October 27, 2015
It's tempting to look at the radio environment solely in terms of the biggest radio groups battling it out in the major markets - but that would be a mistake. A lot of action - with positive results - is happening at the medium and small-market level, where the diary still reigns supreme. Townsquare Media is one of the leading radio groups on that turf, and as Chairman/CEO Steven Price can attest, they're more than holding their own developing live-and-local air personalities, creating distinctive digital properties and generating positive results for their advertisers. Here, Price explains what makes Townsquare tick...
What made you decide to leave the private equity field to help start Townsquare?
In 2009, during all that economic dislocation, I thought it was an interesting time to make an investment and build a business in the traditional media space. I thought that you could find a company with good assets that was undervalued because of its balance sheet, the economic dislocation or investor perception, where the company was seen to be in trouble, but we thought still had a strong future -- and we did. It was just a really interesting time to build a business. So I left private equity, teamed up with Stu Rosenstein and decided to invest in radio. We found that Regent Broadcasting was available, and that led us into the creation of Townsquare.
Did you have any radio history before acquiring Regent ... and what was your strategy for growth with the company thereafter?
I knew radio from my family, who have been in the media business, and even owned radio stations. So growing up, I had some familiarity with radio. Even so, when I left private equity, I didn't assume I'd buy radio -- I was looking for a business in the traditional media space, which also had a future in the connected digital world. I started looking at lots of different radio stations, and thought small-market radio was in the best position. It was very stable, tied in with local advertisers, with live and local DJs to reach into the community. Our strategy was to continue to stay very relevant in the community by having DJs talk about whatever was relevant in Tyler, TX; Boise, or Missoula, MT. We would be closely involved with the communities, local charities and local Chambers of Commerce.
What's more, radio is a good platform to build a diversified, growing media company. That strategy started in 2010, when the economic climate allowed us to buy those stations at a price that made them an effective investment ... then we built from there.
Did you have specific properties in mind when you started building the radio group, or was it more of taking advantage of what became available?
A bit of both, because our goal wasn't just to build an exciting and thriving radio company, but to build a diversified media and entertainment company. In order to do that, we wanted to buy a very dominant, powerful cluster, typically the #1 or #2 radio cluster in the market with heritage brands and top on-air personalities. That's not easy to find; you can go buy small clusters in markets that didn't have top ratings or popular live-and-local personalities, but that wouldn't work for us. We had to pick and choose, and be selective in the acquisitions we made. We wanted stations that had market leadership, reached at least half the community, with good sales talent and on-air talent. Finding those stations took a bit of time; we had to wait and see what was right. We didn't just buy anything that was available.
At the same time you were growing the radio group, you were also building Townsquare's digital profile. Did you have a detailed digital strategy from the start, and how did that plan work out as you grew your business?
The vast majority of digital properties were built organically. Although I wasn't opposed to buying digital, the majority of our digital business started from scratch. We have been able to leverage our on-air talent and local sales staff in the building with our digital business in the market -- broadly in the music entertainment space. Other than acquisitions such as Comics Alliance and XXL, the latter a leading hip-hop brand, most of our digital properties were built organically with our technology team and our team of editors. We've also built great content for our station websites that has engaged their listeners.
In terms of priorities, how much investment do you put into radio and how much into digital? And how will that ratio change in the future?
We don't differentiate between the local radio station, its website and the local digital business -we use the same content creators and talent, whether on-air or online. The same sales force is selling both platforms to the local businesses, so both can and should be growing simultaneously. We're still investing in radio with new shows, new personalities and new sales training, while we continue to invest in digital, video and mobile -- all our social opportunities that advertisers want to be in. That's why we build a diversified platform.
As you mentioned earlier, you wanted Townsquare to concentrate on small and medium markets. Do you enjoy that playing field better, or was it more due to the fact that major-market opportunities are too expensive, or too few and far between?
We're quite content playing in the small-media market. That's a terrain we know and understand. I've been comfortable selling our strategy to local advertisers from the beginning. I've never looked at buying stations in New York, Los Angeles or Chicago. I know people who do that for a living, and to be quite candid, they know how to run it better. We really focus on sticking to our knitting, being in the small and medium markets.
Your markets still use the diary. Are you happy working under that kind of monitoring?
From our standpoint, it's something measurable that we can still improve on. We can work with Nielsen to get them to constantly improve the accuracy, the number of people in their samples, and how they monitor stream engagement.
If there was a perfect measurement, we'd already be using it. It's not unlike the advantages digital properties have over radio. The concept of digital monitoring hurts the stations and entire radio industry with national advertisers, because monitoring is much more concrete in the digital world than the radio world. We rely on direct accessibility and measurability. The other media issues concern PPM markets.
Has the current Voltair/PPM enhancement brouhaha impacted your efforts to get Nielsen to keep improving the diary process?
I don't know. To be completely honest, I haven't spent a lot of time thinking about how Nielsen is focusing on their PPM markets and Voltair, because that doesn't apply to us. We're focused on doing the things that make a difference to us, our consumers and our advertisers. Those are some of the things we can control in the markets we operate in.
How do your "live-and-local" stations effectively compete against the bigger names who are syndicated and/or voicetracked?
Live-and-local is an important part of our strategy. The more experience we have with live-and-local personalities, the more we believe it's a wiser long-term approach that better serves listeners, advertisers and clients. You need local personalities to go into the community and talk about the things that are relevant to the people there, from what's going on in town to the hot issues of the moment. With a lot of newspapers cutting back to three days a week and with paywalls on their websites, and TV stations cutting back on local news, local radio is becoming a more important source of news, information and weather. We want to continue to provide that to our markets; we feel it's a big differentiator against audio competition.
Where do you find the new talent to be live-and-local stars, and how do you develop them nowadays?
We think about that a lot, about finding ways to bring younger talent in and putting them on different stations and dayparts, to groom them for bigger dayparts on our bigger stations. We hope that young people and even not-so-young people continue to want to join the radio business and be on-air. But it's not just on-air anymore. Not only must you be good on-air, you also have to be good online and have a big social, mobile and video presence. Any DJ should think of him or herself as a multimedia personality, engaging with audiences across platforms. We believe good young talent can come here to start out and create their own careers.
A lot of industry researchers and consultants believe that advertisers ignore the medium's unparalleled reach and still advertise in other media. Do you agree with that assessment, and what do you believe is the best way at attract advertiser interest?
I do agree with that. I know it's frustrating not just to me, but to lots of people in the industry, who see the industry's misperception on Madison Avenue. Radio has always been the dominant form of local media, and we see that in lots of recent studies. We've studied our audience and found them to be remarkably stable. Over 91% of Americans listen to radio for over two hours a day. That number has been pretty stable, which proves that radio is relevant and resilient.
What's Townsquare's opinion of NextRadio and the FM chip?
We're fully supportive of NextRadio and the FM chip -- anything that increases the listeners' ability to access FM on mobile devices is hugely popular for us and the industry as a whole. What Jeff Smulyan and others have done is great; we hope to continue their momentum and convince Apple and other carriers to activate the FM chip and give consumers a real choice. I'm not sure what they're afraid of ... a little competition won't hurt. The fact that they don't activate the chips shows that they're aware of the power of radio.
Why did you decide to take Townsquare public - and how has doing so impacted the company?
It hasn't impacted our company. I talked to our employees and management about it, and told them that nothing will change in how we operate and run our business. We were thinking about how it affects us short vs. long term, and that hasn't changed, either. It's not just something that's only in the best interest of the shareholders and debt holders. A year ago, I thought it was the right time -- and we had the right scale -- to benefit from being a public company, to take advantage of a stock issue as a public company, which increases our access to capital.
What do you see happening with Townsquare in the future - more station acquisitions? More investment in digital?
All of the above. We'd like to continue to grow. The ambitions of this company with a bottom-up management team is to take advantage of lots of organic opportunities to grow the business in a diversified field of radio, digital and events. We're continuing on our course to organically start new things, product lines and initiatives. When it comes to possible radio acquisitions, if it's the right group or right cluster, we're absolutely going to take a look at that. I'm not sure how much different the company will be in the future. Our trajectory may be different, but we'll continue to be diversified in the field of entertainment.