Townsquare Media Inc.

The stable outlook reflects S&P Global Ratings' expectation that Townsquare's leverage will decline to 4.7-4.9x over the next 12 months because of high-single-digit percent EBITDA growth from digital and political revenues, but the potential for releveraging remains high due to the company's financial sponsor ownership. We could lower the 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 if broadcast advertising revenues decline quicker than we expect. We could raise the rating if we expect Townsquare to maintain leverage below 5x on a sustained basis. This would likely entail prioritizing excess cash

...Revenue from digital sources will contribute about 35%-40% of revenue in 2020. We believe Townsquare's digital marketing revenue will grow at a double-digit percentage rate as it further penetrates new and existing markets. Townsquare is better positioned to offset the secular decline in industry-wide revenue than most radio broadcasters by generating a larger percentage of revenue from alternative sources such as digital and events. Shareholder-friendly activities will likely prevent sustained leverage improvement. We expect leverage will decline to 4.7x-4.9x by the end of 2020 due to high-single-digit percent EBITDA growth driven by increases in digital and political revenues more than offsetting declines in core broadcast revenues. However, we believe debt-funded shareholder returns or acquisitions are likely due to Oaktree Capital Management L.P.'s controlling ownership. Terrestrial radio broadcasters are facing structural pressures from digital disruption.Digital advertising is taking...

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