In February, I wrote about Entercom’s announcement that it would be merging with CBS Radio. The mega-deal rocked the broadcast industry and when all is said and done, this agreement will establish Entercom as the second largest radio operator in the country. As a refresher for you, the new company will own the broadcast rights to more than 40 professional teams and will control many of the nation’s most successful sports radio stations, including, WEEI and 98.5 The Sports Hub. Not only will the merger alter the balance of power in radio nationally, it may also re-define the landscape here in Boston.
Entercom and CBS combine to own seven FM’s and three AM’s in town. Based on FCC rules governing local ownership which permits a company to own eight stations in Boston, and being the math whiz that I am, Entercom needs to divest of two of its FM properties to meet the FCC’s limit, but rumors persist about how the chips will fall when the dust settles.
If I was a betting man, I’d wager that more than two stations will change hands, and if Entercom wants to keep WEEI and 98.5, it’s as close to a certainty as you can get, in my opinion. Both sports stations are dominant in the market with the ratings they achieve and the revenue that they generate, but we now know that the Department of Justice is deeply involved in its diligence to determine if it will approve of the new company owning both. I’ve learned that Entercom is willing to part with WBZ-AM 1030 in order to maintain both sports properties, and that would be a hefty price to pay. WBZ is a legendary station and one of the highest billers in Boston, but one of the key benefits of this merger is the amount of sports content that Entercom will control, not just here, but across the country. Sometimes you have to give to get.
Last week it was reported that Entercom has signed letters of intent which would detail the stations it plans to divest, but is still awaiting DOJ approval before announcing its specific plans. All told, Entercom has to divest 14 stations in seven markets nationwide, but the people I’ve spoken with say that the situation in Boston has been the DOJ’s primary focus for some time now. Additional reports suggest that once the DOJ grants its approval the merger will close within 30 days. That is a long shot at best. Originally, Entercom announced its expectations were to close in the third quarter of this year, but that will not happen. “We are progressing through the regulatory approval process and now anticipate we will close during the fourth quarter,” chief financial officer Richard Schmaeling said during the company’s quarterly earnings call a week ago Friday. Even that might be wishful thinking. The deal could close this year but based on sources I’ve spoken to in recent weeks, it will be December at the earliest, and it’s very possible that we’re looking at the early part of 2018.
I worked for Entercom for 14 years and I can tell you that no group owner has more passion for sports and sports radio than David Field, but before the DOJ renders its decision, the many legitimate questions it is asking will continue to provoke conversation about the prospect of the new company having so much control over sports content in this market. The assets of 98.5 and WEEI, combined with the play by play rights to all four professional teams could not only be perceived by some as an advantage when it comes to creating advertising revenue, but also as a flat out stranglehold on all sports media dollars. I’m told that the DOJ likens this situation to Entercom’s recent purchase of Lincoln Financial Media. At the time that deal was announced, Denver was the market in question for the DOJ. Entercom had an exceptionally well performing cluster there as did Lincoln Financial. In its competitive impact statement, the DOJ wrote that “The Complaint alleges that the proposed acquisition likely would lessen competition substantially in interstate trade and commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and likely would have the following effects, among others: a) competition in the sale of broadcast radio advertising on English-language radio stations in the Denver MSA would be lessened substantially; b) competition between Entercom broadcast radio stations and Lincoln broadcast radio stations in the sale of broadcast radio advertising in the Denver MSA would be eliminated; and c) the prices for advertising time on English-language broadcast radio stations in the Denver MSA likely would increase.”
You don’t have to be a rocket scientist to see this deal for what it could be in Boston. If Entercom is able to hold on to both sports stations, the reward would be an absolute windfall in ad sales, but if you work for Beasley or IHeart or any other broadcast group that competes with Entercom, there is bound to be concern about how such a powerful entity may change the path of every company’s daily business.
Among the issues that the other broadcast groups will be worried about if Entercom has the monopoly on sports, is price gouging. I don’t think that will happen even if both sports stations remain in the company’s control, but the more conversations I have, the more it’s becoming clear that this is a difficult hurdle for Entercom to overcome. The company clearly wants to leverage its sports assets, not just locally, but nationally, which it hopes will expand its existing relationships as well as create new revenue streams. Mike Dee, former COO of the Red Sox and most recently CEO of the Padres, is Entercom’s new President of Sports and he said as much in a recent interview with Inside Radio. “Strong bridges exist locally but we can bring a national perspective to those local relationships so that partners feel that they are part of something bigger,” Dee said, and he’s right.
If a national sponsor loves the Cubs, why not try to include them in a deal that might work in Boston with the Red Sox or in New York with the Yankees.
So all of that leads to this. If forced to divest one or the other, which station would Entercom keep? EEI or 98.5? Both are ratings winners. Both drive tremendous revenue. Both have A list talent. There are numerous factors that will come into play if Entercom is forced to choose, but here are a few that I think the company will focus on as it contemplates its decision. One is the power and reach of each station’s signal. 98.5 has a much better signal than WEEI, and frankly, it’s not debatable. It’s clearer, more powerful and reaches more people in the Boston metro.
Second, is the breakdown of each station’s audience. You’ve read a million times in various articles that men, between the ages of 25 and 54 are the target listener for sports radio stations and success in that demo means the most to advertisers. The company will have to determine which station is better positioned to succeed long term in that demo. That scale also favors 98.5 because of the hold they have on the younger part of the demo which they’ve dominated since their inception. For the sake of this column, let’s qualify young men as those between 25 and 34 and the older men, as those between 45 and 54. The 25-34 year olds are going to have a more significant effect on future ratings surveys because they’ll be in the core of the demo for a longer period of time. That said, the rating system is not perfect. One or two listeners in any one survey could turn the tide in one direction or another simply based on the amount of time they actually listen. Without boring you with too much of the technical lingo, ratings are determined by personal people meters which are electronic devices that include a chip designed to measure when a person is listening to a specific station. Every time the individual listens for five minutes or longer, the station gets credit. WEEI has made up a lot of ground in the last 12-18 months within the 25-54 demo, but I still think it’s fair to say that, on the whole, most younger men prefer the sports hub.
And that leads to a third point. The talent. Which station has a lineup that is better suited to maintain its current position in the market place over the next 5 or 6 years? Both stations’ morning shows are huge. Love or hate (Kirk) Minihane, he’s had a dramatic effect on the revitalization of WEEI. He’s fearless and unpredictable, qualities that consistently keep him on the edge, but he’s compelling, and along with Gerry (Callahan), who’s one of the smartest guys I’ve ever worked with, they’re winning. Toucher and Rich are not considered sports experts, but they’re excellent broadcasters. Their knowledge of radio and how it’s supposed to work, along with their creativity and sense of humor have made them a ratings juggernaut. And for those of you who still complain that Kirk and Callahan, and to a lesser degree Toucher and Rich, don’t stick to sports, you have no clue what makes a great morning show. While these two shows are dramatically different, both in style and philosophy, they understand what makes their audiences tick and they know how to tap in to the needs of their listeners to create a passionate response to whatever topic they happen to be discussing. So it’s a no lose situation for Entercom if it can only keep one of them. Both have staying power and assuming neither show offers comments or actions that completely derail the train, they should be significant performers for years to come.
The bigger questions come from 10:00 a.m. on. Entercom already tried to rebuild its midday and afternoon drive shows a few years back, hang on — it’s coming back to me now — by firing and demoting some of its top talent, and that attempt was a failure. The Sports Hub has been more consistent in these time slots since it launched in 09 only replacing Gary Tanguay with Andy Gresh and then promoting Marc Bertrand to replace Gresh, but in both cases, the moves have proved to be successful. Bringing Glenn Ordway back, albeit in midday, and putting Dale and Holley back together as well, not only stopped EEI’s decline from 10-6, but is also responsible for its resurgence in those dayparts. Michael Felger remains the dominant host on The Sports Hub and his combination of passion for the subject matter, personality and determination, has made his show with Mazz arguably the most successful in town, regardless of format. I do want to single out one guy who I’ve truly come to appreciate over the last few years and that’s Rob “Hardy” Poole. I tried to hire him at WEEI back 2012 but he chose to stay at The Hub. He is especially outstanding with creative production. His bits are the best on either station and, that, for my ear, raises the entertainment value dramatically.
At the end of the day, I think it’s a wash. Both stations’ core shows from 6:00 a.m. to 7:00 p.m. are operating at an exceptionally high level, with well-branded, highly respected personalities, and while it remains to be seen if the ratings battle will continue to be as close as it currently is, at least for the next few years, both lineups are in an excellent position to continue to win.
To be clear, it has yet to be determined if Entercom will have to make a choice on the two sports stations as the merger moves forward. They may not have to. And if they don’t, it’ll be fascinating to watch how the company manages both entities. However, if they do have to divest of one, will it come down to any of the issues I’ve cited, or something else? Gun to my head, taking everything into account, I think that 98.5 has the better shot at longevity as it’s currently constituted, but that’s just me. There may be thousands of you out there that disagree and to be fair, in the big picture, it doesn’t matter. Entercom absolutely wants to own WEEI and 98.5, but while the situation with both means the most to us as sports radio listeners in Boston, the reality is that it’s a very small piece to a much larger, incredibly beneficial deal. No matter what happens here, the new Entercom will be well positioned to arguably be the industry’s dominant radio group for many years to come.