Entercom Communications, now the second largest U.S. radio company, sent down its fourth quarter 2017 financial report today. It’s the first peek at the group’s revenue and earnings since the merger with CBS Radio in November 2017.
Entercom, which admits it’s a complicated quarterly earnings report due to the timing of the CBS Radio closing, had $246.6 million in net revenues for the quarter ending Dec. 31. That total compares to $124.6 million in 2016, but again those numbers are severely skewed when considering the merger and lack of political advertising in 2017 compared to the presidential election year of 2016.
On a same station pro forma basis, not including any write downs, Entercom legacy station revenues for the quarter were down 1% but up 2% when excluding political. When singling out the CBS legacy stations, Q4 was down 6% and off 3% when excluding political for them.
Entercom CEO David Field was critical of past CBS Radio management on today’s earnings call. “Not to dwell on the lack of leadership issues at CBS Radio, but suffice it to say it was under managed by divisional leadership and lacked strategic focus and energy; playing not to lose rather than to win. CBS Radio’s operating issues were exacerbated by the disruption caused by the extended closing period.”
The broadcaster, which operates 235 radio stations, noted its top performing station clusters were in Detroit, Austin, Texas, Houston, Indianapolis and Las Vegas.
Field said that 100 days into the merger the company is “on track or ahead of schedule” of integration goals and points to the second half of 2018 for acceleration of the top line revenue growth. Entercom has grown to become the “country’s #1 creator of live original live local content and it’s the number two podcaster in the U.S. trailing only NPR,” he says.
A few other nuggets of information were dropped by Entercom leadership today, including news of the sale of property it owned in Chicago near O’Hare Airport for about $46 million. It’s a big win for Entercom since, Field said, the company can “now relocate the radio station located on the property for about $2 million.” The broadcaster also purchased two radio stations in St. Louis from Emmis Communications for $15 million in cash. The purchase includes KNOU(FM) and KFTK(FM) and is expected to close in the second quarter of 2018.
Field divulged that Entercom suffered a $4 million write down of revenues in Q4 related to its contract with United States Traffic Network. USTN, which is part of the Global Traffic Network, contracts with Entercom to acquire a significant amount of on-air traffic report inventory. It then resells the inventory to advertisers, according to Field. “USTN is having significant financial issues and we are currently negotiating with them on a new beneficial arrangement. We are working on alternative paths to mitigate the losses if USTN fails,” Field said.
USTN provides a significant amount of Entercom’s yearly revenue, according to Entercom CFO Rich Schmaeling. In all USTN provided about 2% of Entercom’s net revenue in 2017.
Entercom’s debt grew to a chunky $1.8 billion postmerger, according to Thursday’s earnings report.