One of the nation’s largest audio media companies, with investments in podcasting and a growing streaming app, is rapidly recovering from not only COVID-19 fueled detriments to its revenue, but also from challenges largely associated with the November 2017 tax-free merger it successfully completed with CBS Radio.
Entercom Communications early Wednesday released its Q4 and full-year 2020 earnings report. While its revenue was down 22.8% year-over-year, it surpassed Wall Street estimates. Entercom’s earnings per share? That’s another story.
Entercom’s adjusted net income shriveled to $23.04 million (translating to a non-GAAP earnings per share of $0.17), from $53.38 million ($0.40).
Wall Street analysts expected non-GAAP EPS to come in at $0.18.
On a GAAP basis, Entercom’s EPS was negative, at -$1.21. That was far off from Street prognostications, as profit of $0.02 per share was forecast.
Total net revenue came in at $319.5 million, compared to $414.12 million in Q4 2019.
That said, year-over-year comps are being downplayed by the radio industry, which is intent on showing sequential quarterly improvements from the worst of the COVID-19 pandemic. And, those sequential improvements paint a positive picture for the owner of key Sports Talk properties as WFAN-AM & FM in New York and podcast players Cadence13 and Pineapple Street.
Total net revenue in Q2 2019 was $175.87 million, off from $380.67 million in the second quarter of 2020.
Of course, perspective is everything: Revenue was down 22.8% year-over-year in Q4. Revenue was down a steep 53.8% in Q2.
What was Entercom’s non-GAAP Station Operating Income (SOI)? In Q4 2020 it totaled $80.69 million, slipping from $129.66 million.
Then, there are the non-adjusted numbers, which show a diminished net loss in Q4 2020 of $162.4 million, from a net loss of $487.54 million in Q4 2019.
Lastly, Free Cash Flow, a largely important figure for the radio industry, came in at $37.97 million. While that’s down from Q4 2019’s FCF of $59.52 million, it’s a big swing from negative FCF of $47.87 million seen in Q2 2020.
POLITICAL PROWESS
The Q4 2020 results, while pointing to positive growth, are propelled by something that likely won’t be repeated for some time: incredibly strong political ad dollars.
Entercom in Q4 saw political revenue of $18.89 million — a record high that dwarfs Q4 2018’s revenue of $12.3 million.
Importantly, the record-crushing political didn’t diminish Entercom’s sequential improvements in spot revenue, or its network revenue.
Then, there is Entercom’s digital story. Not only has the company returned to growth, something finally seen in Q4 2019 after months of mediocre revenue trends, but it established a new division record in Q4 2020 — finishing at a mighty $58.8 million.
It’s extremely encouraging news for Entercom, which has invested heavily in its Radio.com streaming app and platform, inherited from the CBS Radio merger and completely rebooted.
The other interesting positive for Entercom: Sponsorship and event revenue isn’t totally comatose, with sequential gains pushing it to $9.6 million in Q4 from $7.24 million in Q2 2020. Year-over-year? That’s ugly, given the loss of holiday-themed live events Entercom would normally stage during the final three months of the year.
In a Securities and Exchange Commission filing, Entercom offered revenue by “format,” splitting its music stations from its Sports and News/Talk broadcast properties. The improvement in revenue on a sequential basis is most noticeable at its music stations.
EXPENSE CONTROL
Entercom’s C-Suite, ahead of its earnings call for investors and financial analysts, also pointed to a slash in station expenses in Q4 as a key factor in achieving revenue growth.
Station expenses for the fourth quarter declined 16% to $238.8 million year-over-year and corporate expenses declined 6% to $20.2 million.
The big black mark for Entercom in Q4: Operating loss for the quarter was $204.9 million, as this includes a non-cash impairment charge of $247.4 million. Yet, this compares to an operating loss of $455.5 million in the fourth quarter of 2019.
In prepared comments ahead of Entercom’s 10am Eastern quarterly earnings call, Entercom President/CEO David Field pointed to “strong sequential operating improvement,” with podcasting and sports betting contributing to across-the-board revenue growth.
“While the pandemic continues to hobble a large number of our advertisers, particularly locally, we are optimistic about a strong recovery in our local ad sales later this year driven by vaccinations, fiscal stimulus and pent-up consumer demand in heavily impacted categories,” he said.
In particular, Radio.com enjoyed 34% year-over-year growth in monthly active users in the fourth quarter and 53% growth in smart speaker listenership.
