Entercom faces weak revenue as it swallows CBS Radio
The big radio operator says that it has a big turnaround underway at CBS Radio. But that investors have to be patient.
Revenues at CBS Radio stations fell 6 percent in the fourth quarter and a turnaround isn't expected until late 2018, Bala Cynwyd radio giant Entercom Communications Corp. said on Thursday.
"We are only 100 days into this transformation and these things take time," Entercom CEO David Field told analysts. He added that he remained optimistic about radio and still considers acquiring more stations.
Entercom closed on its $4 billion deal for CBS Radio last November, including six CBS Radio stations in the Philadelphia market. More than 100 million people listen to Entercom/CBS Radio stations nationwide.
Entercom's revenue almost doubled to $246.6 million because of the consolidation of the CBS Radio stations in the fourth quarter into its operations. Net income available to Entercom common shareholders swelled exponentially to $232.4 million from $10.8 million in the prior-year quarter — but because of a huge noncash benefit from President Trump's tax overhaul.
Company executives and Wall Street analysts noted the difficulty of comparing Entercom's profits and revenues for the fourth quarter because of the timing of the CBS Radio deal, federal tax law changes, millions of dollars in merger-related costs, and asset sales.
But Field gave some color to the big changes underway, such as the company hiring of corporate executives, replacing top managers at radio station clusters, cutting costs, and launching advertising initiatives.
"We fully understood that CBS Radio was performing weakly and that job No. 1 was turning that around," Field said.
While revenues at CBS Radio stations fell 6 percent in the fourth quarter, they fell 3 percent at legacy Entercom radio stations, Field said. The 2016 fourth-quarter revenues were boosted by political spending associated with the Trump election.
Entercom shares were down 4.39 percent, or 45 cents, to close at $9.80. The stock's 52-week high is $14.65 a share.
The radio industry generally is dealing with a crisis of its own making after station groups gorged on debt to build themselves into big corporations after the 1996 rewrite of the federal telecommunications laws. Those station groups then ran into hard times when ad growth slowed, and new platforms — satellite and digital — drained listeners away from over-the-air radio.
Sirius XM, a satellite-delivered subscription radio service, is trading near its 52-week high, closing at $6.48.
Cumulus Media Inc., one of the nation's largest radio station group owners, filed for bankruptcy protection in late 2017. The nation's largest group, Texas-based iHeartMedia Inc., has been attempting to restructure its billions of dollars in debt and is expected to file for bankruptcy protection.
Entercom's revenues in the first quarter at the nation's second-largest radio station group are "pacing down" about 3 percent, Field said. But, he added, "We are making excellent progress on our goals."