Radio giant Entercom breathes sigh of relief as revenues rise for the first time since buying CBS radio stations
Entercom Communications had a healthy fourth quarter after a year of travails as it swallowed CBS Radio.
Radio giant Entercom Communications, which had a nightmarish few months in early 2018 after swallowing CBS Radio, saw revenues jump 4 percent in the fourth quarter and now expects more gains through early 2019, the Bala Cynwyd-based company said Friday.
The fourth quarter was the first since Entercom closed on CBS Radio in late 2017 that revenues rose instead of fell.
Entercom chief executive David Field forecast a 3 percent revenue gain for the current quarter with the help of initiatives such as the Entercom Audio Network -- which stitches together the company’s stations in big cities such as Philadelphia, New York, Minneapolis, New Orleans, Los Angeles, and Houston as a national advertising platform. Another example is the Radio.com app, which expands the reach of Entercom radio stations through streaming and enables the company to tap digital advertising.
Entercom’s stock rose 0.6 percent on the earnings news at 2 p.m. Friday, trading at $7.66 a share. Entercom shares have lost about half of their value since the CBS Radio deal was first announced in early 2017. Entercom owns and operates WTDY-FM, WOGL-FM, WBEB-FM, KYW-AM, WIP-FM, and WPHT-AM in Philadelphia. The company -- which is expected to relocate its headquarters to Center City -- is the nation’s No. 2 radio station group.
“Local [advertising] still lags,” Field said on the call, adding that there are “some fundamental issues” with advertisers shifting from radio to targeted digital ads. Field also said local companies that advertised on radio are stressed by the growth of giant retailers like Walmart and Amazon.
Tempering the enthusiasm was a no-cash $465 million impairment charge to devalue Entercom’s radio broadcast licenses because of the sustained decline in the Entercom share price. But Entercom said that one important measure of profits, or EBITDA, rose 27 percent.
Because of so many moving parts related to the CBS Radio deal, it’s difficult for a clean analysis of the company’s financial performance. Entercom reported $411.4 million in revenue in the fourth quarter, compared with $246.6 million in the year-ago period -- the big difference mostly being the addition of CBS Radio.
Entercom lost $386.6 million on continuing operations in the fourth quarter -- because of the impairment charge -- compared with net income available to common stock holders of $231.8 million, a measure tracked by analysts.
Entercom chief financial officer Richard Schmaeling said in an interview that the company views the fourth quarter “like an inflection point. We are making significant improvements.” He added that “we are excited because this is the first quarter we are posting improved results."
Wall Street analysts have been concerned with Entercom’s debt load of $1.7 billion, particularly if revenues were declining. Schmaeling said on the conference call that Entercom would continue to lower its debt through 2019.
In the last year, Entercom has sacked and replaced many of its radio station executives, reformatted stations, launched an analytics initiative to track radio-ad effectiveness, and taken control of traffic reports so that it can control the ad sales around those traffic alerts.