Examining The CBS/Entercom Market Overlaps
In one fell swoop Entercom reshaped the radio industry with its merger with CBS Radio.
While CBS stockholders will own the 72% of the newly combined Entercom’s shares, it is the smaller company that is essentially acquiring its much larger rival as Entercom’s senior management will remain in place and control the Board of Directors. The new Entercom will hold 244 stations across 47 markets including all of the top 25 with the exception of Puerto Rico and Tampa.
CBS and Entercom have very little overlap considering the size of the two companies. Of the 47 markets, the two only both operate in eight and potentially have to divest stations in six of them. On the call with investors this morning, CEO David Field stated that he expects at at most fifteen stations to need to be divested and that “swaps are the more likely outcome” as opposed to selling off the stations.
Let’s look at the eight markets where both companies operate:
Atlanta & Miami
Both company assets should be able to be consolidated in both of these markets. CBS owns 2 FMs and 1 AM in Atlanta, while Entercom has 1 FM. In Miami, CBS’ 1 AM and 2 FMs should fit within the ownership cap with 1 AM and 3FMs now that CBS’ two television stations will not be a consideration. The only potential content conflict will be that both groups operate Sports Talk stations in Miami: CBS with 560 WQAM and Entercom with “790 The Ticket” WAXY.
This will be one of the most interesting market to watch. CBS brings 1 AM and 4 FMs, while Entercom has 2 AMs and 3 FMs. However both groups have strong FM Sports Talkers with Entercom’s 93.7 WEEI-FM and CBS’ “98.5 The Sports Hub” WBZ-FM. Unless Entercom finds a way to have Rock 107.3 WAAF count as a Worcester market station, they will need to divest two FMs in Boston. The DOJ may even force an additional spin-off if it sees a high revenue concentration.
The simple spin-off here will be Entercom Classic Rock “100.3 The Sound” KSWD as CBS is maxed out on FMs and 1 AM. A swap built around KSWD to Cumulus for CHR 104.1 KRBE Houston would be beneficial to both companies and allow Cumulus to remove competition for 95.5 KLOS.
One of two markets where both groups have full clusters. CBS brings 1 AM and 4 FMs, while Entercom currently owns 1 AM and 5 FMs pending the resolution of the license challenge against CHR “107.9 The End” KDND. In all likelihood one of the clusters will be spun-off as is leaving the status quo.
The combined groups will own six FMs, but the easy divestiture will be 92.1 KSOQ Escondido which rebroadcasts Country 97.3 KSON to the northern portions of the market. The format overlap between AC 96.5 KYXY and “Sunny 98.1” KXSN will likely be resolved in some form as well.
San Francisco/San Jose
The other market where both groups are nearly maxed out, Entercom will need to divest at least four FMs as Entercom will have 9 total. Between the two companies there isn’t much in the way of format overlap to resolve, but a new entrant to the market could lead to a shake-up.
With CBS bringing in 1 AM and 3 FMs and Entercom possessing 4 FMs, at least two will need to be divested. Depending on the buyer of the spun-off stations the only format overlap consists of Country where CBS brings 94.1 KMPS to Entercom’s “100.7 The Wolf” KKWF.
Two stations in Boston, one in Los Angeles, one in San Diego, five in Sacramento, four in San Francisco, and two in Seattle brings us to the fifteen station number that Field mentioned this morning and points to spinning off CBS’ Sacramento cluster as-is. The reverberations of how those stations are spun will dictate changes throughout the remainder of 2017.