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Radio Business News

Report: FCC to Approve Sirius-XM Satellite Radio Merger

The Wall Street Journal is reporting the a "tentative deal" has been reached with the FCC to approve the proposed merger of Sirius and XM Satellite Radio. WSJ says that Commissioner Deborah Taylor Tate (pictured), a Republican and thought to be the deal's swing vote, is expected to vote in favor of the transaction in exchange for a $20 million consent decree.

The consent decree would resolve outstanding enforcement issues involving the two satcasters, including the manufacture of over-powered radios and repeater issues. WSJ also says there could be other, minor conditions as well.

Meanwhile, Commissioner Jonathan Adelstein, a Democrat, has withdraw his previous support for the deal, in which he said he would vote for the deal with certain stringent conditions. Commissioner Michael Copps, the remaining Democrat, said Tuesday (7-22) he would vote no.

Commissioner Robert McDowell and FCC Chairman Kevin Martin have both expressed willingness to approve the deal with previously announced conditions: a 3-year price freeze and a total of 24 channels to minority-controlled programming.

In a statement, NAB Executive VP Dennis Wharton said, "This sweetheart deal for Wall Street speculators is premised on a promise that a monopoly will provide consumers with lower prices, better service, and more programming formats. Only members of the Flat Earth Society would buy into such specious nonsense."

He continued, "the commission is apparently preparing to grant a monopoly to the nation's only two satellite radio companies that in their 11 years of existence have had more luck flaunting the FCC's own rules than creating a successful business model." (07-23-08)

Arbitron reported a 3.7% boost in second quarter revenue to $78.7 million from $75.9 million in 2007. Costs and expenses, however, grew by 9% to $82.4 million from $75.6 million, due primarily to the planned rollout of the PPM service. The rating company posted net earnings of $600,000 (2 cents per diluted share) as compared to $3.8 million (13 cents) in the year-ago period.

President/CEO Steve Morris stated, "In June, we made the decision to restart the commercialization of our Portable People Meter ratings services. Now that preliminary PPM ratings are being released in a number of new markets, we are redoubling our ongoing effort to help the radio industry in its transition from diary to electronic ratings."

During its earnings conference call, Morris said that radio continues to suffer through an extended period of softness. "This obviously makes the price increase on PPM very uncomfortable and makes sales on discretionary or peripheral items, like software, more challenging."

Morris also noted that Hispanic and Urban targeted stations "continue to express concerns on whether our samples effectively represent their constituencies." "We continue to feel strongly that our data are valid and reliable and do in fact effectively represent all segments of the population. We can and we will continue to improve our samples, as part of our continuous improvement, but it's time now to move forward," he added. (07-22-08)

Journal Communications posted a 5% dip in revenue for the second quarter to $140.1 million from $147.5 million in 2007. Earnings from continuing operations fell 29% to $9 million from $12.7 million. Radio revenues also declined 5% from $20.9 million to $22 million. Radio operating earnings decreased 2.2% to $5.1 million. Journal reported net earnings of $9 million, down from earnings of $14.2 million a year earlier.

"The economy continued to impact advertising revenues at Journal Communications during the second quarter," said Chairman/CEO Steven J. Smith. "While television revenue grew in markets like Palm Springs, Omaha, Boise and Lansing and radio revenue grew in Omaha, our larger growth markets continued to experience subdued advertiser spending."

Looking ahead to Q3, Journal expects radio revenues to be slightly down compared to the prior year. (07-22-08)

Robinson Radio, a full service ad agency, launches Robinson Radio Networks (RRN), an end to end ad firm dedicated to developing, producing and placing long-form radio programming. Typically thought of as 30- or 60-minute audio infomercials, RRN will create radio programming for any duration. Currently, RRN reaches almost 12 million listeners weekly on nearly 100 affiliates.

Robinson Radio President/CEO Buck Robinson said, "We're pleased to be able to provide quality long-form radio programming that works for both the stations airing the shows and for the advertisers buying the time. These shows will be hosted by nationally recognized personalities and will lend instant credibility to an advertiser's product or service."

Robinson also announced the appointment of Phil Armas as President of Robinson Radio Networks. He joins RRN after spending nine years with Capital One Financial. (07-22-08)

A federal appeals court has overturned that $550,000 fine levied against CBS Corp. for Janet Jackson's "wardrobe malfunction" during the 2004 Super Bowl halftime show in which she bared her left breast. A three-judge panel in Philadelphia ruled that the FCC "acted arbitrarily and capriciously" when it issued the fine.

The appeals court said the FCC deviated from its almost 30-year practice of fining indecent broadcast programming only when it was so "pervasive as to amount to shock treatment for the audience." "Like any agency, the FCC may change its policies without judicial second-guessing, said the court. "But it cannot change a well-established course of action without supplying notice of and a reasoned explanation for its policy departure."

The appeals court also ruled that "The Commission's determination that CBS' broadcast of a nine-sixteenths of one second glimpse of a bare female breast was actionably indecent evidenced the agency's departure from its prior policy... Its orders constituted the announcement of a policy change -- that fleeting images would no longer be excluded from the scope of actionable indecency." (07-21-08)

The number of journalists of color and women working in local radio & television news rose in 2007, as did both groups in newsroom leadership positions. The 2008 RTNDA/Hofstra University Annual Survey shows that the minority workforce grew to 11.8% in local radio, the first increase after a steady decline for more than a decade.

Also in radio, the percentage of minority news directors returned to 5.9%, down from the previous year's spike, but more in line with earlier percentages. Measurement of minority news directors in radio fluctuates each year based on which stations complete the survey.

The percentage of female news directors in local radio fell again in 2007 from 24.4% to 22.7%. The percentage among news directors also fell back to the 2005 levels of 20% after rising to 23.5% in 2006.

"As thousands of journalists of color gather for the quadrennial Unity convention, I'm pleased we are still seeing progress in diversity in electronic newsrooms," said RTNDA President Barbara Cochran. "There is still more to be done to help newsrooms keep pace with the growing diversity of the U.S. population and RTNDA will continue to provide resources and share best practices to assist with those efforts." (07-21-08)

XM Satellite Radio launches an offering of $400 million in new senior notes, a part of a series of transactions to refinance debt in connection with the pending merger with Sirius. XM says the offering will be structured in a manner that will permit it to be unwound if the merger is not approved or falls apart.

Meanwhile, XM revealed preliminary Q2 results today, showing a gain of 322,000 new net subscribers in Q2 for a total of 9.65 million subscribers, a 17% increase over 2007. Total gross additions for the quarter were 1.08 million including 857,000 OEM gross additions.

Q2 churn improved slightly to 1.67% and Q2 subscription revenue is expected to be in the range of $283 million to $288 million. (07-21-08)

The Radio Advertising Bureau (RAB) is producing ten sales & marketing sessions as part of the NAB Radio Show in Austin, September 17-19. With nearly one-third of the workshops devoted to sales and marketing topics, RAB has identified ten key issues facing today's radio managers and sales managers to be addressed at these NAB Radio Show Sessions:

1. Monetizing your radio streaming
2. 360-degree solutions for multi-cultural convergence
3. Great skills to find and keep great people
4. 1+1=3: Making Radio & the Internet work together for advertisers
5. Small market idea swap
6. Satisfied customers can kill your business – satisfaction vs. loyalty
7. Ten things that grabbed my attention and what they mean for radio
8. Selling radio in a challenging economy
9. How to sell the best story your local client has ever heard
10. Making money with video on your web site

"The NAB Radio Show is one of the most vital conferences in the Radio industry," added RAB Executive VP/Training & Meetings George Hyde. "We are honored to continue our involvement with the Radio Show and to play a role in helping radio stations realize their revenue potential." (07-21-08)

In a press briefing Friday, Arbitron Radio Advisory Council Chairman Chuck DuCoty (pictured), who also serves as CEO of NRG Media, discussed the council's 3-day meeting in Jackson Hole, WY, this week. Among the headlines, DuCoty said that Arbitron President/CEO Steve Morris announced that's its number one priority was to secure MRC accreditation in each of the PPM markets.

The council had previously asked to move PPM's 6-11 demo samples into the 12+ arena, and Arbitron has agreed to just that. 6-11 samples will not be moved into 12+ increasing PPM's 18-54 samples by ten percent. Additionally, Arbitron has agreed to increase samples by 10% across the board, including 18-54, by 2010. The council challenged for a quicker increase.

DuCoty noted that for the first time, the council focused on PPM issues for an entire day and diary issues for one day, providing 100% focus each day. "While PPM has been the sexy kid, we're very focused on diary service," he said. The coun asked Aitron to consider moving the 12+ guarantee to 18-34.

DuCoty feels that council had major sample issues and concerns in current diary markets. "We need to fix this diary product, we need to fix the sample," he said. "I'm concerned about the longterm product." His main concern is that samples are getting smaller and weighted and that the ratings company needs to address this issue."

In conclusion, DuCoty felt that the council and Arbitron are moving in a positive direction. (07-18-08)

In what might be called a major blow to those seeking to deny the proposed merger of Sirius-XM Satellite Radio, Democratic FCC Commissioner Jonathan Adelstein has thrown his support if the two satcasters agree to tougher conditions. Adelstein wants the companies to cap prices for six years and make 25% of their spectrum available for minority programming.

Adelstein's conditions exceed what Sirius and XM have already agreed to -- a 3-year price freeze and a total of 24 channels to minority-controlled programming. But, he says, if the satcasters agreed to the tougher conditions, he will vote for the deal.

"It's critical that if we're going to allow a monopoly, that we put in adequate consumer protections and make sure they're enforced," Adelstein said.

Both FCC Chairman Kevin Martins and Commissioner Robert McDowell, both Republicans, are both supporting the merger with conditions. So far, Deborah Taylor Tate, also a Republican, is undecided and had been considered the possible swing vote. (07-17-08)

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