That was the assessment of CEO David Field as he reported Q3 revenues down 2% to $100.4 million for Entercom, but essentially flat excluding political. Ad sales are currently pacing down 5% in Q4 against a heavy political take in 2010.
Entercom has also been doing some FM format flips to capitalize on its established AM Sports properties. Field told analysts those moves will pay off in the long run – indeed ratings for WEEI in Boston are up over 60% after it replaced Adult Hits “Mike FM,” although the company took an immediate hit in ad sales for the FM format (but also no longer has that overhead). According to Field, if you exclude Boston and San Francisco (another FM flip to Sports) and the impact of political in all markets, Entercom is pacing up 3% in Q4.
The move from AM to FM for established station brands is clearly a company strategy for Entercom. Field noted that “AM only” revenues now account for less than 6% of the company’s revenues.
Along with the 2% decline in Q3 revenues, Entercom saw a 3% increase in station expenses, so station operating income was down 13% to $30.9 million. Adjusted EBITDA was down 14% to $26.7 million and free cash flow dropped 12% to $20.6 million.
Entercom’s best performing markets in Q3 were Austin, Greensboro, Indianapolis, Memphis and Seattle, Field told analysts. The strongest advertising categories were retail, home improvement, insurance, television & cable, casinos & lottery and automotive. July was down high single digits, with August positive and September down low single digits, mostly due to political.
“Looking ahead to 2012, we are highly encouraged by brightening industry prospects due to accelerating industry innovation and outstanding audience usage trends. The total number of local radio listeners continues to grow and is now at an all-time record level. Furthermore, for the first time, now that we have three years of PPM data covering 17 major markets, we’re able to track time spent listening across the industry on an apples-to-apples basis. The data shows that time spent listening has remained essentially flat from 2009 to 2011 – a remarkable achievement for any incumbent medium in our extraordinarily time-starved and ever-changing world,” Field said, also reminding analysts that local radio holds well over a 90% share of total radio listening, vs. satellite and Internet.
RBR-TVBR observation: If you are a voter in Minnesota or South Dakota you might want to send this article along to your United States Senators to inform them of the real world. Sens. John Thune (R-SD) and Amy Klobuchar (D-MN) apparently live in some fantasyland where AM has magically achieved parity with FM.