Entercom May Reduce Dividend as Barclays, JPMorgan Buy Shares
April 22, 2008 at 5:46 AM (PT)
ENTERCOM COMMUNICATIONS is luring BARCLAYS GLOBAL INVESTORS and JP MORGAN CHASE & CO., its fourth- and fifth-largest investors, to buy shares even as the radio chain's stock drops on speculation of a dividend cut, reports BLOOMBERG NEWS. Six of ENTERCOM's nine biggest stockholders added to their holdings in recent months, according to DECEEMBER and JANUARY regulatory filings. JPMORGAN bought almost 100,000 shares to bring its total to 1.28 million, while BARCLAYS raised its stake to 1.55 million shares.
Advertisers are spending less on radio and more on the Internet and cable television, denting radio company earnings. ENTERCOM may be unable to maintain a dividend payout that now yields 17%, said PAT NACCARATO, a portfolio manager at AIC LTD. That's more than 10 times the average for the RUSSELL 2000 CONSUMER DISCRETIONARY AND SERVICES INDEX.
"Anytime you see a stock with a dividend in the high teens, it's usually an indication it may not be sustainable," said NACCARATO, who sold his entire stake of 272,115 ENTERCOM shares this year.