A Primer on Entercom Communications Corporation

Entercom Communications Corporation is a publicly traded (NYSE:ENT) radio only media conglomerate that operates out of Bala Cynwyd, Pennsylvania. It is the fourth largest radio station operator in the United States, operating 106 stations in 25 markets. In 2006, Entercom showed revenue earnings of more than $400 million with more than 85 percent of its revenues coming from its top markets. The top markets, in order of the revenue they generate, are Seattle, Boston, Kansas City, Sacramento, Portland (OR), New Orleans, and Denver (http://www.entercom.com/docs/Entercom%20Annual%20Report.pdf). The company’s radio stations program the standard radio formats, such as music, news and talk.

Entertainment Communications Inc. was founded in 1968 by Joseph M. Field, who continues to hold the majority of shares in the company. Working as a lawyer prior to starting the company, Field believed that f.m. radio would soon be the dominate leader of the medium. He gave up his law practice to start three radio stations in Philadelphia and its surrounding suburbs. In 1973 he purchased KMTT in Seattle and formally changed the company name to Entercom. The Federal Communications Commission had a limit on the amount of stations an owner could own in a market, and Field slowly bought single stations in various other markets during the 1980s. It wasn’t until the Telecommunications Act of 1996 that Field could finally own more than 8 stations in a given market. In 1999 Entercom went public, vastly reducing the amount of debt the company owed. In July 1999, Entercom acquired Sinclair Broadcasting Group. The deal included 46 radio stations in nine markets, the addition of which more than doubled the number of stations under Entercom’s control and more than doubled its number of markets (http://www.fundinguniverse.com/).

The intent of Entercom from its inception was to make money, and when the company went public, a distinct plan was put in place to allow the company to continue to grow. Entercom believes that by “owning multiple stations in a market, [they] are also able to operate [their] stations with more highly skilled local management teams and realize operating efficiencies,” (http://www.entercom.com/docs/Entercom%20Annual%20Report.pdf – p.6). What this means is that the money making goals of the company revolve around controlling the advertising potential to multiple demographics in each market. It is these money making goals in which this paper is focused.

Each cluster Entercom controls has stations whose format caters to the majority of the markets demographic. For example, a cluster will often contain a Rock station that appeals to men 25 years old and younger, a top 40 station that appeals to women 25 years old and younger, a contemporary station which appeals to women 25 to 45 years old, an oldies station which appeals to males 25 to 45 years old and a country station which often appeals to a large portion of a market demographic. The intent is to control the advertising to all of those demographic groups. A business looking to sell vacuum cleaners to stay-at-home moms would have an advertising option with any Entercom cluster. So would the endless amounts of businesses looking to advertise their product. Entercom essentially places every person in a given market in to a station demographic. This is a major fact of business in all big media chains. It is in this practice that Entercom faces a huge problem.

Because all clusters are programmed to, “…capture greater share of advertising revenue” (http://www.entercom.com/docs/Entercom%20Annual%20Report.pdf – p.6), all formats lose any sort of local flavor. Stations with a long history in the community now program the same content as every market in the country. This is to reduce the amount of money being spent and to allow that station to specifically target a market demographic. 97.1 KISN in Portland, Oregon had been a staple station in the market. Its programming of oldies music had long been tied to the interests of the market. In January 2007, Entercom decided to move the oldies format to an a.m. frequency station (replacing their sports station) and fired the long standing DJs. Instead of using live DJs on the a.m. station, they implemented an automation system which replaced them. Entercom then placed the new Charlie format on the 97.1 frequency. This placed an automation system in charge of playing both stations content.

The switch is an important example of the cost cutting measures that big media companies like Entercom practice. 97.1 was given the Charlie format, which was created due to the market’s desire to have a low commercial alternative. People generally want to hear music instead of commercials, and Charlie formats offer a radio MP3 player type format with far fewer commercials. Although Entercom receives less money from formats like Charlie, they are able to make a profit from them, because they do away with live talent. The majority of a stations costs come from paying people their salaries, and Charlie formats use an automation system instead of a live body to play its content. This seems to satisfy the needs of both the radio consumer and the company.

Of course, the consumer ultimately does lose out in the end, because automation systems are incapable of providing local content. The automated programming that one hears on a Charlie in New York City is the same as the Charlie (Ted) station in Fairbanks, Alaska. Local events and talent are vastly reduced and programmed on a national scale to reduce costs. Local news is another format that is on the chopping block, and Entercom has started a trend in nationalizing news content to achieve the same-cost cutting end.

Entercom’s 2004 news station revenues dropped $2.1 million, or 3%, from the year before (http://www.journalism.org/node/845). This drop represents a trend in radio news which shows that most markets news revenue are just barely breaking even (http://stateofthemedia.org/2007/narrative_radio_economics.asp?cat=3&media=9). As a response to this decline, Entercom is gutting many of its stronger news stations in favor of more nationalized news and stronger talk formats. In November 2006, Entercom fired its entire news department at Boston station WRKO. The station’s Program Director Jason Wolfe told the Boston Herald “We’re not eliminating news. We’ve chosen to deliver it in another way,” (http://www.freepress.net/news/19225). WRKO decided that national news agencies like Fox News and their local talk show hosts would be an adequate replacement for the local news team. In a similar move KIRO in Seattle cut its news broadcasting and replaced two of its news shows with talk shows. The cuts are a result of what Entercom believes the consumer wants, but mostly because they want to provide the programming in the most cost efficient manner. By scrimping on their end, earnings can be passed on to their share holders at the expense of the audience. Another example of Entercom’s heavy focus on money is their recent payola scandal.

In March 2006, the New York Attorney General’s Office filed a lawsuit in the Supreme Court of New York against Entercom. The Attorney General alleged that the company engaged in practices of payola. Payola is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio, in which the song is presented as being part of the normal day’s broadcast (http://en.wikipedia.org/wiki/Payola). The former program director of WKSE in Buffalo, told Brian Ross of ABC’s show “Primetime” that he was told by his bosses at Entercom to engage in the payola activities. “Apparently, I’m the poster boy for payola,” he said (http://abcnews.go.com/Primetime/story?id=1628005). Entercom agreed to pay $4.25 million in fines, and agreed to appoint a Compliance Officer to monitor possible instances of payola at their stations.

The influence corporate media has over record labels causes a major problem in how music and other information is delivered to the audience. The kind of music that Entercom chooses to promote places a lot of power in their hands. Sole blame can not be placed on Entercom and other media companies however. Record labels are partially to blame for participating the payola practice. In an attempt to promote their product, record labels use the best method at their disposal to get their product noticed. However, as long as Entercom and the other big media companies continue to control most of the radio stations, record labels will be forced to continue the practice. The implications of this practice go way beyond music. What is to stop Entercom from completely dominating the information that comes from their stations? Will citizens be required to pay for the dissemination of news and information to the general public? The story of Jennifer Strange shows that big media companies like Entercom are already influencing information.

Jennifer Strange died of water intoxication in early 2007 after participating in a water drinking contest hosted by Entercom owned KDND in Sacramento. The family of Mrs. Strange filed a civil lawsuit against Entercom stating that the defendants, who in this case are the event’s organizers and employees of Entercom “negligently, intentionally or recklessly caused the death [of Mrs. Strange],” (http://www.entercom.com/docs/Entercom%20Annual%20Report.pdf). The reports of Mrs. Strange’s death were widely broadcast from stations not owned by Entercom, but were noticeably absent from stations that are.

An article from the Boston based webzine “The Phoenix” states that even though Entercom owns 4 radio stations in the city, none of the stations, newspapers or television stations in town offered any in depth coverage to the story. The article says that even though the story didn’t inherently have a local interest, the question of “if the incestuous nature of Boston’s media landscape may have played a role [in covering the story]?” The article notes that the town’s newspapers are linked in many of the same interests as the Entercom stations. It is speculated that these interests would prevent the other media outlets from publishing stories about Entercom (http://thephoenix.com/article_ektid34312.aspx).

Due to its size, Entercom has the ability to influence the information that not only streams from its stations, but from other media outlets as well. This is at an obvious disadvantage to the general public who trust and rely on these companies to give them their information. While it does not seem right that these companies can have such great influence over information, there is not much that the general public can do to change the situation. As we have seen, just by the companies nature, Entercom is forced to operate in a manner which is in the best interest of their bottom line. They eliminate positions filled by people to cut costs, they choose to discontinue local programming in favor of nationalized formats, and they hold great influence over other media outlets which might influence their bottom line. As long as the government continues to allow media companies to control a large chunk of each market, these problems will continue to arise.

About Matthew Schroder

There is no shortage of science fiction reading here. No lack of appreciation for beards, love of coffee or obsession over blueberries.