How Much Synergy In Radio-TV Combos? For Entravision – A Lot.

Story by Inside Radio

How much of an upside is there in owning radio and TV stations in the same market? Broadcasters from two very different companies offered opposing views on the topic Thursday at the Gabelli 10th Annual Movie & Broadcasting Conference at the Lotte New York Palace Hotel in New York City.

Radio delivered plenty of lift to the E.W. Scripps Co.’s TV stations after it backed into the radio business via its acquisition of Journal Communications three years ago. But with just 34 radio stations nationally, Scripps discovered it didn’t have the scale to compete in the consolidated radio business, president of Local Media Brian Lawlor said.

But for Entravision Communications, which owns 55 TV stations and 49 radio stations and a growing digital division, radio is a core asset that it has no intention of selling. For starters, radio is integrated into all of Entravision’s TV operations, executive VP, treasurer & CFO Chris Young told the Gabelli audience. The company’s sales force sells both radio and TV.

The Spanish language market Entravision operates in is far less competitive than the English language market. Pointing to Denver as an example, Young said the promotional benefits for an English language radio-TV combo “are a lot less interesting” than a Spanish language operator owning a dominant FM and a dominant television station. “That’s one reason why they’re a much more integral part of our operation than what you see from the multi-platform operators of TV and radio in English,” Young said.

Of the 17 markets where Entravision owns radio stations, 11 are combo markets with TV and six are radio standalones.

Young also provided some color on the radio division's second quarter pacings, which look much better than during the company’s first quarter earnings call. Back then, Q2 was pacing down by 6%. Now it’s up 1%. “It’s made some nice inroads as far as revenue is concerned as we get deeper into the quarter so were very pleased about that,” Young said. Entravision also cut radio costs by about $8 million, which should help grow cash flow and earnings.

Among the company’s radio growth drivers are programming changes Entravision made at its Los Angeles stations, along with revenue “kicking in” from political advertisers and for the World Cup. Entravision booked $9.3 million in political in the 2014 mid-term elections, which “should serve as a benchmark for what we do this year,” Young said. Univision has historically secured TV rights for the World Cup and that’s been good for Entravision, which has a lot of Univision TV affiliates. But this year’s World Cup went to Telemundo, while Entravision won the radio rights. “That will pull ad dollars from all Spanish language media operations, TV and radio,” Young predicted. “It’s helping our radio [division]. But that’s going to be an issue for the entire year as folks reallocate their budget spends on World Cup.”

Young also mentioned some headwinds the company is facing in its markets along the U.S.-Mexico border like El Paso, San Diego, and the Texas markets of Laredo, Brownsville, and McAllen. “There is a lot of economic activity that comes from the Mexican side of the border into the U.S.,” Young said. “That’s all but dried up,” he said due to the Trump Administration’s immigration stance. “That’s an issue for us but there’s not a lot we can do about it.”