Townsquare’s Buyer

Townsquare has put itself up for sale.

A book is out.

Nosy competitors are kicking tires and signing non-disclosure forms pertaining to the details.

Chief financial backer Oaktree Capital has grown long in the tooth with this investment way beyond the usual five to seven years’ venture capital likes to hold positions in their investments.

Townsquare is selling at a difficult time.

Industry revenue has been trending downward.

There’s competition from digital and social media for radio dollars.

And Townsquare’s play to be more than just a radio company – in fact, an events and digital operation – has not been that successful.

So who will buy Townsquare?

  • Odd time to sell – Townsquare and its mastermind Steven Price are in the enviable position where their bonds do not come due for another 5 years.  Oaktree probably wanted to get out and Townsquare had the obligation to try and put a book out to gauge interest. 
  • Another oddity – Townsquare continues to buy stations – They recently announced some accretive acquisitions in Massachusetts – all this as they at least on the surface go through the motions of trying to find a buyer.  The main reason Townsquare is buying stations as they are looking to get out of their investment is because they don’t have to sell – another enviable position. 
  • Oaktree could get out if all else fails – They could sell their position and by knowing the price of the entire company on the market, they could become whole again.  Or not.  Investment companies often hold on to bad investments (example: investments that are declining in value) because they are able to generate revenue in other ways.  iHeart owner Bain is going to eventually lose their considerable investment but will get 2% fees until the very end. 
  • Merger? – Townsquare could be part of a future merger with another group.  They have very small markets and could increase the scale if they were to merge with a group – say, Cumulus – that also has major markets.  Their biggest markets are cities like Tyler, TX and Lafayette, LA.  Beasley is another group that is in a must-merge situation but they are having so much trouble running their company right now that it is hard to believe they could handle a diverse radio and events group such as Townsquare. 
  • Their big markets are underperforming – Tyler, TX was down 19% this spring year to year because of cheap oil and Lafayette, LA was in the storm path of hurricane Harvey which could bring a mini-boom later but more likely losses for the next six months. 
  • Owners cannot sell Townsquare – If anyone sells for less than the multiple leverage, they lose.  To do this would be to be, as brokers call it “burning the furniture”.  
  • Townsquare will sell some markets – If they can.  These will be the markets that have little effect on their cash flow and because of that the list of buyers will be limited.  Also the asking price will be depressed.

Townsquare is a radio company that sold itself as not a radio company, but because heavy competition in events marketing and questionable growth in digital did not save the day, they are still a radio company.

One that is ostensibly for sale, but one with no possible buyer or way out of their investment.

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