Forget Cumulus Media‘s slightly-higher net income and the efforts of CEO Mary Berner that are largely repairing “a broken company.”
The company that appears to be shattered is the one responsible for a $4.8 million write-down during Cumulus’ Q2 — US Traffic Network (USTN).
During Cumulus’ Q2 conference call for financial analysts and shareholders, CFO John Abbott disclosed that the No. 2 radio broadcasting company by number of stations has inked a multi-year contract with another company in USTN’s space. Less than three hours later, iHeart-owned Total Traffic & Weather Network announced that it was the party that Cumulus has a new relationship with, starting in September.
The shift from USTN to TTWN by Cumulus, which follows a highly publicized row and legal challenge presented by USTN to Entercom Communications, appears to have been a fatal blow to USTN’s efforts in the radio industry.
According to Streamline Publishing’s Radio Ink, several sources confirm that USTN will be winding down its radio operations, effective Friday.
The sources note that this is the final day advertisers will air during any of the traffic reports. USTN will provide data to stations for another two weeks, with the last day for a live radio traffic report being September 7. All employees will be released from their non-compete contracts; the sales staff has been told their last day will be August 31.
USTN’s TV traffic division will continue operating.
More from the RBR+TVBR Archives:
A three-page internal memo distributed across Entercom’s radio stations on Monday sheds new light on the radio company’s testy relationship with United States Traffic Network (USTN), which has taken a financial hit of approximately $30 million thanks to internal issues that have plagued the third-party provider of traffic reports to AM and FM stations across the U.S.
Entercom President/CEO David Field scrapped his midday appointment schedule and issued a statement Monday explaining how his radio broadcasting company’s contract with USTN has ended — and how “relieved” Entercom is to be out of contract it inherited from its merger with CBS Radio. He also had some sharp words regarding USTN’s lawsuit.
Fraudulent Inducement. Breach of Fiduciary Responsibility. Misappropriation of Trade Secrets. Those are the charges brought against one of the nation’s biggest radio broadcasting companies by a provider of traffic and weather information to local and syndicated radio stations across the country that’s had its fair share of bumps and bruises in the last six months.
Entercom has attracted renewed attention to the radio industry thanks to its merger with CBS Radio, which closed nearly six months ago. But, there’s a long road ahead to fully realize the benefits of this deal — and that was made clear in a Q1 highlighted by weak ad conditions and a $12 million sting tied to a broadcast traffic services company.
Just two months ago, Entercom’s head revealed that US Traffic Network was in severe financial difficulty and directly responsible for the radio company’s dip in Q4 2017 pro forma revenue. David Field called it a short-term issue. He was right: USTN and Entercom have renewed their vows — and struck an equity partnership.
After being called out by Entercom in the company’s Q4 and full-year 2017 earnings call for nonpayment of services, leading to a $4 million write-down of revenues, United States Traffic Network (USTN) has completed a management-led buyout of the company. The buyout was spearheaded by its President.
A Malvern, Pa.-based company that connects businesses with on-air, online and on-the-go traffic technology and provides local content, traffic information, advertising, and interactive marketplace solutions to media partners and businesses nationwide played a key role in Entercom’s dip. This revelation came in a detailed account of what happened to the company in Q4 2017. “Lackluster” leadership at the former CBS Radio was also a factor, Entercom head David Field said.
CEO Mary Berner discussed much of the highlights from the company’s earnings report — its first following its emergence from Chapter 11 bankruptcy protection — in a call with financial analysts and shareholders at 4:30pm Eastern. But the biggest news is the nearly $5 million in write-offs tied to USTN. It took the company Cumulus signed a new deal with to replace USTN to make its identity known.
What a difference a day makes. On Wednesday, the Motley Fool and American City Business Journals were explaining to readers why Entercom stock soared. On Thursday, investors decided to enjoy a bit of a profit and sold some shares — even as the company announced a pretty decent quarterly dividend.