Entercom Communications Corporation (ETM)

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Entercom Communications Corporation (ETM)

Q3 2007 Earnings Call

November 9, 2007 9:30 am ET


Steve Fisher - EVP and CFO

David Field - President and CEO


Kit Spring - Stifel Nicolaus

Victor Miller - Bear Stearns

James Dix - Deutsche Bank

Marci Ryvicker - Wachovia

Bishop Cheen - Wachovia

Lee Westerfield - BMO Capital

David Miller - SMH Capital Market

Jonathan Jacoby - Banc of America Securities

Mark Wienkes - Goldman Sachs

Eileen Furukawa - Citigroup

John Blackledge - JP Morgan

David Bank - RBC Capital Markets

Michael Kupinski - Noble Financial

Jim Goss - Barrington Research



Good morning, and welcome to Entercom's Third Quarter Earnings Release Conference Call. All participants will be able to listen-only until the question-and-answer session of the call. This conference is being recorded.

I'd like to introduce your first speaker for today's call, Mr. Steve Fisher, Executive Vice President and CFO. Sir, you may begin.

Steve Fisher

Thank you, operator, and good morning, everybody. Before David Field begins overviewing our call, I'd like to read you this disclaimer.

Today's call will contain forward-looking statements that are based upon certain 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 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 refer you to our website at entercom.com for a reconciliation of such measures and other pro forma financial information.

So, with that, I'd like to turn this morning's call over to David Field, President and Chief Executive Officer.

David Field

Thank you, Steve, and good morning all. Thanks for joining us today's call. As usual, I'll provide some additional color on the results we released earlier this morning and then share some thoughts on recent developments and business conditions.

As announced earlier, Entercom's same station revenues were up fractionally during the third quarter. Our results compare favorably to our markets, which were down 2% for the quarter. It is worth noting that until early September, we were tracking to deliver low single-digit revenue growth for the quarter. However, September business conditions deteriorated as financial and housing market earns inflated and certainly caused the advertisers jitters.

Same station expenses for the quarter grew 4%, resulting in a 5% decline in same station operating income. However, if you look at those numbers, it's very important to know that the bulk of the increase in our expenses was caused by our new Boston Red Sox rights agreement.

If you exclude the increased expense of this agreement, our same station operating income would have been down 1% and our same station expenses would have been up just 1%, which is a far better reflection of our core expense growth. And next year, the agreement will no longer have the same influence on our expenses due to the expected more normal year of expense growth which Steve will talk about during his portion of the call.

Third quarter performance was led by strong results in Seattle, Boston, Indianapolis and Milwaukee. National and local were essentially equivalent with political revenues down considerably. If you would exclude political, our same station revenues were up 1% for Q3. Digital revenues were up 150% for the quarter, and now equal roughly 1.5% of our total revenues on a run rate basis.

Strategically, we continue to focus on accelerating our revenue growth with a number of core initiatives that we have discussed on these calls in the past that include business development, digital and our brands and our content.

We are investing in our capabilities in each of these areas to provide our customers with enhanced integrated advertising and marketing opportunities across our three platforms, on-air, on-line and on-site. Our efforts are bearing fruit and we are becoming increasingly effective at developing innovative, multi-platform marketing programs for our local and national customers.

Our summer ratings were reasonably strong. One analyst report across my desk this past week said that Entercom is the general market broadcaster with strong set of summer numbers. We have particularly good ratings in Greensboro where we have three of the top four stations among adults 25 to 54.

What is particularly impressive about this is that two of these stations are brand new or relatively new; [Xiamen], our eclectic hits station; and the Wolf, our new country station. In Norfolk, another station that is only a few years old, WBKL, has now settled in as the market's leading station with adults 25-54 leading its rivals by a full two shares.

I also want to mention three other stations whose performance in this book was particularly noteworthy. The Mountain in Seattle search number one adults 25 to 54 and KNRK in Portland jumped number one adult 18 to 49, the first time that has ever happened.

What makes KNRK's achievement particularly noteworthy is that it is an alternative station, a format in which the Diary world has struggled in recent years. Our success there is the direct result of the evolutionary cutting-edge division of our team in Portland.

Finally, The End in Sacramento had a sensational summer book, growing to number one among the adults and women 18-49 and 18-34 and hitting number two with women 25 to 54. While, of course, in any rating books, there are always stations within the portfolio of good and bad books, overall we are pretty pleased with the macro ratings picture from this summer.

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