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Malvern's 24-hour traffic network skips $4M payment to Bala Cynwyd-based Entercom

Traffic hazards loom for one of the nation's largest radio station owners. Bala Cynwyd-based Entercom Communications says that United States Traffic Network didn't pay it $4 million in late 2017 and has "financial issues."

Traffic at a standstill on the West Chester Pike exit of I-476 south earlier this month. Entercom Communications Corp. of Bala Cynwyd said th company that provides its stations with traffic cut-ins skipped a $4 million payment in late 2017.
Traffic at a standstill on the West Chester Pike exit of I-476 south earlier this month. Entercom Communications Corp. of Bala Cynwyd said th company that provides its stations with traffic cut-ins skipped a $4 million payment in late 2017.Read moreCHARLES FOX

Now for the latest radio traffic update: money woes.

The Malvern-based United States Traffic Network — which provides traffic information to hundreds of thousands of radio listeners at stations such as Philly's all-news KYW — missed a $4 million payment to Bala Cynwyd-based Entercom Communications Corp. in late 2017, Entercom executives say.

United States Traffic Network, part of the Australian-based Global Traffic Network, could not be reached for comment.

Entercom officials disclosed the skipped United States Traffic Network payment in its earnings call on Thursday but then declined to further comment late last week and Monday. Officials at KYW traffic center referred questions on Monday to Entercom.

Entercom/CBS Radio uses advertising sponsorships to pay USTN for the traffic reports. USTN finds the advertisers and sells the slots, and then remits some the advertising money back to Entercom, which it failed to do in late 2017.

Entercom acquired the CBS radio stations in November, inheriting the deal with United States Traffic Network. Entercom/CBS Radio's news and talk stations, in addition to KYW, include WCBS in New York, KNX in Los Angeles, WBBM in Chicago, KCBS in San Francisco, and WWJ in Detroit.

Entercom chief financial officer Richard Schmaeling said he expects the situation to be resolved by April 1.

"They are having significant financial issues and can't pay us on a timely basis," he said on the call.

CBS Radio switched its traffic services to the USTN, formerly Radiate Media and traffic.com, in 2017 from Total Traffic & Weather Network, a service controlled by Texas-based iHeartMedia Inc., published reports say. iHeart, the nation's largest radio station owner group, competes with Entercom/CBS Radio stations.

As part of the 2017 deal, USTN sold national sponsors for traffic updates while the CBS Radio stations sold local and regional ads. USTN also would kick back some of the revenue to CBS Radio, now Entercom, for national sponsors for the traffic, which would be the $4 million.

Entercom CEO David Field said that legacy Entercom stations also used USTN but the problem mostly involved the CBS Radio deal. Entercom was looking to resolve the problem and may do the traffic services itself, Field said. "We can take that business in-house and eliminate the middle man," he added.

The United States Traffic Network woes are the latest indigestion for Entercom as it swallows CBS Radio, which it acquired last November. Field has said that the radio stations were mismanaged and has replaced many of the general managers in top radio clusters and changed formats to boost Nielsen ratings.

Entercom also has sold a parcel of land around Chicago's O'Hare airport for $46 million to help fund improvements at its stations. Entercom also has said that it would stop "cash infusion" deals in which radio stations sell future advertising inventory for quick cash, a practice that helps stations make their quarterly sales goals but can flood the market with discount-priced ads.

Entercom's share price has declined about 30 percent over the last year as it faced a regulatory review of its deal for CBS Radio and then closed on the transaction. Entercom shares closed at $9.95, down $.05. Entercom says that revenues at CBS Radio stations declined, on average, about 6 percent in the fourth quarter and it does not expect a turnaround until late 2018.

Entercom/CBS Radio is considered the nation's second-largest radio station group and the nation's No. 2 podcaster behind National Public Radio. It's also considered the most financially viable of the biggest radio station groups after Cumulus Media filed for bankruptcy protection in late 2017. iHeartMedia has been negotiating with lenders to slash its $20 billion in debt. It is expected to file for bankruptcy protection.