S&P: Entercom outlook negative

Standard & Poor's said it affirmed its ratings on Entercom Communications Inc., including the BB- corporate credit rating, and removed the ratings from CreditWatch negative, where they were placed on March 17 based on concerns regarding the company's narrow margin of covenant compliance. The agency also assigned a recovery rating of 6 to Entercom Radio LLC's 7 5/8% senior subordinated notes due 2014, which are rated B.

The outlook is negative.

The agency said the affirmation follows a slight improvement in the company's cushion of covenant compliance for the quarter ended March 31 due to debt repayment and modest EBITDA growth. The action also incorporates the company's decision to reduce its quarterly dividend to $0.10 per share from $0.38 per share.

The ratings on Entercom Communications reflect financial risk from debt-financed radio station acquisitions, the potential for additional acquisitions that could weigh on credit measures, a competitive operating environment and the potential for advertising volatility, S&P said.

The company's good competitive positions in large radio markets, radio broadcasting's decent margin and discretionary cash flow potential and largely resilient station asset values only partially offset these factors, in the agency's view.

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