The Triumphs and Concerns of Radio Mergers

cindy2-260Do you tune-in to your favorite AM radio station in the morning and throughout the day to get your daily dose of news, traffic and weather?  If so, you are probably familiar with many of the CBS owned and operated stations across the country, such as WCBS-AM, (known as 88 or 880, it’s dial position in the NY DMA), WINS-AM, which is the sister station to WCBS-AM, KYW-AM in Philadelphia, WBZ-AM in Boston and WWJ-AM in Detroit. These heritage stations, with maximum power and clear signals that can be heard for miles within their respective DMAs and beyond, along with a long list of FM signals, will be merged into Entercom Radio who owns 127 stations in 27 markets across the U.S.

According to the reports I’ve seen, the deal will establish Entercom as the #3 radio company in the U.S. behind iHeart and Cumulus, which will give them a “leading local media and entertainment company with strong, complementary assets on a national scale,” according to Leslie Moonves, Chairman and Chief Executive Officer, CBS Corporation.

The complementary assets listed below are staggering and will certainly give Entercom a wealth of opportunity to showcase and build upon their strong News, Sports, and Talk base.

  • A leading sports platform with the rights to broadcast 45 pro sports teams, including the New York Yankees, the Boston Red Sox, the Chicago Cubs, the New England Patriots, the Atlanta Falcons, and the Golden State Warriors, and 100+ popular local sports talk shows, including the most-listened-to sports talk station in the country, as well as the CBS Sports Radio Network, which is made up of 300 affiliated radio stations across the country
  • Leadership in news and news/talk format, with some of the most-listened-to news and talk radio stations nationwide, including 1010 WINS in NY, KNX in LA, and WBBM in Chicago
  • A diverse array of music and entertainment formats with popular personalities who are leading influencers of custom curated music and entertainment experiences that drive music discovery
  • A leading creator of more than 4,500 live original events per year, from music festivals and large shows to intimate performances with big-name artists
  • A growing portfolio of digital content that expands reach and engagement by local on-air talent through original programming and social media
  • The ability to monetize the intellectual property of dozens of major-market radio shows across multiple emerging platforms
  • Legendary local stations with rich heritage and well-known call letters, which will remain after the transaction

That all sounds good, right? Yes, I think it does sound like it will be a positive for radio and will allow Entercom to continue to push the mass reach story that David Field, President and CEO of Entercom bestows. In his words, “Radio reaches more Americans than any other medium, and offers advertisers outstanding ROI and local activation. This transformational transaction creates scale-driven efficiencies and opportunities to compete more effectively with other media to better serve our listeners and our advertisers.”

However, just a word of caution: although the terms of the deal were not disclosed, creating a large national footprint along with the all the deal points listed above, doesn’t come cheap. The skeptic in me believes that the only way to pay for all of that is to increase Ad revenue. So, buyers beware, be more vigilant in your rate negotiations and watch your Y-O-Y rates. And, be sure you’re monitoring rating deliveries to insure there isn’t an artificial increase in CPPs. No one wants to see Entercom succeed more than I do as I believe in the power of radio. However, I don’t want that success to be funded by my clients.

Please keep in mind that the former Clear Channel radio, now known as iHeart took on a huge financial burden in 2008 that now has them looking for ways to unbundle some of that debt as spending on radio advertising has decreased to lower levels than in the early 2000s and shifted to streaming companies like Pandora and Spotify.  Let’s hope that history doesn’t repeat itself and the CBS/Entercom merger is successful so that we have those heritage stations I mentioned at the top of the article around for years to come.

CATEGORY: Advertising