|Emmis turns seller (again)
Emmis to sell “at least $80 million” in assets, as part of a new pact with lenders.
So the game begins – what can Jeff Smulyan sell that would generate “at least $80 million of sale proceeds” and would close by July 18 of next year? You think about markets like St. Louis (a robust cluster). Also Austin, where Emmis has 50.1% of an important cluster that it manages (and shares with Sinclair Tele-Cable). Surely Hoosier State native Smulyan’s not going to put his Indy cluster on the block, not after retaining “Indianapolis Magazine” out of his recent Emmis publishing selloff. That leaves the top two radio markets. There’s L.A., where Emmis has hip-hop standalone “Power 106” KPWR (and is locked in a bloody war with iHeart’s “Real 92.3” KRRL). And New York, where Emmis occupies much of the urban/urban AC landscape with hip-hop “Hot 97” WQHT, urban WBLS/107.5 and gospel WLIB/1190. ’LIB’s been publicly for sale since last year, and this NOW Newsletter has speculated that Emmis was holding out for at least $10 million. Emmis still owns WEPN-FM/98.7, the onetime WRKS, but it’s in a long-term LMA with Disney, for duty as “ESPN 98.7.” Whatever asset or combination of assets Emmis sells to produce $80 million, the sale(s) must close by July 18, 2018.
There’s more to the Emmis “Fourth Amendment’’ with lenders.
Upfront, Emmis pays $1.5 million to entice lenders into signing a “Fourth Amendment” to its 2014 credit agreement. That re-sets various terms of their understanding, like replacing the “maximum total leverage ratio covenant” through May 31 of next year with a “minimum consolidated EBITDA [cash flow] covenant of $20 million.” Basically, Emmis is #1, buying time (which it’s done before and survived). And #2, committing to cutting loose $80 million in assets. Painful for founder/CEO Jeff Smulyan. Very painful for his people. They join folks at some CBS Radio and Entercom clusters, whose futures are also dangling because of ownership questions.
That “event of default’’ notice from SBS gets attention from Moody’s.
Just a bit of jargon here – “PDR” is a “probability of default rating.” The Moody’s bond-rating service just cut its PDR for Spanish Broadcasting System from “Caa3-PD” to “D-PD.” And that is definitely not a place you want to be. In fact, Moody’s next move is to withdraw all its various ratings for SBS while the company’s “undergoing a debt re-structuring.” That’s normal practice for Moody’s, since “the availability and flow of information becomes typically more limited.” We knew that Miami-based SBS missed repayment of $275 million in senior secured notes, the ones it signed for back in February 2012. The company did tell last week’s fourth-quarter call that it made the $17.2 million interest payment on the notes. But it couldn’t pay the piper – repay the principal. Moody’s also downgraded various individual ratings of instruments on the balance sheet, but the “D-PD” is what stands out. SBS is working with outside financial and legal advisors on the re-structuring, as it sits down with holders of those 12.5% notes and also its preferred stock. Read the Moody’s research piece here.
From Day 1 of NAB Show 2017 in Las Vegas –
“The connected car is the future, and the future is kinda here now.”
That’s Joe D’Angelo, Senior VP of Broadcast Technology at HD Radio parent Xperi. On an early-afternoon panel in the day-long digital track, Joe says “We still believe AM/FM has a dominant position” in the vehicle dashboard, to which fellow panelist Jessica Jerrick of iHeart nodded her head several times. Joe’s position is that HD Radio is “your advocate at the car manufacturers,” and he says it’s a long haul, outlining the process of two to three years to get a “sourcing decision,” then an RFQ (request for quotation) process, followed by a two to three year “development cycle.” (That’s one reason D’Angelo thinks it will be a couple of decades before America really sees autonomous cars.) He says HD Radio is in “42% of new cars, and about 40 million cars on the road” are HD Radio-capable. But Joe warns that broadcasters “Have to plan for the connected services” that buyers want. HD Radio’s now looking at radio “globally.” That’s because carmakers want to “build one product and ship it around the world,” to Europe and Australia (using the European-developed out-of-band DAB/DAB+ system) as well as HD Radio (the U.S., expanding in some Canadian cities, and looking toward Central/South America).
“Voice is the future,” says iHeart’s Jessica Jerrick.
By that, she means “voice control” of audio in the car. There are legitimate concerns about distracted drivers, and the thought is that with today’s complicated displays, voice-activated choice of media (and volume-control) is critical from a safety standpoint. Jerrick’s concerned about “the removal of [easy-to-figure out] buttons.” Many carmakers are including both Apple’s CarPlay system and Android Auto, and Jerrick, iHeartMedia’s EVP of Business Development and Partnerships, says at the moment, “Android is better” with voice control. Also important is making sure that “all stations are discoverable by voice command” for devices like the Amazon Echo and Google Home. Xperi’s Joe D’Angelo tags on that “Meta-data is really going to be the key...The information that you put out there that is tied to the audio is critical.” That’s info like artist, song title and album art. iHeart’s Jerrick remains true to her company’s motto – to give consumers whatever they want, wherever they want it. In the Q&A, there were questions to Joe D’Angelo about the current cost of HD Radio (much cheaper in the current Generation 4, circa $10,000 for the questioner’s AM).
Nielsen is “not giving up on digital, not walking away, not throwing in the towel” on digital measurement.
Nielsen Audio Managing Director Brad Kelly admits there have been “a couple of false starts,” and last fall they “hit the Pause button.” Why? Some clients said “Take another look” at the product. Everybody wants it to be right, and that includes both terrestrial broadcasters who stream and the pure-plays. And after comparing some preliminary numbers from Nielsen with “another service” – Nielsen doesn’t mention Triton Digital, but that’s the “other service” – people had questions about why some numbers look different. They’ve got answers for that, Nielsen VP Rob Kass tells a late-morning digital-track session at the NAB Show. And it has a lot to do with methods –
Do you want to measure a restaurant’s food consumption in the kitchen, or at the table?
Nielsen Audio VP Digital Rob Kass employs an analogy, when it comes to digital measurement – The other service (Triton) is measuring off of server logs from the publishers’ side – the “kitchen.” While Nielsen’s concept is to measure consumption from the restaurant customer side. Rob says that approach “puts you right at the table.” It tracks the diner who pushes aside the salad to tuck into the entrée, or try the dessert, or reach for a different vegetable. To Nielsen that’s “a more precise measurement,” and helps explain discrepancies between its trial data and the MRC-accredited data from the other guys. And now...we enter the land of “SDK.” Nielsen asks streaming content publishers (radio stations and pure-plays) to install an SDK (Software Developer Kit). It says over 7,500 of them are now in place. A revised SDK is coming to broadcasters “in the next month or two.” Nielsen vows to pursue Media Rating Council accreditation for its own digital measurement product. And be aware that they’re “not going to wait for 100% participation” by stations and webcasters. Obviously, they know that once there’s a measurement service out in the public, many non-participants will want to hop on board.
“At some point in time, Nielsen will stop reporting PPM digital [streaming] data.”
Once the SDK-enabled digital measurement service is established, Rob Kass of Nielsen Audio says “we’ll stop reporting” the streaming done by broadcast stations in the usual monthly PPM report. So “the only way to get that digital [listening] will be using” the SDK-based service. That’s not in the immediate future, but it underscores Nielsen’s belief that they’ve found a superior way to track streaming usage. Some rough dates on the time-line – some stations will start seeing their own streaming data in “a few weeks.” Then Nielsen Audio Managing Director Brad Kelly says “Sometime around September or October, we’ll take a gut-check,” to gauge the progress. He emphasizes “we don’t want to rush through this” – and they certainly don’t aspire to “hit the pause button again” on digital measurement.
Nielsen’s looking at TLR – Total Line Reporting – for streaming.
Rob Kass says the thinking’s along the same line as for terrestrial reporting. But with digital, there are questions like dynamic ad insertion. (Different users hear different ads.) For the digital measurement service, Total Line Reporting will be “elective…you have to raise your hand” if you want it. But beyond that, there’s clearly demand for an audio equivalent to the “Total Content Ratings” Nielsen recently announced for TV. Advertisers want to know what the global reach is of a particular piece of content. Rob says that would “not necessarily be currency data, but there’s been a lot of demand for a combined number.” NRG Media COO Chuck DuCoty had planned to moderate the late-morning “Chat with Nielsen,” but had a family situation to deal with. So Nielsen’s Brad Kelly literally used Chuck’s questions. One of DuCoty’s final questions was about measurement for podcasting. Around last year’s NAB/RAB Radio Show in Nashville, Nielsen announced it was working on a podcast measurement service, with initial client ESPN. It’s a problem that must be handled before podcasting can evolve to its next stage of commercialization. Just measuring downloads doesn’t tell you enough – and Rob Kass says “Our goal is to measure everything consumed by your ears,” no matter what the device.
27% of new vehicles at the North American Auto Show “had no button marked radio, audio or band.”
The NAB’s Senior Director of Advanced Engineering David Layer was deputized to visit the agenda-setting show in Detroit, and comes back with good news and bad news. Want the good news first? Of the 41 new vehicles he inspected and sat it, “all of them except the [all-electric] BMW i3 had AM/FM Radio.” More good news for Xperi – “78% had HD Radio.” Now the bad news – “54% had a tuning knob. But 27% had no button marked ‘radio,’ or ‘audio,’ or even ‘band.’” Very confusing. Layer says “every car manufacturer has their own variety of connected car interface.” And as a rule, “user interfaces are more complicated than traditional radio receivers.” Leading to the question, “Where’s my radio?” David says “NAB has become very interested in the digital dashboard.”
Where’s the FCC’s promised window for new FM translators?
There’s speculation that FCC Chair Ajit Pai might announce it at this morning’s 9am NAB Show address. Makes sense that he’s saving up some piece of good news. D.C. observer tells NOW that “We now have a chairman who has the greatest understanding of radio in a long time, and he’s really interested in helping it out.” Though the Commission-watcher doesn’t foresee a window – probably two windows – to apply for brand-new FM translators until at least late-Summer. (“They’re moving pretty fast, but this is Commission-fast.” This element of the Commission’s AM Revitalization plan was supposed to be a two-parter – last year’s windows for AM stations to acquire existing translators and move them up to 250 miles. And this year’s window for new translators, probably starting with one just for Class C and D AMs, and then one for all AM stations.
Is the FCC a “dodo bird” deserving of death?
That was the opening question of a wonky session titled “The FCC – You’re fired?” The allusion to President Trump’s reality-TV punchline was intentional, and Republican Chairman Mike O’Rielly’s praise of Trump drew quick applause from one corner of the room. There was broader applause for Chairman Ajit Pai, when O’Rielly says Pai brings “a love of broadcasting and a love of small businesses” to his post. O’Rielly sounds familiar themes that gain more potency since he and Pai now control the Commission. “Out-dated rules” like cross-ownership regs should be looked at, he says. And O’Rielly continues to stake out his territory around the menace of pirates. He calls them “illegal squatters in the radio band...[and] if allowed to continue, the situation will get worse” and spread beyond the current hotbeds (such as South Florida and New York City). O’Rielly’s not a fan of many policies of previous Chair Tom Wheeler, especially of closing down about half of the FCC field offices. O’Rielly was asked to address the question of whether the FCC should be eliminated entirely, or perhaps have some of its functions re-distributed to other agencies. Former Commissioner Rob McDowell, also a Republican, has a longer view about “firing the FCC.” He tells the session “the topic comes up from time to time, and it makes for interesting think-tank conversation.”
Prowling the NAB Show –
• NAB President/CEO Gordon Smith quotes “Highly Effective” author Stephen Covey in his Show-opening address. To wit, “There are three constants in life – change, choice and principles.” Gordon proceeds through all three areas (and mentions that the late best-selling author was a friend). NAB CEOs always use these keynotes to set out their agendas, and Gordon’s themes include exhorting the FCC to embrace Next Gen TV (the ATSC 3.0 standard that permits much deeper use of the spectrum). As for radio, its future “lies in being available on every device, and making choices that support its innovations.” Smith’s a fan of the FM chip in smartphones, and nags iPhone maker Apple to get with the program. The NAB’s also solidly behind HD Radio. And Smith promotes the NAB’s own PILOT “Innovation Challenge,” with financial rewards. Read the text of Gordon Smith’s NAB Show Keynote here. Smith salts in many tasty quotes, including this keeper from Thomas Jefferson – “In matters of style, swim with the current. In matters of principle, stand like a rock.”
• “Service Following” is the newest add-on feature to HD Radio parent Xperi’s suite of products titled “Connected Radio.” The “hybrid radio” Connected product has tools such as live pre-sets, social engagement, “advertiser interaction,” and now “Service Following.” Quick description – “When the vehicle reaches a certain point, the driver will have the opportunity to transition over to the station stream, to continue the listening experience.”
• This is a giant class reunion for engineers and vendors. One of this year’s guessing games is “How many engineers did CBS send?” The answer appears to be “fewer than usual.” Of course Entercom will be managing the CBS Radio stations that it’s allowed to merge with, and you’d expect that its engineers will play a prominent role in the merged company. While short-term, CBS wants to keep the lid on costs. Still, there are enough engineers and vendors to keep Las Vegas steakhouses and taxi drivers busy this year. (Though you can tell that gig-economy Uber is taking a toll on the taxi-cab fleets of Las Vegas.) Why is this year’s theme “The M.E.T. Effect?” M.E.T. stands for “Media, Entertainment, Technology.”
Radio One closes on a new $350 million credit facility, “all of which was advanced and outstanding on the date of the closing,” the company tells the Securities & Exchange Commission. The facility matures in 2023. Guggenheim Securities Credit Partners is the administrative agent, Guggenheim Securities is “sole lead arranger and sole book-running manager” (earning fees), and Bank of New York Mellon is collateral agent (also earning fees). Details about the new senior secured facility from Radio One here.
“Disgraced CBC ‘Q’ host Jian Ghomeshi re-emerges” with a podcast, says Canada’s Broadcast Dialogue - but getting distribution is problematic. Broadcast Dialogue says that “after being barraged with complaints, San Francisco-based podcast platform Art19 has suspended its hosting role.” It had supplied Ghomeshi’s new “Ideation Project” podcast to iTunes. At one time, Ghomeshi’s daily “Q” pop-culture show was carried across Canada and on more than a hundred U.S. public radio stations - until he was forced out following allegations of sexual assault by three women and a charges of sexual harassment by a former CBC colleague. Ghomeshi was acquitted on the sexual assault charges (before even taking the stand), and signed a peace bond regarding the sexual harassment case.
Boost Mobile gave itself a boost in last week’s national radio ad buys, purchasing 28,563 spots detected by Media Monitors. That lifted Sprint subsidiary Boost Mobile into the top ten, from #11 two weeks ago to #5. AT&T-owned Cricket’s at #19, While T-Mobile’s at #26. Insurance giant GEICO captures the #1 spots on the Media Monitors list with 42,580 spots. While auction site/online retailer eBay buys 17,973 to be #11.
Radio One’s paying an even $2 million for the D.C.-area WWXT/92.7 and Richmond-market WXGI/950 it's acquiring from Dan Snyder’s Red Zebra Broadcasting. We learn more about the deal rumored and then confirmed in last week’s NOW, like the fact that Radio One gets the WXGI calls and other intellectual property of the sports station. (Sports is the only kind of radio that NFL Redskins owner Snyder’s really interested in, it seems.) Radio One is putting its own talk WTPS Petersburg, Virginia/1240 into a simulcast with WXGI, and it’ll actually be a trimulcast with a translator at 102.7. As for southeast-of-DC WWXT Prince Frederick, MD/92.7 – Radio One doesn’t need those calls, since it will use the Class A signal to simulcast its urban AC “Majic 102.3” WMMJ. LMAs begin May 1. NOW expects that Red Zebra will be selling WWXS Buckland, VA/94.3 and WSPZ Bethesda/570, and keeping WTEM Washington/980. They’re all sport stations. Broker on the sale of WWXT and WXGI – Greg Guy of Patrick Communications for Red Zebra.
Sinclair uses an FCC rule roll-back to strike a $240 million TV deal, acquiring Bonten Media Group’s 14 stations in eight markets. New FCC Chair Ajit Pai just reinstalled the “UHF discount,” effectively allowing more consolidation. As TVNewsCheck says, “Without the discount, the deal would put Sinclair above the [national TV household] cap at 39.6%.” But with the UHF discount, instituted in the days when UHF was less desirable and counted less toward your household reach, Sinclair “remains well below the cap at around 25%.” Onetime NBC Radio executive Randy Bongarten founded Bonten Media in 2007, backed by the Diamond Castle private equity firm. The Bonten markets are Johnson City-Kingsport, Greenville-New Bern, Chico-Redding (CA), Missoula (MT), Abilene-Sweetwater, Butte-Bozeman, Eureka (CA) and San Angelo. The deal includes Sinclair buying the stock of Bonten and Sinclair’s allied Cunningham Broadcasting acquiring Esteem Broadcasting.
Nicola “Nic” Merenda comes back to broadcast radio after working for Pandora in San Antonio. Before that he’d been a VP/Sales for iHeart, a GSM in Kansas City, and a VP/GSM in Chicago. Nic’s new radio home? Cumulus, as market manager for its properties in Topeka. Those include AC “Magic 107.7” KMAJ.
Joe Mathieu is pulling his last morning-show news anchor-shift at CBS Radio’s news/talk WBZ Boston/1030 on Friday. That was announced on-air last night - a definite surprise. Joe’s worked extensively radio journalism and management for the last two decades, including seven years as managing editor and anchor at the former CBS “MarketWatch Radio Network.” For SiriusXM, Joe developed and managed the “POTUS” news/political channel, and at WBZ he’s worked alongside morning hosts Deb Lawlor and Adam Kaufman. His earlier experience included being an anchor and editor at the Washington DC operation of Metro Traffic. And on his first trip through Boston, he worked at WRKO/680. Thanks to the NOW Reader who heard the WBZ announcement about Joe Mathieu and emailed the tip. News tips are welcome to Tom@RTK-Media.com. And good luck to Joe.
Ilwira Marciszek, Stephanie Vance, Donelle Brown and Rebecca Lam are all promoted at the AdLarge shop. Ilwira becomes VP of Digital Sales Strategy. Stephanie is the new VP of Digital Content. Donelle is now VP of Marketing and Client Solutions. And Rebecca’s the new Manager of Digital Ad Operations. AdLarge co-founder Cathy Csukas and Gary Schonfeld announce the promotions, amid what Cathy calls “accelerated growth in the digital audio space, particularly with podcasts.”
Tom Calococci has programmed in Phoenix (KZZP), Houston (Radio One’s “97.9 the Box” KBXX), L.A. (“Beat” KKBT) and Miami (both “Power 96” WPOW and WFLC). Now he’s in the affiliate relations business, at Florida-based Sheet Happens Prep. Its offerings include daily content, features and “Instant phoners.” Calococci’s at email@example.com and (323) 717-1778.
Small deaths in the station lunchroom – Gina Preston Caplan has two such memories – “I remember when a new morning show partner joined the show, and he decides that the coffee-maker needed de-scaling. So first day on the job, he brings in white vinegar and goes to work. But something went wrong, or the appliance was that old, and it died. First day on the job, and he kills the Bunn coffee-maker. At that same station, another jock decided that the tiny fridge in the jock lounge needed defrosting. Impatience won out, and he wielded a screwdriver against the ice. Yep, punctured the wall, the freon ran out, and the fridge had to be replaced. Moral of the story - be lazy and don't kill the appliances.” Share your favorite true radio story with the industry - Email Tom@RTK-Media.com. (We can leave off incriminating names, call letters and markets.)
Delilah is inducted at today’s NAB Show Radio Luncheon into the NAB Broadcasting Hall of Fame. We’ll also learn the ten hard-working stations that have earned an NAB Crystal Award for year-round community service. And the keynote speaker could probably just drive right into the Westgate’s large banquet hall – he’s Ford executive Scott Burnell, whom the NAB says “created and launched the world’s first automotive developer ecosystem, the Ford Developer Program.” Burnell urged Ford to come up with the open-source SDL (SmartDeviceLink). Coverage of the Radio Luncheon plus a full day of radio-related sessions, in tomorrow’s Tom Taylor NOW. See you back first thing tomorrow from Vegas, where 100,000 people pack this year’s Show.