Entercom beats in Q2, but Q3 looking softer


Q2 revenues for Entercom were down 1% — down 2% on a same station basis – beating Wall Street expectations as the company also posted a 25% increase in free cash flow. But CEO David Field told analysts that July revenues were down in the mid single digits and August is looking worse. Q3 is projected to be down in the high single digits.

“In the context of the economic and competitive environment we are facing, I am very pleased by Entercom’s second quarter performance. Difficult and deteriorating economic conditions have significantly impacted a very broad range of consumer basic businesses and our sales and earnings results compare quite favorably to the reports that we have seen from a wide range of media companies, as well as other consumer-driven companies,” Field said in his quarterly conference call.

Despite the tough times for the radio industry, Field was happy to report that Entercom’s nine strongest markets posted double-digit growth in station operating income for Q2. Digital revenues grew to $3 million and now account for 2.5% of the company’s total revenues.

On the bottom line, Entercom posted a net loss of $96.3 million, or $2.60 per share, versus a loss of 32 cents a year ago. That was due to a write-down of $185 million for intangibles, counterbalanced slightly by a $3.3 million insurance recovery from Hurricane Katrina for the company’s New Orleans operation. Those one-time charges don’t impact operating results.

For Q2, net revenues were down 1% to $123.8 million. Station operating income (SOI) declined 2% to $50 million. EBITDA was down 2% to $44.4 million. On a same station basis, revenues decreased 2% and SOI 3%. Field said that outperformed the company’s markets, which were down 5%.

Despite the challenges facing radio and other ad-supported media, Field insisted that radio listening remains extremely high and that radio has a better story to tell than many of its competitors. He complained, though, that the story isn’t being delivered enough.

RBR/TVBR observation: Since Entercom made some acquisitions last year, in what was already a tough market for public companies, it’s not surprising that one analyst wanted to know about Field’s possible interest in any of the 50 or so stations that CBS has up for sale. But the CEO said it would be hard to see his company writing any checks for acquisitions this year. He said, however, that there is still demand for stations that go up for sale, with a handful of large group broadcasters looking at deals, some new players trying to get into the game, and private equity money still chasing deals. But Field said the publicly traded companies are limited in what they can do on the acquisition front. We’ll be interested to see who steps up to the plate for the CBS stations sales, but would also be surprised to see any of the public companies doing anything besides maybe a strategic tuck-in.