EntercomStacked

More than a year after Entercom received a trio of letters of inquiry from the Federal Communications Commission, the agency’s investigation into the company’s political file for its Buffalo, NY stations continues. In a filing on Monday, Entercom says it’s having discussions with FCC staff about the investigation and warns that the eventual settlement of the matter “could have a material effect” on its financial results for a future reporting period.

Entercom received the first of three letters of inquiry from FCC staff in January 2019 in response to a complaint from an individual named Jackie Drost who claimed to have purchased time on three of its stations in Buffalo. Drost alleged the company didn’t charge the lowest unit rate as required by federal law. Entercom said in April that it found no record of anyone with that name running for Congress during the 2018 election or buying any time from its stations. And in its annual report to shareholders – a so called 10-K filing – Entercom said it met with FCC officials last October, who told them they completed the lowest unit rate inquiry. The company hasn’t disclosed whether it paid anything in fines to the FCC to settle the matter, but on its fourth quarter results call last week, Entercom said it incurred a $5 million nonrecurring charge for the combined cost to settle the FCC matter and for costs related to a recent cyber-attack.

When the Media Bureau began poking around the Entercom Buffalo public file after the Drost complaint, it also uncovered some issues with the timeliness of the company's political file record keeping obligations for its Buffalo stations. Entercom owns hot AC “Star 102.5” WTSS, “News Talk 930” WBEN, “Sports Radio 550” WGR, CHR “Kiss 98.5” WKSE, “Alternative Buffalo 107.7” WLKK, R&B oldies WWWS (1400) and “ESPN Radio 1520” WWKB in the market. In its earlier response, Entercom told the FCC its procedures for ensuring political file documents were posted online “broke down.”

Under the agency’s rules, stations are required to place information about the advertising buys made by legally qualified candidates in their political file. That includes not only federal candidates, but also state and local candidates too. The information is supposed to be put in the file in near real-time, with broadcast attorneys advising the documents be put in the file within a 24-hour window. Other buys from political action groups also need to be put in the file under the portion of the rule that sites advertising which is of “political matter of national importance.”

In Monday’s filing, Entercom said it assessed FCC staff allegations about its political file compliance “and will continue to cooperate with the FCC and engage in discussions as to a potential conclusion or settlement of the matter.” The broadcaster said it is “unable to reasonably estimate the ultimate outcome.” It does signal however that it expects to pay a fine for the violations although it doesn’t yet know how much it will be. Whatever the amount, Entercom said it is “reasonably possible” it will be a big enough hit to “have a material effect” on the result in a specific quarter. But it also said the number is unlikely to have much impact on its long-term financial well-being.