SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission file number 001-36558
Townsquare Media, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Manhattanville Road
(Address of Principal Executive Offices)
Registrant's telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol(s)||Name of each exchange on which registered|
|Class A Common Stock, $0.01 par value per share||TSQ||The New York Stock Exchange|
Securities registered pursuant to Section 12(g) of the Act:
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|Large accelerated filer||☐||Accelerated filer||☒|
|Non-accelerated filer||☐||Smaller reporting company||☒|
|Emerging growth company||☐|
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 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 ☒
The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant was $60,857,199 based upon the closing price on the New York Stock Exchange on June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter. For this computation, the registrant has excluded the market value of all shares of its common stock held by directors and officers of the registrant and certain other stockholders; such exclusion shall not be deemed to constitute an admission that any such person is an “affiliate” of the registrant.
As of March 11, 2021, the registrant had 16,098,760 outstanding shares of common stock consisting of: (i) 14,447,123 shares of Class A common stock, par value $0.01 per share; (ii) 815,296 shares of Class B common stock, par value $0.01 per share; and (iii) 836,341 shares of Class C common stock, par value $0.01 per share. The registrant also had 162,696 warrants to purchase Class A common stock outstanding as of that date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement relating to its 2021 annual meeting of stockholders (the “2021 Proxy Statement”), to be filed with the Securities and Exchange Commission are incorporated by reference in Part III, Items 10 to 14 of this Annual Report on Form 10-K as indicated herein.
TOWNSQUARE MEDIA, INC.
`MARKET, RANKING AND OTHER INDUSTRY DATA
In this Annual Report on Form 10-K (“Annual Report”) of Townsquare Media, Inc. (together with its consolidated subsidiaries, except as the context may otherwise require, “we,” “us,” “our,” “Company,” or “Townsquare”) we rely on and refer to information and statistics regarding our industry, the size of certain markets and our position within the sectors in which we compete. Some of the market and industry data contained in this Annual Report is based on independent industry publications or other publicly available information, while other information is based on our good faith estimates, which are derived from our review of internal surveys, as well as independent sources listed in this Annual Report, our management’s knowledge and experience in the markets in which we operate, and information obtained from our customers, suppliers and other contacts in the markets in which we operate. Although we believe that this information is reliable as of its respective dates, it involves uncertainties and is subject to change, including as a result of the factors discussed under “Forward-Looking Statements” and “Risk Factors” in this Annual Report.
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are owned by us or licensed by us. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Annual Report are listed without the ©, ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, trade names and copyrights. This Annual Report may include trademarks, service marks or trade names of other companies. Our use or display of other parties’ trademarks, service marks, trade names or products is not intended to, and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, service mark or trade name owners.
This Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Annual Report are forward-looking statements. Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “believe,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms. For example, all statements we make relating to our estimated and projected earnings, revenue, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to a variety of risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
•the impact of general economic conditions in the United States, or in the specific markets in which we currently do business, including as a result of the COVID-19 pandemic;
•the impact of the COVID-19 pandemic, the extent of which will depend on future actions and outcomes that are highly uncertain and cannot be predicted, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic and financial market effects of the pandemic, the containment measures and the pace of the economic and financial market recovery;
•cancellations, disruptions or postponements of advertising schedules in response to national or world events, including the COVID-19 pandemic;
•the impact of several material weaknesses in internal control over financial reporting that have been identified;
•industry conditions, including existing competition and future competitive technologies;
•the popularity of radio as a broadcasting and advertising medium;
•our ability to develop and maintain digital technologies and hire and retain technical and sales talent;
•our dependence on key personnel;
•our capital expenditure requirements;
•our continued ability to identify suitable acquisition targets and consummate and integrate any future acquisitions;
•legislative or regulatory requirements;
•risks and uncertainties relating to our leverage and changes in interest rates;
•our ability to obtain financing at times, in amounts and at rates considered appropriate by us;
•our ability to access the capital markets as and when needed and on terms that we consider favorable to us; and
•other factors discussed in the section entitled “Risk Factors”.
Further, many of the factors discussed in the section entitled “Risk Factors” are more likely to occur and be further intensified due to the impact of the COVID-19 pandemic. While we believe that our expectations reflected in forward-looking statements are reasonable, we caution that it is difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report, as well as other risks discussed from time to time in our filings with the SEC. We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect
us or our operations in the way we expect and you should not rely upon forward-looking statements as a prediction of future events. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance.
The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this Annual Report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
ELECTRONIC ACCESS TO COMPANY REPORTS
Our investor website can be accessed at www.townsquaremedia.com under the “Equity Investors” section. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge on our investor website promptly after we electronically file those materials with, or furnish those materials to, the SEC. We also use the “Equity Investors” section of our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors are urged to monitor our investor website for announcements of material information relating to us. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report.
ITEM 1. BUSINESS
Description of Business
Townsquare Media, Inc. (together with its consolidated subsidiaries, except as the context may otherwise require, "we," "us," "our," "Company," or "Townsquare") is a community-focused digital media, digital marketing solutions and radio company focused outside the Top 50 markets in the U.S. We own and operate 322 radio stations and more than 330 local websites in 67 U.S. markets, a digital marketing services subscription business providing websites, search engine optimization, social platforms and online reputation management (“Townsquare Interactive”) for approximately 22,750 small to medium sized businesses, a proprietary digital programmatic advertising technology with an in-house demand and data management platform (“Townsquare Ignite,” or “Ignite”), an e-commerce offering, and we own and operate numerous local live events each year. Many of our radio stations are considered market leaders and we also participate in the digital, mobile, video and social media arena. Almost all of our radio stations have local companion websites that utilize the station brands and are populated with proprietary, original content created or curated by our local media personalities. In addition, we create, promote and produce a diverse range of live events, including concerts, expositions and other experiential events within our radio markets. Our brands include local media assets such as WYRK, KLAQ, K2 and NJ101.5; iconic local events such as the WYRK’s Taste of Country, the Boise Music Festival, the Red Dirt BBQ & Music Festival and Taste of Fort Collins; and leading tastemaker music and entertainment websites such as XXLmag.com, TasteofCountry.com and Loudwire.com.
Our integrated and diversified product and service offerings enable local, regional and national advertisers to target audience engagement across multiple platforms, including on-air, online and at live events. We believe our product and service offerings, combined with our leading market position in small and mid-sized markets, enable us to generate higher total net revenue per audience member than radio station owners focused on larger markets.
The Company has identified three operating segments, which are Advertising, including broadcast and digital advertising products and solutions, Townsquare Interactive, our digital marketing solutions subscription business and Live Events, including concerts, expositions and other experiential events.
Our Advertising segment includes the broadcast operations of our radio stations, together with our owned and operated websites and the various digital advertising solutions we offer, including Townsquare Ignite, our digital programmatic advertising platform. Our primary sources of net revenue are the sale of advertising on our radio stations, owned and operated websites, radio stations’ online streams and mobile applications. Additionally, we offer precision customer targeting solutions to advertisers through Ignite. Combining first and third party audience and geographic location data, Ignite is able to hyper-target audiences for our local, regional and national advertisers, providing them the ability to reach a high percentage of their online audience. Ignite delivers these solutions across desktop, mobile, connected TV, email, paid search and social media platforms utilizing display, video and native executions.
Our sales of advertisements are primarily affected by the demand for advertising from local, regional and national advertisers and the advertising rates we charge. Advertising demand and rates are based primarily on our ability to attract audiences to our various products in the demographic groups targeted by advertisers, as measured by various services on a periodic basis. We endeavor to develop strong audience loyalty and believe that the diversification of formats on our radio stations and websites helps to insulate our radio stations and websites from the effects of changes in musical tastes of the public. We believe that the sale of our online and mobile advertisements, which currently have rates per advertisement that are less than those of terrestrial radio advertisements, has not negatively impacted our terrestrial radio advertising net revenue. Should a significant and sudden shift in demand for these products toward online and mobile occur, there could be a material adverse impact on our financial condition and results of operations if we are
unable to increase rates accordingly. However, we believe that as a result of our strong brands and quality online and mobile offerings we are well positioned to increase rates as demand increases for these products.
Townsquare Interactive offers digital marketing solutions, on a subscription basis, to small and mid-sized local and regional businesses in small and mid-sized markets across the United States, including but importantly not limited to the markets in which we operate radio stations. Our primary source of Townsquare Interactive net revenue is traditional and mobile-enabled website development and hosting services, e-commerce solutions, search engine organic traffic and online directory optimization services, online reputation monitoring, social media management, appointment scheduling services, email marketing services, and website retargeting often packaged together as a comprehensive digital marketing solution.
Our primary source of Live Events net revenue is ticket sales. Our Live Events also generate substantial net revenue through the sale of sponsorships, food and other concessions, merchandise and other ancillary products and services. Live Event ticket pricing is based on consumer demand for each event and the geographic location and target audience demographic of each event. Unforeseen events such as inclement weather conditions can have an adverse impact on our net revenue. In certain cases, we mitigate this risk with insurance policies, which cover a portion of lost revenue as a result of unforeseen events including inclement weather. Legislative and regulatory responses to the COVID-19 pandemic required us to cancel nearly all scheduled live events beginning in March 2020.
We strive to maximize our net revenue by managing our advertising inventory and adjusting prices based on supply and demand, and by broadening our base of advertisers and subscribers. Our selling and pricing activities are based on demand for our advertising inventory and, in general, we respond to this demand by varying prices rather than by varying our target inventory levels. The optimal number of advertisements available for sale depends on the platform and in the case of our radio stations, their online streams and mobile applications, the programming format of a particular radio station. We seek to broaden our base of advertisers in each of our markets by providing a wide array of audience demographic segments, thereby providing each of our potential advertisers with an effective means of reaching a targeted demographic group.
Our advertising contracts are generally short-term. In the media industry, companies, including ours, sometimes utilize barter agreements that exchange advertising time for goods or services such as travel or lodging, instead of cash.
Our most significant expenses are sales personnel, programming, digital, marketing and promotional, engineering, and general and administrative expenses. We strive to control these expenses by closely monitoring and managing each of our local markets and through efficiencies gained from the centralization of finance, accounting, legal and human resources functions and management information systems. We also use our scale and diversified geographic portfolio to negotiate favorable rates with vendors where feasible.
A portion of our expenses are variable. These variable expenses primarily relate to sales costs, such as commissions, as well as certain programming costs, such as music license fees, and certain costs related to production. Marketing and promotions expenses are discretionary and are primarily incurred in an effort to maintain and/or increase our audience share. Other programming, digital, engineering and general and administrative expenses are primarily fixed costs.
We believe that we are well-positioned to capitalize on the following competitive strengths to achieve growth in our future performance:
National Scale and Expertise, on a Local Level, in Small and Mid-Sized Markets.
Our scale, national reach and expertise in media and entertainment provides significant competitive advantages in our small and mid-sized markets.
Large-Market Products, Technology and Practices Deployed in Small and Mid-Sized Markets.
Our flexible and customized content management system, digital advertising products and delivery capabilities, mobile applications, digital marketing solutions capabilities, digital programmatic advertising platform, data analytics and strategic insights platform, online video content and repeatable live event templates allow us to deliver world-class products in small and mid-sized markets. We believe that with our scale we can offer superior solutions for advertisers and audiences alike as compared to many of our local competitors.
National Scale with Local Focus.
We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on small and mid-sized markets in the United States. This national scale allows us to have greater relevance to, and recognition from, our advertising clients while sharing best practices for strategy and operations across our asset portfolio.
Captive Local Audience Drives Superior Opportunity in Small and Mid-Sized Markets.
The competitive and economic environments found in small and mid-sized markets, particularly the markets where we have an established presence, provide significant advantages to us and, we believe, reduce volatility in our financial results.
Attractive Competitive Landscapes.
There are fewer and less well-capitalized, local media competitors across our small and mid-sized markets relative to larger markets. In 43 of our 67 local markets, we do not compete against any of the five largest English language national radio competitors, as measured by number of radio stations owned. We believe this competitive landscape allows our brands to gain a greater share of audience and advertising expenditures in our markets than what is generally achieved by peers operating in large markets.
Stable, Locally Significant Institutions.
We have assembled our radio station assets and most of our live events operations across a collection of small and mid-sized markets, supported by stable, locally significant institutions such as universities, military bases, state capitals, regional medical centers and retail hubs. We believe these stabilizing institutions further reduce the volatility of advertising spending in our markets.
#1 or #2 Revenue Market Share in Nearly All of Our Markets.
Our brands, in the aggregate, capture the largest or the second largest radio revenue share in 64 of our 67 markets, and in 47 markets we are ranked number one. This leading market share position is indicative of our audience reach and engagement as well as our relevance to advertisers in our markets.
Strong Relationships with Local and Regional Advertisers.
In the year ended December 31, 2020, we generated approximately 80% of our revenue from a broad array of local and regional advertisers in a number of industries, including automotive dealers, banking and mortgage service providers, furniture and home furnishings retailers, food and beverage service providers, healthcare service providers and media and telecommunications service providers. We generate a majority of our local advertising revenue by selling directly to local advertisers, as well as to local and regional advertising agencies which affords us the opportunity to better present our products, cross-sell products and more directly influence their advertising expenditure decisions.
Geographic Diversification with Strength in Regional Clusters.
Our assets are geographically diversified, which helps to mitigate potential regional economic volatility and inclement weather events. By clustering our markets in the Northeast, Upper Midwest, Texas and Mountain West regions we are able to create compelling audience coverage for regional advertisers and benefit from economies of scale.
Diversified and Integrated Product Offering.
Our diversified product offering substantially differentiates us from our competition. This diversification allows us to provide superior solutions to our audience and advertisers, underpins our growth strategy and, we believe, helps to mitigate the risks associated with advertising revenue concentration.
Audience Engagement In and Out-of-Home, Across Multiple Platforms.
We offer our audience the ability to access our branded content on-air, online and on-site across multiple distribution channels. We believe that leveraging technology to make our branded content experiences accessible on any device and in multiple locations strengthens our audience engagement.
Targeted Audience Reach, Closer to the Point of Sale, for Local, Regional and National Advertisers.
A significant portion of our audience engagement occurs when our audience is out-of-home, particularly in the car, at the workplace or at our live events. Our audience frequently interacts with our content in close proximity to point of purchase, thereby amplifying the impact of our advertisers.
Launch Point for Non-Radio Products.
Our radio reach and engagement provide a powerful foundation from which we are able to grow our websites, social media presence, online radio streams, mobile applications, digital marketing solutions, programmatic digital advertising platform and live events. We believe that the increased interaction with consumers across these products and platforms in turn reinforces consumer loyalty and affinity toward our radio brands and enables us to develop and grow complementary products in our markets.
Diversified Revenue Base.
We generate revenue from a diversified base of products and services, advertisers and markets. In the year ended December 31, 2020, approximately 46% of our net revenue was derived from sources other than the sale of terrestrial radio station advertising. For the year ended December 31, 2020, no advertising category, market, or state represented more than 20% of revenue. No single customer accounted for more than approximately 1% of revenue for the years ended December 31, 2020 and 2019.
Monetization of Our Audience Relationships.
We believe that our diversified and integrated product and service offerings, combined with our leading market position in small and mid-sized markets based on radio revenue share, enables us to generate higher total revenue per audience member than radio station owners focused on larger markets.
Influential Local and National Brands.
Strong Brand Recognition with Deep Local Heritage.
We believe our brands are well positioned, both to defend their competitive position in the radio medium and to expand their competitive position online, on social media platforms, mobile devices, voice activated smart speakers, and in live events, which will allow for greater audience reach and deeper, more frequent interaction with our audience.
Original and Nationally Oriented Digital Brands Attract Significant Audience.
In addition to our heritage brands, we established several original brands that have experienced significant audience growth since their inception and attract a large, stable and engaged audience.
Focus On Providing Original Entertainment, Music and Lifestyle Media Experiences to Our Audience.
We believe that our focus on providing original entertainment, music and lifestyle media experiences to our audience is a key driver of our powerful audience reach and engagement metrics.
Market Leadership in High-Quality, Locally-Focused Content.
In our markets, we are among the largest providers of locally-focused content available to consumers. The quality and availability of our locally-focused content allows our brands to distinguish themselves from other local offerings, attract larger audiences and build a loyal audience. Several of our competitors, particularly in print media, have reduced the amount of original local content they produced or created pay-walls that restrict access to their digital content. We believe these trends will continue and will provide an advantage to our offerings as compared to other local media offerings.
Expertise in Music and Entertainment.
We believe that our expertise in the creation of music and entertainment content represents the foundation of our audience value proposition and is, in part, responsible for many of the strong metrics evidencing our broad and deep audience engagement, our ability to attract employees who excel at content production, and our success with advertisers seeking to reach the valuable consumers attracted by our premium content.
Attractive Radio Industry Fundamentals.
The local media industry is an important medium for advertisers to reach targeted local consumers and for consumers to engage with relevant local content and events. Radio is a significant component of total local advertising spend as it remains a highly relevant and important medium for consumers.
Stable and Engaged Audience Base.
Despite the increased number of alternative media, terrestrial radio has experienced negligible audience fragmentation over the past 50 years and remains a significant source of daily media exposure. According to Nielsen Holdings N.V. (“Nielsen”), terrestrial radio broadcasts reached approximately 85% of American adults ages 12+ each week as of December 2020, a level that has remained largely consistent since 1970.
Trusted and Socially-Influential Local Media Personalities.
Research suggests that radio personalities are trusted by their audience and are socially influential. As reported in the Katz Media Group, Our Media, 2019 survey, 81% of listeners considered their favorite personality to be like a friend, family member or acquaintance. Additionally, 83% value and trust their favorite personality’s opinion. According to Jacobs Media’s Tech Survey 2020, 72% of listeners feel a connection with their home radio station, and 59% say radio personalities are the main reason they listen to the radio.
Cost-Effective Value Proposition to Advertisers.
Given the stability of its audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar
scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our markets.
Free Delivery of Local Content to End-Users.
Terrestrial radio’s free content distribution model provides an effective competitive advantage against other mediums, particularly those that deploy a subscription-based business model or rely on costs associated with internet connectivity or bandwidth use. In many of our markets, radio represents the only local content available to consumers free of charge.
Key Provider of Safety Information and Charitable Support in the Communities We Serve.
Our radio stations and local websites, together with our employees, play a vital role in the communities we serve by providing emergency information in times of crisis and by supporting a wide variety of charitable endeavors. During weather and other emergencies, government officials rely on our radio stations to disseminate critical, occasionally life-saving, information. Our radio stations and local websites also routinely support charity and community events through on-air and digital promotions to bolster fundraising activities and emergency relief efforts. These efforts further strengthen our position with both our audience and our advertisers.
Reliable and Substantial Cash Flow Generation.
Our business enjoys strong cash flow generation owing to the relatively limited capital needs of our operations. During the year ended December 31, 2020, we recorded $14.9 million of capital expenditures, which represented 4.0% of net revenue during the same period. In addition, we benefit from certain tax attributes that generate tax deductions which have historically limited the amount of cash taxes we pay.
Strong, Experienced and Incentivized Management Team.
We have an experienced senior management team with a proven, multi-disciplinary track record of delivering results for stakeholders.
The principal features of our operating strategy are:
Solidify Our Position in Our Markets.
Our market positioning is supported by the demonstrable and consistent positive results our products produce for advertisers.
Continue to Build Our Premium Portfolio of Brands.
Our branding strategy is fundamental to growing our audience and revenue. Across our markets, we have a large portfolio of distinct local brands that resonate with and appeal to our audiences. Many of our brands have several decades of heritage in our markets. Consumers associate our brands with high quality, locally-relevant content and entertainment. We intend to continue to invest in marketing and promotions in support of our brands and to actively participate in community events to increase our local market presence.
Deepen Relationships with Advertisers to Increase Share of Advertising Spend.
We are committed to growing our sales force, training our sales personnel and investing in our business to allow us to deepen relationships with our advertisers, including developing new products that will allow our content, and our advertisers, to reach a broader audience more frequently and in more locations. Over time, we believe we can capture a greater share of the advertising expenditure in our markets across all mediums.
Continue to Develop New Products That Foster Interaction with Our Audience Across Multiple Mediums and Increase Monetization Opportunities.
Our audience reach, combined with our direct relationship with local advertisers in our markets, positions us to launch and monetize new products and services, further diversifying and growing our revenue. The natural synergies between our products allow us to leverage our operating structure and further monetize existing audience and advertiser relationships. In the past, we have introduced a mobile streaming application (radioPup), an e-commerce product (Seize the Deal), a digital marketing solutions platform (Townsquare Interactive), a programmatic digital advertising platform (Townsquare Ignite), and mobile applications for individual stations and brands. In addition to delivering revenue growth, these products and services which we continue to develop, frequently appeal to potential customers in our markets who may not access our radio products, thereby increasing our overall customer base and market share. We intend to continue to develop new digital products and offerings and to better monetize our digital audience.
Focus on Differentiated Live and Local Content.
We generally provide a larger proportion of live and local content relative to other local media companies in our markets. We believe such live and local content is more engaging to our audience and differentiates our offerings in an increasingly crowded media landscape, mitigating the threat of audience attrition. Many competing audio media offerings, including Spotify, Pandora and SiriusXM, do not offer local content in our markets. We intend to continue providing audiences with this differentiated content and enjoy the advantages it provides us with our audience and our advertisers.
Capitalize on Strong Positions and Brands in Country, News/Talk/Sports, and Rock Formats.
As of March 5, 2021, we own 70 radio stations formatted with Country content, 68 formatted with News/Talk/Sports content and 61 formatted with Rock content, representing approximately 22%, 21%, and 19% of our radio stations, respectively. The majority of our radio stations airing these formats capture the largest audience among radio stations airing similar content in their respective markets, as ranked by Nielsen or other ratings services. We create audio programming, online content and live events which leverage our strength in these formats, together with the strength of our brands. We intend to continue to use our expertise and knowledge in these formats to share best practices and optimize content across our portfolio in order to maximize audience engagement within these formats.
Leverage Scalable Infrastructure and Continue to Improve Operating Efficiencies Across Our Company.
Our various media products share common, largely fixed-cost operating infrastructure, resulting in significant economies of scale. We also negotiate vendor contracts with key suppliers on a centralized basis, which further reduces costs. As a result, as we grow our revenue, a significant majority of each incremental dollar of revenue is converted into incremental earnings.
The principal features of our acquisition strategy are:
Prudently Pursue Attractively-Valued Acquisition Opportunities.
We have a successful track record of sourcing and integrating acquisitions. We intend to continue to pursue attractively-priced acquisitions of radio stations, digital properties, and live events. We target assets that have strong brands, enjoy leading market share positions, generate strong cash flow, and generally possess traits consistent with our existing assets. In addition, acquiring assets allows us to achieve additional economies of scale, share best practices across a broader platform, and further diversify our revenue base across our properties and geographies.
Add to Our Portfolio of Attractive Radio Station Clusters.
Since our Company’s founding by members of the current senior management team in 2010, we have expanded our radio station portfolio from 60 to 322 by completing more than 10 radio transactions. Radio station ownership in the United States remains significantly fragmented with over 3,000 owners operating over 10,000 commercial radio stations. While current Federal Communication Commission (“FCC”) ownership limitations restrict our ability to acquire incremental radio stations in many of our markets, there remain a large number of markets with characteristics that are consistent with Townsquare’s acquisition criteria, in which we have no presence today. Given our acquisition track record, we are viewed by many sellers of radio stations to be a potential buyer, which has afforded us the opportunity to review the majority of stations sold in recent years. We expect to remain active, and disciplined from a valuation perspective, in the radio station marketplace. For information regarding certain of our recent acquisitions and dispositions, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview of our Performance - Changes to our Business.”
Augment the Growth of Our Digital Product Offerings Through Acquisitions.
In addition to our radio acquisition activity, since 2010 we have executed acquisitions of digital assets, which have further extended our multi-product, cross-platform offering and provided geographic and revenue diversification. The acquired assets included certain assets of AOL Music and XXL. We strive to leverage our existing platform in combination with the acquired assets to drive operating efficiencies and financial performance. We expect to continue to consider opportunities in the digital acquisition marketplace.
Evaluate New Product Opportunities.
We have evaluated a number of acquisition opportunities in other sectors that we view as adjacent and complementary to our existing asset portfolio. We expect to continue to consider such opportunities and potentially take action, in the event that we find an opportunity that provides a natural extension to our core competencies, further diversifies our revenue and demonstrates a risk-reward profile that meets our stringent financial return requirements.
Sources of Revenue
We generate revenue by providing multiple products and services across a range of media platforms. We approach our media products holistically, maximizing our revenue potential by pursuing integrated cross-platform sales and solutions for our advertising clients. Specifically, we offer advertisers cross-platform packages that incorporate our audience reach across radio, websites, social media, online video, mobile, voice activated smart speakers, digital marketing solutions, e-commerce and live events.
Our revenue is generated primarily through the integrated sale of the following products and solutions:
•Spot radio advertisements sold to local, regional and national advertisers that air on our radio stations via terrestrial radios, computers, mobile devices, connected devices such as cars and TVs, and voice activated smart speakers.
•Sponsorships, live reads and endorsements in our radio programming, website content, video channels and social media sold to local, regional and national advertisers.
•Remote broadcasts of our radio stations at advertisers’ places of business sold to local and regional advertisers.
•Barter-based auctions sold to local and regional advertisers.
•Display, sponsorship and video advertising, including custom developed digital advertisement products on our radio station websites, owned and operated, and affiliated national websites, mobile applications, social media platforms, YouTube channels, email newsletters and digital programmatic advertising platform, to local, regional and national advertisers.
•Advertising and sponsorships in our radio stations’ online radio streams accessible on computing devices, voice activated smart speakers, and mobile devices through our mobile streaming application, radioPup, or individual station mobile applications, sold to local, regional and national advertisers.
•Sponsored video content, including branded content series, often featuring musicians or other celebrities, and distributed across our portfolio of local and/or national digital properties and social media channels, sold to local, regional and national advertisers.
•Traditional and mobile-enabled website development and hosting services, e-commerce solutions, search engine and online directory optimization services, online reputation monitoring, social media management, appointment scheduling services, email marketing services, and website retargeting sold to local and regional small and mid-sized businesses.
•E-Commerce offerings, including daily deals, ongoing deals and auctions sold to local and regional advertisers.
•Admission tickets, merchandise, food and other concessions, and other ancillary products and services sold to our audience.
•Sponsorships, exhibit space and activations sold to our local, regional and national advertisers.
•Licenses of our brands and content, sold to other media companies.
We believe we are positioned to generate revenue growth by increasing audience interaction with our radio and digital assets and live events, as well as increasing our share of advertising with new and existing advertisers.
No single customer accounts for more than approximately 1% of revenue in any of the years ended December 31, 2020 and 2019. A significant percentage of our advertising revenue is generated from the sale of advertising to the automotive, financial services, health services, entertainment, and retail industries.
The local media industry is an important medium for advertisers to reach targeted local consumers and for consumers to engage with relevant local content and events. According to SNL Kagan forecasts, local advertising spending across all U.S. major media categories totaled $92.9 billion in 2020. Since 2015, U.S. local advertising has increased at a 4.8% compound annual growth rate and is projected to grow at a 6.3% compound annual growth rate through 2025. In 2020, local advertising spending on radio and digital, among our target categories, totaled $66.8 billion. Since 2015, U.S. local advertising spending on radio and digital has increased at a 14.1% compound annual growth rate and is projected to grow at a 9.0% compound annual growth rate through 2025.
Radio. The primary source of revenue for radio broadcasting companies is the sale of advertising time to local, regional and national spot advertisers, and national network advertisers. According to SNL Kagan, over the past 5 years radio advertising has generally represented approximately 4.4% to 6.0% of the overall U.S. advertising market, and has typically followed macroeconomic growth trends. In 2020, radio advertising revenue reached $11.2 billion of which $8.2 billion was from local radio advertising. The radio industry has a stable and engaged audience base and continues to be one of the core methods for advertisers to reach their targeted audience. According to Nielsen, terrestrial radio broadcasts reached approximately 85% of American adults age 12+ each week as of December 2020, a level that has remained largely consistent since 1970.
Digital. The primary source of revenue for national and local websites, accessed either from a PC, tablet or mobile device, is the sale of search ads, display ads and video advertising directly to advertisers and indirectly through advertising networks and exchanges. According to SNL Kagan forecasts, in 2020 digital advertising revenue reached $122.0 billion of which $58.7 billion was local. Since 2015, local digital advertising has represented one of the fastest growing local media advertising categories with a compound annual growth rate of 19.7%, outpacing national advertising which grew at 13.0%. Local digital advertising is projected to grow at a compound annual growth rate of
10.0% through 2025 and continue to gain market share on national digital advertising which is projected to grow at 6.0%.
The primary source of revenue for Townsquare Interactive is the sale of digital marketing solutions, on a subscription basis, to small and mid-sized local and regional businesses in small and mid-sized markets across the United States, including the markets in which we operate radio stations. Our digital marketing solutions include traditional and mobile-enabled website development and hosting services, e-commerce platforms, search engine and online directory optimization services, online reputation monitoring, social media management and website retargeting.
The primary source of revenue for live events is the sale of tickets to attendees and sponsorships, event marketing, and activation opportunities sold to local, regional and national advertisers. According to IBIS World, total revenue from the U.S. live event industry, which includes the production, management and promotion of live events and performances, including concerts, sporting events and public appearances, grew to $37.8 billion in 2019 (pre-pandemic), from $29.3 billion in 2015, which represented a 6.6% compound annual growth rate. In 2020, revenue from the U.S. live event industry decreased 39.9% to $22.7 billion, as the COVID-19 pandemic and measures taken to contain it resulted in the cancellation of a large number of live events beginning March 2020. According to Pollstar, North American concert tour gross revenues as measured by the top 100 grossing North American tours, totaled $0.8 billion in 2020, down from $3.7 billion in 2019 and $2.8 billion in 2015. For 2020 it was solely the pre-pandemic box office results that determined the ranking of top touring artists.
The local media industry is very competitive. The success of each of our radio stations, digital properties, live events, and digital marketing services depends largely upon each product’s ability to attract audiences, pricing, the number of local media competitors and the overall demand for advertising and digital marketing services within individual markets. We mitigate these competitive pressures by focusing on small to mid-sized markets, where there are fewer and less well-capitalized local media competitors across all mediums, including radio stations, broadcast television stations, pay television networks, locally-focused websites, live events, outdoor advertising, newspapers, magazines and directories. The lack of competition often allows our brands to garner a greater share of both the local audience and advertising expenditures in our markets.
Radio - Our radio stations compete directly for audiences and advertising revenue with other radio stations within their respective markets as well as with other alternative mediums including satellite radio, television, print and digital media. Additionally, online music services have begun to sell advertising locally, creating additional competition for both audience and advertisers. By building strong brands with a loyal audience consisting of specific demographic groups in each of our markets, we are able to attract advertisers seeking to reach those particular audiences.
Factors that affect a radio station’s competitive position include its brand identity and audience loyalty, management experience, the radio station’s audience rank in its local market (which is highly affected by the competitive radio landscape in a market and format changes that occur from time to time), transmitter power and location, assigned frequency, audience characteristics, local program acceptance, and the number and characteristics of other radio stations and other advertising media in the market area. We attempt to improve our competitive position in each market by constantly researching and improving the content of our radio stations and websites, implementing advertising campaigns aimed at the demographic groups for which our radio stations target content and managing our sales efforts to attract a larger share of advertising dollars for each radio station individually.
Local Digital Content - Our local websites compete for audiences and advertisers directly with other local radio station websites, television station websites, newspaper websites, online directories, local sections of national digital
properties, blogs and other types of locally focused websites, as well as all national and international websites. We attempt to improve our competitive position, maximize our audience and grow our revenue by focusing on high quality, differentiated local content and by providing innovative and effective advertising integrations for our customers.
National Digital Content - Our national digital assets compete for audience and advertisers with a diverse and large pool of advertising, media and internet companies. We expect that this competition will persist in the future as a result of the continuing maturation of the industry and a lack of significant barriers to entry. Our continued success will depend upon a number of factors, including the quality of content on our owned and operated websites, the ability to manage search engine optimization efforts to direct traffic to these websites, our sales efforts and the ability to remain price competitive.
The market for local online marketing solutions is highly fragmented, dynamic and competitive. These solutions are also rapidly evolving, creating opportunity for new competitors to enter the market. Our competitors include large internet marketing providers, offline media companies such as yellow page publishers, newspaper and television companies, as well as other local small and medium-sized business marketing providers. While some of our competitors enjoy substantial competitive advantages, such as greater name recognition, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources, we believe we compete favorably and our product capabilities meet customer requirements due to our secure, reliable and integrated technology platform, cost-effective customer acquisition strategies, customer service and support, brand awareness and reputation, and overall customer satisfaction.
Our live events compete for audiences and sponsorships with both national competitors, such as Live Nation and AEG, and a variety of local or regional competitors, including promoters and event marketing companies. Additionally, we compete with venue operators, including arenas, theaters and casinos, which bring in live entertainment directly.
Our net revenue varies throughout the year. Typically, we expect that our first calendar quarter will produce the lowest net revenue for the year, as advertising expenditures generally decline following the winter holidays. However, due to the COVID-19 pandemic, the seasonality of our net revenue was materially impacted and our second quarter produced our lowest net revenue for 2020. During even-numbered years, net revenue generally includes increased advertising expenditures by political candidates, political parties and special interest groups. Political spending is typically highest during the fourth quarter. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that typically do not have an effect on net revenue generation until future periods, if at all.
The COVID-19 pandemic has materially and adversely impacted the U.S. economy and financial markets, with legislative and regulatory responses including unprecedented monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to the timing of stabilization and recovery. The extent of the COVID-19 impact will depend on future actions and outcomes, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the short-term and long-term economic impact of the outbreak (including the effect on advertising activity, consumer discretionary spending and our employees in the markets in which we operate), the actions taken to mitigate the impact of the pandemic, and the pace of economic and financial market recovery when the COVID-19 pandemic subsides, among others.
The COVID-19 pandemic and measures taken to contain it have subjected our business, results of operations, financial condition, stock price and liquidity to a number of material risks and uncertainties, all of which may continue or
worsen. Our operations had performed strongly in the first two months of 2020 before the effects of COVID-19 began to impact our operations in early March 2020, as the challenges that COVID-19 created for advertisers and consumers has materially and adversely impacted our net revenues since mid-March. In particular, our clients canceled a significant amount of advertising, and we experienced a material decline in the purchase of new advertising by our clients. In addition, we canceled a large number of our live events. While our Advertising revenue and Live Events revenue significantly declined, Townsquare Interactive continued its revenue growth.
We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business. We took certain proactive initiatives to preserve financial flexibility, mitigate the impact of the recent and uncertain decline in net revenue, as well as position us for growth as advertising demand rebounds.
The Company also instituted immediate actions to address the impacts to its consolidated financial position, consolidated results of operations, and liquidity, including significantly reducing our non-essential capital expenditures and reducing our workforce through the termination or layoff of approximately 135 full-time employees. We instituted wage reduction efforts, such as the temporary suspension of the Company’s match on employee contributions to the Company’s defined contribution plan and the deferral of the payment of certain payroll taxes until December 31, 2021 and 2022 under the Coronavirus Aid, Relief, and Economic Security (“CARES Act”). Additionally, our board of directors determined to cease payment of quarterly cash dividends, following the payment of our first quarter dividend of $2.1 million on May 15, 2020.
The U.S. federal government responded to the COVID-19 pandemic on March 18, 2020 by enacting the Families First Coronavirus Response Act (“FFCRA”) and on March 27, 2020, the CARES Act. In addition to the deferral of the payment of certain payroll taxes until December 31, 2021 and 2022 noted above, the CARES Act amends the Tax Cut and Jobs Act of 2017 by modifying the amount of allowable interest expense deductions, allowing five-year carryback of net operating losses, and characterizing qualified improvement property as 15-year property eligible for bonus depreciation. The Company has availed itself of all applicable credits and deferrals, however neither the FFCRA nor the CARES Act has had a material impact on our financial condition, results of operations or liquidity.
The full extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the outbreak, and the impact on our clients, employees and the markets in which we operate, all of which remain uncertain and cannot be predicted. As a result of the pandemic, there is a reasonable possibility that actual results could differ from estimates and such differences could be material to the financial position and results of operations, specifically impairment testing of intangible assets, valuation and impairment testing of long-lived tangible assets, the present value of leasing arrangements and the Company’s calculation of allowance for doubtful accounts. At this point, the full extent to which the pandemic will impact our financial condition or results of operations is uncertain, but it has been and may continue to be material.
Starting in late March, the majority of our employees began working remotely, with the exception of much of our on-air broadcast staff, whom remained in studio as our business is considered essential. Beginning in May 2020, the Company began re-opening offices when restrictions were lifted in each of the states and counties within which the Company operates and as of the third quarter of 2020, most of the Company’s radio station employees had returned to work in the office, while most of our digital and TSI employees continue to work from home. Due to the nature of the Company’s products and services, remote operations have not had a material impact on results to date. We have implemented health and safety policies in accordance with applicable law, which include routine disinfection of all surfaces, limited and restricted use of common areas, the wearing of masks and provision of hand sanitizer and gloves and social distancing measures employed while in our office spaces.
As of December 31, 2020, we employed 2,257 full and part-time employees. None of our employees are covered by collective bargaining agreements and we consider our relations with our employees to be satisfactory.
We employ individuals in a large variety of roles. On occasion, in order to protect our interests, we enter into employment agreements with certain of our employees, including members of senior management, product leaders, local
market presidents and selected sales personnel and local media personalities. We do not believe that the loss of any one these individuals, excluding certain key members of our senior management, would have a material adverse effect on our financial condition or results of operations, taken as a whole. Our risks related to losing key members of our senior management are more fully described in the section titled “Risk Factors.”
Federal Regulation of Radio Broadcasting
The ownership, operation and sale of radio stations, including those licensed to us, are subject to the jurisdiction of the FCC, which acts under authority of the Communications Act of 1934, as amended (the “Communications Act”). The Telecommunications Act of 1996 amended the Communications Act and directed the FCC to change certain of its broadcast rules. Among its other regulatory responsibilities, the FCC issues permits and licenses to construct and operate radio stations; assigns broadcast frequencies; determines whether to approve changes in ownership or control of radio station licenses; regulates transmission equipment, operating power and other technical parameters of radio stations; adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of radio stations; regulates some forms of radio broadcast content; and has the authority under the Communications Act to impose penalties for violations of its rules.
The following is a brief summary of certain provisions of the Communications Act and relevant FCC rules and published policies (collectively, the “Communications Laws”). This description does not purport to be comprehensive and reference should be made to the Communications Laws, public notices, and decisions issued by the FCC for further information concerning the nature and extent of federal regulation of radio stations. Failure to observe the provisions of the Communications Laws can result in the imposition of various sanctions, including monetary forfeitures and the grant of a “short-term” (less than the maximum term) license renewal. For particularly egregious violations, the FCC may deny a radio station’s license renewal application, revoke a radio station’s license, or deny applications in which an applicant seeks to acquire additional broadcast properties.
Radio broadcast licenses are generally renewed for terms of eight years. Licenses are renewed by filing an application with the FCC. Petitions to deny license renewal applications may be filed by interested parties, including members of the public. While we are not currently aware of any facts that would prevent the renewal of our licenses to operate our radio stations, there can be no assurance that any of our licenses will be renewed for a full term.
Each class of FM station has the right to broadcast with a certain amount of power from an antenna located at a certain height. The most powerful FM radio stations are Class C FM radio stations, which may operate with the equivalent of up to 100 kilowatts of effective radiated power (“ERP”) at an antenna height of up to 1,968 feet above average terrain. These radio stations typically provide service to large areas that cover one or more counties. There are also Class C0, C1, C2 and C3 FM radio stations which may operate with progressively less power and/or antenna height. Class B FM stations operate with the equivalent of up to 50 kilowatts ERP at an antenna height of up to 492 feet above average terrain. Class B radio stations typically serve large metropolitan areas and their outer suburban areas. There are also Class B1 radio stations that can operate with up to 25 kilowatts ERP at an antenna height of up to 328 feet above average terrain. Class A FM radio stations may operate with the equivalent of 6 kilowatts ERP at an antenna height of up to 328 feet above average terrain, and generally serve smaller cities and towns or suburbs of larger cities.
The area served by an AM radio station is determined by a combination of frequency, transmitter power, antenna orientation and soil conductivity. The effective service area of an AM radio station is determined based on the radio station’s power, operating frequency, antenna patterns and its day/night operating modes. The area served by an FM radio station is determined by a combination of transmitter power and antenna height, with radio stations divided into eight classes according to these technical parameters, as set forth above.
The following table sets forth, as of February 26, 2021 the market, call letters, cities of license, frequencies, FCC license expiration dates, and our markets’ population rankings as reported by Nielsen, of all our owned radio stations, booster stations and FM translators, and all stations operated under Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMAs”).
|Market||Station||City of License||Frequency||License Expiration Date|
|Abilene, TX (#229)||KEAN-FM||Abilene, TX||105.1||August 1, 2021|
|KEYJ-FM||Abilene, TX||107.9||August 1, 2021|
|KMWX(FM)||Abilene, TX||92.5||August 1, 2021|
|KSLI(AM)||Abilene, TX||1280||August 1, 2021|
|KULL(FM)||Abilene, TX||100.7||August 1, 2021|
|KYYW(AM)||Abilene, TX||1470||August 1, 2021|
|Abilene, TX||94.7||August 1, 2021|
|Albany-Schenectady-Troy, NY (#67)||WGNA-FM||Albany, NY||107.7||June 1, 2022|
|WQSH(FM)||Cobleskill, NY||103.5||June 1, 2022|
|WPBZ-FM||Rensselaer, NY||103.9||June 1, 2022|
|WQBK-FM||Malta, NY||105.7||June 1, 2022|
|WTMM-FM||Mechanicville, NY||104.5||June 1, 2022|
|Albany, NY||99.1||June 1, 2022|
|Amarillo, TX (#168)||KATP(FM)||Amarillo, TX||101.9||August 1, 2021|
|KIXZ(AM)||Amarillo, TX||940||August 1, 2021|
|KMXJ-FM||Amarillo, TX||94.1||August 1, 2021|
|KPRF(FM)||Amarillo, TX||98.7||August 1, 2021|
|KXSS-FM||Amarillo, TX||96.9||August 1, 2021|
|Atlantic City-Cape May, NJ (#156)||WENJ(FM)||Millville, NJ||97.3||June 1, 2022|
|WFPG(FM)||Atlantic City, NJ||96.9||June 1, 2022|
|WPGG(AM)||Atlantic City, NJ||1450||June 1, 2022|
|WPUR(FM)||Atlantic City, NJ||107.3||June 1, 2022|
|WSJO(FM)||Egg Harbor City, NJ||104.9||June 1, 2022|
|Atlantic City, NJ||95.5||June 1, 2022|
|Augusta-Waterville, ME (#242)||WEBB(FM)||Waterville, ME||98.5||April 1, 2022|
|WJZN(AM)||Augusta, ME||1400||April 1, 2022|
|WMME-FM||Augusta, ME||92.3||April 1, 2022|
|WTVL(AM)||Waterville, ME||1490||April 1, 2022|
|Augusta, ME||95.9||April 1, 2022|
|Bangor, ME (#213)||WEZQ(FM)||Bangor, ME||92.9||April 1, 2022|
|WBZN(FM)||Old Town, ME||107.3||April 1, 2022|
|WDEA(AM)||Ellsworth, ME||1370||April 1, 2022|
|WQCB(FM)||Brewer, ME||106.5||April 1, 2022|
|WWMJ(FM)||Ellsworth, ME||95.7||April 1, 2022|
|Battle Creek, MI (Not Rated “NR”)||WBCK(FM)||Battle Creek, MI||95.3||October 1, 2028|
|WBXX(FM)||Marshall, MI||104.9||October 1, 2028|
|Billings, MT (NR)||KBUL(AM)||Billings, MT||970||April 1, 2021|
|KCHH(FM)||Worden, MT||95.5||April 1, 2021|
|KCTR-FM||Billings, MT||102.9||April 1, 2021|
|KKBR(FM)||Billings, MT||97.1||April 1, 2021|
|KMHK(FM)||Billings, MT||103.7||April 1, 2021|
|Billings, MT||95.1||April 1, 2021|
|Billings, MT||103.3||Construction Permit|
|Binghamton, NY (#194)||WAAL(FM)||Binghamton, NY||99.1||June 1, 2022|
|WHWK(FM)||Binghamton, NY||98.1||June 1, 2022|
|WNBF(AM)||Binghamton, NY||1290||June 1, 2022|
|WWYL(FM)||Chenango Bridge, NY||104.1||June 1, 2022|
|WYOS(AM)||Binghamton, NY||1360||June 1, 2022|
|Binghamton, NY||92.1||Construction Permit|
|Bismarck, ND (#241)||KACL(FM)||Bismarck, ND||98.7||April 1, 2021|
|KBYZ(FM)||Bismarck, ND||96.5||April 1, 2021|
|KKCT(FM)||Bismarck, ND||97.5||April 1, 2021|
|KLXX(AM)||Bismarck-Mandan, ND||1270||April 1, 2021|
|KUSB(FM)||Hazelton, ND||103.3||April 1, 2021|
|Boise, ID (#86)||KAWO(FM)||Boise, ID||104.3||October 1, 2021|
|KCIX(FM)||Garden City, ID||105.9||October 1, 2021|
|KFXD(AM)||Boise, ID||630||October 1, 2021|
|KIDO(AM)||Nampa, ID||580||October 1, 2021|
|KSAS-FM||Caldwell, ID||103.5||October 1, 2021|
|KXLT-FM||Eagle, ID||107.9||October 1, 2021|
|Boise, ID||107.5||October 1, 2021|
|Boise, ID||105.5||October 1, 2021|
|Bozeman, MT (NR)||KISN(FM)||Belgrade, MT||96.7||April 1, 2021|
|KMMS-FM||Bozeman, MT||95.1||April 1, 2021|
|KMMS(AM)||Bozeman, MT||1450||April 1, 2021|
|KPRK(AM)||Livingston, MT||1340||April 1, 2021|
|KXLB(FM)||Churchill, MT||100.7||April 1, 2021|
|KZMY(FM)||Bozeman, MT||103.5||April 1, 2021|
|Livingston, MT||98.7||April 1, 2021|
|Bozeman, MT||94.5||April 1, 2021|
|Buffalo-Niagara Falls, NY (#59)||WBLK(FM)||Depew, NY||93.7||June 1, 2022|
|WBUF(FM)||Buffalo, NY||92.9||June 1, 2022|
|WMSX(FM)||Buffalo, NY||96.1||June 1, 2022|
|WYRK(FM)||Buffalo, NY||106.5||June 1, 2022|
|Casper, WY (NR)||KKTL(AM)||Casper, WY||1400||October 1, 2021|
|KRNK(FM)||Casper, WY||96.7||October 1, 2021|
|KRVK(FM)||Vista West, WY||107.9||October 1, 2021|
|KTRS-FM||Casper, WY||104.7||October 1, 2021|
|KTWO(AM)||Casper, WY||1030||October 1, 2021|
|KWYY(FM)||Midwest, WY||95.5||October 1, 2021|
|Casper, WY||95.1||Construction Permit|
|Casper, WY||101.9||Construction Permit|
|Cedar Rapids, IA (#200)||KDAT(FM)||Cedar Rapids, IA||104.5||February 1, 2029|
|KHAK(FM)||Cedar Rapids, IA||98.1||February 1, 2029|
|KRNA(FM)||Iowa City, IA||94.1||February 1, 2029|
|Cheyenne, WY (#251)||KGAB(AM)||Orchard Valley, WY||650||October 1, 2021|
|KIGN(FM)||Burns, WY||101.9||October 1, 2021|
|KLEN(FM)||Cheyenne, WY||106.3||October 1, 2021|
|Orchard Valley, WY||99.5||Construction Permit|
|Danbury, CT (#196)||WINE(AM)||Brookfield, CT||940||April 1, 2022|
|WRKI(FM)||Brookfield, CT||95.1||April 1, 2022|
|WDBY(FM)||Patterson, NY||105.5||June 1, 2022|
|Brookfield, CT||105.5||June 1, 2022|
|Dubuque, IA (NR)||KLYV(FM)||Dubuque, IA||105.3||February 1, 2029|
|KXGE(FM)||Dubuque, IA||102.3||February 1, 2029|
|WDBQ(AM)||Dubuque, IA||1490||February 1, 2029|
|WDBQ-FM||Galena, IL||107.5||December 1, 2028|
|WJOD(FM)||Asbury, IA||103.3||February 1, 2029|
|Duluth-Superior, MN, WI (#206)||KKCB(FM)||Duluth, MN||105.1||April 1, 2021|
|KLDJ(FM)||Duluth, MN||101.7||April 1, 2021|
|WEBC(AM)||Duluth, MN||560||April 1, 2021|
|KBMX(FM)||Proctor, MN||107.7||April 1, 2021|
|WWPE(FM)||Hermantown, MN||92.1||April 1, 2021|
|Duluth, MN||106.5 ||April 1, 2021|
|El Paso, TX (#77)||KLAQ(FM)||El Paso, TX||95.5||August 1, 2021|
|KROD(AM)||El Paso, TX||600||August 1, 2021|
|KSII(FM)||El Paso, TX||93.1||August 1, 2021|
|Evansville, IN (#164)||WDKS(FM)||Newburgh, IN||106.1||August 1, 2028|
|WGBF(AM)||Evansville, IN||1280||August 1, 2028|
|WGBF-FM||Henderson, KY||103.1||August 1, 2028|
|WJLT(FM)||Evansville, IN||105.3||August 1, 2028|
|WKDQ(FM)||Henderson, KY||99.5||August 1, 2028|
|Faribault/Owatonna, MN (NR)||KDHL(AM)||Faribault, MN||920||April 1, 2021|
|KQCL(FM)||Faribault, MN||95.9||April 1, 2021|
|KRFO(AM)||Owatonna, MN||1390||April 1, 2021|
|KRFO-FM||Owatonna, MN||104.9||April 1, 2021|
|Owatonna, MN||94.7||Construction Permit|
|Faribault, MN||97.9||April 1, 2021|
|Flint, MI (#140)||WCRZ(FM)||Flint, MI||107.9||October 1, 2028|
|WFNT(AM)||Flint, MI||1470||October 1, 2028|
|WLCO(AM)||Lapeer, MI||1530||October 1, 2028|
|WQUS(FM)||Lapeer, MI||103.1||October 1, 2028|
|WRCL(FM)||Frankenmuth, MI||93.7||October 1, 2028|
|WWBN(FM)||Tuscola, MI||101.5||October 1, 2028|
|Ft. Collins-Greeley, CO (#105)||KKPL(FM)||Cheyenne, WY||99.9||October 1, 2021|
|KMAX-FM||Wellington, CO||94.3||April 1, 2021|
|KTRR(FM)||Loveland, CO||102.5||April 1, 2021|
|KUAD-FM||Windsor, CO||99.1||April 1, 2021|
|Grand Junction, CO (NR)||KEKB(FM)||Fruita, CO||99.9||April 1, 2021|
|KBKL(FM)||Grand Junction, CO||107.9||April 1, 2021|
|KMXY(FM)||Grand Junction, CO||104.3||April 1, 2021|
|KKNN(FM)||Delta, CO||95.1||April 1, 2021|
|KEXO(AM)||Grand Junction, CO||1230||April 1, 2021|
|Grand Junction, CO||96.5||Construction Permit|
|Grand Rapids, MI (#68)||WFGR(FM)||Grand Rapids, MI||98.7||October 1, 2028|
|WGRD-FM||Grand Rapids, MI||97.9||October 1, 2028|
|WLHT-FM||Grand Rapids, MI||95.7||October 1, 2028|
|WNWZ(AM)||Grand Rapids, MI||1410||October 1, 2028|
|WTRV(FM)||Walker, MI||100.5||October 1, 2028|
|Grand Rapids, MI||104.9||October 1, 2028|
|Kalamazoo, MI (#183)||WKFR-FM||Battle Creek, MI||103.3||October 1, 2028|
|WKMI(AM)||Kalamazoo, MI||1360||October 1, 2028|
|WRKR(FM)||Portage, MI||107.7||October 1, 2028|
|Paw Paw, MI||102.5||October 1, 2028|
|Killeen-Temple, TX (#135)||KSSM(FM)||Copperas Cove, TX||103.1||August 1, 2021|
|KUSJ(FM)||Harker Heights, TX||105.5||August 1, 2021|
|KLTD(FM)||Temple, TX||101.7||August 1, 2021|
|KTEM(AM)||Temple, TX||1400||August 1, 2021|
|KOOC(FM)||Belton, TX||106.3||August 1, 2021|
|Temple, TX||94.3||Construction Permit|
|Lafayette, LA (#112)||KPEL-FM||Breaux Bridge, LA||96.5||June 1, 2028|
|KHXT(FM)||Erath, LA||107.9||June 1, 2028|
|KMDL(FM)||Kaplan, LA||97.3||June 1, 2028|
|KPEL(AM)||Lafayette, LA||1420||June 1, 2028|
|KROF(AM)||Abbeville, LA||960||June 1, 2028|
|KTDY(FM)||Lafayette, LA||99.9||June 1, 2028|
|Lafayette, LA||103.3||Construction Permit|
|Lake Charles, LA (#211)||KHLA(FM)||Jennings, LA||92.9||June 1, 2028|
|KLCL(AM)||Lake Charles, LA||1470||June 1, 2028|
|KJMH(FM)||Lake Arthur, LA||107.5||June 1, 2028|
|KNGT(FM)||Lake Charles, LA||99.5||June 1, 2028|
|KJEF(AM)||Jennings, LA||1290||June 1, 2028|
|KTSR(FM)||De Quincy, LA||92.1||June 1, 2028|
|Lansing-East Lansing, MI (#127)||WFMK(FM)||East Lansing, MI||99.1||October 1, 2028|
|WMMQ(FM)||East Lansing, MI||94.9||October 1, 2028|
|WVFN(AM)||East Lansing, MI||730||October 1, 2028|
|WITL-FM||Lansing, MI||100.7||October 1, 2028|
|WJIM(AM)||Lansing, MI||1240||October 1, 2028|
|WJIM-FM||Lansing, MI||97.5||October 1, 2028|
|Laramie, WY (NR)||KCGY(FM)||Laramie, WY||95.1||October 1, 2021|
|KOWB(AM)||Laramie, WY||1290||October 1, 2021|
|Lawton, OK (NR)||KLAW(FM)||Lawton, OK||101.3||June 1, 2021|
|KVRW(FM)||Lawton, OK||107.3||June 1, 2021|
|KZCD(FM)||Lawton, OK||94.1||June 1, 2021|
|Lubbock, TX (#165)||KFMX-FM||Lubbock, TX||94.5||August 1, 2021|
|KFYO(AM)||Lubbock, TX||790||August 1, 2021|
|KKAM(AM)||Lubbock, TX||1340||August 1, 2021|
|KKCL-FM||Lorenzo, TX||98.1||August 1, 2021|
|KQBR(FM)||Lubbock, TX||99.5||August 1, 2021|
|KZII-FM||Lubbock, TX||102.5||August 1, 2021|
|Lubbock, TX||103.9||Construction Permit|
|Lufkin-Nacogdoches, TX (NR)||KVLL-FM||Wells, TX||94.7||August 1, 2021|
|KYKS(FM)||Lufkin, TX||105.1||August 1, 2021|
|KAFX-FM||Diboll, TX||95.5||August 1, 2021|
|KSFA(AM)||Nacogdoches, TX||860||August 1, 2021|
|KTBQ(FM)||Nacogdoches, TX||107.7||August 1, 2021|
|Nacogdoches, TX||104.5||Construction Permit|
|Missoula, MT (NR)||KYSS-FM||Missoula, MT||94.9||April 1, 2021|
|KGVO(AM)||Missoula, MT||1290||April 1, 2021|
|KMPT(AM)||East Missoula, MT||930||April 1, 2021|
|KBAZ(FM)||Hamilton, MT||96.3||April 1, 2021|
|KLYQ(AM)||Hamilton, MT||1240||April 1, 2021|
|KAMM-FM||Frenchtown, MT||101.5||April 1, 2021|
|KENR(FM)||Superior, MT||107.5||April 1, 2021|
|Missoula, MT||107.5||April 1, 2021|
|Seeley Lake, MT||98.1||April 1, 2021|
|Missoula, MT||98.3||April 1, 2021|
|East Missoula, MT||99.7||April 1, 2021 |
|Monmouth-Ocean, NJ (#55)||WADB(AM)||Asbury Park, NJ||1310||June 1, 2022|
|WCHR-FM||Manahawkin, NJ||105.7||June 1, 2022|
|WJLK(FM)||Asbury Park, NJ||94.3||June 1, 2022|
|WOBM(AM)||Lakewood Township, NJ||1160||June 1, 2022|
|WOBM-FM||Toms River, NJ||92.7||June 1, 2022|
|Lakewood Township, NJ||93.5||June 1, 2022 |
|Asbury Park, NJ||96.7||Construction Permit|
|New Bedford-Fall River, MA (NR)||WBSM(AM)||New Bedford, MA||1420||April 1, 2022|
|WFHN(FM)||Fairhaven, MA||107.1||April 1, 2022|
| New Bedford, MA||99.5||Construction Permit|
|Odessa-Midland, TX (#162)||KBAT(FM)||Monahans, TX||99.9||August 1, 2021|
|KODM(FM)||Odessa, TX||97.9||August 1, 2021|
|KNFM(FM)||Midland, TX||92.3||August 1, 2021|
|KZBT(FM)||Midland, TX||93.3||August 1, 2021|
|KMND(AM)||Midland, TX||1510||August 1, 2021|
|Lubbock, TX||95.1||August 1, 2021|
|Oneonta, NY (NR)||WBKT(FM)||Norwich, NY||95.3||June 1, 2022|
|WCHN(AM)||Norwich, NY||970||June 1, 2022|
|WDHI(FM)||Delhi, NY||100.3||June 1, 2022|
|Oneonta, NY||94.3||June 1, 2022|
|WDLA(AM)||Walton, NY||1270||June 1, 2022|
|WDLA-FM||Walton, NY||92.1||June 1, 2022|
|WDOS(AM)||Oneonta, NY||730||June 1, 2022|
|WIYN(FM)||Deposit, NY||94.7||June 1, 2022|
|WKXZ(FM)||Norwich, NY||93.9||June 1, 2022|
|Norwich, NY||94.3||June 1, 2022|
|Hamilton, NY||99.3||June 1, 2022|
|WSRK(FM)||Oneonta, NY||103.9||June 1, 2022|
|WTBD-FM||Delhi, NY||97.5||June 1, 2022|
|WZOZ(FM)||Oneonta, NY||103.1||June 1, 2022|
|Owensboro, KY (NR)||WBKR(FM)||Owensboro, KY||92.5||August 1, 2028|
|WOMI(AM)||Owensboro, KY||1490||August 1, 2028|
|Owensboro, KY||99.1||August 1, 2028|
|Owensboro, KY||103.7||Construction Permit|
|Pittsfield, MA (NR)||WBEC(AM)||Pittsfield, MA||1420||April 1, 2022|
|WBEC-FM||Pittsfield, MA||95.9||April 1, 2022|
|WNAW(AM)||North Adams, MA||1230||April 1, 2022|
|WSBS(AM)||Great Barrington, MA||860||April 1, 2022|
|WUPE(AM)||Pittsfield, MA||1110||April 1, 2022|
|WUPE-FM||North Adams, MA||100.1||April 1, 2022|
|Great Barrington, MA||94.1||April 1, 2022|
|Pittsfield, MA||103.3||April 1, 2022|
|North Adams, MA||94.7||April 1, 2022|
|Portland, ME (#99)||WBLM(FM)||Portland, ME||102.9||April 1, 2022|
|WCYY(FM)||Biddeford, ME||94.3||April 1, 2022|
|WHOM(FM)||Mount Washington, NH||94.9||April 1, 2022|
|WJBQ(FM)||Portland, ME||97.9||April 1, 2022|
|Portsmouth-Dover-Rochester, NH (#122)||WSHK(FM)||Kittery, ME||105.3||April 1, 2022|
|WOKQ(FM)||Dover, NH||97.5||April 1, 2022|
|WSAK(FM)||Hampton, NH||102.1||April 1, 2022|
|WPKQ(FM)||North Conway, NH||103.7||April 1, 2022|
|Manchester, NH||97.9||April 1, 2022|
|Poughkeepsie, NY (#167)||WRRB(FM)||Arlington, NY||96.9||June 1, 2022|
|WCZX(FM)||Hyde Park, NY||97.7||June 1, 2022|
|WPDA(FM)||Jeffersonville, NY||106.1||June 1, 2022|
|WKXP(FM)||Kingston, NY||94.3||June 1, 2022|
|WRRV(FM)||Middletown, NY||92.7||June 1, 2022|
|WEOK(AM)||Poughkeepsie, NY||1390||June 1, 2022|
|WPDH(FM)||Poughkeepsie, NY||101.5||June 1, 2022|
|WZAD(FM)||Wurtsboro, NY||97.3||June 1, 2022|
|Middletown, NY||95.7||June 1, 2022|
|Presque Isle, ME (NR)||WBPW(FM)||Presque Isle, ME||96.9||April 1, 2022|
|WOZI(FM)||Presque Isle, ME||101.9||April 1, 2022|
|WQHR(FM)||Presque Isle, ME||96.1||April 1, 2022|
|Quad Cities, IA-IL (#155)||KJOC(FM)||Bettendorf, IA||93.5||February 1, 2029|
|KBOB(AM)||Davenport, IA||1170||February 1, 2029|
|KIIK-FM||De Witt, IA||104.9||February 1, 2029|
|WXLP(FM)||Moline, IL||96.9||December 1, 2028|
|KBEA-FM||Muscatine, IA||99.7||February 1, 2029|
|Davenport, IA||104.1||Construction Permit|
|Quincy, IL-Hannibal, MO (NR)||KHMO(AM)||Hannibal, MO||1070||February 1, 2029|
|KICK-FM||Palmyra, MO||97.9||February 1, 2029|
|KRRY(FM)||Canton, MO||100.9||February 1, 2029|
|WLIQ(AM)||Quincy, IL||1530||December 1, 2028|
|Richland-Kennewick-Pasco, WA (NR)||KEYW(FM)||Pasco, WA||98.3||February 1, 2022|
|Pasco, WA||98.7 ||February 1, 2022|
|KFLD(AM)||Pasco, WA||870||February 1, 2022|
|KOLW(FM)||Basin City, WA||97.5||February 1, 2022|
|KORD-FM||Richland, WA||102.7||February 1, 2022|
|KXRX(FM)||Walla Walla, WA||97.1||February 1, 2022|
|Rochester, MN (#212)||KFIL-FM||Chatfield, MN||103.1||April 1, 2021|
|KFIL(AM)||Preston, MN||1060||April 1, 2021|
|KDOC-FM||Eyota, MN||103.9||April 1, 2021|
|KOLM(AM)||Rochester, MN||1520||April 1, 2021|
|KROC(AM)||Rochester, MN||1340||April 1, 2021|
|KROC-FM||Rochester, MN||106.9||April 1, 2021|
|KWWK(FM)||Rochester, MN||96.5||April 1, 2021|
|KDCZ(FM)||St. Charles, MN||107.7||April 1, 2021|
|KFNL-FM||Spring Valley, MN||104.3||April 1, 2021|
|KYBA(FM)||Stewartville, MN||105.3||April 1, 2021|
|Rochester, MN||104.9||April 1, 2021|
|Rochester, MN||106.5||April 1, 2021 |
|Rochester, MN||96.9||April 1, 2021|
|Rockford, IL (#161)||WXXQ(FM)||Freeport, IL||98.5||December 1, 2028|
|WKGL-FM||Loves Park, IL||96.7||December 1, 2028|
|WROK(AM)||Rockford, IL||1440||December 1, 2028|
|WZOK(FM)||Rockford, IL||97.5||December 1, 2028|
|Rockford, IL||96.1||Construction Permit|
|San Angelo, TX (#245)||KELI(FM)||San Angelo, TX||98.7||August 1, 2021|
|KGKL(AM)||San Angelo, TX||960||August 1, 2021|
|KGKL-FM||San Angelo, TX||97.5||August 1, 2021|
|KKCN(FM)||Ballinger, TX||103.1||August 1, 2021|
|San Angelo, TX||103.1||August 1, 2021|
|KNRX(FM)||Sterling City, TX||96.5||August 1, 2021|
|San Angelo, TX||96.5||August 1, 2021|
|Sedalia, MO (NR)||KSDL(FM)||Sedalia, MO||92.3||February 1, 2029|
|KSIS(AM)||Sedalia, MO||1050||February 1, 2029|
|KXKX(FM)||Knob Noster, MO||105.7||February 1, 2029|
|Shelby, MT (NR)||KSEN(AM)||Shelby, MT||1150||April 1, 2021|
|KZIN-FM||Shelby, MT||96.7||April 1, 2021|
|Shreveport, LA (#146)||KEEL(AM)||Shreveport, LA||710||June 1, 2028|
|KXKS-FM||Shreveport, LA||93.7||June 1, 2028|
|KRUF(FM)||Shreveport, LA||94.5||June 1, 2028|
|KVKI-FM||Shreveport, LA||96.5||June 1, 2028|
|KWKH(AM)||Shreveport, LA||1130||June 1, 2028|
|KTUX(FM)||Carthage, TX||98.9||August 1, 2021|
|Shreveport, LA||101.7||June 1, 2028|
|Shreveport, LA||103.3||Construction Permit|
|Sioux Falls, SD (#179)||KSOO(AM)||Sioux Falls, SD||1000||April 1, 2021|
|KKLS-FM||Sioux Falls, SD||104.7||April 1, 2021|
|KIKN-FM||Salem, SD||100.5||April 1, 2021|
|KXRB(AM)||Sioux Falls, SD||1140||April 1, 2021|
|KKRC-FM||Sioux Falls, SD||97.3||April 1, 2021|
|KYBB(FM)||Canton, SD||102.7||April 1, 2021|
|KXRB-FM||Brandon, SD||100.1||April 1, 2021|
|KSOO-FM||Lennox, SD||99.1||April 1, 2021|
|Sioux Falls, SD||96.9||Construction Permit|
|Sioux Falls, SD||102.3||Construction Permit|
|St. Cloud, MN (#184)||KLZZ(FM)||Waite Park, MN||103.7||April 1, 2021|
|KMXK(FM)||Cold Spring, MN||94.9||April 1, 2021|
|KXSS(AM)||Waite Park, MN||1390||April 1, 2021|
|KZRV(FM)||Sartell, MN||96.7||April 1, 2021|
|WJON(AM)||St. Cloud, MN||1240||April 1, 2021|
|WWJO(FM)||St. Cloud, MN||98.1||April 1, 2021|
|Waite Park, MN||93.9||Construction Permit|
|St. Cloud, MN||95.3||April 1, 2021|
|Texarkana, TX-AR (NR)||KKYR-FM||Texarkana, TX||102.5||August 1, 2021|
|KOSY(AM)||Texarkana, AR||790||June 1, 2028|
|KPWW(FM)||Hooks, TX||95.9||August 1, 2021|
|KYGL(FM)||Texarkana, AR||106.3||June 1, 2028|
|KMJI(FM)||Ashdown, AR||93.3||June 1, 2028|
|Texarkana, AR||107.5||Construction Permit|
|Trenton, NJ (#152)||WKXW(FM)||Trenton, NJ||101.5||June 1, 2022|
|WCHR(AM)||Flemington, NJ||1040||June 1, 2022|
|WNJE(AM)||Trenton, NJ||920||June 1, 2022|
|WPST(FM)||Trenton, NJ||94.5||June 1, 2022|
|Tuscaloosa, AL (#205)||WQRR(AM)||Reform, AL||101.7||April 1, 2028|
|WFFN(FM)||Coaling, AL||95.3||April 1, 2028|
|WTBC(AM)||Tuscaloosa, AL||1230||April 1, 2028|
|WTSK(AM)||Tuscaloosa, AL||790||April 1, 2028|
|WTUG-FM||Northport, AL||92.9||April 1, 2028|
|Tuscaloosa, AL||100.1||April 1, 2028|
|Tuscaloosa, AL||100.9||April 1, 2028|
|Brent, AL||93.3||April 1, 2028|
|WALJ(FM)||Northport, AL||105.1 ||April 1, 2028|
|Twin Falls-Sun Valley, ID (NR)||KEZJ-FM||Twin Falls, ID||95.7||October 1, 2021|
|KLIX(AM)||Twin Falls, ID||1310||October 1, 2021|
|KLIX-FM||Twin Falls, ID||96.5||October 1, 2021|
|KSNQ(FM)||Twin Falls, ID||98.3||October 1, 2021|
|Twin Falls, ID||96.1||Construction Permit|
|Tyler-Longview, TX (#141)||KISX(FM)||Whitehouse, TX||107.3||August 1, 2021|
|KNUE(FM)||Tyler, TX||101.5||August 1, 2021|
|KTYL-FM||Tyler, TX||93.1||August 1, 2021|
|KKTX-FM||Kilgore, TX||96.1||August 1, 2021|
|Utica/Rome, NY (#172)||WFRG-FM||Utica, NY||104.3||June 1, 2022|
|WIBX(AM)||Utica, NY||950||June 1, 2022|
|WLZW(FM)||Utica, NY||98.7||June 1, 2022|
|WOUR(FM)||Utica, NY||96.9||June 1, 2022|
|WODZ-FM||Rome, NY||96.1||June 1, 2022|
|Utica, NY||106.9||Construction Permit|
|Victoria, TX (NR)||KIXS(FM)||Victoria, TX||107.9||August 1, 2021|
|KLUB(FM)||Bloomington, TX||106.9||August 1, 2021|
|KQVT(FM)||Victoria, TX||92.3||August 1, 2021|
|Victoria, TX||98.7||August 1, 2021|
|Waterloo-Cedar Falls, IA (#230)||KOEL(AM)||Oelwein, IA||950||February 1, 2029|
|Oelwein, IA||92.3||February 1, 2029|
|KKHQ-FM||Cedar Falls, IA||98.5||February 1, 2029|
|KCRR(FM)||Grundy Center, IA||97.7||February 1, 2029|
|Wichita Falls, TX (#237)||KBZS(FM)||Wichita Falls, TX||106.3||August 1, 2021|
|KNIN-FM||Wichita Falls, TX||92.9||August 1, 2021|
|KWFS(AM)||Wichita Falls, TX||1290||August 1, 2021|
|KWFS-FM||Wichita Falls, TX||102.3||August 1, 2021|
|Wichita Falls, TX||96.9||August 1, 2021|
|Yakima, WA (NR)||KATS(FM)||Yakima, WA||94.5||February 1, 2022|
|KDBL(FM)||Toppenish, WA||92.9||February 1, 2022|
|KFFM(FM)||Yakima, WA||107.3||February 1, 2022|
|KIT(AM)||Yakima, WA||1280||February 1, 2022|
|KMGW(FM)||Naches, WA||99.3||February 1, 2022|
|KUTI(AM)||Yakima, WA||1460||February 1, 2022|
|Ellensburg, WA||94.3||February 1, 2022|
|Yakima, WA||101.3||Construction Permit|
(1) Townsquare Media Victoria, LLC programs KTXN-FM pursuant to an LMA.
(2) Our station count of 322 excludes the booster, LMA and TBA stations, as well as FM translators listed above. “(FX)” is used to identify FM translator stations. The “FM1” suffix after a call sign means the station is a booster station, rebroadcasting the programming of the station listed above it with the same four-letter call sign.
The Communications Laws prohibit the assignment or transfer of control of a broadcast license without the prior approval of the FCC. In determining whether to grant an application for assignment or transfer of control of a broadcast license, the Communications Act requires the FCC to find that the assignment or transfer would serve the public interest. The FCC considers a number of factors in making this determination, including (i) compliance with various rules limiting common ownership of media properties, (ii) the financial and “character” qualifications of the assignee or transferee (including those parties holding an “attributable” interest in the assignee or transferee), (iii) compliance with the Communications Act’s foreign ownership restrictions, and (iv) compliance with other Communications Laws, including those related to content and filing requirements.
As discussed in greater detail below, the FCC may also review the effect of proposed assignments and transfers of broadcast licenses on economic competition and diversity. See “Antitrust and Market Concentration Considerations.”
The Communications Act restricts us from having more than one-fourth of our equity owned or voted by non-U.S. persons, foreign governments or non-U.S. entities, without prior approval from the FCC.
The Communications Laws also restrict the number of radio stations one person or entity may own, operate or control in a local market.
None of these rules requires any change in our current ownership of radio stations. The Communications Laws could limit the number of additional radio stations that we may acquire in the future in our existing markets as well as new markets.
The FCC generally applies its rules and its broadcast multiple ownership rules by considering the “attributable” or cognizable interests held by a person or entity. With some exceptions, a person or entity will be deemed to hold an attributable interest in a radio station if the person or entity serves as an officer, director, partner, stockholder, member, or, in certain cases, a debt holder of a company that owns that station. Whether that interest is attributable and thus subject to the FCC’s multiple ownership rules is determined by the FCC’s attribution rules. If an interest is attributable, the FCC treats the person or entity who holds that interest as an “owner” of the radio station in question, and that interest thus counts against the person in determining compliance with the FCC’s ownership rules.
With respect to a partnership (or limited liability company), only the interest of a general partner (or managing member) is attributable if the entity’s organizational documents include certain terms. With respect to a corporation, officers, directors and persons or entities that directly or indirectly hold 5.0% or more of the corporation’s voting stock (20.0% or more of such stock in the case of insurance companies, investment companies, bank trust departments and certain other “passive investors” that hold such stock for investment purposes only) generally are attributed with ownership of the radio stations, television stations and daily newspapers owned by the corporation. As discussed below, participation in an LMA or a Joint Sales Agreement (“JSA”) also may result in an attributable interest. See “Local Marketing Agreements” and “Joint Sales Agreements.”
The following interests generally are not attributable:
1.debt instruments, non-voting stock, and options and warrants for voting stock, partnership interests, or membership interests that have not yet been exercised; Non-voting equity and debt interests which, in the aggregate, constitute more than 33.0% of a radio station’s “enterprise value” (which consists of the total equity and debt capitalization) are considered attributable in certain circumstances;
2.limited partnership or limited liability company membership interests where (a) the limited partner or member is not “materially involved” in the media-related activities of the partnership or limited liability company, and (b) the limited partnership agreement or limited liability company agreement expressly “insulates” the limited partner or member from such material involvement by inclusion of provisions specified in FCC rules; and
3.holders of less than 5.0% of an entity’s voting stock.
In November 2017, as part of its periodic review of broadcast ownership rules required by the Communications Act, the FCC adopted an Order on Reconsideration and Notice of Proposed Rulemaking (“Order”) addressing its ownership rules. The Order eliminated the newspaper/broadcast cross-ownership prohibition, including the ban on common ownership of newspapers and radio stations within the same market. The Order also eliminated the radio/television cross-ownership rule. However, on September 23, 2019, a three-judge panel of the U.S. Court of Appeals for the Third Circuit overturned the FCC’s 2017 decision and sent the proceeding back to the FCC for further consideration. On November 20, 2019, the full Third Circuit denied requests for rehearing en banc of the three-judge panel’s September decision. On December 20, 2019, the FCC issued an order stating that certain rules that the FCC eliminated in 2017 were now reinstated as a result of the Third Circuit decision, including the newspaper/broadcast cross-ownership prohibition and the radio/television cross-ownership rule. In the meantime, the FCC and some industry groups asked the U.S. Supreme Court to review the Third Circuit decision. On October 2, 2020 the Supreme Court agreed to accept the case for review. Following that Supreme Court action, briefs were submitted by the various parties and the Supreme Court held oral argument on January 19, 2021. The Supreme Court is expected to decide the case during April 2021.
Content and Operation
The Communications Act requires broadcasters to serve the “public interest.” To satisfy that obligation, broadcasters are required by the Communications Laws to present content that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness. Complaints from audiences concerning a radio station’s content may be filed at any time and will be considered by the FCC both at the time they are filed and in connection with a licensee’s renewal application. FCC rules also require broadcasters to provide equal employment opportunities (“EEO”) in the hiring of new personnel, to abide by certain procedures in advertising employment opportunities, to make information available on employment opportunities on their websites (if they have one), and to maintain certain records concerning their compliance with EEO rules. The FCC will entertain individual complaints concerning a broadcast licensee’s failure to abide by the EEO rules and also conducts random audits on broadcast licensees’ compliance with EEO rules. We have been the subject of several EEO audits. To date, none of those audits has disclosed any major violation that would have a material adverse effect on our operations. Radio stations also must follow provisions in the Communications Laws that regulate a variety of other activities, including political advertising, the broadcast of obscene or indecent content, sponsorship identification, the broadcast of contests and lotteries, and technical operations (including limits on radio frequency radiation).
Local Marketing Agreements
A number of radio stations, including certain of our radio stations, have entered into LMAs (also known as Time Brokerage Agreements). In a typical LMA, the licensee of a radio station makes available, for a fee, airtime on its radio station to a party which supplies content to be broadcast during that airtime and collects revenue from advertising aired during such content. LMAs are subject to compliance with the antitrust laws and the Communications Laws, including the requirement that the licensee must maintain independent control over the radio station and, in particular, its personnel, content and finances. The FCC has held that such agreements do not violate the Communications Laws as long as the licensee of the radio station receiving content from another station maintains ultimate responsibility for, and control over radio station operations and otherwise ensures compliance with the Communications Laws.
A radio station that brokers more than 15.0% of the weekly content hours on another radio station in its market will be considered to have an attributable ownership interest in the brokered radio station for purposes of the FCC’s ownership rules. As a result, a radio station may not enter into a LMA that allows it to program more than 15.0% of the weekly content hours of another radio station that it could not own under the FCC’s multiple ownership rules.
Joint Sales Agreements
From time to time, radio stations enter into JSAs. A typical JSA authorizes one radio station to sell another radio station’s advertising time and retain the revenue from the sale of that airtime. A JSA typically includes a periodic payment to the radio station whose airtime is being sold (which may include a share of the revenue being collected from the sale of airtime). Like LMAs, JSAs are subject to compliance with antitrust laws and the Communications Laws, including the requirement that the licensee must maintain independent control over the radio station and, in particular, its personnel, content and finances. The FCC has held that such agreements do not violate the Communications Laws as long as the licensee of the radio station whose time is being sold by another station maintains ultimate responsibility for, and control over, radio station operations and otherwise ensures compliance with the Communications Laws.
Under the Communications Laws, a radio station owner that sells more than 15.0% of the weekly advertising time of another radio station in the same market will be attributed with the ownership of that other station. In that situation, a station cannot have a JSA with another station in the same market if the FCC’s ownership rules would otherwise prohibit common ownership of the radio stations.
Antitrust and Market Concentration Considerations
Potential future acquisitions, to the extent they meet specified size thresholds, will be subject to applicable waiting periods and possible review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), by the Department of Justice (“DOJ”) or the Federal Trade Commission (“FTC”), either of whom can be required to evaluate a transaction to determine whether that transaction should be challenged under the federal antitrust laws. Transactions are subject to the HSR Act only if the acquisition price or fair market value of the radio stations to be acquired is above a certain threshold that increases periodically ($92.0 million, effective March 4, 2021). Our acquisitions have not met this threshold. Acquisitions that are not required to be reported under the HSR Act may still be investigated by the DOJ or the FTC under the antitrust laws before or after consummation. At any time before or after the consummation of a proposed acquisition, the DOJ or the FTC could take such action under the antitrust laws as it deems necessary, including seeking to enjoin the acquisition or seeking divestiture of the business acquired or certain of our other assets. The DOJ has reviewed numerous radio station acquisitions where an operator proposes to acquire additional radio stations in its existing markets or multiple radio stations in new markets and has challenged a number of such transactions. Some of these challenges have resulted in consent decrees requiring the sale of certain radio stations, the termination of LMAs or other relief. In general, the Department of Justice has more closely scrutinized radio mergers and acquisitions resulting in local market shares in excess of 35.0% of local radio advertising revenue, depending on format, signal strength and other factors. There is no precise numerical rule, however, and certain transactions resulting in more than 35.0% revenue shares have not been challenged, while certain other transactions may be challenged based on other criteria such as audience shares in one or more demographic groups as well as the percentage of revenue share. We estimate that we have more than a 35.0% share of radio advertising revenue in many of our markets.
The DOJ enforces the antitrust laws in the broadcasting industry and there can be no assurance that one or more of any future acquisitions will not be the subject of an investigation or enforcement action by the DOJ. Similarly, there can be no assurance that the DOJ, the FTC or the FCC will not prohibit such acquisitions, require that they be restructured, or require that we divest radio stations we already own in connection with an acquisition. In addition, private parties may under certain circumstances bring legal action to challenge an acquisition.
As part of its review of certain radio station acquisitions, the DOJ has stated publicly that it believes that commencement of operations under LMAs, JSAs and other similar agreements customarily entered into in connection with radio station ownership assignments and transfers prior to the expiration of the waiting period under the HSR Act could violate the HSR Act. Accordingly, our policy is not to commence operation under an LMA, a JSA, or similar agreement of any affected radio station to be acquired until the waiting period under the HSR Act has expired or been terminated.
Formation and Form of Organization
Townsquare Media, LLC, a Delaware limited liability company, was formed on February 26, 2010. In connection with our initial public offering, on July 25, 2014, Townsquare Media, LLC, converted to Townsquare Media, Inc., a Delaware corporation.
SUMMARY RISK FACTORS
The following is a summary of the principal risks that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business.
We face risks and uncertainties related to the COVID-19 pandemic and the measures taken to contain it have had a material adverse effect on our business and revenues to date and may have a material adverse effect on our business, financial condition, results of operations, stock price, and liquidity in the future.
We are also subject to risks and uncertainties related to general economic conditions and our business, many of which are beyond our control, including that:
•Decreased spending by advertisers, decline in attendance of our live events and changes in the economy may have a material adverse effect on our business.
•Our business, financial condition and results of operations may be adversely affected if we are unable to acquire certain broadcast rights or our broadcast rights contracts are not renewed on sufficiently favorable terms.
•Our results are dependent on radio advertising revenue, which can vary from even to odd-numbered years based on the volatility and unpredictability of political advertising revenue.
•If we are unable to retain our digital audience, our business will be adversely affected.
•Our digital businesses are dependent on technology and technical and sales talent.
•The rates we charge for in-stream and mobile advertisements are currently less than those we charge for terrestrial radio advertisements.
•The failure or destruction of transmitter and other facilities that we depend upon to distribute our content could materially adversely affect our business, financial condition and results of operations.
•We may lose key on-air talent to competing radio stations or other types of media competitors. Our success is also dependent upon audience acceptance of our content, particularly our radio programs and live events, which is difficult to predict.
•Increases in or new royalties could adversely impact our business, financial condition and results of operations.
•Our substantial indebtedness could have an adverse impact on us.
•We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, pandemics or natural disasters.
•Capital requirements necessary to operate our business or consummate acquisitions could pose risks.
We also face risks and uncertainties related to our industry and competition, including that:
•We may lose audience ratings, market share and advertising revenue to competing radio stations or other types of media competitors.
•To remain competitive, we must respond to changes in technology, services and standards that characterize our industry.
•Our future revenue and earnings growth will be significantly impacted by our digital lines of business, which are subject to significant competition and rapidly changing technology.
•We face intense competition in the live events industry, and we may not be able to maintain or increase our current revenue, which could adversely affect our business, financial condition and results of operations.
Additionally, we are subject to risks related to our acquisitions, such as:
•Due to various market and financial conditions, we may not be able to successfully complete future acquisitions or future dispositions of our radio stations.
We are also subject to risks related to our financial reporting and accounting, including the material weaknesses in our internal control over financial reporting we identified and the risks posed by potential future asset impairment of our FCC licenses and/or goodwill.
We are also subject to risks and uncertainties related to technology that may also affect our business, including that:
•New technologies could block our ads, which would harm our business.
•A security breach or a cyber-attack could adversely affect our business.
Our business depends upon licenses issued by and is subject to the rules and regulations of the FCC and other government entities, and our business is subject to risks associated therewith, including that:
•Our business depends upon licenses issued by the FCC, and if licenses were not renewed or we were to be out of compliance with FCC regulations and policies, our business could be materially impaired.
•The FCC has been vigorous in its enforcement of its rules and regulations, including its indecency and sponsorship identification rules, violations of which could have a material adverse effect on our business.
Our status as a smaller reporting company may subject us and our stockholders to certain risks.
ITEM 1A. RISK FACTORS
An investment in Townsquare involves a variety of risks and uncertainties. The following factors and other factors discussed in this Annual Report could cause our actual results to differ materially from those contained in forward-looking statements made in this Annual Report or presented elsewhere in future SEC reports or statements made by our management from time to time. These factors may have a material adverse effect on our business, financial condition, operating results and cash flows, and should be carefully considered. We may update these factors in our future periodic reports.
Risks Related to COVID-19
The impact of the COVID-19 pandemic, or the impact of any future pandemic, is uncertain and difficult to predict, but the COVID-19 pandemic and the measures taken to contain it has had a material adverse effect on our business and revenues to date and may have a material adverse effect on our business, financial condition, results of operations, stock price, and liquidity in the future.
The COVID-19 pandemic has materially and adversely impacted the U.S. economy and financial markets, with legislative and regulatory responses including unprecedented monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to timing of stabilization and recovery. Our business, results of operations and financial condition were adversely affected by the COVID-19 pandemic in 2020. The COVID-19 pandemic and measures taken to contain it have subjected our business, results of operations, financial condition, stock price and liquidity to a number of material risks and uncertainties, all of which may continue or worsen, including, but not limited to:
•advertising revenue makes up the majority of our revenue, and, like other broadcast companies and similar businesses that depend on advertising spend, we have experienced, and may continue to experience, a significant decline in this revenue stream;
•as a result of the COVID-19 pandemic, we have been forced to postpone or cancel a large number of our live events, which has had, and may continue to have, a significant negative impact on our live events revenue;
•the COVID-19 pandemic has resulted in significantly reduced U.S. economic activity and significantly increased unemployment since early March, which could lead to a prolonged economic recession; consumer discretionary spending has been significantly curtailed and may worsen, all of which adversely impacts our customers’ businesses, financial condition, and liquidity and therefore our ability to sell advertising and our other products and services at acceptable rates or at all;
•even when certain government and regulatory restrictions are lifted, consumer discretionary spending, attendance at live events and customer advertising may continue to be challenged due to fear, uncertainty and the increased challenges for businesses to re-start. Any prolonged reduction in actual revenues and anticipated reduction in projected revenues may require us to evaluate our intangible assets or goodwill for impairment;
•the potential negative impact on the health of our employees, particularly if a significant number of them are impacted, could affect our ability to ensure business continuity during the period of disruption related to the pandemic and could increase our health benefits expense. The outbreak has forced many of our on-site and management office employees to work remotely, which may adversely impact our ability to effectively manage our business and maintain our financial reporting processes and related controls, as well as introduce operational risk, including an increased vulnerability to potential cyber security attacks;
•the financial markets and our stock price have also been adversely impacted by the COVID-19 pandemic, and the negative financial impact of the COVID-19 pandemic could result in difficulty accessing debt or equity capital on attractive terms, or at all, funding business operations, complying with the covenants and obligations under any existing or future debt, including meeting required payments of principal and interest
or repaying outstanding debt, as well as negatively affect our credit rating, and could present similar difficulties to our clients as well as challenging their ability to meet their payment obligations to us and our and their ability to comply with our agreements;
•as a result of the impact of the COVID-19 pandemic on our business and cash flows, our board of directors has determined to cease payment of quarterly cash dividends. The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount, and composition of any such future dividends, will continue to be at the sole discretion of our board of directors and will depend on our earnings, liquidity, financial condition, capital requirements, contractual prohibitions, or other limitations under our debt, state law and such other factors as our board of directors deems relevant; and
•our operations have been affected by the COVID-19 pandemic. We have taken actions, including significantly reducing our non-essential capital expenditures, reducing our workforce and other wage reduction efforts, and we continue to evaluate opportunities for managing our operating expenses and conserving our financial resources. Our future strategies, prospects and plans for growth may also be negatively impacted by the COVID-19 pandemic.
Taken individually, or together in any combination, the above could cause a material adverse effect on our business, financial condition, results of operations, and liquidity, although the extent of the potential effect will depend on future actions and outcomes, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the short-term and long-term economic impact of the outbreak (including the effect on advertising activity, consumer discretionary spending and our employees in the markets in which we operate), the actions taken to mitigate the impact of the virus, including the distribution and effectiveness of vaccines, and the pace of economic and financial market recovery when the COVID-19 pandemic subsides, among others. Further, many of the Risk Factors described in this report are more likely to occur and be further intensified as a result of the impact of the COVID-19 pandemic.
Risks Related to Economic Conditions and Our Business
Decreased spending by advertisers, decline in attendance of our live events and changes in the economy may have a material adverse effect on our business.
Because a substantial majority of our net revenue is generated from the sale of local, regional and national advertising on our radio stations, digital properties and at our live events, a downturn in the economy or reduction in consumer confidence in the U.S. economy may have a material adverse impact on our business, financial condition and results of operations, as advertisers generally reduce their spending during such periods. Furthermore, because a substantial portion of our revenue is derived from local advertisers, our ability to generate advertising revenue in specific markets (including concentrations in and around the Northeast, Upper Midwest, Texas and the Mountain West) could be adversely affected by local or regional economic downturns. A downturn in the U.S. economy could also adversely affect our advertising revenue and our results of operations.
In addition, a significant percentage of our advertising revenue is generated from the sale of advertising to the automotive, financial services and retail industries. These industries, among others, have been adversely affected by prior downturns in the economy, and may be adversely affected by any future downturns in the economy, and a significant decrease in advertising revenue from advertisers in these industries in the future could have a material adverse effect on our business, financial condition and results of operations.
A decline in attendance at or reduction in the number of concerts, expositions and other experiential events and other forms of entertainment may have an adverse effect on revenue and operating income from our live events business. In addition, during periods of economic slowdown and recession, many consumers have historically reduced their discretionary spending and advertisers have reduced their advertising expenditures. Consumer discretionary spending is sensitive to many factors such as employment, fuel and energy prices, inflation and general economic conditions, and as a result, the risks associated with our live events business may become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in attendance at our live events. The impact of economic
slowdowns on our business is difficult to predict, but they may result in reductions in ticket sales, sponsorships and our ability to generate revenue from live events or grow our live events business.
Our business, financial condition and results of operations may be adversely affected if we are unable to acquire certain broadcast rights or our broadcast rights contracts are not renewed on sufficiently favorable terms.
The acquisition of broadcast rights is highly competitive, and we may be adversely impacted by certain exclusive content rights held by our competitors. We sometimes enter into broadcast rights contracts in the ordinary course of business for both the acquisition and distribution of media content and products, including contracts for both the acquisition and distribution of content rights for sporting events and other programs, and contracts relating to content produced by third parties on our radio stations. If we are unable to renew these contracts, as they expire, on acceptable terms, we may lose these rights, the related content and the related revenue. Even if these contracts are renewed, the cost of obtaining content rights may increase (or increase at faster rates than in the past) or the revenue from distribution of content may be reduced (or increase at slower rates than in the past). The impact of broadcast rights contracts and the terms of the contracts on our results will depend on a number of factors beyond our control, including the strength of advertising markets, effectiveness of marketing efforts, the size of audiences, and the related contract expenses and costs. There can be no assurance that revenue from content based on these rights will exceed the cost of the rights plus the other costs of producing and distributing the content.
Our results are dependent on radio advertising revenue, which can vary from even to odd-numbered years based on the volatility and unpredictability of political advertising revenue.
Approximately 4.3% and 0.7% of our net revenue for the years ended December 31, 2020 and 2019, respectively, consisted of political advertising revenue. Political advertising revenue from elections, which is generally greater in even-numbered years and especially the years in which the U.S. President is elected, has the potential to create fluctuations in our operating results on a year-to-year basis. For example, during 2020, we had political advertising revenue of $16.0 million, as compared to $3.1 million in 2019. In addition, political advertising revenue is dependent on the level of political ad spend and competitiveness of local, state and national elections within each local market.
If we are unable to retain our digital audience, our business will be adversely affected.
The increasing number of digital media options available on the internet, through social networking tools and through mobile and other devices distributing news and other content is expanding consumer choice significantly. Faced with a multitude of media choices and a dramatic increase in accessible information, consumers may place greater value on when, where, how and at what price they consume digital content than they do on the source or reliability of such content. The increasing popularity of news aggregation websites and customized news feeds (often free to users) may reduce our traffic levels by creating a disincentive for the audience to visit our websites or use our mobile applications. In addition, the undifferentiated presentation of some of our content in aggregation with other content may lead audiences to fail to distinguish our content from the content of other providers. Our reputation for quality journalism and content are important in competing for revenue in this environment and are based on consumer and advertiser perceptions. If consumers fail to differentiate our content from other content providers in digital media, or if the quality of our journalism or content is perceived as less reliable, we may not be able to increase our online traffic sufficiently or retain a base of frequent visitors to our local and national digital properties.
Online traffic is also driven by internet search results, including search results provided by Google, the primary search engine directing traffic to our websites. Search engines frequently update and change the methods for directing search queries to websites or change methodologies or metrics for valuing the quality and performance of internet traffic on delivering cost-per-click advertisements. Any such changes could decrease the amount of revenue that we generate from online advertisements. The failure to successfully manage search engine optimization efforts across our business could result in a significant decrease in traffic to our various websites, which could result in substantial decreases in conversion rates and repeat business, as well as increased costs if we were to replace free traffic with paid traffic, any or all of which would adversely affect our business, financial condition and results of operations.
We may not be able to create sufficient advertiser interest in our digital properties or to maintain or increase the advertising rates of the inventory on our digital properties. Even if we maintain traffic levels, the market position of our brands may not be enough to counteract a significant downward pressure on advertising rates.
Our digital businesses are dependent on technology and technical and sales talent.
Future success and growth in our digital businesses will depend upon our continued ability to develop and maintain technology and identify, hire, develop, motivate and retain highly skilled technical and sales talent. Competition for employees with these skill sets is intense and our continued ability to compete effectively depends, in part, upon our ability to attract new employees. We will also need to be able to balance the costs of recruiting and retaining these employees with profitable growth. If we are unable to do so, our business, financial condition or results of operations may be adversely affected.
The rates we charge for in-stream and mobile advertisements are currently less than those we charge for terrestrial radio advertisements.
The rates we charge for in-stream and mobile advertisements are currently less than those we charge for terrestrial radio advertisements. Listeners are increasingly shifting toward online radio streams and mobile applications. If we are unable to sufficiently increase the rates we charge for in-stream and mobile advertisements, a significant shift in listeners could have a material adverse impact on our business, financial condition and results of operations.
The failure or destruction of transmitter and other facilities that we depend upon to distribute our content could materially adversely affect our business, financial condition and results of operations.
We use studios, satellite systems, transmitter facilities and the internet to originate and/or distribute our content. We rely on third-party contracts and services to operate our origination and distribution facilities. These third-party contracts and services include, but are not limited to, electrical power, satellite downlinks, telecom circuits and internet connectivity. Distribution may be disrupted due to one or more third parties losing their ability to provide particular services to us, which could adversely affect our distribution capabilities. A disruption can be caused as a result of any number of events such as local disasters (accidental or environmental), various acts of terrorism, war or armed conflict, power outages, major telecom and internet connectivity failures or satellite failures. Our ability to distribute content to our radio station audience and/or network affiliates may be disrupted for an undetermined period of time until alternate facilities are engaged and put on-line. Furthermore, until we fix issues that arise or third-party services resume when applicable, the inability to originate or distribute content could have a material adverse effect on our business, financial condition and results of operations.
We may lose key on-air talent to competing radio stations or other types of media competitors.
The success of our radio stations is significantly impacted by our on-air talent, and we compete for on-air talent with other radio stations and radio station groups, radio networks, and other providers of syndicated content and other media such as broadcast television, cable television, satellite television, the internet and satellite radio. Our employees and other on-air talent are subject to change and may be lost to competitors or for other reasons, and the contracts we have with certain talent generally are limited in duration. Any adverse changes in particular programs or on-air talent generally could have a material adverse effect on our ratings and our ability to attract advertisers, which could negatively impact our business, financial condition or results of operations.
Our success is dependent upon audience acceptance of our content, particularly our radio programs and live events, which is difficult to predict.
Media and radio content production and distribution is an inherently risky business because the revenue derived from the production and distribution of media content or a radio program, and the licensing of rights to the intellectual property associated with the content or program, depend primarily upon their acceptance by the public, which is difficult to predict. The commercial success of content or a program also depends upon the quality and acceptance of other competing programs released into the marketplace at or near the same time, the availability of alternative forms of
entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which are difficult to predict.
Ratings for broadcast radio stations and traffic or visitors to a particular website are also factors that are weighed when advertisers determine which outlets to use and in determining the advertising rates that the outlet receives. Poor ratings or traffic levels can lead to a reduction in pricing and advertising revenue. For example, if there is an event causing a change of programming at one of our radio stations, there could be no assurance that any replacement programming would generate the same level of ratings, revenue or profitability as the previous programming. In addition, changes in ratings methodology and technology could adversely impact our ratings and negatively affect our advertising revenue. In each market, there has been a compression in the relative ratings of all radio stations in the market, enhancing the competitive pressure within the market for advertising dollars. Because of the competitive factors we face, we cannot assure investors that we will be able to maintain or increase our current audience ratings and advertising revenue, which could have an adverse impact on our business, financial condition and results of operations.
Our live events business depends in part on our ability to anticipate the tastes of consumers and to offer events that appeal to them. Since we rely on unrelated parties to perform at certain of our live events, any lack of availability of popular artists could limit our ability to generate revenue. In addition, our live events business typically plans and makes certain commitments to future events up to 18 months in advance of the event, and often agrees to pay an artist or other service providers or venues a fixed guaranteed deposit amount prior to our receiving any revenue as is standard in the live events industry. Therefore, if the public is not receptive to the event, or we or an artist cancel the event, we may incur a loss for the event depending on the amount of the fixed guaranteed or incurred costs relative to any revenue earned, as well as revenue we could have earned at the event. For certain events, we have cancellation insurance policies in place to cover a portion of our losses but this coverage may not be sufficient and is subject to deductibles. Furthermore, consumer preferences change from time to time, and our failure to anticipate, identify or react to these changes could result in reduced demand for our live events, which would adversely affect our business, financial condition and results of operations.
If we lose key members of our senior management team, our business could be disrupted and our financial performance could suffer. Our business depends upon the continued efforts, abilities and expertise of our senior management team.
The leadership, skills and experience of our senior management team are critical to our operations, and the loss of one or more members of our senior management team could have a material adverse effect on our business, financial condition and results of operations, including impairing our ability to execute and evolve our business strategy. We believe that our future success will depend greatly on our continued ability to attract, retain and motivate highly skilled and qualified personnel.
Increases in or new royalties could adversely impact our business, financial condition and results of operations.
We pay royalties to song composers and publishers through four professional rights organizations (“PROs”), which currently are Broadcast Music, Inc. (“BMI”), the American Society of Composers, Authors and Publishers (“ASCAP”), SESAC, Inc. (“SESAC”) and Global Music Rights, Inc. (“GMR”), for the performance of music on our radio stations and websites. We also pay royalties to Sound Exchange for music streamed on our websites. 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. In addition, the emergence of one or more new PROs could increase the royalties we pay.
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. The proposed legislation would add an additional layer of royalties to be paid directly to record labels and artists. It is currently unknown what proposed legislation, if any, will become law, however such an additional royalty could have an adverse effect on our business, financial condition and results of operations.
The Department of Justice has been considering whether to reform or terminate the long-standing consent decrees that govern music licensing by ASCAP and BMI. Additionally, there has been litigation concerning whether these consent decrees require full-work licensing, resulting in a ruling by a federal appeals court that they do not. The reformation or termination of these consent decrees and the resolution of the full-work licensing issue each could lead to the increase of our royalty rates associated with obtaining rights to use musical compositions and sound recordings in our programming content.
Our substantial indebtedness could have an adverse impact on us.
We have a significant amount of indebtedness. As of December 31, 2020, we had $543.4 million of outstanding indebtedness, net of deferred financing costs of $2.4 million, with annual cash interest expense requirements of approximately $28.5 million which represented 89.5% of cash flow from operating activities for continuing operations. On January 6, 2021, we completed the sale of $550.0 million aggregate principal amount 6.875% senior secured notes due 2026 (the “2026 Notes”) at an issue price of 100.0%. The Company used the net proceeds from the 2026 Notes Offering to repay the term loans under our Senior Secured Credit Facility (the “Term Loans”) and to redeem all of our 6.5% Unsecured Senior Notes (the “2023 Notes”). Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. We may incur substantial additional amounts of indebtedness, as well as incur significant non-debt obligations, which could further exacerbate the risks associated with such indebtedness. Our substantial indebtedness could have other significant effects on our business.
For example, it could:
•increase our vulnerability to adverse changes in general economic, industry and competitive conditions;
•require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•restrict us from taking advantage of opportunities to grow our business;
•make it more difficult to satisfy our financial obligations;
•place us at a competitive disadvantage compared to our competitors that have less debt obligations; and
•limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, the execution of our own business strategy or other general corporate purposes on satisfactory terms or at all.
In addition, the agreements evidencing or governing our current indebtedness do contain, and the agreements evidencing or governing our future indebtedness may contain, restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interest. Our ability to comply with those covenants depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness, which would have a material adverse effect on our business.
Interest is payable on the 2026 Notes semi-annually in cash in arrears on February 1 and August 1 of each year, commencing on August 1, 2021. Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional
indebtedness. If we cannot make scheduled payments on our indebtedness, we will be in default under one or more of the agreements governing our indebtedness, and, as a result, we could be forced into bankruptcy or liquidation.
We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, pandemics or natural disasters.
The occurrence of extraordinary events, such as terrorist attacks, natural disasters, contagious disease outbreaks or pandemics (for example, the coronavirus that surfaced in Wuhan, China), intentional or unintentional mass casualty incidents or similar events may substantially impact our operations in specific, geographic areas, as well as nationally, may directly affect our employees, including our key employees, and may decrease the use of and demand for advertising, and the attendance at our live events, which may decrease our revenue or expose us to substantial liability. The occurrence of future terrorist attacks, military actions by the U.S., contagious disease outbreaks or pandemics or other unforeseen similar events cannot be predicted, and their occurrence can be expected to negatively affect the economies where we do business in general and specifically in the market for advertising or live events. In addition, an act of God or a natural disaster could adversely impact any one or more of the markets where we do business, thereby impacting our business, financial condition and results of operations.
Poor weather and personal injuries or accidents may adversely affect expenses and attendance at our live events, which could negatively impact our financial performance from period to period.
We produce, promote and/or ticket many live events. Weather conditions surrounding these events affect sales of tickets, concessions and merchandise, among other things, particularly at our outdoor live events. Poor weather conditions can have a material effect on our results of operations particularly because we produce, promote and/or ticket a finite number of events. Due to weather conditions, we may be required to cancel or reschedule an event to another available day or a different venue, which would increase our costs for the event and could negatively impact the attendance at the event, as well as food, beverage, and merchandise sales. Poor weather can affect current periods as well as successive events in future periods, any of which could adversely affect our business, financial condition and results of operations. For certain events, we have cancellation insurance policies in place to cover a portion of our losses but this coverage may not be sufficient and is subject to deductibles.
There are inherent risks involved with producing live events. As a result, personal injuries and accidents have, and may, occur from time to time, which could subject us to claims and liabilities for personal injuries. Incidents in connection with our live events at any of our venues that we own or rent, could also result in claims, reducing operating income or reducing attendance at our events, which could cause a decrease in our revenue. While we maintain insurance policies that provide coverage within limits that are sufficient, in management’s judgment, to protect us from material financial loss for personal injuries sustained by persons at our venues or events or accidents in the ordinary course of business, there can be no assurance that such insurance will be adequate at all times and in all circumstances.
Capital requirements necessary to operate our business or consummate acquisitions could pose risks.
Our business requires a certain level of capital expenditures. If our cash flows and capital resources are insufficient to fund our debt service obligations, we could be forced to reduce or delay investments and capital expenditures, adversely impacting our business, financial condition and results of operations. In addition, we may be required to increase our debt and/or issue equity securities in order to consummate an acquisition, and we may not have sufficient cash flows and capital resources to consummate one or more acquisitions. In addition, our ability to obtain financing depends on a number of other factors, many of which are also beyond our control, such as interest rates and national and local business conditions. If the cost of obtaining needed financing is too high or the terms of such financing are otherwise unacceptable in relation to the acquisition opportunity we are presented with, we may decide to forego that opportunity. Additional indebtedness could increase our leverage and make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures.
Risks Related to Our Industry and Competition
We may lose audience ratings, market share and advertising revenue to competing radio stations or other types of media competitors.
We operate in a highly competitive industry. Our radio operations compete for audiences and advertising market share with other radio stations and radio station groups, radio networks, other syndicated content and other media such as broadcast television, newspapers, magazines, cable television, satellite television, the internet, internet radio, satellite radio, outdoor advertising, mobile devices and other portable digital audio players. We also compete for advertising dollars with other large companies, such as Facebook, Google and Amazon. Any adverse change in a particular market or in the relative market positions of the radio stations located in a particular market, or any adverse change in audiences’ preferences could have a material adverse effect on our ratings or revenue. Other radio broadcasting companies may enter the markets in which we operate or may operate in the future, offer syndicated content that competes with our content, or try to acquire distribution rights of media content and products or on-air talent that we use or have under contract, and these companies may be larger and have more financial resources than we do.
In addition, from time to time, other radio stations may change their format or content, or a radio station may adopt a format to compete directly with us for audiences and advertisers. These tactics could result in lower ratings, lower market share and lower advertising revenue or increased promotion and other expenses and, consequently, lower earnings and cash flow for us. Audience preferences as to format or content may also shift due to demographic changes, personnel or other content changes, a decline in broadcast listening trends or other reasons. We may not be able to adapt to these changes or trends, any of which could have a material adverse impact on our business, financial condition and results of operations. If we elect to make significant changes to our format or content to respond to changes in audience preferences or competition in a number of markets, such changes could utilize significant management resources, capital and time to implement and our new format and content may not be successful.
We face substantial competition for advertising revenue in our various markets from free and paid newspapers, magazines, websites, digital platforms and applications, television, radio, other forms of media, direct marketing and online advertising networks and exchanges. Competition for advertising is generally based on audience levels and demographics, price, service and advertising results. It has intensified as a result of the continued development of digital media and in recent years, advertisers have shifted dollars toward digital, putting downward pressure on our broadcast revenue. If this trend continues, we may experience a decline in broadcast revenue as a result. In addition, competition from all of these media and services affects our ability to attract and retain advertisers and consumers and to maintain or increase our advertising rates.
To remain competitive, we must respond to changes in technology, services and standards that characterize our industry.
The radio broadcasting and digital advertising industries are subject to technological change, evolving industry standards and the emergence of new media technologies and trends. We may not have the resources to acquire new technologies or to introduce new services that could compete with these new technologies and may allow us to adapt to new trends.
Various new media technologies and services have been or are being developed or introduced, including:
•satellite-delivered digital audio radio service, which resulted in subscriber-based satellite radio services with numerous niche formats;
•audio content by cable systems, direct-broadcast satellite systems, personal communications systems, content available over the internet and other digital audio broadcast formats;
•in-band on-channel digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services;
•Low-Power FM radio stations, which are non-commercial FM radio broadcast outlets, that serve small, localized areas;
•applications that permit users to listen to programming on a time-delayed basis and to fast-forward through programming and/or advertisements (e.g. podcasts);
•iPhone/iPod/iPad and similar mobile devices;
•gaming consoles, in-home entertainment and enhanced automotive platforms;
•voice activated smart speakers; and
•streaming internet services such as Spotify and Pandora.
The radio broadcasting industry historically has grown despite the introduction of new technologies for the delivery of entertainment and information, including the introduction of new technologies used in automobiles, as a result, in part, of a growing population, greater use of the automobile and increased commuter times. We cannot guarantee that this historical growth will continue. Some of the technologies, particularly satellite digital audio radio service and internet radio, compete for the consumer’s attention in the car, workplace, outdoors and elsewhere.
In addition, we cannot predict the effect, if any, that competition arising from new technologies may have on the radio broadcasting and digital advertising industries or on our business, financial condition and results of operations, some of which could result in the imposition of significant costs and expenses not previously part of our business operations.
Our future revenue and earnings growth will be significantly impacted by our digital lines of business.
We invest significant capital and employee resources in Townsquare Interactive, our digital marketing solutions business, and Townsquare Ignite, our programmatic digital advertising business. These digital business lines are subject to significant competition, rapidly changing technology, and evolving standards. As we continue to grow these lines of business and to expand into new markets, we will also face new sources of competition, including, in certain of these markets, from companies with longer operating histories, established customer bases, greater brand recognition and more financial, technical, marketing, and related resources. We will need to cultivate new relationships with customers, third party providers and other partners in each of these markets. We may not be able to compete successfully against current and future competitors, and our business, results of operations and financial condition will be harmed if we fail to meet these competitive pressures. In addition, there can be no assurance that our digital technologies we use or develop will be adequate, or that we will be able to establish our proprietary right to the technologies we rely upon.
The ability to grow Townsquare Interactive depends in large part on maintaining and expanding our subscriber base. To do so, we must convince prospective subscribers of the benefits of our technology platform and existing subscribers of the continuing value of our products and services. Most of our contracts with subscribers are terminable upon short or no notice. The digital marketing solutions sector is highly competitive. We believe our solutions are well positioned to serve the SMBs in the small and mid-sized markets upon which we focus. However, if our net subscriber base decreases, our business, financial condition and operating results will be adversely affected.
We face intense competition in the live events industry, and we may not be able to maintain or increase our current revenue, which could adversely affect our business, financial condition and results of operations.
The live events industry is highly competitive, and we may not be able to maintain or increase our current revenue due to such competition. The live events industry competes with other forms of music and non-music entertainment for consumers’ discretionary spending and within this industry we compete with other venues to win contracts and book talent, and, in the markets in which we promote music concerts, we face competition from other promoters and venue operators. Our competitors may engage in more extensive development efforts, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential customers, talent, and venues. Our competitors may develop services, advertising options or venues that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. In addition, although many live events formats are annual in nature, there is risk that they will reach the end of their product life cycle as consumer tastes evolve and we will not be able to develop new events that cater to new consumer preferences. Finally, it is possible that new competitors may emerge and rapidly acquire significant market share.
Risks Related to Acquisitions
There are risks associated with our acquisition strategy.
We may continue to grow in part by acquiring radio stations, digital properties, live events or other businesses in the future. We cannot predict whether we will be successful in pursuing these acquisitions or what the consequences of these acquisitions will be. Any acquisitions in the future may be subject to various conditions, such as compliance with FCC and antitrust regulatory requirements.
The FCC requirements include:
•approval of license assignments and transfers;
•limits on the number of radio stations a broadcaster may own in a given local market; and
•other rules and policies, such as the ownership attribution rules, that could limit our ability to acquire radio stations in certain markets where one or more of our stockholders, officers or directors have other media interests.
•The antitrust regulatory requirements include:
•filings with the DOJ and the FTC under the HSR Act, where applicable;
•expiration or termination of any applicable waiting period under the HSR Act; and
•possible review by the DOJ or the FTC of antitrust issues under the HSR Act or otherwise.
Completion of any acquisition may be approved by regulatory authorities subject to our compliance with certain conditions. These conditions may be onerous, and may include the requirement that we divest certain assets, which may include radio stations we already own or we propose to acquire. We cannot be certain whether we would be willing to satisfy any of these conditions or whether they can be satisfied, the timing thereof, or the potential impact on us any such conditions may have. In addition, the FCC has in the past asserted the authority to review levels of local radio market concentration as part of its acquisition approval process, even where proposed assignments would comply with the numerical limits on local radio station ownership in the FCC’s rules and the Communications Act.
Our acquisition strategy involves numerous other risks, including risks associated with:
•identifying acquisition candidates, competing for such acquisitions and negotiating definitive purchase agreements on satisfactory terms, and the related costs of these activities;
•integrating operations, systems, and other internal controls, and managing a large and geographically diverse group of assets;
•unsatisfactory returns on investment or an inability to achieve anticipated synergies on a timely basis or at all;
•diverting our management’s attention from other business concerns;
•entry into new markets and geographic areas where we have limited or no experience;
•retaining key employees, customers, suppliers or other third party relationships of the acquired businesses;
•assumption of known and unknown liabilities, some of which may be difficult or impossible to quantify;
•non-cash impairment charges or other accounting charges relating to the acquired assets;
•tax costs or inefficiencies; and
•a diminishing number of properties available for sale in appropriately sized and located markets.
We cannot be certain that we will be able to successfully integrate any recent or future acquisitions or manage the resulting business effectively, or that any acquisition will achieve the benefits that we anticipate. In addition, we are not certain that we will be able to acquire properties at valuations as favorable as those of previous acquisitions. Depending upon the nature, size and timing of potential future acquisitions, we may be required to raise additional financing or issue additional securities in order to consummate additional acquisitions. Our debt agreements, as may be in place at any time, may not permit us to consummate an acquisition or access the necessary additional financing because of certain covenant restrictions. Furthermore, we cannot be certain that additional capital will be available to us or, if available, that capital would be on terms acceptable to our management team.
Due to various market and financial conditions, we may not be able to successfully complete future acquisitions or future dispositions of our radio stations, or achieve the related benefits we anticipate.
We pursue strategic acquisitions when such acquisitions are strategic and financially additive and meet our overall business needs. We engage in strategic sales of our assets from time to time, as it makes financial sense to do so and meets our overall business needs. We have also been required by the FCC to divest radio stations. However, due to financial and economic market conditions, both in the radio industry and in the overall U.S. economy, as well as antitrust, FCC and other regulatory requirements, our consummation of future acquisitions or dispositions, including those requiring radio station divestitures, is uncertain and may be difficult. In addition, we cannot be certain that we will be able to successfully integrate any recent or future acquisitions or manage the resulting business effectively, or that any acquisition or disposition will achieve the benefits that we anticipate.
Risks Related to Our Financial Reporting and Accounting
We have identified several material weaknesses in our internal control over financial reporting. If we are unable to remediate the material weaknesses, or if we experience additional material weaknesses in the future, our business may be harmed.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. Our 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 reporting purposes in accordance with U.S. GAAP. As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies. In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting.
We were previously an emerging growth company and our auditor previously was not required to make a formal assessment of the effectiveness of our internal control over financial reporting in our 2018 Annual Report. Because we ceased to be an “emerging growth company” as of the end of the year ended December 31, 2019 and are not a non-accelerated filer, we are now subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting for the first time in our Annual Report for the year ended December 31, 2019, and again in this Annual Report, among additional requirements.
Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020 and concluded that our internal control over financial reporting was not effective as of December 31, 2020 due to the material weaknesses described under “Item 9A. Controls and Procedures” in this Annual Report. For similar reasons, management also concluded our disclosure controls and procedures were not effective as of December 31, 2020. We have taken and continue to take steps to remediate our material weaknesses.
Remediation efforts place a significant burden on management and add increased pressure to our financial resources and processes. If we are unable to successfully remediate our existing material weaknesses or any additional material weaknesses in our internal control over financial reporting are identified in the future, our business may be
harmed. Such harm may include: (i) failure to accurately report our financial results, to prevent fraud or to meet our SEC reporting obligations on a timely basis or at all; (ii) material misstatements in our Consolidated Financial Statements and harm to our operating results and investor confidence; and (iii) a material adverse effect on the trading price of our stock. In addition, the foregoing could subject us to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, and result in the breach of covenants in our debt agreements, any of which could have a material adverse impact on our operations, financial condition, results of operations, liquidity and our stock’s trading price.
Further, there are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.
We identified certain misstatements to our previously issued financial statements and previously restated certain of our consolidated financial statements, which has created additional risks and uncertainties that may have a material adverse effect on our business, financial position and results of operations.
In our Annual Report on Form 10-K for the year ended December 31, 2019, we restated our previously issued consolidated financial statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018 and 2017, and restated our unaudited quarterly financial data of the first three quarters of the year ended December 31, 2019, and each quarter of the year ended December 31, 2018. We had concluded that these previous periods should be restated to correct; (i) an error in the projected cash flows that were utilized in our FCC license valuation model, which resulted in the understatement of specified impairment charges, (ii) the tax treatment of the loss on the 2018 sale of North American Midway Entertainment, (iii) recognizing a valuation allowance against our federal net operating loss carryforwards, (iv) the elimination of deferred tax assets related to stock-based compensation and (v) the calculation of basic loss per common share and the related impacts to our consolidated financial statements.
As a result of these errors and the restatement, we became subject to a number of additional risks and uncertainties and unanticipated costs for accounting, legal and other fees and expenses. We may become subject to legal proceedings brought by regulatory or governmental authorities, or subject to other legal proceedings, as a result of the errors or the related restatement, which could result in a loss of investor confidence and other reputational harm, the loss of key employees, additional defense and other costs. Any of the foregoing impacts, individually or in aggregate, may have a material adverse effect on our business, financial position and results of operations.
Future losses could be caused by future asset impairment of our FCC licenses and/or goodwill.
Under Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 350, “Intangibles-Goodwill and Other,” goodwill and indefinite-lived intangibles, including FCC licenses, are not amortized but instead are tested for impairment at least annually, or more frequently if events or circumstances indicate that there may be an impairment. Impairment is measured as the excess of the carrying value of the goodwill or intangible asset over its fair value. Intangible assets that have finite useful lives continue to be amortized over their useful lives and are also measured for impairment if events or circumstances indicate that they may be impaired. Impairment losses are recorded as operating expenses.
As of December 31, 2020, our FCC licenses and goodwill comprised approximately 36.0% and 20.6% of our consolidated total assets, respectively. The valuation of intangible assets is subjective and based on estimates rather than precise calculations. If actual future results are not consistent with the assumptions and estimates used, we may be exposed to impairment charges in the future. The fair value measurements for both our goodwill and indefinite-lived intangible assets use significant unobservable inputs which reflect our own assumptions about the estimates that market participants would use in measuring fair value including assumptions about risk.
Given the current economic environment and the potential negative impact on our business, there can be no assurance that our estimates and assumptions regarding the period and strength of the current economic recovery, made for the purpose of our non-amortizable intangible fair value estimates, will prove to be accurate.
Interim and/or annual impairment testing, as applicable, could result in future impairment losses. The fair value of FCC licenses and goodwill is primarily dependent on the expected future cash flows of our business. If actual market conditions and operational performance underlying the intangible assets were to deteriorate, or if facts and circumstances change that would more likely than not reduce the estimated fair value of the FCC licenses or goodwill below their adjusted carrying amounts, the Company may be required to recognize additional non-cash impairment charges in future periods, which could have a material impact on the Company’s business, financial condition and results of operations.
Refer to Note 7, Goodwill and Other Intangible Assets for additional information.
Risks Related to Technology
New technologies could block our ads, which would harm our business.
Technologies have been developed that can block the display of our ads and that provide tools to users to opt out of our advertising products. Most of our revenue from our digital businesses are derived from fees paid to us by advertisers in connection with the display of ads on web pages for our users. As a result, such technologies and tools could adversely affect our operating results.
A security breach or a cyber-attack could adversely affect our business.
A security breach or cyber-attack of our computer systems could interrupt or damage our operations or harm our reputation. A security breach could occur both from external sources, including malicious attacks and third party service provider vulnerabilities, as well as internal sources, such as employee error, failures in our security measures or vulnerabilities in our networks or code base. Any security breaches of our computer systems, including repeated or sustained attacks or disruptions, could interrupt delivery of services to customers, potentially increasing costs and reducing revenue. If third parties or our employees are able to penetrate our network security or otherwise misappropriate personal information or contact information of our customers, audience, business partners or advertisers, or if we give third parties or our employees improper access to such data, we could be subject to liability. This liability could include identity theft or other similar fraud-related claims. This liability could also include claims for other misuses or losses of personal information, including for unauthorized marketing purposes. Even in the absence of bad actors, unidentified vulnerabilities or glitches in our systems could result in loss of business critical data or otherwise compromise the confidentiality, integrity or availability of such data. Other liabilities could include claims alleging misrepresentation of our privacy and data security practices. We could also be subject to regulatory or private rights of action in certain jurisdictions.
The number and scale of cyber-attacks causing significant business disruptions, such as global ransomware attacks, are increasing and could pose a risk to our ability to deliver our services and operate our business. Any future ransomware or other cyber-attack could disrupt our service delivery for an indeterminate period of time, as well as compromise or destroy personal and business-critical data and information within our control. Recovering from such an attack may require significant resources to restore business operations and our services, including personnel time and capital costs. In some cases, recovery of such data may not be possible. If a security breach results in the exposure or unauthorized disclosure of personal information, we could incur additional costs associated with data breach notification and remediation expenses, investigation costs, regulatory penalties and fines, and legal proceedings. Our insurance coverage may not be adequate to cover all the costs related to such breaches or attacks.
We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure online transmission of confidential consumer information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the algorithms that we use to protect sensitive customer transaction data. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations.
We may be required to expend capital and other resources to protect against such security breaches or cyber-attacks or to alleviate problems caused by such breaches or attacks. Our security measures are designed to protect against security breaches and cyber-attacks but may not be adequate, implemented properly, or appropriately complied with internally to prevent a security breach or cyber-attack. No network or system can ever be completely secure. Our failure to prevent such security breaches and cyber-attacks could subject us to liability, adversely affect our results of operations and damage our reputation.
Our engagement of third party service providers increases our exposure to security and data privacy risks.
Select business operations, including online advertising, analytics engines and data storage, rely on partnerships with third party service providers, the operations, practices, and processes of which are outside our control. Despite due diligence in engaging these third parties and efforts to contractually protect our interests, we cannot guarantee that these third parties will adequately protect the personal information that we share with, or that is collected on our behalf by, such third parties or that such third parties will fully or sufficiently comply with all applicable data protection laws and contractual obligations. The failure of our third party service providers to adequately protect the personal information we process could result in a security breach of such personal information, potentially exposing us to the liability of a data breach or mishandling of personal information. Even where personal information is not involved, a successful cyber-attack on one of our third party service providers could result in a disruption to our operations and impact revenues.
Under recent developments in data protection laws, particularly the European Union’s General Data Protection Regulation, we may be liable for the compliance of any third parties engaged to process personal information on our behalf with applicable data protection laws. More recently, California enacted the California Consumer Privacy Act (the “CCPA”) that, among other things, requires covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information and, in some cases, delete such personal information. If any of our third party service providers fail to comply with applicable laws, we may face additional exposure and liability on behalf of such providers. While we attempt to control against such outcomes through our vetting of third party service providers and with appropriate contractual obligations, we cannot ensure our third party service providers will fully comply with all such obligations. Moreover, the regulatory landscape is constantly evolving and subject to ongoing interpretations and guidance from regulatory authorities. The costs of compliance with, and other burdens imposed by, the GDPR and CCPA and other privacy laws could have an adverse impact on our business, results of operations and financial condition.
We rely on third parties to provide the technologies necessary to deliver content, advertising and services to our audience, and any change in the licensing terms, costs, availability, or acceptance of these formats and technologies could adversely affect our business.
We rely on third parties to provide the technologies that we use to deliver content, advertising, and services. There can be no assurance that these providers will continue to license their technologies or intellectual property to us on reasonable terms, or at all. Providers may change the fees they charge users or otherwise change their business model in a manner that slows the widespread acceptance of their technologies. In order for our services to be successful, there must be a large base of users of the technologies necessary to deliver our content, advertising and services. We have limited or no control over the availability or acceptance of those technologies, and any change in the licensing terms, costs, availability, or user acceptance of these technologies could adversely affect our business.
Certain components of our online business depend on continued and unimpeded access to the internet by us and our audience. Internet access providers may be able to block, degrade, or charge for access to certain of our products and services, which could lead to additional expenses and the loss of our audience and advertisers.
Certain of our products and services depend on the ability of our audience to access the internet, and certain of our products require significant bandwidth to work effectively. Currently, this access is provided by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers. Some of these providers may take measures that could degrade, disrupt, or increase the cost of, access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our audience to provide or access our offerings. Such interference could result in a loss of existing audience and advertisers, and increased costs, and could impair our ability to attract new audience and advertisers, thereby harming our revenue and growth.
Risks Related to Governmental Regulation and Legislation
Our business depends upon licenses issued by the FCC, and if licenses are not renewed or we are out of compliance with FCC regulations and policies, our business could be materially impaired.
The radio industry is subject to extensive regulation by the FCC under the Communications Act. Our radio stations depend upon maintaining their broadcasting licenses issued by the FCC, which are currently issued for a maximum term of eight years and are renewable. Interested parties may challenge a renewal application. On rare occasions, the FCC has revoked licenses, not renewed them, or renewed them with significant qualifications, including renewals for less than a full term of eight years. In the last renewal cycle, the FCC granted all of the license renewal applications that were filed for our radio stations. Our latest license renewal cycle began in 2019. We cannot be certain that our current or future license renewal applications will be approved, or that the renewals will not include conditions or qualifications that could adversely affect our business, financial condition and results of operations, result in material impairment and adversely affect our liquidity and financial condition. If any of our FCC licenses are not renewed, it would prevent us from operating the affected radio station and generating revenue from it. Further, the FCC has a general policy restricting the transferability of a radio station license while a renewal application for that radio station is pending. In addition, we must comply with extensive FCC regulations and policies governing 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. 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 have a material adverse effect on our business. Moreover, governmental regulations and policies may change over time, and the changes may have a material adverse impact upon our business, financial condition and results of operations. For further details on federal regulation of radio broadcasting, see “Business-Federal Regulation of Radio Broadcasting.”
The FCC has been vigorous in its enforcement of its rules and regulations, including its indecency and sponsorship identification rules, violations of which could have a material adverse effect on our business.
The FCC’s rules prohibit the broadcast of obscene material at any time and indecent material between the hours of 6 a.m. and 10 p.m. Broadcasters risk violating the prohibition against broadcasting indecent material because of the vagueness of the FCC’s definition of indecent material, coupled with the spontaneity of live content. The FCC vigorously enforces its indecency rules against the broadcasting industry as a whole and violations of these rules may result in fines or, in some instances, revocation of a FCC license. The FCC’s focus on the indecency regulatory scheme, against the broadcast industry generally, may encourage third parties to oppose our license renewal applications.
Furthermore, in recent years the FCC has increased its enforcement of regulations requiring a radio station to include an on-air announcement which identifies the sponsor of all advertisements and other matter broadcast by any radio station for which any money, service or other valuable consideration is received. Fines for such violations can be substantial as they are dependent on the number of times a particular advertisement is broadcast.
We cannot predict whether Congress will consider or adopt further legislation in this area. In the ordinary course of business, we or the FCC may receive complaints and we may become subject to FCC inquiries or proceedings related to our stations’ broadcasts or operations, and any resulting settlement with or fines from the FCC, revocation of any of our radio station licenses or denials of license renewal applications, could have a material adverse effect on our business, financial condition and results of operations.
We are required to obtain prior federal approval for each station acquisition, which approvals may be subject to our compliance with certain conditions, possibly including asset divestitures, which may be material.
Acquisitions have been and may continue to be, a critical component of our overall strategy. The acquisition of a radio station requires the prior approval of the FCC and may require approvals by other governmental agencies, such as the DOJ or the FTC. To obtain that approval, a proposed acquirer is required to file a transfer of control or assignment of license application with the FCC. The Communications Act and FCC rules allow members of the public and other interested parties to file petitions to deny or other objections to the FCC with respect to the grant of any transfer or assignment application. The FCC could rely on those objections or its own initiative to deny a transfer or assignment application or to require changes in the transaction, including the divestiture of radio stations and other assets, as a condition to having the application granted. Although we do not currently expect such divestitures to be material to our financial position or results of operations, no assurances can be provided that we would not be required to divest additional radio stations in connection with obtaining such approval, or that any such required divestitures would not be material to our financial position or results of operations. The FCC could also change its existing rules and policies to reduce the number of radio stations that we would be permitted to acquire in some markets. For these and other reasons, there can be no assurance that the FCC will approve potential future acquisitions that we deem material to our business. See “-There are risks associated with our acquisition strategy” for additional information regarding FCC and other regulatory approvals required for acquisitions.
We may be adversely affected by the FCC’s actions with respect to Revitalization of AM Radio.
In October 2015, the FCC released a First Report and Order and Further Notice of Proposed Rulemaking titled “Revitalization of AM Radio Service,” enacting several modifications to its technical rules for AM radio stations. Included in the order is the elimination of a rule which requires certain AM stations to reduce nighttime interference when seeking to modify their facilities. Also included is a relaxation of the FCC’s requirements for AM stations to provide their communities of license with a specific level of signal coverage, with the intended purpose of permitting AM stations to change the locations of their transmitting facilities. As a result of these rule changes, it is possible that some of our stations may experience increased nighttime interference from other stations in connection with facility modifications. It is also possible that stations owned by others and not serving our markets could move into our markets and become new competitors and cause interference to our stations or translators. Another aspect of the FCC’s revitalization order was exclusive AM filing windows in 2016 to allow AM stations to move a FM translator up to 250 miles to rebroadcast that AM station’s signal, and windows in 2017 and 2018 exclusively for AM stations to apply for a new FM translator construction permit. As a result of these filing windows many broadcast companies, including our Company, have constructed and are operating new FM broadcast translator stations, or have construction permits to do so in the future, and thereby rebroadcast certain of their AM stations in the FM band. We cannot predict at this time to what extent these new FM broadcast translator stations will impact our Company.
The information we collect and process is of increasing business importance and new or changing federal, state or international privacy legislation or regulation create uncertainty for our continued use of the information we collect and process.
In the course of our ordinary business operations, we may collect personal information and non-personal information that is critical or commercially-useful to our business, including personal information related to our employees, audience, advertisers, contractors, and customers. As a result of our digital expansion efforts and third party partnerships, the volume, sensitivity, and business importance of the information we collect and use is increasing. We collect this information directly from individuals, through passive tracking technology such as “cookies” and indirectly through third parties engaged to provide services on our behalf. In addition to the risk that a security breach may
compromise this information, this information may include personal information such as names, contact information, credit card information, geolocation and demographic information that is subject to specific data protection and privacy laws.
We are subject to federal, state and international data protection and privacy laws and regulations that require us to comply with specific consumer protection, information security and data protection and privacy requirements. The legal and regulatory landscape continues to evolve, with new laws being enacted or coming into force. Additionally, we are now required to comply with the CCPA, which requires us to update both our internal and external policies and procedures to meet our compliance obligations under CCPA. Compliance with CCPA may require that we change or amend activities that involve personal information, which may impact business operations or our ability to effectively use personal information in our control. Furthermore, as mentioned under “— Our engagement of third party service providers increases our exposure to security and data privacy risks” above, such requirements include allowing consumers to limit our use of their personal information, or delete it entirely.
Regulatory enforcement actions and interpretations of new data protection and privacy laws and regulations may change how these requirements apply to our business and collection, use, storage, and disclosure of personal information, creating uncertainty regarding the continued viability of information-reliant business activities. Certain interpretations or implementation of new data protection and privacy laws, as well as the evolving legal and regulatory landscape, could harm our business, including negatively impacting the cost of doing business or our ability to engage in certain business practices. Furthermore, recent disclosures of major data breaches and company data collection, use and disclosure practices to which large segments of the consumer population have objected may result in both increased interest in U.S. federal data privacy legislation as well as changes to consumer privacy expectations and demands. Such shifts may restrict our ability to collect and/or process personal information in a particular way or derive economic value from personal, and even non-personal, information.
We have implemented and are implementing policies and procedures to comply with applicable data protection and privacy laws and regulations, but such measures may not always be effective, particularly as the legal landscape continues to evolve, and regulatory guidance is often ambiguous or inconsistent. Some of our internal processes are manual and rely on employees to follow and adhere to our policies and procedures, which can result in employee error and internal compliance failures. Any failure or perceived failure by us to comply with our policies or applicable data protection and privacy laws and regulations could result in regulatory enforcement actions against us, proceedings by governmental entities, consumers or others (including our contractual third parties), and loss in brand value and reputation. Such results could possibly require us to incur costs for defending against proceedings or paying regulatory fines or penalties and responding to such outcomes could consume considerable management focus and internal resources, decrease demand for our services, or increase the costs of, or otherwise limit, our ability to do business.
New or changing federal, state or international privacy legislation or regulation could hinder the growth of our internet properties.
A variety of federal and state laws govern the collection, use, retention, sharing and security of consumer data that our internet properties use to operate certain services and to deliver certain advertisements to its customers, as well as the technologies used to collect such data. Not only are existing privacy-related laws in these jurisdictions evolving and subject to potentially disparate interpretation by governmental entities, new legislative proposals affecting privacy are now pending at both the federal and state level in the U.S. Changes to the interpretation of existing law or the adoption of new privacy-related requirements could hinder the growth of our internet presence. Also, a failure or perceived failure to comply with such laws or requirements or with our own policies and procedures could result in significant liabilities, including a possible loss of consumer or investor confidence or a loss of customers or advertisers, and could adversely affect our business, financial condition and results of operations. Furthermore, the oversight required to monitor and adapt to the ever-changing regulatory landscape could consume considerable management focus and internal resources, or increase the costs of, or otherwise limit, our ability to do business.
Risks Related to Our Smaller Reporting Company Status
We are a smaller reporting company and intend to avail ourselves of certain reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors.
We are a smaller reporting company, as defined in the Exchange Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including reduced disclosure obligations regarding executive compensation. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We intend to take advantage of certain of these reporting exemptions until we are no longer a smaller reporting company. We will remain a smaller reporting company until the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250 million or more and annual revenue as of our most recently completed fiscal year is $100 million or more, or the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700 million or more, regardless of annual revenue.
General Risk Factors
The public market for our Class A Common Stock may be volatile.