USTN Suit Doesn’t Fit Entercom
• On July 30, Entercom Communications Corp. announced that its reseller agreement with United States Traffic Network (“USTN”) had ended and that Entercom had taken back the remainder of the traffic inventory that USTN had been selling. At the time, Entercom President & CEO David Field said, “We are relieved to no longer be mired by the difficult USTN situation that was inherited as part of the CBS Radio merger. We will move quickly to augment our strong internal sales organization to ensure that we realize the full value of this inventory.”
Just three days before, USTN filed a lawsuit against Entercom, seeking “material and punitive damages in excess of $5 million.” In a statement, Entercom said it “believes the lawsuit is entirely baseless, frivolous and frankly, insulting. Entercom has worked tirelessly and constructively with USTN over the past six months to help USTN work through its significant financial issues. Entercom is owed substantial amounts of money by USTN, and the Company intends to defend itself vigorously and assert all of its rights.”
Yesterday, in a lengthy internal memo obtained by RAMP, Field (left) reviewed the entire situation in painstaking detail. Among the highlights, as he noted: 1) Entercom has received only $3 million out of the original $33 million due under the agreements in place at the closing of the CBS Radio merger. 2) Entercom did not create this problem; USTN did. 3) Entercom has bent over backwards to work constructively and patiently with USTN to help them fix their problems. We have made enormous financial concessions to help them. And yet USTN still has not demonstrated that they are able to make ends meet, failing to make their required payments to Entercom for June and failing to make a $5 million required payment on their restructured debt to Entercom. 4) USTN management can conjure up a ridiculous lawsuit and engage in name-calling, but it can’t change the facts or the truth of what has occurred here. USTN has failed to meet its obligations over many months. 5) Entercom has acted with great restraint for many months, but we cannot continue to invest our time, resources and capital in a business that has been unable to fix its own problems.
In conclusion, Field noted, “We have moved on and are glad to be in control of our own destiny with our valuable traffic inventory, but given the ridiculous allegations by USTN, I wanted to make sure you were fully familiar with the facts and understood that we have acted ethically and responsibly throughout this painful situation.” The text of the entire memo is posted at RAMP247.com.
