Entercom/USTN Deal Gone Bad – What Really Happened

When last we heard, David Field and Ivan Shulman were in love.

U.S. Traffic Network just missed its target for ad revenue and Entercom was willing to take a piece of the company in lieu of cash.

It didn’t stop Field from blaming USTN for its first quarter $24 million revenue shortfall, but they were saying nice things about each other.

Until yesterday.

When USTN sued Entercom for $5 million calling it a bully and alleging that Entercom stole data to start a competing company.

What really happened? 

  • USTN did not do the content for CBS Radio – That deal was negotiated before the Entercom merger by Field’s dreaded CBS executives but because CBS had iconic all-news stations that were dependent on stability in traffic reporting, they wanted to keep control of content.  CBS hired all the traffic reporters who worked for CBS.  Field inherited this. 
  • CBS bought info from USTN – Part of the original pre-merger deal that Field inherited.  CBS bought USTN data and augmented it with other sources.  All legal and in the original deal so USTN arguing that Entercom stole data appears to be a stretch. 
  • USTN got tons of inventory to sell – But CBS made them guarantee north of $15 to possibly $20 million per year in ad revenue.  Sources close to the situation say USTN delivered although they may have slow walked it in the final quarter that CBS owned CBS Radio.  The first quarter (when Field controlled the merged company) USTN reportedly fell behind in their deal payments and Entercom reportedly settled on a piece of USTN instead of the cash. 
  • Field may have tried to buy all of USTN – This is not known for sure but speculated that a relationship between Field and Shulman that had reportedly been good for years suddenly soured.  Shulman may have been insulted by a low-ball bid for Entercom to takeover USTN. Field may have thought technically USTN was in default any way. 
  • USTN’s owners sold the company to Shulman once they got a negative read on Field – Bill Yde, the successful Australian and Canadian traffic business owner, got out of his investment almost as fast as he got in when he apparently realized that Field was in it to control his own destiny in traffic.  Now Entercom is bailing out of their part of the deal confirming Yde’s suspicions. 
  • Entercom had its own deal with USTN – It was a traditional traffic arrangement where USTN provided content and ad sales for year’s prior to the CBS merger.  USTN reportedly paid Entercom fees for selling ads. 
  • Field backed out of any deal to own part of USTN – He backed out while he was reportedly in due diligence perhaps feeling he didn’t need USTN at any price.  Entercom could proceed on their own. 
  • USTN is likely finished after losing Entercom’s business – There are no more big companies out there who aren’t spoken for in traffic reporting and while smaller groups do exist, USTN could in theory be a smaller, boutique business going forward but its major growth days are gone.  They may even be admitting that by filing a $5 million suit against Entercom.

As usual, lawyers will make a lot of money.

This will eventually get settled out of court.

Entercom will simply use the content providers CBS had the foresight of setting up and sell the inventory themselves.

Field will no longer be able to blame USTN for its revenue shortfalls – still another $20 million loss is expected to be revealed for the second quarter.

Shareholders and lenders will continue to question David Field’s ability to integrate the CBS merger into Entercom because here is yet another fine mess he has gotten Entercom into considering that CBS in their infinite wisdom, didn’t put themselves in a position to have a traffic meltdown just when radio revenue was declining.


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