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Futuri
Tom Taylor Now
Friday, July 31, 2015 Volume 4   |   Issue 148
Not so fast, Pandora…
PandoraStation-owner Pandora loses Round 1 in its fight to pay less for streaming music.

They’re not surprised one little bit. Pandora’s Dave Grimaldi says a judge’s decision rejecting Pandora’s attempt to pay the same rates as terrestrial stations “was a basic procedural step, and we remain confident in our legal position.” It’s why Pandora paid $600,000 for Connoisseur’s Rapid City-market CHR “Hits 102.7” KXMZ Box Elder, South Dakota. ASCAP continues to try to roll back Pandora’s already-closed purchase, while it was BMI that Pandora was targeting in this most recent legal effort. Judge Louis Stanton had previously ordered Pandora to pay a 2.5% rate, up from its original 1.75% level (June 1 NOW). Does Pandora think its tactic of buying an FM will work? It’s a crapshoot, and it knows that.

Sun & Fun
More putting-on-our-best-face exits at CBS Radio.

One NOW Reader says “there’s fear in the hallway” at the CBS cluster he visited recently. We do know that in Philadelphia, the cuts from a couple of weeks ago are followed by two more departures – cluster Director of Sales and WOGL GM Jim Loftus, and WOGL/98.1 morning host Ross Brittain. Loftus is “very grateful to [new CBS Radio COO Scott Herman] for the terrific new opportunities he presented to me, and especially appreciative of the gift of time to review them.” But he’s taking “the exit option” and is “off to a spiritual retreat in Arizona, then some time at our home in the Poconos” to “hit the re-set button.” Jim’s at JFLoftusIV@aol.com. Brittain’s doing his last show for WOGL today and says thanks to Jim Loftus, PD Anne Gress and his wife Rasa Kaye (who still works for co-owned all-news KYW/1060 and talk WPHT/1210). Ross is at Ross_Brittain@compuserve.com. WOGL already cut Bob Charger, its live night jock. Up in Chicago, there’s a resignation that really is a resignation. Patty Reilly-Murphy had been promoted to GSM at adult-alternative WXRT/93.1 just last month – but now she’s taking a break, though not until the end of August. That occasions some changes. Market manager Rod Zimmerman announces “the return of the WXRT/WSCR combo sell” from the 1990s, meaning WXRT and all-sports “Score 670” WSCR. Chad Feldman will be GSM for both stations and John Goforth the local sales manager. The sales staffs will be merged.

iHeartiHeart (proudly) keeps out-performing the industry.

Is that because of its “unmatched portfolio of products, media, platforms, content and personalities?” iHeart President/COO/CFO Rich Bressler confidently tells yesterday’s Q2 call that “no other company can do what we do.” Is that because Bob Pittman attends top-level events like the Cannes Lions Festival in France and make sure they’re in front of the right national advertisers? Is it because iHeart keeps investing in national talent like Ryan Seacrest, Elvis Duran and Bobby Bones? Is it because iHeart owns the Katz mega-rep and has a great feel for national business? Supply your own reasons, and Rich Bressler can think of some more. But based on yesterday’s call, he’s very happy with his company’s position. (True, there’s still that stubborn $20 billion in debt, but there are “no significant debt maturities until 2018,” which fuels jokes about the coming pre-packaged bankruptcy that year.) But at a time when others view flat revenue as “up,” iHeart is up 4% for second quarter. National was good, and even the core local category was in positive territory. Bressler says iHeart “out-performed the radio sector, as measured by Miller Kaplan,” and it’s “strong” in categories like automotive, medical/health-care and financial services. Also contributing is the Total Traffic and Weather Network, and Premiere Networks. It’s quite an integrated power-house.

“How long can you keep that up?”

The trending is so positive at iHeart, compared to the industry as a whole, that one analyst literally asked Rich Bressler about the “dramatic divergence” from its peers. Bressler emphasizes that he and Chairman/CEO Bob Pittman still think radio is “significantly under-monetized” and they’re in “the very early, early innings” of converting the national reach into revenue. Bressler preaches about radio’s 93% weekly reach, compared to the declining reach of television (especially with 18-34s). The various iHeart properties have a combined 75 million followers on Facebook and Twitter. Meanwhile, third quarter pacing is up 3.3%, and that’s despite the comparison to last year’s $10 million in political revenue. Bressler says local is “up after more than five consecutive quarters of decline” – another way iHeart is out-performing the industry.

Tom Kent
iHeart just sold another nine towers, for $6 million.

That was the smaller second chapter of the much-bigger initial sale of 369 towers for $367 million, to Boca Raton-based Vertical Bridge. We just found out on yesterday’s call about the more recent sale, which closed on July 16. That would bring the dealings between iHeart and Vertical Bridge to 378 towers, with potentially another couple of dozen to go. They initially announced that Vertical would purchase as many as 400 towers, in stages. Management likes having the money in the bank, from the sale, but here’s a detail from the SEC filing – “direct operating expenses increased $14.8 million, primarily due to higher lease expense as a result of the sale and subsequent leaseback of radio towers.” So there’s now an out-of-pocket cost to use the towers it once owned. How did iHeart do overall in its second quarter? Revenues from iHeartMedia (where radio is) plus Clear Channel Outdoor slipped 2% to $1.59 billion, compared to 2014. Just as with Nielsen earlier this week, the foreign exchange rates were messing with the numbers. If you exclude the fluctuations of foreign currency, revenues would’ve been 2% better than the year before. iHeart is still losing money, but less – about $54.7 million, compared to $187 million a year ago. Study iHeart’s SEC filing here. The slide-deck is downloadable here.

CumulusCumulus hustles to catch up with iHeart.

When it comes to national sales, iHeart “has been performing at a much higher level than the rest of the industry that is represented by” iHeart-owned Katz, says Lew Dickey of Cumulus. He says iHeart can “take dollars off the table before they’re available to the rest of the industry.” That makes the radio business “a tale of two cities,” with apologies to Charles Dickens. Lew says what Bob Pittman and Rich Bressler are doing is using their scale “to get agencies to earmark” money for iHeart, leaving “fewer dollars” for everybody else. National sales is one battlefront where Cumulus yearns to better compete with iHeart, but there are others. Lew says he’s recently hired more than 40 “highly-talented industry executives.” Yes, he’s cutting costs and replacing more than a few market managers, but he tells analysts that “our team is largely in place.” He’s made hires like Pierre Bouvard (Chief Marketing Officer, who was doing a client pitch with Lew just yesterday), Ron Russo (EVP/Sales) and Lori Lewis (VP/Social Media). Now what’s critical is to have a strong upfront selling season, which is just beginning. Lew explains that the upfront is like “making your bed for the next year,” getting in front of about 40 key accounts. Dickey says part of this year’s lag in performance is the result of last year’s upfront sales. With his new team pulling together, Lew’s expecting much better results this year – but the obstacle is always iHeart, in line ahead of him and everybody else. And expectations are now different. Dickey says “It’s amazing how fast things are changing [in negotiations], and what clients are asking for.”

vcreative
“Is Q2 the low point?”

The numbers don’t look pretty. One analyst on yesterday’s Cumulus call scans the second quarter results – local revenue down 4%, national off nearly 11%, Westwood down 16% – and sums up his feeling with that “low point” question. The thing is, these results are just about what Cumulus had been guiding to and what the street was expecting. In fact the overall 8.8% revenue decline is “slightly better than the pacing data,” according to CEO Lew Dickey. The Cumulus stations as a group are down about 5% (4.9%). But that’s only “slightly behind” the 54 local markets where there’s revenue measurement, and Cumulus says it out-performed its markets in digital. Going forward, Dickey predicts “sequential improvement” in the last two quarters of the year, with both stations and Westwood currently pacing down about 6%. So if Cumulus is down about 6% and that’s in-line with its markets – does that mean Cumulus expects the industry to be off about 5% to 6%? One problem lurking in the year-ago numbers is the mid-term political revenues. Lew’s expecting third quarter to pace down about 3.5% to 4% with local and to be down double digits on national. More about Cumulus -

• “It looks like you’re running in place,” says CRT Capital analyst Lance Vitanza to Lew Dickey. Lance then asks if Cumulus would “make an attractive merger partner” for somebody else. Dickey admits there’s debt on the balance sheet and says “it’s a mortgage we’re working very hard to pay down.” Nobody mentioned the recent drop in Cumulus stock price, but the analysts know about it. Yesterday, before Wall Street saw the Q2 numbers, “CMLS” slipped another 7 cents (4%) to close at $1.51 share – trading at levels not seen since 2009.

Nash FM• “Nash” is still one of Cumulus’ big bets. One analyst questions how the Cumulus-partnered CBS Sports Radio Network is doing (it’s lumped in with NFL and other sports generally, and Lew Dickey says the CBS business is “doing well”). And nobody’s asking about another former Cumulus big bet, the SweetJack daily deals product. But the country Nash project remains a big topic for Cumulus, and Dickey says there’s generally “good progress” in building out the brand. That includes the Country Weekly magazine (being re-branded as Nash) and the Nash Next “country superstar” talent contest. (Over 1,000 bands and artists have already entered, and Lew says “we own all aspects of this competition.”)

• Chicago is a star, partly due to the stations that Cumulus is LMAing from Merlin (classic rock “Loop” WLUP and alternative WKQX/101.1). Dickey calls Chicago his best-performing market and says while the market as a whole is down 1%, “our stations are up 16.5%.” Dickey name-checks recently-hired market manager Peter Bowen, and he likes the prospects for the White Sox and Bulls coming to Cumulus next year.

• Real-estate update (Hurricane Katrina, too). Cumulus is “on track” with its $125 million sale of the acreage under the tower of L.A.’s KABC/790 and that should close by next March. The choice piece of land under Washington DC’s WMAL/630 is sold to Toll Brothers, and depending on how many housing units it can build, Cumulus might get as much as $85 to $90 million. Proceeds from both deals will pay down debt. And there’s $14.6 million in insurance money coming from the 2005 Hurricane Katrina, dating back to when Citadel owned stations in New Orleans and it took its insurer to court.

• Rdio Live is being tested in a few markets now, allowing users of the app to toggle back and forth between a live local Cumulus station and Rdio streaming. Cumulus owns or will own about 15% of the international Rdio service, in exchange for marketing.

• Cumulus cheers the AT&T deal for FM-enabled Android phones, with Lew Dickey complimenting Jeff Smulyan on “a wonderful job” of creating the app and his “indefatigable” pursuit of the carriers and other necessary partners. Lew also throws in this line – “I view the car as a mobile device.”

RCS
Disney sells its other Radio Disney affiliate in Chicago to Polnet – which also bought the first one.

This didn’t happen right off the bat – an earlier deal for WRDZ La Grange/1300 cratered. Then ethnic broadcaster Polnet Communications stepped in. In 2006 it bought what’s now regional Mexican WPJX Zion/1500, and now it reunites them by paying $3,450,000 cash for WRDZ/1300. We say “reunites” because Disney originally bought the 1500 and 1300 signals from Lotus in 1998, when they were WTAQ and WTAU. The 1300 becomes Polnet’s fifth AM in Chicago, including Polish “Polskie Radio 1030” WNVR Vernon Hills, brokered-ethnic WKTA Evanston (1330) and brokered-ethnic WEEF Deerfield/1430. WRDZ is licensed to La Grange, Illinois and runs 4,500 watts daytime, 4,000 watts at night. Walter Kotaba leads Polnet, which also has radio stations in the New York market and Florida. Disney doesn’t have many stations left, out of the 23 former Radio Disney O&Os it put on the block last year. When everything’s done, the only Radio Disney-owned station will be LA-market KDIS/1110. Brokers on the sale of WRDZ – Bill Schutz for seller Disney and Kozacko Media Services for buyer Polnet.

Dave PaulusQuote of the Day – “When my kids start asking me at the dinner table, ‘What’s going with Voltair today?’...It’s become obvious I’ve gotten a little too engaged on this topic.” That’s Max Media Norfolk GM Dave Paulus, who’s been in the forefront of radio managers talking about the Voltair audio processor and its effect/lack of effect on Nielsen PPM markets. Paulus believes that “as an industry, we haven’t asked the important questions about the measurement process, be it diary or PPM. The Voltair discussion provided a great basis to do just that.” A lot of this discussion’s now happening on blogs. Read Marc Greenspan at Research Director Inc. (“To Voltair or Not to Voltair?”), here. Consultant Randy Kabrich continues to be in the “skeptic” camp, after his own exhaustive analysis of historical data, blogging here.

Syndication network
Doing Business

Post-Colin Cowherd, ESPN Radio will plug in midday talent from L.A. and Chicago, while the brains in Bristol puzzle out their next move. They knew Colin was bolting at the end of his contract (most likely to be reunited with Jamie Horowitz at Fox TV Sports). But they hadn’t planned on evicting him following the racial slur about baseball players from the Dominican Republic. Next week, Max & Marcellus from KSPN Los Angeles (710) will create a 10am-1pm Eastern time show for the national network (in addition to their normal L.A. PM drive program). ESPN2 Sports Nation host Michelle Beadle and Ben Lyons of the ESPNLA site will handle the following two weeks, with WMVP Chicago’s Tom Waddle & Mark Silverman (“Waddle & Silvy”) heard the week of August 24.

Radio Free IraqToday is the final sign-off for Radio Free Iraq, whose “resources” will be merged into Radio Sawa Iraq, says government-funded parent RFE/RL. The Arabic-language Radio Free Iraq began in 1998, five years before President George W. Bush invaded the country. Radio World says RFI’s parent, the Washington-based Broadcasting Board of Governors, has talked for several years about combining it with Radio Sawa. Though “the planned closure [at that time] brought criticisms from some in Congress and among rights groups.” Radio Free Iraq has 11 staffers in Prague (headquarters of much of the BBG’s European operations), six full-timers in Baghdad, plus dozens of stringers. Several Radio Free Iraq staffers have lost their lives, including former Baghdad Bureau Chief Dr. Muhammad Bdaiwi Owaid al-Shammari. Many others have faced harassment.

Stand-up “Comedy Greats” channel is taking over from soccer on SiriusXM Channel 94, giving the satcaster an even wider profile in comedy. Its current comedy tier begins at channel 95 with “Comedy Central Radio,” while this new Comedy Greats offering will “showcase the greatest stand-up performers of all time.” They’ll contemporize it with “special vignettes with comedians like Dan Aykroyd, Adam Carolla, Cedric the Entertainer, Bill Hader, George Lopez, Howie Mandel, Marc Maron and Russell Brand sharing personal stories about comedians who have changed their lives.” Launch date for Comedy Greats is August 13.

Point To Point
Nielsen Ratings

The latest Spring-book Nielsen diary markets –

Springfield, Missouri – This is 29 straight #1’s for Scripps-owned country KTTS. It’s also a welcome rebound from a 14-year low, with KTTS bouncing from a 20.2 share last Spring, a nasty-looking 10.8 last Fall, and now a 13.0-share. Second is rhythmic sister “Power 96.5” KSPW (6.8-5.4-6.0). Then we’ve got a slew of iHeart stations, starting with country “Wolf” KSWF (6.6-4.4-5.4) and AC KGBX (3.3-5.6-4.9). Midwest Family gets into the rankings with #7 classic rock KKLH (2.6-5.9-4.1). Scripps has the leading talk-based station, talk KSGF (3.8-5.6-3.0). All shares in this section are age 12+ AQH for the total broadcast week.

Froggy 99.9Salisbury-Ocean City, MD – “Froggy” stays on top, and that’s iHeart’s country WWFG (10.3-10.6-9.2). Co-owned AC “Q105” WQHQ is second (6.4-6.7-8.2) and Adams has rhythmic “OC104” WOCQ tied for third place (6.6-6.7-6.5) with iHeart’s urban AC “Magic” WSBY (5.1-4.7-6.5). Nice pop for Delmarva’s fifth-place classic hits “Wave” WAVD (3.9-2.8-5.5). But watch the rise of urban “Power 101.7” WZEB owned by Great Scott but LMA’d out. It wasn’t there in the Spring 2014 book, but did a 1.6 last Fall and a 4.0-share now.

Beaumont-Port Arthur – 31 wins in a row for Cumulus urban “Magic” KTCX (16.9-16.6-16.1). Next among the stations we can see (per the Nielsen “subscriber only” policy) is iHeart’s classic hits “Cool” KCOL (7.4-6.6-8.5) and third is country sister “Kicker” KYKR (5.7-6.1-6.6). Fourth is iHeart’s rhythmic “Kiss 104.5” KKMY, 4.5-5.4-6.3. iHeart and Cumulus are the only subscribers here.

Savannah – Another recent best for Cumulus’ now-double-digit urban WEAS, 8.8-9.5-11.0. Then comes a string of five iHeart stations, like its own urban station, “Beat” WQBT (8.3-7.3-7.2), urban AC “Love” WLVH (8.3-6.7-6.6), and top 40 WAEV (5.1-4.8-6.3). Local owner Thoroughbred has classic hits “Quality Rock Q105.3” WRHQ (5.1-4.5-3.6) and Alpha’s a player with “Rock 106.1” WFXH (4.0-3.1-3.3). There are four country stations, which might be too many. Cumulus runs “Nash” WJCL (4.0-5.9-3.9) and “Nash Icon” WZAT (1.3-1.4-1.5). Alpha has country “Bob” WUBB (5.3-5.3-3.0) plus classic country “Hank” WGCO (3.2-2.5-2.4). Once again, the only talk-based station among the 15 subscribing stations is iHeart’s talk WTKS (2.7-3.1-2.7).

Quad Cities again has just two subscribers, iHeart and Townsquare. This is consecutive win #31 for iHeart’s country WLLR (21.2-17.5-15.8). Townsquare watches the rise of #2-ranked classic rock “97X” WXLP (9.5-7.7-12.9). In a three-way tie for third place are iHeart’s own classic rock “Q106.5” KCQQ (5.6-6.2-7.2), AC sister “Mix 96” KXMG (5.9-8.3-7.2) and top 40 sister “Kiss” KUUL (5.3-6.3-7.2.). iHeart’s talk WOC (warming up for political season) moves 5.0-5.3-4.6.

Montgomery – iHeart and Cumulus are the lone subscribers, and iHeart’s urban WZHT (10.1-10.5-12.0) is up in the double digits along with urban AC sister WWMG (14.2-10.7-10.4). Falling out of double digits is third-ranked sister gospel “Hallelujah 104.3” WHLW (9.6-10.5-9.8). Fourth is Cumulus country WLWI, 4.9-6.7-5.2. Rounding out the top five is Cumulus top 40 “Y102” WHHY (4.9-4.6-4.6).

Bloomington, Illinois rewards Cumulus top 40 WBNQ with its 11th straight win, 11.9-9.7-11.1. Second and third are sisters WBWN (country, 8.7-9.0-7.6) and WJBC (talk, 6.0-7.1-6.9). Fourth is Connoisseur “I-Rock” WIHN (3.4-3.9-5.8). Nielsen’s Spring book ran March 26-June 17.

RAIN
Formats & Branding

“Duke has chased Willie out of Fargo,” says Northpine - and it happened just “days after Midwest Communications brought classic country to FM in Fargo with the launch of ‘104.7 Duke-FM’ KMJO,” licensed to Hope, North Dakota. Northpine and also Radio Insight observe the return of Jim Ingstad’s KQWB Fargo to all-sports. From 2007-2012 it was “1660 ESPN,” and then it started playing oldies and then classic country. But the new Duke sends KQWB back to sports, this time as “Fox Sports 1660.”

KFLY“World Class Rock” – adult alternative – replaces “Rock 101.5” in Eugene, Oregon, at Bicoastal Media’s KFLY Corvallis. Two weeks ago, Radio Insight said the air-staff and PD Carl Sundberg were dropped, and the replacement format debuted yesterday at noon. No jocks for now, and they’re branding it as “Eugene’s Sophisticated Rock Station.” Eugene is the home of the University of Oregon.

Transitions

Alex Berkett co-founded Townsquare Media in 2010 and last week announced he was leaving for one of those can’t-turn-down jobs – and here it is. He’s the new Senior VP/Corporate Development for Viacom. That’s a heavy job, indeed. It mirrors his M&A work with Connecticut-based Townsquare, which is now over 300 stations strong. Berkett will report to Viacom CFO Wade Davis, and his job is to “identify and develop growth opportunities for Viacom and all its brands, including partnerships, acquisitions, investments and joint ventures.” Before Townsquare, Alex worked with J.P. Morgan and Bear Stearns (R.I.P.).

Scott ShannonScott Shannon and CBS find themselves in a congenial relationship, and renew it on a “multi-year” basis.” Perhaps Cumulus thought Scott was retiring when he left hot AC WPLJ New York/95.5 after 23 years, but CBS was happy to bring him on in mornings at classic hits WCBS-FM/101.1. Now he’s teamed with familiar voices like Patty Steele and Joe Nolan, and weather from WCBS-TV’s John Elliott. CBS says “the show’s weekly cume has grown nearly 20%, to approximately four million listeners.” Shannon came to New York in the early 1980s to launch “worst-to-first” top 40 Z100/WHTZ, sailed to L.A. for “Pirate Radio” KQLZ, came back to do mornings at WPLJ and program it – and now settles in at WCBS-FM on Hudson Street.

Gun Talk
You Can't Make This Up

Going undercover? – Jake Russell continues this week’s “Men in Black” theme, remembering “when I was a sales manager at WPLR in New Haven in the 1970s…I was asked to speak about a career in broadcasting sales at an inner-city high school during their Career Day. I thought it best to bring along a black account executive to add credibility to the talk. Not knowing the layout of the school, my partner and I apparently went into the entrance of the cafeteria during lunch time. We were dressed alike, in long trench coats and clean-shaven. The very loud cafeteria immediately fell silent as we walked through. Hushed whispers of ‘Narcs’ swept through the hall. Both of us had a good laugh after we exited the cafeteria. The classroom talk went well, but we both felt that the students didn't believe we were from radio. Undercover agents from the narcotic bureau? Yes. Broadcast representatives? No.” Remind of your own mistaken-identity story? Email “You Can’t Make This Up” – Tom@RTK-Media.com.

Take 2’s – From yesterday’s story about Kimball, Nebraska, a kind of double correction about the calls of the FM license turned in – Reader Howard Fine points out that KBHM (not KGHM) is now “DKBHM,” for “deleted.” And from earlier this week, a reader checks my math and says that given the latest raised guidance from SiriusXM, they won’t quite hit 30 million subscribers by year-end.

Like what you’re seeing here every morning? Tell a friend, and forward the NOW Newsletter on to them. It’s how we keep growing the readership, and you’ll be helping us to keep this daily management newsletter coming to you at no charge. Want to reach this highly-engaged readership with your company’s marketing message? Contact Kristy Scott - Kristy@RTK-media.com or phone 818-591-6815. See you back first thing Monday, to start a very busy week – July PPMs and many Q2 reports - Tom

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