Many investors have soured on the radio industry recently, and Entercom's (NYSE:ETM) second-quarter results didn't give investors much reason to tune in.

Entercom posted a second-quarter loss of $12.5 million, or $0.32 per share, compared with last year's profit of $17.1 million, or $0.43 per share. Revenues increased 7% to $125.2 million, but station operating expenses increased 12%. Free cash flow dropped 19% to $26.1 million.

Entercom's press release pointed to the "sluggish business conditions that continue to affect most traditional advertising media." Those are true words indeed -- radio is not unlike the newspaper industry when it comes to suddenly having a whole lot more to worry about, in growth terms, with the advent of serious competitive forces such as the Internet.

A private-equity buyout of Cumulus Media (NASDAQ:CMLS) at a 40% premium apparently sparked a rally for radio stocks late last month, but isn't it a sad state of affairs when investors are hinging hopes on the possibility of premium buyouts? Above and beyond that, there's no guarantee that such deals would transpire for all of these companies. Using that as a reason to like the industry sounds more like gambling than long-term investing to me.

I've long found radio to be an industry I wasn't attracted to as an investor. There have been so many disruptive influences at hand, and music lovers may be tempted not only by terrestrial rivals on the radio dial but also by the satellite-radio companies -- XM Satellite Radio (NASDAQ:XMSR) and Sirius Satellite Radio (NASDAQ:SIRI) -- as well as by Internet radio. Even the ubiquity of Apple's (NASDAQ:AAPL) iPods reflect consumers' preference for their own tastes over incessant playlists of the same old hits (or incessant advertising, for that matter). I have to admit I can't remember the last time I listened to the radio.

Of course, Entercom does have a few things going for it that have nothing to do with buyout hopes, such as its free cash flow and its dividend yield. The dividend is what makes it is a Motley Fool Income Investor recommendation, although back in April, advisor James Early had come to view it as a stock to hold, not buy. Despite its positive attributes, it was a bit more risky because it had tripled its long-term debt over the past three years.

Entercom's stock price fell quite dramatically yesterday -- it closed down nearly 7% -- following its quarterly report. As is often the case, though, the real question isn't really whether it's cheaper, but whether it's cheap enough given its expected growth. With all of the challenges it faces in its struggling industry, I can see why many investors would just say no to Entercom right now.

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Entercom is a Motley Fool Income Investor recommendation. To find out what dividend-paying stocks Foolish advisor James Early has recommended recently, take a 30-day free trial.

Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool has a disclosure policy that's pleasant to the ears and eyes.