THE MOST TRUSTED NEWS IN RADIO · on new rates starting in the spring. If the two parties can’t agree by the end of next year, they’ll begin binding arbitration in the first quarter

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Voltair Stations Say ‘We’re Keeping It.’ Despite Nielsen’s plans to update its PPM encoders, programmers at Voltair-equipped stations say they have no plans to unplug the infamous audio processor any time soon. “I question whether anybody will turn their Voltair off—even after Nielsen puts its enhancements in place,” says one programmer at a station that is said to be using one. “Nobody wants to lose anything.” Speaking anonymously, numerous programmers have claimed to see ratings gains after plugging in the mystery box, which is said to increase the likelihood of Nielsen’s audio watermarks being received by its ratings meters. On Tuesday, Nielsen said it would increase PPM code density and amplification in the fourth quarter as part of its continuous improvement initiative. But in a ratings-compressed market, where even a minor increase or decrease in ratings can have a significant impact on revenue, stations appear reluctant to part with their $15,000 Voltair investment. “I don’t think anyone wants to be left on the sidelines when there is two-tenths to a half share on the table that potentially isn’t being picked up,” the programmer said. “I see the issue as unchanged.” The Voltair code-altering setting can be set as high as 24. Programmers who share their own sort of Voltair best practices say they set it at 20 to get the encoding benefits without introducing what Nielsen has termed “audible artifacts.” “A setting of 20 seems to be the consensus point in the industry,” the programmer said, adding that Nielsen Audio predecessor Arbitron set watermark density and amplification levels at a modest level. “It was conservatively set when PPM first came out and nobody did anything until [25-Seven Systems] started rolling Voltair out,” the programmer said. “Then the hood got lifted and that’s where it became a headache for Nielsen.”

Orban Disputes Voltair Claims vs. Nielsen. Voltair manufacturer 25-Seven Systems has positioned the product as an “audio processor” but it does more than just make a station’s audio sound loud and crisp. Nielsen went so far as to claim it “interferes” with the encoding process of its proprietary PPM technology and introduces “audible artifacts” that disrupt the listening experience. Now a well-known competitor to 25-Seven Systems in the audio processing space is echoing that sentiment. Orban, which manufactures the widely used Otimod audio processor, is drawing a line in the sand between audio processing that “increases the opportunity of the Nielsen encoder to insert audibly undetectable watermark tones,” which the company says its processors do, and processing “that directly manipulates the level of the watermark, potentially breaking [the] Nielsen psychoacoustic masking model and allowing the tones to become audible.” On Tuesday Nielsen presented lab results that suggest that the Voltair, when dialed up to a maximum level, can degrade audio quality. “In an environment where traditional radio is suffering ever-increasing competition from new media, we believe that it is unwise for radio to degrade its audio in an internecine battle whose ultimate winner could be non-broadcast providers,” Orban said in a press release. The company says it’s putting its faith in Nielsen to make any needed improvements to its encoding system and says it won’t add processing to Optimods that “directly manipulates the Nielsen watermark signal because we expect that any such effort would degrade audio quality and would soon be rendered obsolete by Nielsen’s encoder improvements.” Orban notes its Optimod processors are compatible with Voltair but urges “caution” when the two are used together.

Radio, SESAC In Historic Fee Settlement. The Radio Music Licensing Committee has reached a settlement with SESAC that ends almost three years of antitrust litigation brought by RMLC against the performance-rights organization. It’s also an historic agreement: For the first time in SESAC’s 85-year history, the licensing fees it’ll receive from radio stations will be determined by a third-party arbitration panel. “It’s the first light at the end of the tunnel in terms of getting us the ability to achieve some sort of sustained fee relief for the industry from SESAC,” said Bill Velez, executive director of the RMLC, which represents the vast majority of commercial radio stations in the U.S. The RMLC sought government consent decrees that would have regulated SESAC’s rate-

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setting process in a manner similar to those that govern BMI and ASCAP, the two dominant songwriter organizations. Unable to get the Justice Department to open a formal investigation, it filed an antitrust complaint in the U.S. District Court for the Eastern District of Pennsylvania in October 2012, alleging anticompetitive behavior on the part of SESAC, which represents 400,000 songs on behalf of 30,000 members, including those by Bob Dylan, Mumford & Sons, Lady Antebellum and Nirvana. Velez says that even if the RMLC prevailed in court, “We knew going in that we could not get the consent decrees as a remedy, that the best we would be able to achieve was binding arbitration.” The settlement sets the stage for the radio industry and SESAC to begin voluntary negotiations on new rates starting in the spring. If the two parties can’t agree by the end of next year, they’ll begin binding arbitration in the first quarter of 2017. The new rates would be retroactive and cover the period from 2016-2018.

RMLC, SESAC Set To Talk the Talk. The courtroom action between the Radio Music Licensing Committee and SESAC is finally over after years of back-and-forth shouting and disagreements. Now comes the hard part—the negotiating on new rates is about to begin, and reaching a voluntary agreement won’t be easy. The two sides have been at odds over what the radio industry has characterized as excessively high rates. Broadcasters have testified that they paid SESAC as much in licensing fees as they paid to ASCAP and BMI, which are believed to control as much as 90%-95% of the market. There have also been accusations of hard-nosed tactics by SESAC. A central argument to RMLC’s case was that SESAC forced stations to buy its license or risk copyright fines as high as $150,000 per infringement—without knowing whether or not they were playing SESAC-controlled songs. The settlement will make it easier for stations to know what songs are in SESAC’s repertory. It also requires “much more stringent notice” for SESAC before making an infringement claim, limiting them to songs that have been posted to its website for at least 45 days. The negotiations could change the way SESAC rates are determined to a percentage of station revenue rather than the current system that takes into account a station’s market population and its highest one-minute commercial rate. SESAC has also made a good faith commitment to transition by 2016, its current three separate license structures for over-the-air, HD Radio and streaming into a single license, the way BMI and ASCAP do. Despite the animosity that has divided them, RMLC executive director Bill Velez says he’s encouraged by SESAC’s settlement with both the radio and TV industries under John Josephson, who took over as CEO one year ago. “Perhaps everybody is ready to turn the page here and try harder to make this relationship work,” Velez says. It’s Settled—For Now: Find out what SESAC has actually agreed to do in the settlement, at InsideRadio.com.

Youth Still Sold On Radio and TV Ads. A new study bucks conventional wisdom that traditional media has trouble connecting with younger consumers. According to Nielsen’s Global New Product Innovation Survey for Q1 2015, digitally savvy generation Z (ages 15-20) and millennials (ages 21-34) actually use some traditional ad vehicles as sources for new product information as much as—or more than—older demos. For instance, millennials and gen-Z consumers cite TV and radio as sources at similar levels as their generation X (ages 35-49) and baby boomer (ages 50-64) counterparts. Also notable, these two younger groups are more inclined to use outdoor ads, public transportation ads and event advertising to learn about new products. As more radio stations host concerts and other live events, these place-based ads can be another way for radio to reach younger audiences with both station messages and clients’ brands. As expected, younger consumers are most likely to rely on digital ad sources, including Internet ads and video-sharing websites, while older consumers give more attention to traditional print ads sources, including newspapers, magazines and direct mail. Also in the study, Nielsen noted that globally, shoppers’ reliance on earned media is growing, while some paid media sources are on the decline. Social media postings and Internet searches are both growing sources of earned media. Comparing data from Q1 2015 to Q3 2012, Nielsen found that among paid media categories, TV ads are still the largest source with 52% share, although it dropped 11% from 2012. Internet ads, including pop-ups and banners, grew 1% to a 26% share, while video sharing climbed 1% to a 9% stake. Radio and outdoor ads both declined 3%, with radio down to a 10% share and outdoor slipping to a 15% stake.

Scripps ‘Casts Its Lot With Midroll. The E.W. Scripps Co. on Wednesday acquired Los Angeles-based Midroll Media, which operates the country’s largest podcast sponsorship network and has a roster of top-flight shows such as “WTF With Marc Maron,” “The Nerdist,” Dan Savage’s “Savage Lovecast” and podcast networks Earwolf and Wolden. Scripps considers the buy a sound radio business move—according to Pew Research Center for Journalism and Media, the percentage of Americans who have listened to a podcast in the last month has nearly doubled since 2008, to 17%. Edison Research says one-third of all Americans over 12 have

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listened to at least one, and when they do, they also come in contact with commercials that are almost uniquely unskippable. “They’re done in the carefully integrated way where a host just leads into it,” says Scripps CEO Rich Boehne. “Skipping ahead just doesn’t make sense.” Buying Midroll did, however. “It’s very successful as it exists and we’re excited about working with them on ideas that can benefit both podcasting and our radio brands,” says Scripps VP of radio, Steve Wexler. “We’ve already been kicking around some very interesting ideas.” Midroll already comes with 240 advertisers and its revenues have been doubling for the last five years, says Boehne. “We don’t have unrealistic expectations for market growth,” he says, but the acquisition gives a lot of opportunities for revving up Scripps’ roster of podcasts, currently heard at some of its 34 radio station properties. “It’s an opportunity to use it to improve our journalism and information delivery,” Boehne adds. Tale Behind the Tale: Find out how Scripps first latched onto the idea of a deal with Midroll, only at InsideRadio.com.

Advertiser News: Auto dealer groups report strong quarter. Solid truck demand helped General Motors top Wall Street expectations for Q2, with net income jumping to $1.1 billion from only $200 million a year ago. Revenues were actually down 3.5% to $38.2 billion. GM has been enjoying strong sales of its highly profitable pickups in the U.S.—recently outpacing long-time leader Ford, which is still ramping up deliveries of its redesigned, all-aluminum F-150 pickups. The nation’s largest dealer group, AutoNation, posted record Q2 results, with revenues up 9% to $5.2 billion. All business sectors gained—new vehicles, used vehicles, parts and service, and finance and insurance. Retail new vehicle unit sales increased 6% overall and 4% on a same store basis, while used vehicle unit sales increased 9% overall and 7% on a same store basis. Group 1 Automotive says net income was up 19.9% to $47.9 million. Total revenue was up 8.6% to an all-time quarterly record of $2.7 billion. New vehicle revenue rose 4.7% on 5.4% higher unit sales and used vehicle retail revenue grew 18.2% on 17.7% higher unit sales. Same-store sales were up 11% for Lithia Motors, with used sales up 16% and new 8%. Including the acquisition of DCH, Q2 revenues jumped 63% to $2.0 billion. For all of 2015 Lithia is projecting that same-store new vehicle sales will increase 7% and used by 12%. Q2 revenues were up 12% to $1.7 billion for Asbury Automotive Group, which has 86 dealership locations, including 106 franchises.

CBS Still Tweaking Its Exec Ranks. Continuing to reshape its executive ranks, CBS Radio today announced new market managers in a half-dozen markets. The changes include the departure of some veteran names from the company. In Philadelphia, all-news KYW (1060) general sales manager David Yadgaroff is promoted to senior VP/market manager, replacing Marc Rayfield, who is transferring to the same position in New York. In New England, Boston market manager Mark Hannon is adding Hartford to his oversight, to replace Suzanne McDonald, who is retiring. In Florida, CBS Radio is consolidating management of its Miami and Orlando clusters under Steve Carver, who rejoins the company as senior VP of both markets. Carver replaces Joe Bell in Miami and Dave Robbins in Orlando—both of whom are leaving the company. In Las Vegas, VP/director of sales Tony Perlongo is promoted to senior VP/market manager, replacing Jerry McKenna, who is leaving the company. And in Riverside, CA, VP/director of sales, Mike Valenzuela, has been promoted to senior VP/market manager, replacing Harvey Wells. The reassignments came three days after the company promoted executive VP of operations and New York market manager Scott Herman to COO as part of its first major upper-management restructuring since 2007. The reorganization follows a tumultuous period for the company, which made a sizable reduction in its workforce last week under new president Andre Fernandez.

Field Puffs Entercom’s Chest To Employees. Fresh from closing its $105 million purchase of Lincoln Financial Media, Entercom CEO David Field is understandably upbeat about his company’s future. In fact, he has declared it “America’s best positioned radio broadcaster.” Field enumerated on why he believes the company, which owns 125 stations in 27 markets, is better positioned than others in the radio space in a midyear letter to employees. As the 4th largest company in radio, Entercom has “the size and pureplay focus to compete effectively, further enhanced by the addition of our latest acquisitions,” he reasoned. Field played up Entercom’s local assets – “outstanding local brands with great local personalities, powerful local marketing solutions capabilities” – and said it has top performers throughout the organization. Field pegged Entercom as “one of the financially strongest companies in the industry” with moderate debt and a rising stock price and the ability “to invest boldly “when it sees “compelling opportunities for expansion and innovation.” And he claimed that “no other broadcaster can make this complete set of statements.” In addition to welcoming new employees from LFM and Bonneville, Field used the occasion to tout the success of new investments the company has made in content, staff, tools and capabilities. He pointed to SmartReach Digital, its marketing solutions division which he said has attracted

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“hundreds of customers and many millions in revenues.” And he contended that Nielsen research has shown Entercom to be the “No. 1 preforming radio group in ratings performance.”

In Contest, Big Sean, Radio One Award Praises, Prizes. A radio promotion that offers up both exciting prizes and some much-needed recognition for selfless deeds? That’s a powerful mix, and it’s the tale behind Radio One and hip-hop mogul Big Sean’s “One Man Can Change the World” contest, currently running on 11 Radio One urban stations. The national contest, which shares a name with Big Sean’s third single off his new album, “Dark Sky Paradise,” is looking for “movers and shakers who actively work to empower others and build community,” according to a release. To enter, listeners must submit a two-minute video explaining how they are providing leadership to affect change; the winner, to be selected by Big Sean, will receive $2500 for the 501(c) charity of their choice, as well as a more typical prize package including tickets to the upcoming Made in America Music Festival in Philadelphia, airfare, hotel and passes to a meet-and-greet with Big Sean. Both the song and the contest were inspired by the artist’s late grandmother, Mildred V. Leonard, who was one of the first African-American female captains in WWII, an early African-American female police officer in Detroit and a long-time Detroit public school teacher. “I’m incredibly excited to partner up with Radio One to recognize a deserving individual who has made it their mission to make a difference,” Big Sean said in a statement. Participating stations include “Hot 107.9” WHTA, Atlanta; WIZF, Cincinnati (101.1); “Power 107.5” WCKX, Columbus; “Hot 107.5” WGPR, Detroit; “Power 92” WCDX, Richmond; “93.9 Kiss FM” WKYS, Washington D.C.; “92-Q” WERQ-FM, Baltimore; “Z-107.9” WENZ, Cleveland; “97-9 The Beat” KBFB, Dallas; “K-97.5” WQOK, Raleigh; “Hot 104” WHHL, St. Louis; and “Hot 96.3” WHHH, Indianapolis.

For Hispanics, Radionovelas That Are Good For Your Health. A South Carolina public health non-profit has come up with a novel way to engage Hispanic radio listeners on some thorny health-related topics—put them in a Spanish-language radionovela. The 60-minute soap-like programs currently air on music stations in four South Carolina markets. The show, “Las Reinas Somos No Tontas,” is produced by PASOs, a non-profit associated with the University of South Carolina’s Arnold School of Public Health that seeks to improve Latinos’ access to health and public services. The radionovelas are voiced by PASOs staffers, and the focus is on topics that can be hard to discuss in the Latino community, such as domestic violence, nutrition, family planning and children’s health. Using a popular entertainment format as a delivery vehicle may help break down those barriers. The series is “designed to capture listeners’ attention with characters and stories that are real and relevant to their lives, opening the door to informative discussions on a variety of health and wellness subjects,” PASOs said in a statement. The programs, funded by the March of Dimes, reportedly reach about 2,500 Latino listeners. New episodes air monthly but have multiple airings. Participating stations include “Radio Sol” WNFO-AM, Beaufort (1430); Spanish CHR “El Sol” WAZS-AM, Charleston (980,1480); regional Mexican “La Raza” WCEO-AM, Midlands (840) and regional Mexican “La Nueva” WOLI-FM Greenville (103.9). The series is also available for streaming via TuneIn.com. At the end of each episode, the announcers pose questions to the audience and offer information on community resources. PASOs plans to present its experience with the radionovelas at the American Public Health Association’s upcoming annual meeting in Chicago, according to GreenvilleOnline.com.

Competitive Info: Print Coupons Up 6%... Kantar Media has found that more than $281 billion in consumer incentives were distributed via Free Standing Inserts during the year’s first half, about 5.5% higher than the first six months of last year. The growth came despite the fact that the actual number of coupons distributed was down a bit (off by 0.9%), as the average value of coupons rose by 6.5% to $1.80. A trend towards quicker expiration of coupons continued: the average expiration is now 6-1/2 weeks. It was the eighth straight year in which average expiration windows got shorter. The number of manufacturers issuing coupons fell from 325 last year to 255, while the number of retailers participating fell from 125 to 99… Political Goes Programmatic… Rubicon Project is the latest to set its sights on grabbing a piece of the election advertising spending that usually goes to traditional media. The programmatic digital advertising company has opened an office in Washington, DC. Theresa Mueller, previously of Rocket Fuel and a recognized leader in political and advocacy digital advertising, will head the new office. Rubicon Project cites an estimate by Reuters that U.S. digital political advertising could quadruple to nearly $1 billion in the 2016 election. And it also notes that 85% of political agencies plan to use programmatic ads for their political media-buying efforts in 2015, according to a STRATA political survey last year.

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