NJBA Weekly Newsletter Friday, July 23, 2010

P-Tax is a Death Tax for Radio

Despite what Bonneville’s Bruce Reese said last week at the Conclave panel, not every group head is feeling the pressure from Congress to settle with MusicFirst and the record labels. Tom Taylor was there and he reports that Ed Christian of Saga, the chairman of the Radio Music License Committee, which represents member stations to the “PROs” – the performing rights organizations, which are ASCAP, BMI and SESAC, is but one voice disagreeing with Reese. Christian believes the Committee has been making good progress with the rights organizations, whose job it is to pay the composers, authors and publishers. Radio’s won concessions – rate decreases – from ASCAP and BMI worth tens of millions, and is headed to rate court with the hope of doing even better. So when Christian reads what Bonneville President/CEO Bruce Reese said in Minneapolis, he’s not a happy camper. From an NAB/industry perspective, this is a rare public dispute on strategy. Should radio preemptively seek the best possible deal from MusicFirst, to stave off something more dire? Christian says no, that Reese “speaks for Bonneville and not necessarily the radio industry.” Ed just doesn’t buy the premise that radio should compensate artists, since it paid ASCAP, BMI and SESAC “close to half a billion dollars in 2009." Bruce Reese isn’t necessarily making the “fairness” argument – just the pragmatic we’re-getting-beaten-up in Washington argument. Besides, when has anyone ever heard of a Tax not going up? And by trying to make a deal to protect your interest will only lead to your demise. Ask anyone who still has satellite radio or is paying streaming fees. The Performance Tax is a job killer and a radio killer. Let’s not be an enabler of such foolish legislation. 

Speaking of the Performance Tax

In spite of continuing intellectually dishonest pressure from RAII to move the P-Tax bill forward, several more House Members recently agreed to co-sponsor the broadcasters’ anti-performance tax bill. This dangerous and wrong headlined legislation is the misguided folly of a few greedy, foreign owned record companies who couldn’t care less about the American people or many of the artists they have under contract. If you want to see a glimpse of the result of such a tax, just call any satellite radio service and ask how much it costs for a subscription quote and they actually break out the “Performers Royalty Fee” of x% on their billing, just like sales tax. If you ask how much does an annual contract cost, you get something like $165 per year, plus 7% tax and an additional  Performers Royalty Fee of $xx dollars !!! While the fee appears less than the proposed 30% on broadcasters it is explained by the company that “they give 2 months free, and they do not charge “tax and fees” on giveaway months.” Well, neither do broadcasters, who give their services away for free to the public 24/7! ) And guess what? It is the consumer who is actually paying the tax; not the satellite companies. (There’s a shock!) Remember, they don’t collect if they don’t charge…and they are predominantly a non-music service. And since Free-over-the-air-radio is FREE….we have no such billing scheme to collect this tax on listeners. Unlike Internet and Satellite radio, we do not have a way to track every “user” and charge them accordingly. Rest assured Radio is merely the first stop on the tax train. History proves that they always cast a wider and deeper tax net. 

Report Reveals NJ Unprepared to Protect Children During Disasters

Almost five years after Hurricane Katrina, a new report reveals that New Jersey meets only one out of four minimum criteria for protecting children in disasters. “This report underscores the urgent need for a properly working EAS in New Jersey,” said NJBA President Paul Rotella. Ninety percent of U.S. children live in an area at risk of a natural disaster, and terrorists can strike anywhere.  New Jersey lacks basic protections for kids such as requiring all licensed child care centers to have a plan to reunite children with their families or requiring them to have plans for children with special needs. The 2010 year report found that 38 states and the District of Columbia did not meet all four basic standards and seven states met zero standards.  Hurricane Katrina demonstrated what can happen when children are not accounted for in disaster planning with 5,192 children were reported missing after Hurricanes Katrina and Rita, and the last child was not found until six months later. About 50,000 Louisiana and Mississippi children missed school in the 2005-2006 school year and approximately 15,000 did not attend in the 2006-2007 school year. More than a third of Louisiana children experienced clinically-diagnosed depression, anxiety, or another behavior disorder after the storm.“Five years after Hurricane Katrina, it is unacceptable for states to ignore these low-cost and common-sense safeguards for kids,” said Mark Shriver, Save the Children U.S. Programs Senior Vice President. “The most vulnerable New Jerseyans in the most vulnerable settings are made more vulnerable because of government inaction.” A properly working EAS is a fundamentally essential component of our nation’s Homeland Security arsenal. It is crucially needed to respond to the myriad of potential terroristic threats facing our region’s target rich environment. Couple this need with the recent weather emergencies that have plagued the northeast, not to mention the myriad weather threats we endure year round like hurricanes, and the urgency of the situation becomes overwhelming.” Rotella told officials in Trenton this week “As first responders in the event of such an emergency, New Jersey Broadcasters are particularly concerned with respect to the adequacy, obsolesce and deterioration of the EAS apparatus currently in place in state, and its potentially catastrophic failure to act in response to a large regional, statewide, or national emergency. This unthinkable prospect, coupled with the vast New York/New Jersey metropolitan resident and working population, is precisely why New Jersey must be technologically sophisticated in providing effective and comprehensive emergency communications to the public in times of crisis via our native broadcast airways.” Rotella warns government officials to waste no time in purchasing and installing the new EAS approved by the State Police.  

Good News for NJBA ABIP Participants

One of the most important benefits of belonging to the NJBA is participation in our championship quality ABIP program, and NJBA members enjoy significant discounts to take advantage of this valuable program. This can save tens of thousands of dollars in unnecessary fines by making sure your station(s) are in complete compliance with FCC rules and regulations. The value offered through our NJBA ABIP program is a tremendous member benefit for all stations and station groups. (And NJBA members receive a substantial discount in ABIP fees.) Smart GMs and owners should call Mary at the Broadcast House to make an ABIP appointment today. 

Glenn Beck Fights for His Sight

Radio and TV Superstar Glenn Beck announced he is fighting to keep his eyesight last week. The Premiere-syndicated talker’s potentially very serious medical condition, “macular dystrophy” became a viral Google search topic within minutes of the disclosure, a further testament to Glenn’s fame. You’ve probably heard Glenn’s story by now - "a couple of weeks ago I went to the doctor because I can't focus my eyes. Actually, I went to Lenscrafters first, and the guy said, 'Whoa, you might be going blind.'" A follow-up visit to an eye doctor produced a diagnosis of macular dystrophy. It's a progressive disease, often hereditary, that can cause a loss of central vision as the cells in the center of the retina (named the macula) fill up with a yellow fatty substance. Macular dystrophy is a different disease from macular degeneration, which can also produce loss of central vision. The NJBA wishes our esteemed colleague the very best of luck and good wishes as he battles this serious disease.  

NJBA Sponsor Expands Business Model

Timeless Cool Music was the Premier Sponsor at out great conference last month and we’re happy to report that they are expanding by hiring three new regional directors of affiliate relations. Scott Gilreath is the manager of Syndication Operations at Timeless Cool, and he’ll continue in that role and also (from his new base in North Carolina) function as regional director for the Eastern and Gulf Coast. Joining Timeless Cool, the syndicator of a hip-standards 24/7 music format, are Bill Kreutz, Dennis Soapes and Rob Magaziner. Bill Kreutz, with experience at Dial Global (as senior affiliate sales manager) and Unistar/Westwood, takes the Midwest. Dennis Soapes, a veteran of Broadcast Programming and Jones Radio wrangles the West. Rob Magaziner, formerly of Westwood, Unistar, United Stations and Dow Jones Radio Network, owns the East. Congratulations to Scott and his team at Timeless Cool Music! 

PPM Rocks

Since PPM first appeared on the scene the numbers have showed electronic measurement has been good to rock stations.  As more stations have converted from the diary, that continues to hold true.  Inside radio reports that this trend is not just among young demos, but also with the key advertiser-friendly 25-54 target. Because it’s fragmented into assorted sub-formats over the past several decades, rock’s overall ratings success is often overlooked in a PPM world, where AC and CHR frequently hog the headlines.  But an Arbitron PPM analysis of top-ranked formats shows a surprisingly strong finish for rock. It had the second largest number of stations (9) that ranked first in persons 25-54 from January-March in the 33 markets where the PPM has been commercialized.  That includes the various subsets of the format, such as classic rock (two #1s), classic hits (four), active rock (two) and AOR (one).

Political Interference Squelches LPFM Expansion

A bill that would clear the way for hundreds of new low-power FM stations across the country has hit a sizeable legislative roadblock. This from Inside Radio. After the Local Community Radio Act won approval in the House last December, the bill moved to the Senate. It appeared to be in good shape in March when the Commerce Committee gave its blessing after a debate that lasted less than half an hour. The proposal was then “hotlined” — a move by Democratic leadership to pass it by unanimous consent rather by a roll call vote. Senate Democrats cleared passage, but that’s where progress ground to a halt. “Our understanding is that multiple Republican Senators have placed secret holds on the bill,” says John Diamond, a spokesman for bill sponsor Senator Maria Cantwell (D-WA). No Republican senator has come out publicly against the bill and, under Senate rules; it may never be known who’s put a hold on the bill. Supporters in Congress are left scratching their heads. “There are powerful broadcast interests who don’t want this bill,” one Hill staffer suggests. The bill would remove third-adjacent channel protections yet require mandatory reporting of interference complaints and on-air alerts to listeners about potential signal conflicts. It would also require LPFMs to fix any interference to a full-power station on the third-adjacent channel — even outside the big FM’s contour protection area.  

Tiger Bites FCC
Well, at least Tiger Woods, who may be the first test case of last week’s federal court ruling shooting down the FCC’s fleeting expletive policy. For the Golf great, and the broadcaster’s microphone following him on the course, it may have come in the nick of time. Tiger Woods was heard uttering a string of F-words during live TV coverage of the British Open Golf Championship over the weekend after missing a putt. If it stands expected challenges, the Second Circuit Court of Appeals ruling means no radio or TV station could be fined for such an unexpected outburst. But, let’s hope Tiger can keep his tongue in check in the future.

Radio Show and RAB Perfect Together

The 2010 Radio Show, produced by the Radio Advertising Bureau (RAB) and the National Association of Broadcasters (NAB), will be held September 29-October 1 in Washington, DC. This year's show brings radio broadcasters and industry colleagues together to share knowledge, discover the latest innovations, network with industry leaders and explore creative business strategies to help radio flourish in the digital age. To learn more about the 2010 Radio Show, visit www.radioshowweb.com. Don’t miss this opportunity to join other leaders in the radio industry for this exclusive event.

Warfield Wins Top Honors

Charles Warfield, president and chief operating officer of ICBC Broadcast Holdings, Inc., will receive the National Radio Award during the Radio Show Luncheon held Friday, October 1. The luncheon will take place during the 2010 Radio Show, held September 29 - October 1 in Washington, DC. "NAB is proud to honor Charles Warfield as this year's recipient of the National Radio Award," said NAB Executive Vice President of Radio John David. "His entire career has been devoted to bettering the business that he loves and the communities that ICBC radio stations serve. Charles has been an exemplary leader and role model, and his dedication to ICBC, NAB, and the entire Radio profession make him an ideal choice for this noteworthy award." The NJBA agrees and wishes him the very best as he accepts this distinguished honor. Each year the National Radio Award honors an individual who is an outstanding leader in the radio industry. Previous National Radio Award recipients include Ed Christian, Bruce Reese, Jerry Lee, David Kennedy, John Dille, Lowry Mays, Jeff Smulyan, Bill Stakelin, and Erica Farber. 

Mediaguide Predicts Aggressive Back-to-School Campaigns

According to the latest Mediaguide AdMonitor review of radio advertising across the U.S., from July 1st through July 15th, the top retail brands are, for the most part, tracking at lower levels that the same period in 2009. “I read in MediaPost NEWS that the retail recovery is showing alarming signs of pooping out,” said Joan Gerberding, Mediaguide’s EVP Advertising Sales, “but the experts are predicting that marketers will go, all in for the back-to-school season. Our data may be predicting the same thing.”

While Macy’s, Target, JC Penney and Kmart are down for the first 15 days of July 2010 versus the same period of 2009, both Kohl’s and Wal-Mart are significantly up with Kohl’s running nearly 10 times the number of radio commercials this year and Wal-Mart doubling their radio spot load. During the period August 1 through Sept. 1, 2009, the top four advertisers in this category were: Wal-Mart with 220,324 ads, Macy’s with 62,364 ads, Kohl’s with 45,589 and JC Penney with 41,195 ads. Target and Kmart ran under 1,000 ads during this period last year. “I think it’s a good bet to say that the big name department stores are saving their advertising budgets to blast back-to-school ads toward the end of the summer,” continued Gerberding. Mediaguide’s AdMonitor, StationMonitor and MusicMonitor use proprietary digital fingerprinting and watermarking technology to monitor and measure advertisement, PSA and music airplay on more than 2500 radio stations in over 150 US markets, real time, 24/7.

BP Radio at $1mm

While Oil giant BP has slowed the advertising this week, it has spent over $1 million on radio since the drilling rig blowup. Tom Taylor reported that Media Monitors has been tracking the British company’s radio spending week by week since the April 20 explosion at the drilling rig in the Gulf. A month ago (June 22-June 28), BP’s radio spending hit a high of $185,502 with 2,251 spots detected. Since then, the estimated dollars spent on radio have dropped to $171,421, then $157,497 – and last week, $107,300. But that was enough to push its two-month total at just over $1 million.

QuickNews will be on vacation next week but will return on Friday August 6^th!  See you at the Jersey Shore!

QuickNews is provided for general information purposes only and should not be relied upon as legal or tax advice pertaining to any specific factual situation. Legal and tax related decisions should be made only after proper consultation with a legal professional of your choosing.

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