In a memo to all Entercom staff members released today, CEO David Field touts the strength of the radio industry in the wake of iHeartMedia‘s current bankruptcy issues. He points to debt as the root cause of financial troubles with broadcasters, not the medium itself.
Field notes that “iHeart and Cumulus went bankrupt because years ago prior management teams made ill-advised decisions to place too much debt on their companies. Period, full stop. The bankruptcies have nothing to do with Radio. In fact, any company in any industry that takes on too much debt will suffer a similar fate.” Debt troubles are what notably sank Toys ‘R’ Us, which made news last week with its plans to close all its stores.
He continued, “Unfortunately, some reporters and observers have created an erroneous and misleading narrative that the bankruptcies are a result of challenges within the radio industry. They could not be more wrong. The fact is that Radio is a healthy business that generates large amounts of earnings and operating cash flow. And as you know, Radio has recently emerged as the #1 Reach medium in the United States touching over 270 million Americans weekly. It also generates superior ROI for customers and is the #1 medium in the country from 5am to 5pm daily. While other media have been highly disrupted by changing consumer habits and suffered severe audience erosion, Radio has more listeners than ever before. In fact, even in the latest cars with the newest technology, Americans listen to 13x more Radio than all streaming services combined (source: Edison Media Research – Share of Ear study).”
“If Radio has an issue, it isn’t the size of our audiences or the value of our product or the health of our business model. No, our issue is that we are highly undervalued and receive far less than our fair share of total ad spending. With Entercom’s newly enhanced scale, advocacy efforts, marketing capabilities and customer outreach, we intend to change that. And with iHeart and Cumulus emerging from bankruptcy, the industry will be even healthier going forward and that’s good news for all of us.”
