The Corporate Restructuring Report-Entercom Communications Corp (ETM) UPDATE
On November 17th, 2017, CBS corporation (NYSE:CBS) completed the spin-off of its radio business, CBS Radio Inc. and its subsequent merger with Entercom Communications Corp (NYSE:ETM). In our note dated November 16th, 2017, we had a positive view on ETM and continue to remain bullish on its prospects.
ETM, post-merger, is the 2nd largest radio group in the US, operating in 22 of the top 25 markets. We expect annual revenue growth of 2-3% over the next 3 years, driven by: (1) scale benefits, growth initiatives, industry enhancement and CBS Radio turnaround; (2) continued economic growth bolstered by recovery from Irma, Harvey, etc.; and (3) strong political advertising revenues. he combined company anticipates $100 million in net cost synergies in the next 18 months, which should support margins.
Given ETM's successful record of turning around businesses, we expect significant improvement in performance of CBS radio over the first two years post-closing of the transaction. In our view, ETM is undervalued.
Entercom Communications is a holding company. Through its subsidiaries, Co, is a media and entertainment company primarily engaged in the sale of advertising time to local, regional and national advertisers and national network advertisers who purchase commercials in varying lengths. The company focuses on station-related digital product suites, which allow for audience interaction and participation, and integrated digital advertising solutions. The company's stations are classified by their format, such as news, sports, talk, classic rock, urban, adult contemporary, alternative and country, among others.
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Producing quality, in-depth, and unbiased research to help our client's shape their investment processes has been the cornerstone of our company's success. WhiteSand Research employs a value-oriented, event-driven investment strategy that seeks to capitalize on the most inefficient and attractive investment opportunities.
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