Canadian telemarketers must pay the FTC $7.5 million for fraudulent billing practices, under a U.S. Dist. Court, Seattle, ruling, the agency said. The defendants called U.S.-based businesses and organizations and conned employees into “verifying” information for directory listings, then sending invoices for directory-listing purchases and referring those that didn’t pay to an in-house collection company, the FTC alleged in a 2005 complaint. Under the ruling, the companies also can’t sell business directories or listings to U.S. residents. The defendants were Quebec Inc., doing business as Global Management Solutions; Quebec “Inc,” doing business as Commutel Mktg. and Mktg. USA; and principal Ty Nguyen. The FTC also settled with the other 3 defendants, all former presidents of the defendant companies. Byron Steczko and Cory Kornelson agreed to permanent bans on directory business activity in the U.S. and will pay $3.8 million and $2.1 million. Phong Vo will pay $1.6 million. All judgments are suspended based on defendants’ inability to pay, FTC said.
Friend and foes of statewide video franchising bill AB- 2987 in Cal. may have set a new state lobbying expense record for a single bill in the April-June quarter, spending $23.3 million trying to sway lawmakers, an average $256,000 per day. AT&T alone spent an average $196,000 daily pushing the bill. So far, lobbying by AT&T and Verizon has helped the bill pass the Assembly and 3 Senate committees without a single “no” vote. The bill is awaiting final Senate floor consideration, perhaps this week. Lobbying expense reports filed with the Cal. Secy. of State show AT&T between April and June spent $17.8 million on AB-2987, while Verizon spent $1.7 million. The incumbent cable industry spent $3.8 million, at first trying to stop the bill in the Assembly. But after the bill’s unanimous late-May Assembly passage, cable companies changed their focus to getting amendments like a municipal franchise opt-out provision that would ease the sting of state video franchising for the cable industry. Comcast was the single biggest cable lobbyist, spending $3.1 million. Veteran bill-watchers called spending on AB-2987 unprecedented. Consumer groups and municipalities, still opposed to the bill, said the phone companies’ spending offers a textbook example of wealthy special interests buying public policy.
The FCC’s air-to-ground auction opened Wed. and at the close of the 4th round at our deadline Va.-based Unison Spectrum was the high bidder for the coveted nationwide license with a high bid of $3.8 million. A 5th round was getting underway. Unison isn’t considered among the prime contenders for the spectrum, which will be used to offer broadband on commercial airliners. Verizon Airfone is considered by many to be the leading contender, followed on many lists by AirCell (CD April 4 p10). In another auction development, the FCC granted a motion by AirCell to withdraw from the auction, but that wasn’t a surprise since the company has indicated it will bid as part of AC BidCo. In a big day for auctions, short form applications for the June advanced wireless services (AWS) auction were also due Wed. The number of contenders will be of more interest than usual since the FCC will keep bidder identity secret as the auction develops unless a sufficient number file short forms so that the FCC considers the auction likely to be competitive. Based on past auctions, the FCC is likely to release lists of potential bidders within the next 2 weeks.
Telco entry into video distribution will be a boon for content owners, said Citigroup analysts Jason Bazinet and Mike Rollins. Phone companies lack the scale that cable operators have, so they will paying much more to programmers in carriage fees, Bazinet said: “We believe telco video entry creates $3.8 billion in incremental value” annually the next 3 years, to be distributed unevenly among existing cable networks and operators. Disney will see the largest benefit, largely due to ESPN, said Bazinet. The analysts said they see telco entry into video as a way to protect the voice business from cable competition. “We haven’t seen anything to suggest that the incremental video profit is going to be significant. We think the telcos are looking at this as a way to protect what they have in voice,” said Rollins.
Rates on some inmate payphone calls from Wash. state jails and prisons will drop sharply under a new Corrections Dept. deal with Chicago-based FSH Communications. The pact replaces an expiring state inmate payphone contract with AT&T that priced intrastate long distance calls at $1.10 a minute. The FSH contract sets an in-state long distance rate equal to about 17 a minute on a typical, 20-minute call. The deal, to take effect in the summer, prices an intrastate interexchange call at a flat $3.15 paid from inmate debit account or $3.50 collect. Local calls will cost what intrastate long distance calls do. Under the AT&T contract, a local call was $2. The new deal doesn’t change rates for out-of-state long distance, which will stay $4.95 the first minute and 89 a minute after. The new contract guarantees the state $5.1 million yearly in payphone commissions. The AT&T deal had a 40% commission on revenue, which in the 2004- 05 fiscal year yielded $3.8 million for the Corrections Dept. to spend on unfunded inmate needs. Inmates’ families long have complained that Wash. tied Ariz. for the nation’s highest inmate phone rates, harming inmates and their families.
Broadcast Q4 earnings: CBS took a $9.5 billion writedown to reflect a decline in the value of its radio and TV properties amid weak advertising industrywide. The firm’s quarterly loss of $8.8 billion was less than a $17.4 billion loss a year earlier. TV properties helped boost companywide sales 2% to $3.8 billion; radio cash flow fell 11%… Hearst-Argyle sales and profit declined on weak advertising. Profit plunged about 75% to $9.85 million on a 13% revenue decrease… Radio One shares fell 11% after Pres. Alfred Liggins said it’s too soon to tell if broadcast results will rebound this year. Profit plunged about 50% to $9.5 million, though broadcast sales rose 15% to $9.2 million.
PanAmSat officials told analysts the MPEG-4 transition for FSS video distribution is still “a good 3 to 5 years out,” in a quarterly earnings call Wed. “None of our full-time transmissions are using MPEG-4 today,” said COO Jim Frownfelter: “Where we are using it is in an experimental mode with some of our broadcast business on an ad hoc basis, as well as with foreign customers who provide MPEG-4 as part of on-demand programming.” About 33% of PanAmSat’s customers are still using analog, Frownfelter said. “The investment is really on both ends, and you've got to have customers willing to make the investment,” he said: “And we haven’t seen any significant movement in the U.S. toward MPEG-4 in terms of distribution.” PanAmSat CEO Joseph Wright said modulation technologies won’t soon affect historically long-term video customer contracts, averaging 8-9 years. “Whether they're using MPEG-4, MPEG-2 or analog, it’s basically one contract per transponder,” he said: “MPEG-4 is going to occur but from what our customers say, it’s not going to be as soon as everybody thinks it might.” PanAmSat reported $209.1 million revenue 3rd quarter, compared with $207 million a year earlier. Net income in the quarter rose to $54.2 million, vs. a $76 million loss for the prior year, officials said. PanAmSat’s video revenue rose $7.6 million over the 3rd quarter and govt. services revenue increased by $1.2 million, offset by a $3.8 million decrease in networked services revenue, they said.
Broadcast Financials: Hearst Argyle TV revenue was $188.5 million in the 2nd quarter ended June 30 down from $198 million the year before. Operating income was $63.7 million down from $77.5 million. The decrease in total revenue was due to a $9.7 million decrease in net political ads and a $2.6 million drop in network compensation… Beasley Bcstg. Group net revenue rose 7% to $33 million in the 2nd quarter and net income remained virtually unchanged at $3.8 million.
An auction of 306 fixed wireless licenses in Canada brought in $45.4 million, Industry Canada announced. Canada sold licenses in the 2.3 and 3.5 GHz bands to be used for wireless broadband across the nation. Bell Canada was the largest bidder by far, bidding $45.4 million during the 17 day auction for 55 licenses. Telus Mobility came in 2nd, bidding $7 million for 130 licences. A numbered company bid $6 million for 25 licences. Rogers Wireless bid $3.8 million for 40 licences. Industry Canada said 8 other firms also bought licenses.
Emmis Communications revenue increased 11% to $169 million and operating income grew 24% to $48.5 million in the 3rd quarter ended Nov. 30. Radio revenue increased 3% due to raising rates while optimizing the amount of inventory the company sells, Emmis said. TV revenue increased 24% largely due to an increase in political ads. International radio revenue and operating income were $4 million and $3.8 million, respectively.