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Entercom Settles DOJ Investigation; Swaps For 100.3 The Sound Los Angeles

Entercom Lincoln Financial Media Denver Miami San Diego AtlantaEntercom and Bonneville have announced they will begin operating their newly acquired stations on Friday, July 17 with Entercom closing on its acquisition of Lincoln Financial Media.

Entercom Communications Corp. (“Entercom” or the “Company”) (NYSE: ETM) announced today that it has closed its acquisition of Lincoln Financial Media Corporation (“LFM”) and will begin operating the LFM stations on Friday, July 17.

Entercom also announces that effective the same date it will commence operations of KSWD-FM Los Angeles under a time brokerage agreement (“TBA”) with Bonneville International Corporation (“Bonneville”). At the same time, Bonneville will commence operations of Entercom’s Denver stations KOSI-FM, KYGO-FM, KKFN-FM and KEPN-AM under a TBA with Entercom.

This follows the Company’s announcement on July 14 of the settlement of certain regulatory requirements necessary to close the LFM acquisition.

Closing of the Bonneville-Entercom station exchange is subject to FCC approval and other customary closing conditions. Entercom expects this transaction to close by the fourth quarter of this year.

Update 7/14: The Department of Justice has come down hard on Entercom’s acquisition of Lincoln Financial Media.

In addition to the planned divestiture of Lincoln’s Sports “104.3 The Fan” KKFN Longmont, the agency required Entercom to divest Lincoln Country 98.5 KYGO and Entercom AC 101.1 KOSI Denver. Entercom has agreed to transfer the licenses of those three stations and Sports “1600 The Zone” KEPN to Bonneville International Corporation in exchange for Classic Rock “100.3 The Sound” KSWD Los Angeles and $5 million to settle the issue.

“Denver is a vibrant, growing area where we see great opportunity. The stations we are acquiring are legacy brands and provide a powerful cluster in this market. They align well with our existing portfolio, allowing us to expand our regional footprint,” said Darrell Brown, President of Bonneville in a press statement. “Bonneville’s core mission is building and lifting the communities where we own broadcast properties. We have a commitment to provide quality sports, news and entertainment products and are thrilled to serve the Denver market.”

Entercom and Bonneville will begin operating their newly acquired stations via Time Brokerage Agreements within a few business days.

Entercom’s new Denver cluster will add Comedy “Comedy 103.1” K276FK, Rhythmic CHR “KS 107.5” KQKS and Oldies “Cruisin 950” KRWZ to Classic Rock “99.5 The Mountain” KQMT, Hot AC “Alice 105.9” KALC and Adult Standards “Studio 1430” KEZW.

Entercom Communications Corp. (Entercom) will be required to divest three radio stations in Denver, in order to proceed with its acquisition of Lincoln Financial Media Company (Lincoln). Without these divestitures, the transaction would have resulted in higher prices and a reduced quality of service to purchasers of English-language radio advertising in Denver.

“Entercom and Lincoln own some of the most highly rated radio stations in Denver, and advertisers targeting radio listeners in Denver have benefitted from competition between them,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “These divestures will preserve that competitive dynamic.”

The Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court of the District of Columbia to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. According to the complaint, the proposed merger would have eliminated the head-to-head competition that currently exists between Entercom’s and Lincoln’s radio stations for the business of local and national companies that advertise to English-language listeners on radio stations in Denver. Under the terms of the proposed settlement, Entercom has agreed to divest three stations in Denver to a department-approved buyer.

Entercom is incorporated in Pennsylvania and headquartered in Bala Cynwyd, Pennsylvania. Lincoln is an indirect, wholly owned subsidiary of Lincoln National Corp. Lincoln is organized under the laws of North Carolina, and headquartered in Atlanta. Both Entercom and Lincoln operate broadcast radio stations in various metropolitan areas throughout the United States.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to David Kully, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Fourth Floor, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Entercom Communications Corp. (“Entercom” or the “Company”) (NYSE: ETM) announced today:

An agreement with Bonneville International Corporation (“Bonneville”) to exchange four stations in Denver for KSWD-FM (The Sound) in Los Angeles

Time brokerage agreements (“TBA”) that will allow Bonneville and Entercom to operate the exchanged stations immediately upon the closing of the Lincoln Financial Media acquisition (“LFM”)

A settlement with the Antitrust Division of the U.S. Department of Justice (“DOJ”) related to the Company’s previously announced acquisition of LFM

An expectation that the closing of the LFM acquisition and commencement of the Bonneville/Entercom TBAs will take place within a few business days

Entercom has entered into an exchange agreement with Bonneville under which Entercom will exchange four stations in Denver for Classic Rock station The Sound in Los Angeles and $5 million in additional consideration. The stations Entercom will exchange with Bonneville are: KOSI-FM, KYGO-FM, KKFN-FM and KEPN-AM. Entercom owns KOSI-FM, while the remaining stations are being acquired through the acquisition of LFM.

Entercom and Bonneville will begin operating the exchanged stations under TBAs once the LFM transaction is completed. Closing of the Bonneville-Entercom exchange is subject to FCC approval and other customary closing conditions. Entercom expects the Bonneville transaction to close by the fourth quarter of this year.

Entercom also announced today that it has reached a settlement with the DOJ regarding the Company’s acquisition of LFM which was announced in December 2014. The DOJ initiated its Hart Scott Rodino review of the acquisition with a focus on the impact of the transaction on concentration in the Denver radio market. As a result of the exchange agreement with Bonneville, the DOJ has agreed to approve the Company’s acquisition of LFM. The Company has received FCC approval for the LFM acquisition and will close the transaction after DOJ terminates the Hart-Scott-Rodino waiting period.

Closing of the LFM acquisition and the commencement of the related Bonneville-Entercom time brokerage agreements are expected to take place within a few business days. Commenting on the transactions, Entercom President and Chief Executive Officer David J. Field stated: “We are delighted to be moving forward on our long-delayed acquisition of Lincoln Financial Media and adding their terrific brands, markets and people to our organization. We are also very excited to be acquiring The Sound, the fastest growing radio station in Los Angeles, through our station exchange with Bonneville. Adding Los Angeles, Miami, Atlanta, and San Diego to our footprint will meaningfully enhance our ability to serve our listeners, customers, employees and shareholders. This is a great day for Entercom that will enhance our competitive position and bolster our growth potential well into the future.”

The purchase price for the LFM acquisition is $105 million which will be paid with $77.5 million in cash and $27.5 million in newly issued Series A Perpetual Convertible Preferred Stock which will be
held by Lincoln Financial Group. Entercom will fund the cash portion of the purchase price using cash on hand and by drawing on a portion of its existing $50 million revolving credit facility.

Original Report 6/26: Entercom’s $105 million acquisition of Lincoln Financial Media has finally cleared its first regulatory hurdle.

The FCC has approved the deal to transfer all of Lincoln’s radio holdings to Entercom with Sports “104.3 The Fan” KKFN Longmont to the Pikes Peak Trust for divestiture.

The deal is still awaiting approval from the Department of Justice over worries that the combination of Entercom’s existing four station cluster and Lincoln’s remaining four stations in Denver would have too high of a concentration of revenue. With the FCC finally acting on the deal we expect resolution in some form from the DOJ to soon follow.

Profile photo of Lance Venta
Lance Venta is the Owner and Publisher of RadioInsight.com and a consultant for RadioBB Networks specializing in integration of radio and the internet. Lance has two decades of experience tracking the audio industry and its use of digital platforms.

16 Comments

  1. Profile photo of Dr. Akbar


    Much ado about nada. Heck of a price for good markets and solid stations!

  2. Profile photo of only1moore


    Well at least Entercom will retain their formats in the markets they are entering and expanding in. I don’t see them tampering with the outlets either, especially in Denver, which I expect will see a resolution settled with the DOJ soon in Entercom’s favor.

  3. Profile photo of Alex0490


    So when does the transition begin?

  4. Profile photo of only1moore


    Wow! So it looks like Bonneville will enter the Mile High City but at the same time leave Los Angeles. Can’t wait to see how this scenarios play out. I wouldn’t be surprised if CBS Radio is thrown into the mix to make this deal happen.

    • Profile photo of K.M. Richards


      CBS isn’t going to be “thrown into the mix”. The DOJ has approved this as it stands, no need for further negotiations.

  5. Profile photo of Dr. Akbar


    Bonneville is an enigma. Build a cluster; sell it;, then buy back in the market at a later date. Boss Angeles, Seattle, Phoenix, etc. come to mind. But at least they’re getting a cluster in Denver. And the Nurse and I think Entercom will move quickly to build a cluster in el Lay or do some more horse tradin’.

    • Profile photo of K.M. Richards


      If they can find something for sale, that is. Ten of the full-market signals are owned by either CBS or iHeart, five are owned by Spanish language broadcasters, leaving one each owned by Emmis, Cumulus, Salem and Mount Wilson.

      Anyone want to “speculate” if any of those will sell out? I’m skeptical any will.

    • Profile photo of Nathan Obral


      Don’t forget New York; Bonneville owned WWRL 1600 and FM 105.1 for decades. (As a matter of fact, Bonneville sold 105.1 at the same time that they purchased WTOP 1500, back in late 1997.)

  6. Profile photo of only1moore


    I wouldn’t be surprised if another broadcaster enters th picture. And all roads point to a certain Indiana-based company that owns a “Power”-ful station in Los Angeles where Hip-Hop Lives, a Saint Louis station whose mascot is nicknamed “Sweatmeat” and a New York City station that’s always in “Hot” water.

    • Profile photo of K.M. Richards


      Stop it. You are speculating on a matter that has been legally settled.

      NO ONE else is going to “enter the picture” at this point. Entercom was faced with a divestiture order by DOJ, they negotiated with Bonneville, and DOJ has accepted the agreement.

      No CBS, no Emmis, no anyone else.

      • Profile photo of Jack Bayes


        How exactly do you know that Entercom is keeping all these stations and not trading or selling? David Field sending you notes from his negotiations, is he?

        Apparently you’ve misunderstood what the point of message boards are: a place to discuss and yes, that includes speculation.

        To quote you, in other words, stop it.

        • Profile photo of K.M. Richards


          Go read David Fields’ statement at the Entercom website.

          http://www.entercom.com/important-announcement-from-david-field

          Doesn’t sound to me like he’s planning on doing anything but the Bonneville deal which DOJ has submitted to the court. Maybe you read his “notes” different;y, though.

          Speculation on a message board? Of course. Speculation after the press releases? Nope.

          To quote you: Apparently you’ve misunderstood.

  7. Profile photo of JeremyAndrews


    Bonneville only does certain formats. Adult Contemporary (KOSI’s format) is one of them. No idea how this will effect Crusin’ 980 as Entercom butchered their remaining Oldies stations (although they still for whatever reason leave KEZW Standards) Everything else should remain intact. I can’t expect Easy 98.1 in San Diego to remain Gold-based Soft AC though. They’ll likely tweak or flip it.

    • Profile photo of Dr. Akbar


      Bonneville does whatever produces results, and isn’t locked into any format(s). Entercom would be coo-coo for Cocoa Puffs if they messed around with KIFM.

  8. Profile photo of Nathan Obral


    The only question out there is if WQXI 790 becomes a simulcast of WSTR 94.1, or gets leased out to a religious or foreign-language broadcaster of some sort.

    Otherwise, this is a clean resolution… well, as clean as you could get with the DOJ down their necks. AND Entercom enters market #2 with a solid signal, albeit a standalone (but WSTR is effectively a standalone signal as well).

  9. Profile photo of only1moore


    Looking at the Denver strategy, having KALC paired up with KQKS seems to be a good move and a perfect way to flank KPTT on the Top 40 side and KIMN on the Hot AC spectrum.

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