AUDACY, INC. - Annual Report: 2017 (Form 10-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2017

or

For the transition period from __________ to ___________

Commission File Number: 001-14461

Entercom Communications Corp.

(Exact name of registrant as specified in its charter)

401 E. City Avenue, Suite 809

Bala Cynwyd, Pennsylvania 19004

(Address of principal executive offices and zip code)

(610) 660-5610

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☑    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☑    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act and Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

As of March 6, 2018, the aggregate market value of the Class A common stock held by non-affiliates of the registrant was $1,326,414,517 based on the June 30, 2017 closing price of $10.50 on the New York Stock Exchange on such date.

Class A common stock, $0.01 par value 137,501,236 shares outstanding as of March 06, 2018

(Class A shares outstanding includes 3,213,935 unvested and vested but deferred restricted stock units).

Class B common stock, $0.01 par value 4,045,199 shares outstanding as March 06, 2018.

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DOCUMENTS INCORPORATED BY REFERENCE

Certain information in the registrant’s Definitive Proxy Statement for its 2018 Annual Meeting of Shareholders, pursuant to Regulation 14A, is incorporated by reference in Part III of this report, which will be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year.

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CERTAIN DEFINITIONS

Unless the context requires otherwise, all references in this report to “Entercom,” “we,” the “Company,” “us,” “our” and similar terms refer to Entercom Communications Corp. and its consolidated subsidiaries, which would include any variable interest entities that are required to be consolidated under accounting guidance.

With respect to annual fluctuations within “Management’s Discussion And Analysis Of Financial Condition and Results Of Operations”, the designation of “nmf” represents “no meaningful figure.” This designation is reserved for financial statement line items with such a significant change in annual activity, that the fluctuation expressed as a percentage would not provide the users of the financial statements with any additional useful information.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains, in addition to historical information, statements by us with regard to our expectations as to financial results and other aspects of our business that involve risks and uncertainties and may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements, including certain pro forma information, are presented for illustrative purposes only and reflect our current expectations concerning future results and events. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws including, without limitation: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

We report our financial information on a calendar-year basis. Any reference to activity during the year is for the year ended December 31.

Any reference to the number of radio markets covered by us in top 15, 25 and 50 markets is sourced to the Fall 2017 publication of Nielsen’s Radio Markets; Population, Rankings and Information.

You can identify forward-looking statements by our use of words such as “anticipates,” “believes,” “continues,” “expects,” “intends,” “likely,” “may,” “opportunity,” “plans,” “potential,” “project,” “will,” “could,” “would,” “should,” “seeks,” “estimates,” “predicts” and similar expressions which identify forward-looking statements, whether in the negative or the affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. These forward-looking statements are subject to risks, uncertainties and other factors, some of which are beyond our control, which could cause actual results to differ materially from those forecasted or anticipated in such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, the factors described in Part I, Item 1A, “Risk Factors.”

Any pro forma information that may be included reflects adjustments and is presented for comparative purposes only and does not purport to be indicative of what has occurred or indicative of future operating results or financial position.

You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this report. We do not intend, and we do not undertake any obligation, to update these statements or publicly release the result of any revision(s) to these statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

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PART I

We are a leading American media and entertainment company, reaching and engaging over 100 million people each week, with coverage of close to 90% of persons 12+ in the top 50 U.S. markets through our premier collection of highly-rated, award-winning radio stations, digital platforms and live events. We are the number one creator of live, original, local audio content and the nation’s unrivaled leader in news and sports radio. We are home to seven of the eight most listened to all-news stations in the U.S., as well as more than 40 professional sports teams and dozens of top college programs. As one of the country’s two largest radio broadcasters, we offer local and national advertisers integrated marketing solutions across audio, digital and event platforms to deliver the power of local connection on a national scale. We have a nationwide footprint of radio stations including positions in all of the top 15 markets and 22 of the top 25 markets. We were organized in 1968 as a Pennsylvania corporation.

On February 2, 2017, we and our wholly owned subsidiary (“Merger Sub”) entered into an Agreement and Plan of Merger (the “CBS Radio Merger Agreement”) with CBS Corporation (“CBS”) and its wholly-owned subsidiary CBS Radio Inc. (“CBS Radio”). Pursuant to the CBS Radio Merger Agreement, Merger Sub merged with and into CBS Radio with CBS Radio surviving as our wholly-owned subsidiary (the “Merger”). The parties to the Merger believe that the Merger was tax free to CBS and its shareholders. The Merger was effected through a stock for-stock Reverse Morris Trust transaction.

In connection with the Reverse Morris Trust transaction, CBS Corporation commenced an exchange offer for the separation of its radio business to allow for the combination of CBS Radio and Entercom. In the exchange offer, CBS shareholders had the opportunity to exchange their shares of CBS Class B common stock for shares of CBS Radio common stock, which were immediately converted into the right to receive an equal number of shares of Entercom Class A common stock upon completion of the Merger. Under the terms of the exchange offer, 5.6796 shares of CBS Radio common stock were exchanged for each share of CBS Class B common stock accepted in the offer. CBS accepted 17,854,689 of the tendered shares in exchange for 101,407,494 shares of CBS Radio common stock, which upon closing of the Merger were immediately converted into an equal number of whole shares of Entercom Class A common stock.

On November 1, 2017, we entered into a settlement with the Antitrust Division of the U.S. Department of Justice (“DOJ”). The settlement with the DOJ together with several required station divestiture transactions with third parties, allowed us to move forward with the Merger. On November 9, 2017, we obtained approval from the Federal Communications Commission (the “FCC”) to consummate the Merger. The transactions contemplated by the CBS Radio Merger Agreement were approved by our shareholders on November 15, 2017. Upon the expiration of the exchange offer period on November 16, 2017, the Merger closed on November 17, 2017.

Our Digital and Live Events Platforms

Radio.com delivers scale by unifying the listening experience of our broad portfolio of stations, leading podcasts, shows and talent. Harnessing the power of our 100 million weekly listeners, this robust platform is delivering fast growth and deep engagement twenty-four hours a day, seven days a week.

Through our 45% investment in Cadence13, we are the number two podcaster in the market, creating and distributing premium, personality-based podcasts to our audiences with approximately 50 million monthly downloads.

We are a leading creator of live, original events, including large-scale concerts, live, intimate performance with big artists on small stages, and crafted food and beverage events, all supported by Eventful, our digital local event discovery business with 27 million registered users and 8.5 million monthly unique visitors.

Our Strategy

Our strategy focuses on accelerating growth by capitalizing on scale, efficiencies and operating expertise to consistently deliver the best local radio content, events and experiences in the communities we serve and, in turn offer advertisers access to a highly effective marketing platform to reach large and targeted local audiences. The principal components of our strategy are to: (i) continue to be America’s number one creator of live, original, local audio content by building strongly branded radio stations with highly compelling content; (ii) focus on delivering effective integrated marketing solutions for our customers that incorporate audio, digital and experiential assets and leverage our national scale and digital and live events platforms; (iii) assemble and develop the strongest market leading station clusters; (iv) drive a positive perception of radio as the nation’s number one reach and ROI medium; and (v) offer a great place to work, where the most talented high achievers can grow and thrive.

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Source Of Revenue

The primary source of revenue for our radio stations is the sale of advertising time to local, regional and national advertisers and national network advertisers who purchase spot commercials in varying lengths. A growing source of revenue is from station-related digital product suites, which allow for enhanced audience interaction and participation, and integrated digital advertising solutions. A station’s local sales staff generates the majority of its local and regional advertising sales through direct solicitations of local advertising agencies and businesses. We retain a national representation firm to sell to advertisers outside of our local markets.

Our stations are typically classified by their format, such as news, sports, talk, classic rock, urban, adult contemporary, alternative and country, among others. A station’s format enables it to target specific segments of listeners sharing certain demographics. Advertisers and stations use data published by audience measuring services to estimate how many people within particular geographical markets and demographics listen to specific stations. Our geographically and demographically diverse portfolio of radio stations allows us to deliver targeted messages to specific audiences for advertisers on a local, regional and national basis.

Competition

The radio broadcasting industry is highly competitive. Our stations compete for listeners and advertising revenue with other radio stations within their respective markets. In addition, our stations compete for audiences and advertising revenues with other media including: digital audio streaming, satellite radio, broadcast television, digital, satellite and cable television, newspapers and magazines, outdoor advertising, direct mail, yellow pages, wireless media alternatives, cellular phones and other forms of audio entertainment and advertisement.

Federal Regulation of Radio Broadcasting

Overview. The radio broadcasting industry is subject to extensive and changing government regulation of, among other things, ownership limitations, program content, advertising content, technical operations and business and employment practices. The ownership, operation and sale of radio stations are subject to the jurisdiction of the FCC pursuant to the Communications Act of 1934, as amended (the “Communications Act”).

The following is a brief summary of certain provisions of the Communications Act and of certain specific FCC regulations and policies. This summary is not a comprehensive listing of all of the regulations and policies affecting radio stations. For further information concerning the nature and extent of federal regulation of radio stations, you should refer to the Communications Act, FCC rules and FCC public notices and rulings.

FCC Licenses. The operation of a radio broadcast station requires a license from the FCC. Certain of our subsidiaries hold the FCC licenses for our stations. The total number of radio stations that can simultaneously operate in any given area or market is limited by the amount of spectrum allotted by the FCC within the AM and FM radio bands, and by station-to-station interference within those bands. While there are no national radio station ownership caps, FCC rules do limit the number of stations within the same market that a single individual or entity may own or control.

The total number of stations authorized to operate in a local market may fluctuate from time to time, and the number of stations that can be owned by a single individual or entity in a given market can therefore vary over time. Once the FCC approves the ownership of a cluster of stations in a market, that owner may continue to hold those stations under “grandfathering” policies, despite a decrease in the number of stations in the market. We were “grandfathered” with respect to one FM station in our Wilkes-Barre/Scranton market. To facilitate the consummation of the transactions contemplated by the CBS Radio Merger Agreement, we sold this grandfathered station together with other radio stations in the fourth quarter of 2017.

Ownership Rules. The FCC sets limits on the number of radio broadcast stations an entity may permissibly own within a market. Same-market FCC numeric ownership limitations are based: (i) on markets as defined and rated by Nielsen Audio; and (ii) in areas outside of Nielsen Audio markets, on markets as determined by overlap of specified signal contours.

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Ownership Attribution. In applying its ownership limitations, the FCC generally considers only “attributable” ownership interests. Attributable interests generally include: (i) equity and debt interests which when combined exceed 33% of a licensee’s or other media entity’s total asset value, if the interest holder supplies more than 15% of a station’s total weekly programming or has an attributable interest in any same-market media (television, radio, cable or newspaper), with a higher threshold in the case of investments in certain “eligible entities” acquiring broadcast stations; (ii) a 5% or greater direct or indirect voting stock interest, including certain interests held in trust, unless the holder is a qualified passive investor, in which case the threshold is a 20% or greater voting stock interest; (iii) any equity interest in a limited liability company or a partnership, including a limited partnership, unless properly “insulated” from management activities; and (iv) any position as an officer or director of a licensee or of its direct or indirect parent.

Alien Ownership Rules. The Communications Act prohibits the issuance to, or holding of broadcast licenses by, foreign governments or aliens, non-U.S. citizens, whether individuals or entities, including any interest in a corporation which holds a broadcast license if more than 20% of the licensee’s capital stock is owned or voted by aliens. In addition, the FCC may prohibit any corporation from holding a broadcast license if the corporation is directly or indirectly controlled by any other corporation of which more than 25% of the capital stock is owned of record or voted by aliens if the FCC finds that the prohibition is in the public interest. The Communications Act gives the FCC discretion to allow greater amounts of alien ownership. The FCC considers investment proposals from international companies or individuals on a case-by-case basis. In September 2016, the FCC announced that it was streamlining foreign ownership rules and procedures to provide for a standardized filing and review process. The streamlined rules permit a broadcast licensee to file a petition with the FCC seeking approval for a proposed controlling investor to own up to 100% foreign ownership of the controlling parent entity and for a non-controlling foreign investor identified in the petition to increase its equity and/or voting interest in a parent entity at a future time up to 49.99%. This change will make it easier for broadcast licensees to seek foreign investors. The FCC also adopted a methodology for determining the citizenship of beneficial owners of publicly held shares that companies may use to ascertain compliance with the foreign ownership rules.

License Renewal. Radio station licenses issued by the FCC are ordinarily renewable for an eight-year term. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application is pending. All of our licenses have been renewed and are current.

The FCC is required to renew a broadcast station’s license if the FCC finds that the station has served the public interest, convenience and necessity; there have been no serious violations by the licensee of the Communications Act or the FCC’s rules and regulations; and there have been no other violations by the licensee of the Communications Act or the FCC’s rules and regulations that, taken together, constitute a pattern of abuse. If a challenge is filed against a renewal application, and, as a result of an evidentiary hearing, the FCC determines that the licensee has failed to meet certain fundamental requirements and that no mitigating factors justify the imposition of a lesser sanction, the FCC may deny a license renewal application. In certain instances, the FCC may renew a license application for less than a full eight-year term. Historically, our FCC licenses have generally been renewed for the full term.

The FCC initiated an investigation in January 2007, related to a contest at one of our stations. In October 2016, the FCC designated for a hearing whether we operated this station in the public interest and whether such station’s license should be renewed. In February 2017, in order to facilitate the Merger, we permanently discontinued operation of our only station subject to a petition to deny, in order to cancel the license, dismiss its renewal application and terminate the renewal hearing.

Transfer or Assignment of Licenses. The Communications Act prohibits the assignment of broadcast licenses or the transfer of control of a broadcast licensee without the prior approval of the FCC. In determining whether to grant such approval, the FCC considers a number of factors pertaining to the existing licensee and the proposed licensee, including:

To obtain FCC consent for the assignment or transfer of control of a broadcast license, appropriate applications must be filed with the FCC. Interested parties may file objections or petitions to deny such applications.

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Programming and Operation. The Communications Act requires broadcasters to serve the “public interest.” A licensee is required to present programming that is responsive to issues in the station’s community of license and to maintain records demonstrating this responsiveness. The FCC regulates, among other things, political advertising; sponsorship identification; the advertisement of contests and lotteries; the conduct of station-run contests; obscene, indecent and profane broadcasts; certain employment practices; and certain technical operation requirements, including limits on human exposure to radio-frequency radiation. The FCC considers complaints from listeners concerning a station’s public-service programming, employment practices, or other operational issues when processing a renewal application filed by a station, but the FCC may consider complaints at any time and may impose fines or take other action for violations of the FCC’s rules separate from its action on a renewal application.

FCC regulations prohibit the broadcast of obscene material at any time as well as the broadcast, between the hours of 6:00 a.m. and 10:00 p.m., of material it considers “indecent” or “profane”. The FCC has historically enforced licensee compliance in this area through the assessment of monetary forfeitures. Such forfeitures may include: (i) imposition of the maximum authorized fine for egregious cases ($397,251 for a single violation, up to a maximum of $3,666,930 for a continuing violation); and (ii) imposition of fines on a per utterance basis instead of a single fine for an entire program. There may be indecency complaints which have been submitted to the FCC of which we have not yet been notified.

Certain FCC rules regulate the conduct of on-air station contests, requiring in general that the material rules and terms of the contest be broadcast periodically or posted online and that the contest be conducted substantially as announced.

Enforcement Authority. The FCC has the power to impose penalties for violations of its rules under the Communications Act, including the imposition of monetary fines, the issuance of short-term licenses, the imposition of a condition on the renewal of a license, the denial of authority to acquire new stations, and the revocation of operating authority. The maximum fine for a single violation of the FCC’s rules (other than the rules regarding indecency and profanity) is $49,096.

Proposed and Recent Changes. Congress, the FCC and other federal agencies are considering or may in the future consider and adopt new laws, regulations and policies regarding a wide variety of matters that could: (i) affect, directly or indirectly, the operation, ownership and profitability of our radio stations; (ii) result in the loss of audience share and advertising revenues for our radio stations; and (iii) affect our ability to acquire additional radio stations or to finance those acquisitions.

Federal Antitrust Laws. The federal agencies responsible for enforcing the federal antitrust laws, the Federal Trade Commission (“FTC”) and the DOJ, may investigate certain acquisitions. For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires the parties to file Notification and Report Forms with the FTC and the DOJ and to observe specified waiting-period requirements before consummating the acquisition. The Merger was subject to review by the FTC and the DOJ. On November 1, 2017, we entered into a consent decree with the DOJ that resolved the DOJ’s investigation into the Merger.

HD Radio

AM and FM radio stations may use the FCC selected In-Band On-Channel (“IBOC”) as the exclusive technology for terrestrial digital operations. IBOC, developed by iBiquity Digital Corporation, is also known as “HD Radio.”

HD Radio technology permits a station to transmit radio programming in digital format. We currently use HD Radio digital technology on most of our FM stations. The advantages of digital audio broadcasting over traditional analog broadcasting technology include improved sound quality, the availability of additional channels and the ability to offer a greater variety of auxiliary services.

Employees

As of January 31, 2018, we had 4,489 full-time employees and 3,125 part-time employees. With respect to certain of our stations in our Boston, Chicago, Detroit, Hartford, Kansas City, Los Angeles, New York City, Philadelphia, Pittsburgh, San Francisco and St. Louis markets, we are a party to collective bargaining agreements with the Screen Actors Guild—American Federation of Television and Radio Artists (known as SAG-AFTRA). Approximately 847 employees are represented by these collective bargaining agreements. We believe that our relations with our employees are good.

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Corporate Governance

Code Of Business Conduct And Ethics. We have a Code of Business Conduct and Ethics that applies to each of our employees, including our principal executive officers and senior members of our finance department. Our Code of Business Conduct and Ethics can be found on the “Investors” sub-page of our website located at www.entercom.com/investors.

Board Committee Charters. Each of our Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee has a committee charter as required by the rules of the New York Stock Exchange (the “NYSE”). These committee charters can be found on the “Investors” sub-page of our website located at www.entercom.com/investors.

Corporate Governance Guidelines. NYSE rules require our Board of Directors (the “Board”) to establish certain Corporate Governance Guidelines. These guidelines can be found on the “Investors” sub-page of our website located at www.entercom.com/investors.

Environmental Compliance

As the owner, lessee or operator of various real properties and facilities, we are subject to various federal, state and local environmental laws and regulations. Historically, compliance with these laws and regulations has not had a material adverse effect on our business.

Seasonality

Seasonal revenue fluctuations are common in the radio broadcasting industry and are due primarily to fluctuations in advertising expenditures. Typically, revenues are lowest in the first calendar quarter of the year.

Internet Address and Internet Access to Periodic and Current Reports

You can find more information about us that includes a list of our stations in each of our markets at our Internet website located at www.entercom.com. Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports are available free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission (the “SEC”). The contents of our websites are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. We will also provide a copy of our annual report on Form 10-K upon any written request.

ITEM 1A. RISK FACTORS

Many statements contained in this report are forward-looking in nature. See “Note Regarding Forward-Looking Statements.” These statements are based on current plans, intentions or expectations, and actual results could differ materially as we cannot guarantee that we will achieve these plans, intentions or expectations. Among the factors that could cause actual results to differ are the following:

BUSINESS RISKS

Our results may be impacted by economic trends.

Our net revenues increased in 2017 as compared to the prior year primarily as a result of acquisitions made during 2017. Excluding the net revenues from those radio stations divested, exchanged or operated by third-parties as part of the Merger, net revenues were flat for the year.

Our results of operations could be negatively impacted by economic fluctuations or by future economic downturns. Also, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions. The risks associated with our business could be more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in advertising. A decrease in advertising expenditures could adversely impact our business, financial condition and result of operations.

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There can be no assurance that we will not experience an adverse impact on our ability to access capital, which could adversely impact our business, financial condition and results of operations. In addition, our ability to access the capital markets may be severely restricted at a time when we would like or need to do so, which could have an adverse impact on our capacity to react to changing economic and business conditions.

Our radio stations may be adversely affected by changes in programming and competition for advertising revenues.

We operate in a highly competitive business. Our radio stations compete for audiences with advertising revenue as our principal source of income. We compete directly with other radio stations, as well as with other media, such as broadcast, cable and satellite television, satellite radio and pure-play digital audio, newspapers and magazines, national and local digital services, outdoor advertising and direct mail. We also compete for advertising dollars with other large companies such as Facebook, Google and Amazon. Audience ratings and market shares are subject to change, and any decrease in our listenership ratings or market share in a particular market could have a material adverse effect on the revenue of our stations located in that market. Audience ratings and market shares could be affected by a variety of factors, including changes in the format or content of programming (some of which may be outside of our control), personnel changes, demographic shifts and general broadcast listening trends. Adverse changes in any of these areas or trends could adversely impact our business, financial condition, results of operations and cash flows.

While we already compete in some of our markets with stations with similarly programmed formats, if another radio station in a market were to convert its programming format to a format similar to one of our stations or if an existing competitor were to garner additional market share, our stations could suffer a reduction in ratings and/or advertising revenue and could incur increased promotional and other expenses. Competing companies may be larger and have more financial resources than we do. There can be no assurance that any of our stations will be able to maintain or increase their current audience ratings and advertising revenues.

We may be unable to effectively integrate our acquisitions, including the Merger with CBS Radio.

The integration of acquisitions involves numerous risks.

In particular, we now have significantly more sales, assets and employees than we did prior to the Merger. The integration process will require us to expend significant capital and expand the scope of our operations and financial systems. We will be required to devote a significant amount of time and attention to the process of integrating the operations of the CBS Radio business. There is a great degree of difficulty and management involvement inherent in that process. These difficulties include:

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There is no assurance that the CBS Radio business will be successfully or cost-effectively integrated into our business. The process of integrating the CBS Radio business into our operations may cause an interruption of, or loss of momentum in, the activities of our business. If we are not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer and our liquidity, results of operations and financial condition could be adversely impacted.

The loss of key personnel could have a material adverse effect on our business.

Our business depends upon the continued efforts, abilities and expertise of our executive officers and other key personnel. We believe that the loss of one or more of these individuals could adversely impact our business, financial condition, results of operations and cash flows.

Our radio stations compete for creative and on-air talent with other radio stations and other media, such as broadcast, cable and satellite television, digital media and satellite radio. Our on-air talent are subject to change, due to competition and for other reasons. Changes in on-air talent could materially and negatively affect our ratings and our ability to attract local and national advertisers, which could in turn adversely affect our revenues.

The Merger with CBS Radio may not achieve its intended benefits.

Even if we are able to successfully combine the two business operations, it may not be possible to realize the full benefits of the increased sales volume and other benefits, including the expected synergies, which we anticipate will result from the Merger, or realize these benefits within the time frame that is expected. For example, the elimination of duplicative costs may not be possible or may take longer than anticipated, or the benefits from the Merger may be offset by costs incurred or delays in integrating the companies. If we fail to realize the benefits we anticipate from the acquisition, our liquidity, results of operations or financial condition could be adversely impacted.

We have incurred transaction- and merger-related costs in connection with the Merger.

We have incurred and expect to incur a number of non-recurring direct and indirect costs associated with the Merger. These costs and expenses include fees paid to financial, legal and accounting advisors, severance and other potential employment-related costs, including payments that may be made to certain Entercom and CBS Radio executives, filing fees, printing expenses and other related charges. There are also processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Merger and the integration of the two companies’ businesses. While we have assumed that a certain level of expenses would be incurred in connection with the Merger and the other operations contemplated by the Merger Agreement and continue to assess the magnitude of these costs, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated costs in connection with the Merger that we may not recoup. These costs and expenses could reduce the realization of efficiencies and strategic benefits we can expect to achieve from the Merger. Although we expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

Increases in or new royalties, including through legislation, could adversely impact our business, financial condition and results of operations.

We pay royalties to song composers and publishers through performance rights organizations (“PROs”), currently American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), SESAC, Inc. and Global Music Rights (“GMR”) for the performance of music on our radio stations and websites. The emergence of new PROs could increase the royalties that we pay. Although we pay royalties to record labels and

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recording artists for distributing music content online, we do not pay royalties to record labels or recording artists for broadcasts of music on our radio stations. From time to time, Congress considers legislation that could require that radio broadcasters pay performance royalties to record labels and recording artists. The proposed legislation has been the subject of considerable debate and activity by the radio broadcast industry and other parties that could be affected. We cannot predict whether any proposed legislation will become law. In addition, royalty rates are subject to adjustment and it is possible that our royalty rates associated with obtaining rights to use musical compositions and sound recordings in our programming content could increase as a result of private negotiations, regulatory rate-setting processes, or administrative and court decisions. Various independent record companies that claim to own the rights to several hundred sound recordings created prior to February 15, 1972 (the “Pre-1972 Recordings”) have sued several radio broadcasters (including CBS Radio) for allegedly infringing their exclusive right of public performance in certain states. In August 2015, CBS Radio was named as a defendant in two separate putative class action lawsuits in a federal court in each of California and New York for common law copyright infringement as well as related state law claims. In May 2016, the California court dismissed the California case against CBS Radio. In June 2016, the plaintiff record companies appealed this judgment to the U.S. Court of Appeals for the Ninth Circuit. In March 2017, the New York federal court dismissed the New York suit with prejudice. CBS Radio intends to vigorously defend itself in the California case. An adverse decision in the California case could impede our ability to broadcast or stream the Pre-1972 Recordings and/or increase our royalty payments. New or increased royalty payments could increase our expenses, which could adversely impact our businesses, financial condition, results of operations and cash flows.

The failure to protect our intellectual property could adversely impact our business, financial condition and results of operations.

We have limited rights to use the trademarks “CBS Radio,” “CBS Sports Radio” and certain other trademarks owned by CBS, subject in each case to certain license agreements entered into upon consummation of the Merger. Certain trademarks may be limited to a period of no more than twelve months after the Merger. Any substantial failure to protect and enforce our intellectual property rights prior to the expiration of these rights to use Trademarks owned by CBS and its subsidiaries could adversely impact our business, financial condition and results of operations. In addition, early termination of the trademark licenses could result in our rebranding such trademarks before we are prepared to do so and could require that we spend significant unanticipated resources.

Our ability to protect and enforce our intellectual property rights is important to the success of our business. We endeavor to protect our intellectual property under trade secret, trademark, copyright and patent law, and through a combination of employee and third-party non-disclosure agreements, other contractual restrictions, and other methods. We have registered trademarks in state and federal trademark offices in the United States and enforce our rights through, among other things, filing oppositions with the U.S. Patent and Trademark Offices. There is a risk that unauthorized digital distribution of our content could occur, and competitors may adopt names similar to ours or use confusingly similar terms as keywords in internet search engine advertising programs, thereby impeding our ability to build brand identity and leading to confusion among our audience or advertisers. Moreover, maintaining and policing our intellectual property rights may require us to spend significant resources as litigation or proceedings before the U.S. Patent and Trademark Office, courts or other administrative bodies, is unpredictable and may not always be cost-effective. There can be no assurance that we will have sufficient resources to adequately protect and enforce our intellectual property. The failure to protect and enforce our intellectual property could adversely impact our business, financial condition, results of operations and cash flows.

We may be subject to claims and litigation from third parties claiming that our operations infringe on their intellectual property. Any intellectual property litigation could be costly and could divert the efforts and attention of our management and technical personnel, which could have a material adverse effect on our business, financial condition and results of operations. If any such actions are successful, in addition to any potential liability for damages, we could be required to obtain a license in order to continue to operate our business.

We cannot predict the competitive effect on the radio broadcasting industry of changes in audio content distribution, changes in technology or changes in regulations.

The radio broadcasting industry is subject to rapid technological change, evolving industry standards and the emergence of new media technologies and services. We may lack the resources to acquire new technologies or introduce new services to allow us to compete with these new offerings. Competing technologies and services, some of which are commercial-free, include: personal audio devices; national and local digital audio services; satellite-delivered digital radio services; smart speaker driven services; content available over the Internet; HD Radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services; and low-power FM radio, which could result in additional FM radio broadcast outlets, including additional low-power FM radio signals authorized under the Local Community Radio Act of 2010.

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We cannot predict the effect, if any, that competition arising from new technologies or regulatory changes may have on the radio broadcasting industry or on our financial condition, results of operations and cash flows.

We are subject to extensive regulations and are dependent on federally-issued licenses to operate our radio stations. Failure to comply with such regulations could damage our business.

The radio broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. See Federal Regulation of Radio Broadcasting under Part I, Item 1, “Business.” We are required to obtain licenses from the FCC to operate our radio stations. Licenses are normally granted for a term of eight years and are renewable. Although the vast majority of FCC radio station licenses are routinely renewed, there can be no assurance that the FCC will approve our future renewal applications or that the renewals will not include conditions or qualifications. During the periods when a renewal application is pending, informal objections and petitions to deny the renewal application can be filed by interested parties, including members of the public, on a variety of grounds. The non-renewal, or renewal with substantial conditions or modifications, of one or more of our licenses could adversely impact our business, financial condition, results of operations and cash flows.

We must comply with extensive FCC regulations and policies in the ownership and operation of our radio stations. FCC regulations limit the number of radio stations that a licensee can own in a market, which could restrict our ability to consummate future transactions and in certain circumstances could require us to divest some radio stations. The FCC’s rules governing our radio station operations impose costs on our operations, and changes in those rules could have an adverse effect on our business. The FCC also requires radio stations to comply with certain technical requirements to limit interference between two or more radio stations. If the FCC relaxes these technical requirements, it could impair the signals transmitted by our radio stations and could adversely impact our business, financial condition and results of operation. Moreover, these FCC regulations may change over time, and there can be no assurance that changes would not adversely impact our business, financial condition and results of operations. We are currently the subject of several pending investigations by the FCC.

Congress or federal agencies that regulate us could impose new regulations or fees on our operations that could have a material adverse effect on us.

There has been in the past and there could be again in the future proposed legislation that requires radio broadcasters to pay additional fees such as a spectrum fee for the use of the spectrum. In addition, there has been proposed legislation which would impose a new royalty fee that would be paid to record labels and performing artists for use of their recorded music. It is currently unknown what impact any potential required royalty payments or fees would have on our business, financial condition, results of operations and cash flows.

We depend on selected market clusters of radio stations for a material portion of our revenues.

For 2017, we generated over 50% of our as reported net revenues in 11 of our 48 markets, which were Boston, Buffalo, Denver, Kansas City, Los Angeles, Miami, New Orleans, Portland, Sacramento, San Francisco and Seattle. On a pro forma basis as if we completed the Merger on January 1, 2017, we would have generated over 50% of our net revenues in nine of our 48 markets, which were Boston, Chicago, Dallas, Detroit, Los Angeles, Miami, New York City, Philadelphia and San Francisco. Accordingly, we have greater exposure to adverse events or conditions in any of these markets, such as changes in the economy, shifts in population or demographics, or changes in audience tastes, which could adversely impact our business, financial condition, results of operations and cash flows.

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We may have difficulty attracting, motivating and retaining key employees as a result of the merger with CBS Radio.

As a result of the Merger, our employees may experience uncertainty about their future roles with us, which may adversely affect our ability to attract and retain key personnel. Key employees may depart because of the uncertainty or potential difficulty of integration or a desire not to remain with the combined company.

Impairments to our broadcasting licenses and goodwill have reduced our earnings.

We have incurred impairment charges that resulted in non-cash write-downs of our broadcasting licenses and goodwill. A significant amount of these impairment losses were recorded in 2008 during the recession, and the most recent impairment loss to goodwill was recorded in the second quarter of 2017. As of December 31, 2017, our broadcasting licenses and goodwill comprised approximately 77% of our total assets. The valuation of our broadcasting licenses and goodwill is subjective and based on our estimates and assumptions rather than precise calculations. The fair value measurements for both our broadcast licenses and goodwill use significant unobservable inputs and reflect our own assumptions, including market share and profit margin for an average station, growth within a radio market, estimates of costs and losses during early years, potential competition within a radio market and the appropriate discount rate used in determining fair value. If events occur or circumstances change that would reduce the fair value of the broadcasting licenses and goodwill below the amount reflected on the balance sheet, we may be required to recognize impairment charges, which may be material, in future periods. Current accounting guidance does not permit a valuation increase.

We have significant obligations relating to our current operating leases.

As of December 31, 2017, we had future operating lease commitments of approximately $388.7 million that are disclosed in Note 20, Contingencies And Commitments, in the accompanying notes to our audited consolidated financial statements. We are required to make certain estimates at the inception of a lease in order to determine whether the lease is operating or capital. In February 2016, the accounting guidance was modified to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The most notable change in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases with a term of more than one year. This change will apply to our leased assets such as real estate, broadcasting towers and equipment. While we are currently reviewing the effects of this guidance, we believe that this change would result in: (i) an increase in ROU assets and lease liabilities reflected on our consolidated balance sheets to reflect the rights and obligations created by operating leases with a term of greater than one year; and (ii) no material change to the expense associated with the ROU assets. This guidance is effective for us as of January 1, 2019.

Our business is dependent upon the proper functioning of our internal business processes and information systems, and modification or interruption of such systems may disrupt our business, processes and internal controls.

The proper functioning of our internal business processes and information systems is critical to the efficient operation and management of our business. If these information technology systems fail or are interrupted, our operations and operating results may be adversely affected. Our business processes and information systems need to be sufficiently scalable to support the future growth of our business and may require modifications or upgrades that expose us to a number of operational risks. Our information technology systems, and those of third-party providers, may also be vulnerable to damage or disruption caused by circumstances beyond our control. These include catastrophic events, power anomalies or outages, computer system or network failures and natural disasters. Any material disruption, malfunction or similar challenges with our business processes or information systems, or disruptions or challenges relating to the transition to new processes, systems or providers, could adversely impact our business, financial position, results of operations and cash flow.

The FCC has engaged in vigorous enforcement of its indecency rules against the broadcast industry, which could have a material adverse effect on our business.

FCC regulations prohibit the broadcast of obscene material at any time and indecent or profane material between the hours of 6:00 a.m. and 10:00 p.m. Over the last decade, the FCC has increased its enforcement efforts relating to the regulation of indecency and has threatened on more than one occasion to initiate license revocation proceedings against a broadcast licensee who commits a “serious” indecency violation. Congress has dramatically increased the penalties for broadcasting obscene, indecent or profane programming, and these penalties may potentially subject broadcasters to license revocation, renewal or qualification proceedings in the event that they broadcast such material. In addition, the FCC’s heightened focus on the indecency regulatory scheme, against the broadcast industry generally, may encourage third parties to oppose our license renewal applications or applications

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for consent to acquire broadcast stations. We may in the future become subject to inquiries or proceedings related to our stations’ broadcast of obscene, indecent or profane material. To the extent that these inquiries or other proceedings result in the imposition of fines, a settlement with the FCC, revocation of any of our station licenses or denials of license renewal applications, our business, financial condition, results of operations and cash flow could be adversely impacted.

Cybersecurity threats could have a material adverse effect on our business

The use of our computers and digital technology in substantially all aspects of our business operations give rise to cybersecurity risks, including viruses or malware, physical or electronic intrusions and unauthorized access to our data. A cybersecurity attack could compromise confidential information. There can be no assurance that we, or the security systems we implement, will protect against all of these rapidly changing risks. A cyber security incident could increase our operating costs, disrupt our operations, harm our reputation, or subject us to liability under laws and regulations that protect personal data. We maintain insurance coverage against certain of such risks, but cannot guarantee that such coverage will be applicable or sufficient with respect to any given incident or on-going incidents that go undetected.

We are exposed to credit risk on our accounts receivable. This risk is heightened during periods of uncertain economic conditions.

Our outstanding accounts receivable are not covered by collateral or credit insurance. While we have procedures to monitor and limit exposure to credit risk on our receivables, which risk is heightened during periods of uncertain economic conditions, there can be no assurance such procedures will effectively limit our credit risk and enable us to avoid losses, which could have a material adverse effect on our financial condition, results of operations and cash flow.

We rely on key contracts and business relationships, and if our business partners or contracting counterparties fail to perform, or terminate, any of their contractual arrangements with us for any reason or cease operations, our business could be disrupted and our revenues could be adversely affected.

We rely on key contracts and business relationships, and if our business partners or contracting counterparties fail to perform, or terminate, any of their contractual arrangements with us for any reason or cease operations, our business could be disrupted and our revenues could be adversely affected. For instance, if one of our business partners or counterparties is unable (including as a result of any bankruptcy or liquidation proceeding) or unwilling to continue operating in the line of business that is the subject of our contract, we may not be able to obtain similar relationships and agreements on terms acceptable to us or at all. The failure to perform or termination of any of the agreements by a partner or a counterparty, the discontinuation of operations of a partner or counterparty, the loss of good relations with a partner or counterparty or our inability to obtain similar relationships or agreements, may have an adverse effect on our financial condition, results of operations and cash flow.

RISKS RELATED TO OUR INDEBTEDNESS

We have substantial indebtedness, which could adversely impact our business, financial condition and results of operations.

We have substantial indebtedness. As of December 31, 2017, we had a senior secured credit agreement (the “Credit Facility”) of $1.6 billion outstanding that is comprised of: (a) a $ 1,330.0 million term B-1 loan (the “Term B-1 Loan”) and (b) a $250.0 million senior secured revolving credit facility (the “Revolver”), of which $143.0 million was outstanding. In addition to the Credit Facility, we also have outstanding $400.0 million aggregate principal amount of 7.250% senior notes due October 2024 (the “Senior Notes”).

This significant amount of indebtedness could have an adverse impact on us. For example, these obligations:

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The undrawn amount of the Revolver was $105.1 million as of December 31, 2017. The amount of the Revolver available to us is a function of covenant compliance at the time of borrowing. Based on our financial covenant analysis as of December 31, 2017, we would not be limited in these borrowings.

We may from time to time seek to amend our existing indebtedness agreements or obtain funding or additional debt financing, which may result in higher interest rates.

The terms of the Credit Facility and the Senior Notes may restrict our current and future operations.

The Credit Facility and the Indenture governing the Senior Notes (the “Senior Notes Indenture”) contain a number of restrictive covenants that impose significant operating and financial restrictions on us and limit our ability to engage in actions that may be in our long-term best interests, including restrictions on our ability to:

As a result of our substantial indebtedness, we may be:

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These restrictions could hinder our ability to pursue our business strategy or inhibit our ability to adhere to our intended dividend policies.

We may still be able to incur substantial additional amounts of indebtedness, including secured indebtedness, which could further exacerbate the risks associated with our indebtedness and adversely impact our business, financial condition and results of operations.

We may incur substantial additional amounts of indebtedness, which could further exacerbate the risks associated with the indebtedness described above. Although the terms of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and additional liens, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. If new indebtedness is added to our existing indebtedness levels, the related risks that we face would intensify, and we may not be able to meet all of our respective indebtedness obligations. The incurrence of additional indebtedness may adversely impact our business, financial condition and results of operations.

We must comply with the covenants in our debt agreements, which restrict our operational flexibility.

The Credit Facility contains provisions which, under certain circumstances: limit our ability to borrow money; make acquisitions, investments or restricted payments, including without limitation dividends and the repurchase of stock; swap or sell assets; or merge or consolidate with another company. To secure the indebtedness under our Credit Facility, we have pledged substantially all of our assets, including the stock or equity interests of our subsidiaries.

The Credit Facility requires us to maintain compliance with a financial covenant, including a maximum Consolidated Net Secured Leverage Ratio (as defined in the Credit Facility) that cannot exceed 4.0 times as of December 31, 2017. Under certain circumstances, the Consolidated Net Secured Leverage Ratio can increase to 4.5 times for a limited period of time.

Our ability to comply with these financial covenants may be affected by operating performance or other events beyond our control, and there can be no assurance that we will comply with these covenants. A default under the Credit Facility could have a material adverse effect on our business.

Failure to comply with our financial covenants or other terms of these financial instruments and the failure to negotiate and obtain any required relief from our lenders could result in the acceleration of the maturity of our outstanding indebtedness and our lenders could proceed against our assets, including the equity interests of our subsidiaries. Under these circumstances, the acceleration of our indebtedness could have a material adverse effect on our business.

A breach of the covenants under the Senior Notes Indenture or under the Credit Facility could result in an event of default under the applicable agreement. Such a default would allow the lenders under the Credit Facility and/or the holders of the Senior Notes to accelerate the repayment of such indebtedness and may result in the acceleration of the repayment of any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an uncured event of default under the Credit Facility would also permit the lenders under the Credit Facility to terminate all other commitments to extend additional credit under the Credit Facility.

Furthermore, if we are unable to repay the amounts due and payable under the Credit Facility, those lenders could seek to foreclose on the collateral that secures such indebtedness. In the event that creditors accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness.

Because of our holding company structure, we depend on our subsidiaries for cash flow, and our access to this cash flow is restricted.

We operate as a holding company. All of our radio stations are currently owned and operated by our subsidiaries. CBS Radio, our 100% owned subsidiary, is the borrower under the Credit Facility. All of our station operating subsidiaries and FCC license subsidiaries are subsidiaries of CBS Radio. CBS Radio’s subsidiaries are all full and unconditional joint and several guarantors under the Credit Facility.

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As a holding company, our only source of cash to pay our obligations, including corporate overhead and other expenses, is cash distributed from our subsidiaries. We currently expect that the majority of the net earnings and cash flow of our subsidiaries will be retained and used by them in their operations, including servicing CBS Radio’s indebtedness obligations. Even if our subsidiaries elect to make distributions to us, there can be no assurance that applicable state law and contractual restrictions, including the restricted payments covenants contained in our Credit Facility, would permit such dividends or distributions.

Our variable-rate indebtedness gives rise to interest rate risk, which could cause our debt service obligations to increase significantly. Any increase in our debt service obligations could adversely impact our business, financial condition and results of operations.

Borrowings under the Term B-1 Loan and the Revolver are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations under the Credit Facility could increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, could correspondingly decrease.

As of December 31, 2017, if the borrowing rates under London Interbank Offered Rate (“LIBOR”) were to increase 100 basis points above the current rates, our interest expense on: (1) the Term B-1 Loan would increase $13.3 million on an annual basis; and (2) the Revolver would increase by $2.5 million, assuming our entire Revolver was outstanding as of December 31, 2017.

In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate risk. We may, however, not maintain interest rate swaps with respect to all of our variable-rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk. An increase in our debt service obligations could adversely impact our business, financial condition and results of operations.

To service our indebtedness and other cash needs, we require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to satisfy our indebtedness obligations and to fund any planned capital expenditures, dividends and other cash needs will depend in part upon our future financial and operating performance, and upon our ability renew or refinance borrowings. There can be no assurance that we will generate cash flow from operations, or that we will be able to draw under the Revolver or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on our indebtedness.

Prevailing economic conditions and financial, business, competitive, legislative, regulatory and other factors, many of which are beyond our control, will affect our ability to make these payments.

If we are unable to make payments or refinance our indebtedness or obtain new financing under these circumstances, we may consider other options, including:

These alternative measures may not be successful and may not enable us to meet scheduled indebtedness service obligations. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial conditions at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future indebtedness agreements may restrict us from adopting some of these alternatives. In the absence of sufficient cash flow from operating results and other resources, we could face substantial liquidity problems and could be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value, or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. Our inability to generate sufficient cash flow to satisfy our indebtedness obligations, or to refinance such indebtedness on commercially reasonable terms or at all, could adversely impact our business, financial condition and results of operations.

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A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.

Any decline in the ratings of our corporate credit or any indications from the rating agencies that their ratings on our corporate credit are under surveillance or review with possible negative implications could adversely impact our ability to access capital, which could adversely impact our business, financial condition and results of operations.

RISKS ASSOCIATED WITH OUR STOCK

Our Chairman Emeritus and our Chairman, President and Chief Executive Officer own a large minority equity interest in us and have substantial influence over our Company. Their interests may conflict with your interest.

As of March 6, 2018, Joseph M. Field, our Chairman Emeritus, beneficially owned 5,154,012 shares of our Class A common stock; and 3,295,949 shares of our Class B common stock, representing approximately 21.8% of the total voting power of all of our outstanding common stock. As of March 6, 2018, David J. Field, our Chairman, President and Chief Executive Officer, one of our directors and the son of Joseph M. Field, beneficially owned 3,318,409 shares of our Class A common stock and 749,250 shares of our Class B common stock, representing approximately 6.2% of the total voting power of all of our outstanding common stock. Joseph M. Field and David J. Field, beneficially own all outstanding shares of our Class B common stock. Other members of the Field family and trusts for their benefit also own shares of Class A common stock.

Shares of our Class B common stock are transferable only to Joseph M. Field, David J. Field, certain of their family members or trusts for any of their benefit. Upon any other transfer, shares of our Class B common stock automatically convert into shares of our Class A common stock on a one-for-one basis. Shares of our Class B common stock are entitled to ten votes only when Joseph M. Field or David J. Field vote them, subject to certain exceptions when they are restricted to one vote. Joseph M. Field is able to significantly influence the vote on all matters submitted to a vote of shareholders.

Our Equity Interests Will Continue To Be Impacted By Former CBS Radio Stockholders

A large percentage of our common stock shares are held by former holders of CBS Radio common stock. The former CBS Radio stockholders’ interests may not be aligned with our interests and that may cause future stock price volatility.

Sales of our Class A Common Stock may negatively affect the market price of our Class A common stock.

The shares of our Class A common stock that were issued in the Merger are generally eligible for immediate resale. The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock in the market or even the perception that these sales could occur.

A large percentage of our outstanding shares of our Class A common stock may be held by pre-Merger holders of CBS Class B common stock, including CBS employees who held certain CBS stock-based compensation rights that were converted into the right to receive our Class A Common Stock. The original holders of CBS Class B common stock may include index funds that have performance tied to the Standard & Poor’s 500 Index or other stock indices, and institutional investors subject to various investing guidelines. Since we may not be included in these indices or may not meet the investing guidelines of some of these institutional investors, these index funds and institutional investors may decide or be required to sell our Class A common stock that they received in the Merger. These sales, or the possibility that these sales may occur, may also make it more difficult for us to obtain additional capital by selling equity securities in the future at a time and price that we deem appropriate.

Our Class A common stock price and trading volume could be volatile.

Our Class A common stock has been publicly traded on the NYSE since January 29, 1999. The market price of our Class A common stock and our trading volume have been subject to fluctuations since the date of our initial public offering. As a result, the market price of our Class A common stock could experience volatility, regardless of our operating performance.

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The difficulties associated with any attempt to gain control of our company could adversely affect the price of our Class A common stock.

There are certain provisions contained in our articles of incorporation, by-laws and Pennsylvania law that could make it more difficult for a third party to acquire control of our Company. In addition, FCC approval for transfers of control of FCC licenses and assignments of FCC licenses is required. These restrictions and limitations could adversely affect the trading price of our Class A common stock.

None.

The types of properties required to support each of our radio stations include offices, studios and transmitter/antenna sites. We lease most of these sites. A station’s studios are generally housed with its offices in business districts. Our studio and office space leases typically contain lease terms with expiration dates of five to 15 years, which may contain options to renew. Our transmitter/antenna sites, which may include an auxiliary transmitter/antenna as a back-up to the main site, contain lease terms that generally range from five to 30 years, which may include options to renew.

The transmitter/antenna site for each station is generally located so as to provide maximum market coverage. In general, we do not anticipate difficulties in renewing facility or transmitter/antenna site leases or in leasing additional space or sites if required.

As of December 31, 2017, we had approximately $388.7 million in future minimum rental commitments under these leases. Many of these leases contain clauses such as defined contractual increases or cost of living adjustments.

Our principal executive office is located at 401 E. City Avenue, Suite 809, Bala Cynwyd, Pennsylvania 19004, in 14,061 square feet of leased office space. This lease is due to expire on October 31, 2021; however, we have the ability to vacate at any time, upon short notice. We expect to pursue other opportunities that would permit us to operate more efficiently by consolidating all of our operations in the Philadelphia radio market as we are currently located in multiple sites within the metro area.

We currently and from time to time are involved in litigation incidental to the conduct of our business. Management anticipates that any potential liability of ours that may arise out of or with respect to these matters will not materially adversely affect our business, financial position, results of operations or cash flows.

Broadcast Licenses

We could face increased costs in the form of fines and a greater risk that we could lose any one or more of our broadcasting licenses if the FCC concludes that programming broadcast by our stations is obscene, indecent or profane and such conduct warrants license revocation. The FCC’s authority to impose a fine for the broadcast of such material is $397,251 for a single incident, with a maximum fine of up to $3,666,930 for a continuing violation.

In connection with an administrative hearing, in early February 2017 we voluntarily cancelled one radio station license to facilitate certain regulatory approvals that were needed for the Merger.

Performance Fees

We incur fees from PROs to license our public performance of the musical works contained in each PRO’s repertoire. The Radio Music Licensing Committee (the “RMLC”), of which we are a represented participant: (i) entered into an industry-wide settlement with ASCAP that became effective January 1, 2017 for a five-year term; (ii) is currently seeking reasonable industry-wide fees from BMI effective January 1, 2017; (iii) is currently subject to arbitration proceedings with SESAC, Inc. to determine fair and reasonable fees that would be retroactive to January 1, 2016; and (iv) filed in November 2016 a motion in the U.S. District Court for the Eastern District of Pennsylvania against Global Music Rights (“GMR”) arguing that GMR is a monopoly demanding monopoly prices and asking the

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Court to subject GMR to an antitrust consent decree. GMR filed a counterclaim in the U.S. District Court for the Central District of California and a motion to dismiss the RMLC’s claim in the U.S. District Court for the Eastern District of Pennsylvania. There have been subsequent claims and counterclaims to establish jurisdiction. In January 2017, we obtained an interim license from GMR for fees effective January 1, 2017 to avoid any infringement claims by GMR for using GMR’s repertory without a license. This license, with an optional extension, is expected to expire September 30, 2018.

Not applicable.

Market Information for Our Common Stock

Our Class A common stock, $0.01 par value, is listed on the New York Stock Exchange under the symbol “ETM.” The table below shows, for the quarters indicated, the reported high and low trading prices of our Class A common stock on the NYSE.

There is no established trading market for our Class B common stock, $0.01 par value.

Holders

As of February 28, 2018, there were approximately 581 shareholders of record of our Class A common stock. Based upon available information, we believe we have approximately 32,500 beneficial owners of our Class A common stock. There are two shareholders of record of our Class B common stock, $0.01 par value, and no shareholders of record of our Class C common stock, $0.01 par value. In connection with the Merger, we refinanced our then-outstanding indebtedness in the fourth quarter of 2017 and in the process we fully redeemed our outstanding perpetual cumulative convertible preferred stock (“Preferred”). As a result, there are no holders of our Preferred as of December 31, 2017.

Dividends

Effective as of the second quarter of 2016, our Board commenced an annual common stock dividend program of $0.30 per share, with payments that approximated $2.9 million per quarter. In addition to the quarterly dividend, we paid a special one-time cash dividend of $0.20 per share of common equity on September 15, 2017.

On November 2, 2017, our Board approved an increase to the annual dividend program to $0.36 per share, with payments that will approximate $12.5 million per quarter. Any future dividends will be at the discretion of the Board based upon the relevant factors at the time of such consideration, including, without limitation, compliance with the restrictions set forth in the Credit Facility and the Senior Notes.

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In connection with the refinancing of our then-outstanding credit facility during the fourth quarter of 2017, the following funds were paid in November 2017 in order to fully redeem our Preferred: (i) $27.5 million to fully redeem the amount of Preferred previously outstanding; and (ii) $0.2 million in unpaid dividends through the redemption date. Quarterly dividends on our Preferred were paid in each of the quarters beginning in October 2015 at an annual rate of 6% that increased over time to 10% at the time of redemption.

For a summary of restrictions on our ability to pay dividends, see Liquidity under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 9, Long-Term Debt, in the accompanying notes to our audited consolidated financial statements.

Sales of Unregistered Securities

We did not sell any equity securities during 2017 that were not registered under the Securities Act.

Repurchases of Our Stock

The following table provides information on our repurchases of stock during the quarter ended December 31, 2017:

On July 16, 2015, we issued 11 shares of Series A Preferred Stock in connection with an acquisition. Each share of preferred stock had an initial conversion price of $14.35 (subject to typical anti-dilution adjustments, such as for common stock dividends) and a liquidation preference of $2,500,000 per share. We previously provided the information required by Item 702 of Regulation S-K in a Current Report on Form 8-K filed with the SEC on July 17, 2015. As discussed above, we fully redeemed our Preferred in November 2017 in connection with the Merger.

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Equity Compensation Plan Information

The following table sets forth, as of December 31, 2017, the number of securities outstanding upon the exercise of outstanding options under our equity compensation plan, the weighted average exercise price of such securities and the number of securities available for grant under these plans:

Equity Compensation Plan Information as of December 31, 2017

For a description of the Plan, refer to Note 14, Share-Based Compensation, in the accompanying notes to our audited consolidated financial statements.

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Performance Graph

The following Comparative Stock Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this information by reference. This Comparative Stock Performance Graph is being furnished with this Form 10-K and shall not otherwise be deemed filed under such acts.

The following line graph compares the cumulative five-year total return provided to shareholders of our Class A common stock relative to the cumulative total returns of: (i) the S&P 500 index; (ii) a peer group index consisting of Emmis Communications Corp., Urban One, Inc., Beasley Broadcast Group, Inc. (“Beasley”), and Saga Communications, Inc. (the “2017 Peer Group”); and (iii) a peer group index consisting of Cumulus Media Inc., Emmis Communications Corp., Urban One, Inc. and Beasley (the “2016 Peer Group”). An investment of $100 (with reinvestment of all dividends) is assumed to have been made on December 31, 2012. The change in peer group resulted from the replacement of Cumulus Media, Inc., which recently filed for bankruptcy, with a more relevant peer company in Saga Communications, Inc.

Cumulative Five-Year Return Index Of A $100 Investment

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The selected financial data below, as of and for the year ended 2017 and the four prior years, were derived from our consolidated financial statements. The selected financial data for 2017, 2016 and 2015 and balance sheets as of December 31, 2017 and 2016 are qualified by reference to, and should be read in conjunction with, the corresponding audited consolidated financial statements, the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this annual report. The selected financial data for 2014 and 2013 and the balance sheets as of December 31, 2015, 2014 and 2013 are derived from financial statements not included herein.

Our financial results are not comparable from year to year due to acquisitions and dispositions of radio stations, impairments of broadcasting licenses and goodwill, adoption of new accounting standards, and other significant events:

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SELECTED FINANCIAL DATA

(amounts in thousands, except per share data)

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SELECTED FINANCIAL DATA

(amounts in thousands, except per share data)

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Overview

We are the second-largest radio broadcasting company in the United States. We are also a leading local media and entertainment company with a nationwide footprint of radio stations including positions in all of top 15 markets and 22 of the top 25 markets.

On February 2, 2017, we and Merger Sub entered into the CBS Radio Merger Agreement with CBS and CBS Radio, pursuant to which Merger Sub merged with and into CBS Radio with CBS Radio surviving as our wholly-owned subsidiary. The parties to the Merger believe that the Merger was tax free to CBS and its shareholders. The Merger was effected through a stock-for-stock Reverse Morris Trust transaction.

In connection with the Reverse Morris Trust transaction, CBS Corporation commenced an exchange offer for the separation of its radio business to allow for the combination of CBS Radio and Entercom. In the exchange offer, CBS shareholders had the opportunity to exchange their shares of CBS Class B common stock for shares of CBS Radio common stock, which were immediately converted into an equal number shares of Entercom Class A common stock upon completion of the Merger. Under the terms of the exchange offer, 5.6796 shares of CBS Radio common stock were exchanged for each share of CBS Class B common stock accepted in the offer. CBS accepted 17,854,689 of the tendered shares in exchange for 101,407,494 shares of CBS Radio common stock, which upon closing of the Merger were immediately converted into an equal number of whole shares of Entercom Class A common stock.

On November 1, 2017, we entered into a settlement with the Antitrust Division of the DOJ. The settlement with the DOJ together with several required station divestiture transactions with third parties, allowed us to move forward with the Merger. On November 9, 2017, we obtained approval from the FCC to consummate the Merger. The transactions contemplated by the CBS Radio Merger Agreement were approved by our shareholders on November 15, 2017. Upon the expiration of the exchange offer period on November 16, 2017, the Merger closed on November 17, 2017.

Our results are based upon the aggregate performance of our radio stations. The following are some of the factors that impact a radio station’s performance at any given time: (i) audience ratings; (ii) program content; (iii) management talent and expertise; (iv) sales talent and expertise; (v) audience characteristics; (vi) signal strength; and (vii) the number and characteristics of other radio stations and other advertising media in the market area.

As opportunities arise, we may, on a selective basis, change or modify a station’s format due to changes in listeners’ tastes or changes in a competitor’s format. This could have an initial negative impact on a station’s ratings and/or revenues, and there are no guarantees that the modification or change will be beneficial at some future time. Our management is continually focused on these opportunities as well as the associated risks and uncertainties. We strive to develop compelling content and strong brand images to maximize audience ratings that are crucial to our stations’ financial success.

A radio broadcasting company derives its revenues primarily from the sale of broadcasting time to local, regional and national advertisers and national network advertisers who purchase spot commercials in varying lengths. A growing source of revenue is from station-related digital platforms, which allow for enhanced audience interaction and participation, integrated local digital marketing solutions and station events. A station’s local sales staff generates the majority of its local and regional advertising sales through direct solicitations of local advertising agencies and businesses. We retain a national representation firm to sell to advertisers outside of our local markets.

In the radio broadcasting industry, seasonal revenue fluctuations are common and are due primarily to variations in advertising expenditures by local and national advertisers. Typically, revenues are lowest in the first calendar quarter of the year.

In 2017, we generated the majority of our net revenues from local advertising, which is sold primarily by each individual local radio station’s sales staff, and the next largest amount from national advertising, which is sold by an independent advertising sales representative. This includes, but is not limited to, the sale of advertising during audio streaming of our radio stations over the Internet and the sale of advertising on our stations’ websites. We generated the balance of our 2017 revenues principally from network compensation, non-spot revenue, event marketing, e-commerce and our suite of digital products.

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The majority of our revenue is recorded on a net basis, which is gross revenue less advertising agency commissions. Revenues from digital marketing solutions and e-commerce are reflected on a net basis when appropriate. Revenues from event marketing are reflected on a net basis when we are not the primary party hosting the event. The revenues are determined by the advertising rates charged and the number of advertisements broadcast. We maximize our revenues by managing the inventory of advertising spots available for broadcast, which can vary throughout the day but is consistent over time.

Our most significant station operating expenses are employee compensation, programming and promotional expenses, and audience measurement services. Other significant expenses that impact our profitability are interest and depreciation and amortization expense.

You should read the following discussion and analysis of our financial condition and results in conjunction with our consolidated financial statements and related notes included elsewhere in this report. The following results of operations include a discussion of 2017 as compared to the prior year and a discussion of 2016 as compared to the prior year.

Results Of Operations

The year 2017 as compared to the year 2016

The following significant factors affected our results of operations for 2017 as compared to the prior year:

Business Combinations

In connection with the Merger with CBS Radio, which closed on November 17, 2017, we acquired multiple radio stations, net of certain dispositions and acquisition of radio stations through exchanges with third parties, which significantly increased in 2017 our net revenues, station operating expenses and depreciation and amortization expenses.

Related to the Merger, we incurred: (i) merger and acquisition costs, including legal, advisory services and professional fees of $41.3 million in 2017 and $0.7 million in 2016; and (ii) restructuring charges and transition services costs of $16.9 million in 2017.

On January 6, 2017, we acquired four radio stations in Charlotte, North Carolina for $24.0 million in cash, using cash on hand to fund the acquisition. We commenced operations under a TBA for three of the stations on November 1, 2016, and the fourth upon acquisition on January 6, 2017, which increased our net revenues, station operating expenses and depreciation and amortization expense.

During the fourth quarter of 2017, we assigned assets to a trust, which subsequently entered into a TBA that allows a third party to operate eight of our radio stations, which decreased our net revenues and station operating expenses and increased our TBA income.

We sold three radio stations in the fourth quarter of 2017, which resulted in a decrease to net revenues and station operating expenses and a $2.6 million gain on the sale of assets.

We recorded a $13.5 million loss in the first quarter of 2017 as a result of permanently discontinuing the operation of one of our stations and returning the station’s license to the FCC for cancellation, in order to facilitate the Merger. The loss is included within net (gain) loss on sale or disposal of assets.

Other

Due to the tax legislation enacted during the fourth quarter of 2017, we recognized an income tax benefit from continuing operations of $291.5 million due to the reduction to our effective tax rate and its impact on our deferred income taxes.

In connection with the Merger, which closed on November 17, 2017, we refinanced our then-outstanding credit facility and redeemed our Preferred. As a result of the refinancing, we recognized a loss on extinguishment of indebtedness of approximately $4.1 million.

Our outstanding indebtedness upon which interest is computed increased significantly on November 17, 2017 as a result of the Merger and our assumption of CBS Radio’s outstanding indebtedness.

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In November 2016, we refinanced our outstanding former senior credit facility and retired our former Senior Notes outstanding. As a result of the refinancing, we recognized a loss on extinguishment of debt of approximately $10.9 million in 2016.

During the third quarter of 2016, we settled a legal claim with British Petroleum as a result of their Deepwater Horizon oil spill in the Gulf of Mexico that occurred in 2010 and recovered $2.3 million on a net basis after deducting certain related expenses. The claim was a result of lost business due to the oil spill. This amount was included in other income and expense.

Net Revenues

The increase in net revenues was primarily attributable to the Merger, net of certain divestitures and acquisitions through exchanges with third parties. Net revenues from the new stations together with our existing stations contributed to overall 28% growth over prior year results. Excluding the net revenues from these acquisitions and disposition, net revenues were flat for the year.

Excluding new markets and overlap markets, net revenues increased the most for our stations located in the Greensboro and Indianapolis markets.

Excluding new markets and overlap markets, net revenues decreased the most for our stations located in the Denver and Sacramento markets.

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Station Operating Expenses

The increase in station operating expenses was primarily attributable to the acquisition of new stations, net of certain divestitures and radio stations acquired through exchanges with third parties. Station operating expenses from the new stations together with our existing stations contributed to the reported 37% increase over prior year results, primarily due to an increase in the variable expenses associated with the increase in net revenues.

Depreciation and Amortization Expense

Depreciation and amortization expense increased in 2017 primarily due to the acquisition of assets included in the Merger and in the Charlotte Acquisition and an increase in capital expenditures. The increase in capital expenditures in 2017 was primarily due to the consolidation and relocation of several studio facilities in larger markets together with an increase in the size of our company.

Corporate General and Administrative Expenses

Corporate general and administrative expenses increased primarily due to: (i) an increase in non-cash equity compensation expense of $2.7 million, which includes the non-cash compensation expenses associated with the conversion of equity awards assumed in the Merger; (ii) an increase in compensation expense of $2.4 million due an expanded workforce in anticipation of the merger together with additional corporate employees added as a result of the Merger; (iii) an increase in consulting expenses of $2.2 million in connection with additional services provided related to the Merger; (iv) an increase in deferred compensation expense of $1.7 million as our deferred compensation liability generally tracks the movements in the stock market; and (v) certain contractual obligations of $1.3 million to a senior executive as a result of the non-renewal of an employment agreement.

Merger and Acquisition Costs

Merger and acquisition costs increased due to transaction costs relating to the Merger. These costs primarily consisted of legal, professional, and other advisory services.

Restructuring Charges and Transition Services Costs

We incurred restructuring charges and transition services costs of $16.9 million in 2017 primarily as a result of the restructuring of operations for the Merger. These costs primarily included workforce reduction charges and the abandonment of excess studio space in certain markets.

Other Operating Income and Expenses

Other operating expenses increased primarily as a result of incurring a $13.5 million loss from permanently discontinuing the operation of one of our stations and returning the station’s license to the FCC for cancellation, in order to facilitate the Merger. Offsetting this loss, in the fourth quarter of 2017 we sold three radio stations in order to facilitate the Merger and recognized a gain of $2.6 million.

Operating Income

Operating income this year decreased primarily due to: (i) an increase in merger and acquisition costs of $41.3 million in connection with the Merger; (ii) the recognition of a $13.5 million loss from permanently discontinuing the operation of one of our stations and returning the license to the FCC for cancellation, in order to facilitate the Merger; (iii) an increase in restructuring charges as described above; (iv) an increase in station operating expenses for the reasons described above; and (v) an increase in corporate, general and administrative expenses for the reasons described above.

Interest Expense

Net interest expense decreased $4.1 million for the year. This was primarily due to the decrease for the 2017 period prior to the Merger in our average outstanding interest rate on our average outstanding indebtedness upon which interest is computed as compared to 2016. The decrease in interest expense was due to the refinancing in the fourth quarter of 2016 of our senior secured credit facility with lower interest rates that replaced our former Senior Notes with higher interest rates.

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The interest expense decrease was offset by the interest expense incurred on the indebtedness assumed from the Merger for the period of November 17, 2017 through the end of the year. As a result of the Merger and subsequent refinancing of our then-outstanding credit facility, we incurred interest expense on additional net outstanding indebtedness upon which interest is computed. Assuming that LIBOR is flat, we expect interest expense to increase in future periods as a result of the significant increase in outstanding indebtedness upon which interest is computed.

The weighted average variable interest rate for our credit facilities as of December 31, 2017 and 2016 was 4.2% and 4.5%, respectively.

Other (Income) Expense

In connection with the Merger, we refinanced our then outstanding pre-merger indebtedness in the fourth quarter of 2017 and recorded a loss on extinguishment of indebtedness of $4.1 million.

We also refinanced our outstanding indebtedness in the fourth quarter of 2016 and recorded a loss on extinguishment of indebtedness of approximately $10.9 million. This loss was partially offset by the recovery of $2.3 million on a net basis from the settlement of a legal claim with British Petroleum as a result of their Deepwater Horizon oil spill in the Gulf of Mexico that occurred in 2010. The claims was a result of lost business due to the oil spill.

The decrease in the amount of loss on extinguishment of indebtedness is primarily attributable to the inclusion of a $5.8 million call premium on the early retirement of our indebtedness in 2016, which was non-recurring in nature.

Income (Loss) Before Income Taxes (Benefit)

The generation of income (loss) before the income taxes (benefit) was largely attributable to the merger and acquisition costs and restructuring charges and transition services costs incurred in connection with the Merger and the $13.5 million loss from permanently discontinuing the operation of one of our stations and returning the station’s license to the FCC for cancellation, in order to facilitate the Merger.

Income Taxes (Benefit)

The effective income tax rate from continuing operations for 2017 was significantly impacted by a $291.5 million income tax benefit that reduced our income tax expense. The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017, which contained significant changes to the U.S. Federal tax law, including a reduction in the U.S. federal corporate tax rate from the previous rate of 35% to 21%. The Company recorded an estimated benefit from continuing operations of $291.5 million to adjust our deferred income tax balances as a result of the reduced corporate income tax rate. The estimated amounts are included as components of income tax expense from continuing operations.

The effective income tax rate was 28.0% for 2016, which was impacted by: (i) discrete income tax benefits from the reversal of valuation allowances against net operating losses for certain single member states due to changes in future estimated income; (ii) the reversal of partial valuation allowances in certain single member states as a result of internal restructuring; and (iii) a retroactive decrease in deferred tax liabilities associated with non-amortizable assets such as broadcasting licensees and goodwill. Our income tax rate has been trending down as expenses not deductible for tax purposes have decreased due to the issuance to senior management of a higher percentage of awards that were fully deductible for tax purposes.

Estimated Income Tax Rate For 2018

We estimate that our 2018 annual tax rate before discrete items, which may fluctuate from quarter to quarter, will be between 26% and 27%. We anticipate that we will be able to utilize certain net operating loss carryovers to reduce future payments of federal and state income taxes. We anticipate that our rate in 2018 could be affected primarily by: (i) changes in the level of income in any of our taxing jurisdictions; (ii) adding facilities through mergers or acquisition in states that on average have different income tax rates from states in which we currently operate and the resulting effect on previously reported temporary differences between the tax and financial reporting bases of our assets and liabilities; (iii) the effect of recording changes in our liabilities for uncertain tax positions; (iv) taxes in certain states that are dependent on factors other than taxable income; (v) the limitations on

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the deduction of cash and certain non-cash compensation expense for certain key employees; and (vi) any tax benefit shortfall associated with share-based awards. Our annual effective tax rate may also be materially impacted by: (a) tax expense associated with non-amortizable assets such as broadcasting licenses and goodwill; (b) regulatory changes in certain states in which we operate; (c) changes in the expected outcome of tax audits; (d) changes in the estimate of expenses that are not deductible for tax purposes; and (e) changes in the deferred tax valuation allowance.

In the event we determine at a future time that it is more likely than not that we will not realize our net deferred tax assets, we will increase our deferred tax asset valuation allowance and increase income tax expense in the period when we make such a determination.

Net Deferred Tax Liabilities

As of December 31, 2017 and 2016, our total net deferred tax liabilities were $609.8 million and $92.9 million, respectively. The substantial increase in deferred tax liabilities was the result of the deferred tax liabilities assumed in the Merger, net of the tax benefit as a result of the TCJA. Our net deferred tax liabilities primarily relate to differences between book and tax bases of certain of our indefinite-lived intangibles (broadcasting licenses and goodwill). Under accounting guidance, we do not amortize our indefinite-lived intangibles for financial statement purposes, but instead test them annually for impairment. The amortization of our indefinite-lived assets for tax purposes but not for book purposes creates deferred tax liabilities. A reversal of deferred tax liabilities may occur when indefinite-lived intangibles: (1) become impaired; or (2) are sold, which would typically only occur in connection with the sale of the assets of a station or groups of stations or the entire company in a taxable transaction. Due to the amortization for tax purposes and not book purposes of our indefinite-lived intangible assets, we expect to continue to generate deferred tax liabilities in future periods (without consideration for any impairment loss in future periods).

Income (Loss) From Discontinued Operations, Net of Income Taxes (Benefit)

Several stations acquired from CBS Radio, which were operated under a local marketing agreement (“LMA”), immediately met the criteria to be classified as held for sale. In addition, the results of operations for these stations are presented as discontinued operations as these stations are never expected to be operated by us. Amounts of net revenues, station operating expenses, depreciation and amortization and LMA income earned from these stations is not included in our income from continuing operations. The income generated from these stations during the period of the LMA through December 31, 2017 is separately presented net of income taxes (benefit).

Net Income (Loss) Available To The Company

The change in net income (loss) available to the Company was primarily attributable to the reasons described above under Income (Loss) Before Income Taxes (Benefit) and Income Taxes (Benefit).

Results Of Operations

The year 2016 as compared to the year 2015

The following significant factors affected our results of operations for 2016 as compared to the prior year:

Business Combinations

On November 1, 2016, we commenced operations of three radio stations in Charlotte, North Carolina under a TBA with a trust, which increased our net revenues, station operating expenses and TBA expense. These radio stations were placed in trust by Beasley.

In the third quarter of 2016, we recorded merger and acquisition costs of $0.7 million.

On July 16, 2015, we acquired the stock of Lincoln Financial Media Company (“Lincoln”) for $77.5 million in cash and $27.5 million in newly-issued Preferred (the “Lincoln Acquisition”). Lincoln indirectly held the assets and liabilities of radio stations serving the Atlanta, Denver, Miami and San Diego markets.

On November 24, 2015, we completed a transaction with Bonneville International Corporation (“Bonneville”) to exchange certain radio stations in Denver for a radio station in Los Angeles, California (the “Bonneville Exchange”) plus additional consideration. Pursuant to a TBA, on July 17, 2015, we commenced operations of a radio station in Los Angeles. That same day, Bonneville commenced operations of certain of our Denver radio stations.

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On a combined basis, the 2015 transactions resulted in an increase in 2016 to our net revenues and station operating expenses, depreciation and amortization expense and interest expense and a decrease in 2016 to our TBA income. In addition, we recognized a gain of $1.5 million in 2015 on the disposition of a radio station.

We incurred merger and acquisition costs of $4.0 million in 2015 primarily related to the Lincoln Acquisition and the Bonneville Exchange.

We incurred restructuring charges of $2.8 million in 2015 primarily as a result of the restructuring of operations for the Lincoln Acquisition. These costs included a workforce reduction charge, the recognition of duplicative contractual obligations and the abandonment of excess studio space in one of the acquired markets.

Other

On November 1, 2016, we entered into a $540 million credit facility and used the proceeds to: (i) refinance our then-outstanding senior credit facility that was comprised of: (a) a term loan component with $223.0 million outstanding at the date of the refinancing; and (b) a revolving credit facility with $3.0 million outstanding at the date of the refinancing; (ii) fund the redemption of the $220.0 million 10.5% Senior Notes due December 1, 2019 and discharge the indenture governing such senior notes; (iii) fund $11.6 million of accrued interest and a call premium of $5.8 million on the senior notes; and (iv) pay transaction costs associated with the refinancing.

As a result of the refinancing activity described above, we recorded a loss on extinguishment of indebtedness of $10.9 million, related refinancing expenses of $0.6 million and new deferred financing costs of $8.0 million. The loss on extinguishment of indebtedness was included in other income.

During the third quarter of 2016, we settled a legal claim with British Petroleum as a result of their Deepwater Horizon oil spill in the Gulf of Mexico that occurred in 2010 and recovered $2.3 million on a net basis after deducting certain related expenses. The claim was a result of lost business due to the oil spill. This amount was included in other income and expense.

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Net Revenues

Net revenues increased across most of our markets. For our core stations, which exclude the new stations acquired/disposed of through the Lincoln Acquisition and Bonneville Exchange, net revenues were up in the low-single digits. Comparing our performance for the new stations to the prior owners’ performance, net revenues were up in the high single digits. Net revenues from the new stations together with our core stations contributed to overall double digit growth over prior year results.

Excluding the benefit of the net revenues associated with the new stations, net revenues increased the most for our stations located in the Denver and San Francisco markets.

Excluding the benefits of the net revenues associated with the new stations, net revenues decreased the most for our stations located in the New Orleans and Portland markets.

Station Operating Expenses

For our core stations, station operating expenses increased in the low single digits. Comparing our performance for the new stations to the prior owners’ performance, station operating expenses decreased in the mid-single digits. Station operating expenses from the new stations together with our core stations contributed to the reported overall increase over prior year results, primarily due to an increase in the variable expenses associated with the increase in net revenues.

Depreciation and Amortization Expense

Depreciation and amortization expense increased in 2016 primarily due to the acquisitions in 2015 of assets included in the Lincoln Acquisition.

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Corporate General and Administrative Expenses

Corporate general and administrative expenses increased primarily due to an increase in costs associated with: (i) a $1.0 million bonus incurred in the second quarter in connection with a new employment agreement for our Chief Executive Officer; (ii) an increase in non-cash equity compensation expense of $0.9 million; (iii) an increase in deferred compensation expense of $0.7 million as our deferred compensation liability generally tracks the movements in the stock market; and (iv) investment in corporate marketing capabilities and staff.

Operating Income

Operating income in 2016 benefited from: (1) an increase in net revenues, net of station operating expenses, to reflect a full year of operations of the Lincoln Acquisition and the Bonneville Exchange as these stations were only included in operations for a portion of the year in 2015; (2) an increase in net revenues, net of station operating expenses and TBA fees, for the commencement of operations in Charlotte, North Carolina of three radio stations under a TBA that was effective November 1, 2016; and (3) a net reduction in merger and acquisition costs and restructuring charges of $6.1 million.

Interest Expense

Net interest expense was down $1.4 million for the year as average outstanding indebtedness upon which interest is computed, declined slightly as compared to the prior year.

There would have been a further decrease in interest expense, however; we incurred interest expense on $220 million in indebtedness outstanding under both the former senior notes and the former term B loan for the month of November. Assuming LIBOR is flat, we expect interest expense to decrease in future periods as a result of the decrease in future outstanding indebtedness upon which interest is computed and the elimination of our former senior notes as a result of the refinancing.

The weighted average variable interest rate as of December 31, 2016 and 2015 was 4.5% and 4.1%, respectively.

Other (Income) Expense

We refinanced our outstanding indebtedness in the fourth quarter of 2016 and recorded a loss on extinguishment of indebtedness of approximately $10.9 million. This loss was partially offset by the recovery of $2.3 million on a net basis from the settlement of a legal claim with British Petroleum as a result of their Deepwater Horizon oil spill in the Gulf of Mexico that occurred in 2010. The claims was a result of lost business due to the oil spill.

Income (Loss) Before Income Taxes (Benefit)

The increase was largely attributable to: (i) improved results of operations; (ii) a decrease of $6.1 million in merger and acquisition costs and restructuring charges; and (iii) a $2.3 million settlement (net of certain expenses) with British Petroleum as a result of their Deepwater Horizon oil spill in the Gulf of Mexico. These increases were partially offset by a $10.9 million loss on extinguishment of indebtedness incurred in connection with our refinancing of our former credit facility and redemption of the former senior notes.

Income Taxes (Benefit)

The effective income tax rate was 28.0% for 2016, which was impacted by: (i) discrete income tax benefits from the reversal of valuation allowances against net operating losses for certain single member states due to changes in future estimated income; (ii) the reversal of partial valuation allowances in certain single member states as a result of internal restructuring; and (iii) a retroactive decrease in deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill. Our income tax rate has been trending down as expenses not deductible for tax purposes have decreased due to the issuance to senior management of a higher percentage of awards that were fully deductible for tax purposes.

The effective income tax rate was 38.7% for 2015, which was impacted by an adjustment for expenses that are not deductible for tax purposes and an increase in net deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill. Our income tax rate had been trending down as expenses not deductible for tax purposes decreased due to the issuance to senior management of a higher percentage of awards that

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were fully deductible for tax purposes. Following the Lincoln Acquisition and the Bonneville Exchange, the estimated annual income tax rate increased due to the impact of acquisitions on our state income apportionments to states with higher income tax rates. This increase was offset by a discrete state income tax credit due to recent legislation that allowed for the release of a partial valuation allowance in a certain single member state.

Net Income (Loss) Available to the Company

The change in net income (loss) available to us was primarily attributable to the reasons described above under Income (Loss) Before Income Taxes and Income Taxes (Benefit).

Future Impairments

We may determine that it will be necessary to take impairment charges in future periods if we determine the carrying value of our intangible assets is more than the fair value. Our annual impairment test of our broadcasting licenses and goodwill was performed in the second quarter of 2017 and the third quarter for one of our other markets.

We may be required to retest prior to our next annual evaluation, which could result in an impairment. As of December 31, 2017, no interim impairment test was required for our broadcasting licenses and goodwill, other than as noted above.

Liquidity and Capital Resources

Refinancing – Entercom Indebtedness

Prior to the closing of the CBS Radio Merger Agreement, CBS Radio entered into a commitment letter with a syndicate of lenders (the “Commitment Parties”), pursuant to which the Commitment Parties committed to provide up to $500.0 million of senior secured term loans (the “CBS Radio Financing”) as an additional tranche under the Credit Facility among CBS Radio, the guarantors named therein, the lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent.

On March 3, 2017, CBS Radio entered into an amendment to the Credit Facility, to, among other things, create a tranche of Term B-1 Loans (the “Term B-1 Tranche”) in an aggregate principal amount of $500 million. The Term B-1 Tranche, which replaced the commitment under the CBS Radio Financing is governed by the Credit Facility and will mature on November 17, 2024.

On the closing date of the Merger, the proceeds of the Term B-1 Tranche together with other funds were used to: (i) refinance our $540 million credit agreement (the “Former Credit Facility”) that was comprised of: (a) a term loan component (the “Former Term B Loan” with $458.0 million outstanding at the date of the refinancing; and (b) a revolving credit facility (the “Former Revolver”) with $17.5 million outstanding at the date of the refinancing; (ii) redeem our $27.5 million of Preferred; and (iii) pay fees and expenses in connection with the refinancing.

Amendment And Repricing – CBS Radio Indebtedness

In connection with the Merger, we assumed CBS Radio’s indebtedness outstanding under the Credit Facility and the Senior Notes (described below). Immediately prior to the Merger and the refinancing described above, the Credit Facility was comprised of the term B loan and a revolving credit facility. On the closing date of the Merger, the Credit Facility was amended to change certain terms and to lower the borrowing costs. In addition, the term B loan was converted into the Term B-1 Loan of the Credit Facility.

As a result of the refinancing activities described above, in the fourth quarter of 2017, we wrote off $3.1 million of unamortized deferred financing costs and recorded a loss on the extinguishment of indebtedness of $4.1 million. The loss included the write off of deferred financing expense and certain fees paid to lenders in connection with the refinancing activities.

Liquidity

Immediately following the refinancing activities described above, the Credit Facility as amended, is comprised of a $250.0 million Revolver, a $ 1,330.0 million Term B-1 Loan.

As of December 31, 2017, we had $ 1,330.0 million outstanding under the Term B-1 Loan and $143.0 million outstanding under the Revolver. In addition, we had $1.9 million in outstanding letters of credit. As of December 31, 2017, we had $34.2 million in cash and cash equivalents. In connection with our outstanding indebtedness, we have restrictions in the ability of our subsidiaries to distribute cash to our Parent, as more fully described in the accompanying notes to our audited consolidated financial statements. We do not anticipate that these restrictions will limit our ability to meet our future obligations over the next 12 months.

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Over the past several years, we have used a significant portion of our cash flow to reduce our indebtedness. Generally, our cash requirements are funded from one or a combination of internally generated cash flow, cash on hand and borrowings under our Revolver. In 2017, we assumed significant amount of indebtedness in connection with the Merger. For the year ended December 31, 2017, we increased our outstanding net indebtedness by $1,291.5 million.

We may also use our capital resources to repurchase shares of our Class A common stock, to pay dividends to our shareholders, and to make acquisitions. We may from time to time seek to repurchase and retire our outstanding indebtedness through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

The Credit Facility

The $250.0 million Revolver has a maturity date of November 17, 2022 and provides for interest based upon the prime rate or LIBOR plus a margin. The margin may increase or decrease based upon our Consolidated Net Secured Leverage Ratio as defined in the agreement. The initial margin is at LIBOR plus 2.25% or the prime rate plus 1.25%. In addition, the Revolver requires the payment of a commitment fee of 0.5% per annum on the unused amount. The amount available under the Revolver, which includes the impact of outstanding letters of credit was $105.1 million as of December 31, 2017.

The $ 1,330.0 million Term B-1 Loan has a maturity date of November 17, 2024 and provides for interest based upon the Base Rate or LIBOR, plus a margin. The initial rate is at LIBOR plus 2.75%, or the Base Rate plus 1.75%. The Base Rate is the highest of: (a) the administrative agent’s prime rate; (b) the Federal Reserve Bank of New York’s Rate plus 0.5%; or (c) the LIBOR Rate plus 1.0%.

The Term B-1 Loan amortizes: (i) with equal quarterly installments of principal in annual amounts equal to 1.0% of the original principal amount of the Term B-1 Loan; and (ii) mandatory yearly prepayments based upon a percentage of Excess Cash Flow as defined in the agreement.

The Term B-1 Loan requires mandatory prepayments equal to a percentage of Excess Cash Flow, subject to incremental step-downs, depending on the Consolidated Net Secured Leverage Ratio. The first Excess Cash Flow payment will be due in the first quarter of 2019 and then each subsequent year, and is based on the Excess Cash Flow and Leverage Ratio for the prior year.

We expect to use the Revolver to provide for: (i) working capital; and (ii) general corporate purposes, including capital expenditures and any or all of the following (subject to certain restrictions): repurchase of Class A common stock, dividends, investments and acquisitions. All of our wholly-owned subsidiaries, jointly and severally guaranteed the Credit Facility. The Credit Facility is secured by a pledge of 66% of our outstanding voting stock and other equity interests in all of our wholly owned subsidiaries. In addition, the Credit Facility is secured by a lien on substantially all of our assets, with limited exclusions (including our real property). The assets securing the Credit Facility are subject to customary release provisions which would enable us to sell such assets free and clear of encumbrance, subject to certain conditions and exceptions.

The Credit Facility has usual and customary covenants including, but not limited to, a senior secured leverage ratio, limitations on restricted payments and the incurrence of additional borrowings. Specifically, the Credit Facility requires us to comply with a maximum Consolidated Net Secured Leverage Ratio that cannot exceed 4.0 times. In the event that we consummate additional acquisition activity permitted under the terms of the Credit Facility, the Consolidated Net Secured Leverage Ratio will be increased to 4.5 times for a one year period following the consummation of such permitted acquisition. As of December 31, 2017, our Consolidated Net Secured Leverage Ratio was 3.2 times.

As of December 31, 2017, we were in compliance with the financial covenant then applicable and all other terms of the Credit Facility in all material respects. Our ability to maintain compliance with our covenants under the Credit Facility is highly dependent on our results of operations. Management believes that over the next 12 months we can continue to maintain compliance. Our operating cash flow remains positive, and we believe that it is adequate to fund our operating needs. We believe that cash on hand and cash from operating activities will be sufficient to permit us to meet our liquidity requirements over the next 12 months, including our debt repayments.

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Failure to comply with our financial covenants or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any required relief from its lenders could result in a default under the Credit Facility. Any event of default could have a material adverse effect on our business and financial condition. The acceleration of our indebtedness could have a material adverse effect on our business. We may seek from time to time to amend our Credit Facility or obtain other funding or additional funding, which may result in higher interest rates.

The Former Credit Facility

On November 1, 2016, Entercom Communications corp. and its wholly-owned subsidiary, Entercom Radio LLC (“Radio”), entered into the Former Credit Facility with a syndicate of lenders for a $540 million Former Credit Facility, which was initially comprised of: (i) the $60 million Former Revolver that was set to mature on November 1, 2021; and (ii) the $480 million Former Term B Loan that was set to mature on November 1, 2023.

The Former Term B Loan amortized with: (i) equal quarterly installments of principal in annual amounts equal to 1.0% of the original principal amount of the Former Term B Loan; and (ii) mandatory yearly prepayments based upon a percentage of Excess Cash Flow as defined within the agreement and was subject to incremental step-downs depending on the consolidated Leverage Ratio.

Senior Notes

Simultaneously with entering into the Merger and assuming the Credit Facility on November 17, 2017, we also assumed the Senior Notes that mature on October 17, 2024 in the amount of $400.0 million. The Senior Notes, which were originally issued by CBS Radio on October 17, 2016, were valued at a premium as part of the fair value measurement on the date of the Merger. The premium on the Senior Notes will be amortized over the term under the effective interest rate method. As of any reporting period, the unamortized premium on the Senior Notes is reflected on the balance sheet as an addition to the $400.0 million liability.

Interest on the Senior Notes accrues at the rate of 7.250% per annum and is payable semi-annually in arrears on April 15 and October 15 of each year. Due to the timing of the Merger, we only incurred interest expense on the Senior Notes from November 17, 2017 until December 31, 2017.

The Senior Notes may be redeemed at any time on or after November 1, 2019 at a redemption price of 105.438% of their principal amount plus accrued interest. The redemption price decreases to 103.625% of their principal amount plus accrued interest on or after November 1, 2020, 101.813% of their principal amount plus accrued interest on or after November 1, 2021, and 100% of their principal amount plus accrued interest on or after November 1, 2022.

The Senior Notes are unsecured and ranked: (i) senior in right of payment to our future subordinated indebtedness; (ii) equally in right of payment with all of our existing and future senior indebtedness; (iii) effectively subordinated to our existing and future secured indebtedness (including the indebtedness under our Credit Facility), to the extent of the value of the collateral securing such indebtedness; and (iv) structurally subordinated to all of the liabilities of our subsidiaries that do not guarantee the Senior Notes, to the extent of the assets of those subsidiaries.

All of our existing subsidiaries, other than CBS Radio, jointly and severally guaranteed the Senior Notes.

A default under our Senior Notes could cause a default under our Credit Facility. Any event of default, therefore, could have a material adverse effect on our business and financial condition.

We may from time to time seek to repurchase or retire our outstanding indebtedness through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

The Senior Notes are not a registered security and there are no plans to register our Senior Notes as a security in the future. As a result, Rule 3-10 of Regulation S-X promulgated by the SEC is not applicable and no separate financial statements are required for the guarantor subsidiaries as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015.

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The Former Senior Notes

In 2016, the Company issued a call notice to redeem its $220.0 million 10.5% unsecured Senior Notes due December 1, 2019 (the “Former Senior Notes”) in full with an effective date of December 1, 2016, that was funded by the proceeds of the Former Credit Facility. As a result of the full redemption of the Former Senior Notes with replacement indebtedness at a lower interest rate, the net interest expense incurred in 2017 through the date of the Merger was reduced and does not include amortization of original issue discount of Former Senior Notes. This reduction in net interest expense was partially offset by the increase in net interest expense incurred from the closing date of the Merger through December 31, 2017 due to the significant increase in the amount of indebtedness outstanding.

In addition to the parent, Entercom Communications Corp., all of our existing subsidiaries (other than Radio, which is a finance subsidiary and was the issuer of the Senior Notes), jointly and severally guaranteed the Senior Notes.

Perpetual Cumulative Convertible Preferred Stock

In connection with the Lincoln Acquisition on July 16, 2015, we issued $27.5 million of Preferred that in the event of a liquidation, ranked senior to liquidation payments to our common shareholders. We incurred issuance costs, which were recorded as a reduction of the Preferred.

The Preferred was convertible by Lincoln into a fixed number of shares after a three-year waiting period, subject to customary anti-dilution provisions. At certain times (including the first three years after issuance), we could redeem the Preferred in cash at a price of 100%. The initial dividend rate on the Preferred was 6% and increased over time to 12%.

As discussed above, a portion of the proceeds from the debt refinancing that occurred on November 17, 2017 was used to fully redeem the Preferred. As a result of this redemption, we: (i) removed the net carrying value of the Preferred of $27.5 million from our books, which included accrued dividends through the date of redemption of $0.2 million; and (ii) recognized a loss on extinguishment of the Preferred of $0.2 million.

Debt Repurchases

We may from time to time seek to repurchase and retire our outstanding indebtedness through cash purchases, open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Operating Activities

Net cash flows provided by operating activities were $29.1 million and $72.0 million for 2017 and 2016, respectively. The cash flows from operating activities decreased primarily due to increases in our merger and acquisitions costs, restructuring costs and other costs and corporate general and administrative expenses of $40.6 million, $16.9 million and $14.5 million, respectively.

This net decrease was partially offset by a $18.9 million decrease in net investment in working capital in 2017 as compared to 2016.

Net cash flows provided by operating activities were $72.0 million and $64.8 million for 2016 and 2015, respectively. The cash flows from operating activities increased primarily due to the increase in net revenues, net of station operating expenses, from the Lincoln Acquisition and Bonneville Exchange as 2016 benefited from a full year of operating these radio stations. This increase was offset by a net increase in working capital requirements of $12.1 million primarily related to the increase in operating income.

Investing Activities

For 2017, net cash flows provided by investing activities were $17.3 million, which primarily reflected the proceeds of: (i) $57.8 million from the sales of three FM radio stations in Los Angeles, San Diego, and Wilkes Barre, (ii) $12.0 million in cash as partial consideration for an exchange of a radio station; and (iii) $3.0 million from the

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sale of a parcel of land in Atlanta. These proceeds were partially offset by: (i) cash paid to complete an acquisition in Charlotte, North Carolina of $24.0 million; (ii) additions to property, plant and equipment of $20.5 million; and (iii) $9.7 million of cash paid to acquire a preferred stock interest in a privately held company.

For 2016, net cash flows provided by investing activities were $0.5 million, which primarily reflected the proceeds from the sales of various assets in Kansas City, land in Miami, and the sale of two AM radio stations, which were partially offset by additions to property and equipment of $7.3 million. For 2015, net cash flows used in investing activities were $91.7 million, which primarily reflected the purchase of radio station assets of $83.6 million (excluding the issuance of the Preferred and cash acquired from Lincoln).

Financing Activities

For 2017, net cash flows used in financing activities were $59.1 million, which primarily reflect: (i) the payment of common stock dividends of $29.3 million; (ii) the retirement of our Preferred of $27.7 million; (iii) the payment of debt issuance costs related to our Credit Facility of $16.3 million; and (iv) the repurchase of $10.7 million in outstanding common stock, of which $10.0 million was paid in cash as of December 31, 2017. This activity was partially offset by an increase in our net borrowings of $30.8 million.

For 2016, net cash flows used in financing activities were $34.9 million, which primarily reflect the proceeds under our Former Credit Facility, offset by the retirement of the previous credit facility and the Former Senior Notes. For 2015, net cash flows provided by financing activities primarily reflect the use of the previous revolving credit facility of $58.0 million of which $42.0 million was used to fund a portion of the cash requirements necessary to complete the Lincoln Acquisition. This was offset by the reduction of our net borrowings of $51.3 million.

Income Taxes

For federal income tax purposes, the acquisition of CBS Radio was treated as a reverse acquisition which caused us to undergo an ownership change under Internal Revenue Code (“IRC”) 382. This ownership change will limit the utilization of our NOLs for post-acquisition tax years. As a result, we commenced the payment of estimated federal, state and local taxes of approximately $2.0 million during the fourth quarter of 2017.

During 2016 and 2015, we paid a nominal amount in income taxes (state income taxes) as we have benefited from the tax deductions available on acquired assets, which were primarily intangible assets such as broadcasting licenses and goodwill.

Dividends

On November 2, 2017, our Board approved an increase to the annual common stock dividend program to $0.36 per share, beginning with the dividend paid in the fourth quarter of 2017. We estimate quarterly dividend payments to approximate $12.5 million per quarter (after considering the reduction in shares from our stock buyback program in the fourth quarter of 2017). Any future dividends will be at the discretion of the Board based upon the relevant factors at the time of such consideration, including, without limitation, compliance with the restrictions set forth in our Credit Facility and the Senior Notes.

Quarterly dividends on our Preferred were paid in each of the quarters beginning in October 2015 at an annual rate of 6% that increased over time to 10%. On November 17, 2017, our Preferred was retired in full.

During the second quarter of 2016, we commenced an annual $0.30 per share common stock dividend program, with payments that approximated $2.9 million per quarter. In addition to a quarterly dividend, we paid a special one-time cash dividend of $0.20 per share of common stock on August 30, 2017.

See Liquidity under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Note 9, Long-Term Debt, and Note 10, Perpetual Cumulative Convertible Preferred Stock, in the accompanying notes to our audited consolidated financial statements.

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Share Repurchase Programs

On November 2, 2017, our Board announced a share repurchase program (the “2017 Share Repurchase Program”) to permit us to purchase up to $100.0 million of our issued and outstanding shares of Class A common stock through open market purchases. Shares repurchased by us under the 2017 Share Repurchase Program will be at our discretion based upon the relevant factors at the time of such consideration, including, without limitation, compliance with the restrictions set forth in our Credit Facility and the Senior Notes.

During the year ended December 31, 2017, we repurchased 932,600 shares of our Class A common stock at an aggregate average price of $11.45 per share for a total of $10.7 million. As of December 31, 2017, $89.3 million is available for future share repurchase under the 2017 Share Repurchase Program.

Capital Expenditures

Capital expenditures for 2017, 2016 and 2015 were $20.5 million, $7.3 million and $7.0 million, respectively. We anticipate that regular capital expenditures in 2018 will be between $30 million and $35 million. In addition, we anticipate an incremental amount of one-time capital expenditures of approximately $25 million for software and other technological capabilities related to the Merger that will allow us to operate more efficiently. Also, capital expenditures are anticipated to be significantly higher in 2018 due to the expected relocation, consolidation and improvement of studio facilities in several of our larger markets. These expenditures will be funded partially through approximately $46 million in cash we expect to receive from the sale of a parcel of land in Chicago, cash we may receive from the sale of existing owned studio facilities and cash available from landlords for tenant improvement allowances.

Credit Rating Agencies

On a continuing basis, Standard and Poor’s, Moody’s Investor Services and other rating agencies may evaluate our indebtedness in order to assign a credit rating. Any significant downgrade in our credit rating could adversely impact our future liquidity by limiting or eliminating our ability to obtain debt financing.

Contractual Obligations

The following table reflects a summary of our contractual obligations as of December 31, 2017:

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Off-Balance Sheet Arrangements

As of December 31, 2017 and as of the date this report was filed (other than as described below), we did not have any material off-balance sheet transactions, arrangements, or obligations, including contingent obligations.

We do not have any other relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements or other contractually narrow or limited purposes as of December 31, 2017. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Market Capitalization

As of December 31, 2017 and 2016, our total equity market capitalization was $1,535 million and $622.8 million, respectively, which was $229.4 million lower and $229.4 million higher, respectively, than our book equity value on those dates. As of December 31, 2017 and 2016, our stock price was $10.80 per share and $15.30 per share, respectively.

Intangibles

As of December 31, 2017, approximately 77% of our total assets consisted of radio broadcast licenses and goodwill, the value of which depends significantly upon the operational results of our business. We could not operate our radio stations without the related FCC license for each station. FCC licenses are subject to renewal every eight years. Consequently, we continually monitor the activities of our stations to ensure they comply with all regulatory requirements. See Part I, Item 1A, “Risk Factors,” for a discussion of the risks associated with the renewal of licenses.

Impact On Future Revenues And Advertising Network Services

We have a relationship with United States Traffic Network (“USTN”), a vendor that provides short duration advertising network services (e.g., sponsored traffic reports). USTN has a contractual commitment to pay Entercom specified guaranteed payments in exchange for certain short duration advertising inventory. For the year ended December 31, 2017, on a pro forma basis as if the merger with CBS Radio occurred as of January 1, 2017, revenues from USTN represented less than 2% of the Company’s total revenues. USTN has publicly disclosed that it is in financial distress and may cease operations in the United States. As a result, we did not record approximately $4 million of guaranteed revenues due to us for the period November 17, 2017 through December 31, 2017. We are presently evaluating our options with respect to our relationship with USTN and the services they provide. If we terminate our relationship with USTN, there can be no assurance that we will be able to sell the inventory we free up on similar terms and conditions. See Subsequent Events in the accompanying notes to the audited consolidated financial statements for further discussion.

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Inflation

Inflation has affected our performance by increasing our radio station operating expenses in terms of higher costs for wages and multi-year vendor contracts with assumed inflationary built-in escalator clauses. The exact effects of inflation, however, cannot be reasonably determined. There can be no assurance that a high rate of inflation in the future would not have an adverse effect on our profits, especially since our Credit Facility is variable rate.

Recent Accounting Pronouncements

For a discussion of recently issued accounting standards, see Note 2, Significant Accounting Policies, in the accompanying consolidated financial statements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different circumstances or by using different assumptions.

We consider the following policies to be important in understanding the judgments involved in preparing our consolidated financial statements and the uncertainties that could affect our financial position, results of operations or cash flows:

Revenue Recognition

We generate revenue from the sale to advertisers of various services and products, including but not limited to: (i) commercial broadcast time; (ii) digital advertising; (iii) local events; (iv) e-commerce where an advertiser’s goods and services are sold through our websites; and (v) integrated digital advertising solutions.

Revenue from services and products is recognized when delivered.

Advertiser payments received in advance of when the products or services are delivered are recorded on our balance sheet as unearned revenue.

Revenues presented in the consolidated financial statements are reflected on a net basis, after the deduction of advertising agency fees by the advertising agencies. We also evaluate when it is appropriate to recognize revenue based on the gross amount invoiced to the customer or the net amount retained by us if a third party is involved.

Allowance for Doubtful Accounts

We evaluate our allowance for doubtful accounts on an ongoing basis. We specifically review historical write-off activity by market, large customer concentrations, customer creditworthiness, the economic conditions of the customer’s industry, and changes in our customer payment practices when evaluating the adequacy of the allowance for doubtful accounts. Our historical estimates have been a reliable method to estimate future allowances.

Contingencies and Litigation

On an ongoing basis, we evaluate our exposure related to contingencies and litigation and record a liability when available information indicates that a liability is probable and estimable. We also disclose significant matters that may reasonably result in a loss or are probable but not estimable.

Estimation of Our Tax Rates

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As changes occur in our assessments regarding our ability to recover our deferred tax assets, our tax provision is increased in any period in which we determine that the recovery is not probable.

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We expect our effective tax rate, before discrete items, changes in the valuation allowance, the tax expense associated with non-amortizable assets and impairment losses, to be between 26% and 27%. We also have certain NOLs to utilize that will be available to reduce the amount of cash taxes payable in future years. This rate reflects a reduction in the federal corporate income tax rate to 21% beginning in 2018 as a result of the enactment of the TCJA.

In December 31, 2017, our tax rate was significantly impacted by an income tax benefit related to TCJA legislation enacted in December 2017, which resulted in a re-measurement of our deferred tax assets and liabilities at the new federal corporate tax rate of 21%.

The income tax rate in 2016 of 28.0% was lower due to certain discrete tax benefits and the income tax rate in 2015 of 38.7% was higher primarily due to a tax benefit shortfall associated with share-based awards.

The calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation of accounting for uncertain tax positions. The first step is to evaluate the tax position for recognition of a tax benefit by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit based upon its technical merits, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50% likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions, and review whether any new uncertain tax positions have arisen, on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity. A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

We believe our estimates of the value of our tax contingencies and valuation allowances are critical accounting estimates, as they contain assumptions based on past experiences and judgments about potential actions by taxing jurisdictions. It is reasonably likely that the ultimate resolution of these matters may be greater or less than the amount that we have currently accrued. The effect of a 1% change in our estimated tax rate as of December 31, 2017 would be an increase in income tax expense of $0.2 million and a decrease in net income available to common shareholders of $0.2 million. This increase in income tax expense would not result in a change to net income available to common shareholders per basic and diluted share for 2017.

Radio Broadcasting Licenses and Goodwill

We have made acquisitions in the past for which a significant amount of the purchase price was allocated to broadcasting licenses and goodwill assets. As of December 31, 2017, we recorded approximately $3,512 million in radio broadcasting licenses and goodwill, which represented approximately 77% of our total assets as of that date. We must conduct impairment testing at least annually, or more frequently if events or changes in circumstances indicate that the assets might be impaired, and charge to operations an impairment expense in the periods in which the recorded value of these assets is more than their fair value. Any such impairment could be material. After an impairment expense is recognized, the recorded value of these assets will be reduced by the amount of the impairment expense and that result will be the assets’ new accounting basis. Our most recent impairment loss to our broadcasting licenses was in 2012. As a result of our annual impairment test during the second quarter of 2017, we recognized an impairment loss on our goodwill of $0.4 million.

The annual impairment test in 2017 did not include the stations acquired during the first quarter of 2017 in the Charlotte market or the markets acquired through the Merger markets or the two markets acquired as part of a radio station exchange. For these markets, similar valuation techniques that were used in the testing process were applied to the valuation of the broadcasting licenses and goodwill under purchase price accounting. In addition, for the acquisitions consummated during the period, the valuation approximates the fair value related to the valuation of the acquired FCC licenses and goodwill.

We believe our estimate of the value of our radio broadcasting licenses and goodwill assets is an important accounting estimate as the value is significant in relation to our total assets, and our estimate of the value uses assumptions that incorporate variables based on past experiences and judgments about future performance of our stations.

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Broadcasting Licenses Impairment Test

We perform our broadcasting license impairment test by using the Greenfield method at the market level. Each market’s broadcasting licenses are combined into a single unit of accounting for the purpose of testing impairment, as the broadcasting licenses in each market are operated as a single asset. We determine the fair value of broadcasting licenses in each of our markets by relying on a discounted cash flow approach (a 10-year income model) assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. Our fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. These assumptions include, but are not limited to: (ii) the discount rate; (ii) the market share and profit margin of an average station within a market based upon market size and station type; (iii) the forecast growth rate of each radio market; (iv) the estimated capital start-up costs and losses incurred during the early years; (v) the likely media competition within the market area; (vi) the tax rate; and (vii) future terminal values. Changes in our estimates of the fair value of these assets could result in material future period write-downs of the carrying value of our broadcasting licenses and goodwill assets.

The methodology used by us in determining our key estimates and assumptions was applied consistently to each market. Of the seven variables identified above, we believe that the assumptions in items (i) through (iii) above are the most important and sensitive in the determination of fair value.

We most recently completed our annual impairment test for broadcasting licenses during the second quarter of 2017 and determined that the fair value of the broadcasting licenses was more than the carrying value in each of our markets and, as a result, we did not record an impairment loss.

The following table reflects the estimates and assumptions used in the second quarter of 2017 as compared to the second quarter of 2016, the date of the most recent prior impairment test:

While we believe we have made reasonable estimates and assumptions to calculate the fair value of our broadcasting licenses, these estimates and assumptions could be materially different from actual results.

If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the fair value of our broadcasting licenses below the amount reflected on the balance sheet, we may be required to recognize impairment charges, which could be material, in future periods.

The annual impairment test in 2017 did not include the Charlotte market, the Merger markets or the two markets acquired as part of an exchange of radio stations.

The table below, which includes the Charlotte market and excludes the Merger markets and the two markets acquired as part of an exchange of radio stations, presents the percentage within a range by which the fair value exceeded the carrying value of our radio broadcasting licenses as of December 31, 2017 for 25 units of accounting (25 geographical markets) where the carrying value of the licenses is considered material to our financial statements. Three of our 28 markets that were subject to testing are considered immaterial.

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For the Merger markets and the two markets acquired in an exchange of radio stations, similar techniques that are used in the testing process were applied to the valuation of the broadcasting licenses under purchase price accounting. Rather than presenting the percentage separately for each unit of accounting, management’s opinion is that this table in summary form is more meaningful to the reader in assessing the recoverability of the broadcasting licenses. In addition, the units of accounting are not disclosed with the specific market name as such disclosure could be competitively harmful to us.

Broadcasting Licenses Valuation at Risk

The second quarter 2017 impairment test of our broadcasting licenses together with the third quarter 2017 impairment test of our broadcasting licenses in the Charlotte market indicated that there were 11 units of accounting where the fair value exceeded their carrying value by 10% or less. In aggregate, these 11 units of accounting have a carrying value of $520.5 million. If overall market conditions or the performance of the economy deteriorates, advertising expenditures and radio industry results could be negatively impacted, including expectations for future growth. This could result in future impairment charges for these or other of our units of accounting, which could be material.

Goodwill Impairment Test

We perform our annual goodwill impairment test during the second quarter of each year by evaluating our goodwill for each reporting unit. We determined that a radio market is a reporting unit and, in total, we assessed goodwill at 23 separate reporting units. In determining the reporting units to evaluate, we excluded: (1) four reporting units that had no goodwill; and (2) the Charlotte market which was acquired in the first quarter of 2017. Any goodwill allocable to the Merger markets and the two markets acquired as part of an exchange of radio stations, was not included in the annual goodwill impairment assessment, as these acquisitions closed subsequent to the testing periods.

In January 2017, the accounting guidance was amended to modify the accounting for goodwill impairment by removing the second step of the goodwill impairment test. Under the amended guidance, if the carrying amount of goodwill of any reporting unit reflected in the balance sheet exceeds its fair value, we will consider the goodwill to be impaired. Under the previous accounting guidance, we would be required to perform a second step of the impairment test by comparing the amount reflected in the balance sheet to the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets and liabilities in a manner similar to a purchase price allocation. We elected to early adopt this amended accounting guidance for our annual impairment test during the second quarter of 2017.

To determine the fair value, we use a market approach and, when appropriate, an income approach in computing the fair value for each reporting unit. The market approach calculates the fair value of each market’s radio stations by analyzing recent sales of similar properties expressed as a multiple of cash flow. The income approach utilizes a discounted cash flow method by projecting the subject property’s income over a specified time and capitalizing it at an appropriate market rate to arrive at an indication of fair value for the reporting unit.

In our goodwill analysis, we considered the results of the market, and, where appropriate, the income approach in computing the fair value of our reporting units. In the market approach, we applied an estimated market multiple of between seven and a half times and eight times to each reporting unit’s operating performance to calculate the fair value. Management believes that these approaches are an appropriate measurement given the current market valuations of broadcast radio stations together with historical market transactions, including those in recent months. Factors contributing to the determination of the reporting unit’s operating performance were historical performance and management’s estimates of future performance.

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As a result of the Merger and the two markets acquired in the radio station exchange, we will have a presence in 19 new markets. Due to the size and composition of the company post-Merger, management may further consider its reporting unit and operating segment conclusions as it relates to the annual goodwill assessment. Factors that we may consider include, but are not limited to, how the chief operating decision maker will evaluate results of a significantly larger company and whether there is a need to further streamline the operating segment structure.

The following table reflects certain key estimates and assumptions applied to each of our markets that were used in the second quarter of 2017, and in the second quarter of 2016, the date of the most recent prior impairment test:

While we believe we have made reasonable estimates and assumptions to calculate the fair value of our goodwill, these estimates and assumptions could be materially different from actual results.

The results of the goodwill impairment test indicated that the carrying value of goodwill for our Boston, Massachusetts market exceeded its fair value. The amount by which the carrying value exceeded the fair value was larger than the amount of goodwill allocated to this specific reporting unit. As a result, we determined that the entire carrying amount of goodwill for this specific reporting unit was impaired and recorded an impairment loss during the second quarter of 2017 in the amount of $0.4 million. We performed a reasonableness test by comparing the fair value results for goodwill (by using the implied multiple based on our cash flow performance and our current stock price) to prevailing radio broadcast transaction multiples.

If actual market conditions are less favorable than those projected by the industry or us, or if events occur or circumstances change that would reduce the fair value of our goodwill below the amount reflected in the balance sheet, we may be required to conduct an interim test and possibly recognize impairment charges, which could be material, in future periods.

The annual impairment test in 2017 did not include the Charlotte market, the Merger markets or the two markets acquired in the radio station exchange. As stated above, we subsequently elected to conduct an impairment test on the goodwill of the Charlotte market.

The table below presents the percentage within a range by which the fair value exceeded the carrying value of the reporting unit as of December 31, 2017 for 24 reporting units that were tested for goodwill impairment during the second quarter or third quarter of 2017. As of December 31, 2017, the markets reflected in the table with goodwill were 23 after the write off of goodwill in the Boston market. The number of reporting units, enterprise carrying value, and goodwill carrying value in the table: (1) includes the Charlotte market; (2) excludes the Merger markets; (3) excludes the two markets acquired as part of the radio station exchange; and (4) reflects the full write-off of goodwill in the Boston, Massachusetts market.

For the Merger markets and the two markets acquired as part of the radio station exchange, similar techniques that are used in the testing process were applied to the valuation of the goodwill under purchase price accounting. Rather than presenting the percentage separately for each reporting unit, management’s opinion is that this table in summary form is more meaningful to the reader in assessing the recoverability of the reporting unit, including goodwill. In addition, the reporting units are not disclosed with the specific market name as such disclosure could be competitively harmful to us.

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Goodwill Valuation At Risk

The second quarter and third quarter 2017 impairment tests of our goodwill indicated that there were five reporting units that exceeded the carrying value by 10% or less. In aggregate, these five reporting units have a carrying value of $314.6 million, of which $10.6 million is goodwill.

Future impairment charges may be required on any of our reporting units with goodwill, as the discounted cash flow and market-based models are subject to change based upon our performance, our stock price, peer company performance and their stock prices, overall market conditions, and the state of the credit markets.

Sensitivity of Key Broadcasting Licenses and Goodwill Assumptions

If we were to assume a 100 basis point change in certain of our key assumptions (a reduction in the long-term revenue growth rate, a reduction in the operating performance cash flow margin and an increase in the weighted average cost of capital) used to determine the fair value of our broadcasting licenses and goodwill using the income approach during the second quarter of 2017, the following would be the incremental impact:

To determine the radio broadcasting industry’s future revenue growth rate, management uses publicly available information on industry expectations rather than management’s own estimates, which could be different. In addition, these long-term market growth rate estimates could vary in each of our markets. Using the publicly available information on industry expectations, each market’s revenues were forecasted over a ten-year projection period to reflect the expected long-term growth rate for the radio broadcast industry, which was further adjusted for each of our markets. If the industry’s growth is less than forecasted, then the fair value of our broadcasting licenses could be negatively impacted.

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Operating profit is defined as profit before interest, depreciation and amortization, income tax and corporate allocation charges. Operating profit is then divided by broadcast revenues, net of agency and national representative commissions, to compute the operating profit margin. For the broadcast license fair value analysis, the projections of operating profit margin that are used are based upon industry operating profit norms, which reflect market size and station type. These margin projections are not specific to the performance of our radio stations in a market, but are predicated on the expectation that a new entrant into the market could reasonably be expected to perform at a level similar to a typical competitor. For the goodwill fair value analysis, the projections of operating margin for each market are based on our actual historical performance. If the outlook for the radio industry’s growth declines, then operating profit margins in both the broadcasting license and goodwill fair value analyses would be negatively impacted, which would decrease the value of those assets.

The discount rate to be used by a typical market participant reflects the risk inherent in future cash flows for the broadcast industry. The same discount rate was used for each of our markets. The discount rate is calculated by weighting the required returns on interest-bearing indebtedness and common equity capital in proportion to their estimated percentages in an expected capital structure. The capital structure was estimated based upon data available for publicly traded companies in the broadcast industry.

See Note 5, Intangible Assets and Goodwill, in the accompanying notes to our audited consolidated financial statements, for a discussion of intangible assets and goodwill.

For a more comprehensive list of our accounting policies, see Note 2, Significant Accounting Policies, accompanying the consolidated financial statements included within this annual report. Note 2 to our audited consolidated financial statements contains several other policies, including policies governing the timing of revenue and expense recognition, that are important to the preparation of our consolidated financial statements, but do not meet the SEC’s definition of critical accounting policies because they do not involve subjective or complex judgments. In addition, for further discussion of new accounting policies that were effective for us on January 1, 2017, see the new accounting standards under Note 2 to the accompanying notes to our audited consolidated financial statements.

We are exposed to market risk from changes in interest rates on our variable rate senior indebtedness (the Term B-1 Loan and Revolver). Due to our recent Merger with CBS Radio in November 2017, we increased: (1) our fixed rate indebtedness by assuming the $400 million 7.250% Senior Notes issued by CBS Radio in October 2016; and (2) our variable rate indebtedness by: (a) assuming CBS Radio’s term B loan; and (b) refinancing our existing indebtedness with a higher principal amount.

If the borrowing rates under LIBOR were to increase 1% above the current rates as of December 31, 2017, our interest expense on: (i) our Term B-1 Loan would increase $13.3 million on an annual basis; and (ii) our Revolver would increase by $2.5 million, assuming our entire Revolver was outstanding as of December 31, 2017. From time to time, we may seek to limit our exposure to interest rate volatility through the use of interest rate hedging instruments.

Assuming LIBOR remains flat, interest expense in 2018 versus 2017 is expected to be higher due to: (i) the significant increase in our average outstanding indebtedness upon which interest is computed; and (ii) the addition of the fixed rate Senior Notes. The addition of the Senior Notes alone will result in an annual increase to interest expense of $29.0 million in 2018. We anticipate reducing our outstanding indebtedness upon which interest is computed, however, such reductions will not be sufficient to offset the overall increases in outstanding indebtedness assumed in connection with the Merger. We may seek from time to time to amend our Credit Facility or obtain additional funding, which may result in higher interest rates on our indebtedness and could increase our exposure to variable rate indebtedness.

As of December 31, 2017, there were no interest rate hedging transactions outstanding.

Our credit exposure under hedging agreements similar to the agreements that we have entered into in the past, or similar agreements that we may enter into in the future, is the cost of replacing such agreements in the event of nonperformance by our counterparty. To minimize this risk, we select high credit quality counterparties. We do not anticipate nonperformance by such counterparties who we may enter into agreements with in the future, but we could recognize a loss in the event of nonperformance.

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From time to time, we may invest all or a portion of our cash in cash equivalents, which are money market instruments consisting of short-term government securities and repurchase agreements that are fully collateralized by government securities. We do not believe that we have any material credit exposure with respect to these assets.

Our credit exposure related to our accounts receivable does not represent a significant concentration of credit risk due to the quantity of advertisers, the minimal reliance on any one advertiser, the multiple markets in which we operate and the wide variety of advertising business sectors.

See also additional disclosures regarding liquidity and capital resources made under Part II, Item 7, above.

Our consolidated financial statements, together with related notes and the report of PricewaterhouseCoopers LLP, our independent registered public accounting firm, are set forth on the pages indicated in Part IV, Item 15.

None.

Evaluation of Controls and Procedures

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that: (i) information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We carried out an evaluation, which excluded the Merger with CBS Radio, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2017. Based on the foregoing, our Chairman, Chief Executive Officer and President and our Executive Vice President & Chief Financial Officer concluded that, as of December 31, 2017, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

We are in the process of working to incorporate CBS Radio into our internal control over financial reporting structure and our evaluation of internal control over financial reporting and related disclosure controls and procedures. Other than working to incorporate CBS Radio as mentioned above, there has been no change in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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Management’s Report on Internal Control over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

Management has used the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2017. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 15.

Management has excluded the acquired operating subsidiaries of CBS Radio Inc. from its assessment of internal control over financial reporting as of December 31, 2017 because they were acquired by the Company in a purchase business combination during 2017. The acquired operating subsidiaries of CBS Radio Inc. are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 61% and 22%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

David J. Field, Chairman, Chief Executive Officer and President

Richard J. Schmaeling, Executive Vice President & Chief Financial Officer

None.

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PART III

The information required by this Item 10 is incorporated in this report by reference to the applicable information set forth in our proxy statement for the 2018 Annual Meeting of Shareholders, which we expect to file with the SEC prior to 120 days after the end of the fiscal year.

The information required by this Item 11 is incorporated in this report by reference to the applicable information set forth in our proxy statement for the 2018 Annual Meeting of Shareholders, which we expect to file with the SEC prior to 120 days after the end of the fiscal year.

The information required by this Item 12 is incorporated in this report by reference to the applicable information set forth in our proxy statement for the 2018 Annual Meeting of Shareholders, which we expect to file with the SEC prior to 120 days after the end of the fiscal year.

The information required by this Item 13 is incorporated in this report by reference to the applicable information set forth in our proxy statement for the 2018 Annual Meeting of Shareholders, which we expect to file with the SEC prior to 120 days after the end of the fiscal year.

The information required by this Item 14 is incorporated in this report by reference to the applicable information set forth in our proxy statement for the 2018 Annual Meeting of Shareholders, which we expect to file with the SEC prior to 120 days after the end of the fiscal year.

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PART IV

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(b) Exhibits

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Entercom Communications Corp.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Entercom Communications Corp. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based compensation in 2017.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting under Item 9A, management has excluded the acquired operating subsidiaries of CBS Radio Inc. from its assessment of internal control over financial reporting as of December 31, 2017 because they were acquired by the Company in a purchase business combination during 2017. We have also excluded the acquired operating subsidiaries of CBS Radio Inc. from our audit of internal control over financial reporting. The acquired operating subsidiaries of CBS Radio Inc. are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 61% and 22%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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CONSOLIDATED FINANCIAL STATEMENTS OF ENTERCOM COMMUNICATIONS CORP.

ENTERCOM COMMUNICATIONS CORP.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)