Examining The Entercom Lincoln Financial Deal
This morning Entercom shocked the industry with their acquisition of Lincoln Financial Media for $105 million. Entercom acquired fifteen stations and a translator for less money than Steel City Media paid for Wilks four station in Kansas City earlier this year, a smaller market than any of the Lincoln stations. To show how much station prices have dropped, the price is nearly equal to the amount Greater Media paid for Lincoln’s three stations in Charlotte, NC in 2008.
This deal is all about establishing Entercom’s dominance in Denver. Entercom has yet to reveal which station will be divested to satisfy the ownership cap limits. Using the November 2014 Nielsen Audio PPM Ratings, Entercom’s four stations combined for a 14.1 share and Lincoln’s six combined for a 15.7 share. Even if you remove the top station from either group, the combined cluster will have a higher overall share than iHeartMedia’s 24.2% of the Denver audience.
The combined group will be maxed out with 3 AM’s, 5 FM’s, and a translator. “Comedy 103.1” K276FK is the second most successful translator in a PPM market with a 2.4 share. Only Entercom’s “96.3 R&B” in Austin has higher ratings, albeit in a smaller market.
We can’t speculate on format changes until we know what station will be divested and whether the current brand will be included. Neither company has any format overlap between their existing clusters.
Entercom gains a successful three station cluster in America’s Finest City. Country 97.3 KSON/92.1 KSOQ, Soft AC “Easy 98.1“, and Alternative “FM 94.9” KBZT have a 12.6 share of the local audience, which is second to iHeartMedia’s 24.4 share over seven stations. That gives Entercom potentially room to combine with another competitor as we will get to below.
Another market with room to grow. Entercom’s new Miami cluster of AC “101.5 Lite-FM” WLYF, Classic Hits “Magic 102.7” WMXJ, and Sports “104.3 The Ticket” WAXY-FM/790 WAXY holds a 13.3 share of the market, however with five other major players in the market it trails Cox’ 19.9 and iHeart’s 18.4 share.
And the market that sticks out like a sore thumb. Entercom gains just a pair of stations in Atlanta, Hot AC “Star 94” WSTR and Sports “ESPN 790” WQXI. So far this year Lincoln eliminated all local programming on WQXI and transferred the FM broadcasts for Atlanta Falcons football away from WSTR to CBS’ “92.9 The Game” WZGC.
What’s Next For Entercom?
As we stated when CBS and Beasley made their big swap in October, a swap of the newly acquired Entercom properties and some of the stations CBS is seeking to divest makes too much sense. In Atlanta, Miami, and San Diego either company can add the other’s stations with only 92.1 KSOQ (which simulcasts 97.3 KSON in the northern portions of San Diego County) being needed to be divested.
Would a swap of Lincoln’s Atlanta and Miami stations to CBS for San Diego and a couple of their other markets work? The last time CBS divested stations in the mid-2000’s, Entercom acquired Austin, Cincinnati, Memphis, and Rochester for $262 million.
What Does This Say About Other Groups
One thing that sticks out about this deal was how quietly it came together. If this deal had played out in the trades everyone would be wondering why players like Cumulus or Alpha Media were not involved. Did David Field simply strike a deal being in the right place at the right time? Or was it that he had the $50 million in capital available to finance the acquisition at a time when many other groups are in debt and leveraged beyond their ability to spend money on any purchase? If the latter, what does it say about the sale market entering 2015?