Moody's cuts Entercom outlook to negative

Moody's Investors Service said it changed Entercom Radio LLC's outlook to negative from stable and affirmed the company's Ba1 corporate family and Ba2 senior subordinated debt ratings following Entercom's announcement that it has begun a quarterly cash dividend.

Moody's said the negative outlook reflects the company's willingness to take on incremental leverage in order to return cash to shareholders in the form of share repurchases and dividends and Moody's expectation that management is less likely to be focused on maintaining a conservative balance sheet, as evidenced by leverage under 4x historically.

The agency noted that since the initiation of its share repurchase program in 2004, Entercom has repurchased about $341 million, or 19%, of its shares outstanding. Debt has increased by about 47% since the end of 2003 to supplement free cash flow and fund the share repurchases as well as ongoing, though decreased, acquisition activity.

The ratings are supported by Entercom's size and market presence balanced by the competition present in Entercom's larger markets and the concentration of its operations to its three largest markets: Boston, Seattle and Denver, Moody's said.

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