800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO THURSDAY, AUGUST 6, 2015 Townsquare Rise Proves Value of Doing It Live. A 10.6% increase in second-quarter revenue to $117.5 million at Townsquare Media is being trumpeted by the company as further validation of a diversification strategy built on the tent poles of local radio, live events and national online portals. But it was events that paid the biggest Q2 dividends for the publicly traded company. Driven mainly by music events, especially its multi-date festivals, event revenues increased 50.4% to $29.7 million during the second quarter when compared to the same period last year, Townsquare said Wednesday. It cited, among other factors, increases in attendance and revenue per attendee. The addition of three new festivals brought $2.1 million in incremental revenue in the quarter. Without them, event revenue would have been up 39.9%. Townsquare has also invested aggressively in a number of non-talent-based events, such as a national tour of craft beer festivals that is currently rolling out. “We’re doing lots of different things,” CEO Steven Price said during the company’s results call Wednesday. Staging live events requires significant upfront investments for Townsquare and other broadcasters that have made them radio’s fastest-growing revenue sector. So while they produce a big revenue pop, Townsquare said it doesn’t expect the three new festivals to produce cash flow growth until years two and three. “We produced yet another strong quarter and believe that it underscores the success of our ‘Townsquare everywhere’ diversification strategy,” Price said. Price Sees Local Ad Market Improving. Live event revenue was the showstopper for Townsquare Media in the second quarter. But while local ad revenues inched up only 0.6% to $78.5 million, they still accounted for nearly triple the dollars that events put on the table. The local radio advertising market has sequentially improved, CEO Steven Price said yesterday. “I wouldn’t say we feel like it’s a boom market but it’s definitely improved and we feel better about it,” he told investors yesterday. Echoing comments made by other radio CEOs, Price said local clients have been booking business later than normal for the last year and that has made pacings more difficult to gauge. Still the company expects total revenue to grow in the mid-to- high single digits in the third quarter. The majority of Townsquare’s revenue comes from local ad sales. With market conditions varying greatly from one market to another, it’s difficult to generalize ad trends. “Local factors often overwhelm the bigger economic trends,” Price said, such as a city dealing with an especially choppy economy. “Sometimes a great management team that’s aggressive can out run that and in some cases they can’t,” he said. “So much of our business is local that it’s hard to parse out a general ad environment.” Moonves: CBS Radio ‘Making The Right Moves.’ CBS Radio recently completed its first major upper management restructuring since 2007 under new president Andre Fernandez. CBS Corp. CEO Les Moonves and COO Joe Ianniello yesterday expressed confidence that Fernandez, newly named chief operating officer Scott Herman and their team are steering the ship in the right direction. “In radio, our new management team is making the right moves to rejuvenate the business for the digital future,” Moonves told investors during the company’s second quarter earnings call. “CBS Radio has huge brands like WFAN [New York] and ‘The Score’ [WSCR] in Chicago that are now able to find new ways to grow by expanding on to digital platforms outside of their own markets.” Revenue at the company’s radio division decreased 5% while billings at its TV stations grew 1%. All told, local CBS broadcast revenues decreased 2% to $654 million. Auto and healthcare were both “up nicely,” Ianniello said, while entertainment and financial services were “somewhat soft.” Local advertising for radio and TV is pacing even in the third quarter. The company attributes some of the Q2 decline to lower political spending compared to last year’s mid-term elections. [email protected] | 800.275.2840 PG 1 NEWS insideradio.com THURSDAY, AUGUST 6, 2015 But with the 2016 presidential election ramping up, Moonves expects that to change. “Local broadcast will be much, much better,” he promised. “The coming election season will trump anything we’ve ever seen before.” The company’s TV stations are “terrifically positioned” to capitalize on election spending, Moonves said, “and it will also be a great opportunity for our radio stations to build on the momentum they achieved during last team’s mid-term elections.” CBS reported restructuring charges of $55 million for its radio and TV station operations, which it said are expected to reduce its annual cost structure by about $70 million. Passion Players—Study Picks Top Cities Per Format. It’s hardly surprising that Nashville is the top-ranking market for country radio, but who would have picked Kansas City as tops in the nation for sports? A new study from Priceonomics explores which cities attract the largest audiences for some of the biggest formats, analyzing June 2015 Nielsen radio station ratings in the 50 largest markets. For the nation’s top format by station count—country—the biggest audiences behind Music City are also found down south: Charlotte, Jacksonville, Austin, San Antonio, Greensboro and Houston. Less obvious among the top 10 are Oklahoma City, Columbus and Salt Lake City. For the news format, DC leads the pack, followed in the top 5 by St. Louis, Chicago, New York and…surprise…Milwaukee-Racine. Washington is also the No. 1 audience market for NPR (its base), followed by the heady Research Triangle Raleigh-Durham, Boston, Seattle-Tacoma and Portland. Among sports towns, KC keeps track of its team scores with the most rabid airwaves fervor, followed by equally athletic Boston, and then Detroit, San Francisco and San Jose. Rounding out the sports top 10: Long Island, Pittsburgh, Seattle, Minneapolis and Baltimore. Urban radio leads in the Southeast, with top 4 towns Norfolk-Virginia Beach, New Orleans, Atlanta and Miami, and No. 5 Detroit tossed in for some Northeastern dedication. Priceonomics analyst Dan Kopf says of the study: “Traditional radio caters to local audiences. We were curious about what the success of certain radio formats could tell us about cities and regions across America [and about] geographically specific culture and interests.” Townsquare Sells 43 Towers for $22.8M. Townsquare Media has joined a growing list of radio companies selling their broadcast towers to monetize what they see as a valuable non-core asset tucked away in their holdings. The company has cut a deal to sell 43 towers to tower giant Vertical Bridge Holdings for $22.8 million. Townsquare is holding on to 250 towers, which Vertical Bridge will market to add additional tenants in a revenue share arrangement with Townsquare. Townsquare CEO Steven Price says the sale “unlocks capital” and makes better use of assets the company hadn’t maximized to their full potential. Townsquare hasn’t aggressively sought new tenants for its tower portfolio, Price said, many of which either don’t have outside tenants or have only a small number of them. Still others have structures that currently aren’t conducive to bringing in tenants. The deal is structured to not increase Townsquare’s costs, granting what Price said is essentially a 35-year, rent-free lease for its existing station transmitters on the 43 sites. However, the sale will reduce annual revenue by about $1.5 million from lost rent from third-party tenants who lease space on the towers, the company said. “This deal makes a lot of sense for our company,” Price told investors yesterday during the company’s quarterly results call. Other operators have reached a similar conclusion. iHeartMedia recently closed on the sale of roughly 370 broadcast towers, in a deal that leases space for its stations on the divested sites. Cumulus Media is selling valuable real estate in Los Angeles and Washington, DC that are home to towers it owns in those markets. [email protected] | 800.275.2840 PG 2 NEWS insideradio.com THURSDAY, AUGUST 6, 2015 Wilson Doubles His Pleasure With Digity Deal. Alpha Media founder Larry Wilson says he has been trying to buy Digity Media’s West Palm Beach stations since they were owned by famed sportscaster Curt Gowdy. On Tuesday he finally sealed the deal – not just for the market-dominant WPB cluster but for more than 100 other stations rolled up by Dean Goodman’s Digity. Wilson says the transaction will nearly double Alpha’s revenue. BIA Kelsey estimates 2014 revenue for Digity at $73 million and $155.9 million for Alpha. However Mark Fratrik, BIA Kelsey chief economist, says his estimate for Digity understates its revenue since a sizable amount of the company’s stations operate outside Nielsen Audio markets which the firm doesn’t track. Even with an admittedly undercounted combined revenue of $228.9 million, Alpha will advance from radio’s 13th largest company to ninth, just ahead of Hubbard Radio, Fratrik says. In addition to West Palm Beach, Wilson likes the way Digity’s two Bay Area class Bs – AC “K-Bay” KBAY (94.5) and hot AC “Mix 106.5” KEZR – match up with the three Far East Bay stations Alpha recently acquired. But apart from that, there’s almost no overlap between the two companies. After selling Citadel Broadcasting, Wilson has come a long way to build a second radio company at scale, starting with just six stations in 1999.