Cutting-edge Entercom to make impact with local radio station purchase

By Rob Riggsbee

Entercom Corp. will enter the Cincinnati radio market in October when it acquires four local radio stations as part of a recently announced $262 million transaction with CBS Corp.

Entercom will acquire alternative-rock station WAQZ-FM 97.3; classic-hits station WGRR-FM 103.5; country station WUBE-FM 105.1 and WKRQ-FM 101.9, which plays contemporary hits.

As a service to clients, Inside Media owner Rob Riggsbee published a 19-page analysis of the deal, including its impact on the Cincinnati market. The following is an excerpt from that analysis:

Entercom’s (NYSE: ETM) purchase is a best-case scenario for CBS Radio upper management and some department heads, because Entercom does not have a strong regional management team in place, since it doesn’t own or operate any key stations within close proximity of Cincinnati. The Indianapolis stations currently under Entercom ownership are not considered to be the market’s top-rated stations. This lessens the likelihood of heavy and immediate key cutbacks.

From a programming standpoint, WUBE and WGRR have continued to perform to expectations, and in WUBE’s case, to occasionally overperform. WAQZ is the most likely local target of potential change. With the significant ratings setbacks after losing talk-show host Howard Stern, it is in a position of vulnerability. For this reason, WAQZ will be closely reviewed on all fronts and will most likely be subject to quick change.

New media technology is growing at unprecedented speed, but the four local CBS Radio stations have been slower to embrace new-media technologies such as streaming, podcasting, on-demand video, push technology, cellular marketing and RDS initiatives.

Entercom’s corporate culture, and stable of stations, both have been aggressive in streaming their stations, and capitalizing on the new alternative media front, even though this technology is in its infancy.

Entercom is viewed as both an innovator and cutting-edge leader in the digital world, and has a digital strategy that offers the interactive tools and capabilities for distributing Web content marketing opportunities. Entercom views digital media as a “convergence” and has been at the forefront in embracing the technological digital shift in the industry.

Expect new media initiatives, implementation and execution soon after Entercom begins operations of the four local outlets. This strategy should play well into radio listeners, and will pay dividends once Entercom takes over and puts emphasis on these new media and future interactive offerings.

Entercom has a strong presence in several markets in which its stations broadcast pro baseball games (Boston Red Sox), NFL games (New Orleans Saints and Seattle Seahawks), NBA (Boston Celtics), NHL (Buffalo Sabers) and numerous college sports teams. Entercom views sports team broadcasting as a worthy investment, and continually pursues the acquistion of broadcasters’ sports team rights contracts from stations that may be up for bid with their teams rights.

However, the only way a station can secure the rights to a local team’s broadcast is if a current sports team radio rights holder contract happens to become available. Clear Channel Communications Inc. just recently negotiated and re-upped its new Bengals contract, taking the Bengals off the market through 2010.

Clear Channel (NYSE: CCU) is in the final negotiation stage with its Reds On Radio broadcast rights contract, and it is highly likely that WLW-AM and the Reds will reach an agreement in the near future.

Otherwise, Clear Channel has all other major sports franchises/teams (with the exception of new station MAX Radio-97.7 FM which carries Ohio State football games) locked up under multi-year agreements. Depending on the outcome of the Reds contract, it may be awhile before Entercom has the option of outbidding Clear Channel for sports broadcast rights.