December 5, 2024 • 14 mins
How does the Chief Financial Officer of Townsquare Media view his company's potential revenue intake from digital advertising in the coming quarters? "The sky's the limit," he told attendees of the BofA Securities Leveraged Finance Conference, held at the Boca Raton Resort in Palm Beach County, Fla., on December 3.
Stu Rosenstein also shared that a Term Notes issuance is coming, telling institutional investors in attendance, "You guys should look at as as a 'sleep at night' loan," he said, adding that the "Local First" media company heavy on programmatic and local digital solutions will be paying down debt monthly with the bank loan of approximately $460 million — in the works for January 2025 — and that Townsquare's debt leverage at the start would be at 4.6x.
Free Cash Flow and Capital Expeditures were also part of a discussion that saw CEO Bill Wilson chime in on his expectations from a forthcoming Brendan Carr-led FCC, and we're pleased to offer highlights from the company's presentation in this InFOCUS Podcast, presented by dot.FM.
Stu Rosenstein also shared that a Term Notes issuance is coming, telling institutional investors in attendance, "You guys should look at as as a 'sleep at night' loan," he said, adding that the "Local First" media company heavy on programmatic and local digital solutions will be paying down debt monthly with the bank loan of approximately $460 million — in the works for January 2025 — and that Townsquare's debt leverage at the start would be at 4.6x.
Free Cash Flow and Capital Expeditures were also part of a discussion that saw CEO Bill Wilson chime in on his expectations from a forthcoming Brendan Carr-led FCC, and we're pleased to offer highlights from the company's presentation in this InFOCUS Podcast, presented by dot.FM.
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Episode Transcript
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Speaker 1 (00:08):
This is the RBR TVBR in Focus Podcast.
Speaker 2 (00:12):
Here's your host, Radio and Television Business Report Editor in
Chief Adam R. Jacobson.
Speaker 3 (00:18):
Hello and welcome to this edition of the in Focus
podcast presented by dot fm streaming social podcaster broadcast to
get a dot fm domain name by heading over to
get dot fm Today and today, we're in bok Ratone,
Florida at the Boca Ratone Resort for highlights from town
Square Media's December third presentation at the b OFA Securities
(00:40):
Leveraged Finance Conference.
Speaker 4 (00:42):
I am the high Old Cablin medias media analyst herat
Bank of America.
Speaker 3 (00:47):
And she asked questions to both Bill Wilson, CEO of
Townsquare Media and Stu Rosenstein, chief financial Officer of town
Square Media during the nine thirty am presentation on Tuesday,
decemb We'll offer highlights specifically from Stu Rosenstein, to tie
into our exclusive coverage that appeared in The Radio and
(01:08):
Television Business Report on Tuesday, December third. We pick up
the conversation with mister Rosenstein talking about the company's leverage
and its plans for reduction of that debt to income
ratio for your full year guidance.
Speaker 4 (01:24):
You know, you're looking at you know, four forty eight
to four fifty two on the revenue side, one hundred
to one oh one million.
Speaker 2 (01:30):
For justin ebadah.
Speaker 4 (01:32):
You know, as we think about next year, you know,
what are some of the elements of the business that
you're focused on that will be puts intakes to the
overall ebitdah for the full year exactly.
Speaker 1 (01:44):
So, well, we think about abadad next year, let's just
call it for round numbers one hundred. This year I
just mentioned we did thirteen million, roughly thirteen million of
political Next year, we think we'll.
Speaker 5 (01:54):
Do roughly three. We usually do about three in our
all political year, so.
Speaker 1 (01:58):
We'd be losing about ten millions of political revenue. Call
that nine million in profit. So that one hundred we
go down to ninety one. As I just noted, we
think our broadcast business conservatively probably loses a couple million
in terms of IBADA to be conservative. So you're talking
about you know, called ninety million, eighty nine, and then
we think we get into that ninety seven ninety eight
(02:19):
range for next year because of growth in our digital
advertising division quite significant. That'll be by far the largest
profit growth in twenty twenty five.
Speaker 5 (02:29):
But then again, as I noted, we think we're going
to grow.
Speaker 1 (02:31):
Our town's are going to active called one to two
million next year after having not declined five million over
twenty three and twenty four. So that gets us into
the ninety seven ninety eight point.
Speaker 5 (02:42):
And then when you think further out, we.
Speaker 1 (02:44):
See continued growth in talent SQA interactive after next year,
we think, as I said earlier, growing back to three
million in profit ongoing and then growing from there, and
then from a digital advertising perspective, quite on the skies
that limit we really right now today in our size
markets have less than fifteen percent market share of the revenue.
Speaker 5 (03:03):
So even without that.
Speaker 1 (03:04):
Market growing, we're already seeing a lot of share shifting
from dollars being placed with others to us. But the
market's growing high single digits to low double digits. So
with the combination of differentiation, market share shift and growth
and programmatic we feel extremely well positioned for ongoing success
to over time get our EBIT of up to one
O five, one ten, one fifteen over the next three
(03:24):
to five years.
Speaker 4 (03:25):
Great, and then moving on to you know, some free
caught flow items you know from a tax perspective, you're
not a material cash tax payer, won't be until roughly
two thousand and six when you're basically as a use.
Speaker 2 (03:39):
Up all your nls and other tax shields.
Speaker 4 (03:42):
Is there any way to just gauge roughly, you know,
what the tax level could be, you know, once the
nls are.
Speaker 6 (03:49):
So we have a normal effective corporate tax rate, Okay,
twenty seven twenty eight percent.
Speaker 7 (03:55):
But it's not it may be twenty seven, may even
be twenty eight.
Speaker 6 (04:00):
Let's see what happens, but not necessarily over in twenty twenty.
Speaker 4 (04:03):
Six, and that timeline is still in place from late
twenty six, right. And then in terms of cappax, you know,
can you just talk about some of you know, some
of the uses there, and how should we think about
maintenance CAPEX levels?
Speaker 5 (04:18):
So holding in.
Speaker 6 (04:19):
Total capex maintenance plus growth capex for computer's invests and
furniture and also uh technology capex, you should think about it.
Speaker 7 (04:30):
As fifteen million dollars a year berfumance. This year we
accelerated that a little bit, and it'll be.
Speaker 6 (04:38):
Probably seventeen or eighteen because we put in a lot
of new technology that will help us grow even DA.
Speaker 7 (04:44):
The other thing is is that capex is a gross number.
Speaker 6 (04:48):
So there are times when we get you know, if
we lose a tower and an antenor in a storm,
it's two million dollars and we have to replace it.
Speaker 7 (04:56):
That's included in a fifteen million dollar capex.
Speaker 6 (04:59):
Even we've gotten insurance proceeds of two or three million,
so it's really net less than fifteen.
Speaker 7 (05:05):
So you should think.
Speaker 6 (05:05):
About cash flow capex or cash outflows capex.
Speaker 7 (05:09):
Then twelve to thirteen million dollars a year, ok.
Speaker 4 (05:12):
Great, And then what is the lowest cash and liquidity
balance that you like to maintain.
Speaker 7 (05:17):
I mean, we could run this business with two three.
Speaker 6 (05:19):
Million dollars, but we'll always keep you know, somewhere is
between five and eight million dollars.
Speaker 7 (05:24):
You know, we've spent, we've paid down.
Speaker 6 (05:28):
Well, we floated our existing bond back in twenty twenty one.
Speaker 7 (05:31):
It was five hundred and fifty million dollars.
Speaker 6 (05:33):
We've paid down eighty three million dollars of that debt
in the last four years.
Speaker 7 (05:39):
Our level.
Speaker 6 (05:39):
We've now have four hundred and sixty seven million dollars.
We're going to refinance that you know, early next year.
And instead of taking a bond because now, four years ago,
when interest rates were zero, we thought interest rates had
no place to go up, So let's the lock in
and fixed rate. Now we think his restraints will come
down over the next four to seven years, so.
Speaker 7 (05:58):
We're going to issue a terminos a bank loan.
Speaker 6 (06:03):
So for those of you who are interested, you know
we have been a perennial one hundred million dollars a
year ebadah business with thirty five to forty five million
dollars of free cash build.
Speaker 7 (06:14):
Every single year.
Speaker 6 (06:16):
You know, we're thinking, we're being told we'll probably have
a we'll go out at sofa plus three seventy five
to four.
Speaker 7 (06:24):
So it's a nice hoopone eight percent.
Speaker 6 (06:27):
And you guys should think about this as a sleep
at night loan.
Speaker 7 (06:30):
You should have absolutely no concerns. I mean, you could
look at us. For the last ten years. You know
we've been you know, a hair over.
Speaker 6 (06:38):
A hair under one hundred million dollars of ebadah with
forty to forty five million dollars of free cash flow.
Speaker 7 (06:43):
So you know, we're looking forward to locking that down
because now for the last four.
Speaker 6 (06:49):
Years, we've had to go out into the marketplace and
find people willing to part with our bonds and it
hadn't been until this past year that they came down
under par, so we bought a bunch you know, at
par a little bit over, but this past year we
brought a bunch under park.
Speaker 7 (07:04):
So we'll be able to.
Speaker 6 (07:05):
Pay down debt you know, monthly with a bank loan,
as you know, and it'll be a lot easier for us.
Speaker 5 (07:12):
So you know, we'll go.
Speaker 7 (07:13):
Out at a four hundred and sixty million dollar bank loan.
Speaker 6 (07:17):
It will be about four point six times levered to start,
you know with we expect rates to come down and
then talking about a quarter point each quarter next year,
so you know, we expect to de lever relatively quickly
and we'll our mid term goals or you know, between
(07:39):
under four to three.
Speaker 7 (07:39):
And a half in the real terms.
Speaker 4 (07:41):
So great, And is that something you still look to
do before February first.
Speaker 7 (07:46):
Yeah, okay, we'll get this done in January.
Speaker 2 (07:49):
Okay, great, And.
Speaker 4 (07:51):
Then you know, other capital allocation priorities. You know, obviously
the balance sheet very focused on that, but you know,
other priorities in terms of investment, which parts of the business,
you know, any flexibility on the dividend.
Speaker 7 (08:06):
You know, we've always well.
Speaker 6 (08:08):
Historically we've increased our dividend five percent a year, assuming
nothing radical changes. We hope to be able to continue
to do that every year going forwards. The dividends are
really good incentive for equity holders.
Speaker 5 (08:23):
You know.
Speaker 6 (08:23):
Investments are forty five million forty to forty five million
dollars free cash flow include investing in these businesses as
we go along. We've invested tens of millions of dollars
every year into our digital platform and our programmatic platforms.
Speaker 7 (08:41):
So we'll continue to always do that.
Speaker 4 (08:43):
Right and are there any cost saving opportunities as you
look at the business the business is shifting, you know.
Speaker 2 (08:50):
That you can take out next year and forward, you
know any so.
Speaker 6 (08:53):
We constantly look at costs. If revenues decline faster than
we expect. In the broadcasting.
Speaker 7 (09:00):
Business, there's a lot of levers you could pull and
save a lot.
Speaker 6 (09:03):
Of money in the broadcast business. In our digital business,
we're continuing to invest. We're not looking to cut costs there.
I mean, we're in the very low percentage penetration rates
of the total TAM market for the digital marketing services business,
and programmatic is just such a.
Speaker 7 (09:22):
Great ROI for investors in these small markets.
Speaker 6 (09:26):
We are you know, when you think about it, we're
not really competing on a digital basis against anybody in
our markets because we compete. The radio competitors are either
small model pops and they have one or two stations
or even two clusters. Their platform is not big enough
to invest the tens of millions of dollars every year
to build a digital business. The large radio aggregators, you know,
(09:48):
they never built a digital product because they were always
going to Facebook and Google and it was just not.
Speaker 7 (09:55):
It was not an adversary that they thought they wanted
to invest in and fight with.
Speaker 6 (09:59):
So, you know, we're a nine hundred pound guerrilla in
digital in our marketplaces. So we really like the space
that we're in, and we really like the position that
we're in. I think over the next two years, you'll
see us de level a lot with this bank.
Speaker 7 (10:14):
Loan and you know, get a little help on.
Speaker 6 (10:17):
Inflation, we get a little help on interest rates, and
get a little help with the psychology.
Speaker 7 (10:23):
Of our customers in the marketplace. You know, it's been
tough the last couple of years. They borrowed a lot
when rates were zero.
Speaker 5 (10:29):
They were in I mean, I don't want.
Speaker 6 (10:32):
To say anything bad, but they chose to take the
lower variable rate, and now.
Speaker 7 (10:36):
That rates are not up, it's it's hard for them.
And we had inflationary pricing and Mid America, I mean,
most of us in this room live in big cities.
I don't know if anyone's ever lived in a small city.
Speaker 6 (10:46):
But our customers are, you know, pretty much sole practitioners.
You know, five to ten employees in the business at
the most. And you know, it's been tough for them
over the last two years.
Speaker 7 (10:56):
And we've been steady, you know, we've helped them. They've
relied on us. We actually they think of us as partners.
You know, they look to us to help them.
Speaker 6 (11:05):
We do their im mediate buying, we do their creative
you know, because it's all included in the price and
it's a real good deal for them, and we help.
Speaker 7 (11:13):
We're thankful of their loyalty and we like to help
them because you know, they're real working.
Speaker 6 (11:18):
Communities and these communities need to advertise and it's been
a it's a really good spot.
Speaker 4 (11:23):
And Stu, you touched on us briefly said, you know,
getting levers down to four maybe three and three quarters,
is that the right leverage profile for this business.
Speaker 6 (11:33):
In your view, Well, I would turn that question out
to the audience because personally, you know, I think we could.
Speaker 7 (11:40):
Manage this business at seven times level and it's fine.
But when I say that, people cringe. Yeah, we'll get this.
Speaker 6 (11:47):
Down on the four, you know, in a moderate time.
Speaker 7 (11:51):
And I think we'll level off somewhere between three and
three and a half.
Speaker 4 (11:54):
Yeah, and then obviously in a post election environment, to
focus on any you know, regulatory changes and do you
have any views or you know, optimism about you know,
loosening some of the ownership caps or you know M
and A or you.
Speaker 2 (12:11):
Know obviously just you know, throopolies or you know, some
limitation on markets.
Speaker 6 (12:15):
You know.
Speaker 2 (12:15):
I love your thoughts on that.
Speaker 5 (12:17):
Yeah.
Speaker 1 (12:17):
I was on the radio chairboard at the ANAV for
a few years, just turned off recently. And my perspective
is that the rules are, the current regulations are completely outdated.
Speaker 2 (12:27):
There's a lot.
Speaker 5 (12:28):
Obviously a lot of discussion around that.
Speaker 1 (12:30):
Now with card being nominated to head the FCC, my
expectation is de reg it's definitely gonna happen. I've been
saying that for years. It's just a matter of when
that's going to happen.
Speaker 7 (12:38):
I think the.
Speaker 1 (12:39):
Longer it takes, you see more and more industries getting
hurt by it in terms of newspapers, television, with cord cutting, broadcast,
and I think once that loosens up, have a more
competitive landscape to compete, and I think the opportunity for
acquisitions will be there.
Speaker 5 (12:54):
Our last acquisition was Cherry Creek, and our expectation that
was about two years ago now.
Speaker 1 (12:59):
About summer of twenty twenty two, and we said, hey,
we're going to buy this. I think we've bought to
call around six times, but we're going to double the
profit and the cash flow within three to five years,
and two and a half years in we're right on target.
Speaker 5 (13:12):
We'll probably double the cash flow within four years.
Speaker 1 (13:14):
So the opportunity to acquire other great operators who are
great and broadcast but don't have the divers juristication of.
Speaker 5 (13:21):
Digital is clearly something that we've done well.
Speaker 1 (13:24):
You know, we bought twenty plus market from Cumulus, we
bought Cottle Storm Markets, we bought Cherry Greed and each
of those as broadcasts has the client. We've still grown
you but a profit based on our digital.
Speaker 3 (13:33):
Strategy, and that's Bill Wilson, CEO of town Square Media Groups,
speaking at the Bank of America Securities Leverage Finance Conference
twenty twenty four at the bog Grotone Resort on Tuesday,
December third. Questions from Behel Cablin Media's media analyst at
Bank of America Securities. And with that, we think that's
(13:54):
a great place to wrap up this special InFocus podcast,
which is presented by dot fm streaming social podcast or broadcast.
To get a dot fm domain name by heading over
to get dot fm today. And special thanks in booka
ratone in Florida to Palm Trend for providing transportation to
the event. I'm behalfy with the team at Radio Inc.
(14:15):
Magazine and the Radio and Television Business Report in book raton,
Florida are headquarters. This is Adam R. Jacobson. We'll see
you next time. Have a great day.
This is the RBR TVBR in Focus Podcast.
Speaker 2 (00:12):
Here's your host, Radio and Television Business Report Editor in
Chief Adam R. Jacobson.
Speaker 3 (00:18):
Hello and welcome to this edition of the in Focus
podcast presented by dot fm streaming social podcaster broadcast to
get a dot fm domain name by heading over to
get dot fm Today and today, we're in bok Ratone,
Florida at the Boca Ratone Resort for highlights from town
Square Media's December third presentation at the b OFA Securities
(00:40):
Leveraged Finance Conference.
Speaker 4 (00:42):
I am the high Old Cablin medias media analyst herat
Bank of America.
Speaker 3 (00:47):
And she asked questions to both Bill Wilson, CEO of
Townsquare Media and Stu Rosenstein, chief financial Officer of town
Square Media during the nine thirty am presentation on Tuesday,
decemb We'll offer highlights specifically from Stu Rosenstein, to tie
into our exclusive coverage that appeared in The Radio and
(01:08):
Television Business Report on Tuesday, December third. We pick up
the conversation with mister Rosenstein talking about the company's leverage
and its plans for reduction of that debt to income
ratio for your full year guidance.
Speaker 4 (01:24):
You know, you're looking at you know, four forty eight
to four fifty two on the revenue side, one hundred
to one oh one million.
Speaker 2 (01:30):
For justin ebadah.
Speaker 4 (01:32):
You know, as we think about next year, you know,
what are some of the elements of the business that
you're focused on that will be puts intakes to the
overall ebitdah for the full year exactly.
Speaker 1 (01:44):
So, well, we think about abadad next year, let's just
call it for round numbers one hundred. This year I
just mentioned we did thirteen million, roughly thirteen million of
political Next year, we think we'll.
Speaker 5 (01:54):
Do roughly three. We usually do about three in our
all political year, so.
Speaker 1 (01:58):
We'd be losing about ten millions of political revenue. Call
that nine million in profit. So that one hundred we
go down to ninety one. As I just noted, we
think our broadcast business conservatively probably loses a couple million
in terms of IBADA to be conservative. So you're talking
about you know, called ninety million, eighty nine, and then
we think we get into that ninety seven ninety eight
(02:19):
range for next year because of growth in our digital
advertising division quite significant. That'll be by far the largest
profit growth in twenty twenty five.
Speaker 5 (02:29):
But then again, as I noted, we think we're going
to grow.
Speaker 1 (02:31):
Our town's are going to active called one to two
million next year after having not declined five million over
twenty three and twenty four. So that gets us into
the ninety seven ninety eight point.
Speaker 5 (02:42):
And then when you think further out, we.
Speaker 1 (02:44):
See continued growth in talent SQA interactive after next year,
we think, as I said earlier, growing back to three
million in profit ongoing and then growing from there, and
then from a digital advertising perspective, quite on the skies
that limit we really right now today in our size
markets have less than fifteen percent market share of the revenue.
Speaker 5 (03:03):
So even without that.
Speaker 1 (03:04):
Market growing, we're already seeing a lot of share shifting
from dollars being placed with others to us. But the
market's growing high single digits to low double digits. So
with the combination of differentiation, market share shift and growth
and programmatic we feel extremely well positioned for ongoing success
to over time get our EBIT of up to one
O five, one ten, one fifteen over the next three
(03:24):
to five years.
Speaker 4 (03:25):
Great, and then moving on to you know, some free
caught flow items you know from a tax perspective, you're
not a material cash tax payer, won't be until roughly
two thousand and six when you're basically as a use.
Speaker 2 (03:39):
Up all your nls and other tax shields.
Speaker 4 (03:42):
Is there any way to just gauge roughly, you know,
what the tax level could be, you know, once the
nls are.
Speaker 6 (03:49):
So we have a normal effective corporate tax rate, Okay,
twenty seven twenty eight percent.
Speaker 7 (03:55):
But it's not it may be twenty seven, may even
be twenty eight.
Speaker 6 (04:00):
Let's see what happens, but not necessarily over in twenty twenty.
Speaker 4 (04:03):
Six, and that timeline is still in place from late
twenty six, right. And then in terms of cappax, you know,
can you just talk about some of you know, some
of the uses there, and how should we think about
maintenance CAPEX levels?
Speaker 5 (04:18):
So holding in.
Speaker 6 (04:19):
Total capex maintenance plus growth capex for computer's invests and
furniture and also uh technology capex, you should think about it.
Speaker 7 (04:30):
As fifteen million dollars a year berfumance. This year we
accelerated that a little bit, and it'll be.
Speaker 6 (04:38):
Probably seventeen or eighteen because we put in a lot
of new technology that will help us grow even DA.
Speaker 7 (04:44):
The other thing is is that capex is a gross number.
Speaker 6 (04:48):
So there are times when we get you know, if
we lose a tower and an antenor in a storm,
it's two million dollars and we have to replace it.
Speaker 7 (04:56):
That's included in a fifteen million dollar capex.
Speaker 6 (04:59):
Even we've gotten insurance proceeds of two or three million,
so it's really net less than fifteen.
Speaker 7 (05:05):
So you should think.
Speaker 6 (05:05):
About cash flow capex or cash outflows capex.
Speaker 7 (05:09):
Then twelve to thirteen million dollars a year, ok.
Speaker 4 (05:12):
Great, And then what is the lowest cash and liquidity
balance that you like to maintain.
Speaker 7 (05:17):
I mean, we could run this business with two three.
Speaker 6 (05:19):
Million dollars, but we'll always keep you know, somewhere is
between five and eight million dollars.
Speaker 7 (05:24):
You know, we've spent, we've paid down.
Speaker 6 (05:28):
Well, we floated our existing bond back in twenty twenty one.
Speaker 7 (05:31):
It was five hundred and fifty million dollars.
Speaker 6 (05:33):
We've paid down eighty three million dollars of that debt
in the last four years.
Speaker 7 (05:39):
Our level.
Speaker 6 (05:39):
We've now have four hundred and sixty seven million dollars.
We're going to refinance that you know, early next year.
And instead of taking a bond because now, four years ago,
when interest rates were zero, we thought interest rates had
no place to go up, So let's the lock in
and fixed rate. Now we think his restraints will come
down over the next four to seven years, so.
Speaker 7 (05:58):
We're going to issue a terminos a bank loan.
Speaker 6 (06:03):
So for those of you who are interested, you know
we have been a perennial one hundred million dollars a
year ebadah business with thirty five to forty five million
dollars of free cash build.
Speaker 7 (06:14):
Every single year.
Speaker 6 (06:16):
You know, we're thinking, we're being told we'll probably have
a we'll go out at sofa plus three seventy five
to four.
Speaker 7 (06:24):
So it's a nice hoopone eight percent.
Speaker 6 (06:27):
And you guys should think about this as a sleep
at night loan.
Speaker 7 (06:30):
You should have absolutely no concerns. I mean, you could
look at us. For the last ten years. You know
we've been you know, a hair over.
Speaker 6 (06:38):
A hair under one hundred million dollars of ebadah with
forty to forty five million dollars of free cash flow.
Speaker 7 (06:43):
So you know, we're looking forward to locking that down
because now for the last four.
Speaker 6 (06:49):
Years, we've had to go out into the marketplace and
find people willing to part with our bonds and it
hadn't been until this past year that they came down
under par, so we bought a bunch you know, at
par a little bit over, but this past year we
brought a bunch under park.
Speaker 7 (07:04):
So we'll be able to.
Speaker 6 (07:05):
Pay down debt you know, monthly with a bank loan,
as you know, and it'll be a lot easier for us.
Speaker 5 (07:12):
So you know, we'll go.
Speaker 7 (07:13):
Out at a four hundred and sixty million dollar bank loan.
Speaker 6 (07:17):
It will be about four point six times levered to start,
you know with we expect rates to come down and
then talking about a quarter point each quarter next year,
so you know, we expect to de lever relatively quickly
and we'll our mid term goals or you know, between
(07:39):
under four to three.
Speaker 7 (07:39):
And a half in the real terms.
Speaker 4 (07:41):
So great, And is that something you still look to
do before February first.
Speaker 7 (07:46):
Yeah, okay, we'll get this done in January.
Speaker 2 (07:49):
Okay, great, And.
Speaker 4 (07:51):
Then you know, other capital allocation priorities. You know, obviously
the balance sheet very focused on that, but you know,
other priorities in terms of investment, which parts of the business,
you know, any flexibility on the dividend.
Speaker 7 (08:06):
You know, we've always well.
Speaker 6 (08:08):
Historically we've increased our dividend five percent a year, assuming
nothing radical changes. We hope to be able to continue
to do that every year going forwards. The dividends are
really good incentive for equity holders.
Speaker 5 (08:23):
You know.
Speaker 6 (08:23):
Investments are forty five million forty to forty five million
dollars free cash flow include investing in these businesses as
we go along. We've invested tens of millions of dollars
every year into our digital platform and our programmatic platforms.
Speaker 7 (08:41):
So we'll continue to always do that.
Speaker 4 (08:43):
Right and are there any cost saving opportunities as you
look at the business the business is shifting, you know.
Speaker 2 (08:50):
That you can take out next year and forward, you
know any so.
Speaker 6 (08:53):
We constantly look at costs. If revenues decline faster than
we expect. In the broadcasting.
Speaker 7 (09:00):
Business, there's a lot of levers you could pull and
save a lot.
Speaker 6 (09:03):
Of money in the broadcast business. In our digital business,
we're continuing to invest. We're not looking to cut costs there.
I mean, we're in the very low percentage penetration rates
of the total TAM market for the digital marketing services business,
and programmatic is just such a.
Speaker 7 (09:22):
Great ROI for investors in these small markets.
Speaker 6 (09:26):
We are you know, when you think about it, we're
not really competing on a digital basis against anybody in
our markets because we compete. The radio competitors are either
small model pops and they have one or two stations
or even two clusters. Their platform is not big enough
to invest the tens of millions of dollars every year
to build a digital business. The large radio aggregators, you know,
(09:48):
they never built a digital product because they were always
going to Facebook and Google and it was just not.
Speaker 7 (09:55):
It was not an adversary that they thought they wanted
to invest in and fight with.
Speaker 6 (09:59):
So, you know, we're a nine hundred pound guerrilla in
digital in our marketplaces. So we really like the space
that we're in, and we really like the position that
we're in. I think over the next two years, you'll
see us de level a lot with this bank.
Speaker 7 (10:14):
Loan and you know, get a little help on.
Speaker 6 (10:17):
Inflation, we get a little help on interest rates, and
get a little help with the psychology.
Speaker 7 (10:23):
Of our customers in the marketplace. You know, it's been
tough the last couple of years. They borrowed a lot
when rates were zero.
Speaker 5 (10:29):
They were in I mean, I don't want.
Speaker 6 (10:32):
To say anything bad, but they chose to take the
lower variable rate, and now.
Speaker 7 (10:36):
That rates are not up, it's it's hard for them.
And we had inflationary pricing and Mid America, I mean,
most of us in this room live in big cities.
I don't know if anyone's ever lived in a small city.
Speaker 6 (10:46):
But our customers are, you know, pretty much sole practitioners.
You know, five to ten employees in the business at
the most. And you know, it's been tough for them
over the last two years.
Speaker 7 (10:56):
And we've been steady, you know, we've helped them. They've
relied on us. We actually they think of us as partners.
You know, they look to us to help them.
Speaker 6 (11:05):
We do their im mediate buying, we do their creative
you know, because it's all included in the price and
it's a real good deal for them, and we help.
Speaker 7 (11:13):
We're thankful of their loyalty and we like to help
them because you know, they're real working.
Speaker 6 (11:18):
Communities and these communities need to advertise and it's been
a it's a really good spot.
Speaker 4 (11:23):
And Stu, you touched on us briefly said, you know,
getting levers down to four maybe three and three quarters,
is that the right leverage profile for this business.
Speaker 6 (11:33):
In your view, Well, I would turn that question out
to the audience because personally, you know, I think we could.
Speaker 7 (11:40):
Manage this business at seven times level and it's fine.
But when I say that, people cringe. Yeah, we'll get this.
Speaker 6 (11:47):
Down on the four, you know, in a moderate time.
Speaker 7 (11:51):
And I think we'll level off somewhere between three and
three and a half.
Speaker 4 (11:54):
Yeah, and then obviously in a post election environment, to
focus on any you know, regulatory changes and do you
have any views or you know, optimism about you know,
loosening some of the ownership caps or you know M
and A or you.
Speaker 2 (12:11):
Know obviously just you know, throopolies or you know, some
limitation on markets.
Speaker 6 (12:15):
You know.
Speaker 2 (12:15):
I love your thoughts on that.
Speaker 5 (12:17):
Yeah.
Speaker 1 (12:17):
I was on the radio chairboard at the ANAV for
a few years, just turned off recently. And my perspective
is that the rules are, the current regulations are completely outdated.
Speaker 2 (12:27):
There's a lot.
Speaker 5 (12:28):
Obviously a lot of discussion around that.
Speaker 1 (12:30):
Now with card being nominated to head the FCC, my
expectation is de reg it's definitely gonna happen. I've been
saying that for years. It's just a matter of when
that's going to happen.
Speaker 7 (12:38):
I think the.
Speaker 1 (12:39):
Longer it takes, you see more and more industries getting
hurt by it in terms of newspapers, television, with cord cutting, broadcast,
and I think once that loosens up, have a more
competitive landscape to compete, and I think the opportunity for
acquisitions will be there.
Speaker 5 (12:54):
Our last acquisition was Cherry Creek, and our expectation that
was about two years ago now.
Speaker 1 (12:59):
About summer of twenty twenty two, and we said, hey,
we're going to buy this. I think we've bought to
call around six times, but we're going to double the
profit and the cash flow within three to five years,
and two and a half years in we're right on target.
Speaker 5 (13:12):
We'll probably double the cash flow within four years.
Speaker 1 (13:14):
So the opportunity to acquire other great operators who are
great and broadcast but don't have the divers juristication of.
Speaker 5 (13:21):
Digital is clearly something that we've done well.
Speaker 1 (13:24):
You know, we bought twenty plus market from Cumulus, we
bought Cottle Storm Markets, we bought Cherry Greed and each
of those as broadcasts has the client. We've still grown
you but a profit based on our digital.
Speaker 3 (13:33):
Strategy, and that's Bill Wilson, CEO of town Square Media Groups,
speaking at the Bank of America Securities Leverage Finance Conference
twenty twenty four at the bog Grotone Resort on Tuesday,
December third. Questions from Behel Cablin Media's media analyst at
Bank of America Securities. And with that, we think that's
(13:54):
a great place to wrap up this special InFocus podcast,
which is presented by dot fm streaming social podcast or broadcast.
To get a dot fm domain name by heading over
to get dot fm today. And special thanks in booka
ratone in Florida to Palm Trend for providing transportation to
the event. I'm behalfy with the team at Radio Inc.
(14:15):
Magazine and the Radio and Television Business Report in book raton,
Florida are headquarters. This is Adam R. Jacobson. We'll see
you next time. Have a great day.
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