In August 2016, Townsquare Media was on a slightly different path. Its Chairman and CEO was Steven Price. “The potential expansion of Townsquare’s live offerings” was so strong that Madison Square Garden Company, owner of some of the nation’s top entertainment venues and three pro sports teams, acquired an approximately 12 percent common equity stake in the publicly traded company.
Now, MSG National Properties LLC is shedding a big chunk of its stake in Townsquare, thanks to a repurchasing agreement executed by the owner of local radio stations in mid-sized and small-sized markets as well as a digital marketing solutions company and a digital advertising network.
Effective April 1, Townsquare Media is buying — and retiring — some 1.5 million shares of Class A shares of “TSQ,” which trades on the NYSE, held by MSG National Properties LLC.
The strike price is at $9.76 per share — a significant discount from the $10.98 closing price seen on March 28 and an even bigger value than the price seen for TSQ in pre-market trading as of 8:23am on Monday: $11.57.
This transaction is the second to involve MSG seen in the last 12 months. Importantly, this fresh stock buyback effectively reduces MSG’s stake to minimal. In June 2023, Townsquare repurchased 1.5 million shares of “TSQ” from MSG at $9.70 per share, and that lowered the MSG stake in Townsquare Media to 583,139 shares of Class A Common Stock and 1,125,000 shares of Class C Common Stock.
Townsquare Media CEO Bill Wilson says his company is “very pleased” that it was able to repurchase nearly 10% of its total shares outstanding “in an immediately accretive transaction” for shareholders.
Since 2021, Townsquare has been reducing its leverage through stock repurchases, which total 16.2 million shares at an average price of $7.19. This includes the March 2021 repurchase of 12.6 million shares and warrants from Oaktree Capital Management L.P. at $6.40 per share.
Wilson commented, “The strong cash generation characteristics of our business model, which produced $68 million of cash flow from operations in 2023, has afforded us the opportunity to accretively repurchase equity and debt, while also investing internally in our digital growth engine,” he said. “In addition, we introduced a high-yielding dividend in 2023, and recently increased it by 5%. Our dividend has a yield of 7% as of March 28.”
With a cash balance of $40 million following the MSG transaction, Wilson believes Townsquare “will retain financial flexibility moving forward and we are confident in our ability to build shareholder value for our investors through long-term net revenue,
Adjusted EBITDA and cash flow growth, net leverage reduction, future dividend payments, and potential future share repurchases.”
Townsquare now has 15.2 million shares outstanding.
GUIDANCE REAFFIRMED
Along with the news of the stock buyback, net revenue guidance for Q1 2024 was given another thumbs’ up, and is forecast by Townsquare Media to come in between $98.5 million and $100 million.
Adjusted EBITDA guidance is reaffirmed to be between $17.5 million and $18.5 million.
Additionally, FY 2024 net revenue guidance is reaffirmed to be between approximately $440 million and $460 million, while Adjusted EBITDA guidance is reaffirmed to be between $100 million and $110 million.
