Entercom President and CEO David Field wants employees and the broadcast industry at large to remember that Entercom’s company narrative is different from that of iHeartMedia and Cumulus Media — and much of radio at large.
In a Monday memo to employees, Field said that the recent bankruptcy announcements were direct results of “ill-advised decisions to place too much debt on their companies.” More importantly, Field said, “The bankruptcies have nothing to do with Radio. In fact, any company in any industry that takes on too much debt will suffer a similar fate.”
Field also called out media coverage that characterizes the radio industry as one challenged by change. Rather, he said, it’s a “healthy business that generates large amounts of earnings and operating cash flow.” He also cited several optimistic studies that show off radio’s strengths — reach, ROI and listening time.
According to Field, radio’s problem is that the industry is “highly undervalued and receive[s] far less than our fair share of total ad spending.”
His optimism extends beyond Entercom to the industry at large: “Wih iHeart and Cumulus emerging from bankruptcy, the industry will be even healthier going forward and that’s good news for all of us.”
Read his full letter below.
THOUGHTS FROM CEO DAVID FIELD ON THE IHEART BANKRUPTCY FILING
As most of you already know, iHeartMedia declared bankruptcy last week. The story received prominent news coverage across the country. Coming on the heels of a similar announcement from Cumulus Media, the iHeart news has spawned discussion on the implications for the Radio industry and its future. Since there seems to be a considerable amount of misinformation and inaccurate speculation floating around, I thought it would be constructive to share some facts and thoughts to help clarify the situation. You should feel free to share any of this with friends, colleagues, partners, and customers.
First, iHeart and Cumulus went bankrupt because years ago prior management teams made ill-advised decisions to place too much debt on their companies. Period, full stop. The bankruptcies have nothing to do with Radio. In fact, any company in any industry that takes on too much debt will suffer a similar fate.
Unfortunately, some reporters and observers have created an erroneous and misleading narrative that the bankruptcies are a result of challenges within the radio industry. They could not be more wrong. The fact is that Radio is a healthy business that generates large amounts of earnings and operating cash flow. And as you know, Radio has recently emerged as the #1 Reach medium in the United States touching over 270 million Americans weekly. It also generates superior ROI for customers and is the #1 medium in the country from 5am to 5pm daily. While other media have been highly disrupted by changing consumer habits and suffered severe audience erosion, Radio has more listeners than ever before. In fact, even in the latest cars with the newest technology, Americans listen to 13x more Radio than all streaming services combined (source: Edison Media Research – Share of Ear study).
If Radio has an issue, it isn’t the size of our audiences or the value of our product or the health of our business model. No, our issue is that we are highly undervalued and receive far less than our fair share of total ad spending. With Entercom’s newly enhanced scale, advocacy efforts, marketing capabilities and customer outreach, we intend to change that. And with iHeart and Cumulus emerging from bankruptcy, the industry will be even healthier going forward and that’s good news for all of us.
On a final note, in the wake of these announcements, it is a good time to reflect on how well positioned Entercom is to compete effectively, grow and thrive in the years ahead. We did not make the mistake of overleveraging ourselves and yet we still emerged as one of Radio’s two largest companies with the scale, brands and capabilities to compete to win. We are a leading media and entertainment company, reaching over 100 million people each week through our robust collection of highly rated radio stations, digital platforms and live events. We are also the #1 creator of live, original, local audio content and the nation’s unrivaled leader in news and sports radio. And even after our competitors come out of bankruptcy, we will still have the industry’s strongest balance sheet, providing us with the financial strength to build and grow and invest and play offense for the years ahead.
Let’s make sure we get the word out so that our advertisers, partners, and other key influencers understand the facts and don’t come away with any false perceptions.
President & CEO, Entercom