Philly Media Giant Entercom Is Doubling Down on the Future of Radio
Does anyone listen to the radio anymore? America’s second largest radio company is betting a whole lot of money that the answer is yes.
Like any smart CEO, David Field knows that you lead with the good news and try to hum a happy tune over the bad, especially when you’re talking to Wall Street. So when he got on the speakerphone on August 7, 2019, for his company’s second-quarter earnings call, he held back the financial results for a minute and opened with some promising news: Entercom, the quiet media giant based in Philadelphia, the second largest radio broadcaster in America, had just acquired two companies that produce podcasts.
Podcasts are really growing. The traditional radio business that built Entercom really isn’t. So anything that suggests being around to participate in the future of media is encouraging.
“We are poised to become one of the three largest podcast enterprises in the United States,” said Field, Entercom’s CEO. He also said Entercom had launched the Radio.com digital sports network, letting listeners, via a mobile app or website, tune into the dozens of sports radio stations Entercom owns around the country, including WIP in Philly. The network could give advertisers an unrivaled way to reach men who like to hear other men talk about sports.
Then Field unpacked the financials to provide the latest scorecard on Entercom’s progress in making a much bigger acquisition work — the largest and most existential deal in its history.
In 2017, Field bet the company, which his father started in Center City in 1968 and moved to Bala Cynwyd in the early ’70s, on an ambitious takeover of the radio stations CBS was divesting. The CBS Radio deal nearly doubled the number of stations Entercom owned, from 125 to 235. By revenue, CBS Radio was about three times the size of Entercom. The transaction took Entercom, for the first time, into big markets like New York, Chicago and Philadelphia. (It now owns KYW, WIP, WOGL, WPHT, 96.5 TDY, and, through a secondary transaction, B101). Entercom became America’s largest owner of all-news and sports-talk stations.
The company took a gigantic bite of debt in doing the deal, but the media business is eat or be eaten. Field saw the CBS stations as complementary to those Entercom already owned, creating a network with enough reach to compete with anybody for national advertisers. He suggested that the CBS stations were undermanaged. There was upside to exploit, as well as cost-saving opportunity in the combination of the two companies. Plus: CBS had Radio.com, the web address and mobile app, which, if tuned up properly, could help Entercom gain from the future of digital audio flowing through phones, AirPods, vehicles, and smart speakers like Alexa that everyone keeps buying.
Even traditional broadcast radio still had legs, Field believed, because it was undervalued. The public spends about 16 percent of its daily media time with radio, but radio gets only about seven percent of media ad spending dollars, he liked to point out. If ad buyers could be persuaded to appreciate the value of radio commercials even a little more, Entercom could grab a bigger slice of a $200 billion pie.
Field promised long-term but not instant success. He needed to cut costs and grow at the same time. He hoped investors, most of them former CBS shareholders who swapped for Entercom shares, would trust the process.
In general, they haven’t. Entercom’s share price fell 25 percent in 2017, landing it among the worst-performing tech stocks of the year — a year in which the Dow Jones index was up 25 percent. Entercom had opened at $16.55 on the day the Wall Street Journal reported the agreement to buy CBS Radio, but the evening before, when Field was giving his August report, the stock was slumming at $5.25. Wall Street wasn’t buying Entercom’s future.
On the speakerphone, Field announced positive second-quarter numbers: Entercom’s revenues were up 2.3 percent. “Audio is in the midst of an emerging renaissance, and we are well positioned to participate in that opportunity,” he said. “Frankly, it is remarkable that in the light of all this, our stock continues to trade where it does … we see our stock valuation as a complete disconnect with where we see the business.”
Alas, stock analysts expected Entercom’s quarterly numbers to be higher. Following the call, Entercom stock dropped 36 percent more, to $3.36, a new low. Observers cringed. Big institutional investors don’t like stocks below $5.
Entercom had already been through a challenging couple of years. As in any corporate merger, the integration of the CBS stations and employees had its pain. Policies were changed. WIP’s signature event, raunchy and ribald Wing Bowl, was killed. There were staff cuts in cities where Entercom and CBS overlapped.
“Entercom was the fish that swallowed the whale,” one former company manager told me. “They’re a medium-market operator, and they thought that they could keep doing things the same way. It became immediately apparent to everybody inside that they were not equipped for that.” (Author’s note: I began work on this story in 2017. Entercom initially participated, then decided to hold off, until now. The delay gave me an inordinate amount of time to speak with former employees now outside of CBS/Entercom. Many don’t want to be identified, so I quote selected comments without names attached, understanding that bitter honesty can be flavored by sour grapes and allowing Entercom a chance to respond.)
Many managers who left the company repeated the sentiment that Entercom brought an assertive “top-down” management style that undermined authority at local stations over decisions like talent contracts, sports play-by-play licenses, even on-air promotions.
“They ran Entercom like a much smaller company, like a family business,” one person told me. “You can do that when you’re in markets like Buffalo and Rochester, but not in New York, Chicago. I think they didn’t anticipate what they didn’t know.”
Robert Feder, a longtime reporter on Chicago media who has an industry blog, put it bluntly: “I’d be hard-pressed to think of a single way in which the Chicago group is better off under Entercom than it was under CBS Radio. Many, many jobs have been cut, others have been combined, and much of the group’s local programming and operational autonomy has been lost. A day doesn’t go by that I don’t hear complaints from employees about corporate meddling and mindless cost-cutting. In short, it’s been pretty much a disaster from day one.”
To add injury to insult, Entercom was hit by a cyberattack in September, which it acknowledged cost hundreds of thousands of dollars in lost revenue.
But David Field isn’t deterred. He has a plan, a process. When I speak to him in November, inside Entercom’s new Center City headquarters, he dismisses those top-down, small-town gripes.
“I don’t agree with that,” he says. “I mean, we have been in San Francisco. We’ve been in Boston, we’ve been in Los Angeles. Everybody’s entitled to their opinion. But all of our program decisions are made locally. Whether it’s selecting music, coaching their personalities, that’s all done locally. Sales decisions are all done locally. Which, of course, doesn’t mean that there aren’t sort of strategic initiatives from corporate. But I’d say it’s a very collaborative organization, very entrepreneurial at the local level.”
Traditional AM/FM radio is at a crossroads. America’s two other largest radio companies, IHeartMedia and Cumulus Media, have gone through recent bankruptcies, suffocated by debt. Most radio listeners now listen only in the car, where there’s growing competition for ear time from satellite radio and Bluetooth-connected phones. Young people are discovering music on Spotify and Pandora, YouTube, Twitter, TikTok and Tinder. Research from MusicWatch found that among 13-to-24-year-olds, music listening hours are four times higher on streaming platforms than on AM/FM radio.
But David Field thinks there’s a way to save radio. Humanity is consuming more audio content than ever. We’re evolving into a species with little speakers jammed in our ears. Imagine a company poised to deliver all that sound. Sure, Spotify, Pandora, blah, blah. But algorithms can’t replace the familiar voice who finds you in your car on a bad night and makes you laugh and cues up “Livin’ on a Prayer” to drive you home.
When I show Field a chart depicting radio industry revenues as flat for the past five years, he talks about smart speakers and podcasting and voice-activated searches. “We’re focused forward.”
Even the pay services that steal attention — Netflix, Amazon Prime, satellite radio — bring something of a benefit, because advertisers can’t spend their budgets on services that don’t run ads. “As others become less advertising-supported, doesn’t that create opportunity for us?” Field asks.
When I show Field a chart depicting radio industry revenues as flat for the past five years, he talks about smart speakers and podcasting and voice-activated searches. “I think that is the rearview mirror,” he says about the chart. “We’re focused forward.”
You had your time, you had the power
You’ve yet to have your finest hour …
Radio, what’s new?
Radio, someone still loves you
— Queen (1984)
Entercom started in 1968, but one thing David Field insistently doesn’t want to talk much about is its past. In a city with such a rich media history, it seems like a lost opportunity to join the folklore. Philadelphia-based Atwater Kent and Philco were among America’s biggest radio manufacturers. The department stores along Market Street built early radio stations to attract shoppers. Gimbels started WIP in 1922. WCAU was a CBS Radio flagship station in 1927 and helped finance television’s early years. Hy Lit and Jerry Blavat pioneered rock-and-roll radio in Philly. MMR and YSP and Q102 led the FM explosion. Terry Gross took Fresh Air national from WHYY. And now one of the premier radio broadcasters in America is right on Market Street.
I understand David Field’s reluctance to relive the thrilling days of yesteryear. Commercial radio turns 100 years old in 2020, but so-called “legacy media” operators are desperate to cut ties with the golden days and make futuristic versions of themselves seem plausible. The radio format with the greatest loss of stations in recent years is “oldies.” If you’re trying to appeal to the next generation, it’s a good idea not to put oldness right there in your product name, boomer.
I also got the sense that Field, who’s 57, isn’t interested in being depicted as the privileged heir to a business that his dad, Joseph Field, started. Maybe he saw my Philadelphia magazine article, many years ago, about Comcast CEO Brian Roberts and his company-founding father Ralph Roberts, where I kind of did exactly that.
The parallels between Comcast and Entercom are too close to ignore. Both are stories of Philadelphia-area entrepreneurs who in the 1960s dabbled in an emerging communications technology by buying a few regional licenses. Each founder named his new company by clamping together two obvious words (Comcast = “communications” + “broadcasting”; Entercom = “entertainment” + “communications.”). Then the medium exploded, and the enterprises spread across the land. And the Wharton-groomed sons joined the companies to eventually take the helm.
For Joe Field, a former tax lawyer and trained violinist, the emerging technology was FM radio. He was representing a client in 1968 in a radio acquisition when, as he told the Wall Street Journal in 1999, he noticed a “vast disparity” in the valuations of AM and FM stations. FM was cheap. He bought a few small stations. By 1979, FM had more listeners than AM.
The company grew slowly, making only three acquisitions in the 1980s. “Joe Field has never been one to throw money around or flirt with large debts,” Billboard wrote in 1995. The Telecommunications Act of 1996 loosened media ownership rules and set off an acquisition frenzy, even by Entercom. Like Comcast, Entercom expanded. Comcast had some advantages along the way — people were paying for TV, and Comcast had a legal monopoly in many markets. Radio companies never enjoyed those luxuries.
Joseph and Marie Field became local philanthropists, but Entercom kept quiet out on City Avenue. “They’re generally a bit shy,” says media analyst Gordon Borrell. “It’s not really shy. It’s: Why do we need to tell you?”
David Field doesn’t share much personal information. He was a Philly kid. “Concerts at the Spectrum,” he offers. “I listened to British progressive rock. I was a Genesis, Yes, Pink Floyd kind of guy. And a zillion Phillies, Flyers, Sixers and Eagles games.” (Field displayed some local sports cred when he went on the air at WIP in late 2017, shortly after Entercom took over the station from CBS. The Eagles were having a this-could-be-it season, on the way to the Super Bowl. Field told WIP host Angelo Cataldi that his worst Philly sports memory was “[Ronde] Barber’s pick six, at the last game at the Vet [in 2003], on our way to the Super Bowl, and stolen right out of our — defeat right out of the jaws of victory.”)
Field went to Amherst College, came back and got a Wharton MBA in 1988, and headed to Wall Street before joining Entercom. “I was an investment banker at Goldman Sachs, and loving it, and had a great opportunity if I chose to stay,” he says. “But the opportunity to come back to Philadelphia and work with my dad to build Entercom — at the time, the company had eight or nine radio stations — was really appealing. I love the business. I love the power of how a really good personality on the air can connect with audiences.”
He became president in 1998, took the company public in 1999, ascended to CEO in 2002, and maintained a low profile around town the whole time. He never really considered Entercom a Philadelphia story, until now.
Entercom’s glassy new headquarters opened on Market Street in Center City last summer, right on the Schuylkill River. It’s a high-tech spread, a connecting dot for Philadelphia innovation between Comcast’s empire a few blocks east and University City’s biotechs.
Comcast has its skyline-defining skyscrapers. Entercom is on the fourth floor of the new Aramark building, still kind of anonymous but at least downtown. Comcast has a gigantic white sphere you can go inside to watch a 360-degree movie about the power of ideas, created by Steven Spielberg. Entercom has this trapezoid-shaped video screen where I watch Bono and the Edge from U2 performing at the Mix 104.1 Beach House. On the day of my visit, there are occasional loudly vibrating power tools. Studios are still being prepped for Entercom’s six Philadelphia radio stations to move into.
Field says they decided to move from Bala to Philadelphia “from the day we announced the merger.” At the time, the company was in six different locations. Leaving them behind is another way to put the past in the rearview mirror. The new building represents the future and all the changes Entercom is making to get there.
“Now that we have some of the most important media brands in the city, and we’re competing on a national level, we think you need to be in the heart of a great American city. You can’t be stuck in some suburban mall,” Field says.
I get a tour of the facilities from Sarah Harris, vice president of social impact, and David Yadgaroff, senior VP and market manager for the Philly stations. The elevator corridor is lined with flashing squares arranged as a digitized sound wave of the word “Entercom.” Inside, near the trapezoid video screen, is a wide-open space called the Hub, with a stage. It’s a lounge and dining area that holds 300 people for private performances, company meetings or outside events. Entercom is adding around 80 employees to reach 300 in Philly.
We walk past studios with heavy soundproof doors, podcast-recording rooms, the under-construction KYW newsroom. Harris tells me about Entercom’s five pillars of community service, local and national initiatives to help people.
I grill Yadgaroff on key changes Entercom has made at the Philly stations. “It felt like when the Eagles won the Super Bowl, it was the natural end of Wing Bowl,” he explains. “It was this giant pep rally of Philadelphia sports fans frustrated that their team couldn’t get to the big game. When the Eagles won, we thought, let’s just sunset the event. It felt like the right thing to do.”
Two of Entercom’s early moves at WIP were renewing the contracts of the Eagles and Angelo Cataldi. Both bring in huge ratings.
Two of Entercom’s early moves at WIP were renewing the contracts of the Eagles and Cataldi. Both bring in huge ratings. Nationally, sports is a major chunk of the future for Entercom. Its stations carry games for 44 pro teams and engage millions of listeners, men who seem to have a lot of time to debate wide receivers. Legalized sports betting and newly generic male-helper pills are seeking them as customers.
What the Eagles are for WIP, snow is for KYW. When a wispy flurry came down in early November, I reflexively tuned to 1060, and its airwaves seemed to buzz with extra energy. “Clear skies tonight, 22 for the low. That would break the old record low of 24 set in 1996,” meteorologist Matt Peterson proclaimed. News-radio stations are under siege by everything from electronic billboards that inform motorists to navigation apps that make traffic reports obsolete. What Waze user needs to wait for “Traffic on the Twos”?
“We say Waze is the play-by-play and KYW is the color commentary,” Yadgaroff says. “You still want to hear there’s a tree down from last night’s storm. I think there’s a comfort zone and a cadence that comes with it.”
At WBEB, Entercom resurrected the well-known brand name B101, scrapping the “More FM” experiment, which seems like a no-brainer. The station recently axed its live nighttime DJ in favor of pre-recorded “station imaging.” That was just business, says Yadgaroff: “If I’m creating digital jobs and content-creator jobs, is my best use of my salary resources having a live night host when there aren’t a ton of people listening to B101 at night?”
Entercom stations have been making big and small decisions like this all over the country, affecting real people’s jobs and real chickens’ wings. By the last quarter of 2018, the company reported that same-station revenue was up for the first time since the merger. But the stock kept sliding.
Yadgaroff, a holdover from CBS, says Entercom did new market research as soon as it took over. There was a survey talking to 500 women, 18 to 54 years old, about their listening habits and perceptions of radio stations: “That’s more women in that demographic than Nielsen talks to. That was the first time I had seen data like that about our stations.”
When we pass a roomful of servers and communications gear, Yadgaroff explains how radio is much more now than a DJ with a microphone. “Everybody’s a multi-platform content provider,” he says. “They’re live on the radio. They record podcasts. They’re doing video for Twitter and Facebook. If you think of Eagles game day for WIP, not only do we have the traditional pregame show at the Head House at Lincoln Financial Field, but outside the Wells Fargo Center, we do a tailgate zone with a DJ or a band. Joe DeCamara or Jon Ritchie will do a Facebook Live. We’re taking advantage of technology to deliver content via multiple channels.”
Radio.com is the umbrella for all of Entercom’s digital aspirations. I monkeyed with the mobile app during a 50-minute train ride in early November, to taste the future. I heard Angelo Cataldi interview sportswriter Marcus Hayes on WIP about the DeSean Jackson injury bungle; a report about local elections on KYW; the start of a Spike Eskin podcast called Love Songs; some morning jocks blabbing about embarrassing surgeries on Los Angeles’s KROQ; Hall and Oates on WOGL; Chicago sports talkers groaning over the Bulls’ loss to the Lakers on 670 The Score; a podcast called Bad Batch about tainted stem cells; a New Orleans traffic report on Bayou 95.7; and a zombie version of defunct station WYSP that still plays classic rock for streaming listeners only.
In a sense, Radio.com is an effort to become a sort of Spotify for live radio, letting you graze the nation and personalize your listening. It has local stations from Entercom and other broadcasters — more than 500 in all. The app shows what’s playing on each station, so if you’re browsing at the right moment, you can jump into that Tears for Fears track playing in Cleveland before it ends.
It has nifty pause and rewind functions, but they don’t work for the music. If you miss KYW’s traffic or weather report, there’s a way to backtrack until you find the last one. I suggest to J.D. Crowley, Entercom’s chief digital officer, that it would be convenient if there were KYW “weather” and “traffic” buttons right on the phone screen or car dashboard. “You can see exactly where we’re going,” he says.
Thanks to its many commercials, Radio.com is a free alternative to all those groovy niche channels on SiriusXM satellite radio, like Outlaw Country and Tom Petty Radio. One thing hasn’t changed: Radio ads remain aggressively annoying and stacked in breaks that — especially in a digital context — feel endless.
“That’s still a fundamental problem for terrestrial radio,” says Larry Miller, director of the Music Business program at New York University’s Steinhardt school. “How would you like to be the advertiser in minute six of a seven-minute stop-set?”
Entercom’s ad strategy will be interesting as it works to monetize its podcast lineup. Radio.com offers countless podcasts featuring on-air personalities, plus shows produced by newly acquired units Cadence13 and Pineapple Street Media as well as outside makers. Its own titles include Campaign HQ with David Plouffe and Catch and Kill, a new one from Ronan Farrow. Podcasts are distributed everywhere for free, so the benefit to owning them is selling embedded commercials. But podcasts are far less dense with ads than traditional radio, and they have evolved with a much softer-sell approach than the typical annoying radio ad.
Eventually 5G, or some bigger G, may kill FM and its limited range as a way to send sound through the sky. The technology era that birthed Entercom will end. The company’s broadcast licenses will lose value. Then comes the question: Will terrestrial radio, like human beings fleeing Earth for our next planet, successfully make the leap to thrive in the futuristic new habitat? Or will all of radio be left behind, a fading backwater with an aging listener base, like AM is already?
Field is confident Entercom is well-positioned for whatever happens. For all the changes that have happened in how we consume audio, he points out, 90 percent of radio listening still happens over broadcast. And, he says, even if the pace of change accelerates, Entercom — with its traditional stations, digital app, and growing podcast business — will be able to compete: “No matter how listeners want to access our content, we will continue to offer an unmatched portfolio of both live and on-demand audio, however, wherever and whenever listeners want it.”
On November 8th, Field got on the speakerphone again to provide Wall Street analysts with Entercom’s third-quarter financial results. It was his first time performing this seasonal rite from the company’s shiny new headquarters. He started with the financials: Revenue was up two percent, and EBITDA (one way to describe profit) was up 13 percent. There was other news: Entercom had cut its dividend and planned to use the savings to help pay down debt. The company gained listener share in New York, Los Angeles, Philadelphia, Dallas, Atlanta, Houston and D.C., “which, by the way, are all legacy CBS radio markets,” Field said. Entercom feels good about 2020 — as do most media outlets, because political ad spending will be bonkers.
As Field spoke, the stock started rising. It floated above $4, then crept higher. Momentarily, the stock touched $5, for the first time in months. Was it a temporary blip, courtesy of lowered expectations, or the signal of a new direction? Stay tuned.
Published as “Turn On, Tune In, Drop Out?” in the January 2020 issue of Philadelphia magazine.