Entercom Communications Corporation (ETM)

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Entercom Communications Corp. (ETM)

Q4 2008 Earnings Call Transcript

February 24, 2009 11:00 am ET

Executives

Steve Fisher – EVP and CFO

David Field – President and CEO

Presentation

Operator

Good morning and welcome to Entercom’s fourth quarter earnings release conference call. All participants will be in a listen-only mode. This conference is being recorded. I would like to introduce your first speaker for today’s call, Mr. Steve Fisher, CFO and Executive Vice President. Sir, you may begin.

Steve Fisher

Thank you operator, and good morning everybody, and nice to note the sun is shining here in Philadelphia. I would also like to note that we have started a new procedure today, effective with this earnings call, one that we noticed with our announcement of this call, and one that was also noticed in the release itself. And that is – the procedure is that we ask that you submit your questions to us by e-mail, and there is still time.

We had several comments already, and we ask that you send your questions on anything that you would like to know to questions@entercom.com, again questions at entercom.com. And in addition to this call, I am always available for any follow-up questions should you wish to call me directly at 610-660-5647. Also as previously announced in those same two releases, I would note that the company is no longer providing guidance going forward in 2009.

Should the company make any forward-looking statements, such statements are based on current expectations and involve risks and uncertainties. The company’s actual results could differ materially from those projected. Additional information concerning factors that could cause actual results to differ materially is described in the company’s SEC filings on Forms 10-Q, 10-K and 8-K. The company assumes no obligation to update any forward-looking statements. During this call, we may reference certain non-GAAP financial measures. We would refer you to our website at www.Entercom.com for a reconciliation of such measures and other pro forma financial information.

And with that, I’ll turn the call over to David Field, President and Chief Executive Officer.

David Field

Thank you Steve and good morning everyone. Thanks for joining us on our call today. I'm pleased to provide Entercom’s fourth quarter results, and provide you with an update on some recent developments. As you are all well aware, we have been facing and continue to face difficult economic conditions in our country. A significant portion of our customer base has been adversely affected by the recession, and this has impacted advertising demand for all media.

In the face of these conditions, during the fourth quarter, Entercom posted a 14% decline in net revenue. Adjusted net income decreased 19% to $0.33 per share, while free cash flow per share declined 20% to $0.64. For the year, adjusted net income was up 2% to a $1.27 per share, while free cash flow increased 8% to $2.56 per share.

Same station revenues for the fourth quarter declined 14%. Same station expenses declined 7% resulting in a 25% decline in same station operating income.

Here are a few operating highlights for the quarter. Despite the difficult environment, we were able to achieve excellent results in a few markets led by Buffalo, Milwaukee, Denver, Norfolk, Madison and Wichita. Local and national revenues were both down essentially in line with our overall results, while digital revenues were up significantly during the quarter.

Our strongest growing categories were political, digital/online, travel and hotel, and grocery. Our weakest categories were automotive, television, and financial. Ratings remained strong with solid results from the fall Arbitron books.

You're all quite familiar with the extent of the economic issues affecting our country. And as I mentioned earlier, no ad medium has been immune from the impact on ad spending. We have taken a number of steps to reduce expenses significantly, but have done so while continuing to increase our investments in new technologies, new revenue initiatives, and in our sales and marketing capabilities, in order to drive future growth.

We remain fully committed to pursuing our strategic growth initiatives. A few other observation and comments before I turn it over to Steve. I think it is well worth noting that even in a very challenging 2008, we generated close to $100 million in free cash flow, and were able to reduce our debt by $140 million.

In addition, while we were all understandably focused on the gravity of the cyclical challenges facing virtually all businesses, we may be missing an increasingly positive emerging secular story. At a time of unprecedented change in media usage, that is severely impacting a number of other media, radio posted an all-time number of listeners in 2008, and remind the most cost-effective major advertising medium in the nation.

235 million Americans 12 and over, listen to local radio weekly. Radio remains a robust, vibrant medium servicing listeners across the country. And the industry is rapidly reinventing itself through aggressive investments in new digital technologies and capabilities. We are significantly enhancing the ways we interact with and engage our audiences, and in addition we are dramatically enhancing our value to our customers, by enabling them to access our audiences across multiple platforms in ways we couldn't even imagine years ago.

And in just the past few months, we have seen major stars and personalities including Ryan Seacrest and Mike Huckabee launch new radio shows. In sum, we are optimistic as we look to the future. Radio’s strong underlying fundamentals and compelling value proposition should enable it to gain share from other media facing significant secular issues.

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