Entercom Communications (Philadelphia) and CBS Corporation’s have announced a merger—pending approval by Entercom shareholders, expected to close during the second half of 2017—by which Entercom will combine with CBS Radio to create a radio platform with a nationwide footprint of 244 stations, including 23 of the top 25 U.S. markets, as well as digital capabilities and events platform.
“This agreement is great for shareholders and achieves our previously stated objectives by separating our radio business in the best possible way,” said Leslie Moonves, Chairman and Chief Executive Officer, CBS Corporation. “Entercom is a superbly run company, and together with CBS Radio’s powerful brands and remarkable people, we are creating an organization that will be even better positioned to succeed in this rapidly evolving media landscape.”
David J. Field, President and CEO of Entercom, who will lead the combined company, said, “These two great companies, with their impressive histories, complementary assets, and premier content and brands, are a perfect strategic and cultural fit, enabling us to deliver local connection on a national scale and drive accelerated growth. We look forward to welcoming our talented new colleagues at CBS Radio, and we have the utmost respect for their significant contributions to the industry.”
Andre Fernandez, who will continue as President and CEO of CBS Radio through the closing of the transaction, said, “I couldn’t be more proud of the CBS Radio team and all of the exciting breaking news, live events, and business initiatives happening every day across the country. Today marks the beginning of a new chapter for us as we join with an organization with an equally deep tradition in radio broadcasting. The opportunities for the new company are enormous – thanks to our combined collection of industry-leading stations and brands.”
The merger will create a local media and entertainment company with strong, complementary assets on a national scale, including:
- A sports platform with the rights to broadcast 45 pro sports teams, and 100+ popular local sports talk shows, as well as the CBS Sports Radio Network, which is made up of 300 affiliated radio stations across the country
- News and news/talk format, with some of the most-listened-to news and talk radio stations nationwide
- Music and entertainment formats with popular personalities who are leading influencers of custom curated music and entertainment experiences that drive music discovery
- Creator of more than 4,500 live original events per year, including music festivals and large shows
- Digital content that expands local on-air talent
- Monetization of intellectual property for dozens of major-market radio shows
- Legendary local stations
The combined companies’ pro forma revenue on a trailing 12 months basis was approximately $1.7 billion – which would make it the second-largest radio station owner in the United States – and adjusted EBITDA was nearly $500 million, including expected transaction synergies. The merger will create a well-capitalized company with a market cap of over $2 billion.
The combination of CBS Corporation’s radio business with Entercom will be effected through a “Reverse Morris Trust” transaction, which is expected to be tax-free to CBS and its shareholders. Immediately following the completion of this exchange offer, CBS Radio will merge with an Entercom subsidiary, with the new CBS Radio shareholders receiving Entercom shares in exchange for their CBS Radio shares in the transaction. After completion of the merger, CBS Radio shareholders will receive approximately 105 million Entercom shares, or 72% of all outstanding shares of the combined company on a fully diluted basis. Existing Entercom shareholders will own 28% of the combined company on a fully diluted basis.
Morgan Stanley & Co. LLC and Centerview Partners are serving as financial advisors, and Latham & Watkins LLP is serving as legal counsel to Entercom. Goldman, Sachs & Co. is serving as financial advisor, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to CBS Corporation.
A division of CBS Corporation, CBS Radio owns 117 radio stations in 26 markets – including all of the top 10 radio markets as ranked by Nielsen Audio.
Entercom is the fourth-largest radio broadcasting company in the United States, reaching and engaging more than 40 million people a week through its 127 highly rated stations in 27 top markets across the country. Entercom delivers superior ROI by connecting its customers and audiences through its leading local brands and local marketing solutions, which include over 4,000 events each year, and its SmartReach Digital product suite.
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