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Entercom to acquire KSWD "The Sound" to satisfy Dept. of Justice

K

K.M. Richards

Guest
Entercom Communications Corp. (“Entercom” or the “Company”) (NYSE: ETM) announced today:

  • An agreement with Bonneville International Corporation (“Bonneville”) to exchange four stations in Denver for KSWD-FM (The Sound) in Los Angeles
  • Time brokerage agreements (“TBA”) that will allow Bonneville and Entercom to operate the exchanged stations immediately upon the closing of the Lincoln Financial Media acquisition (“LFM”)
  • A settlement with the Antitrust Division of the U.S. Department of Justice (“DOJ”) related to the Company’s previously announced acquisition of LFM
  • An expectation that the closing of the LFM acquisition and commencement of the Bonneville/Entercom TBAs will take place within a few business days

Entercom has entered into an exchange agreement with Bonneville under which Entercom will exchange four stations in Denver for Classic Rock station The Sound in Los Angeles and $5 million in additional consideration. The stations Entercom will exchange with Bonneville are: KOSI-FM, KYGO-FM, KKFN-FM and KEPN-AM. Entercom owns KOSI-FM, while the remaining stations are being acquired through the acquisition of LFM.

Entercom and Bonneville will begin operating the exchanged stations under TBAs once the LFM transaction is completed. Closing of the Bonneville-Entercom exchange is subject to FCC approval and other customary closing conditions. Entercom expects the Bonneville transaction to close by the fourth quarter of this year.

Entercom also announced today that it has reached a settlement with the DOJ regarding the Company’s acquisition of LFM which was announced in December 2014. The DOJ initiated its Hart Scott Rodino review of the acquisition with a focus on the impact of the transaction on concentration in the Denver radio market. As a result of the exchange agreement with Bonneville, the DOJ has agreed to approve the Company’s acquisition of LFM. The Company has received FCC approval for the LFM acquisition and will close the transaction after DOJ terminates the Hart-Scott-Rodino waiting period.

Closing of the LFM acquisition and the commencement of the related Bonneville-Entercom time brokerage agreements are expected to take place within a few business days. Commenting on the transactions, Entercom President and Chief Executive Officer David J. Field stated: “We are delighted to be moving forward on our long-delayed acquisition of Lincoln Financial Media and adding their terrific brands, markets and people to our organization. We are also very excited to be acquiring The Sound, the fastest growing radio station in Los Angeles, through our station exchange with Bonneville. Adding Los Angeles, Miami, Atlanta, and San Diego to our footprint will meaningfully enhance our ability to serve our listeners, customers, employees and shareholders. This is a great day for Entercom that will enhance our competitive position and bolster our growth potential well into the future.”

The purchase price for the LFM acquisition is $105 million which will be paid with $77.5 million in cash and $27.5 million in newly issued Series A Perpetual Convertible Preferred Stock which will be held by Lincoln Financial Group. Entercom will fund the cash portion of the purchase price using cash on hand and by drawing on a portion of its existing $50 million revolving credit facility.
 
At least Bonneville gets a real group of stations in Denver instead of a stand alone in el Lay. But What in the Wide, Wide World of Sports is Entercom going to do? Add more stations in Boss Angeles, or do some horse tradin'?
 
DrAkbar said:
But What in the Wide, Wide World of Sports is Entercom going to do? Add more stations in Boss Angeles, or do some horse tradin'?
Click to expand...

Not much for them to acquire here.

On FM:

KKGO/105.1 (Country) is still owned by the defiantly-independent Saul Levine (the original owner, no less), who has no debt to service and whose adult children are involved both in running the business and in expecting to inherit it. Nyet for sale.

KPWR/105.9 (Urban Hip-Hop) is a standalone for Emmis ever since they made that huge mistake in the deal for the former KZLA/93.9 with Grupo Radio Centro back in 2009. With Big Boy under-performing at KRRL after all that legal drama, I'd bet Smulyan will hang tough, though. Odds of sale: 3-1 against.

KLOS/95.5 (Classic Rock) is the badly programmed Cumulus-owned -- along with equally badly programmed KABC/790 (News/Talk) -- competitor to Entercom's new acquisition. While it would make sense to buy out the only other station in the format, KLOS is so far down in the ratings for their demo it wouldn't make a lot of difference. And I don't see the Dickeys exiting L.A. just yet, even though their next cluster north in Oxnard-Ventura outperforms L.A. in terms of billing vs. expenses percentage. I'll give that one even odds, but Entercom would have to acquire both stations for Cumulus to sell.

The rest of the full-market, full-signal stations are owned by CBS (KCBS, KTWV, KAMP, KRTH and KROQ), iHate ... er, iHeartRadio (KRRL, KYSR, KIIS, KOST, KBIG) or by the Spanish-language broadcasters (SBS owns KXOL and KLAX, GRC owns KXOS as noted previously, Univision owns KSCA and KLVE) and Salem (KKLA).

What's left? The Class As, divvied up at present between Entravision, Univision, and Liberman?

On AM, only two stations have good coverage: KFI (iHeart) and KNX (CBS). Everything else has problems, and unfortunately for Entercom we already have too many sports-formatted AMs.

KSWD cost Entercom one of their existing Denver stations, three of the Lincoln acquisitions, plus $5 million. Are any of the groups that are under the limits going to pony up the cash equivalent to acquire it? Smulyan? The Dickeys? Levine?
 
And it certainly looks like Entercom plans no changes at KSWD.

Excerpt from CEO David Field's memo to Entercom staff nationwide, released a little while ago on their website:

On the other hand, we are very excited to be entering the Los Angeles market, particularly with The Sound which is the fastest growing station in that market, featuring an outstanding talent lineup led by Mark Thompson, formerly of the Mark & Brian show.
Click to expand...

... and ...

We will now be operating in every major market on the West Coast, and will reach listeners from Seattle to Miami and from Boston to San Diego with 125 of the nation’s most distinguished radio brands. Our increased size and scale makes us stronger in a number of ways and opens new doors of opportunity. And we were able to structure these acquisitions in a manner that enables us to remain one of the financially strongest companies in the business, preserving the capacity and flexibility to invest boldly in our company’s future.
Click to expand...

http://www.entercom.com/important-announcement-from-david-field
 
Doin' the math on this deal is beyond our pay grade. However the Nurse and I remember Bonneville bought 100~Three at the top of the market and didn't like the haircut fair market value would bring if they sold it. The swap with Entercom and a measly $5m solved their el Lay stand alone problem quite nicely. Bonneville has far more upside in Denver.

Maybe it's the Arizona ozone, but the Nurse and I don't see the synergy David Field sees with KSWD and no other signal in the market. However it would be nice if someone could put Cumulus out of everyone's misery by purchasing KLOS.
 
DrAkbar said:
However it would be nice if someone could put Cumulus out of everyone's misery by purchasing KLOS.
Click to expand...

Hope you meant that to apply to all the markets where they own stations, Dr.
 
Entercom CEO David Field mentioned "Mark Thompson, formerly of the Mark & Brian show." I don't listen to KSWD but I would guess that Mark never makes any on-air references to his former KLOS partner. I doubt he appreciated Field's reference. It's like calling Paul McCartney a "former member of the Beatles." Are a large number of people who listened to Mark & Brian on KLOS now listening to Mark on KSWD? Has his style changed any? I remember how disappointed I was when I heard Lohman minus Barkley.....and Barkley minus Lohman. And what exactly are those "new doors of opportunity"?
 
Don't know if he appreciated it or not, but the ratings have been going up in the morning at KSWD since Mark started. So, logic would say a good portion of his ex-KLOS listeners are listening to him once again. Now, whether that's simply because Mark is there or whether it's because KLOS sounds (no-pun intended) so bad is anybody's guess.

I can't tell you whether his style has changed since the Mark & Brian show split up. I never listened to it, and I rarely listen to more than about 10 minutes of his new show. I usually flip on 100.3 (via streaming) to see if the day's 10 at 10 interests me, but that's about the most listening I do to the station. Living in the Central Time Zone, morning shows until 11:00 or noon don't interest me much.
 
If KSWD comes under Entercom management, revenue will certainly rise considering that Boneville does not accept alcohol/gambling adverts.
 
radiojomo said:
If KSWD comes under Entercom management, revenue will certainly rise considering that Boneville does not accept alcohol/gambling adverts.
Click to expand...

Good point...nice stream of revenue that The Sound has missed. Entercom will definitely exploit all revenue opportunities, as unlike Bonneville, they've got debt to service.
 
K.M. Richards said:
IF ??!!??

Have you been paying attention at all?
Click to expand...


If you know anything about deals, you know that they can fall through at any time for any reason until the dotted lines are signed. I have been involved in deals that have collapsed very late in the game including once in the signing room at the lawyer's office. So, yes, anytime you are talking about a deal that has not closed, IF is the proper term to use.
 
ChannelFlipper said:
If you know anything about deals, you know that they can fall through at any time for any reason until the dotted lines are signed. I have been involved in deals that have collapsed very late in the game including once in the signing room at the lawyer's office. So, yes, anytime you are talking about a deal that has not closed, IF is the proper term to use.
Click to expand...

Let's see what the original Entercom statement said:
  2. Entercom and Bonneville will begin operating the exchanged stations under TBAs (time brokerage agreements) once the LFM transaction is completed.
  3. As a result of the exchange agreement with Bonneville, the DOJ has agreed to approve the Company’s acquisition of LFM.
  4. The Company has received FCC approval for the LFM acquisition and will close the transaction after DOJ terminates the Hart-Scott-Rodino waiting period.
  5. Closing of the LFM acquisition and the commencement of the related Bonneville-Entercom time brokerage agreements are expected to take place within a few business days.

How I interpret the above: Within a few business days --likely by the end of next week -- Bonneville will begin operating their new Denver stations under a time brokerage agreement. At the same time, Entercom will begin operating KSWD. That certainly sounds like a lot of documents have already been signed in the lawyers' offices, and the TBAs will essentially place KSWD "under Entercom management".

On that basis, I stand by my questioning the use of the word "if", and I hope everyone (including Frank) enjoyed that you have once again tried to prove your superiority and received a straightforward answer from me to your arguments.
 
K.M. Richards said:
Let's see what the original Entercom statement said:
  2. Entercom and Bonneville will begin operating the exchanged stations under TBAs (time brokerage agreements) once the LFM transaction is completed.
  3. As a result of the exchange agreement with Bonneville, the DOJ has agreed to approve the Company’s acquisition of LFM.
  4. The Company has received FCC approval for the LFM acquisition and will close the transaction after DOJ terminates the Hart-Scott-Rodino waiting period.
  5. Closing of the LFM acquisition and the commencement of the related Bonneville-Entercom time brokerage agreements are expected to take place within a few business days.

How I interpret the above: Within a few business days --likely by the end of next week -- Bonneville will begin operating their new Denver stations under a time brokerage agreement. At the same time, Entercom will begin operating KSWD. That certainly sounds like a lot of documents have already been signed in the lawyers' offices, and the TBAs will essentially place KSWD "under Entercom management".

On that basis, I stand by my questioning the use of the word "if", and I hope everyone (including Frank) enjoyed that you have once again tried to prove your superiority and received a straightforward answer from me to your arguments.
Click to expand...

Please do not confuse tedious and tendentious with straightforward. How you should have interpreted: The deal is close to closing, probably will close, but there is still a possibility that it will not close. Nowhere does it say it is a done deal. IF is still the correct phraseology by the poster.
 
"Quote Originally Posted by ChannelFlipper View Post
If you know anything about deals, you know that they can fall through at any time for any reason until the dotted lines are signed. I have been involved in deals that have collapsed very late in the game including once in the signing room at the lawyer's office. So, yes, anytime you are talking about a deal that has not closed, IF is the proper term to use.
Let's see what the original Entercom statement said:
Entercom and Bonneville will begin operating the exchanged stations under TBAs (time brokerage agreements) once the LFM transaction is completed.
As a result of the exchange agreement with Bonneville, the DOJ has agreed to approve the Company’s acquisition of LFM.
The Company has received FCC approval for the LFM acquisition and will close the transaction after DOJ terminates the Hart-Scott-Rodino waiting period.
Closing of the LFM acquisition and the commencement of the related Bonneville-Entercom time brokerage agreements are expected to take place within a few business days.


How I interpret the above: Within a few business days --likely by the end of next week -- Bonneville will begin operating their new Denver stations under a time brokerage agreement. At the same time, Entercom will begin operating KSWD. That certainly sounds like a lot of documents have already been signed in the lawyers' offices, and the TBAs will essentially place KSWD "under Entercom management".

On that basis, I stand by my questioning the use of the word "if", and I hope everyone (including Frank) enjoyed that you have once again tried to prove your superiority and received a straightforward answer from me to your arguments."

xxxxxxxxxxx. My guess is that you didn't receive enough attention as a child. Now, run, don't walk, and tell the moderator.
 
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Entercom bought San Francisco's radio properties from Bonneville in 2007 - the big 'get' being Lite Rock KOIT 96.5; along with KDFC Classical 102.1), and 95.7, which has floundered with various formats over the years. Bonneville sold KOIT-AM (1260 - once KYA) at the same time - to the Catholic Church. Since then, there has been a lot of unhappiness from air-talent and staff about the way they have been treated by Entercom, compared to the apparently fair treatment received from management during the Bonneville era.


http://www.sfweekly.com/thesnitch/2014/04/07/koit-accuses-entercom-of-unfair-labor-practices
 
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