Entercom’s Big Sink: EPS Miss By 11 Cents Despite Revenue Gain


For some, including The Wall Street Journal, the biggest news from Entercom Communications early Wednesday was the media company’s acquisition of Brooklyn, N.Y.-based podcast producer Pineapple Street and the outstanding shares of Cadence13, a podcast creator and distributor it has had a 45% stake in since August 2017, when it was known as DGital Media.

For Wall Street, however, the bigger news may be how disappointing Entercom’s Q2 results are.

At the closing bell, ETM finished down 36% to $3.36 on massive volume of 15.5 million shares.

With ETM down by 13% in pre-market trading as of 9:25am Eastern, to $4.57 per share, the company reported net revenue of $380.7 million, rising from $372.1 million.

Corporate expenses were trimmed to $15.2 million, from $17 million.

But, station expenses increased to $277.9 million, from $274.2 million, as the company logged $3.36 million in restructuring charges and a $1.7 million net loss on the disposition of assets.

Total operating expense for Q2 was $315.9 million, which includes $4.9 million in merger, restructuring and integration costs and $1.9 million in expense related to Entercom’s issuance of 6.5% senior secured second-lien notes. This compares to $344.6 million in Q2 2018, which included $10.9 million in merger, restructuring and integration costs and a $29 million impairment charge.

And, Station Operating Income — a favorite non-GAAP accounting measure for some radio broadcasting companies — grew to $102.7 million from $98 million.

When all was said and done, net income came in at $26 million (19 cents per share).

While not wholly comparable, it reflects a rise from $2.44 million (1 cent) in Q2 2018.

Adjusted net income came in at $36.1 million (26 cents per diluted share), rising from $33.3 million (24 cents).

So … where did Entercom go wrong?

The company led by President/CEO David Field (pictured) didn’t do anything wrong, per se. Entercom simply didn’t meet Wall Street expectations on just how good Q2 was expected to be, despite the growth.

A consensus of Wall Street analysts expected Entercom’s earnings per share to come in at 30 cents, not 19 cents.

Furthermore, the 2.3% year-over-year revenue gain was less than what the Street expected: $386.57 million.

The misses put a damper on the podcast acquisition news, which could make Entercom a major player in the ever-growing podcast space.

The Wall Street expectations also put further pressure on Entercom, which saw its adjusted EBITDA jump to $87.6 million from $82.1 million, and operating income jump to $64.8 million from $27.6 million in the second quarter as the company continues to make enhancements and improvements to former CBS Radio stations Field has repeatedly said were under-funded and languished under its former owner.

How much longer can Entercom say this before investors question the turnaround timetable for these big-market, big-signal properties?

Its further dive into podcasting, and the timing of its Pineapple Street and Cadence13 investments, may be designed to deflect attention from broadcast radio and instead to a hot audio entertainment area. With the two companies, Entercom will become one of the nation’s three largest podcast enterprises, Field said in comments ahead of a 10am Eastern earnings call poised to be a must-listen for radio industry investors and observers.

J.D. Crowley

Chief Digital Officer J.D. Crowley will oversee Entercom’s new podcasting business.

Political and event revenue were Entercom’s weak spots in Q2, offset by “strong” growth in national, network and digital, Field added.


The second quarter saw Entercom take two steps that are designed to prevent the company, with leverage greater than that of post-bankruptcy Cumulus Media, from becoming victim to higher interest payments.

At the end of April, Entercom issued $325 million in 6.5% senior secured second-lien notes due 2027. The company used the proceeds of the issuance, in addition to cash on hand and borrowings under its revolver, to repay $425 million of a senior secured term loan and to pay fees and expenses related to the issuance.

In addition, Entercom amended the financial covenant in its senior secured credit agreement such that the calculation of Consolidated Net Secured Leverage Ratio only includes first lien secured debt.

Entercom in Q2 also executed a $560 million “notional interest rate collar,” which limits its exposure to floating interest rate risk. The collar has a one month LIBOR cap of 2.75% and a floor of 0.40% and the notional amount declines over time in line with the company’s projected debt repayments. “As a result of the issuance of the second-lien notes and executing this interest rate collar, only about 24% of the company’s debt was subject to floating rate risk outside of the collar at the end of the second quarter,” Entercom said.

Still, that 24% could prove to be vexing for some shareholders.

As of March 31, Entercom’s total long-term debt, net of current debt, stood at $1.69 billion, down from $1.87 billion on Dec. 31, 2018. Entercom on Wednesday (8/7) reported similar numbers for its current outstanding money owed.

It has $30 million in cash on hand, representing 1.78% of its debt.


In the hotel business, the pineapple is a symbol of hospitality.

For Entercom, it is also a sign of potential revenue growth.

This explains why Entercom has acquired podcast creator Pineapple Street Media for $18 million and acquired the remaining shares in Cadence13 that it does not already own; it did not immediately disclose the value of this stock acquisition.

However, Streamline Publishing-owned Podcast Business Journal cites Nick Quah — founder and writer of Hot Pod, a newsletter about podcasts that appears on Nieman Lab —  in reporting that Entercom will spend another $50 million for the balance of ownership in the Spencer Brown-run Cadence13.

An Entercom spokesperson declined to confirm the dollar amount of its further Cadence13 investment, giving it full ownership, stating that as of today an “agreement in principle” exists with no final numbers to share.

“We believe these moves make us a much stronger company by broadening our product line and making us a more formidable competitor across the entire audio landscape.” — David Field


Also making news on August 7 was Entercom’s formal launch announcement of the RADIO.COM Sports Digital Network. It is set to debut before September 1 with four new daily programs and several weekly podcasts.

What does all of this mean for the company and our future?,” Field asked in an internal memo obtained by RBR+TVBR. “We believe these moves make us a much stronger company by broadening our product line and making us a more formidable competitor across the entire audio landscape. We now are a unique leader in the audio universe with one of the two leading broadcast radio station groups and the greatest collection of premium, original local audio content in the country, and now also a top three player in podcasting with what is arguably the best national podcast content, [and] the home of RADIO.COM,  In short, we are incredibly well positioned to grow our business significantly and compete for a far greater share of customers’ total ad spending … This is another big step forward toward building a world-class organization uniquely capable of providing outstanding audio content and experiences to our listeners and fantastic marketing results for our customers. Onward and upward!”



Entercom’s Big Goal: ‘Radio.com Sports’ Success

While Beasley Media Group’s CEO is hardly bashful in calling its WBZ-FM 98.5 “The Sports Hub” the new No. 1 all-Sports radio station in the U.S., Entercom Communications has no trouble in calling itself “the unrivaled leader in local sports radio.” Now, it seeks to expand on this in the digital realm.