The stable outlook reflects S&P Global Ratings' expectation that the company will maintain leverage in the 5x-6x area and generate moderate discretionary cash flow over the next 12 months. We could lower our rating on Townsquare if we expect adjusted leverage to rise and remain above 6.5x and if its discretionary cash flow falls below $20 million. This could result from debt-financed acquisitions, inability to successfully integrate future acquisitions, or a faster-than-expected decline in advertising revenues. We could raise the rating if we believe Townsquare will reduce its leverage below 5.0x on a sustained basis. This would likely entail the company either increasing EBITDA by roughly 20% or paying down debt and establishing a publicly stated leverage target below 5x.
