The combination of maturing format flips and a tighter belt allowed radio group Entercom to ride a relatively modest increase in revenue to an impressive 25% increase in operating income. President/CEO David Field touted radio’s continued strength despite numerous new competitors in the audio entertainment business.
Entercom highlighted the following Q3 results:
Net revenues for the quarter increased 2% to $102.3 million
* Station expenses decreased 9% to $63.6 million
* Station operating income increased 25% to $38.7 million
* Adjusted EBITDA increased 26% to $33.5 million
* Adjusted net income per share decreased 7% to $0.27
* Free cash flow was flat at $20.6 million
Field said, “I am pleased to report that Entercom posted strong growth in Station Operating Income and EBITDA during the third quarter. Our focus on business model reinvention continued to reflect favorably on our operating expenses, which also benefited from the recent industry-wide settlement with BMI. The brands we reformatted in 2011 are now starting to contribute to growth and we made a number of operational moves during the quarter which will strengthen our competitive position and enhance our future growth prospects. Fourth quarter pacings look solid and we expect another quarter of solid growth in EBITDA.”
Q3 political income amounted to $1.2M, less than the company expected but about $1M ahead of Q3 2011. It has booked $4M in political for Q4.
Entercom prefers the private negotiation model in regards to the royalty debate. Noting that radio pays double what Pandora does to stream content, it touted its agreement with record label Big Machine.
Looking ahead, Field said he was optimistic about 2013 but that it was too early to make any predictions. Entercom is not actively seeking acquisitions, but rather will continue to focus on operations and deleveraging.
Wells Fargo analyst Marci Ryvicker noted that the revenue result was just slightly below expectations.