino says “I reviewed over 1,400 call letters and found only 3% of stations hitting a 0.05 Rtg, and about 20% hitting a 0.025.” Note that Mike's probably using the broadest possible age range. Got your own thoughts about simulcasting and/or webcasting? Email Tom@RTK-Media.com.

On The Block

KOKE“Austin’s Country Alternative” KOKE-FM laces up the third FM signal in its trimulcast, with the $200,000 cash purchase of a translator at 98.5. On Tuesday, you read about Bob Cole and his fellow entrepreneurs at Genuine Austin Radio filing a $3.2 million deal to buy KLGO Austin (1490) and KOKE-FM Thorndale (99.3) from Reo Radio. They already own a translator at 105.3 (K287FG). Now they’ll lock down this one at 98.5, as it’s being acquired by a friendly third party. The signal is K253AN, licensed to southwest-of-Austin Sunset Valley. The buyer is Westface Ventures LLC, led by Salim Haddad, and the seller is John Henderson’s HFP Radio LLC. There’s an interesting clause in the sale contract – “if the sale of KLGO and KOKE-FM from Reo Radio Group to Genuine Austin Radio does not close for any reason, this agreement shall automatically terminate.” Cole and company want it all, as they compete with the Big Guys using a chain of translators and a suburban full-power signal. Check the KOKE website here.

“K-Love” network parent EMF wasn’t able to close on its purchase of this Texas FM due to a hassle with the landlord, and then “Lonestar Country” KHLB Mason (102.5) went dark. Now the replacement deal is with III & W Broadcasting, led by Mason businessman Tim Walker. He’s paying $130,000 for both KHLB (a Class C2 at 102.5) and a sister that’s also silent. That’s KZZM, a class C3 at 101.7. But KHLB is the one that Educational Media Foundation wanted in this market, and ultimately didn’t buy. Seller Munbilla Broadcasting (Shane Fox) says the landlord at the transmitter site wasn’t allowing access to the facility that Munbilla had originally built, and there was litigation. Broker on the current sale of KHLB/KZZM – Bill Whitley of Media Services Group.

A silent Texas Panhandle FM sells to the son of the man who already owns two other stations in the town of Childress. But it’s no problem, FCC-wise. Even if it were James G. Boles Sr. buying the station instead of son James Junior, that would still fit under the ownership limits. The station is KCHT, a Class A at 104.1. Peter J. Salazar’s selling it to the younger Boles for $50,000 cash. Boles Senior owns adult contemporary KCTX (1510) and country KCTX-FM at 96.1. This will be his son’s only station. Seller Peter Salazar still has San Antonio-market classic country KSAQ Charlotte (102.3).

Arkansas broadcaster Bobby Caldwell adds a translator to his just-bought cluster west of Little Rock. And the sale document is signed by a Catholic priest – Father Francis Hoffman of Green Bay, Wisconsin-based Starboard Media Foundation. Earlier this year, Starboard told the FCC it was planning to use its new construction permit to re-broadcast all-sports KTTG, Mena, Arkansas at 96.3. But instead there’s a sale, and the translator at 97.1 is going to be the FM partner of talk KCAB Dardanelle (980), one of the six stations Caldwell’s East Arkansas Broadcasting is buying from Max Media (last Friday’s NOW). Price for translator K246BY Russellville - $15,000 cash.

Broadcasters Foundation
Worth Reading

“Brandmeier goes freeform” for the new “G” – the online WGN Chicago feed that will be Jonathon Brandmeier’s new playground. He’s being succeeded in mornings at Tribune’s over-the-air talk WGN (720) by Steve Cochran, and Tribune manager Jimmy de Castro’s crew has planted a clever video about Brandmeier and the new online WGN.fm here. More talent to come, to complement Brandmeier.

JackFM2Sean Ross’ First Listen to Jack FM2 - the station that just debuted in Oxfordshire, England this week as a younger female-leaning companion to the existing variety hits Jack FM. Sean says “the imaging, presented with a female voice, is clearly in keeping with the spirit of the original Jack – ‘We take complaints very seriously, all the way to the shredder.’’” And “We’re playing what you want, and we really hope your taste in music is better than your taste in men.” Musically, it’s targeted to women under 30, and plays One Direction and Miley Cyrus, instead of Styx and Phil Collins. To Sean Ross at Edison Research, “Jack FM2 is the sort of brand extension that would make sense in the U.S., particularly as time and a shifting radio coalition has made certain coalition formats more difficult.” Listener Driven Radio is also a component of the Oxis Media Jack FM2 execution, inviting more listener interaction. Read Sean’s First Take here.

Disney to lay off 175 people at its ABC television division, says AdAge - which says that’s due to “new technology and changes in viewership.” It thinks most of the layoffs will be shared between “operations” and the eight Disney TV O&Os in New York, L.A., Chicago, San Francisco, Houston, Philadelphia, Raleigh and Fresno. (Yes, Disney owns Fresno’s KFSN television.) AdAge notes that the ABC TV network “ended the 2012-2013 season ranked fourth among all broadcasters in the all-important 18-49 demo.” Read the AdAge coverage of Disney here.

Tom Kent
You Can't Make This Up

Alarm ClockNot everybody is cut out to do mornings - Jake Russell says "Back in the late '70s in New Haven, I not only worked with our morning jock (I was in sales), I happened to live in his house. He was not a morning person by nature, so his way of dealing with getting up at 4:30am every morning was to have three alarm clocks set up. The first was by his bed. The second was on his bureau across the room (so he had to get out of bed to turn that one off). The third alarm was downstairs in the kitchen - so he really had to get out of bed, and by that time, he was semi-sort-of awake and would turn the coffee machine on and start his day. Needless to say and thankfully for his wife, the AM shift lasted six months and he went back to his regular part/time shift and full time DJ music service." Got your own story of mornings, or another unusual shift? Email “You Can’t Make This Up” – Tom@RTK-Media.com.

Thanks for your support of this daily Tom Taylor NOW Newsletter – whether it’s sharing it with a friend who might become a new subscriber, or talking about a story you read here first, or using us to fill a vacancy with our classified section. For classified, and advertising in general, you’ll want to talk to our Kristy Scott - Kristy@RTK-media.com or phone 818-591-6815. Did you notice that this month contains a “blue moon”? That means it’s a season with four full moons instead of the more normal three. Don’t wait for the next “blue moon” to enjoy a fine Summer weekend with family and friends, and see you back first thing Monday morning. Tom

Road Show Planner

BROKERS

Kozacko Media Services: George W. Kimble, Cell: 520-465-4302, Email: georgewkimble@aol.com; Dick Kozacko, Cell: 607-738-1219, Email: dick@kozacko.com; Rosen Shingle Creek; Office: 607-733-7138; www.radio4sale.com

Patrick Communications: Larry Patrick, Susan Patrick, Greg Guy, Jason James. Contact info: Rosen Shingle Creek; Office: 410-799-1740; Elizabeth@patcomm.com; www.patcomm.com

RTK Media, Inc.
 
 
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