Entercom Communications CorporationETM

Morningstar Rating

Stock Research and Analysis

by John Ayling

Entercom Communications' top-line deterioration and weak financial health reflect the broader trends and challenges facing the beleaguered terrestrial radio business.

We think persistent industry headwinds are going to make future growth a challenge. Read more

Bulls Say

The terrestrial radio industry is characterized by relatively low capital requirements, which favorably affects cash flow generation for Entercom and its peers.

Through Entercom's clustering strategy, its stations can collectively attract a higher proportion of listeners in each market it serves, relative to smaller operators. Read more

Bears Say

Entercom's leverage is nearing the ceiling on its debt covenants. A continued decline in revenue or an increase in costs could cause the company to trip a covenant. If this occurred, the company would likely have to sell assets to raise cash.

Entercom depends on on-air advertising, which is a highly cyclical market.

Entercom's portfolio of assets is focused entirely on terrestrial radio. This gives the company higher exposure to an industry with stagnant growth prospects than its more-diversified media peers. Read more

Strategy

Entercom employs a cluster strategy, where it owns from as few as three to as many as nine different radio stations in each market it serves. Stations are programmed individually so as to collectively Read more

Management

The father-and-son team of David J. Field and Joseph M. Field hold the key positions of CEO and board chairman, respectively. Although we like the fact that management returns capital to shareholders via buybacks and a dividend, we are less enthusiastic Read more

Profile

Entercom is the nation's fifth-largest radio broadcasting company based on revenue. The company operates 110 stations in 23 markets, including San Francisco, Boston, and Read more

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