Within Townsquare Media, local media—including radio—proved to be the growth engine in an otherwise challenging first quarter. While the company’s total Q1 revenue fell 6.4% to $88.4 million, its local media segment managed positive results. The Local Marketing Solutions unit, which includes Townsquare’s 300+ radio stations, local digital, digital marketing solutions and e-commerce businesses, climbed.
The division reported a 1.2% increase in billings to $76.1 million, compared to the same period a year ago. Excluding political, revenue was up 2.5% for the quarter.
At the same time, revenue for the Entertainment unit, which includes live events and national digital business, tumbled 35.8% to $12.3 million. Townsquare cited several factors it claimed pushed down revenue for the quarter, including lower political advertising, fewer live events occurring in the quarter, and the sale of some smaller live events.
Still, Townsquare CEO Steven Price said the results were in line with company forecasting and credited the local business with buoying financials. Townsquare says Q1 2017 marked the 13th consecutive quarter of growth for its Local Marketing Solutions division. “In spite of these challenges, we have continued to generate positive growth due to the continued strength of our local products and services,” he said.
Townsquare’s digital marketing solutions business, Townsquare Interactive, continues to be a growth engine within that division. Price said the business, which provides a range of digital services from web design to digital advertising management for local businesses, now counts 11,200 subscribers, up from about 10,700 at the end of 2016.
While Townsquare did not provide specific details about its radio station revenue, company executives said advertising revenue for its local division was mixed for the quarter, reporting softness in national advertising, while local business was solid. Retail was up in Q1, while auto was flat, Price said. Entertainment, financial services and political “were among the tougher categories,” he added.
At a time when many retailers are struggling with declining sales, Price says a shift in advertising strategy could benefit both retailers and Townsquare’s media properties. Townsquare’s radio stations are concentrated in small and mid-sized markets and largely removed from major urban centers on the coasts.
“Maybe national advertisers or local advertisers and retailers are realizing they want to go invest in the heartland, which is a mantra we’ve been articulating for the past five years,” Price said. “It is time to stop focusing on just the big cities. There are lots of people out in Middle America and maybe that’s starting to take hold.”
Price said slowing auto sales could also be a boon for Townsquare’s ad revenue. “I’d argue that means they have to spend more on marketing, but we’ll see,” he noted.
When asked about Entercom’s proposed acquisition of CBS Radio, Price said the deal could have benefits for the overall radio industry. “What’s going to help us at Townsquare is a healthy, growing combined CBS-Entercom…and a lot more liquidity and float of radio and local media stocks,” Price said. “To the extent there is a lot more float out there, it could in theory attract new group investors who will think it makes sense now to look at this space broadly because there is enough equity to buy.”
Looking ahead to 2018, Price said political advertising should be promising, including some contested Senate races that will overlap with Townsquare markets. “From running Townsquare’s standpoint, we are optimistic that the fight for control of state houses and state legislatures and federal [races] is going to be pretty robust, where people see it as a pivotal year, but it is still too early to say,” Price noted.