After Entercom reported its Q4 results Wells Fargo Securities analyst Marci Ryvicker pulled back a bit on her earnings estimates for 2011. More recently Ryvicker had face-to-face meetings with Entercom CEO David Field and CFO Steve Fisher. The analyst hasn’t changed her numbers, but she is calling the tone from management “relatively upbeat.”
Entercom didn’t provide any pacing figures when it reported Q4, except that Field said March and April were better after a flattish January – and that Q2 looked strong. “While management did not quantify how business is pacing in either Q1 or Q2, they did specifically mention that local is continuing to show incremental improvement and that Q2 is looking ‘pretty good.’ Not surprisingly, management did caveat that it is still early and visibility remains fairly limited, but nonetheless trends are on an upward trajectory,” Ryvicker wrote in her report to clients on the meetings with Field and Fisher.
Auto and telecom spending remain strong. Even with fuel prices going up, the Entercom execs reported no ad cancellations in the auto sector.
It has been widely reported that Entercom was the losing bidder for Citadel Broadcasting, so it is not surprising that Ryvicker talked with Field and Fisher about M&A. Most interesting, though, is what Ryvicker herself wrote on the topic.
“One thing about ETM is certain – they have been VERY disciplined when it comes to using their cash. What underscores this more than anything, at least in our opinion, are the deals that Entercom has NOT done – specifically Susquehanna (which went to CMLS in 2006), ABC Radio (which went to Citadel – and led to Chapter 11– in 2007) and most recently Citadel (which is currently in a merger agreement with CMLS -2011).
Don’t get us wrong –ETM has been involved in M&A and most recently purchased a station in San Jose. However, ETM seems to be a little more opportunistic and disciplined when it comes to an actual purchase – which we think this stems from the fact that management owns one-third of the company, meaning its interests are quite aligned with shareholders.”
Ryvicker also paraphrased Field as telling her that “Entercom may get bigger because we WANT to get bigger – not because we HAVE to get bigger.” So she doesn’t expect him to go chasing after a deal just because Entercom “lost” Citadel.