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Mid-Year Update: Adaptability, Digital Investments Pay Off

Mid-Year Update: Adaptability, Digital Investments Pay Off

Weekly News Recap July 2-6, 2018 Mid-Year Update: Adaptability, Digital Investments Pay Off. At 2018’s mid-point, some execs good digital strategies and are operating someone about buying a car is say the year has taken shape as good digital companies supporting our legacy in a car, period. And I think car dealers – or even better – than they expected. business are probably in a little better get that.” Digital investments are paying dividends shape than people who haven’t done while some big brands are taking a fresh that,” he said. Townsquare’s Wilson agreed, saying he’s look at how they divvy up their marketing seen some local dealers find the money dollars. But 2018 is also proving to be Galaxy Media president/CEO Ed Levine in their own pocket to buy radio when co- another year that’s testing the mettle of agreed “digital is starting to be real op dollars disappeared. “They know radio broadcasters’ ability to respond to how money” for his company in what he works so at the same time they’re looking the ground continues to under local describes as a “so far, so good” sort of for their own funds outside of co-op media. “I don’t think there’s a seminal year for his company. On the national money to put in broadcast so I think with change in the radio business, it’s just front, Gen Media Partners CEO Kevin the focus on attribution we’ll be in a good tough,” Alpha Media president/CEO Bob Garrity says 2018 opened with the sort of place moving forward,” he said. Other ad Proffitt said. Hubbard Radio executive combination that keeps radio managers categories, such as retail, are also facing VP/COO Drew Horowitz said there’s “a up at night with national radio clients like big changes in their businesses and that’s lot of volatility” in the marketplace. “It’s Bon Ton’s shutting its doors, sandwich impacting how they spend on radio. a little bit of a repercussion of what’s chain Jimmy John’s moving to network going on in the agency side of the radio and a new media agency cutting Mid-term election years have the prospect business. They are suffering very similar smaller markets off O’Reilly Auto Parts’ of outperforming presidential campaign dynamics,” he said. ad buys. The privately-held rep firm years on radio as congressional races posted year over year revenue growth often spend more with local stations than during both the first and second quarters. statewide and national candidates. As a “We have been able to show single-digit result, Borrell Associates projects radio growth in the first and second quarter will pocket $564.3 million in election- when most people predicted the year will related ad spending in 2018. Kantar be flat at best,” Garrity said. Media’s Campaign Media Analysis Group says radio has a good shot at capturing Auto Finds A Back Road To Radio more political ad dollars than it did during Automotive advertising still makes up the last midterm elections four years ago. 14% to 16% of radio’s overall billings and “With a lot of races that are closer to the category has been under increased home, maybe radio could do a little better pressure in 2018 as car sales have – given the dynamics of how the election slowed slightly and the automakers have works,” VP/GM Steve Passwaiter said. Kagan projects radio revenue will forced dealerships to spend increase 1% to $17.8 billion in 2018, more of their co-op advertising which would give the industry its dollars in digital. “People are best revenue year since before the still using radio and TV, but last recession. And for several radio maybe they’re not spending companies, 2018 got off to a strong start. as much and are allocating “We had a good first half,” Townsquare some of their budget to the Media co-CEO Dhruv Prasad said, digital side,” Horowitz said. pointing out the group had a better-than- But Proffitt said despite those average start to the year with revenue corporate edicts there are local up 6.6% in the first quarter. dealers who’ve concluded they can’t live without radio. “The Horowitz thinks the investments that car guys are still buying ideas broadcasters have made on the digital and people are still figuring out side of their businesses are now paying that you can’t live by search dividends. “What is growing is on the or alone,” Proffitt digital side and those of us that have said. “The best place to talk to Page 1 Weekly News Recap July 2-6, 2018

Mid-Year Report: ‘Slow But Steady’ Deal Market. Translators may be helping stimulate AM radio deals in 2018, but they’ve yet to make a significant impact on pricing. That’s according to a mid-year analysis by Kagan. It characterizes the 2018 deal market as “slow but steady” with multiples on par with a year ago. The average price paid for an FM so far this year is $1.5 million compared to $400,000 for an AM. “So far there is no statistical difference for AMs selling with a transla- tor compared to those that don’t have one,” Kagan research analyst Volker Moerbitz tells Inside Radio. Moerbitz notes that AM stations are still selling for less than $1 on a “per pop” price metric—the measurement of how much it cost for each person covered by the signal. Kagan calculates $254 million of radio transactions announced during the first half of 2018, including $102.3 million worth of deals announced during the second quarter. The biggest deal in the first half of the year was Hubbard Radio’s $45 million deal in St. Louis to buy rock KSHE (94.7) and “105.7 The Point” KPNT from Nielsen, Bubba Attorneys Sharpen Their Knives For Trial. Emmis Communications. Overall, Moerbitz said multiples for While Nielsen and Bubba “The Love Sponge” Clem take most FM deals hovered between 6.0- and 6.5-times cash flow. another stab at negotiating an out of court settlement, both Kagan reports 387 radio deals were announced through last sides are sharpening their knives for an elongated ratings week, including 162 FMs and 95 AMs. In addition, 130 FM tampering trial should the latest attempt at mediation fail. translators changed hands. See more HERE Based on a court filing last week, Randy Michaels may spend more time testifying than any other witness called to the stand by Clem’s attorneys. Clem’s legal team intends to Mid-Year Report: What Formats Rule The Radio Dial? ask the former Jacor, Clear Channel and Tribune executive Country continues to dominate as the most programmed radio about everything from Nielsen’s in-tab rates and panelist format in the U.S., with 2,183 stations across the AM/FM dial. incentives to methodological deficiencies exposed by Voltair, There are 24 more country stations on the air as of the end of MRC accreditation and the overall accuracy of Nielsen ratings. June, compared to 2,159 in June 2017. Rounding out the top Michaels testimony could be key to Clem’s case that Nielsen 5 most pervasive formats at the mid-year point are news/talk, – not the syndicated morning man it is suing – damaged its religious teaching, contemporary Christian and Spanish, ac- own reputation through deficiencies in its ratings service. Near cording to Inside Radio/PrecisionTrak. Following those genres the top of the Nielsen exhibit list are photos of the Holmes are what might be considered more mainstream over-the-air oscillating table fan that Clem allegedly purchased for PPM formats (in order): variety, , sports, alternative/ panelists, to mount their ratings meters on while tuned into modern rock, CHR, AC, classic rock, hot AC, and rock. his radio show, to fool the motion detectors embedded in the Thanks to a rash of recent sign-ons, modern rock/alternative meters. From there Nielsen will focus jurors on dozens of text now ranks as radio’s ninth most programmed format – and with messages between Clem and Tabachuk from July 29, 2015 good reason. The format has been pulling some of its best num- to Sept. 23, 2015, including one where Clem says, “I need u bers ever in PPM markets. In June Nielsen said the format’s more than ever.” The jury is also expected to be shown Clem’s Persons 25-54 share was at an all-time high since February, televised on-air apology where he says the allegations that he when it cracked a 4 share for the first time ever. Showing the influenced the activities of a PPM panelist are true. Nielsen’s greatest growth on the dial in June 2018, meanwhile, is the expert witness David Hass is slated to give a presentation catch-all “variety” format, which added +52 outlets over June on how much Clem’s alleged ratings hijinks cost Nielsen in 2017. Variety encompasses a wide array of non-commercial damages and out of pocket expenses. See more HERE outlets, AM stations and low power FMs, including many in unrated markets. Other formats that exhibited major year-over- year growth include classic hits, +32; and country, +24. Urban/ Smulyan Signs New Nearly 4-Year Employment Deal With hip-hop had 186 outlets over the air as of June 2018—only five Emmis. fewer stations than the year before. See more HERE Jeff Smulyan marked the Fourth of July with a new employment contract at the company he founded nearly four decades ago. In addition to inking a new nearly four-year deal, the Progressive Pioneer Dead At 64. Emmis chairman and chief executive has also pocketed a Liberal talk radio pioneer and TV host Ed Schultz died Thursday $1 million signing bonus. Like his morning at his home in , DC. He was 64. Along with last deal signed in 2012, Smulyan’s , and others, Schultz formed base salary will remain at just over the backbone of radio’s progressive talk format in the early $1 million a year through Feb 28, 2000s. In radio he was best known for the nationally syndicated 2019 – with modest annual bumps “Ed Schultz Show.” Schultz went on to host “” on of $25,000 for each succeeding fiscal MSNBC from Washington. Most recently he anchored “News year through February 2022. After with Ed” on Washington-based TV channel RT America and that, the contract will automatically hosted a one-hour , “Ed Schultz News and Commen- renew for one year terms (with tary.” A former college All American quarterback, Schultz began automatic $25,000 pay increases) unless Smulyan or the his broadcast career in Fargo, , where he held company provides the other party with written notice that they sportscaster positions at local radio and TV stations. From don’t want to renew. Smulyan could earn another $1.25 million sports Schultz moved to talk, hosting a conservative each year, depending on how the company performs. Thanks on WDAY Fargo (970) and then KFGO. He eventually leaned to an equity incentive compensation package, Smulyan also left after visiting a Salvation Army kitchen and then taking the gets stock options of 37,500 shares each year the contract is show on the road with a trip throughout rural North Dakota in in effect. See more HERE a 38-foot RV, according to the Virginian Pilot. See more HERE Page 2 Want a more engaged audience?

Here are the facts: Our audience listens longer. They spend 59 minutes per day with us compared to the industry standard of 37 minutes.*

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*Sources: 2016 Dave Ramsey Show Listener Survey, 2017 Nielsen.

Page 3 Stuttering John Makes Big News For Pranking The President. Weekly News Recap officials were scrambling last weekend to figure July 2-6, 2018 out how a prank call from Stuttering John Melendez ended up with the former sidekick getting a return call from the President aboard Air Force 1. The comedian placed Victory For MO Broadcasters In Alcohol Ad Rules Fight. A multiyear legal effort targeting ’s restrictive alcohol a call Friday to the White House, pretending to be Sen. Bob advertising regulations has paid off for the Missouri Broadcasters Menendez (D-NJ), under the guise that he had to speak with Association. In a complete and total dismantling of the rules, a the President right away about pending legislation, according federal court has struck down the limits after concluding they to . The call was reportedly routed around to several violate the First Amendment and are unconstitutional. U.S. operators, before the Melendez was told the president would District Court Judge Douglas Harpool has ordered the state call him back. According to Melendez, senior White House to stop enforcing the ad restrictions that MBA partnered with adviser and Trump son-in-law Jared Kushner returned the call Zimmer Radio Group, the Springfield, MO wine producer and connected the comedian to Trump, who was returning from Meyer Farms, and Uncle D’s Sports Bar & Grill in Saint Joseph, North Dakota aboard Air Force 1. A regular on the Stern show MO to fight. Under what’s known as the Discount Advertising 1988 to 2004, Melendez currently hosts the weekly “Stuttering Prohibition Regulation, a store, bar or restaurant is prohibited John Podcast.” See more HERE from advertising a special sale price, rebate or discount. The state has argued its rules are designed to promote responsible Latest Evidence M&A Is Building Comes From SiriusXM. drinking. But in a 19-page decision, Harpool said the state failed Add SiriusXM Radio to the growing list of audio companies to provide any evidence to back that up. At the same time, stowing away dry powder for potential future acquisitions and broadcasters were able to present “credible and substantial investments. The satellite broadcaster evidence” that there’s no relationship between advertising has amended its $1.75 billion revolver of alcohol and either issue. That included data points that loan with JPMorgan Chase so it can showed increases in overall alcohol advertising expenditures borrow against the credit facility through has occurred while the per capita consumption of alcohol has June 29, 2023. SiriusXM said it may use actually declined. The court also sided with broadcasters borrowings from the revolver for “working that advertising significantly affected the brand and type of capital and other general corporate alcohol sold, but not the quantity of alcohol consumed. Harpool purposes, including share repurchases, also agreed that Missouri residents were exposed to alcohol dividends and the financing of acquisitions.” The cash could advertising from radio and TV stations in the neighboring come in handy as SiriusXM contemplates future investments, states of Kansas, , and and the impact like last year’s purchase of a $480 million stake in Pandora. The of Missouri’s regulations put businesses in the state at a satcaster, along with Liberty Media, its majority owner, was also competitive disadvantage “by depriving consumers of truthful part of a $1.159 billion offer for a 40% stake in iHeartMedia that comparative pricing information for Missouri establishments.” was turned down by the broadcaster because it said the price See more HERE was too low. Sirius joins Beasley and Saga in making financial preparations to have cash at the ready for future growth amid a wave of mergers or announced mergers/deals in the larger Man Charged With Threatening To Kill Ajit Pai’s Family. A man was arrested Friday (6/29) in on media space. See more HERE charges of threatening to kill the family of FCC chairman Ajit Pai for his role in repealing net neutrality regulations enacted Digital AM’s Next Test Site Is Frederick, Maryland. during the Obama administration. Markara Man, 33, was Hubbard Radio’s adult alternative “The Gamut” WWFD charged with threatening to murder a member of the immediate Frederick, MD (820) has asked the FCC to grant it one-year family of a U.S. official, the Department of Justice said Friday. experimental authority to drop its analog signal and go all-digital. Prosecutors say Man sent three emails to Pai on Dec. 19 and In a filing with the FCC last week, Hubbard said it plans to work 20, 2017, shortly after the Commission voted to repeal the net with the NAB’s PILOT program as well as Xperi, Kintronic neutrality rules. One of the emails sent to both Pai’s FCC and Laboratories and the engineering consulting firm Cavell, Mertz personal email accounts listed the names and addresses of & Associates. Their aim is use the real-world environment to three preschools in or around Arlington, VA, where Pai lives, conduct experiments designed to improve “the technical phases including the chilling message: “I will find your children and I will of operation and service.” And whether there are enough HD kill them,” according to the affidavit against Man, as reported Radio receivers in the marketplace so the station’s ratings aren’t by . The FBI traced the emails to Man’s Norwalk, CA impacted by the loss of an analog signal that older rely residence and confronted him in May 2018. Man admitted he on. “All-digital testing of WWFD will be of significant value to the sent the threatening emails and said he was “angry” about the broadcast and consumer electronics industries, and is intended repeal of the net neutrality regulations and wanted to “scare” to support the feasibility of a possible transition to all-digital AM Pai. See more HERE transmissions,” Hubbard said in its request filed with the Media Bureau. See more HERE KOGO Host Leads Opposition To California Gas Tax Bill. A politician-turned-broadcaster has raised over a million SBS Says It’s On Track For ‘Great’ Second Quarter. dollars for a campaign to repeal California Governor Jerry Not only did the first three months of 2018 mark the best Q1 Brown’s 12-cents-a-gallon gas tax increase. Former San performance in Spanish Broadcasting System’s history, but Diego councilman Carl DeMaio, who now hosts afternoons on Q2 results look even stronger. While not offering any official iHeartMedia “NewsRadio 600” KOGO San Diego, is behind guidance, COO Albert Rodriguez said local, national and net- the Reform California super PAC, which aims to garner work advertising grew at a high single-digit rate during April. GOP support to kill the bill. Reform California garnered the “I think it’s going to be a great quarter,” Rodriguez said. The one million signatures needed to have the California Gas Q2 prognosis comes after total revenue at the -based Tax Repeal ballot measure, known as Proposition 6, on the broadcaster grew 8% to $33.9 million in Q1 and radio revenues November ballot. The super PAC has helped amass “the increased 4% to $29.3 million. Live events are part of a strategy biggest grassroots donor database” of any GOP effort in the to grow top line billings by diversifying its revenue streams, state. More than 25,000 donors have contributed an average the company told investors. SBS grossed $1.6 million from of $37 each so far during the campaign. See more HERE its sold-out MiamiBash concert April 14 at American Airlines Arena. See more HERE

Page 4 SALES – STATIONS SALES – TRANSLATORS

Washington, DC – Atlantic Gateway Communications files – David Greenlee’s a $12 million deal to buy contemporary Christian WGTS Lancaster Broadcasters files a (91.9) from Washington Adventist University. The deal $6,000 deal to buy the Barbourville, KY-licensed translator includes a $10 million promissory note that extends through W231DM at 94.1 FM from Sonya Lynn Read. Lancaster 2048. The contract also stipulates Broadcasters will use the translator to simulcast talk WZXI, that $1 million of the upfront Lancaster, KY (1280). payment will be the forgiveness of University debt held by the buyer. CLOSINGS: In a statement Atlantic Gateway says the programming, staff and – closes a $17.3 million deal mission of WGTS will remain the to buy CHR WPST (94.5) and sports “920 The Jersey” WNJE same once the newly formed not- in Trenton, NJ and religious WCHR (1040) in the Monmouth- for-profit takes over. It also plans to Ocean market from Connoisseur Media. It is Townsquare’s maintain a satellite studio at Washington Adventist University third acquisition in the last nine months. The company once the sale closes to continue its training and mentoring already owns news-talk “New Jersey 101.5” WKXW-FM in work with the students, as well as for use as a backup facility. Trenton (market No. 152) and it owns five other stations in the Monmouth-Ocean (market No. 54) including hot AC “94.3 – Michael Schaus’ Thnk Tank Media strikes a The Point” WJLK, AC WOBM-FM (92.7), classic rock “105.7 $390,000 deal to buy AC WENT, Gloversville, NY (1340) The Hawk” WCHR-FM, and oldies “Beach Radio” WADB/ from Douglass and Jonathan Clark’s Whitney Radio WOBM (1310/1160). Broadcasting. The deal also includes the Gloversville, NY- licensed translator W286CD at 105.1 FM. Whitney Radio Tri-Cities & Yakima, WA – Stephens Media Group closes Broadcasting has owned WENT since 1986. Schaus has a $10.725 million deal to buy a dozen full-power stations spent the past 30 years working in sales and management at and two FM translators from the Ingstad family in the Tri- radio stations in the Albany, NY and Worcester, MA markets. Cities, WA (market No. 179) and Yakima, WA (market No. He has also operated an advertising agency, a direct mail 198) markets. In the Tri-Cities, WA market it buys AC “95.7 Colacoupon Wars magazine, Hit Full and Force an event With company. Since 2014 he’s More FM” KKSR, country “94.9 The Wolf” KIOK, CHR “Power also been an account rep for the outdoor company Lamar. Pepsi, Coke Vying On Radio. 99.1” KUJ-FM, 80s hits “Big 106.1” KALE, classic rock “Eagle WENT will become his first radio station acquisition. 106.5” KEGX, sports “1340 ESPN Radio” KJOX. The cluster also includes the Richland, WA-licensed K291BS at 106.1 – Mark Porter’s GlobeCom Media files a $150,000 FM which simulcasts KALE. In the Yakima, WA market it deal to buy classic hits “Happy Radio 92.5” KKHA, Markham, buys “New Country 104.1” KXDD, rhythmic CHR “Hot 99.7” TX from Tomlinson-Leis Communications. GlobeCom Media KHHK, classic hits KARY-FM (100.9), classic rock “105.7 The already owns “96 Country” KIOX-FM in the area. Once the Hawk” KRSE, sports “1390 The Fan” KBBO, and Spanish- sale closes, Tomlinson-Leis Communications will still own language sports “ESPN Deportes 980” KTCR. The cluster CHR “104.5 The Bay” KBYC in Markham, TX as well as four also includes the Wapato, WA-licensed K283BX at 104.5 FM stations in Palestine, TX. which simulcasts KBBO. Broker: MVP Capital

Youngstown, OH – An judge has put two Whiplash Wilkes Barre-Scranton, PA – Vince Benedetto’s Bold Gold Radio-owned stations in the Youngstown-Warren market Media closes a $700,000 deal to buy WMMZ (103.5) from stations under control of a court-appointed receiver. Attorney Joseph Reilly’s Columbia Broadcasting Co. Bold Gold Media Michael Thompson will oversee talk WYCL (1540) and urban already owns six other stations in the market including the AC “Hot Jamz 1570” WHTX until the pending $150,000 sale of classic hits “The River” trimulcast on WWRR (104.9), WYCY the two AMs to Nelson Cintron’s Sagittarius Communications (105.3) and WYCK (1340) plus “94.3 The Talker” WTRW and closes. The sales agreement was struck in Oct. 2012 and sports “The Game” WICK/WCDL (1400/1440)—but because after a lengthy dispute Whiplash Radio filed to turn in the of the geography of the market none of those stations stations to the FCC. But in March the court ordered Whiplash overlaps with WMMZ. The Class A signal now relays “The owner Chris Lash to rescind that request and pay the $27,000 River” format. Columbia Broadcasting Co. still owns the in regulatory fees it owes the FCC to allow the sale to be classic hits simulcast WBWX (1280) and WHLM (930) in the completed. Wilkes Barre-Scranton market.

Huntsville, AL – Brantley Broadcast Associates files an Illinois & – Tim Milner closes a deal to create a new $117,000 deal to buy sports “ESPN 1400” WWTM from R&B ownership group that will own five stations south of . Communications. The deal also includes the Decatur, AL- The newly-created Milner Media Partners includes former Triad licensed translator W232DL at 94.3 FM. Brantley Broadcast Broadcasting CEO David Benjamin (33% stake), former KGO Associates already owns sports “97.7 The Zone” WZZN in general manager Mickey Luckoff (32% stake), the Huntsville market. Robby Markose’s R2 Investments (33% stake)—with Milner retaining a 2% interest in the group. The stations include CHR – Dan and Kim Dockstader’s SVI Media files a $47,000 WFAV (95.1) and oldies “92.7 The Valley” WVLI in Kankakee, deal to buy oldies “K-940” KMER, Kemmerer, WY from Broadway IL; and the “River Country” simulcast of WIVR, Kentland, IN Media. The deal also includes the Kemmerer, WY-licensed (101.7) and WYUR, Gilman, IL (103.7). Also included in the translator K223DD at 92.5 FM. SVI Media will operate the station deal is the Bourbonnais, IL-licensed translator W241BS at under a local marketing agreement until closing. The company has 96.1 FM that relays WVLI. According to the filing the purchase also struck a deal (see below) to buy country “105.3 The Diamond” price will be an amount equal to 5.374-times the adjusted net KDWY in the area. It also already owns an AM/FM combo in Afton, operating income generated during a measurement period that WY about 100-miles away from where the two new stations are ran April 1, 2017 through March 31, 2018. The exact purchase located. price will be adjusted in the weeks to come, but Milner Media More station and translator sales HERE Partners has already put up $345,000 as a deposit. More closings HERE

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