Katz Media Group

From the Editor:
After a short hiatus RadioWaves is back to continue our mission of separating the Media industry's truth from hype. We have a new improved delivery system and easier-to-read graphics. Thanks, as always, for your continued support of RadioWaves!

RADIO
Radio -- Four media for the price of one
Radio has a unique opportunity in today's digital world. The negative perspective might portray Radio as threatened by "new" media but nothing could be further than the truth. The digital world gives Radio the ability to expand its horizons to limitless possibilities, enabling Radio to morph from one medium into four, which includes:

Radio: Radio offers the audio consumer limitless choices in music and talk. The vast majority of Americans still report they listen to Radio as much or more than they did five years ago. HD Radio continues to grow, with new model offerings coming on the market, including lower priced tabletop models and sets that instantly convert car Radios to HD models. Three out of four Americans are now aware of the more than 1,200 HD Radio stations already on the air.
Internet: Radio stations have built strong brand equity enabling Radio station websites to be strong destination sites in the fast-growing digital audio category. Radio station websites have quickly become among the most visited on the Internet. In fact, one in five Internet users visit a Radio station website every month!Radio station websites give marketers a new platform to deliver locally targeted audiences, something that's very elusive on the Internet.
TV: Even more exciting is the prospect that the Internet gives every Radio station the ability to become a TV station.Radio station websites that run streaming video give advertisers the ability to use TV spots in a Radio buy. Since the vast majority of Internet users have watched online video, Radio gives advertisers the ability to combine the massiveness of the online Radio audience with the growing interest in streaming video as an ad medium. Advertisers in the forefront of digital video can deliver Radio's highly targeted audiences, without the issues of controversy and the unknowns of user-generated sites like YouTube or MySpace.
Mobile: Radio stations already use SMS technology for listener interaction (music requests, contest entries, etc.) and a huge number of them are able to give advertisers use of their opt-in mobile text messaging promotional platform. Radio easily provides advertisers with the ability to deliver to 95% of all mobile phones that are text message capable and tie into the instant result traffic driver that combining traditional media with digital media can produce.

Radio generates a true multi-media experience, giving advertisers the ability to buy four media for one price and strategically be in the forefront of combining the capabilities of digital media with the relative safety of traditional media.

Sources: Borrel; Media Audit; AMS; Critical Mass Media

TRADITIONAL MEDIA
TV: The more things change, the more they remain the same
TV's 2007 upfront buying/selling period is over. And despite ominous predictions to the contrary, it turned out to be the medium's best upfront in history with solid growth over 2006. This happened despite a challenging and changing landscape for TV, with ratings down to historic lows and even top-rated shows like "American Idol" reporting audience declines of as much as 20%. These ratings declines were the result of several factors, including an increasingly fragmented TV landscape. Big changes in Nielsen ratings methodology was added to this murky stew for this year's upfront season. There are many new ways to measure TV, from minute-by-minute commercial ratings to counting DVR viewing for up to a week after the show airs. The controversy surrounding which set of ratings to use has been every bit as loud as the conversations we're having in Radio about Arbitron's PPM methodology. Yet, despite declining ratings and significant changes in ratings methodology, television reported solid gains in this year's upfront.

DIGITAL MEDIA
Free Internet access is coming to your market ... maybe
In the past two years, more than 400 cities have seen their city councils rush to pass initiatives to provide free Internet access to all its citizens. The concept: municipalities contract with various providers to wire the entire city with WiFi antennas so WiFi-enabled digital devices (i.e., most laptop computers) can access these municipal WiFi connections to get into the Internet for free.

A WiFi-wired market would be like one endless Starbucks, with the ability to go online in any public or private place. Recently, though, many municipal WiFi's doors were slammed shut. San Francisco, Chicago and St. Louis announced significant roadblocks to their WiFi projects. Philadelphia and Houston's ardor toward WiFi has also cooled. The early enthusiasm for citywide WiFi came from two major assumptions: advertising could support the connectivity and residents would actually want to use these free, but not digitally secure connections. These assumptions appear to be incorrect and without them the business model is unworkable.

Companies that were contracted to these WiFi networks agreed to generous terms and have determined they have no profitability. Since WiFi signals only travel 100-200 feet, the infrastructure that needs to be created is mind-boggling. However, it is the lack of consumer demand that is apparently the deal breaker. Cities that were in the planning process for municipal WiFi thought 25% of the population would initially sign up for free Internet access. In most cases, however, only 1-2% signed up.

Free Municipal WiFi may not be completely dead. New business models and new technologies emerge every day. But for now, the reality check of high cost and low return has caused many of the highly publicized citywide WiFi projects to boot down.

Source: AFP, Wired, Sept. 2007

EVERYTHING OLD IS NEW AGAIN
The progression from traditional to digital revenues:
Last July's 16-hour, 6-continent Live Earth concert was one of the largest digital media events ever. It was either an enormous success or a colossal failure, depending on who you're talking to. From a network television perspective, it was a failure as the primetime highlights telecast on NBC came in fourth for the night with low viewer ratings. Further, the all-day Bravo Network telecast did only moderately better, delivering modest shares as well.

On the other hand, the webcast on MSN was considered to be a huge success, with a record-breaking number of people streaming the concert during its marathon 16-hour webcast. Further, during the telecast and webcast there were text messaging requests at every commercial break (text your name and city to [various numbers] and you will win a chance of getting your name put on the crawl-there was a large digital sign with a crawl on every one of the various venue's stages which had names regularly going across). There were millions of text messages sent and millions of dollars generated by these texts.

Overall, the Live Earth concert showed the progression of the same content from a traditional to digital platform, both as a medium and as a revenue generator. Further, it put in perspective that something that's considered to be a minor concert on traditional media can break records when positioned against the more fragmented, emerging digital media.

SATELLITE RADIO UPDATE
The satellite category has been quiet as the two rivals, XM and Sirius, continue the long wait for approval of their pending merger. But Arbitron has just brought this conversation to the forefront again with the release of ratings data for every satellite channel. These are not estimates of subscribers (which usually include unsold autos with factory-installed satellite Radios) these are real Arbitron ratings.

Top10Satellite 10-24

To put these audience numbers in context:
- When Stern was on the air in NY, he often generated a 2.0 rating (in
  NY); today he generates a 0.05 rating. The current nationwide cume
that the Stern 100 channel reports wouldn't make the top 10 in the
NY market.
- The Arbitron study further noted that --
    o All 14 of XM's Major League Baseball stations combined,
        register less than a 0.01 rating.
    o All 20 of XM's local traffic & weather channels combined,
        have an AQH of only 700.

In fact, only 6 of Sirius's 198 channels and only 16 of XM's 247 channels have AQH audience large enough to even register a .01 rating with Arbitron. Arbitron's minimum reporting standards generally require a .05 rating to make the book so none of the satellite channels generate enough listeners to "make the book".

FACTOIDS YOU CAN USE
Car buyers in the plan-to-purchase mode are heavy Radio listeners. Adults planning to buy a car in the next year listen to the Radio 3 ¼ hours per day on average, which is 21% longer than the average adult. What's more, those planning to purchase high-end cars (over $30K) are among the heaviest Radio listeners - one in four spend over 3 hours per day with Radio, which is 24% higher than the norm. Note that Radio has an equal percentage of the media day as TV (broadcast and cable combined) for these future car buyers.

Source: Media Audit Sept. 2007

THIS ISSUE'S DEFINITION
What are Social Bookmarks? Social bookmark websites are used for storing, sharing and discovering Internet sites and news articles saved by other members. Some examples are del.icio.us, reddit.com, digg.com, stumbleon.com and blink.com. Many of these sites can also be used as organizational tools that enable a user to bookmark and file articles of interest for reference. For example, at RadioWaves, we use del.icio.us extensively to save and organize online articles we want to reference to create a RadioWaves edition.

TRUTH OR HYPE?
Time spent with all media is declining. Truth!
It was initially thought that time-spent with traditional media was declining in favor of digital media. It turns out that time spent with all media has dropped. According to the annual Veronis Suhler Stevenson report, the average American's time spent with media is down about 1% in the past year. It is thought that because digital offerings are more efficient than entertainment media, there is less need to spend time with them. For example, while a TV show is 30 minutes long, a YouTube Video is only a few minutes long. While a newspaper takes an hour to read, a newspaper website offers up a few choice articles that are easily digested in less than 30 minutes. In fact, the largest loss in time spent is with the print medium, which has fallen sharply in the last 5 years. Despite that loss, print still has twice the time spent as digital media and broadcast sources still occupy the most consumer media time.

Source: Veronis, Suhler, Stevenson; MediaPost

SHOW ME THE MONEY
This is a new RadioWaves feature about revenue and spending trends in advertising and on the consumer side. This month we'd like to put a different perspective on the much-publicized recent TNS Media data about the drop in advertising revenue. We have seen a great deal published about Radio's revenue loss as a percentage of total dollars. But in terms of actual dollars lost, Radio revenue declines pale in comparison to newspapers and TV. Further, Radio's non-spot revenues, which are growing in double digits, are not factored into these numbers.

Advspending3-Oct07

Much of the enormous growth of magazine revenue in this forecast can be attributed to TNS's methodology, since it takes its magazine revenue estimates from published rate cards rather than from actual transactions. Other sources do not show this degree of positive momentum for magazines.

Note that other forecasters have differing opinions on these revenues:
- Much is being written about how online advertising is stagnating and that Internet CPMs are dropping, especially for premium display ads. Prognosticators say Internet advertising has already begun to slow its growth. As the Internet hits saturation and page-view growth slows, pressure to grow rates will cause website pages to become more cluttered which could cause page views to drop.
- TV forecaster Jack Myers agrees to some degree with this current negative picture, but remains positive about 2008, projecting an overall gain of 7% for all advertising revenue for next year with a 3% gain for Radio.

FROM THE SUBLIME TO THE RIDICULOUS
The month's Sublime/Ridiculous column is devoted to the September 2007 issue of Vogue magazine, which appears to single-handedly be responsible for the large increase in revenues in the consumer magazines category. It is a whopping 840 pages and is about as thick as the Manhattan phone book. Vogue's production people uncharacteristically numbered the last page so you can easily see how big this issue is. Bragging rights are clearly an issue here, but at what price? Whatever happened to concern about clutter? One wonders if the ads on page 839 have ever been viewed and by how many especially considering their cost!

Published by The Katz Radio Group; Written & Edited by Maggie Hauck, VP, Marketing.
Please email your comments or suggestions to: maggie.hauck@katzRadiogroup.com