BREAKING: Entercom, Citadel Shares Collapsing
by Brian Maloney, July 10th, 2008 at 11:22am
*** UPDATES BELOW ***
Shares of WRKO - WEEI owner Entercom Communications and Citadel Communications (WPRO/ Providence, WABC/ New York, WLS/ Chicago, WBAP/ Dallas, KABC, KGO, KSFO, etc) are collapsing today after a key analyst cut their ratings to “sell” from a “hold”.
Very few stocks are rated “sell” by investment firms and it’s usually a sign of deep financial troubles within a particular company.
Though we’ve known for some time that Citadel was unlikely to survive, the new research indicates Entercom’s troubles are far more substantial than Wall Street previously believed.
The Citi Investment Research analyst cited rapidly declining ad revenues as a key factor behind the financial meltdown.
ETM is down $1.32 to a new record low of $5.40, while Citadel fell under a dollar to 91 cents earlier but has recovered slightly to $.99.
Entercom shares have fallen 88% over the past five years, while Citadel’s have fallen 91.49%.
Meanwhile, Clear Channel is holding steady at $35.38, down two cents.
UPDATE: Entercom shares (at 11:49) have fallen further to $5.22. There’s no bottom in sight.
The company has now lost almost $50 million in market capitalization today alone and all of the firm’s common shares could theoretically be purchased for just over $160m.
If CDL closes under a dollar, it could trigger a delisting warning from the New York Stock Exchange. Should the price remain that low, it could be removed from trading and shift to fly-by-night over-the-counter (OTC) trading.
UPDATE: at 12:38, CDL has dropped back down to 94 cents, ETM at $5.23.
Other radio stocks are also taking a hit: Cumulus (CMLS) is down 50 cents to $2.84, while Salem (SALM) is down two cents to $1.51.
At 14:29, ETM has continued to tank, now down $1.65 to $5.07. Just a few minutes ago, it touched $5.04.
UPDATE: AT 15:51, CDL HAS TAKEN A TURN FOR THE WORSE AND DROPPED TO A SHOCKING 85 CENTS, ETM AT $4.96.
Entry Filed under: Entercom
11 Comments
1. BigBlueNow | July 10th, 2008 at 12:14 pm
Why do you keep giving us stock info. I don’t know if you crawl out of your rock lately but all stocks are in the tubes thanks to your ‘heros’ in the GOP.
2. Chris | July 10th, 2008 at 12:34 pm
Is there a proviso in Howie’s contract that stipulates that Entercomm can pay him less if their ad revenues plummet? No? Pity that. I can hear Howie just laughing inside at the irony of Entercomm’s ’successful’ ploy to make him an indentured servant. How’s that all working out, guys?
3. neal5x5 | July 10th, 2008 at 1:41 pm
It’s ironic that the Clear Channel, which recently signed the huge Rush Limbaugh contract, hasn’t moved much compared to the others. While Entercom and Citadel are the ones tanking, Cumulus and Salem are being dragged down as well. Of course, there are other variables, but if the Clear Channel/Limbaugh deal is as big a stinker as many say, why isn’t Clear Channel dropping like a rock as well?
4. Fair and Balanced | July 10th, 2008 at 3:57 pm
The Clear Channel price is holding up better because of the sale that is set to close at the end of the month, and everything is relative. It is not that long ago that Clear Channel was trading around 90 (Entercom was at 50, CBS was at 60…but I digress). This whole industry is in the crapper from a speculative standpoint. I’m not an expert, but it seems to me that while many of these companies still return healthy margins (and they do), they are not as high as they used to be and investors are finding better places for their money, fostering the “woe is media” perception. I worked in TV a couple of years ago and we were doing margins over 50 as recently as 2005. How bad can it be? 40’s? 35? Even at that level, that is not a bad return. I think the industry would benefit from more private ownership like Sunbeam in TV or Greater Media in radio. It would allow the companies to be more forward thinking. Until that becomes more prevalent or the ad market gets better (2010? 2012? never?), these guys are in for more of the same.
To answer Chris, I think Entercom would be far worse off without Howie. His salary may seem bloated juxtaposed with the stock decline, but we are still talking about a radio station that bills about $8,000,000/year exclusive of Red Sox. You’d have to figure that Howie is responsible for 35-40% of that minimally, and if he were to leave, how much of that $3M would they be able to keep? Maybe half? Through that lens the Howie deal continues to make sense.
5. BigBish | July 10th, 2008 at 4:04 pm
From all the verbal masturbation that WRKO was spewing, one would think the ad revenues for the Felons show alone wouldl prop up this dog. Can’t sell ads to a show no one’s listening to
6. Mike | July 10th, 2008 at 4:11 pm
How’s that 9% Congressional approval rating doing for ya, BigBlueNow?
7. Love Howie | July 10th, 2008 at 4:33 pm
He is mocking this collapse on the air. It is great stuff, wants it delisted!
8. bobo | July 10th, 2008 at 4:48 pm
Howie is having a great time with this
and laughing his ass off this afternoon.
9. Laurence Glavin | July 10th, 2008 at 5:04 pm
This “Congressional Approval” figure is a bit misleading. Most INDIVIDUAL congressmen and women rate far higher in their home districts, and the Democratic members running for re-election should do well.
10. Jay-B | July 10th, 2008 at 10:45 pm
Brian - keep up with the stock reports. I just put ETM and CCU on my Mac dashboard stocks widget - plenty of entertainment there.
The Clear Channel/Limbaugh deal was a wise move - Air America was not. WJIB has better revenues in the Boston area, I suspect, than Air America…
11. stve1970 | July 16th, 2008 at 6:26 am
President Bush’s approval ratings must be misleading too. They are much higher in Texas then they are nation-wide (all 57 states according to obama). You see Laurence Glavin, anyone can edit information to shape it to fit their agenda. Fact is, the federal congress (not state) effects all of the nation not just their INDIVIDUAL districts. ex: Fat-boy’s bone-headed ideas have hurt the US from coast-to coast.