Entercom’s Market Meltdown

Anyone not drinking the Kool-Aid saw that this was coming and the flavor didn’t even matter.

Entercom stock closed at $3.36 yesterday and that includes a late market Hail Mary that barely lifted ETM stock out of the upper two-dollar range by the 4 o’clock bell.

This meltdown was coming because what David Field has been saying and promising since the bungled CBS merger has not been delivered and it’s finally caught up to him.

Entercom stock tanked on 15x the usual one million or so shares traded every day after it revealed disappointing and concerning second quarter revenue before the market opened.

Entercom posted quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.28 per share. This compares to earnings of $0.01 per share a year ago. 

Over the previous four quarters in spite of Field’s rhetoric, Entercom has not been able to exceed consensus EPS (earnings per share) estimates.

Entercom shares have lost about 8.1% since the first of the year compared to the S&P 500's gain of 15%.

And it gets worse.

No matter what magic Field pulls from a hat he singlehandedly has presided over a precipitous loss of shareholder value from $16 to $3.36.  Fixing the share price means fixing the company and the headstrong Field is unlikely to do anything but double down and mix another pitcher of Kool-Aid.

In fact, he did it on his conference call yesterday – everything’s beautiful in its own way.

Here are some of the major challenges that Field faces. 

  • Erosion of the CBS All-news franchise – KYW Newsradio in Field’s hometown of Philadelphia is now stuck at #10 (6+) driven by mainly very old demographics. The only Entercom all-news stations in the Top 5 are simulcasting on both AM and FM (Chicago and San Francisco).  KYW broadcasts on a weak AM signal and Field has an 18thranked FM station in WTDY that is available and yet he remains unwilling or unable to make the switch. This is a no-brainer because music formats usually do well in the summer so an 18thranked FM is nothing to protect.  Mistakes like these should make investors cringe because without the CBS all-news revenue, Entercom is done and that’s being frank about it. 
  • No, David didn’t just so do that! – So on the day he knew that Entercom would greatly disappoint investors, he announced the purchase of two podcasting companies. Field bought the rest of Cadence13 for an estimated value of $50 million (Entercom already put $10 million into Cadence13 ownership previously). And an estimated $18 million for Pineapple Media supposedly making Entercom the third biggest podcasting company. I don’t who is doing the counting but Apple and Spotify and many others are bigger but David did the Pittman head fake to podcasting which is not a business, has never been proven to be a business and will never be a business.  But Field is in it now just like Bob Pittman whose head fake is really fake because their signature podcast, Ron Burgundy consists of only 12 episodes to date.  Buying podcasting companies didn’t work for iHeart and it is not likely to work for Entercom but it’s a diversionary tactic. You’ve got to love the happy talk radio trade press for being so complicit in covering for the incompetence of radio CEOs.
  • Entercom’s sports franchise is in jeopardy – So you want to buy ETM stock? With all-news revenue expected to continue its decline and errors being made all over the place with Entercom’s sports franchise, this is a pipe dream that will never develop.  Sports is waning, Entercom is sticking to what’s waning, ignores e-sports and all the money that generates and has lost the CBS exec who could stabilize things – Chris Oliviero.  Mike Dee is clueless.  Can I say that? 
  • Where’s Weezie? – Weezie Kramer’s claim to fame for her longevity at Entercom is to speak softly and deliver ad revenue.Some of the Entercom ad revenue decline is on her.  Maybe they should have kept Scott Herman.  But Weezie is likely to survive at least for another quarter.  She could retire anytime now and a change could happen.

Entercom will pick up some of its losses yesterday but now has entered territory that is tenuous.

A punch in the belly to Entercom yesterday is that Townsquare stock went up to $5.94 with tiny markets with one-third of its revenue coming from digital (not podcasting).

David Field would need a brain transplant to turn CBS around.

He famously said he could run CBS better than CBS could.

Apparently not.

He fired and continues to fire CBS employees which should concern investors because they are the only ones who know what they are doing in the merged company.

Apparently he needs them.

Podcasting is a decoy for declining radio revenue, no shareholder is going to assume of all companies Entercom is going to be the first to actually make money from podcasting.

9 white men and a white woman is not a management team for today’s media business.

The CBS merger can’t be fixed.

Radio is sunsetting whether we like it or not.

Think of it like this – could you imagine people not liking music anymore.  If that happened, the record business would be over but instead they adapted to streaming and provide lots of positive cash flow.

But listeners have soured on what passes for consolidated radio and the only solution is to turn to their devices.

And for investors, if you insist on buying a radio stock, buy Saga, the debt-free radio revenue machine. (Full disclosure:  I own Apple, no radio stocks).

Buy Entercom at your own risk because the trouble with Entercom is the person running it.

Jerry Del Colliano is a professor at NYU Steinhardt Department of Music and Performing Arts Professions.  His background includes Clinical Professor of Music Industry at the University of Southern California, TV, radio, program management, publishing and digital media.

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