UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission file number 001-36558

Townsquare Media, Inc.

(Exact name of registrant as specified in its charter)

Delaware		27-1996555
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Manhattanville Road
Suite 202
Purchase,	New York	10577
(Address of Principal Executive Offices, including Zip Code)

(203) 861-0900

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	TSQ	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

As of November 1, 2024, the registrant had 15,547,213 outstanding shares of common stock consisting of: (i) 14,231,917 shares of Class A common stock, par value $0.01 per share and (ii) 815,296 shares of Class B common stock, par value $0.01 per share; and (iii) 500,000 shares of Class C common stock, par value $0.01 per share.

TOWNSQUARE MEDIA, INC.

INDEX

PART I FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	2
	Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023	3
	Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2024 and 2023	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	6
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 4.	Controls and Procedures	40
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
	Signatures	43

1

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

TOWNSQUARE MEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(in Thousands, Except Share and Per Share Data)

	September 30, 2024		December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	21,786	$	61,046
Accounts receivable, net of allowance for credit losses of $4,131 and $4,041, respectively	57,654		60,780
Prepaid expenses and other current assets	12,759		10,356
Total current assets	92,199		132,182
Property and equipment, net	110,428		110,194
Intangible assets, net	165,179		200,306
Goodwill	152,903		157,270
Investments	975		3,542
Operating lease right-of-use assets	42,460		46,887
Other assets	763		1,165
Restricted cash	509		503
Total assets	$	565,416	$	652,049
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,799	$	5,036
Deferred revenue	9,092		9,059
Accrued compensation and benefits	12,007		13,085
Accrued expenses and other current liabilities	26,986		25,112
Operating lease liabilities, current	9,487		9,376
Accrued interest	5,501		14,420
Total current liabilities	66,872		76,088
Long-term debt, net of deferred finance costs of $2,234 and $3,960, respectively	476,702		499,658
Deferred tax liability	25,163		11,856
Operating lease liability, net of current portion	38,153		41,437
Other long-term liabilities	10,989		13,099
Total liabilities	617,879		642,138
Stockholders’ equity:
Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 15,196,963 and 14,023,767 shares issued and outstanding, respectively	152		140
Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and 815,296 shares issued and outstanding, respectively	8		8
Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 500,000 and 1,961,341 shares issued and outstanding, respectively	5		20
Total common stock	165		168
Treasury stock, at cost; 965,399 and 183,768 shares of Class A common stock, respectively	(11,218)		(2,177)
Additional paid-in capital	304,097		310,612
Accumulated deficit	(349,000)		(302,193)
Non-controlling interest	3,493		3,501
Total stockholders’ equity	(52,463)		9,911
Total liabilities and stockholders’ equity	$	565,416	$	652,049

See Notes to Unaudited Consolidated Financial Statements

2

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in Thousands, Except Per Share Data)

(unaudited)

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2024		2023		2024		2023
Net revenue	$	115,311	$	115,104	$	333,169	$	339,445
Operating costs and expenses:
Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	83,794		81,323		246,201		245,301
Depreciation and amortization	4,947		4,717		14,896		14,496
Corporate expenses	6,063		6,604		17,762		18,911
Stock-based compensation	2,867		2,350		14,062		6,228
Transaction and business realignment costs	645		161		3,683		764
Impairment of intangible assets, investments, goodwill and long-lived assets	2,008		30,970		36,264		65,697
Net gain on sale and retirement of assets	(110)		(362)		(66)		(703)
Total operating costs and expenses	100,214		125,763		332,802		350,694
Operating income (loss)	15,097		(10,659)		367		(11,249)
Other expense (income):
Interest expense, net	9,175		9,343		27,418		28,215
Gain on repurchases of debt	(8)		(430)		(11)		(1,249)
Other income, net	(277)		(547)		(4,974)		(6,451)
Income (loss) from operations before tax	6,207		(19,025)		(22,066)		(31,764)
Income tax (benefit) provision	(5,129)		17,478		13,903		9,380
Net income (loss)	$	11,336	$	(36,503)	$	(35,969)	$	(41,144)
Net income (loss) attributable to:
Controlling interests	$	10,847	$	(36,999)	$	(37,261)	$	(42,620)
Non-controlling interests	$	489	$	496	$	1,292	$	1,476
Basic income (loss) per share	$	0.71	$	(2.27)	$	(2.38)	$	(2.52)
Diluted income (loss) per share	$	0.63	$	(2.27)	$	(2.38)	$	(2.52)
Weighted average shares outstanding:
Basic	15,296		16,277		15,650		16,897
Diluted	17,227		16,277		15,650		16,897

See Notes to Unaudited Consolidated Financial Statements

3

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in Thousands, Except Share Data)

(unaudited)

	Shares of Common Stock			Treasury Stock
	Class A	Class B	Class C	Class A
	Shares	Shares	Shares	Shares	Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Non- Controlling Interest		Total
Balance at January 1, 2024	14,023,767	815,296	1,961,341	183,768	$	168	$	(2,177)	$	310,612	$	(302,193)	$	3,501	$	9,911
Net income	—	—	—	—	—		—		—		1,136		417		1,553
Conversion of common shares(1)	1,961,341	—	(1,961,341)	—	—		—		—		—		—		—
Settlement of options(2)	—	—	—	—	—		—		(6,902)		—		—		(6,902)
Dividends declared ($0.1975 per share)	—	—	—	—	—		—		—		(3,158)		—		(3,158)
Stock-based compensation	—	—	—	—	—		—		2,162		—		—		2,162
Treasury stock acquired at cost(3)	—	—	—	396,759	—		(4,299)		—		—		—		(4,299)
Common stock issued under exercise of stock options	263,053	—	—	—	3		—		2,202		—		—		2,205
ESPP shares issued	42,360	—	—	—	—		—		403		—		—		403
Issuance of restricted stock(4)	143,737	—	—	—	1		—		(1)		—		—		—
Shares withheld to satisfy tax withholdings	(3,108)	—	—	—	—		—		(35)		—		—		(35)
Balance at March 31, 2024	16,431,150	815,296	—	580,527	$	172	$	(6,476)	$	308,441	$	(304,215)	$	3,918	$	1,840
Net (loss) income	—	—	—	—	—		—		—		(49,244)		386		(48,858)
Repurchase of stock(5)	(1,500,000)	—	—	—	(15)		—		(14,625)		—		—		(14,640)
Dividends declared ($0.1975 per share)	—	—	—	—	—		—		—		(3,174)		—		(3,174)
Stock-based compensation	—	—	—	—	—		—		2,717		—		—		2,717
Common stock issued under exercise of stock options	294,962	—	—	—	3		—		2,629		—		—		2,632
Treasury stock acquired at cost (3)	—	—	—	259,934	—		(3,353)		—		—		—		(3,353)
Issuance of restricted stock (4)	72,690	—	—	—	1		—		(1)		—		—		—
Cash distributions to non-controlling interests	—	—	—	—	—		—		—		—		(1,300)		(1,300)
Balance at June 30, 2024	15,298,802	815,296	—	840,461	$	161	$	(9,829)	$	299,161	$	(356,633)	$	3,004	$	(64,136)
Net income	—	—	—	—	—		—		—		10,847		489		11,336
Conversion of common shares (1)	(500,000)	—	500,000	—	—		—		—		—		—		—
Dividends declared ($0.1975 per share)	—	—	—	—	—		—		—		(3,214)		—		(3,214)
Stock-based compensation	—	—	—	—	—		—		2,005		—		—		2,005
Common stock issued under exercise of stock options	349,778	—	—	—	4		—		2,626		—		—		2,630
Treasury stock acquired at cost (3)	—	—	—	124,938	—		(1,389)		—		—		—		(1,389)
ESPP shares issued	33,486	—	—	—	—		—		305		—		—		305
Issuance of restricted stock (4)	14,897	—	—	—	—		—		—		—		—		—
Balance at September 30, 2024	15,196,963	815,296	500,000	965,399	$	165	$	(11,218)	$	304,097	$	(349,000)	$	3,493	$	(52,463)

(1) During the three months ended March 31, 2024, direct holders of Class C Common Stock converted approximately 2.0 million shares into an equal number of Class A Common Stock. During the three months ended September 30, 2024, direct holders of Class A Common Stock converted approximately 0.5 million shares into an equal number of Class C Common Stock. Except as expressly provided in our certificate of incorporation, the Class A common stock, Class B common stock and Class C common stock have equal economic rights and rank equally, share ratably and are identical in all respects as to all matters. Class C common stock is not redeemable, but is convertible 1:1 (including automatically upon certain transfers) into Class A common stock.

(2) During the three months ended March 31, 2024, the Company launched a program that offered certain holders a cash settlement of options. Refer to Note 9, Stockholders' Equity, in the accompanying Notes to Consolidated Financial Statements for additional information related to the settlement.

(3) Represents shares repurchased under the terms of the Company's stock repurchase plan pursuant to which the Company is authorized to repurchase up to $50 million of the Company’s issued and outstanding Class A common stock over a three-year period, the "2021 Stock Repurchase Plan." Refer to Note 9, Stockholders' Equity, in the accompanying Notes to Consolidated Financial Statements for additional information related to the stock repurchases.

4

(4) Refer to Note 9, Stockholders' Equity, in the accompanying Notes to Consolidated Financial Statements for additional information related to shares issued.

(5) On April 1, 2024, the Company repurchased 1.5 million shares of the Company’s Class A common stock. For further discussion on the repurchase, see Note 9, Stockholders' Equity, in the accompanying Notes to Consolidated Financial Statements.

	Shares of Common Stock			Treasury Stock
	Class A	Class B	Class C	Class A
	Shares	Shares	Shares	Shares	Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Non- Controlling Interest		Total
Balance at January 1, 2023	12,964,312	815,296	3,461,341	—	$	173	$	—	$	309,645	$	(244,298)	$	3,559	$	69,079
Net (loss) income	—	—	—	—	—		—		—		(2,421)		480		(1,941)
Dividends declared ($0.1875 per share)	—	—	—	—	—		—		—		(3,343)		—		(3,343)
Stock-based compensation	—	—	—	—	—		—		1,772		—		—		1,772
Common stock issued under exercise of stock options	5,000	—	—	—	—		—		31		—		—		31
ESPP shares issued	65,732	—	—	—	—		—		430		—		—		430
Issuance of restricted stock	82,263	—	—	—	1		—		(1)		—		—		—
Balance at March 31, 2023	13,117,307	815,296	3,461,341	—	$	174	$	—	$	311,877	$	(250,062)	$	4,039	$	66,028
Net (loss) income	—	—	—	—	—		—		—		(3,200)		500		(2,700)
Repurchase of stock	—	—	(1,500,000)	—	(15)		—		(14,535)		—		—		(14,550)
Dividends declared ($0.1875 per share)	—	—	—	—	—		—		—		(3,148)		—		(3,148)
Stock-based compensation	—	—	—	—	—		—		2,106		—		—		2,106
Common stock issued under exercise of stock options	551,121	—	—	—	5		—		4,272		—		—		4,277
Treasury stock acquired at cost (3)	—	—	—	89,568	—		(1,135)		—		—		—		(1,135)
Cash distributions to non-controlling interests	—	—	—	—	—		—		—		—		(1,499)		(1,499)
Balance at June 30, 2023	13,668,428	815,296	1,961,341	89,568	$	164	$	(1,135)	$	303,720	$	(256,410)	$	3,040	$	49,379
Net (loss) income	—	—	—	—	—		—		—		(36,999)		496		(36,503)
Dividends declared ($0.1875 per share)	—	—	—	—	—		—		—		(3,164)		—		(3,164)
Stock-based compensation	—	—	—	—	—		—		2,350		—		—		2,350
Common stock issued under exercise of stock options	132,314	—	—	—	2		—		1,130		—		—		1,132
Issuance of restricted stock	17,752	—	—	—	—		—		—		—		—		—
ESPP shares issued	45,977	—	—	—	1		—		298		—		—		299
Treasury stock acquired at cost (3)	—	—	—	94,200	—		(1,059)		—		—		—		(1,059)
Balance at September 30, 2023	13,864,471	815,296	1,961,341	183,768	$	167	$	(2,194)	$	307,498	$	(296,573)	$	3,536	$	12,434

See Notes to Unaudited Consolidated Financial Statements

5

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Thousands)

(unaudited)

	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(35,969)	$	(41,144)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14,896		14,496
Amortization of deferred financing costs	1,576		1,567
Non-cash lease (income) expense	(558)		69
Net deferred taxes and other	13,307		8,817
Allowance for credit losses	4,036		2,817
Stock-based compensation expense	14,062		6,228
Gain on repurchases of debt	(11)		(1,249)
Trade and barter activity, net	(993)		(1,352)
Impairment of intangible assets, investments, goodwill and long-lived assets	36,264		65,697
Realized gain on sale of digital assets	—		(839)
Gain on sale of investment	(4,054)		(5,210)
Unrealized gain on investment	(202)		493
Amortization of content rights	3,667		3,645
Change in content rights liabilities	(3,747)		(1,819)
Reimbursement of equipment modification costs	—		(1,487)
Other	1,837		(1,276)
Changes in assets and liabilities
Accounts receivable	(1,117)		(3,037)
Prepaid expenses and other assets	(1,516)		5,130
Accounts payable	(1,231)		646
Accrued expenses	(10,812)		(3,845)
Accrued interest	(8,920)		(9,443)
Other long-term liabilities	42		60
Net cash provided by operating activities	20,557		38,964
Cash flows from investing activities:
Purchases of property and equipment	(13,771)		(11,373)
Proceeds from sale of digital assets	—		2,975
Proceeds from insurance recoveries	336		721
Proceeds from sale of assets and investment related transactions	5,829		7,277
Net cash used in investing activities	(7,606)		(400)
Cash flows from financing activities:
Repurchases of 2026 Notes	(24,521)		(25,621)
Dividend payments	(9,267)		(6,285)
Proceeds from stock options exercised	7,252		5,440
Shares withheld in lieu of employee tax withholding	(35)		—
Withholdings for shares issued under the ESPP	708		729
Repurchases of stock	(23,551)		(16,645)
Cash distribution to non-controlling interests	(1,300)		(1,499)
Repayments of capitalized obligations	(1,491)		(140)
Net cash used in financing activities	(52,205)		(44,021)
Cash and cash equivalents and restricted cash:
Net decrease in cash, cash equivalents and restricted cash	(39,254)		(5,457)
Beginning of period	61,549		43,913
End of period	$	22,295	$	38,456

See Notes to Unaudited Consolidated Financial Statements

6

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in Thousands)

(unaudited)

	Nine Months Ended  September 30,
	2024		2023
Supplemental Disclosure of Cash Flow Information:
Cash payments:
Interest	$	35,390	$	37,273
Income taxes	945		1,122
Supplemental Disclosure of Non-cash Activities:
Dividends declared, but not paid during the period	$	3,214	$	3,164
Property and equipment acquired in exchange for advertising (1)	772		550
Accrued capital expenditures	79		229
Supplemental Disclosure of Cash Flow Information relating to Leases:
Cash paid for amounts included in the measurement of operating lease liabilities, included in operating cash flows	$	9,175	$	8,850
Right-of-use assets obtained in exchange for operating lease obligations	4,691		4,035
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	21,786	$	37,955
Restricted cash	509		501
	$	22,295	$	38,456

(1) Represents total advertising services provided by the Company in exchange for property and equipment during each of the nine months ended September 30, 2024 and 2023, respectively.

See Notes to Unaudited Consolidated Financial Statements

7

TOWNSQUARE MEDIA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Description of the Business

Townsquare is a community-focused digital media and subscription digital marketing solutions company with market leading local radio stations, principally focused outside the top 50 markets in the U.S. Our integrated and diversified products and solutions enable local, regional and national advertisers to target audiences across multiple platforms, including digital, mobile, social, video, streaming, e-commerce, radio and events. Our assets include a subscription digital marketing solutions business (“Townsquare Interactive”), providing a business management platform, website design, creation and hosting, search engine optimization, social platforms and online reputation management for small to medium sized businesses; a robust digital advertising division (“Townsquare Ignite,” or “Ignite”), a powerful combination of a) an 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 and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and a portfolio of 349 local terrestrial radio stations in 74 U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local media brands such as WYRK.com, WJON.com and NJ101.5.com, and premier national music brands such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com.

Current economic challenges, including high and sustained inflation and interest rates 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).

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and related notes thereto included in the Company's Annual Report on Form 10-K (the "2023 Annual Report on Form 10-K"). The accompanying unaudited interim Consolidated Financial Statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, with all significant intercompany balances and transactions eliminated in consolidation. These financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. All adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of results of operations and financial condition as of the end of the interim periods have been included. The results of operations for the three and nine months ended September 30, 2024, cash flows for the nine months ended September 30, 2024, and the Company’s financial condition as of such date are not necessarily indicative of the results of operations or cash flows that can be expected for, or the Company’s financial condition as of, any other interim period or for the fiscal year ending December 31, 2024. The Consolidated Balance Sheet as of December 31, 2023 is derived from the audited Consolidated Financial Statements at that date.

8

Use of 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, the Company evaluates its significant estimates, including those related to assumptions used in 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 and investments, the present value of leasing arrangements, share-based payment expense and the calculation of allowance for credit losses and income taxes. The Company bases its 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.

Actual amounts and results may differ materially from these estimates under different assumptions or conditions.

Note 2. Summary of Significant Accounting Policies

There have been no significant changes in the Company’s accounting policies since December 31, 2023. For the Company's detailed accounting policies please refer to the Consolidated Financial Statements and related notes thereto included in the Company's 2023 Annual Report on Form 10-K.

Recently Issued Standards That Have Not Yet Been Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures, which enhances disclosures of significant segment expenses by requiring the disclosure of significant segment expenses regularly provided to the chief operating decision maker, extending certain annual disclosures to interim periods, and permitting more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. As this update only requires additional disclosures, the adoption of this standard is not expected to have a significant impact on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires additional categories of information about federal and state income taxes in the rate reconciliation table and to provide more details about reconciling items in some categories if items meet a quantitative threshold. The guidance also requires the disclosure of income taxes paid, net of refunds, disaggregated by federal and state taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. As this update only requires additional disclosures, the adoption of this standard is not expected to have a significant impact on the Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires the disclosure in the notes to financial statements, information about certain costs and expenses including, purchases of inventory, employee compensation, depreciation and intangible asset amortization. The guidance also requires a qualitative description of amounts remaining in certain expense captions that are not separately disaggregated on a quantitative basis, as well as the disclosure of the total amount of selling expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

Note 3. Revenue Recognition

The following tables present a disaggregation of our revenue by reporting segment and revenue from political sources and all other sources (in thousands) for the three and nine months ended September 30, 2024 and 2023:

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	Three Months Ended September 30, 2024										Three Months Ended September 30, 2023
	Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total		Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total
Net Revenue (ex Political)	$	19,080	$	40,716	$	50,775	$	1,040	$	111,611	$	20,257	$	38,943	$	53,618	$	1,659	$	114,477
Political	—		145		3,555		—		3,700		—		66		561		—		627
Net Revenue	$	19,080	$	40,861	$	54,330	$	1,040	$	115,311	$	20,257	$	39,009	$	54,179	$	1,659	$	115,104

	Nine Months Ended September 30, 2024										Nine Months Ended September 30, 2023
	Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total		Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total
Net Revenue (ex Political)	$	55,848	$	116,177	$	147,563	$	7,362	$	326,950	$	63,086	$	113,715	$	152,704	$	8,695	$	338,200
Political	—		364		5,855		—		6,219		—		127		1,118		—		1,245
Net Revenue	$	55,848	$	116,541	$	153,418	$	7,362	$	333,169	$	63,086	$	113,842	$	153,822	$	8,695	$	339,445

Revenue from contracts with customers is recognized as an obligation until the terms of a customer contract are satisfied; this occurs with the transfer of control as we satisfy contractual performance obligations. Our contractual performance obligations include the performance of digital marketing solutions, placement of internet-based advertising campaigns, broadcast of commercials on our owned and operated radio stations, and the operation of live events. Revenue is measured at contract inception as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Our contracts are at a fixed price at inception and do not include any variable consideration or financing components by normal course of business practice. Sales, value add, and other taxes that are collected concurrently with revenue producing activities are excluded from revenue.

The primary sources of net revenue are the sale of digital and broadcast advertising solutions on our owned and operated websites, radio stations’ online streams, and mobile applications, radio stations, and on third-party websites through our in-house digital programmatic advertising platform. Through our digital programmatic advertising platform, we are able to hyper-target audiences for our local, regional and national advertisers by combining first and third-party audience and geographic location data, providing them the ability to reach a high percentage of their online audience. We deliver these solutions across desktop, mobile, connected TV, email, paid search and social media platforms utilizing display, video and native executions. We also offer subscription digital marketing solutions under the brand name Townsquare Interactive to small and mid-sized local and regional businesses in markets outside the top 50 across the United States, including the markets in which we operate radio stations. Townsquare Interactive offers traditional and mobile-enabled website development and hosting services, e-commerce platforms, search engine and online directory optimization services, online reputation monitoring, social media management, and website retargeting.

Political net revenue includes the sale of advertising for political advertisers. Contracted performance obligations under political contracts consist of the broadcast and placement of digital advertisements. Management views political revenue separately based on the episodic nature of election cycles and local issues calendars.

Net revenue from digital subscription-based contractual performance obligations is recognized ratably over time as our performance obligations are satisfied. Subscription-based service fees are typically billed in advance of the month of service at a fixed monthly fee that is contractually agreed upon at contract inception. The measure of progress in such arrangements is the number of days of successful delivery of the contracted service.

Our advertising contracts are short-term (less than one year) and payment terms are generally net 30-60 days for traditional customer contracts and net 60-90 days for national agency customer contracts. Our billing practice is to invoice customers on a monthly basis for services delivered to date (representing the right to invoice). Our contractual arrangements do not include rights of return and do not include any significant judgments by nature of the products and services.

For all customer contracts, we evaluate whether we are the principal (i.e., report revenue on a gross basis) or the agent (i.e., report revenue on a net basis). Generally, we report revenue for advertising placed on Townsquare properties on a gross basis (the amount billed to our customers is recorded as revenue, and the amount paid to our publishers is recorded as a cost of revenue). We are the principal because we control the advertising inventory before it is transferred to our customers.

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Our control is evidenced by our sole ability to monetize the advertising inventory, being primarily responsible to our customers, having discretion in establishing pricing, or a combination of these factors. We also generate revenue through agency relationships in which revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for advertisers that use agencies.

The following tables provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):

	September 30, 2024		December 31,  2023
Accounts Receivable	$	57,654	$	60,780
Short-term contract liabilities (deferred revenue)	$	9,092	$	9,059
Contract Acquisition Costs	$	6,600	$	5,175

We receive payments from customers based upon contractual billing schedules; contract receivables are recognized in the period the Company provides services when the Company’s right to consideration is unconditional. Payment terms vary by the type and location of our customer and the products or services offered. Payment terms for amounts invoiced are typically net 30-60 days.

Our contract liabilities include cash payments received or due in advance of satisfying our performance obligations and digital subscriptions in which payment is received in advance of the service and month. These contract liabilities are recognized as revenue as the related performance obligations are satisfied. As of September 30, 2024, and December 31, 2023, the balance in the contract liabilities was $9.1 million and $9.1 million, respectively. The increase in the contract liabilities balance at September 30, 2024 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $0.7 million and $7.8 million of recognized revenue for the three and nine months ended September 30, 2024. For the three and nine months ended September 30, 2023, we recognized $0.6 million and $9.1 million of revenue that was previously included in our deferred revenue balance. No significant changes in the time frame of the satisfaction of contract liabilities have occurred during the three and nine months ended September 30, 2024.

Our capitalized contract acquisition costs include amounts related to sales commissions paid for signed contracts with perceived durations exceeding one year. We defer the related sales commission costs and amortize such costs to expense in a manner that is consistent with how the related revenue is recognized over the duration of the related contracts. We have evaluated the average customer contract duration (initial term and any renewals) to determine the appropriate amortization period for these contractual arrangements. Capitalized contract acquisition costs are recognized in prepaid expenses and other current assets in the accompanying consolidated balance sheets. As of September 30, 2024 and December 31, 2023, we had a balance of $6.6 million and $5.2 million, respectively, in capitalized contract acquisition costs and recognized $1.0 million and $3.2 million of amortization for the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2023, we recognized $1.8 million and $5.1 million of amortization, respectively. No impairment losses have been recognized or changes made to the time frame for performance of the obligations related to deferred contract assets during the three and nine months ended September 30, 2024 and 2023.

Arrangements with Multiple Performance Obligations

In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligations are distinct within the context of the contract at contract inception. When multiple performance obligations are identified, we identify how control transfers to the customer for each distinct contract obligation and determine the period when the obligations are satisfied. If obligations are satisfied in the same period, no allocation of revenue is deemed to be necessary. In the event performance obligations within a bundled contract do not run concurrently, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers. Performance obligations that are not distinct at contract inception are combined.

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Performance Obligations

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Amounts related to performance obligations with expected durations of greater than one year are at a fixed price per unit and do not include any upfront or minimum payments requiring any estimation or allocation of revenue.    

Allowance for Credit Losses

The Company maintains an allowance for credit losses, which represents the portion of accounts receivable that is not expected to be collected over the duration of its contractual life. Credit losses are recorded when the Company believes a customer, or group of customers, may not be able to meet their financial obligations. Account balances are charged off against the allowance when it is probable the receivable will not be recovered.

The change in the allowance for credit losses for the nine months ended September 30, 2024 was as follows (in thousands):

Balance at December 31, 2023	$	4,041
Provision for credit losses	4,036
Amounts written off against allowance, net of recoveries	(3,946)
Balance at September 30, 2024	$	4,131

Note 4. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

	September 30, 2024		December 31, 2023
Land and improvements	$	18,781	$	19,320
Buildings and leasehold improvements	59,348		58,302
Broadcast equipment	111,143		107,663
Computer and office equipment	26,477		25,097
Furniture and fixtures	22,477		22,384
Transportation equipment	18,809		18,573
Software development costs	50,635		45,347
Total property and equipment, gross	307,670		296,686
Less accumulated depreciation and amortization	(197,242)		(186,492)
Total property and equipment, net	$	110,428	$	110,194

Depreciation and amortization expense for property and equipment was $4.3 million and $4.1 million for the three months ended September 30, 2024 and 2023, respectively and $13.1 million and $12.7 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, the Company recognized $0.3 million in impairment charges related to ROU assets associated with tower and land leases in 3 local markets and a $0.1 million impairment charge related to the pending sale of a station in Trenton, NJ.

During the nine months ended September 30, 2023, the Company recognized a total of $0.7 million in gains on the sale of buildings and land in the Bozeman, MT, and Yakima, WA, markets respectively.

During the nine months ended September 30, 2023, the company recognized $0.4 million in impairment charges related to the sale of land and buildings in Battle Creek, MI and a total of $0.4 million in impairment charges to right of use assets associated with the abandonment of leased office space in Purchase and Binghamton, NY.

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The Company had no material right of use assets related to its finance leases as of September 30, 2024 and December 31, 2023.

Note 5. Goodwill and Other Intangible Assets

Indefinite-lived intangible assets

Indefinite-lived assets consist of FCC broadcast licenses, goodwill and investment in digital assets.

FCC Broadcast Licenses

FCC licenses represent a substantial portion of the Company’s total assets. The FCC licenses are renewable in the ordinary course of business, generally for a maximum of eight years. The fair value of FCC licenses is primarily dependent on the future cash flows of the radio markets and other assumptions, including, but not limited to, forecasted revenue growth rates, profit margins and a risk-adjusted discount rate. The Company has selected December 31st as the annual testing date.

The Company evaluates its FCC licenses for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Due to changes in the weighted average cost of capital and changes in forecasted traditional broadcast revenues in the markets in which we operate, the Company quantitatively evaluated the fair value of its FCC licenses at September 30, June 30, and March 31, 2024.

The key assumptions used in applying the direct valuation method are summarized as follows:

	September 30, 2024
Discount Rate	15.4%
Long-term Revenue Growth Rate	(0.5)%
	Low	High
Mature Market Share*	20.7%	75.0%
Operating Profit Margin	23.1%	46.7%

	June 30, 2024
Discount Rate	16.5%
Long-term Revenue Growth Rate	0.0%
	Low	High
Mature Market Share*	20.7%	75.0%
Operating Profit Margin	23.1%	46.7%

	March 31, 2024
Discount Rate	13.7%
Long-term Revenue Growth Rate	0.0%
	Low	High
Mature Market Share*	22.0%	73.0%
Operating Profit Margin	23.1%	46.7%

* Market share assumption used when reliable third-party data is available. Otherwise, Company results and forecasts are utilized.

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Based on the results of the interim impairment assessments of our FCC licenses, the Company incurred no impairment charges during the third quarter of 2024, and $29.7 million of impairment charges for the nine months ended September 30, 2024, for FCC licenses in 26 of our 74 local markets. The impairment charges were primarily driven by increases in the discount rate applied in the valuation of our FCC licenses due to an increase in the weighted average cost of capital for the respective periods and decreases in third-party forecasts of broadcast revenues. The increases in the weighted average cost of capital were driven by changes in the market data, specifically industry bond yields, utilized in determining the discount rate applied in the valuation of our FCC licenses. The Company recorded an impairment charge of $23.6 million and $48.4 million for FCC licenses in 24 and 32 of our 74 local markets for the three and nine months ended September 30, 2023.

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 $21.1 million which would have resulted in an impairment charge of $3.3 million as of September 30, 2024. 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 $10.5 million which would have resulted in an impairment charge of $9.0 million as of September 30, 2024. 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 $10.3 million which would result in an impairment charge of $9.0 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, 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.

Goodwill

For goodwill impairment testing, the Company has selected December 31st as the annual testing date. In addition to the annual impairment test, the Company regularly assesses whether a triggering event has occurred, which would require interim impairment testing. As of December 31, 2023, the fair values of our National Digital, Townsquare Ignite, Analytical Services, and Townsquare Interactive reporting units were in excess of their respective carrying values by approximately 117%, 41%, 157%, and 147%, respectively. The Local Advertising and Amped reporting units had no goodwill as of December 31, 2023.

The Company considered whether any events have occurred or circumstances have changed from the last quantitative analysis performed as of December 31, 2023 that would indicate that the fair value of the Company's reporting units may be below their carrying amounts. During the third quarter of 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. During the second quarter of 2024, the Company concluded that the carrying amount of the National Digital and Live Events reporting units exceeded their fair values, resulting in the recognition of a non-cash goodwill impairment charges of $1.8 million and $0.9 million, respectively. In total, the company recorded $4.4 million of non-cash goodwill impairment charges during the nine months ended September 30, 2024.

Interim impairment assessments were considered necessary as a result of declines in revenues and profit and increases in the weighted average cost of capital. The Company did not identify indicators of impairment related to any other reporting units that would have required an interim impairment assessment during the three months ended September 30, 2024. The Local Advertising, Amped, and Live Events reporting units had no goodwill as of September 30, 2024.

The fair value of the Live Events reporting unit was determined using an income approach whereby the fair value was calculated utilizing discounted estimated future cash flows. The income approach requires several assumptions including future sales growth, EBITDA (earnings before interest, taxes, depreciation and amortization) margins, and capital expenditures and discount rates which are the basis for the information used in the discounted cash flow model. The weighted-average cost of capital used in testing the Live Events reporting unit for impairment was 13.4%, with a perpetual growth rate of 3.2%.

The following table presents changes in goodwill by segment during the nine months ended September 30, 2024:

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	Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total
Balance at December 31, 2023	$	77,000	$	77,687	$	—	$	2,583	$	157,270
Impairment	—		(1,784)		—		(2,583)		(4,367)
Balance at September 30, 2024	$	77,000	$	75,903	$	—	$	—	$	152,903

Digital Assets

During the first quarter of 2022, the Company invested an aggregate of $5.0 million in digital assets. They were accounted for as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, included as a component of intangible assets, net on the Consolidated Balance Sheet. Any decrease in the digital assets' fair values below our carrying values at any time subsequent to acquisition was recognized as an impairment charge. No upward revisions for any market price increases were recognized.

In early March 2023, the Company sold its digital assets with a carrying value of $2.1 million, recognizing a gain on the sale of $0.8 million, which was included as a component of Other (income) expense, net on the Consolidated Statements of Operations.

Definite-lived intangible assets

The Company’s definite-lived intangible assets were acquired primarily in various acquisitions as well as in connection with the acquisition of software and music licenses.

The following tables present details of our intangible assets as of September 30, 2024 and December 31, 2023, respectively (in thousands):

	September 30, 2024
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets:
FCC licenses	Indefinite	$	151,582	$	—	$	151,582
Content rights and other intangible assets	2 - 8	32,518		(18,921)		13,597
Total		$	184,100	$	(18,921)	$	165,179

	December 31, 2023
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets:
FCC licenses	Indefinite	$	181,236	$	—	$	181,236
Content rights and other intangible assets	3 - 9	32,630		(13,560)		19,070
Total		$	213,866	$	(13,560)	$	200,306

Amortization of definite-lived intangible assets was $1.8 million for the three months ended September 30, 2024 and 2023, respectively, and $5.5 million and $5.4 million for the nine months ended September 30, 2024 and 2023, respectively.

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Estimated future amortization expense for each of the five succeeding fiscal years and thereafter as of September 30, 2024 is as follows (in thousands):

2024 (remainder)	$	1,824
2025	3,609
2026	3,195
2027	1,978
2028	1,880
Thereafter	1,111
	$	13,597

Note 6. Investments

Long-term investments consist of minority holdings in various companies. As management does not exercise significant influence over operating and financial policies of the investees, the investments are not consolidated or accounted for under the equity method of accounting. The initial valuation of equity securities is based upon an estimate of market value at the time of investment, or upon a combination of valuation analyses using both observable and unobservable inputs categorized as Level 2 and Level 3 within the ASC 820 framework.

In accordance with ASC 321, Investments - Equity Securities, the Company measures its equity securities at cost minus impairment, as their fair values are not readily determinable and the investments do not qualify for the net asset value per share practical expedient. The Company monitors its investments for any subsequent observable price changes in orderly transactions for the identical or a similar investment of the same investee, at which time the Company would adjust the then current carrying values of the related investment. Additionally, the Company evaluates its investments for any indicators of impairment.

Equity securities measured at cost minus impairment

During the three and nine months ended September 30, 2024, the Company recorded $0.2 million and $1.8 million of impairment charges for existing investments, respectively. During the three and nine months ended September 30, 2023, the Company recorded $4.4 million and $13.6 million of impairment charges for existing investments, respectively. The impairment charges were based on the implied fair values of the investees, as the Company became aware of objective evidence to indicate that the fair value of the investments were below their carrying amounts.

In February of 2024, one of the Company’s investees announced the completion of its acquisition in a private transaction. The Company recognized a $4.0 million gain on the transaction during the nine months ended September 30, 2024, based on total cash consideration received in the amount of $4.0 million. On April 12, 2023, one of the Company's investees was acquired as a result of a private transaction. The Company recognized a $5.2 million gain on the transaction, based on total consideration received in the amount of $6.0 million.

Equity securities measured at fair value

On July 2, 2021, one of the Company's investees completed its registration with the SEC and became a publicly traded company. During the three months ended September 2024, the company sold the investment for $1.1 million, recognizing an immaterial gain on sale. During the nine months ended September 30, 2024, the Company recognized a total unrealized net gain of $0.2 million as a result of changes in the fair value of the investee's common stock during the period. During the three and nine months ended September 30, 2023, the Company recorded an unrealized loss of $0.6 million and $0.5 million, respectively, as a result of changes in the fair value of the investee's common stock.

Unrealized gains and losses are included as a component of other expense (income) on the Unaudited Consolidated Financial Statements. The market price of the investee's common stock is categorized as Level 1 within the ASC 820 framework.

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Note 7. Long-Term Debt

Total debt outstanding is summarized as follows (in thousands):

	September 30, 2024		December 31, 2023
2026 Notes	$	478,936	$	503,618
Deferred financing costs	(2,234)		(3,960)
Total long-term debt	$	476,702	$	499,658

During the three and nine months ended September 30, 2024, the Company voluntarily repurchased an aggregate $11.0 million and $24.7 million principal amount of its 2026 Notes below par, plus accrued interest, respectively. The Company wrote-off approximately $0.1 million and $0.2 million of unamortized deferred financing costs, recognizing immaterial net gains for the three and nine months ended September 30, 2024, respectively. The repurchased notes were canceled by the Company.

The 2026 Notes indenture contains certain covenants that may limit, among other things, our ability to; incur additional indebtedness, declare or pay dividends, redeem stock, transfer or sell assets, make investments or agree to certain restrictions on the ability of restricted subsidiaries to make payments to the Company. Certain of these covenants will be suspended if the 2026 Notes are assigned an investment grade rating by Standard & Poor’s Investors Ratings Services, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. and no event of default has occurred and is continuing.

The Company was in compliance with its covenants under the 2026 Notes indenture as of September 30, 2024.

As of September 30, 2024, based on available market information, the estimated fair value of the 2026 Notes was $478.3 million. The Company used Level 2 measurements under the fair value measurement hierarchy established under Fair Value Measurement (Topic 820).

Annual maturities of the Company's long-term debt as of September 30, 2024 are as follows (in thousands):

2024 (remainder)	$	—
2025	—
2026	478,936
2027	—