Entercom Looks Ahead to Big 2017

Field discusses Q4 and the outlook for CBS Radio merger
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Field discusses Q4 and the outlook for CBS Radio merger

Entercom Communications’ latest earnings data shows that it boosted revenue and grew operating income to wrap up 2016. But that news will likely be overshadowed implications of its pending merger with CBS Radio.

The Bala Cynwyd, Pa.,-based company, the fourth-largest U.S. radio broadcasting company, increased net revenues for Q4 by 5% to $123.2 million. Adjusted EBITDA was flat for the quarter at $35.2 million while station expenses jumped 6% to $81.1 million.

Entercom President and CEO David Field pointed to “a solid quarter of organic growth,” which he said “completed an excellent year with same station revenues increasing 4% and free cash flow improvement of 16%.” Full year highlights for Entercom included net revenues up 12% to $460.2 million in 2016 and station operating income up 14% to $142.9 million from the previous year.

The company is now focused on its pending merger with CBS Radio, Field said, which is expected to be completed in the second half of 2017. The combined Entercom/CBS Radio will have 244 stations and operate in 23 of the top 25 radio markets, it says. The transaction is still subject to regulatory and Entercom stockholder approvals. The combination is expected to create the second largest radio group in terms of revenue in the country, trailing only iHeartMedia.

“We’ve already begun the early phases of transition and integration. This is going to be an impressive company with sufficient scale to compete with the likes of iHeartMedia and other larger national media. Going forward we will be positioned to capitalize on the rapidly growing areas of digital and events,” Field said.

He has been traveling with a team of Entercom executives to CBS Radio markets to visit properties; he noted that the company has handed back to the FCC the license of KDND(FM) in Sacramento, Calif., to help facilitate the CBS merger. Circumstances surrounding surrender of the license gained attention due to challenges filed with the FCC against the station’s license renewal. KDND gained notoriety for a fatality associated with a promotion called “Hold Your Wee for a Wii” contest in 2007. Several groups targeted the station’s license renewal process.

As a result of the merger, Entercom must divest four of nine FM signals in Sacramento, among other holdings. The new entity is expected to divest up to 15 radio stations in markets that overlap as required by FCC rules. Field said there is already a high level of interest in the divestiture stations going on the block.

Also from the conference call: Entercom’s board during the quarter approved the refinancing of the company’s debt to reduce interest payments significantly, and earlier it approved a quarterly dividend on the company’s stock of $0.075 per share.

Field said Wednesday during the earnings call that the best-performing categories for the radio broadcaster in Q4 2016 were department stores, home furnishings, drug stores and restaurants. Entercom’s best-performing markets were Boston, Greensboro, N.C., Indianapolis and Miami.