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