Slight improvement for Entercom


Q2 revenues were down 18% at Entercom, but that was a slightly improvement over Q1. CEO David Field is talking cautiously about future growth for radio as the US economy recovers.

That 18% revenue decline put Q2 revenues at $101.3, but Field noted that the company is seeing sequential improvement since Q1, which was down 21%. He said June was the best month of the quarter. July, he noted, was down only 14-15% and comps get easier in Q4. Even so, he warned that “conditions remain tepid.”

Q2 EBITDA declined 32% to $30.1 million. The company recorded a non-cash impairment charge of $67.7 million during the quarter, but Entercom also noted proudly that it had reduced its outstanding net debt by $20.3 million in Q2.

“Second quarter results improved modestly from first quarter as business conditions remained weak, but stabilized and strengthened slightly off of their lows. We continue to make progress towards our goals of emerging from the recession with enhanced capabilities, a stronger competitive position and an improved business model. Over the past twelve months, we have trimmed our debt by well over $100 million, significantly reduced operating expenses, grown our broadcasting, streaming and website audience ratings, and added new products and programs to increase our value to our customers. And as the economy recovers, we believe radio is well-positioned for revenue growth based on strong audience listening trends and the medium’s outstanding value proposition to customers,” said Field.

Does he still believe, as he stated three months ago, that March was the bottom? “As far as we know,” was Field’s reassurance.

What about the future? Will radio ever get back to 40%-plus cash flow margins, or has that changed forever, one analyst wanted to know. “I don’t see any reason why we don’t have a business model with sustainable 40%-plus margins. That’s what we had before. Since that time we’ve obviously been impacted by cyclical pressures with revenues that we believe will mitigate over time. And on the cost side, we’ve actually made some sustainable and fundamental improvement by taking meaningful expenses out of the model without adversely impacting our ability to generate revenues and generate audiences. So, I’m quite optimistic that as we see this cyclical recovery that we’ll see a normalization of margins in this business,” Field replied.