From Records to Radio: Bill Wilson's Journey to Leading a Digital Media Empire

Episode Transcript
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Jonathan Boyar (00:05):
Welcome to the World According to Boyar, where
we bring top investors,bestselling authors and business
leaders to show you thesmartest ways to uncover value
in the stock market.
I'm your host, Jonathan Boyer.
I'm really excited abouttoday's special guest, Bill
Wilson, CEO of publicly tradedcompany Townsquare Media.
Prior to joining Town Square,Bill was president of AOL Media

(00:30):
from 2006 to 2010.
Before working at AOL, billstarted his career in the record
industry, where he worked underthe great Clive Davis.
It's especially exciting tohave Bill on the show today as,
in full disclosure, I personally, as well as my clients, own
shares in Towns quare, and Billand his team have done a

(00:50):
fantastic job, bothoperationally and in terms of
capital allocation, which I wantto discuss with him.
We also recently featured Townsquare in our March 2024 Substack
Report, stating that, in ouropinion, it is intrinsically
undervalued.
Without further ado, bill,welcome to the show.

Bill Wilson (01:08):
Jonathan, thank you so much for having me on the
show.

As I said, I'm really excited and, before
digging into Towns quare, justlove to talk a little bit about
your early career.
You started in the recordbusiness after finishing your
MBA.
What was that like?

Well, I think I was very, very fortunate.
Early on in my life I had avery distinct perspective on
what I wanted to do, which israre.
I have two children now, onegraduating college and one just
in college as a freshman, andwhen I was in middle school.
I grew up in Teaneck, newJersey, which I think also
influenced my career and who Ibecame as a person, because it
was the first town in the UnitedStates to voluntarily

(01:45):
desegregate in 1965.
And my parents moved there in1968.
So it was a very diversecommunity which I think helped
form who I am today.
But in junior high school I readClive's autobiography.
I think it was a biography atthe time.
Clive Davis, that is, he hadjust started Arista Records
after leaving Sony and I was abig music fan.

(02:08):
My family, I was never amusician in terms of capable
skills in music, but I lovedmusic and my family always
listened to music and that had aprofound impact on me.
So I remember reading thatbiography and saying one day I
want to run an entertainmentbusiness, particularly a record
label at the time.
So fast forward, graduating withmy MBA at Rutgers University

(02:32):
for literally two years,Jonathan, I wrote everybody who
got promoted in the recordbusiness.
There was a trade publicationcalled Billboard and there was a
section called the ExecutiveTurntable, and no exaggeration,
for two years I would go to thepublic library because it was a
very expensive subscription so Icouldn't afford it at the time
and I would literally write aletter to everybody who got
promoted, if you were frommailroom to mailroom manager.
And one of the people who gotpromoted was Jack Rovner.

(02:54):
He had left Sony and joinedArista and I interviewed with
Jack Rovner for about a year andI was fortunate enough to be
hired as Richard Sandersassistant, who was an incredible
mentor.
I would not be in the positionI am today without Richard
Sanders' help.
And it was a dream come true.
I always wanted to work foreither Clive Davis, who was at
Arista, or Mo Austin at WarnerBrothers, and I kind of

(03:15):
manifested it and it happened.

That's amazing and shows the value of
persistency.
For those who have been livingunder a rock.
Persistency for those who havebeen living under a rock, you
know, Clive Davis is legendary,discovered Whitney Houston,
helped with Billy Joel, BruceSpringsteen, Aerosmith,
basically anyone who's been inthe music business over the past
40, 50 years.
Were you able to work with himat all?

Yeah, directly with him.
So you know, the book I readwas published in 1975.
It was called Inside the RecordBusiness and it was fascinating
.
It's still on Amazon they'recharging $50 these days but
definitely worth reading.
He's actually had a more recentautobiography and a movie on
Netflix for those interested.
But not only did I workdirectly with him, it was
probably my earliest influenceof a leader running a company.

(04:02):
The first thing that happened isSoundScan came about in 1991.
And if you're familiar with themusic industry, Soundscan was
the first time it was actuallytracking sales of records
accurately.
Before they would just shipthem out and there would be some
qualitative conversation on thephone how many of these did you
sell by Sam Goody or the Wizand so forth?
And then SoundScan came out in1991 and it was to the copy of

(04:23):
how many CDs, how many vinylswere being sold.
And I joined the company in1992.
And in the marketing departmentas an assistant, I started
obviously at the bottom andworking for Richard Sanders who
was running marketing, and Clivewould track everything you know
visits to radio stations,visits to record stores, promo
tours, concerts, and there'd bereports about every artist.

(04:45):
And I had a economicsbackground and I actually taught
econometrics as anundergraduate at SUNY Stony
Brook and so I started talkingto Richard about hey, we can
actually look at all thesevariables and come up with cause
and effect.
So if an artist went on a promotour or if they went to a radio
station, did it have an impactand we could correlate that to

(05:06):
the market.
They did that in and the soundscan.
And so I started creating areport and I gave it to Richard
and Richard a lot of people inthese days wouldn't have done
that he put my name on thereport.
He could have easily put hisname on the report and sent it
to Clive.
So he's like hey, just call itthe Wilson Report.
So to Clive.

(05:30):
So he's like hey, just call itthe Wilson Report.
So I called it the WilsonReport.
And after two or three weeks Iget a call from Clive's
assistant, Rose, and she's likeClive would like you to come up.
And she's like I come in andhe's like what is this?
How are you doing this?
How are you calculating thesevariables and these cause and
effects?
And I walked him through amodel that I had created and he
was fascinated.
He gave me so much attention andin essence, every week he
started distributing it to allof his leaders in the company
and he has a very infamousluncheon meeting every week.

(05:52):
It was every Thursday, startedat one o'clock and it would
literally go from one until hewas done and he would go through
every artist on the label andhe started to use, obviously,
some of the information that Iprovided, but obviously a lot of
other information.
So, going back to your originalquestion, I had direct contact
with him on a daily basis and ithelped his level of detail, as
you said in the introduction,from Whitney Houston to Sarah

(06:14):
McLaughlin, to Kenny G, toAretha Franklin, Carlos, I mean,
the list just goes on and onand on.
When I was starting out, I wasworking with really small
artists a band calledSpiritualized out of London and
what really struck me, Jonathan,is he cared just as much about
an artist who was selling 20,000copies as he did about Whitney
Houston and he gave that theattention.
And that struck me as a leader,that it's a responsibility.

(06:36):
You have these brands andyou're investing in these
people's lives you have to putas much attention on each one of
them and that stuck to me tothis day.

That's amazing.
Besides that the attention todetail, because I'm always
fascinated with what makessomeone a fantastic leader what
else made him great?
He's known as the man with thegolden ear, or whatever it is,
but why was he so much betterthan everyone else?

I think his passion , first and foremost, his
passion for the music, hispassion for the artistry.
I've never seen an individualwork as hard as somebody did.
And I remember talking to himat times and he didn't view it
as work, he viewed it as almosta calling.
I mean, I remember when WhitneyHouston would go up against
Mariah Carey back in 1993, 94.
He would start the meeting bysaying you know how are we doing

(07:20):
with Whitney's new single?
And the head of R&B or popradio promotion would say we're
doing great, We've got 99 spinson this station, We've got 67 on
these.
And what also struck me,Jonathan, he never looked at any
piece of paper and he said well, I don't understand how you
could be pleased with 99 spinswhen Mariah, on that same
station, has 102 spins for hersong with Boyz II Men.

(07:41):
How can you be pleased ifMariah Carey is on top?
And literally, Jonathan, hewould do this for like the top
15, 20 markets without everlooking at a piece of paper.
And in this meeting we'd goliterally from anywhere, the
shortest four hours.
Sometimes he'd have to order indinner at six or seven o'clock.
And I think it's that passionand that level of detail and he
made everybody better in theroom because they knew they

(08:03):
needed to bring their A gameevery week.
You couldn't walk into thatmeeting and not be prepared.
So I think it's him as a leader, but also the culture he built
of accountability.
We have an accountability tothese people's lives and
profession and we're not goingto take that lightly.

For those of you who are not familiar with Towns
quare maybe just give a briefbackground of what Towns quare
is and what you do, etc.

Yeah.
So, Townsquare is a local mediacompany focused on really the
whole premise of the companyoriginally was use radio as a
Trojan horse to build a digitalfirst company, and this was
formed in 2010, originally withabout 17 markets, 60 radio
stations and one of theimportant things, Jonathan was,
the premise all along was Abuild a digital company on the

(08:48):
back of a radio company and twofocus on markets outside the top
50.
For two reasons One, radiomeans a lot more in markets
outside the top 50.
And we can go through some ofthe statistics that bear that
out.
And two, the digitalcompetition for digital
advertising and digitalmarketing solutions is going to
be a lot less competitive inmarkets outside the top 50

(09:10):
versus New York, LA, Chicago andNashville.
So we're very proud of theradio business and, to me, we
would never have had the successover the last 14 years in
transforming into a digitalfirst company without the DNA of
radio.
I grew up on radio.
It's one of the reasons Idecided to take this opportunity
is, you know, my parents wouldbe watching TV upstairs, I'd be

(09:31):
having headphones on downstairslistening to New York City radio
, living in Teaneck, New Jersey,and I just know that
companionship, that connectionis unparalleled.
There's nothing like that fromwatching a local newscaster on
TV or reading a journalist, andso I really felt like harnessing
that power of radio to build adigital connection and make sure

(09:52):
people who joined radio toinform and entertain their
communities were relevant fordecades and decades and decades,
no matter what happened withthe radio audience, and
thankfully, over the last decadewe've transformed the company
from a successful radio companyto a digital-first company that
also owns radio stations, withnow over 50% of our revenue and

(10:12):
50% of our profits coming fromour digital divisions.

Can you talk a little bit more about the
hyper-local importance?
Why is that so important intoday's day and age?

Yeah, I mean you think about what's happened.
We call them news deserts,right.
So going back almost six, seven, eight years now, the
newspapers, particularly in oursize markets but I think across
the US, but particularly inmarkets outside the top 50, have
really been decimated.
There's close to 2000newspapers that have been folded
in the last decade and thepandemic and COVID really

(10:46):
accelerated some of thosechallenges.
So it's a great business for us, but it's also, we feel, like a
calling to make sure that thesesmaller markets are informed
and have trustworthy journalists.
You know a lot of our hires overthe last five years have
actually come from the localnewspapers.
As they shed jobs and focusmore on national content.
We've actually picked up thosereporters to serve that need and

(11:09):
we have them on the air.
But we also have digital-onlyreporters creating content that
if you go to any one of our300-plus local websites, I think
most people would look at themas almost like a local newspaper
.
They wouldn't recognize that aradio company was behind them.
So we think it's incrediblydifferentiated.
We reach one in two adultslistening to the AM FM stations

(11:31):
of ours because they're so local.

Can you explain that again?
That statistic is unbelievable.

Yes, so on average we're in 74 markets.
On average we own four FM radiostations and two AM, so six
markets in a station on average.
When you look at those sixmarkets on a weekly basis, we
reach one in two adults justthrough the AM FM broadcast, so
50% of the adult population.
You go back to asking about howI got from AOL to Towns quare

(11:57):
earlier.
That was Stephen Prices who atthat time was the CEO.
Stephen Prices and StuRosenstein were the co-founders
of the company, had the visionearly on.
Stu's not only a co founder butalso our current CFO.
And Stephen's kind of pitch tome was if I just walked into a
room and told you that you couldmarket for free to 50% of the
adult population and you can goout and create any digital

(12:19):
products over the next five to10 years, would that be
compelling to you?
I'm like, yeah, of course, ifyou can mark the 50% of the
adult population, it goes.
Well, that's what we can do andwe can do that through our AM
FM radio stations and we havethe benefit of a great cashflow
business that we think is goingto be relatively stable for the
next five to 10 years.
And, to your point.
It's incredibly eye-opening.
In the top 50 markets say NewYork City, where you're sitting

(12:42):
the number one market share isprobably about 20%, so reaching
obviously two in 10 adults.
So, our company reaches one intwo adults.
So that, in essence, is one ofthe reasons we've had so much
success with our digitalproducts is because we can
market to free for 50% of theadult population.
And if anybody who's listeningto your podcast knows, radio

(13:02):
overall has been a great reachmedium.
It's actually now the numberone reach medium in America
because TV and cord cutting overthe last five years has
accelerated so much that TV usedto be the number one reach
medium.
Now radio is.
The challenge for the radioindustry at large is time spent
listening has been decreasing.
For Towns quare that's not thecase.
So our reach is rock stable 50%of the adult population and our

(13:26):
time spent listening is rockstable.
So that's one of the reasonswe're generating so much free
cash flow because we have arelatively stable, what I call a
traditional cash cow.
It is a declining business overtime but it has so many great

characteristics (13:38):
A the 50% adult population and the 30% margin
in terms of cashflow.
It gets lumped into the rest ofthe industry which has
struggled, when you're lumpedinto an industry that three of
the largest players iHeart,Odyssey and Cumulus have either
all been in or are currently inbankruptcy in the last three or
four years.
We kind of just got lumped intothat.

(14:00):
I appreciate your time andresearch on the company because
when you peel back and start tolook at what we've actually done
in terms of the transformationand what our plans are over the
next three to five years youstart to see the intrinsic value
of the company, which as younoted in your piece and we
believe is tremendouslyundervalued at the stock price
that is today.
That's why we've been veryaggressive in doing share buy
backs because we recognize thatwhen people look up in three to

(14:25):
five years the price is going tobe much higher.
Let's take off what we can atthis point with the cash on hand
we have.

So why are your stations doing so much better
than other ones, let's say, notthe ones that are in the top 50
in the country, but why are yourstations doing better than
other kind of small andmid-sized markets?

Yeah, I think it's a combination of a couple of
factors.
First of all, what you saidwhen you look at all the other
major public radio companies,there's really nobody at scale
public or private who focuses onmarkets outside the top 50.
That's true not only of radio,but when you think about
newspaper, if you think abouttelevision, there's nobody else
with this strategy in localmedia, that's, that discipline

(15:06):
not going into the top 50markets.
So that is a, I'd say,important reason to our success.
The second reason is becausewe've had this digital success
and this digital growthconsistently year over year,
it's allowed us to invest inlocal content and the fact that
I can hire a DJ and they'regoing to do a great on-air show

(15:27):
that's going to be hyper-local.
But they're also creatingcontent for all of our digital
platforms.
We call them the originalsocial influencers, 360 degree
content creators.
So when they're postingarticles to our websites, we're
obviously able to draw a bigaudience.
So, I just shared with yourlisteners that through our AM FM

(15:48):
broadcast, we reach one in twoadults.
Through our local websites, wereach 70, seven zero of the
adult population, so even morethan our AM FM broadcast.
And that's because we arecreating credible, original,
entertaining and informing localcontent for our website.
So I want to encourage yourlisteners to go to any one of
our websites to see that.
So with that business model, itwould be very hard for a local

(16:11):
broadcaster and nobody in theindustry has the digital
percentage of revenue we have.
We're over 50% and no one'sclose to that.
So it has afforded us tocontinue to invest in local
content where others don't havethe wherewithal to do that
because they don't have thisdigital growth engine to be able
to do that.
And I think that's afundamental strategic

(16:33):
competitive advantage for Townquare and I think that only
continues to widen as we lookforward over the next three to
five years.

So, I know you're trying to at least from
the stock market narrative,pivot away from being a radio
station, but it's still a goodbusiness and it helps obviously
grow the digital footprint.
So, you have 370 radio stationsor so across the country.
Correct.
Yes, how many out there besidesthose that you own?
Like, how big can you get interms of radio, because it seems

(17:05):
like it's the return oninvestment would be fantastic.

You're exactly right and listen, we're not
trying to pivot away from radio.
We just don't want to beperceived as a radio only
company and, as your piece inMarch noted, our multiple is
actually less than other publicradio companies at a six times
multiple.
So we're not pivoting away fromit.
We embrace it, we love radio.
We wouldn't be where we arewithout it.

(17:29):
But we are not a radio company.
We're a digital first localmedia company and therefore we
think we should be valued on amultiple of traditional radio at
six times and digitalbusinesses at 10 to 12 to 14
times.
So that's really the storywe're trying to continue to gain
understanding of.
But, going back to yourquestion, there's so many
regional smaller players, momand pops there's hundreds to be

(17:53):
able to be acquired, if not overa thousand.
We actually recently did anacquisition, Jonathan, a small
scale company called CherryCreek, coming up on two years
ago, so it was June of 2022.
And, we bought that at call it,five and a half times, six
times multiple, but they had nodigital business.
So, when we look atacquisitions, we look at leading

(18:14):
market share.
So, we want stations and brandsthat are in the top five,
beloved by the community, withgreat local leadership, great
sales teams, so they had theiringrained in that community and,
obviously, markets outside thetop 50.
But we knew when we boughtCherry Creek that we'd be buying
it let's just call it a sixtimes multiple and that within
five years that would be the twoto three times multiple because

(18:36):
of the growth in digital and Iactually was just doing our
first quarter financial reviewyesterday and the growth in
Cherry Creek in the last twoyears has been exactly as we
expected.
So, there is a lot ofopportunity for acquisition and
taking what I would calltraditional radio companies and
building digital businessesalongside them, which is how
Townsquare has done it for 14years.

(18:57):
And there's also theopportunity for organic growth.
Even without acquisitions, weexpect to be a high single-digit
revenue growth driver andmid-single-digit profit driver
over the next five years.
Acquisitions would just be ontop of that.

Does the government prohibit you from
growing to a certain percent, orare you free to keep on buying
radio stations?

Yeah, so, I was actually the executive chair of
the National Association ofBroadcasting.
On the radio side theyrepresent radio and TV, an
amazing organization led byCurtis Legette.
I just came back from theconference in Vegas, second
largest conference outside ofCES out there, and
unfortunately, my views are theFCC is antiquated in their rules

(19:39):
.
The quadrennial rule 20 yearsago has a cap where we're
restricted from owning more thanfour FMs and two AMs in any of
our markets.
And 20 years ago you didn'thave Meta and you didn't have
Google and you didn't have youname, your device or your
platform that competes forpeople's attention and we're

(20:03):
limited and I think that'sunfair.
I expect at some point thoselimits will be taken away and
it'll be very accretive for usbecause we can add more
distribution, more content, moreAM FM signals with really the
infrastructure we have alreadyof a sales team and a market
president.
But we're not limited fromgoing out and acquiring
additional markets, we're justlimited to having more stations
in the market.
We are so, Cherry Creek we wereable to add a number of markets

(20:23):
that we didn't have, which isgoing to shape up quite nicely
because we have a good presencein Montana, which is going to be
a great political year for us.
And then we picked up a stationand a market in Sierra Vista,
Arizona, which again should be agreat political market for us.
So, we are limited to how manywe can own, but we're not
limited to the number of marketswe can operate in.
so there's plenty of room onthe growth side there, 100%.

So there's plenty of room on the growth
side there?
100% (Bill Wilson).
You were talking about notgetting the multiple you deserve
.
One way to do that is by havingartificial intelligence in your
name.
You have been talking a littlebit about how you're using AI.
Just curious, how you're usingit in your business today.

Yeah, I couldn't be more excited about artificial
intelligence just from abusiness perspective efficiency,
productivity, as well as justbeing a citizen, and what's
going to transpire over the nextfive years.
I'm just incredibly fascinated.
But we actually, over the last12 months, have been starting to
leverage artificialintelligence for business
processes.
This gentleman by the name ofSun Sax, he actually just won

(21:22):
the Digital Leadership Awardfrom the National Association of
Broadcasting a couple days agoin Vegas.
Sun and I go back over 20 years.
He was my head product at AOLand he brought over a team of 15
to 20 people, including AnibalRosado and Juan Sarri and many
others.
So I had the benefit when Ijoined.
It wasn't just myself, it wasalmost 40 colleagues from AOL at
the time, and he is reallyleveraging a lot of artificial

(21:45):
intelligence.
So I'll give you a coupleexamples.
One would be, when we createcreative or we create a website,
traditionally we would startfrom scratch.
I would call Boyar Value andsay okay, what assets do you
have?
What can you provide me so Icould start to create digital
advertising for you, be that adisplay ad or a video ad or
anything else of that nature.

(22:06):
He's created some AI that willplug in the name of the business
.
You plug in the URL of theirwebsite and it'll scrape that
website.
Come back with draft creative.
Then the human is involved andthey do the extra 10 or 15% on
top of that to make it great.
Show you, Jonathan, as theclient.
Here's your creative, you signoff on it.
Then they use AI instead of ahuman to put that across

(22:27):
multiple sizes and platforms.
Where before, it would takesomebody, say, an hour to create
multiple sizes of a display ad,we now use AI to do that.
So obviously an amazing,efficient way to save time and
energy and put that time andenergy into other returns on
those people's times.
The other thing we're doing isin Towns quare Interactive,
we're using AI to listen to allthe clients who call in, as well

(22:50):
as all of the outbound salescalls we do, and we used to have
a manager sit there and listenor transcribe and get some key
takeaways from calls.
Now we're using AI to go okay,if a client is upgrading, what
are the things they're upgradingfor?
If someone's looking todowngrade or if they have a
problem with their service, whatare those commonalities?
When a sale pitch goes well andcloses, what are those

(23:15):
commonalities?
We're using AI for all of that,where before it would literally
be hundreds of hours oflistening to calls.
So those are just two examplesof maybe 10 or 15 today that
we're using.
So when I think about the nexttwo, three, four years, I think
it's going to have a profoundimpact on our business.
But, quite honestly, I thinkit's going to have a profound
impact on everybody's business.

Okay, Towns quare AI.
You get an AI multiple.
The stock will rip.
I hope you've been enjoying theinterview.
To read Boyar Research's reporton Towns quare, please visit
boyarresearch.
substackcom.
And now back to the show.
You had mentioned Towns quareInteractive.
Can you briefly explain whatthat business is?

Sure.
So we have two significantdigital businesses.
One is Towns quare Interactiveand one is Towns quare Ignite.
Towns quare Ignite isadvertising and Towns quare
Interactive is digital marketingsolution.
So I'll talk about Towns quareInteractive.
It was interesting, Jonathan,coming from AOL and New York
City and big city media one ofthe things when I started at
Towns quare that Stephen Priceand Stu Rosenthal.

(24:18):
They were very dedicated to goto every market Back then it was
35, grew to 50, today 74, butliterally go to every market
every year.
I joined this chief content anddigital officer back in 2010,
and I would join them on thesetrips and as we started to
transform our digital websites.
When I joined the company, wehad no digital websites.
We created digital websites.
We created this audience that Itold you earlier reaches 70% of

(24:41):
the adult population.
In one of our town halls, w e'dalways go in and we'd give an
update on the company, butreally the benefit to us was
hearing what was going well, butalso the challenges and how we
could do better for our clients,our community.
What could we do better atcorporate to help and empower
the teams?
So it was a two-hour town hall,open questions and an account
executive in St.
Cloud, Minnesota it's about 90minutes outside of Minneapolis

(25:04):
raised her hand and said we'vedone such a great job for our
own brands and createdtremendous value on our websites
.
Why aren't we doing that forour clients?
And I'm like, well, tell memore, because I'm coming from
New York.
I'm thinking everybody's got awebsite and they're good to go.
And long story short, afterhearing her and then doing
market research in five of ourmarkets, we realized there was a

(25:25):
significant opportunity toprovide digital marketing
solutions.
So building websites, helpingpeople with search engine
optimization, doing social media, helping them set up their
profile on LinkedIn anything youwould think of for a business.
So, we started that businessorganically in the markets we
were in back then when we werein less than 50 markets.
This is in 2013, roughly thatbusiness, in essence, over the

(25:49):
past decade has added almost 10million top line once it got it
started and 3 million bottomline every year.
So I think last year was over80 million in revenue at roughly
a high 20% margin.
After a few years of only beingin our markets, Jonathan, we
realized I wouldn't call it bymistake but there was a seller

(26:09):
in our Fort Collins market inColorado, which is about an hour
outside of Denver, who startedselling the same product and
solution to small SMBs.
Our target was businesses withless than 20 employees, less
than 5 million in revenue, sopretty small businesses.
And they were going home oneday or on a trip to Colorado
Springs, which isn't a market wehad radio stations in, and they

(26:31):
say, hey, I see there's a needhere for the same thing.
Can I sell it?
I'm like, of course.
So then all of a sudden westarted testing a call center in
Charlotte and started callinginto like-sized markets so again
, markets outside the top 50 andoffering the same service.
And today 70% of our TownsquareInteractive clients are outside
of our radio footprint androughly 30 are inside.

(26:52):
And it's a monthly subscriptionbusiness.
So, as a small business owner,you're giving us your credit
card.
On average, we're charging youabout $300 a month and it's a
recurring revenue stream andthat's almost 20% of the
company's revenue and profitstoday.
And we see significant,significant opportunity over the
next 10 years to continue togrow that business and grow that
first over $100 million, thenover $200 million, and then keep

(27:15):
going.
We have a great slide in ourinvestor deck that talks about
there's 9 million targetcustomers here with a $32
billion TAM opportunity, so, alot of runway for us.
We did take a step back lastyear.
First time ever, we lost somesubscribers and that was really

two things that happened: self-inflicted wound of having a (27:29):
undefined
return to work mandate, becausecoming out of COVID Charlotte
was our largest office with over500 employees and they all were
working remotely for a coupleof years.
And, in 2022, we had a returnto work decision that if you
were either a new employee ornot, a tenured high performer,

(27:50):
you needed to come back at leasthybridly.
And we lost more people in 24months in that division than we
had lost in the first nine yearsand that created a lot of
turmoil with our customer baseand our client base.
And then, obviously in 2023,there was significant inflation
wage pressures on these smallbusinesses.
So last year we took a stepback in that business and, as I

(28:11):
said recently on our earningscall in March, my expectation is
we return to a subscribergrowth in Q2 of this year.
As I said recently on ourearnings call in March, my
expectation is we return to asubscriber growth in Q2 of this
year and then, after subscribergrowth, you'll also start to see
month-over-month revenue growthand I expect that in Q2 this
year and that'll be followed bymonth-over-month profit growth
Really depends on how quicklywe're investing.
Given what we're seeing now,we're investing quite heavily in
the business.

(28:32):
We opened the second locationin Phoenix last year and, given
the runway and our currentmetrics, we're investing quite
heavily.
So, profit will return monthover month growth either in Q3
or Q4, depending on how much wecan invest right now.

So, you had a bunch of employees who
essentially quit when you toldthem they had to actually step
foot in an office, and that madecustomer service deteriorate
and some of these subscribersleft.
Is that basically what happened?

Yes, exactly that's exactly what happened and, to
be honest with you, obviously itwas a somewhat unexpected in
terms of the magnitude of that.
Truthfully, I believe it madeus a stronger company.
We got knocked out, let's callit what it was.
Literally every quarter formany, many years we were adding
roughly 800 net subscribers,sometimes 1,000, but very, very

(29:19):
consistent.
All of a sudden, last year welost I call it 7,000 subscribers
.
We cut that Q4 to Q1.
We told people we'd cut that inhalf, we'd be under 800 losses
in Q1 and return to growth in Q2, as I just said.
But we took it on the chin.
So we said, okay, let's takethis opportunity and really
attack ourselves.
We built a company from zero to$90 million with a call it a

(29:43):
30% profit margin.
What would we do differently totake a company from 90 million
in revenue to make it 250million in revenue?
And so one big change we did iswe used to have a one-to-one
customer service model.
So, Jonathan, if you called in,you would get Johnny and
Johnny's manager would be Susie,and so obviously, when Johnny

(30:03):
left, that was very disruptivefor you.
You start talking to Johnny.
He was your marketingconsultant.
So we decided to go to a pooledmodel where when you call in
today you may not get Johnny,you're going to get somebody who
knows your business, knows whyyou called before and handle
whatever your questions or yourneeds are, and to your question
earlier, we're starting to useartificial intelligence on those

(30:24):
calls as well.
I think that's a much moreefficient model.
Our answer rates have gone upalmost 100% because before, if
you called in and you weretalking to Johnny, Johnny used
to handle 200 businesses.
When I called in as anotherclient, I may go to voicemail
because Johnny's on the phone.
So, this is a much moreefficient in terms of how to
scale and, I think, a bettercustomer service model for our

(30:46):
subscribers.
So, there were many things likethat.
We don't have enough time to gothrough them all in this
podcast, but I am incrediblyconfident.
Towns quare Interactive is astronger company today because
of the setback we faced lastyear.

In terms of the Towns quare Interactive piece of
your business.
I mean you said now a largepercentage of it is not in your
traditional radio markets.
How do you leverage having theradio stations in those markets,
like, how do they go together?

So in the 70% of the clients who are outside the
market has nothing to do withradio.
There's no overlap In the 30%where we are selling Towns quare
Interactive.
We're utilizing our existingsales teams to provide referrals
to our Towns quare Interactiveteam.
So I think, going back to oneof your questions like why are
you performing so much betterjust radio to radio companies?

(31:36):
Putting aside the successyou've had in growing a very
profitable digital business,part of it is we have full
funnel marketing solutions.
So meaning clients don't wantto deal with multiple vendors.
Well, Gordon Burrell has done anumber of studies where 10 years
ago, a small business wouldwork with, quite honestly, 10
different providers, be it theyellow pages, the newspaper,
television, radio, outdoorcompany.

(31:58):
Today, they want to work withone or two providers who could
really handle their advertisingand marketing needs.
So, you want to be really oneof one and the only way to do
that is to have full funnelsolutions.
So, the fact that we've gotradio, which is the best
cost-effective reach medium, butthen we've got this
programmatic digital business,and then we could also help you
with your website, build yourwebsite, make sure you're on the

(32:19):
front page of Google for theappropriate search terms.
That is highly differentiatedand a competitive advantage.
So, going back to your question, in the 30% of the sales where
they're coming from our marketsit's part of the same pitch that
we're pitching advertising, so,it is one ecosystem in those
markets.

Yeah, but Wall Street hasn't been as kind to
you as it should be, at least inour opinion.
In terms of the valuation, itseemed like the Timess quare
Interactive would get a highermultiple.
Have you ever consideredspinning out that portion?
Would that make sense?

We get a lot of questions about that.
Is that a possibility one day?
It could be, but thecharacteristics of helping the
radio division and that overlapis powerful.
So could that happen?
Yes, because they couldobviously be an arm's length
relationship.
But my view is we are going toget that value, particularly as
we today call it 50% of ourrevenue, 55% of our profits

(33:14):
coming from digital.
Fast forward, just two or threeyears, I expect that to be over
60% and then think five years,I expect that to be 70% revenue
of digital and 70% digitalprofit.
So, we're extremely patient.
I mean just like you are, asinvestors, like I read a lot of
your materials.
We have the same approach where, as long as we stay disciplined

(33:34):
, consistent, I think we have aculture of high performance and
accountability.
We're not worried how we'revalued today.
We're trying to unlock value.
We're de-levering.
We get the advantage of ourstock price being so undervalued
.
We're able to retire millionsand millions of shares at what
we think is a ridiculously slowprice.
I think part of the story,Jonathan, is A, w e're lumped in
with radio traditionally and Ithink we're starting to break

(33:56):
out of that box.
Two, we've been highly levered.
We stated for a little whilethat we were going to come down
from six times.
We stayed above six times forquite some time.
We've got our lowest netleverage, in essence in quite a
while at 4.4 times.
We expect that over the next 18to 24 months to come down to
three times.
So I expect that to be amaterial difference in the eyes

(34:17):
of investors.
As you know, we just initiateda dividend a year ago.
We increased that dividend by5% in March on our year-end call
.
It's now, I think it's about a6.5% yield.
You talked about pivoting fromthe radio business before.
What I think we're doing ispivoting to really putting a
spotlight on our cash flowgeneration.

(34:37):
We continue to do amazing interms of growing our cash flow
from operations, and byinitiating the dividend based on
the investor meetings I've hadthat new investors who
discovered the company.
I think it's clear that was agreat, almost a marketing
strategy on its own to getpeople to recognize the company.
So we're just going to staydisciplined.

(34:58):
We're going to continue tode-lever, we're going to
continue to grow our overallprofits and the mix is going to
be more and more digital revenue, more and more digital profits
and, to your point, theintrinsic value I think in your
piece was called $25.
We think not only are we goingto get there, our aspirations
are much higher, as long as wecontinue to execute and grow the
overall business.

Yeah, no, I mean you've done a fantastic job in
terms of capital allocation andI think it helps that you
personally own a lot of thecompany because you have skin in
the game.
I mean, I think, at least inour calculation, you've
purchased about 60% of sharesand warrants outstanding.
You know an average price of alittle over $7.
Its share price now is 12,which is great, assuming the

(35:40):
shares are undervalued.
But does the leverage keep youup at night in an uncertain
world?

Not at all, because I mean, just think about our
cash flow generation.
Obviously, if we were concernedat all about that, we wouldn't
be buying back as aggressivelyas the share.
We'd just be hoarding the cash,and you noted this in your
piece.
If you just look at the freecash flow yield and you look at
the free cashflow versus themarket cap, and I don't know if
that's three or just incrediblyundervalued we talked about
multiples before of EBITDA.

(36:07):
I would encourage people justlook at our free cashflow.
You've noted in your piece thethree-year average.
In that it's consistent.
It's not like one year wasgreat and a couple of years were
subpar.
Each and every year, even afterlast year, which I would call a
subpar year for the companyoverall because of the step back

(36:28):
in subscribers at TownsquareInteractive, we still had a
great year second highestrevenue, second highest profit
in the company's history.
So, going back to your question, not at all, I think.
As I moved into this roleputting aside COVID in 2019, I
became the sole CEO when, Ithink, we were about over six
times levered and we've marchedthat down to about 4.4.
And we said we were going to dothat.
We're going to continue to dothat I think, as I said earlier,
we'll get that under four andcloser to three over the next
two years.

Do you like being CEO of a public company?

I like being CEO.
I'm blessed.
I have an incredible family.
This is a dream come true forme in terms of the job and the
people I work with, the culturewe built.
I'm incredibly proud of theTowns quare team.
I feel it's an honor torepresent the team.
They're obviously doing all thework.
The corporate office isextremely small.
We're talking about even withthe accounting team, we're

(37:13):
talking about less than 50people.
So, with over 2,200 employees,the people doing the work are
all in the markets, servingtheir communities and their
clients, and to me, that's whatTownsquare is about.
It's like how do we serve thesetremendously underserved
communities, how do we helpthese clients?
And that's what we're really,really proud of helping these
business owners reach theirdreams.
So, I love being the CEO ofTownsquare.

(37:35):
I look forward to doing thisfor as long as the board will
have me.
The board couldn't be moresupportive, as a first-time CEO
has given me tremendous advice.
They have long-term vision.
I can't say enough about theTowns quare board, but obviously
, being a public company, youspend a lot of time on things
that maybe aren't the mosteffective.
It's just sometimes there'sthings you got to do that are a
waste of time.
Thankfully, I have an amazingcorporate team, our COO, Eric

(37:58):
Hellum, a tremendous businesspartner.
He actually started in theradio industry, so it's been a
great combination of somebodylike myself with the digital
background.
He started decades ago and beenin the radio industry the whole
time, and we wouldn't be wherewe are without Eric Hellum.
So I love being the CEO ofTowns quare.
I could see us being private orpublic and being just as happy.

Would you be doing anything different if you
were a private company now?

Nothing in terms of strategic decisions or
decisions.
So, I'm sure everybody saysthis, but, as I said, going back
to the board, they haveimpressed on me from day one.
As we plan, say, 2025, we'rethinking about what's the right
thing for 2030.
And that should be factoredinto your plan for 2025.
So, we're never makingshort-term decisions for the
next quarter or, quite honestly,even the next 12 months.

(38:45):
If that was the case, Jonathan,we would have actually stopped
our investment in TownsquareInteractive last year while we
had an off year and said, okay,let's take a step back, let's
make sure we've got this right.
They were like if you'reconfident, continue to invest.
We continue to hire throughoutthis significant downturn where
our revenue is down 15% in Q4for Townsquare Interactive.
So no, being a public company,we're not making decisions that

(39:08):
are different than if we wereprivate.
It's just there's a lot ofauditing and a lot of the stuff
around SOX compliance and thingswe have to do.
That we wouldn't necessarily do, we definitely wouldn't do, if
we were a private company.
They just added personnel forSOX compliance that we wouldn't
have.

Would it shock you one day if you were part of
another company or if thecompany was private?

Not at all.
I think about it one of twoways.
As you said, a lot of mycompensation personally has been
part of stock-basedcompensation.
When I joined in 2010, inessence, Stephen Price said I
can't pay you what you make atAOL.
My salary back then was publicbecause I was an officer of AOL
as a public company, so I tookabout a 50% cash comp step back

(39:50):
and my wife was a big part ofthat decision, obviously because
we had a family and I got thatin stock-based comp before I was
CEO.
And then now about third to 40%of my compensation is
stock-based versus cash and alot of that is performance-based
, meaning I earn the RSUs onlyif there's different hurdles hit
in terms of shareholder value.

(40:13):
So, I think, all in, if you lookat unvested and invested, I
probably have a million sharesin the company.
So it's significant to yourpoint of making sure the
business is run right and that'swhy we're going to make
long-term decisions and nevershort-term decisions.
But, I think one of two thingsis going to happen.
Let's say, five years from now,just to pick a number.
Our stock is either going to besignificantly higher not only
what you said at 25, butsignificantly higher above that
in five years, or we'll have thewherewithal to go private.

(40:34):
That's the way I look at things.
If we were sitting here inthree, four years at the same
stock price, given our cashflowgeneration and our ability to in
essence, de-lever, we couldtake the company private.

So, I just wanted to talk a little bit
about digital advertising andthe Ignite piece part of the
business.
It's a little bit harder forpeople to, I guess, understand.
You gave us a fantasticdemonstration, I think, probably
two years ago, of the powerbehind that.
Can you explain what it is forpeople who might not be as

(41:06):
digital savvy?

Yes, thank you, Jonathan, for asking so for your
listeners.
We have a division in thecompany called Towns quare
Ignite.
So we talked earlier aboutInteractive, which was the
subscription business for awebsite building and SEO and
things like that.
Ignite is our digitaladvertising business and within
that there's really twocomponents.
There's monetizing thesignificant scale of audience we
have on our property.
So we have over 300 websites,over 300 mobile apps and there's

(41:31):
a significant size at scaleaudience there.
We collect first party data onthat audience.
So in a world where cookies goaway, it's highly valuable.

What's first party data just for those who
don't understand?

So, first party data would be getting
information when they come toyour website about their
interests.
So are they reading a personalfinance article?
Are they reading an articleabout real estate?
Are they reading an articleabout nutrition or medical?
And knowing that about anindividual, you can get that
data on the open marketplacefrom third parties and you pay
an effective CPM for that data.

(42:03):
But, as I said earlier, wereach 70% of the adult
population, so I believe nobodyhas as much data on the people
in our 74 markets than Townsquare has.
So that's a very, verysignificant competitive
advantage in the digitaladvertising landscape.
So that's one component ofTowns quare Ignite.
The other component of Townsquare Ignite is programmatic

(42:24):
advertising, so we're able tobuy inventory across the
internet.
We are integrated with all ofthe major exchanges.
If you're familiar with TradeDesk, Simplify, Zander, Madhive,
there's literally dozens anddozens of companies that
aggregate inventory across anyconnected device.
So, not just a traditional PCor laptop, but you're watching

(42:46):
your Samsung TV and you'rewatching Netflix, now added
advertising, Hulu, DisneyChannel.
If you're watching ESPN, all ofthese are now being served
advertising through a connecteddevice.
One of the fastest growing partsof the company is serving
programmatic digital advertisinghighly targeted.
So, as Jonathan, you describeda couple of years ago when we

(43:08):
met in your office, you're likeyou know, I think I understand
this.
Can you demonstrate this for me?
So, we actually, with Jonathanand his team, walked through a
presentation where he was asmall business in one of our
markets and we gave him a pitchand I think all the light bulbs
went off, which is great.
So, you tell me you're abusiness, say you're an HVAC

(43:31):
company in Tyler, Texas.
Who is your ideal customer?
What's their household income?
Where do they live?
What are their interests?
I then go find those customers.
First, I create the advertisingfor you.
I A B test that to make surethe creative is the best that
can be continually optimizingthat creative.
And then I serve that ad to theright individual, the right
individual being that targetdemographic you described.
And then I optimize where thatad shows up.

(43:54):
Should it show up on a Hulushow?
Should it show up on a Disneyshow?
Should it show up on theWeather Channel?
And we see which one performsbest.
And performs best is reallydefined by the client.
What is their key performanceindicator?
Are they looking for awareness?
Are they looking for a formfill.
Are they looking to convert toa paying subscriber for
e-commerce?

(44:15):
It's incredibly powerful andwhen you think about what we've
been talking about, Jonathan,where Towns quare is focused on
markets outside the top 50, mybelief is no one can do this
better than we can, and we'requite pleased with the growth
where we are.
It's the fastest growing part ofthe company in terms of revenue
and profit for the last fiveyears.
But when we think about thenext decade, you think about 69%

(44:38):
of all advertising today in theUnited States, local
advertising is digitaladvertising.
That is expected to grow almostto 80%.
In the United States, localadvertising is digital
advertising that is expected togrow almost to 80% in the next
five years.
So we've got this tailwindbehind our back of growth in
digital advertising.
We believe we're highlydifferentiated in that space and
then, even if it wasn't growingas much as it is, based on our

(44:59):
data from Gordon Burrell andAssociates today, in 2023, we
captured less than 15% of theaddressable digital market in
our markets.
So, there's so much more shareshift that can happen and then
you have share shift plus thebenefit of a growing market, and
that's why we're as excited aswe are about Towns quare.
Ignite our digital advertisingarm.

Is there a big overlap between the customers of
Towns quare Ignite and Townsquare Interactive?

Very little overlap .
I think part of the reason isour Ignite customers.
There is some overlap, but I'dsay less than 20%, because the
Ignite customers are usuallymuch larger in scale, have a lot
more money to spend than thesmaller customers that we're
focused on for Towns quareInteractive.
So incredible opportunity withTowns quare Ignite and it's
performed extremely well year inand year out and we're excited

(45:44):
for the next five to 10 years inthat space.

Your competitive advantage, I guess on Ignite
and please correct me if I'mwrong is, you have all these
websites that you created inthose smaller towns and you're
able to target people in smallcommunities, and that's why
someone would want to use yourmarketing agency.
Is that?

That's one component of it.
The other component is a, we'vegot all this first party data.
Two, we have a team there'sroughly a hundred people who buy
media, optimize media.
The creative is a big part ofthis in terms of the messaging
and the visuals we're doing now.
In essence, we're doingtelevision advertising for
clients.
We weren't able to do that fiveyears ago because we didn't own

(46:27):
television stations, but now,with cord cutting and as much
inventory with streamingtelevision, we're in essence
competing with cable televisionand network television.
So part of the differentiationthere is we've got this huge
scale of hundreds, if notsometimes thousands, of
campaigns for lawyers, doctors,plastic surgeons, hvac you name

(46:50):
a vertical and quite honestly, Icould sit down with you we're
doing this in the homeimprovement space and
particularly HVAC, and I couldsit down with you and say we've
done this campaign for over 500customers across the US that
look just like you.
This is what they did prior toworking with Townsquare and this
is what they're doing today.
So having that scale and thatexpertise in verticals is highly

(47:14):
differentiated.
Again, particularly in marketsoutside the top 50.
In addition, we're oftencompeting with local agencies.
There's a digital agency inevery one of our 74 markets.
They're utilizing usually freeexchanges.
They go on Facebook.
My son buys ads on Facebook.
There's no barrier to entry.
You could buy displayadvertising through Google
there's no barrier to entry.

(47:35):
But we're sitting at exchangesthat have six or seven figure
minimums per month in spend.
So, a local agency wouldn't beable to do that necessarily in
Tyler Texas.
But because we're bringingthis, I call it national
sophistication to small townAmerica, it gives us outside
differentiation in terms ofpurchasing power for inventory,

(47:55):
as well as just the ability tosee the amount of inventory we
can.
And that may matter less in NewYork, but when you're in Tyler
Texas with 300,000 people andyou want to reach somebody with
a household income of 75,000 whohas two kids, drives a Honda
Odyssey and loves MMA, there'sonly so many opportunities you
have to do that.
So, the more inventory you haveto not only reach that person

(48:18):
but to optimize that creative,make sure that you're reaching
them on the right platform.
We take great pride in that andwe live and die by the results
we provide our clients.
So, I view that as highlydifferentiated for Towns quare
versus others that we'recompeting with in our size
markets.

Bill, I want to thank you for your time.
It's been fantastic learningabout your career, working with
Clive Davis to AOL to then goingto Towns quare, where you took
kind of a big risk in terms of apay cut to try and build
something great.
I look forward to monitoringyour progress and following
Towns quare, and I think thebest days are still ahead.

I agree, Jonathan.
Thank you so much.
It's been an honor, it's been apleasure and I look forward for
all your listeners, hopefullyto learn more about Towns quare,
spend some more timeunderstanding the company, and
if anybody has any questions,they could always reach out to
me at any time.
My email address is bill@soundsquaremedia.
com.
And thank you again, Jonathan.

Thank you.
I hope you enjoyed the show.
To be sure you never missanother World According to Boyer
episode, please follow us onTwitter @Bboyarvalue .
Until next time.

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