Owning It: Townsquare Speaks Out On Loosened Subcaps



On August 6, a coalition of 10 radio broadcasting companies penned a letter to the radio broadcasting industry that, unequivocally, puts in print their support of increased industry consolidation. The letter comes following a proposal drafted in June by the NAB that would eliminate FCC-mandated subcaps in markets ranked higher than No. 75, and allow one company to own as many AM stations as they wish, regardless of market size.

Those signing the letter, in which group heads argue that further consolidation will, among other things, lead to greater programming diversity and advertiser benefits, include Townsquare Media co-CEOs Bill Wilson and Dhruv Prasad. Townsquare facilitated the distribution of the letter.

If the Commission goes along with the NAB plan, Townsquare could theoretically own all of the radio stations in all but four of the markets it operates in. Is this fair? Is this how radio industry leaders believe the battle against local digital media group should be waged?

RBR+TVBR asked Townsquare Media why it is in support of the NAB plan. Here’s what they said.

RBR+TVBR: Given the difficulties seen with consolidation at iHeart (presently in debtor-in-possession status and against the NAB proposal Townsquare supports) and Cumulus Media, how does Townsquare Media envision the ability to expand without getting into leverage issues? 

TOWNSQUARE MEDIA: Over the period of the last eight years here at Townsquare, we have expanded from ownership of zero radio stations to ownership of 320 radio stations in 67 markets.  Not only is it safe to say we have been the most prolific acquirer of radio stations in America in the last decade, we also became, in 2014, the first radio company to have an IPO in more than a decade.  We have done this without compromising our balance sheet.  We try to focus on making responsible financial decisions that benefit our shareholders, including the initiation of a dividend for our stockholders this year.  For sure, we haven’t gotten it right 100% of the time, and we’ve certainly had our share of missteps, too, but as an overall matter we have been able to “expand without getting into leverage issues” (to use your language), and, whether ownership caps are changed or not, we will continue to try to grow our company in the same responsible, thoughtful manner that we always have.

We would also note, just as a matter of clarity, that the current restructuring at iHeart is not the result of consolidation, but rather the result of over-leverage and bad timing resulting from their leveraged buyout in 2008. Yes, we have noted that they do not support the NAB proposal. As you know, we respectfully disagree.

“For sure, we haven’t gotten it right 100% of the time, and we’ve certainly had our share of missteps, too, but as an overall matter we have been able to ‘expand without getting into leverage issues.’” — Townsquare Media

RBR+TVBR: We would love to hear from Dhruv or Bill how owning more stations will allow for greater diversity.

TOWNSQUARE MEDIA: There have been numerous studies, including some commissioned by the FCC, that have shown that common ownership leads to greater programming diversity and that the number of different program formats offered by local radio stations increased following relaxation of the radio ownership limits in 1996.

These studies were cited by the NAB in its letter to [FCC Media Bureau Chief] Michelle Carey on June 15 and therefore we thought it would be redundant to reference them again in our group’s letter.  You can see the NAB letter here. The footnote citation to the studies appears at the bottom of page 3, should you wish to review the studies further.

In addition to the studies on the matter, it’s also just a matter of common sense.  It’s unlikely that, if a single company were to own eight stations in a market, they would operate multiple stations in the same format so as to compete for the same audience and with themselves. Instead, and in the view of our group, it’s much more likely that those companies would develop alternative programming that is targeted to new demographics and audience groups which they are not already reaching. Acting in this manner would help eliminate some format redundancy, which is unquestionably a good thing.

RBR+TVBR: Although we didn’t initially ask this question, we remain curious as to the central point of the group’s letter, which we deemed in an Observation as a warning shot to smaller operators to grow or sell. 

TOWNSQUARE MEDIA: Let’s highlight again the central point of our group’s letter: that the intention of ownership caps was not, and has never been, to determine winners and losers and to attempt to use them in that way today is a perversion of their intent.  The economic and format diversity points you raised and that we addressed are important, but secondary to the point that the caps themselves exist to address past concerns regarding radio’s extraordinary audience influence during an era when media competition was fundamentally different than it is today.

In our view, that’s principally the lens through which we need to view the current suitability of caps, and that is why we devoted so much of our letter to the historical context.  Seen in this light, to argue that caps are needed to safeguard against radio’s influence in today’s hyper-competitive environment for information and entertainment is absurd. As an industry, to take this position is self-defeating.

Regarding format diversity, RBR+TVBR queried Townsquare specifically on a format adjustment in March 2018 made at WCZX-FM 97.7 in Poughkeepsie, N.Y. This saw a rebranding of the Hot AC from “Mix 97.7” to “Now 977” following the departure of 35-year market veteran Mark Bolger from mornings. He was replaced with the syndicated Brooke & Jubal in the Morning while the station’s playlist was tweaked to better fit with the nighttime PopCrush Nights with Lisa Paige program, syndicated by Compass Media Networks. The move allows WCZX to more effectively compete against Pamal-owned Top 40 WSPK-FM 104.7 “K104,” while providing Townsquare with an aligned advertising solution across the many stations it owns airing this program.

Townsquare did not respond to this question.

Additionally, Townsquare declined to address questions regarding media monopolization in unrated markets including Oneonta, N.Y. Should the FCC pass the NAB-endorsed rule change, Townsquare could own all of the radio stations in the small Central New York town that is home to two universities and a daily newspaper.

It already owns all but one local signal, the Sidney, N.Y.-based WCDO-FM 100.9.

Townsquare’s assets include 320 radio stations in 67 markets.

In 63 of these markets, Townsquare could theoretically own every AM and FM in town.

Of course, that’s not a realistic assumption. In markets such as Poughkeepsie, N.Y. and Tuscaloosa, Ala., iHeartMedia is a competitor.

Then, there is Market No. 242 — Texarkana. Here, Townsquare owns four FMs and an AM and competes against one local broadcaster: Texarkana Radio Center Licenses, which in November 2012 created a cluster through the purchase of Jo-Al Broadcasting’s Urban AC KTOY-FM 104.7 and KCMC-AM, KTFS-AM & FM and KBYB-FM from Ark-La-Tex LLC, headed by Donald T. Jack Jr.  Texarkana Radio Center is headed by E. Roy Paschal, Jason Paschal, Richard J. Burns and Sharon Burns.

What if the Paschals and Burnses decided to sell to Townsquare? It would be OK under FCC rules.

This hypothetical combination would grow Townsquare Texarkana to three AMs and seven FMs. That would leave six commercially licensed radio stations on the FM band not owned by Townsquare, and KKTK-AM 1400, the local FOX Sports Radio affiliate. Of those remaining stations, American Media Investments (AMI)’ Results Radio owns two FMs.

Texarkana-licensed KTAL-FM 98.1 has long been marketed as a Shreveport, La., station, and is owned by Alpha Media.

Shreveport is some 60 miles to the south of Texarkana, and thanks to terrain and large facilities several stations can be heard in Texarkana and appear in the market’s Nielsen Audio ratings. These include KXKS-FM and KRUF-FM, stations owned by Townsquare Media.

A third station, KTUX-FM, only has a fringe signal in greater Texarkana but regularly earns a 0.8 or 0.7 share among listeners 12+ in the diary-rated market.

While Townsquare could argue that the three Shreveport stations are stations not actively marketed to Texarkana, it nevertheless presents a scenario where it could control 3 AMs and 10 rated FMs in a market that’s home to 128,300 potential listeners.

For Townsquare and 9 other radio industry leaders, such a situation is vital to the future of American radio.

What are YOUR thoughts on radio industry consolidation and the possibility of total control of what’s heard on the radio in markets below No. 75 — the vast majority of the nation’s rated markets? Voice your opinion below!

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