Marci Ryvicker at Wells Fargo Securities still calls Entercom “one of the best pure-play radio companies,” but Q4 results came in a tad below her expectations, so she’s now scaled back her earnings estimates for 2011.
Q4 revenues were up 6.5% pro forma, by Ryvicker’s calculation, but she had been expecting 7.5%.
“It sounds like October was the worst month of the quarter (organically and tough comps from the lack of post season baseball), but ETM returned to outperforming its markets in November. As we have heard from other operators, January started out slow (mostly due to the weather), but pacings have picked up in all categories (national, digital AND local) in February, March and Q2,” the analyst said in a note to clients.
She is actually raising her same station revenue growth estimate for full year 2011 – to 2.9% from her previous 1.7%. But Ryvicker is also raising her expense estimates after hearing Entercom management discuss rising costs from such things as the recent station acquisition and format change in San Francisco, ending its wage freeze, reinstating the 401(k) match and absorbing the last fee increases from the PPM rollout. So, instead of seeing expenses rise 2% this year, the analyst is now modeling for 4.9%.
Ryvicker is now expecting 2011 station operating income at Entercom to increase only to $134.8 million from 2010’s $133.9 million, whereas she had previously estimated $138.2 million. She’s looking for earnings per share (EPS) of 98 cents, rather than $1.17. Full year 2010 EPS was 1.25.
RBR-TVBR observation: Also worth noting is that a day after correctly predicting that TV group owner Sinclair Broadcast Group would reinstate its dividend Ryvicker says it is inevitable that Entercom will also make an announcement to return capital to its investors, with a resumption of its dividend most likely – although she doesn’t expect it to happen in 2011. (Companies also do so by buying back stock, which increases the relative value of all other shares.) Entercom, which once had the highest dividend yield of any radio company, suspended dividend payments in 2008.