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2010-07-28: According to latest figures from the US Federal Communications Commission (FCC) licensed broadcast station numbers continued to rise in the first half of this year, although the number of AM stations fell marginally: At the end of 2009 the total of licensed broadcast stations was 30,503 and this went up by 163 to 30,666 at the end of March and in the second quarter this went up by another 189 to reach 30,855 at the end of June. Within this there were 14,453 licensed radio stations at the end of March, up 33 from the 14,420 at the end of 2009, and a further 50 were added in the second quarter to take the total to 14,503. AM station totals went down from 4,790 at the end of 2009 - and the same number at the end of March - to 4786 at the end of June. Commercial FM numbers rose from 6479 at the end of 2009 to 6483 at the end of March and 6494 at the end of June and Educational FM numbers rose from 3151 at the end of 2009 to 3180at the end of March and 3223 at the end of June. The total of Low Power FMs rose from 864 at the end of 2009 to 865 at the end of March but then fell back again to 864 at the end of June. Previous FCC: Previous FCC station numbers: 2010-07-28: According to Forbes, the US Inland Revenue Service (IRS) is demanding USD 45 million in back taxes from billionaire Billy Joe "Red" McCombs, the San Antonio billionaire and Clear Channel co-founder, relating to sales of 11.3 million shares of Clear Channel stock that he sold. Forbes says that Mc Combs used a tax strategy similar to one disallowed last week for Denver-based billionaire, Philip Anschutz, a ruling that is likely to hit many more of America's rich - Economywatch estimates that collectively they could need to find some USD 35 billion this year. Under the scheme stock options were turned into cash and the capital gains deferred through an arrangement in which they would lend shares underlying the options to a bank and receive cash around 75-85% of their market value: Because the shares were to be delivered to the bank in future - the contracts were a prepaid variable forward and a sale lending agreement- this was treated as a lending arrangement not a sale but the Tax Court ruled that as the banks typically sold short the share they borrowed it amounted to a sale and thus capital gains tax could not be deferred. Many rich Americans had used such arrangements on the advice of Wall Street institutions. In the Anschutz case he converted options into USD 375 million I cash and deferred payment of the tax due - more than USD 144 million - for 11 years but in 2006 the IRS issued guidance that it would regard such arrangements as a sale, leading Anschutz to take the case to court. His company is to appeal the Tax Court ruling. In McCombs' case, Forbes reports that the IRS says he should have reported a total of USD 216.7 million in long-term capital gains in 2002 and 2003 and that in those two years he had USD 245 million in taxable income but reported only USD 18 million and also that he owed USD 53 million in income tax but paid only USD 8 million. McCombs, like Anschutz, has gone to the courts and Forbes adds that according to his lawsuit McCombs borrowed USD 300 million in the late 1990s to buy the Minnesota Vikings NFL team and put down 11.3 million of his 14.5 million Clear Channel shares as collateral. Clear Channel shares as collateral: After their value plummeted, McCombs faced margin calls but did not wish to sell the Clear Channel stock and was advised by three investment banks to enter into a prepaid variable forward contract. Following this in July 2002 he set up such a contract with JPMorgan Chase with 12 different tranches to be settled (with stock or cash) in 2003, 2004 and 2005 and in August that year he agreed to lend the shares to JPMorgan Chase. Rather than sell the shares he agreed to lend them to JPMorgan Chase and in 2002 entered into a "variable prepaid forward contract" in 2002 with three banks, including JP Morgan, where he'd use the stock to finalize debt over the next three years." The IRS is claiming that says that the transactions were in effect one deal that in substance were a sale in 2002 on which tax was due but McCombs is arguing that the deals were separate, that for tax purposes, he sold no stock in 2002, and also that the statute of limitations has passed for assessing back 2002 and 2003 taxes. The IRS in relation to the latter denies that it took action too late and says that Gary V. Woods, MCombs' long-time partner and the president of McCombs Enterprises, signed an agreement on behalf of McCombs, extending the statute. Woods told Forbes that as the case was still being litigated he was restricted in what he could say but added, "We believe that the facts in our case are substantially different than those in the Anschutz case." Previous Clear Channel: Economy Watch report: Forbes report: 2010-07-28: Emmis has won a legal round against investors who had tried to block the planned sale of the company to a company set up by its Chairman and CEO Jeffrey H. Smulyan. Marion County Superior Court Judge Robyn L. Moberly in denying a petition from the investors commented that shareholders who objected to the sale on the basis that the price offered was too low were free to sell their shares. Emmis termed the decision a "sweeping victory". JS Acquisition Ltd, which is backed by Global Capital, has offered USD 2.40 per share for Emmis's Class A Common stock and Smulyan holds enough of this to ensure acceptance of the offer but preferred stockholders could still scupper the deal (See RNW Jul 14). Emmis is still facing legal action in other jurisdictions including a class action in the in U.S. District Court in New York announced by the law firm Wolf Haldenstein Adler Freeman & Herz. This suit also claims that the bid is too low Reporting on the latest ruling the Indianapolis Star noted that the Emmis board had agreed to accept the offer in May this year (See RNW May 26) and says the stock sale is expected to now go ahead at a shareholders meeting in Indianapolis on August 3. It also noted that the Indianapolis Business Journal reported that Emmis has more than USD 340 million in debt, and said that including noncash charges, operating losses over the last two fiscal years have totalled more than USD 500 million. Previous Emmis: Previous Smulyan: Indianapolis Star report: 2010-07-28: Mexican radio group Grupo Radio Centro has reported second quarter revenues up 17.2% on a year earlier at MXN 208.6 million ( USD 16.39 million); expenses up 10.6% to MXN 167.3 million (USD 13.14 million) ; broadcasting income up 54.5% to MXN 41.34 million (USD 3.25 million ); operating income up 91.2% to MCN 31.42 million ( USD 2.47 million) and net income of MXN 3.12 million (USD 245,000) compared to a loss of MXN 28.29 million (USD 2.22 million) a year earlier. The company put the increased revenues down to increased advertising revenue in Mexico and also revenue from KXOS-FM, Los Angeles, which it began to operate on April 15 last year. For the first six months broadcasting revenues were up 12.3% to MXN 374.9 million (USD 29.5 million); expenses were up 24.6% to MXN 328.0 million (USD 25.8 million); broadcasting income down 33.5% to MXN 46.84 million (USD 25.24 million); operating income down 45.7% to MXN 27.0 million (USD 2.12 million); and a net loss of MXN 24.48 million (USD 1.92 million) compared to a net loss of MXN 13.62 million (USD 1.07 million) a year earlier. The company also noted that as of June 30 its outstanding bank debt totalled MXN 180 million (USD 14.14 million) and that it was not in compliance with one of the financial covenants of its credit facility, the fixed charges coverage ratio for the first and second quarter of 2010. It adds that it obtained a waiver from the lender of this non-compliance for the first and second quarter of 2010and that no assurance can be made as to whether the Company will be able to comply with the fixed charges coverage ratio for the third quarter of 2010. It also noted that the lender may not provide future waivers and could accelerate the amounts due under the loan. Previous Grupo Radio Centro: 2010-07-27: Entercom has reported second quarter revenues to the end of June up 4% to USD 105.8 million with station expenses up 2% to USD 68.1 million and station operating income up 8% to USD 37.7: Same station increases were of 5% for revenues, 2% for expenses and 9% for operating income. EBITDA was up 11% to USD 33.4 million, operating income went from a loss of USD 43.65 million to income of USD 28.84 million and net income went from a loss of USD 41.91 million in the second quarter of 2009 when the figures included a USD 67.68 million impairment charge, to net income of USD 14. 26 million (from a loss of USD 1.19 cents per basic share and per diluted share to net income of 38 cents per diluted share and 40 cents per basic share. The company also noted that during the quarter it reduced its outstanding net senior debt by USD 16.8 million and as of June 30 had USD 4.4 million in cash and USD 701.2 million of senior debt. For the first six months net revenues are up 1.8% at USD 127.31 million; an operating loss of USD 36.86 million became operating income of USD 41.01 million; and net income went from a loss of USD 36.58 million to income of USD 18.46 million (from a loss of USD 1.03 per basic and diluted share to net income of 49 cents per diluted share and 52 cents per basic share. President and CEO David J. Field said of the results in a release, "Entercom posted strong operating results in the second quarter as solid revenue growth and margin expansion drove double-digit increases in EBITDA and Free Cash Flow. Looking ahead, we are highly enthusiastic about our future prospects based upon the likelihood of continued economic recovery, the ad market rebound, radio's excellent audience listening trends and cost effectiveness, secular weakness in certain competitive media, and the impact of our internal digital and business development initiatives. In addition, we should continue to benefit from our strong free cash flow generation that has enabled us to reduce our debt by over USD 200 million in the past two years." At the company's conference call Field said that national sales had led the improvement and that following improved revenue so far there were encouraging signs for the rest of the year. He added that the industry as a whole was now two quarters into a solid recovery in radio ad spending Previous Entercom: Previous Field: 2010-07-27: A calculation by Harker Research estimates that the use of Arbitron's Portable People Meter (PPM) ratings as opposed to numbers to be expected from Nielsen Ratings, which use a diary system, could be costing US radio stations in the top 50 markers as much as USD 7 billion a year. Harker says it came up with the estimate after Nielsen released a summary of listening in the 51 markets they survey: Harker then compared the figures for reach, time spent listening and AQH (average quarter-hour) listening, noting that in Arbitron diary markets TSL is almost 50% higher than in its PPM markets and Nielsen's estimate is even higher, nearly twice that for the PPM. AQH is nearly 30% lower for the PPM than Arbitron's diary estimates and 45% lower then the Nielsen estimate, and Harker says this is why Arbitron "created the misguided 70 is the new 100 sales campaign aimed at media buyers. Their goal was to convince media buyers that they could buy only 70 rating points in a PPM market with the confidence that they were really getting 100 rating points." Clients says Harker are telling it they don't accept the premise and are demanding lower rates if the PPM shows lower ratings and if the Nielsen figures are correct a "Back of the envelope" calculation shows that in 2009 using the 16.5 Nielsen rating rather than Arbitron's 9 rating, stations in the top markets could have taken billing up from around USD 9 billion to around USD 16 billion at the same cost per point. RNW comment: The crucial issue here it seems to us is how far the figures from either system can be shown to accurately record listening. Diary systems leave room for human error in the listening recorded but equally the PPM may be neutral in "human" terms but biased because of the make-up of panels or missing listening because of inability to read the encoded data at all times - in 2005 UK radio ratings organization RAJAR showed the best identification of signals in its tests came from the Eurisko Media Monitor, an audio-matching pager-type device - which correctly identified 70% of the signals compared to 59% for the PPM, which works by inserting a code into the transmitted signal, and 30% for the GfK/Telecontrol MediaWatch, a wristwatch audio-matching device (See RNW Feb 15, 2005). We do not know how far the technology has improved since then but 41% missed leaves a very large margin for error, even if the PPM panels are now perfect in their composition. Previous Arbitron: Previous Nielsen: Harker Research report: |
2010-07-26: The US Federal Communications Commission (FCC) has entered into a Consent Decree with Univision Radio that resolves pay-for-play allegations made against the company: As part of the settlement Univision is to pay USD 1 million to the US Treasury and will also "implement business reforms and compliance measures" to ensure future compliance. In a companion criminal action a federal district court has accepted the plea of Univision Services, Inc. to charges filed by the U.S. Department of Justice ("DOJ"), based on the same facts. Under the agreement, Univision will appoint a Compliance Officer and regional Compliance Contacts responsible for monitoring and reporting company performance under the settlement and ensure regular training of programming personnel on payola restrictions: There will be a general prohibition on Univision stations and employees exchanging airplay for cash or other valuable considerations except under specified conditions, and provided that such exchanges comply with sponsorship identification laws and limits on the sizes of any gifts, concert tickets and other items that Univision stations and employees can accept from record labels. Commenting on the settlement, FCC chairman Julius Genachowski said in an FCC news release, "Payola -- the idea of pay-for-play -- misleads the listening public. This agreement with Univision underscores the FCC's focus on consumer protection and our commitment to ensuring that broadcasters play it straight with the public." FCC Enforcement Bureau Chief Michele Ellison added, "Broadcasters play a critical role in educating and entertaining the public and along with that special role comes some fundamental obligations. We will continue to work with other government agencies, including criminal law enforcement authorities where appropriate, leveraging all the tools at our disposal to protect consumers and prevent them from being misled." Previous FCC: Previous Genachowski: Previous Univision: 2010-07-26: In an interview with the Wall Street Journal, Tribune Co. Chief Executive Randy Michaels - a former Clear Channel Radio CEO - presages further cuts in the business to trim costs and take the company that was taken private in 2007 in a USD 8.2 billion that was financed almost entirely with borrowed finance, out of bankruptcy. Tribune owns eight major newspapers including the Chicago Tribune and Los Angeles Times as well as 23 TV stations and WGN-AM, and the Journal says he's reducing duplication in news reports through supplying international and national reports to the smaller papers from their larger siblings rather than their doing their own reports and also intends to follow the consolidation pattern he set for radio at Clear Channel with similar consolidation in Tribune's print and broadcast operations. He was asked about keeping employees motivated - something that would appear to be problematical at WGN (See RNW June 26) - and cited as an example an employee who "figured out a way to save us a couple of million dollars [in] the way we buy newsprint." "We gave him a USD 25,000 check, took his picture, sent it around," responded Michaels. "There were some people who groused about that, but there were a lot more people who sent us ideas." [RNW Comment - an indication perhaps that employees will sell themselves cheap and executives grab as much as they can - 1.25% of the saving is hardly a generous reward.] Michaels told the Journal he didn't think paywalls would work for the company's papers and that at the moment none of its newspapers was close to being economically viable as a pure online operation but advertising was rebounding substantially in some sectors. He forecast that the company's lenders would approve its plans to exit bankruptcy on which they are set to vote by August 6. Previous Michaels: Previous Tribune Co.: Wall Street Journal report: 2010-07-26: Absolute Radio has announced that former Arsenal and England footballer Ian Wright is to be amongst its team of commentators for its Barclays Premier League programming along with Jim Proudfoot and Russ Williams. The station, which bought Premier League rights packages along with BBC Radio Five Live and UTV's talkSPORT (See RNW Feb 11), will launch its cover on August 14th with a schedule in which from 13:30 Russ Williams will anchor 90-minutes of pre-match build-up cover on Absolute Radio Extra followed by a two-hour Rock & Roll Football programme on Absolute Radio whilst Jim Proudfoot will be match commentator for the same slot on Absolute Radio Extra. At 17:00 Wright will anchor a 90-minute post-match commentary analysis and commentary on both stations accompanied by Jim Proudfoot, Russ Williams and guests. The Live commentary will be co-produced by Independent Production Company USP and Executive Produced by Simon Crosse. Absolute also says in a posting on the station's blog that it already has a sponsor in place for the programming but cannot give details yet. Previous Bennett, Coleman & Co. Ltd (Ultimate parent of Absolute): 2010-07-25: Last week was yet another where the main regulatory news as regards radio came from North America with a lower level of activity elsewhere: In Australia the Australian Communications and Media Authority (ACMA) has found that community radio broadcaster 4CCR, Cairns, in Queensland, has breached the licence condition that requires licensees to encourage community participation in the operations of the service. The ACMA investigated after receiving a number of complaints about station policies that restricted membership and notes that in response to its finding 4CCR has begun the process of redeveloping its membership policies and constitution to ensure it has open membership: This process is being undertaken in conjunction with a range of agreed measures that were implemented in December 2009 when 4CCR's licence was renewed and the ACMA says that accordingly it will take no further action for now although it will continue to monitor the station's implementation of the agreed measures. In Canada, the Canadian Radio-television and Telecommunications Commission (CRTC) had a fairly quiet week as regards radio licensing decisions, announcing only one, in addition to which it has launched a number of consultations and announces new policy to strengthen the community and campus radio sector. The licence decision was approval of an application by Joel Lagacé, on behalf of a not-for-profit corporation to be incorporated for a broadcasting licence for a 50 watts English-language, low-power Type B community FM radio programming undertaking in Iroquois Falls, Ontario. The station will broadcast 126 hours of programming per broadcast week, all of which will be locally produced and will include the promotion of local activities and festivals, local news, sports and weather; programming directed to the Francophone population in the area; and a range of musical selections, including Pop, Rock, Dance, Country, Jazz and Blues. Regarding the country's community and campus radio sector, the agency said its new policy will provide this sector with stable funding, and emphasize the importance of local reflection as well as the participation of volunteers in all areas of a station's operations. Michel Arpin, the CRTC's Vice-Chairman of Broadcasting, said of the move, "Community and campus radio stations serve a distinct need within the broadcasting system. In the years to come, these stations will have access to predictable funding so that they may continue to offer local information, give exposure to emerging Canadian artists and provide opportunities for volunteers to participate in the broadcasting system." As part of the policy the Community Radio Fund of Canada (CRFC) will see its annual funding increase by more than CAD 700,000 (USD 678,000). This will be distributed among the more than 140 community and campus radio stations and will come from a re-allocation of commercial broadcasters Canadian Content Development (CTD) contributions. The policy will also ease regulation on campus radio stations which will see their advertising limits regulated on the basis of a weekly limit rather than the current hourly one. The CRTC also posted a public notice with an Aug 23 deadline for the submission of interventions or comments relating to an application by Newcap Inc. to change the antenna radiation pattern of CJYQ-AM, St. John's, Newfoundland and Labrador, from directional to non-directional; decrease the transmitter power from 25,000 watts to 3,500 watts night time while maintaining it at 25,000 watts day time, and change the antenna site. Newcap said that its previous antenna site is unusable due to deterioration caused by the coastal Newfoundland weather. Another notice with the same Aug 23 deadline for the submission of intervention or comments includes the following radio applications: Ontario: *Application by 4352416 Canada Inc. to renew the broadcasting licence for its English-language specialty station, CJMB-FM, Peterborough, expiring 31 August 2010. The CRTC notes that this licensee may have failed to comply with regulations relating to the filing of annual returns for the 2007 and 2008 broadcast years and also its condition of licence relating to Canadian talent development contributions for the 2006 and 2008 broadcast years and for Canadian Content Development contributions for the 2009 broadcast year. The licensee is also requesting an easing of its licence condition requiring minimum of 90% of all musical selections broadcast during each broadcast week shall be devoted to selections drawn from subcategory 35 (non-classic religious) as this relates to Christmas music on the basis that not all Christmas songs falls into subcategory 35. It is proposing that from 1 November until 5 January it be required to broadcast a minimum level of 67% of Category 3 music and a maximum level of 33% Category 2 music each week. A third consultation for which the deadline to submit interventions or comments is August 24 relates to an application by Newcap Inc. to add a 50 watts FM transmitter in Springdale, Newfoundland and Labrador, to the licence of CKCM-AM, Grand Falls, New Brunswick. Quebec: *Application by Astral Media Radio inc. to renew the broadcasting licence for its French-language commercial station CITF-FM, Québec, expiring 31 August 2010, and to delete licence conditions requiring it to a minimum of 63 hours of local programming; the maintenance of the current level of 2 hours and 6 minutes of news; and the requirement to file annually until the expiry of the implementation period for the benefits related to Transfer of control of 3903206 Canada Inc., of Telemedia Radio Atlantic Inc. and of 50% of Radiomedia Inc. to Astral Radio Inc., Broadcasting a report on the report on the diversity of musical selections aired on each of its three predominantly music-based FM network services (i.e., Énergie, RockDétente and Boom FM). Astral noted that no other group is required to file a report on musical diversity or to broadcast local programming at a level that exceeds what is required of all licensees under the Radio Regulations, 1986. *Application by Astral Media Radio inc. to renew the broadcasting licence for its French-language commercial station CITÉ-FM-1, Sherbrooke, and its transmitter CITÉ-FM-2, Sherbrooke, expiring 31 August 2010, and also to delete the same conditions that apply to CITF from its licence. There were no radio announcements from Ireland but in the UK Ofcom issued its first report on the progress of digital radio (See RNW Jul 22) and also upheld standards complaints against three radio stations in its latest bulletin (See RNW Jul 19). In the US the main radio news from the Federal Communications Commission (FCC) was the ending of its Auction 88 in which 13 construction permits fetched just below USD 1.9 million (See RNW Jul 23): The FCC also defended its decision to relax cross-ownership rules in a court filing although Democrat Commissioner Michael J. Copps posted a dissent (See RNW Jul 21). In enforcement actions the agency confirmed a USD 10,000 penalty on Dexter Blake of Mt. Vernon, New York, for operating a pirate FM. It had filed a Notice of Apparent Liability for Forfeiture (NAL) in this amount in March last year to which it received no response. Previous ACMA: Previous CRTC: Previous FCC: Previous Licence News: Previous Ofcom: ACMA web site: BAI web site: CRTC web site: FCC web site: Ofcom web site: |
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