NEWS

Radio Recovers: Auto spending may’ve turned the corner. Long radio’s top revenue-generating advertising category, automotive has been stuck in reverse for more than a year. But for the first time since 2008 the segment is positive. Katz says the category is up 36% in the first quarter — with budget increases by General Motors, Honda, Chrysler and Ford. Auto spending gains are larger than what’s seen in other big categories such as telecom (+23%) and retail (+8%). Entertainment spending is up 36% as well, highlighting how broad the recovery appears to be. Katz Media Group CEO Stu Olds says the national spot market remains “very robust” in the first quarter, with February pacing up 11% and March up 13%. In a memo to staff, Olds reports, “The widespread recovery is placing higher demand on inventory, pushing pricing up and reducing the number of no-charge and low-charge spots, causing near sold-out conditions in selected markets for mid-February.” He notes first quarter no-charge spots, as a percentage of sold inventories, are down 13%. Pacing is up the most in top ten markets (+27%) with markets 26-50 and 76-100 seeing smaller, single-digit gains. The Northeast (+37%) is up the most, followed by the Central regions (+19%), Southeast (+18%) and the West Coast (+11%).

Chrysler’s new “connected” minivan means more media choices for motorists. Further evidence that radio faces heightened competition in the digital race for the dashboard will be on display at the 2010 Chicago Auto Show from February 12-21. But it isn’t some futuristic concept car that will bring live TV, a Wi-Fi hotspot, online gaming and a 30-gigabyte hard drive to soccer moms and their families. Those features and more can be ordered today on Chrysler’s 2010 Connected Dodge Caravan: up to 20 channels of live TV through FLO TV; Sirius Satellite Radio and Backseat TV; and Uconnect Web, which combines Wi-Fi and 3G cellular connectivity to bring the internet into the vehicle for email, online gaming, personalized music and other features. In addition to navigation software and mapping, the hard drive holds approximately 2,400 songs. There’s even a voice-memo recorder feature. A swivel third-row screen allows passengers facing the rear of the vehicle to view the screen. Dual DVD players and screens include ports to connect games and media players with audio and/or video output capability, including iPods. The van’s Uconnect Media Center uses touch screen and voice command to control media sources and outputs. While these features carry additional charges and some involve subscription fees, they’re indicative of the latest moves by automakers to make vehicles “infotainment” hubs on wheels. At last month’s Consumer Electronics Show, Ford pulled back the curtain on the next generation of its Sync entertainment and communication system, which lets drivers flip from FM or AM to Pandora or Stitcher’s online radio services without taking their hands off the steering wheel. Ford also plans to add a new Sync wireless broadband modem. Kia and other automakers are adding the same Microsoft software that powers Sync to some of their fleets.

PwC sees “emerging signs” of recovery in media deal market. The credit markets remain as frozen, but analysts at PricewaterhouseCoopers (PwC) believe signals hint at a recovery in the 2010 deal market. PwC partner Thomas Rooney says, “Continuing signs of gradual economic recovery and an anticipated easing of credit markets point to a potential uptick in entertainment and media deal activity.” Radio has a long way to go. BIA/Kelsey reports just 696 radio stations traded hands last year, a 5% decline over 2008 while the value of what was sold plummeted 46%. Yet radio wasn’t alone. PwC says the number of all media and entertainment sector deals fell to the lowest level since 2003. Broadcasting saw one of the biggest declines. Last year, broadcasting-related deals totaled $500 million compared to $5.6 billion a year earlier. The biggest culprit was the still-challenging credit market where lenders preferred to sit on their cash rather than lend it to a company able to strike a deal. But PwC notes private equity remains interested in media, sponsoring 126 deals across the various sectors last year. The latest radio example of that comes from San Diego, where John Lynch has partnered with the private equity firm Thoma Bravo to form Local Media of America. Their mission is to spend millions buying stations in the top 30 markets over the next several months. They may be the first of many. With a threefold increase in media company Chapter 11 filings last year and many more companies restructuring, PwC predicts a number of “distressed focused” private equity firms and strategic buyers will spend the year hunting for “desirable distressed acquisition targets.” Media companies are buying too, particularly when it comes to the digital world. PwC points to Radio One’s $38 million purchase of the social networking company Community Connect as an example. Rooney says “We expect similar interest to continue well into 2010.”

BizRadio owner settles SEC suit. BizRadio Network owner Albert Kaleta has settled a complaint brought by the Securities and Exchange Commission which said he ran a Ponzi-type scheme. In a lawsuit filed in U.S. District Court in Houston last November, the agency contended Kaleta Capital Management defrauded about 50 investors who poured millions into his companies between December 2007 and August 2009. The SEC claims Kaleta funneled $5.5 million into the money-losing BizRadio, which saw nearly $2 million in losses last year. In its suit, government attorneys claim Kaleta lied to investors about the intended use of the $10 million he raised, promising they’d earn 10-14% interest on their money. Instead, Kaleta allegedly took roughly $1.5 million to pay his own personal expenses. That included more than $10,000 per month to cover credit card bills for him and his family and thousands more for his Mercedes-Benz. Kaleta said they were loans, but the SEC says there was no sign they’d ever be repaid. In his settlement with the SEC, he admits no wrongdoing and isn’t ordered to repay investors or pay any fine. But he does agree to stop acting as a financial advisor.

BizRadio returns to Houston’s airwaves. After a Texas judge ordered the airwaves be turned over to South Asian programming provider Asia Vision, BizRadio Network returned yesterday to KTEK (1110). The format was off the station after Asia Vision owner Rehan Siddiqi went to court claiming he signed a six-month $180,000 lease with an option to buy KTEK for $3.5 million. The deal was negotiated with BizRadio CEO Ronald Crider and allegedly signed by president Albert Kaleta. But BizRadio founder Dan Frishberg says Crider was never an employee of the company — although they did meet to discuss a possible merger with Crider’s firm. Yet no deal was struck and Frishburg says Crider had no authority to sign-away control of the station. BizRadio also contends Kaleta’s signature was forged. Crider says the maneuvers to undo the deal with Siddiqi weren’t justified. “This is the most egregious thing I’ve ever seen,” he told the Houston Chronicle. But Frishburg insists the company never agreed to sell KVET for less than half the $7.6 million it paid two years ago – and points out a similar allegation was brought against Crider in Denver in 1994. “In a difficult economy, there are all kinds of people desperately doing all kinds of things,” Frishburg says in a website posting. BizRadio regained control of KTEK after Texas District Judge Robert Schaffer agreed. Monday the financial advice format returned to the air. Hoping to jumpstart sales, Frishburg is offering one-minute spots for $50 apiece, telling potential advertisers, “It will not last forever, and we will allow the immediate supporters to keep that below market rate for an extended period of time.”

A single email sums up radio’s power in an emergency. Bonneville’s WTOP-FM, Washington (103.5) shares an email from a Germantown, MD woman named Holly. While her note had nice things to say about the station’s winter weather coverage, it’s emblematic of radio’s power during a crisis. She writes, “My house temperature was down to 41 degrees and we still don’t have any phone service. If it wasn’t for WTOP on our battery powered radio, I think I would have lost my mind. We kept the radio on even through out the night just so we did not feel alone. The tips you provided and the interviews with the power company kept us going. We followed the stories people were telling and what they were experiencing. I can not thank you enough for what you have given us in our darkest hours. We were cold, scared and hungry and your station gave us hope.” There were 250,000 homes without power at the height of the storm, with thousands still without electricity. WTOP-FM went to full storm coverage but VP Jim Farley says, “There’s not even a ratings payoff for this. If people have no power, their people meters cannot report data to Arbitron. But we made a lot of friends and fans and it will pay off down the road.” An Arbitron spokeswoman says PPM battery life has been improved over earlier generations and notes even after the unit goes dead, once electricity is restored any listening data previously captured will be recorded when the unit is docked. WTOP wasn’t alone in its dedication. Salem Radio Network Washington bureau chief Ken Lormand and his staff remained snowed in at their studios for 72-hours while 27-inches of snow fell outside.

Towers down in California and Oklahoma. Heavy rains and high winds in Southern California are blamed for bringing down one of the five 199-foot towers used by ethnic-brokered KWRM, Corona (1370). Meanwhile in Oklahoma, Gap Broadcasting is still recovering from an ice storm two weeks ago. It’s told the FCC that due to “severe icing” the tower for Lawton-market rock “Z-94” KZCD (94.1) and country “K-Law 101” KLAW (101.3) came down. Both stations are operating from a low power antenna with 1,000-watts until the tower can be repaired or rebuilt.

Korean listeners donate thousands for Haiti. The radio industry is still raising funds for the people of Haiti. But it doesn’t take an FM or big-signaled station to make a difference. Korean Radio Broadcasting raised $210,000 from a single station, Korean-language WWRU, New York (1660) during a two-day fundraiser. As part of the effort, WWRU got a commitment from New York City Comptroller John Liu — the city’s first citywide Asian American politician — to agree to have lunch with anyone who donated $1,000 or more. High school student Samuel Kim called in with a pledge of $500 which he earned tutoring students — with a donation and a desire to meet Liu. When listeners heard the teen’s story, they came forward and made up the difference allowing Kim to meet Liu. Korean Radio Broadcasting has a history of being a fundraising powerhouse. After 9/11, the station raised $1.26 million. Korean Radio Broadcasting brokers WWRU from Multicultural Radio Broadcasting.

INSIDE RADIO DEAL DIGEST

North Carolina — WLNC, Laurinburg (1300) program director/ops manager/afternoon host Gary Gallman and his wife Terry are buying the AC station from Fox Broadcasting for $200,000. Gary tells the Fayetteville Observer, “I’ve always really wanted to own a station. That was my dream as a teenager.” He’s struck a brokerage agreement with seller Fred Fox until the FCC approves the deal. Fox will remain with the station as morning drive host.

INSIDE RADIO STOCK REPORT

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