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Digital Still Drives Townsquare Bus, Yet Broadcast Was More Resilient In Q4.

Digital now accounts for 55% of profits and 51% of revenue at Townsquare Media. And although it continues to drive the bus, broadcast advertising held up better than digital in what was a challenging fourth quarter across the entire industry.

Townsquare said Friday morning that radio ad revenues declined 2.5% to $57.9 million in the last three months of 2023. Total digital billings, meanwhile, decreased at more than double that rate, falling 6.4%.

The culprit wasn’t digital advertising, which held its own at $36.4 million, down 1.5% year-over year-over-year. Digital advertising, branded as Townsquare Ignite, remains the company’s sturdiest business segment. It was the subscription-based digital marketing solutions provider Townsquare Interactive that took the biggest hit, as Q4 revenues tumbled 14.5% to $19.1 million.

Total fourth quarter revenues declined 4.6% to $114.8 million, from $120.3 million one year earlier. Excluding political, revenue was down 2.7% to $113.1 million. The Q4 results met or exceeded the company’s earlier guidance.

Digital Posts Full Year Growth

Digital revenue grew on a full-year basis at Townsquare. “Our Digital Advertising segment delivered net revenue and Adjusted Operating Income growth this year (each +7% year-over-year), offsetting weakness in the national and network marketplace, and first-time hurdles in our Subscription Digital Marketing Solutions segment,” CEO Bill Wilson said in a press release ahead of his quarterly call with analysts. Digital maintained a 30% profit margin, consistent with that of 2022.

Full year 2023 digital growth and strong profit margins delivered strong cash flow for the “Digital First” company with an increase of $18 million year-over-year in cash from operations, which totaled $68 million in 2023, up 35%.

Townsquare reported a loss of $1.9 million for the quarter, compared to income of $3.9 million in Q4 2022. The loss is mainly due to a $14.0 million increase in non-cash impairment charges. Earnings fell 12.7% to $24.8 million.

Board Increases Shareholder Dividend

Citing its “strong cash position” and confidence in the business, Townsquare is increasing its dividend by 5.3% to 79 cents per share on an annual basis. “The Board’s decision to increase the dividend reflects their ongoing confidence in our current capitalization, the strength of our balance sheet, our free cash flow generation, and our business strategy,” Wilson said.

Townsquare also used some of the cash last year to buy back and retire $27 million of its unsecured debt at a discount and bought back $17 million of its stock. The company ended the year with $61 million of cash on hand and net leverage of 4.43-times.

On a full year 2023 basis, revenue (excluding political) decreased 0.9% year-over-year, and dipped 1.9% in total, to $454.2 million. That was the second highest revenue amount in Townsquare’s history and 5% above pre-pandemic 2019 levels. Earnings (excluding political) decreased 9.1% year-over-year, minus 12.1% in total, to $100.0 million. That was 98% of the company’s 2019 level.

‘Progressively Challenging Economic Landscape’ In 2023

“Despite the lack of tailwinds at our back in 2023, I am very pleased with how the Townsquare team navigated the progressively challenging economic landscape,” Wilson said. “We outperformed competitors and gained market share due to our local focus and our digital platform.

“I believe that our performance over the past several years has demonstrated the efficacy of our Digital First Local Media strategy, and validated our focus on local markets outside of the Top 50 U.S. cities, reinvigorating my confidence in our business model and our path moving forward,” Wilson added.

First quarter 2024 revenue is expected to land between $98.5 million and $100 million, with earnings in the $17.5 million to $18.5 million neighborhood. For the full year 2024, Townsquare is guiding to revenue between $440 million and $460 million and earnings between $100 million and $110 million.

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