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TWST: James, are there any characteristics that are common to the radio and television companies that you focus on?

Mr. Marsh: The commonalities include a number of factors. Clearly, the biggest one would be just the reliance on advertising, as Lee pointed out. Other than that, they tend to be very local companies. They focus on local advertising in general and, in many cases, are locally owned. I would say they’re driven primarily by the same factors. Regulation also comes to mind. Both groups are, I don’t want to say “overly regulated,” but regulated by the FCC, which tends to get into media-ownership issues.

TWST: James, will you look back for us before we look ahead and tell us about how the stocks in this group performed over the last six to 12 months?

Mr. Marsh: Maybe I’ll go back a little bit further, if that’s all right — for the radio group, anyway. I’d take us back to 1996 when the Telecom Act dramatically loosened the ownership restrictions for radio broadcasters. This is the first time in a very long time that the radio broadcasters were able to compete on a relatively flat playing field with television and newspapers. The ownership rules went from two AM and two FM for local stations up to eight stations in the bigger markets, scaling down to five in the smaller markets; the national ownership caps were altogether scrapped. Previously, they had limited ownership to 20 AMs and 20 FMs, but the largest station group back in 1996 was probably 38 stations. Also, radio-versus-radio competition has changed — and probably for the better. Since that period of time, the stocks have been strong performers. I think over the last few years they’ve been up well over 300%. Lately, the bloom has fallen off the rose, to some degree, and the last six months I think the stocks, on average, were down about 40%. My biggest concerns have been, one, that ad revenue growth is slowing, and two, the dot-com dollars that have partly fueled some of the ad revenue growth over the last year and a half might be going away. Clearly, those two factors — mixed in with relatively high multiples — have really beaten up the group. We’re convinced that the growth rates are still very solid for the group. They’re clearly slowing from the first half of this year, but I don’t think investors are going to be disappointed in the third and fourth quarters with the published, expected numbers.

TWST: What’s interesting to you, James, in the niche areas?

Mr. Marsh: We also like Radio One (Nasdaq:ROIA), and I would point out that the Radio One D shares are trading at a substantial discount to the Radio One A shares. The D shares were issued recently. I think some investors have typically looked at the ROIA, the A shares. I think they should take a hard look at the D shares. They’re trading at roughly a 30% discount to the A shares, but with the same ownership interest as the A. You don’t get a vote with the D shares; you do get a vote with the A. But we remind investors that even if they owned every single A share, they would only have about 25% of the total load anyway. So I don’t think a meaningful difference in the characteristics of that class of stock warrants a huge discount. Over time we expect that gap to narrow.