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Entercom Reports Q1 and More CBS Merger Details

Revenue nudges up a bit, still awaiting merger approval

On Monday Entercom Communications released earnings data that shows a boost in revenue in the first quarter of 2017 as this country’s fourth largest radio broadcasting group awaits government approval of its merger with CBS Radio.

Net revenue for the first quarter increased by 1.4% to $97.5 million compared to the same quarter one year ago. Station expenses jumped a dramatic 5% to $75.4 million in Q1, but that was attributed to one time only expenses that include the surrendering of an FM license in Sacramento, Calif., ($13.5 million) to help facilitate the CBS merger, and other CBS transaction costs ($10.3 million).

The pending merger of Entercom with CBS Radio, which the U.S. Department of Justice continues to review, would create the second largest radio group in terms of revenue in the country. It’s expected to create a combined 244 stations in 23 of the top 25 radio markets in the country.

The DOJ’s Antitrust Division in April sent a notice of “second request” for more information regarding the $1.7 billion deal, which typically indicates the feds will dig deep into the proposed merger. Entercom still expects the merger to close in the second half of 2017.

Entercom President and CEO David Field told those listening on an earnings conference call Monday the company will continue to incur some additional expenses related to “transformational growth” as it continues to work through the approval process and ramps up for the merger and transition to a significantly larger enterprise.

“This will truly be a game changing event for Entercom as we achieve a number of scale-related benefits, including the ability to compete far more effectively against other media for a larger share of advertising spending,” Field said.

As part of its acquisition of CBS Radio, Entercom has placed 14 FM radio stations in seven markets into a trust called TDC Communications with the intention to sell the assets. “We are in active discussions with other radio groups on our required divestitures. We have received a number of strong offers in the form of cash and trade for all of the spinoffs,” Field said on today’s earnings call.

Field described second quarter pacing as “a bit choppy, but with some recent improvement.” Entercom’s best performing markets in Q1 2017 were Atlanta, Miami and Milwaukee.

Entercom’s new Chief Financial Officer Richard Schmaeling disclosed today that capital expenditures in the quarter ending March 31, 2017, totaled $4.2 million. “Several new office and studio relocation projects will drive up cap-ex spending for the year to between $14 and $16 million,” Schmaeling said.

CBS Corp. officials reported last week CBS Radio saw revenue drop about 4.6% to $250 million for Q1 compared to the same period in 2016.