Entercom Communications Corp. (ETM)

The year 2006 was the radio industry’s annus horribilis. Advertisers abandoned the radio and migrated to new media like the internet and mobile phone. A prospective Sirius-XM Radio is also giving sleepless nights to the terrestrial radio companies. Entercom, however, seems to be sailing the rough waters quite smoothly. Entercom’s 2006 revenues increased 1.8% to $440.5 million. This was commendable, considering radio’s terrible last year. A substantial increase in expenses, however, resulted in reduced net income. Entercom announced that its late February revenues were pacing up single digits. The company completed a string of acquisitions over the year which will hold it in good stead in the years to come.





Entercom has decided to focus on three growth drivers. They are investing in new brands and enhancing on-air content, expanding business development capabilities and beefing up their digital platform. Entercom entered the San Francisco market in January, 2007. They agreed to exchange four radio stations in Cincinnati and three of their seven radio stations in Seattle for Bonneville International Corporation’s three FM radio stations in San Francisco. San Francisco is the fourth largest radio market in the USA.





Currently, digital revenues account for less than 1% of the company’s total revenues. Digital revenues are, however, expected to contribute robust growth in the future. Entercom expects low single-digit same station revenue and expense increases in 2007’s first quarter. 2007’s capital expenditures are expected to range between $14 million and $15 million. The royalty rate increases for internet radio broadcasters will have the terrestrial radio stations like Entercom jumping in joy. Consequently, Entercom should have a good year ahead of it.