Entercom Divestitures Sealed As CBS Radio Merger Process Inches Along

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If there were two key takeaways from Entercom’s Q2 earnings call held Friday morning, each are tied to the company’s pending merger with CBS Radio. First, letters of intent on all of the planned divestitures from the merger have been finalized. Second, the process of merging CBS Radio and Entercom is akin to a sloth running a half marathon. 


Entercom President/CEO David Field noted that, to the surprise of few in the industry, it’s “quite a busy time” at the company based in the Philadelphia suburb of Bala Cynwyd, Pa.

He says there’s been great progress on the merger, and anticipates a Q4 closing. Even if it sounds like rhetoric, Field believes the CBS Radio acquisition “truly is a transformational deal that will help the entire radio industry.”

Why is that the case? Field explains that the combined assets of Entercom and CBS Radio will allow his company to better compete against other media for local and digital advertising dollars.

It is no secret that digital giants such as Alphabet-owned Google and Facebook are gobbling up local ad dollars. Yet, results may not be to the liking of some CMOs. At Procter & Gamble Co., some $100 million in digital marketing was pulled during its most recent quarter. The result, said CFO Jon Moeller? There was little impact on P&G business.

“What it reflected was a choice to cut spending from a digital standpoint where it was ineffective, where either we were serving bots as opposed to human beings or where the placement of ads was not facilitating the equity of our brands,” he said during a conference call held to discuss P&G’s quarterly results.

Without naming P&G, Field seized on these comments, noting that “increased frustration with other ad platforms” can attract brand managers and media planners to radio, as it offers marketers a “strong and compelling business model.”

It was at this point that Field revealed that it is presently seeking Justice Department approval on its planned divestitures and merger of CBS Radio. Indeed, all of the deals look ready to go, with Elliot B. Evers, Managing Director of MVP Capital, serving as the broker in the spin-offs.

There were no specifics on which stations were designated for sale: In Los Angeles the choice for divestment is likely Class B KSWD-FM 100.3 “The Sound.” Market rumors indicate much of the station’s staff and programming could be merged with, or outright replace, the programming on the other station Entercom was considering for sale: Class B KCBS-FM 93.1 “Jack FM.”

Meanwhile, sources tell RBR+TVBR that the final decisions on what stations to sell in the San Francisco-Oakland-San Jose DMA was not easy, with much time spent on the determination process.

ROCKY MOUNTAIN OUCH

What markets are propelling Entercom?

In Q2 the company’s strongest markets included Atlanta, where it owns WSTR “Star 94;” Miami, Indianapolis and Milwaukee.

Meanwhile, Charlotte is looking up, with integration of the former Beasley Media Group stations progressing positively, the company notes.

But Denver is weak, Field says, and as Entercom looks to Q3, the forecast is “tepid.” That’s because business is being placed later, and as a result Q3 is anticipated to be down in the low single digits on a same-station basis.

Combating this mediocre atmosphere are Entercom’s current and forthcoming Sports properties, and Field says its sports platform post-merger looks “exciting.” Furthermore, he’s confident Entercom Sports will be a magnet of “significant interest from major national advertisers who have been non-users or light users of radio.”

Also bringing a positive impact to Entercom, and all radio stations, in the coming months are Smart Speakers such as Amazon Echo and Google Home. “It is clear that will drive the audio category, and drive interest in marketing,” Field says.

INCHING CLOSER TO A MERGER CLOSING

Commenting on how things were progressing on Entercom’s Reverse Morris Trust-fueled merger with CBS Radio, Entercom CFO Rich Schmaeling says, “The process is painfully slow.”

He added that Entercom will share additional specificity about its integration plan for CBS Radio stations later this fall.

What could that mean for CBS Radio stations being brought into the Entercom fold? Streamlining is likely.

Addressing a question emailed to the company, in lieu of a live-by-phone Q&A session to conclude its earnings call, Entercom head Field answered a query as to why CBS “is trending lower than Entercom.”

His response? “Nothing is inherently wrong or broken.”

Field added that he sees lots of opportunities for improvement, and that the CBS Radio stations will benefit from being part of “a focused pure-play company.”

Meanwhile, Entercom was asked if it was interested in a deal involving an unnamed company that has hired a strategic advisor to explore opportunities that could involve an outright sale.

Field’s curt answer: No.

RBR+TVBR