Report: Entercom To Remain Aggressive In Cutting Costs

Third-quarter revenue at radio station operator Entercom Communications Corp. increased by 53% from the second quarter, showing signs of improvement. But that figure was still 30% off the pace from the same period of 2019, causing the company to suffer an operating loss of nearly $300,000 compared to income of $79.5 million.

The Philly Business Journal reports the news on Friday sent the Philadelphia-based company’s stock tumbling by more than 9% — from $1.74 to $1.55. Entercom was able to make that up Monday thanks to the news that Pfizer was closing in on a Covid-19 vaccine, which sent the stock market soaring. Entercom’s shares were up by almost 13% in midday trading Monday.

Richard Schmaeiling

One promising sign for the nation's second-largest radio station operator is its monthly revenue improvement trend when compared to one year ago: July was down 36%, August down 32% and September was down 25%.

“Although we have seen five months of sequential improvement since April, an examination of our advertiser base makes clear that many of our local and national spot advertising clients remain highly disrupted by Covid-19,” Entercom Chief Financial Officer Richard Schmaeling said.

In response to the revenue reduction, Entercom has been aggressively cutting costs since the beginning of the pandemic in March. It trimmed station expenses in the third quarter by 16% compared to 2019 totals to $228.1 million. CEO David Field told investors Friday that the company will continue to focus on cost-cutting initiatives so it will be better positioned for economic recovery post-pandemic.

David Field

“For example, we are planning to reduce the size of our studio locations significantly to reflect expected post-pandemic work structures, and anticipate significantly reducing the $70 million we currently spend on studio leases over the next several years,” Field said. “In addition, we have significantly reduced the staffing and scope of our promotions department and discontinued some of the legacy practices, which have diminishing value given the rapid adoption of our digital, social and other technologies.”

To mitigate the financial impact of Covid-19, Entercom also implemented a series of cost-cutting measures in late March that included a “substantial” reduction in its workforce and temporary salary reductions impacting every full-time employee making over $50,000 per year. Full salaries were restored in late July. The company trimmed its 2020 capital expenditures by over 40% and suspended its dividend. Entercom has more than 4,400 employees spread across 46 U.S. markets.