Townsquare Media(TSQ) - 2023 Q4 - Annual Report

Digital Revenue and Advertising - Digital revenue reached $232.5 million in 2023, accounting for 51% of total net revenue, compared to $230.8 million and 50% in 2022[38] - Subscription Digital Marketing Solutions segment generated net revenue of $82.2 million in 2023, down from $90.4 million in 2022[39] - Digital Advertising segment, marketed as Townsquare Ignite, generated revenue of $150.3 million in 2023, up from $140.4 million in 2022[42] - Broadcast Advertising segment revenue was $211.7 million in 2023, a decrease from $223.9 million in 2022[45] - Approximately 84% of net revenue was generated from local and regional advertisers across various industries in 2023[51] - No single customer accounted for more than 1% of revenue in 2023, and no advertising category represented more than 20% of revenue[52] - Political advertising revenue is variable and can significantly impact the company's financial performance[107] Digital Audience and Market Position - The company reached 75 million unique visitors per month across its digital platform in 2023, with 44 million social media followers[31] - Digital advertising is projected to grow from 69% of total advertising spend in 2023 to 77% by 2028, positioning the company as a "Digital First" local media company[35] - The total addressable market for Townsquare Interactive is estimated at approximately $32 billion, targeting around 8.8 million small and medium-sized businesses[41] - The company is dependent on retaining its digital audience to maintain its business performance[107] Radio Operations and Market Presence - The company operates 352 radio stations across 74 local markets, all outside the top 50 markets in the U.S.[46] - Terrestrial radio broadcasts reached approximately 84% of American adults ages 18+ each week as of December 2023, consistent since 1970[47] - The company has expanded its local radio station portfolio from 60 to 350 since its founding in 2010, completing more than 10 radio transactions[64] - The company has more than a 35.0% share of radio advertising revenue in many of its markets, which may attract scrutiny from the DOJ regarding future acquisitions[100] Financial Performance and Investments - Capital expenditures for the year ended December 31, 2023, were $15.0 million, representing 3.3% of net revenue[55] - The company plans to continue investing in digital businesses, including Townsquare Interactive and Townsquare Ignite, to drive growth[57] - The company faces risks related to its acquisition strategy, including potential inability to complete future acquisitions due to market conditions[107] - The company has substantial indebtedness, which could adversely impact its financial condition[107] - The company’s future revenue growth may be significantly influenced by its digital lines of business, which face intense competition[107] Employee Relations and Diversity Initiatives - As of December 31, 2023, the company employed 2,159 full and part-time employees, with satisfactory relations reported[77] - The company has established a Black Employee Resource Group (B.E.R.G.) to enhance recruitment, retention, and professional development for Black employees[75] - The company has implemented diversity training for newly hired employees and ongoing training during employment[75] - The company has no employees covered by collective bargaining agreements, indicating a non-unionized workforce[77] Regulatory Compliance and Risks - The company is subject to FCC regulations, which include compliance with ownership limits and public interest obligations[89][97] - The FCC granted all license renewal applications for the company's radio stations in the last renewal cycle, each for a full eight-year term[82] - The company is currently not aware of any facts that would prevent future renewal of its licenses to operate radio stations[82] - The company must adapt to technological changes to remain competitive in the industry[107] - The company is subject to risks associated with FCC regulations, which could materially impair its business if not complied with[110] Community Engagement and Support - The company’s radio stations play a vital role in community support during emergencies, providing critical information and promoting charity events[76] - The company aims to deepen relationships with advertisers to increase its share of advertising spend across various mediums[58] - The company intends to develop new products that foster interaction with audiences and increase monetization opportunities[59]