Entercom States Case Against USTN

While Entercom hasn’t yet filed its response to United States Traffic Network’s $5 million lawsuit against the broadcaster, CEO David Field provides a glimpse of what that that might look like in an internal memo sent to employees Monday. InsideRadio says the memo also sets the stage for how Entercom may update investors Wednesday about the traffic services deal gone bad during its second quarter results call.

Last week USTN filed suit in U.S. District Court, Harris County District Court in Texas, claiming that Entercom was in talks to buy the traffic services company but bailed on the deal, severed its relationship with the company and used trade secrets it gained from USTN to develop a competing service to launch in fourth quarter. The suit had no shortage of venomous accusations, such as: “Defendants' scheme was so perverse and all-encompassing that even Vladimir Putin would be left blushing.”

David Field

Now Field calls USTN’s allegations “ridiculous” and says Entercom “acted in good faith and made every reasonable effort and then some to assist USTN in fixing their challenging issues.” To set the record straight, he walks employees through the history of the relationship between the two companies and encourages them to share it with their colleagues and clients.

In his memo, David Field stated:

• Entercom has received only $3 million out of the original $33 million due under the agreements in place at the closing of the CBS Radio merger.
• Entercom did not create this problem; USTN did.
• Entercom has bent over backwards to work constructively and patiently with USTN to help them fix their problems. We have made enormous financial concessions to help them.
• And yet USTN still has not demonstrated that they are able to make ends meet, failing to make their required payments to Entercom for June and failing to make a $5 million required payment on their restructured debt to Entercom.
• USTN management can conjure up a ridiculous lawsuit and engage in name-calling, but it can’t change the facts or the truth of what has occurred here. USTN has failed to meet its obligations over many months.
• Entercom has acted with great restraint for many months, but we cannot continue to invest our time, resources, and capital in a business that has been unable to fix its own problems.