Townsquare Media Inc.
11/10/2025 | Press release | Distributed by Public on 11/10/2025 05:12
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management's discussion and analysis is intended to provide the reader with an overall understanding of our financial condition, results of operations, cash flows and sources and uses of cash. This section also includes general information about our business and a discussion of our management's analysis of certain trends, and risks and opportunities in our industry. In addition, we also provide a discussion of accounting policies that require critical judgments and estimates. This discussion should be read in conjunction with our Unaudited Consolidated Financial Statements and related notes appearing elsewhere in this quarterly report.
Note About Forward-Looking Statements
This report includes estimates, projections, statements relating to our business plans, objectives and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include the impact of general economic conditions in the United States, or in the specific markets in which we currently do business including supply chain disruptions, inflation, labor shortages, tariffs, and the effect on advertising activity, industry conditions, including existing competition and future competitive technologies, the popularity of radio as a broadcasting and advertising medium, cancellations, disruptions or postponements of advertising schedules in response to national or world events, our ability to develop and maintain digital technologies and hire and retain technical and sales talent, our dependence on key personnel, our capital expenditure requirements, our continued ability to identify suitable acquisition targets, and consummate and integrate any future acquisitions, legislative or regulatory requirements, risks and uncertainties relating to our leverage and changes in interest rates, our ability to obtain financing at times, in amounts and at rates considered appropriate by us, our ability to access the capital markets as and when needed and on terms that we consider favorable to us and other factors discussed in this section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report and under "Risk Factors" in our 2024 Annual Report on Form 10-K, as well as other risks discussed from time to time in our filings with the SEC. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Format of Presentation
Townsquare is a community-focused digital and broadcast media and marketing solutions company principally focused outside the top 50 markets in the U.S. Townsquare Ignite, our robust digital advertising division, specializes in helping businesses of all sizes connect with their target audience through data-driven, results based strategies, by utilizing a) our proprietary digital programmatic advertising technology stack with an in-house demand and data management platform and b) our owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data. Townsquare Interactive, our subscription digital marketing services business, partners with small and medium-sized businesses ("SMBs") to help manage their digital presence by providing a SAAS business management platform, website design, creation and hosting, search engine optimization and other digital services. And through our portfolio of local radio stations strategically situated outside the Top 50 markets in the United States, we provide effective advertising solutions for our clients and relevant local content for our audiences.
We believe that our diversified product offering substantially differentiates us from our competition. This diversification allows us to provide superior solutions to our advertisers and engaging experiences for our audience, underpins our growth strategy and, we believe, helps to mitigate the risks associated with advertising revenue dependency.
The Company has identified three segments, which are Digital Advertising, Subscription Digital Marketing Solutions, and Broadcast Advertising, and the remainder of our business is reported in an Other category.
Digital Advertising
Our Digital Advertising segment, marketed externally as Townsquare Ignite, is a combination of our proprietary digital programmatic advertising platform and our owned and operated digital properties, and an in-house demand and data management platform collecting valuable first party data.
Subscription Digital Marketing Solutions
Our Subscription Digital Marketing Solutions segment encompasses Townsquare Interactive, our subscription digital marketing solutions business. Townsquare Interactive offers digital marketing solutions, on a subscription basis, to SMBs in markets outside the top 50 across the United States, including but importantly not limited to the markets in which we operate radio stations. We offer a variety of digital marketing solutions, which enables SMBs to choose the optimal features for their specific business.
Broadcast Advertising
Our Broadcast Advertising segment includes our portfolio of 341 local terrestrial radio stations. Our primary source of Broadcast Advertising net revenue is the sale of advertising on our local radio stations primarily to local and regional spot advertisers and, to a lesser extent, national spot and national network advertisers. We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on markets outside the top 50 markets in the United States. Given the stability of radio's audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our local markets outside the top 50 markets in the U.S.
Other
We report the remainder of our revenue in the Other category, and it includes revenue from our live events, which includes concerts, expositions, and other experiential events. Our live events portfolio includes iconic local events such as WYRK's Taste of Country, the Boise Music Festival, the Red Dirt BBQ & Music Festivaland Taste of Fort Collins.Our primary source of live events net revenue is ticket sales. Our live events also generate revenue through the sale of sponsorships, food and other concessions, merchandise and other ancillary products and services.
Overall
We generate a majority of our advertising revenue by selling directly to local advertisers, as well as to local and regional advertising agencies which affords us the opportunity to better present our products, cross-sell products and more directly influence their advertising and marketing expenditure decisions. A significant percentage of our advertising revenue is generated from the sale of advertising to the automotive, financial services, health services, entertainment, and retail industries.
Our most significant expenses are sales personnel, programming, digital, marketing and promotional, engineering, and general and administrative expenses. We strive to control these expenses by closely monitoring and managing each of our local markets and through efficiencies gained from the centralization of finance, accounting, legal and human resources functions and management information systems. We also use our scale and diversified geographic portfolio to negotiate favorable rates with vendors where feasible.
A portion of our expenses are variable. These variable expenses primarily relate to sales costs, such as commissions and inventory costs, as well as certain programming costs, such as music license fees, and certain costs related to production. Other programming, digital, engineering and general and administrative expenses are primarily fixed costs.
Seasonality
Our revenue varies throughout the year. Typically, we expect that our first calendar quarter will produce the lowest net revenue for the year, as advertising expenditures generally decline following the winter holidays. During even-numbered years, net revenue generally includes increased advertising expenditures by political candidates, political parties and special interest groups. Political spending is typically highest during the fourth quarter. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that typically do not have an effect on net revenue generation until future periods, if at all.
Macroeconomic Indicators
Current economic challenges, including high and sustained inflation and interest rates, and proposed and enacted tariffs have caused and could continue to cause economic uncertainty and volatility. These factors could result in advertising and subscription digital marketing solutions cancellations, declines in the purchase of new advertising by our clients, declines in the addition of new digital marketing solutions subscribers, and increases to our operating expenses. We monitor economic conditions closely, and in response to observed or anticipated reductions in revenue, we may institute precautionary measures to address the potential impact to our consolidated financial position, consolidated results of operations, and liquidity, including wage reduction efforts and controlling non-essential capital expenditures.
The extent of the impact of current economic conditions will depend on future actions and outcomes, all of which remain fluid and cannot be predicted with confidence (including effects on advertising activity, consumer discretionary spending and our employees in the markets in which we operate).
OVERVIEW OF OUR PERFORMANCE
Changes in Our Business
Recent Developments
On February 19, 2025, the Company entered into a $490 million Credit Agreement with Bank of America, N.A., as administrative agent and collateral agent and the lenders and financial institutions party thereto. The Credit Agreement provides for a five-year, $470 million senior secured Term Loan Facility (the "Term Loan") and a five-year, $20 million Revolving Credit Facility (the "Revolver"), together the "Senior Secured Credit Facility."
The Company used the approximately $453 million of net proceeds from the Senior Secured Credit Facility (after giving effect to original issue discount, fees, expenses and $10 million of the Revolving Credit Facility that was drawn at closing), together with cash on hand, to redeem all of the Company's outstanding 2026 Notes on February 19, 2025, and to pay fees and expenses related thereto.
The Company incurred approximately $5.5 million of fees and expenses in connection with the Senior Secured Credit Facility, which were capitalized and are being amortized over the remaining term of the Senior Secured Credit Facility, along with an original issue discount of $23.5 million, using the effective interest method.
During the three months ended September 30, 2025, the Company voluntarily repaid an aggregate $5.8 million principal amount of its Term Loan below par, plus accrued interest.
Refer to Note 7, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements for additional information related to the Credit Agreement.
Highlights of Our Financial Performance
Certain key financial developments in our business for the three months ended September 30, 2025 as compared to the same period in 2024 are summarized below:
•Net revenue decreased $8.6 million, or 7.4%, primarily driven by a $7.5 million decrease in our Broadcast Advertising net revenue, a $0.6 million decrease in our Digital Advertising net revenue and a $0.4 million decrease in Subscription Digital Marketing Solutions net revenue.
•Excluding political revenue of $0.2 million and $3.7 million for the three months ended September 30, 2025 and 2024, respectively, net revenue decreased $5.0 million, or 4.5%, to $106.6 million, Broadcast Advertising net revenue decreased $4.1 million, or 8.1%, to $46.8 million, and Digital Advertising net revenue decreased $0.5 million, or 1.2%, to $40.2 million.
•Operating income decreased $9.2 million for the three months ended September 30, 2025. The decrease was primarily due to the $8.6 million decrease in net revenue and a $6.2 million increase in transaction and business realignment costs, partially offset by a $5.0 million decrease in operating expenses.
•Digital Advertising segment reported operating income of $5.3 million for the three months ended September 30, 2025, which represents a decrease of $5.1 million, as compared to operating income of $10.4 million for the same period in 2024. The decrease is primarily due to a $3.0 million non-cash goodwill impairment charge and a $2.2 million decrease in segment profit for the three months ended September 30, 2025, as compared to the same period in 2024. Subscription Digital Marketing Solutions reported operating income of $5.7 million, an increase of $1.3 million from the three months ended September 30, 2024, primarily due to a $1.1 million increase in segment profit. Broadcast Advertising reported operating income of $12.0 million for the three months ended September 30, 2025, which represents a decrease of $0.9 million, as compared to $12.9 million for the same period in 2024. The decrease is primarily due to a $2.6 million decrease in segment profit, partially offset by a $1.5 million increase in net gain on sales and retirements of assets.
Certain key financial developments in our business for the nine months ended September 30, 2025, as compared to the same period in 2024 are summarized below:
•Net revenue for the nine months ended September 30, 2025 as compared to the same period in 2024, decreased $12.3 million, or 3.7%, primarily driven by a $16.6 million decrease in our Broadcast Advertising net revenue partially offset by a $3.0 million increase in our Digital Advertising net revenue, an $0.8 million increase in Other net revenue and a $0.6 million increase in our Subscription Digital Marketing Solutions net revenue.
•Excluding political revenue of $1.3 million and $6.2 million for the nine months ended September 30, 2025 and 2024, respectively, net revenue decreased $7.4 million, or 2.3% to $319.6 million. Broadcast Advertising net revenue decreased $11.9 million, or 8.0%, to $136.5 million, and Digital Advertising net revenue increased $3.2 million, or 2.7%, to $119.3 million.
•Operating income increased $33.8 million for the nine months ended September 30, 2025, primarily due to a $31.7 million decrease in non-cash impairment charges, a $8.8 million decrease in direct operating expenses, a $7.5 million increase in net gain on sales and retirements of assets, and a $3.0 million decrease in stock-based compensation. These variances were partially offset by a $12.3 million decrease in net revenue and a $7.0 million increase in transaction and business realignment costs.
Consolidated Results of Operations
Three months ended September 30, 2025 compared to three months ended September 30, 2024
The following table summarizes our historical consolidated results of operations:
| ($ in thousands) | Three Months Ended September 30, | ||||||||||||||||||||||
| Statement of Operations Data: | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 106,759 | $ | 115,311 | $ | (8,552) | (7.4) | % | |||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Direct operating expenses, excluding depreciation, amortization, and stock-based compensation | 78,758 | 83,794 | (5,036) | (6.0) | % | ||||||||||||||||||
| Depreciation and amortization | 4,646 | 4,947 | (301) | (6.1) | % | ||||||||||||||||||
| Corporate expenses | 5,985 | 6,063 | (78) | (1.3) | % | ||||||||||||||||||
| Stock-based compensation | 3,066 | 2,867 | 199 | 6.9 | % | ||||||||||||||||||
| Transaction and business realignment costs | 6,891 | 645 | 6,246 | 968.4 | % | ||||||||||||||||||
|
Impairment of intangible assets, goodwill, investments and long-lived assets
|
3,098 | 2,008 | 1,090 | 54.3 | % | ||||||||||||||||||
| Net gain on sales and retirements of assets | (1,621) | (110) | (1,511) | ** | |||||||||||||||||||
| Total operating costs and expenses | 100,823 | 100,214 | 609 | 0.6 | % | ||||||||||||||||||
| Operating income | 5,936 | 15,097 | (9,161) | (60.7) | % | ||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 12,606 | 9,175 | 3,431 | 37.4 | % | ||||||||||||||||||
| Gain on repayment and repurchase of debt | (247) | (8) | (239) | ** | |||||||||||||||||||
| Other expense (income), net | 135 | (277) | 412 | ** | |||||||||||||||||||
| (Loss) income from operations before tax | (6,558) | 6,207 | (12,765) | ** | |||||||||||||||||||
| Income tax benefit | (1,060) | (5,129) | 4,069 | (79.3) | % | ||||||||||||||||||
| Net (loss) income | $ | (5,498) | $ | 11,336 | $ | (16,834) | ** | ||||||||||||||||
** not meaningful
Segment Results
The following table presents the Company's reportable segment net revenue, direct operating expenses and segment profit for the three months ended September 30, 2025 and 2024 (in thousands):
| Net Revenue | Direct Operating Expenses | Segment Profit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30, |
Three Months Ended September 30, |
Three Months Ended September 30, |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Advertising | $ | 40,228 | $ | 40,861 | $ | (633) | (1.5) | % | $ | 31,590 | $ | 30,050 | $ | 1,540 | 5.1 | % | $ | 8,638 | $ | 10,811 | $ | (2,173) | (20.1) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription Digital Marketing Solutions | 18,649 | 19,080 | (431) | (2.3) | % | 12,442 | 13,956 | (1,514) | (10.8) | % | 6,207 | 5,124 | 1,083 | 21.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Broadcast Advertising | 46,997 | 54,526 | (7,529) | (13.8) | % | 33,633 | 38,560 | (4,927) | (12.8) | % | 13,364 | 15,966 | (2,602) | (16.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 885 | 844 | 41 | 4.9 | % | 1,093 | 1,228 | (135) | (11.0) | % | (208) | (384) | 176 | (45.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 106,759 | $ | 115,311 | $ | (8,552) | (7.4) | % | $ | 78,758 | $ | 83,794 | $ | (5,036) | (6.0) | % | $ | 28,001 | $ | 31,517 | $ | (3,516) | (11.2) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net Revenue
Net revenue for the three months ended September 30, 2025 decreased $8.6 million, or 7.4%, as compared to the same period in 2024. Broadcast Advertising net revenue decreased $7.5 million, or 13.8%, Digital Advertising net revenue decreased $0.6 million, or 1.5%, due to decreases in the purchases of advertising by our clients and political revenue. Subscription Digital Marketing Solutions net revenue decreased $0.4 million, or 2.3%, due to reduced sales velocity as a result of lower headcount.
Direct Operating Expenses
Direct operating expenses for the three months ended September 30, 2025 decreased by $5.0 million, or 6.0%, as compared to the same period in 2024. Broadcast Advertising direct operating expenses decreased by $4.9 million, or 12.8%, and Subscription Digital Marketing Solutions direct operating expenses decreased by $1.5 million, or 10.8%, each due to lower compensation as compared to the same period a year ago. These decreases were partially offset by a $1.5 million, or 5.1%, increase in Digital Advertising direct operating expenses due to higher compensation and inventory costs, partially offset by lower bad debt as compared to the same period in 2024.
Segment Profit
Segment profit for the three months ended September 30, 2025 decreased by $3.5 million, or 11.2%, when compared with the same period in 2024. Broadcast Advertising segment profit decreased $2.6 million, or 16.3%, primarily due to the decrease in net revenue, including the loss of political net revenue. Digital Advertising segment profit decreased $2.2 million, or 20.1%, as compared to the same period in 2024, primarily due to the increase in compensation and inventory costs. These decreases were partially offset by an increase in Subscription Digital Marketing Solutions segment profit of $1.1 million, or 21.1% as compared to the same period in 2024, primarily due to the decrease in compensation. Other segment profit increased $0.2 million, or 45.8%.
Transaction and Business Realignment Costs
Transaction and business realignment costs for the three months ended September 30, 2025 increased $6.2 million, as compared to the same period in 2024, primarily due to the costs associated with a change in the provider for listing management tools supporting the Subscription Digital Marketing Solutions segment and the August 2025 settlement between the Radio Music License Committee and performing rights organizations related to music license royalty payments from 2022 through June of 2025.
Impairment of Investments, Goodwill and Long-lived Assets
The Company incurred no impairment charges related to FCC licenses during the three months ended September 30, 2025, and 2024. For further discussion, see Note 5, Goodwill and Other Intangible Assets,in the Notes to Unaudited Consolidated Financial Statements.
Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would cause the estimated fair values of our FCC licenses to decrease by $26.5 million which would have resulted in an incremental impairment charge of $0.3 million as of September 30, 2025. Further, a 100-basis point decline in the long-term revenue growth rate would cause the estimated fair values of our FCC licenses to further decrease by $13.8 million which would have resulted in an impairment charge of $0.4 million as of September 30, 2025. Finally, a 100-basis point decline in operating profit margins would result in a decrease in the estimated fair values of our FCC licenses of $10.7 million which would result in an incremental impairment charge of $0.8 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast radio operations. In the event broadcast radio revenue experiences actual or anticipated declines, in excess of these assumptions, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.
During the third quarter of 2025, in connection with an interim goodwill impairment assessment, the Company concluded that the carrying amount of the National Digital reporting unit exceeded its fair value, resulting in the recognition of a non-cash goodwill impairment charges of $3.0 million for the three months ended September 30, 2025. An interim impairment assessment was considered necessary as a result of declines in forecasted revenues and profit and increases in the weighted average cost of capital. Following the non-cash goodwill impairment charge, the National Digital reporting unit had $3.5 million of goodwill remaining as of September 30, 2025. The Company did not identify indicators of impairment related to any other reporting unit that would have required an interim impairment assessment during the three months ended September 30, 2025.
During the three months ended September 30, 2024, the Company concluded that the carrying amount of the Live Events reporting unit exceeded its fair value resulting in the recognition of a non-cash goodwill impairment charge of $1.7 million.
For further discussion, see Note 5, Goodwill and Other Intangible Assets,in the Notes to Unaudited Consolidated Financial Statements.
During the three months ended September 30, 2024, the Company recorded an impairment charge of $0.2 million related to one of its equity securities, which is measured at cost minus impairment.
Net Gain on Sale and Retirement of Assets
During the three months ended September 30, 2025, the Company recognized $1.6 million in net gains on the sales of property and leased assets in several markets, including a $0.7 million gain on the sale of property in the Bismarck, ND market.
Interest Expense, net
The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):
| Three Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| 2026 Notes | $ | - | $ | 8,327 | |||||||
| Term Loan | 11,061 | - | |||||||||
| Revolver | 85 | - | |||||||||
| Capital leases and other | 212 | 283 | |||||||||
| Deferred financing costs | 237 | 586 | |||||||||
| Debt discount amortization | 1,011 | - | |||||||||
| Interest income | - | (21) | |||||||||
| Interest expense, net | $ | 12,606 | $ | 9,175 | |||||||
Benefit for income taxes
We recognized benefit for income taxes of $1.1 million for the three months ended September 30, 2025, as compared to $5.1 million for the same period in 2024. Our effective tax rate for the three months ended September 30, 2025 and 2024 was approximately 16.2% and 82.6%, respectively. The decrease in the effective tax rate and tax benefit for the three months ended September 30, 2025 is primarily driven by the decrease in the valuation allowance for interest expense carryforwards resulting from an increase in deductible interest expense pursuant to the OBBBA tax law change and non-deductible compensation costs.
Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.
Consolidated Results of Operations
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
The following table summarizes our historical consolidated results of operations:
| ($ in thousands) |
Nine Months Ended September 30, |
||||||||||||||||||||||
| Statement of Operations Data: | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 320,882 | $ | 333,169 | $ | (12,287) | (3.7) | % | |||||||||||||||
| Direct operating expenses, excluding depreciation, amortization, and stock-based compensation | 237,403 | 246,201 | (8,798) | (3.6) | % | ||||||||||||||||||
| Depreciation and amortization | 13,619 | 14,896 | (1,277) | (8.6) | % | ||||||||||||||||||
| Corporate expenses | 16,905 | 17,762 | (857) | (4.8) | % | ||||||||||||||||||
| Stock-based compensation | 11,044 | 14,062 | (3,018) | (21.5) | % | ||||||||||||||||||
| Transaction and business realignment costs | 10,718 | 3,683 | 7,035 | 191.0 | % | ||||||||||||||||||
|
Impairment of intangible assets, goodwill, investments and long-lived assets
|
4,598 | 36,264 | (31,666) | (87.3) | % | ||||||||||||||||||
| Net gain on sales and retirements of assets | (7,524) | (66) | (7,458) | ** | |||||||||||||||||||
| Total operating costs and expenses | 286,763 | 332,802 | (46,039) | (13.8) | % | ||||||||||||||||||
| Operating income | 34,119 | 367 | 33,752 | ** | |||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 35,497 | 27,418 | 8,079 | 29.5 | % | ||||||||||||||||||
| Loss (gain) on repayments, repurchases and extinguishment of debt | 1,205 | (11) | 1,216 | ** | |||||||||||||||||||
| Other expense (income), net | 226 | (4,974) | 5,200 | ** | |||||||||||||||||||
| Loss from operations before income taxes | (2,809) | (22,066) | 19,257 | (87.3) | % | ||||||||||||||||||
| Income tax provision | 2,191 | 13,903 | (11,712) | (84.2) | % | ||||||||||||||||||
| Net loss | $ | (5,000) | $ | (35,969) | $ | 30,969 | (86.1) | % | |||||||||||||||
** not meaningful
Segment Results
The following table presents the Company's reportable segment net revenue, direct operating expenses and segment profit for the nine months ended September 30, 2025 and 2024 (in thousands):
| Net Revenue | Direct Operating Expenses | Segment Profit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Advertising | $ | 119,517 | $ | 116,541 | $ | 2,976 | 2.6 | % | $ | 92,082 | $ | 87,665 | $ | 4,417 | 5.0 | % | $ | 27,435 | $ | 28,876 | $ | (1,441) | (5.0) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription Digital Marketing Solutions | 56,438 | 55,848 | 590 | 1.1 | % | 37,812 | 40,251 | (2,439) | (6.1) | % | $ | 18,626 | $ | 15,597 | 3,029 | 19.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Broadcast Advertising | 137,581 | 154,198 | (16,617) | (10.8) | % | 100,583 | 111,442 | (10,859) | (9.7) | % | 36,998 | 42,756 | (5,758) | (13.5) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 7,346 | 6,582 | 764 | 11.6 | % | 6,926 | 6,843 | 83 | 1.2 | % | 420 | (261) | 681 | ** | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 320,882 | $ | 333,169 | $ | (12,287) | (3.7) | % | $ | 237,403 | $ | 246,201 | $ | (8,798) | (3.6) | % | $ | 83,479 | $ | 86,968 | $ | (3,489) | (4.0) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net Revenue
Net revenue for the nine months ended September 30, 2025, decreased $12.3 million, or 3.7%, as compared to the same period in 2024. Broadcast Advertising net revenue decreased $16.6 million, or 10.8%, due to decreases in the purchases of advertising by our clients and political revenue. This decrease was partially offset by an increase in Digital Advertising net revenue of $3.0 million, or 2.6%, an increase in Other net revenue of $0.8 million, or 11.6%, and an increase in Subscription Digital Marketing Solutions net revenue of $0.6 million, or 1.1%.
Direct Operating Expenses
Direct operating expenses for the nine months ended September 30, 2025, decreased by $8.8 million, or 3.6%, as compared to the same period in 2024. Broadcast Advertising direct operating expenses decreased by $10.9 million, or 9.7%, primarily driven by lower compensation and insurance costs, as well as lower music license fees. Subscription Digital Marketing Solutions direct operating expense decreased by $2.4 million or 6.1%, primarily due to lower compensation, partially offset by higher software costs. These decreases were partially offset by an increase in Digital Advertising direct operating expenses of $4.4 million, or 5.0%, due to higher inventory and compensation costs, partially offset by lower bad debt expense.
Segment Profit
Segment profit for the nine months ended September 30, 2025, decreased by $3.5 million, or 4.0%, when compared with the same period in 2024. Broadcast Advertising segment profit decreased $5.8 million, or 13.5%, primarily due to the decline in net revenue, including the loss of political net revenue, and Digital Advertising segment profit decreased $1.4 million, or 5.0%, due to the increases in direct operating expenses discussed above. These decreases were partially offset by a $3.0 million, or 19.4% increase in Subscription Digital Marketing Solutions segment profit, primarily due to the decrease in direct operating expenses, and a $0.7 million increase in Other segment profit.
Stock-based Compensation
Stock-based compensation expense for the nine months ended September 30, 2025, decreased $3.0 million, or 21.5%, as compared to the same period in 2024, due to $4.6 million of expense recognized for the cash settlement of options in 2024 that did not reoccur in 2025. This was partially offset by an $0.7 million increase in expense recognized for grants during 2025 and an $0.9 million increase in expense related to the stock bonus program. For further discussion, see Note 9, Stockholders' Equity,in the Notes to Unaudited Consolidated Financial Statements.
Transaction and Business Realignment Costs
Transaction and business realignment costs for the nine months ended September 30, 2025 increased $7.0 million, as compared to the same period in 2024, primarily due to the costs associated with a change in the provider for listing management tools supporting the Subscription Digital Marketing Solutions segment and the August 2025 settlement between the Radio Music License Committee and performing rights organizations related to music license royalty payments from 2022 through June of 2025.
Impairment of Intangible Assets, Investments, Goodwill and Long-Lived Assets
The Company incurred $1.5 million in impairment charges related to FCC licenses 4 of our 74 local markets during the nine months ended September 30, 2025, as compared to impairment charges of $29.7 million related to FCC licenses in 26 of our 74 local markets during the nine months ended September 30, 2024. The impairment charges during the nine months ended September 30, 2025, were primarily driven by decreases in third-party forecasts of broadcast revenue. For further discussion, see Note 5, Goodwill and Other Intangible Assets,in the Notes to Unaudited Consolidated Financial Statements.
During the third quarter of 2025, in connection with an interim goodwill impairment assessment, the Company concluded that the carrying amount of the National Digital reporting unit exceeded its fair value, resulting in the recognition of a non-cash goodwill impairment charges of $3.0 million for the nine months ended September 30, 2025. An interim impairment assessment was considered necessary as a result of declines in forecasted revenues and profit and increases in the weighted average cost of capital. Following the non-cash goodwill impairment charge recognized during the nine months ended September 30, 2025, the National Digital reporting unit had $3.5 million of goodwill remaining as of September 30, 2025. The Company did not identify indicators of impairment related to any other reporting unit that would have required an interim impairment assessment during the nine months ended September 30, 2025 .
During the nine months ended September 30, 2024, in connection with interim goodwill impairment assessments, the Company recognized total non-cash goodwill impairment charges of $4.4 million related to the National Digital and Live Events reporting units.
For further discussion, see Note 5, Goodwill and Other Intangible Assets,in the Notes to Unaudited Consolidated Financial Statements.
During the nine months ended September 30, 2024, the Company recorded total impairment charges of $1.8 million related to certain of its equity securities, which are measured at cost minus impairment.
Net Gain on Sale and Retirement of Assets
During the nine months ended September 30, 2025, the Company recognized $7.5 million in net gains on the sales of property and leased assets in several markets, including a $5.6 million and $0.7 million gain on the sales of property in the Boise, ID and Bismarck, ND markets, respectively.
Interest Expense, net
The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):
|
Nine Months Ended September 30, |
|||||||||||
| 2025 | 2024 | ||||||||||
| 2026 Notes | $ | 4,282 | $ | 25,568 | |||||||
| Term Loan | 26,893 | - | |||||||||
| Revolver | 362 | - | |||||||||
| Capital leases and other | 702 | 923 | |||||||||
| Deferred financing costs | 802 | 1,576 | |||||||||
| Debt discount amortization | 2,456 | - | |||||||||
| Interest income | - | (649) | |||||||||
| Interest expense, net | $ | 35,497 | $ | 27,418 | |||||||
Loss (gain) on Extinguishment of Debt
During the nine months ended September 30, 2025, the Company recognized a $1.2 million net loss on the early extinguishment of debt, comprised of the write-off of $1.5 million of unamortized deferred financing fees previously capitalized in connection with the 2026 Notes, partially offset by a $0.2 million net gain on the voluntarily repayment of an aggregate $5.8 million principal amount of Term Loan below par, plus accrued interest during the nine months ended September 30, 2025. For further discussion, see Note 7, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.
Other expense (income), net
Realized Gain on Investment
In February of 2024, one of the Company's investees announced the completion of its acquisition by a third-party. The Company recognized a $4.0 million gain on this transaction during the nine months ended September 30, 2024.
Insurance Recoveries
During the nine months ended September 30, 2024, the Company recorded total insurance recoveries of $0.3 million related to construction and flood damages in two of its local markets.
Unrealized Gain on Investment
Other expense (income), net included unrealized gains related to measuring the fair value of one of the Company's former investees. During the nine months ended September 30, 2024, the Company recorded an unrealized net gain of $0.2 million.
Provision for income taxes
We recognized a provision for income taxes of $2.2 million for the nine months ended September 30, 2025, as compared to $13.9 million for the same period in 2024. Our effective tax rate for the period was approximately 78.0% for the nine months ended September 30, 2025 as compared to 63.0% for the nine months ended September 30, 2024. The effective tax rate for the nine months ended September 30, 2025 is driven by the decrease in the valuation allowance for interest expense carryforwards resulting from an increase in deductible interest expense pursuant to the OBBBA tax law change in the current year period and higher non-deductible compensation costs in the nine months ended September 30, 2024.
The decrease in the tax provision for the nine months ended September 30, 2025, as compared to the same period in 2024, is driven by the decrease in the valuation allowance for interest expense carryforwards resulting from an increase in deductible interest expense pursuant to the OBBBA tax law change in the current year period and a greater valuation allowance for interest expense carryforwards resulting from higher non-cash impairment charges and non-deductible compensation costs recorded in the prior year period.
Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21.0%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.
Liquidity and Capital Resources
The following table summarizes our change in cash and cash equivalents (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
|
Cash and cash equivalents
|
$ | 3,211 | $ | 21,786 | |||||||
|
Restricted cash
|
323 | 509 | |||||||||
|
Cash provided by operating activities
|
18,009 | 20,557 | |||||||||
|
Cash used in investing activities
|
(3,391) | (7,606) | |||||||||
|
Cash used in financing activities
|
(44,074) | (52,205) | |||||||||
|
Net decrease in cash and cash equivalents and restricted cash
|
$ | (29,456) | $ | (39,254) | |||||||
Operating Activities
Net cash provided by operating activities was approximately $18.0 million for the nine months ended September 30, 2025, as compared to $20.6 million for the same period in 2024. The decrease was primarily related to higher cash interest payments in 2025, partially offset by changes in working capital balances, particularly accounts receivable, accounts payable and accrued expenses.
Investing Activities
Net cash used in investing activities was $3.4 million for the nine months ended September 30, 2025 as compared $7.6 million for the same period in 2024. The decrease in net cash used in investing activities was primarily due to an increase of $2.6 million in net proceeds from sales of assets and investment related transactions and a $2.0 million decrease in purchases of property and equipment.
Financing Activities
Net cash used in financing activities was $44.1 million for the nine months ended September 30, 2025, as compared to $52.2 million for the same period in 2024. The primary differences in net cash used in financing activities in 2025 as compared to 2024 include:
•the repayment of $467.4 million of principal amount of the 2026 Notes, offset by proceeds from the Term Loan of $441.7 million, net of fees and expenses;
•total Term Loan repayments of $11.1 million, as compared to voluntary repurchases of 2026 Notes in the amount of $24.5 million in 2024;
•$5.0 million in net borrowings under the Revolver;
•$1.5 million of shares repurchased to cover employee tax withholdings on restricted stock that vested during the nine months ended September 30, 2025, as compared to $23.6 million for repurchases of common stock during the nine months ended September 30, 2024, and
•a $6.4 million decrease in proceeds from stock option exercises for the nine months ended September 30, 2025 as compared to the same period a year ago.
Sources of Liquidity and Anticipated Cash Requirements
We fund our working capital requirements through a combination of cash flows from our operating, investing, and financing activities. Based on current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash on hand and cash flows from our operating, investing, and financing activities will enable us to meet our working capital, capital expenditures, debt service, and other funding requirements for at least one year from the date of this report. Future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, some of which are beyond our control. We have focused on and will continue to monitor our liquidity in response to current and future economic challenges and uncertainty.
As of September 30, 2025, we had $437.6 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $25.8 million.
During the nine months ended September 30, 2025, the Company voluntarily repaid an aggregate $5.8 million principal amount of its Term Loan, below par plus accrued interest.
Based on the terms of our Senior Secured Credit Facility, as of September 30, 2025, we expect our mandatory debt service requirements to be approximately $53.7 million over the next twelve months. See Note 7, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our Senior Secured Credit Facility.
As of September 30, 2025 we had $3.2 million of cash and cash equivalents, and $55.5 million of receivables from customers, which historically have had an average collection cycle of approximately 50 days.
On August 4, 2025, the board of directors approved a quarterly cash dividend of $0.20 per share. The dividend of $3.3 million was paid to holders of record as of October 27, 2025, on November 3, 2025.
On October 29, 2025, the board of directors approved a quarterly cash dividend of $0.20 per share. The dividend will be payable on February 2, 2026 to shareholders of record as of the close of business on January 26, 2026.
Our anticipated uses of cash in the near term include working capital needs, interest payments, debt amortization payments, dividend payments, excess cashflow payments that may be required under the terms of the Credit Agreement, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, interest payments, debt payments, dividend payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in debt service obligations. Such debt instruments could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.
Additionally, on a continuing basis, we evaluate and consider strategic acquisitions and divestitures to enhance our strategic and competitive position as well as our financial performance. Any future acquisitions, joint ventures or other similar transactions may require additional capital, which may not be available to us on acceptable terms, if at all.
We closely monitor the impact of capital and credit market conditions on our liquidity and our ability to refinance in the future. We also routinely monitor the changes in the financial condition of our customers and the potential impact on our results of operations.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements or transactions.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our significant estimates, including those related to determining the fair value of assets and liabilities acquired in a business combination, impairment testing of intangible assets, valuation and impairment testing of long-lived tangible assets, the present value of leasing arrangements, share-based payment expense and the calculation of allowance for doubtful accounts and income taxes. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the result of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the Consolidated Financial Statements. Actual results could differ from such estimates, and any such differences may be material to our financial statements.
We believe the accounting policies and estimates discussed within "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K reflects our more significant judgments and estimates used in the preparation of the Consolidated Financial Statements. There have been no material changes to the critical accounting policies and estimates as filed in such report.
Recent Accounting Standards
For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please refer to Note 2, Summary of Significant Accounting Policiesof the Notes to Unaudited Consolidated Financial Statements included under Item 1.
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