Weekly News Recap April 30-May 4, 2018 Industry Consensus Remains Elusive On Media Ownership. As the FCC prepares to launch the next some groups look to sell the AMs in their Despite a lack of unanimity on radio’s legally-required quadrennial review of clusters to buy more FMs. But that could ownership limits, there is some media ownership rules, the industry deflate the value of AMs, as many go on consensus that more needs to be done finds itself in a unique position of the sale block in an environment where to address the still-low number of women deciding what to push for. Executives a fewer number of buyers are interested and minority owners in radio. But how to from across radio have begun holding in those stations. Miller Kaplan data get there is still the subject of debate. And discussions and it’s quickly apparent shows roughly 15% of the industry’s some broadcasters worry that relaxing that there’s a wide array of perspectives revenue is still tied to the AM dial and one radio ownership rules could make the and no clear agreement so far. Whatever veteran market manager said eliminating problem even worse. The diversity consensus is presented to FCC chair the subcaps would also lead to less question also ties closely with subcap proposals, since a disproportionate number of women- and minority-owned stations are AMs. The NABOB has said doing away with subcaps would not only undermine efforts to revitalize AM radio but also disproportionately hurt minority broadcasters. The NAB has formed a committee of industry players to develop and submit a proposal to the FCC in the coming months. The FCC has often been hesitant Ajit Pai will be critical in helping him differentiation and a cheapening of the to take any action if broadcasters don’t decide which way to go as he looks FM band. largely agree on the solution for what the to fulfill his pledge to do away with industry views as a problem. But some outdated media regulations. Some worry that an aggressive push on industry veterans say that might not hold media deregulation could also result in true in 2018 as Pai looks to make good The FCC is currently considering the industry being painted with a bull’s on his pledge to address outdated media an outline that would take a tiered eye by consolidation critics. There ownership rules. They say it only further approach, allowing more deregulation are a number of issues on Capitol Hill raises the stakes on why broadcasters in smaller and unrated markets, with where radio needs bipartisan support, need to think long and hard about what less relaxation in big and mid-sized and the concern is there could be they really want out of the upcoming metros. One variable in the equation political fallout that could make it more quadrennial review. would be whether to do away with the difficult to achieve wins in Congress. subcaps which limit how many AMs or Fresh evidence of just FMs an owner can have as part of their how toxic the media WHAT HAS local cluster. ownership issue remains in Washington The industry split on whether the came last week when PROGRAM subcap rules are still needed isn’t new 22 Senators sent a but, with an FCC that might actually take letter to the FCC urging action, some broadcasters are taking it to take a “holistic” DIRECTORS a fresh look at why advocates for the look at the state of status quo should be heard in what may broadcasting and the become a proverbial “be careful what media. “Until this has TALKING? you wish for” scenario. occurred, the FCC Read more on page 3 should not adopt any Brokers predict a decision by the FCC to additional changes to do away with the subcaps may stimulate its media ownership the deal market in the short-term as rules,” the letter said. THIS IS AN ADVERTISEMENT Page 1 Weekly News Recap April 30, May 4, 2018 After Detroit Sale, Liggins Seeks More Deleveraging Deals. Fresh from signing a deal to sell WPZR Detroit (102.7) to EMF for $12.7 million, Urban One CEO Alfred Liggins has signaled the company is interested in doing more transactions to further deleverage its balance sheet. While no other deals are imminent, Liggins told investors the company will “look for any transaction” that will help it reach a more desirable leverage ratio. “Where we have underperforming assets that somebody would deem more valuable than they would be in our hands, and that would continue to reduce our leverage, we’re open to that,” Liggins said during the company’s first quarter 2018 results call. More sales like the WPZR deal, which went for a high double-digit seller’s multiple, could help Urban One With Court Approval In Hand, Cumulus Eyes Exit meet its deleveraging goal. “We’re always trolling and looking From Chapter 11. at stuff and we believe there will be some options out there,” Independence Day could have a double-meaning for Cumulus Liggins said. At the right leverage, radio is “a great business Media this year. The company says it expects to emerge from with great free cash flow,” Liggins told investors. So good that Chapter 11 before the end of the second quarter, giving it a he says he’s fielded calls from venture capital firms asking for newfound financial freedom after years of punishing debt. In a his view of the business as they consider buying stations and major step toward exiting bankruptcy protection, the company’s holding on to them for their cash generation. FULL STORY financial reorganization plan was confirmed in U.S. Bankruptcy Court on Tuesday. CEO Mary Berner said the court approval Report: Radio Newsroom Salaries Increased In 2017. “allows us to complete the balance sheet restructuring that is A new RTDNA study shows local radio news salaries grew by critical to the success of our turnaround strategy. With a firmer 2.8% in 2017 – up from a 2.3% increase a year before. It was financial foundation in place, we look forward to continuing a comparatively good year overall for radio news salaries. to implement the business initiatives that have already taken However, the RTDNA findings were mixed for the two most this company so far.” Before the company can make break common positions of news director and news reporter. The from Bankruptcy Court, it first needs to satisfy the conditions latest instalment of the Newsroom Survey saw average radio outlined in the plan. The confirmation marks a crucial victory by news director salaries increase, but “they held steady in the Cumulus in a battle with its junior creditors over the valuation more meaningful median of radio’s third largest company. The “juniors” had argued that (typical) category,” the report Cumulus “grossly underestimated” its value so it can hand a read. Average salaries for controlling equity share to “their preferred new owners”—the news reporters also rose, but in terms of median, they actually company’s term loan lenders. But Judge Shelley Chapman dropped, the study found. Meanwhile, news producers’ salaries overruled the juniors and adopted the company’s suggested were down in both average and median. Increases came for valuation. The reorganization will reduce the company’s debt news anchors, sports anchors and web producers/writers. by more than $1 billion. FULL STORY FULL STORY Edison: Radio’s Biggest Users More Likely To Own Entercom Gains Stake In USTN. Smart Speaker. Entercom has gained an equity position in United States Traffic As broadcasters look to smart speakers to increase AM/FM Network (USTN) as part of a new agreement with the traffic radio listening at home, a new study from Edison Research provider. The deal follows USTN president Ivan Shulman’s shows that one-fifth of broadcast radio’s biggest users already Texas-based Fair & Equal LLC buy-out of the company, which own one. The report, which looks at the 30% of Americans age separated it from the Australian-based Global Traffic Network, 12+ who listened to more than one hour of radio in the last day, after Entercom revealed its Q4 earnings were negatively finds 82% of heavy radio listeners have a radio in their home, affected by financial issues it was having with the company. which means nearly 18% of this group achieved “heavy” status Further terms of the transaction were not disclosed. Entercom primarily through in-car or at-work listening. Intriguingly, 20% CEO David Field said he was pleased with the partnership of heavy radio listeners have smart speakers in their homes, and noted that USTN’s new management team “has moved compared to 18% for the total population. Radio’s best custom- quickly to fix their issues and establish a solid business model ers are heavy users of all audio – nearly two-thirds of “heavies” following the company’s separation from its former corporate listen to audio online, with large numbers choosing YouTube parent.” When reporting its Q4 numbers in March, Entercom (44%), Pandora (29%), and the streams of AM and FM radio said it was having “significant financial issues” with USTN, and stations (20%). Over one-in-six heavy radio listeners now say its quarterly numbers were negatively affected by a $4 million they have listened to a podcast in the last week. The report write-down it took from the ongoing issues with the network. is chocked full of sales-friendly findings about radio’s biggest Shulman, who was named chairman and CEO of USTN after users.