Townsquare Media, Inc.

Good morning and welcome to Town Square Media's 3rd Quarter 2024 Conference Call. As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to introduce the first speaker for today's call, Claire Yenneke, Executive Vice President.

Thank you, Operator, and good morning to everyone. Thank you for joining us today for Town Square's third quarter financial update. With me on the call today are Bill Wilson, our CEO, and Stuart Rosenstein, our CFO and Executive Vice President. Please note that during this call, we may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans, and prospects. These statements are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements reflect the company's beliefs based on current conditions but are subject to certain risks and uncertainties, including those that are detailed in the company's annual report on Form 10-K filed with the SEC. We may also discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted operating income by segment, which we may refer to as profit in our remarks. Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly, year-end, and current reports available on our website. I would also encourage all participants to go to our corporate website and download our investor presentation, as Bill will reference some of those slides during our discussion this morning. At this time, I'd like to turn the call over to Bill Wilson.

Thank you, Claire, and thank you all for joining us this morning. It's great to reconnect with everyone. We are very pleased to share with you that Town Square's third quarter results are directly in line with the expectations we shared with you on our last call, reflecting sequential improvement in revenue growth rates across each of our three business segments. In addition, we return to net revenue growth, with net revenue increasing slightly year over year. A small step, but a meaningful one. and one we can and will continue to build upon, as we forecast that Q4 net revenue growth will be equal to or greater than Q3's growth rate. Adjusted EBITDA declines also continued to moderate in the third quarter, and again, matched our expectations that we laid out on our last call. As always, our differentiated business model generated meaningful cash in the third quarter, and we applied that cash to repurchase $11 million of our bonds below par over $1 million of our stock and also pay our $3 million high yielding quarterly dividends. Our third quarter net revenue of $115 million was up slightly compared to the prior year and at the midpoint of our guidance range. Importantly, it was the fourth quarter of sequential improvement in net revenue growth and we anticipate sequential improvement in the fourth quarter as well. As you may recall, I projected on our last earnings call that third quarter broadcast net revenue would be flat to up 1%. And I'm glad to report, even with political coming in under our expectations in Q3, that broadcast advertising performed right in line with that forecast, up slightly year over year, and a sequential improvement from Q2's growth rate. We're also very pleased to share that, as anticipated, our digital revenue returned to growth in the third quarter, and contributed to 52% of our total net revenue in the third quarter. Town Square Interactive delivered sequential quarterly revenue growth, which I'm pleased to report was better than we forecasted on our last call. I had also projected that Q3's digital advertising net revenue would grow plus 4%, and it did slightly better than that, growing at plus 5%, a significant acceleration from the plus 1% revenue growth in the first half of the year. A main driver of our digital advertising momentum is the very strong digital programmatic advertising growth rates that I projected, which did in fact deliver meaningfully as our digital programmatic advertising grew at a strong plus 10% year over year. Again, sequential improvement from Q2. In essence, just like we've done all year, we executed and delivered on what we said we would do. while simultaneously building value for our shareholders through debt reduction and share repurchases and paying a high-yielding dividend. TownSquare's digital platform sets us apart from others in local media. As highlighted on slide 12, 52% of our total revenue is digital revenue in both the third quarter and through the first nine months of 2024, more than two times the industry average. And more impressively, more than half of our total profit was digital profit in the same periods. This highlights a point we often make and can't state enough. Town Square is no longer the radio broadcast company it was when it was founded in 2010, nor the company it was when we went public a decade ago. Town Square has evolved and transformed into a digital first local media company that is truly distinguished from our local media peers. Validating our focus on markets outside of the top 50 U.S. cities, with a world-class team and a unique and differentiated strategy, assets, platforms, and solutions. I'm also thrilled to announce that Town Square Ignite has been recognized as one of the best and brightest companies to work for in the nation for the third year in a row by the National Association for Business Resources. I could not be more proud of Todd Lawley and the entire Town Square Ignite team, not only for being recognized as one of the best and brightest companies, but also for their standout execution and performance in accelerating our digital programmatic advertising growth. Overall, we owe our digital advertising success to our sophisticated digital products and proven solutions, which are entirely in-house, giving us 100% control of the client relationship, starting with the client pitch, then campaign design, media buying and optimization, and ongoing reporting and insights. which we believe translates to a better customer experience, higher average spend, and higher client retention rates. We are very confident in our ability to continue to grow this business and capitalize on our competitive advantages on our local markets. Owning our tech platforms in-house, combined with the breadth of our digital solutions and the amount of quality of our first-party data pools is a competitive advantage in any size market, Yet in cities outside the top 50, it is a significant difference maker, driving our digital advertising to be the strongest growth engine in the company. We are most excited and confident about our digital programmatic business, where we have unlimited growth opportunities, particularly when factoring in the potential of the third-party partnership model, which I'll discuss shortly. Programmatic makes up about 60% of our digital advertising segment today and continues to be the fastest-growing revenue stream in our company. Given our momentum and success, as we discussed on our last earnings call, we are exploring another avenue of growth in a digital programmatic advertising space, which capitalizes on the knowledge, expertise, and competitive advantages we hold in markets outside of the top 50. White labeling our digital programmatic advertising solution to third-party local broadcasters in markets where we do not overlap. Earlier this year, We created Town Square Ignite's Media Partnership Division and launched a trial to white label our programmatic platform with a single broadcaster in a single Nevada market. The insights we learned and the success we had from this trial gave us the confidence to continue down this path. And last month, I'm thrilled to say we announced a strategic partnership with Summit Media, an excellent broadcaster who operates local media properties across nine markets. We expect to finish their onboarding by year's end, including providing world-class training for their sales team. While this is currently a modest-sized opportunity in the context of our overall Ignite division, which this year will be over $155 million in revenue with very healthy digital profit margins, especially in the initial year we expect sales from this media partnership to ramp throughout 2025, we are very excited about what this and potential partnerships represent. which we believe is the opportunity to become the chosen provider of digital programmatic advertising to broadcasters and digital agencies in cities outside of the top 50. Under this model, Town Square handles all of the creative, buying, optimization, and customer support of the digital campaigns. So why partner with third parties instead of entering those markets ourselves? Well, instead of using our capital to acquire new markets to deploy our digital assets, this partnership model allows us to enter new markets and accelerate our digital revenue growth without deploying capital. We are then free to deploy our capital in other ways, such as debt pay down or equity buybacks or increasing our dividend payments. While early, We believe this media partnership initiative has the potential to be a significant difference maker and revenue and profit growth driver in 2026 and beyond, as we're currently in discussions with numerous other broadcasters about potentially partnering with us. Looking to Q4, we expect our digital advertising revenue growth to further accelerate from Q3's plus 5% revenue growth to approach plus 15% in Q4. Let me say that again. We expect Q4's digital advertising revenue growth to approach plus 15% in Q4, which if accomplished would be triple Q3's growth rate. This strong growth rate will be driven by what we expect to be very strong growth rates in programmatic digital advertising revenue, coupled with the improvement of our national digital business. I am also extremely pleased to share that TownSquare Interactive, our subscription digital marketing solutions business, continues along its path of recovery as sequential revenue growth accelerated in the third quarter. In Q3, TownSquare Interactive's net revenue decline of negative 6% year over year was slightly ahead of expectations I shared with you on our last call. And importantly, the decline represented less than half of Q2's negative 13% decline, a meaningful improvement. Town Square Interactive's third quarter profit declined an expected negative 11% year over year, as we managed expenses such that our third quarter profit margin of 27% was only a slight decline from Q3 2023's 28%. We are pleased to share that Town Square Interactive's fourth quarter net revenue is expected to return to year over year revenue growth. We are also very pleased with Town Square Interactive's new and improved product offering, which I described at length and in detail on our last call. We strongly believe that our new SaaS business management platform is a very powerful and will be a difference maker as we grow and continue to scale the Town Square interactive business. We are not only helping SMBs with their digital presence, we are also helping them operate their business more effectively. We're bringing sophisticated national scale to smaller markets, and we're proud to partner with our clients to do so. In the long term, we are confident that we have a long, sustainable runway ahead of us. With approximately 24,000 subscribers at the end of Q3, which approximately 59% of those are outside our local media footprint, and an addressable market of nearly 9 million target customers, we are only scratching the surface. With our existing subscriber base superior product offering, including our new business management platform, and a significant market opportunity of nearly 9 million target customers, as outlined on slide 15, I am confident that TownSquare Interactive is set up for long-term, profitable growth and success. Another positive development in the third quarter was that our broadcast advertising revenue increased slightly year over year, a sequential improvement from the first half's growth rate. Unfortunately, national broadcast advertising revenue reversed course from Q2's flat performance and was a headwind in the third quarter. Looking to Q4, national will not only once again be a meaningful decline, but also much steeper. with an expected national decline in excess of 20% in the quarter. Overall, we continue to outperform the industry in the third quarter, gaining broadcast market share according to Miller Kaplan estimates. I am very proud of our team achieving this market share growth as it demonstrates the benefits and importance of our differentiated local content of our local radio broadcast. In the third quarter, We generated $3.7 million of political revenue, which is behind Q3 2020's $4.5 million. Based on what is currently on the books today, we now believe we will be under our initial expectations of $14 million to $16 million in political revenue. We view local radio as a mature cash cow business, yet an extremely valuable asset with significant cash flow properties, unparalleled consumer reach, and an important local connection to our audience. We believe Town Square's ability to drive profitable, sustainable digital growth is the key differentiator for our company. Digital is and will continue to be our growth engine, and we will continue to invest in our digital businesses to fuel further profitable growth. One last point I'd like to make before handing it over to Stu is a very important aspect of our business model, our significant cash flow generation. We continue to generate strong cash flow, granting us the ability to invest in our digital growth engine and affording us financial flexibility as evidenced by our ongoing debt and share buybacks in the open market. Year to date through October, we used our cash to repurchase $24 million of our shares, buyback and retire $36 million of our bonds, and execute an $11 million option buyback at an attractive price to avoid shareholder dilution. all while investing in our digital growth engine and rewarding our shareholders with a very attractive dividend yield. With $22 million of cash on hand at the end of September and net leverage of 4.86 times as of September 30th, we remain very confident in our current capitalization and strength of our balance sheet, and we are pleased that we can continue to deliver attractive cash returns for our equity shareholders. As I shared on our last call, S&P Global upgraded their rating of our bonds from B to B-plus in June, citing our performance and credit metrics. As we're gearing up for our upcoming refinancing, which we're looking forward to updating when we report year-end in March, we are building momentum and set up for a solid 2025 and, more importantly, long-term success. As we say internally, how high is high? And now, Stu will go through our results in even more detail, as well as provide an update on our guidance. All yours, Stu. Take it away.

Thank you, Bill, and good morning, everyone. It's great to speak to you today. We're pleased to report that our third quarter results met our revenue and adjusted EBITDA guidance. Third quarter net revenue returned to growth in the quarter, and revenue increased 0.2%, or just over $200,000 year over year, to $115.3 million, just above the midpoint of our guidance range of $114,000. to $116 million. That's a sequential improvement from first and second quarter revenue declines. In Q3, political revenue was $3.7 million, and through September, political revenue is $6.2 million, which is approximately 93% of 2020's $6.7 million. Although we expect to record the second highest amount of political revenue in Town Square's history in 2024, We no longer expect that that will reach our initial political revenue estimates of $14 to $16 million. Based on the political revenue on our books today, we anticipate that this revenue stream will be just north of $13 million for the full year. Still, a very strong outcome, but less than the 85% of 2020's all-time high of $16 million, which we were hoping to achieve again this year. Excluding political, third quarter net revenue declined 2.5% year over year, a sequential improvement from Q2's 3.4% decline. Third quarter adjusted EBITDA declined 6.3% year-over-year to $25.5 million, also within our guidance range of $25 to $27 million. Third quarter adjusted EBITDA declines also reflect sequential improvement from the first and second quarter. Town Square Ignite, our digital advertising segment, is building a lot of momentum and demonstrated stronger growth rates in the third quarter as strength in programmatic advertising, which, as Bill noted, was up 10% year-over-year, offset ongoing weakness in national digital advertising, which declined $1.2 million in Q3 as compared to the prior year. In total, third quarter digital advertising net revenue increased 4.7% year-over-year, an improvement from Q1 and Q2's performance. As Bill also noted, we expect Q4 digital advertising revenue growth overall to almost triple, approaching 15%. Digital advertising profit margins remained strong in the mid-20s in the third quarter, and at 26.5% were equal to Q2's profit margin. Town Square Interactive, our subscription digital marketing solution segment, continued to demonstrate growth and recovery in the third quarter, growing net revenue by 3% from Q2 to Q3. due to previous subscriber losses in 2023 and Q1 2024. Net revenue and profit declined on a year-over-year basis. As Bill mentioned, we are thrilled to share that we expect to return to year-over-year revenue growth in the fourth quarter. In the third quarter, net revenue decreased 5.8% as compared to the prior year, and profit decreased 11% year-over-year. Margins were strong at approximately 27% in Q3 2021, despite our continued investment in the business. Third quarter broadcast advertising net revenue increased slightly, up 0.3% as compared to the prior year, which again was sequential improvement from the first and second quarter declines. Third quarter broadcast profit declined 5.4% year over year, but margins remained strong at 29%. In September year-to-date period, broadcast advertising profit is up 5% year over year. Our other category, which is comprised of live event activity, generated $1 million of revenue in the third quarter, a decline of 37% year-over-year, or approximately $600,000. The other category had a small loss of less than $200,000, which was an improvement from the loss of approximately $400,000 in the prior year period. As a reminder, our live event activity should not be viewed as a growth driver or revenue center for TownSquare, but rather a marketing arm of the company. Our third quarter net income was $11.3 million, or 63 cents per diluted share, as compared to a net loss per diluted share of $2.27 in the prior year period. We would like to remind you that any benefit or provision for income taxes included on the face of the income statement is for GAAP financial statement purposes only. We maintain significant tax attributes, including more than $100 million of federal NOL tax carry-forwards and other substantial tax shields, related to the tax amortization of our intangible assets. We continue to believe that we will not be a material cash taxpayer until approximately 2026. As Bill highlighted, and I would again like to emphasize, we consistently have strong cash flow generation. We generated $9.9 million of cash flow from operations in the third quarter and $20.6 million of cash flow from operations in the first nine months of 2024, ending the quarter with $22 million of cash. During the first nine months of the year, we repurchased approximately $24 million worth of shares, or 2.3 million shares, throughout our ongoing share buyback program, including the repurchase of 1.5 million of MSG shares at an accretive price on April 1st. Since 2021, we have repurchased 16.6 million shares at an average price of $7.30, while simultaneously reducing leverage over that period. Year-to-date through October, we have also bought back and retired $36 million worth of bonds, including approximately $11 million of bonds below par in Q3, plus an additional $12 million at or close to par in October. We anticipate refinancing our existing debt prior to February 1st and look forward to sharing that outcome with you on our next call. At the end of the third quarter, our net leverage was 4.86 times, As always, our number one priority is to invest in our local business through organic, internal investments that support our revenue and profit growth, particularly on a digital growth engine. We plan to continue to invest in our digital product technology, sales, content, and support teams, specifically in our Town Square Interactive and Town Square Ignite businesses, to maintain our strong competitive advantage in markets outside the top 50 cities. Our Board has approved our next quarterly dividend, payable on February 1st, to shareholders of record on January 21st. The dividend of 19.75 cents per share, which we raised by 5% earlier this year, equates to 79 cents per share on an annualized basis. That implies an annual payment of approximately $13 million based on our current share count and a dividend yield of approximately 8% based on our current share price. We believe our strong cash flow characteristics will allow us to continue to invest in our business, support our dividend, and give us flexibility to opportunistically pursue debt and share repurchases as circumstances allow. We are reaffirming that our 2024 full year results will come in within our original guidance ranges for both net revenue and adjusted EBITDA. We expect fourth quarter net revenue to be between $114.8 million and $118.8 million. This implies a year-over-year revenue growth of flat to 3.5%. We expect fourth quarter adjusted EBITDA to be between $30.8 million and $31.8 million. This implies that Town Square's 2024 full-year revenue will be between $448 million and $452 million. and adjusted EBITDA will be between $100 million and $101 million, both within our original guidance ranges. And with that, I will now turn the call back over to Bill.

Thank you, Stu, and thanks to each of you for taking the time to be updated on Town Square's Q3 results this morning. We greatly appreciate it. I want to conclude today's call by again highlighting the progress we have made in 2024. Our differentiated in-house digital advertising platform has demonstrated that even in the face of extreme national advertising weakness, we can deliver strong growth and continue to find new avenues of growth that will capitalize on our strengths, including the new partnership model I discussed earlier. TownSquare Interactive has returned to sequential revenue growth, and we expect to return to year-over-year revenue growth in Q4. Our mature Cash Cow broadcast advertising platform continues to gain market share and generate a solid profit. We have efficiently repurchased debt and equity this year while maintaining a high yielding dividend, delivering attractive current returns to our shareholders. We retain financial flexibility moving forward, and we are well positioned to execute our refinancing in the coming months. Most importantly, we are confident in our ability to build shareholder value for our investors through long-term net revenue, profit, and cash flow growth, net leverage reduction, future dividend payments, and potential future share repurchases. And again, I'd like to take the opportunity to thank the entire Town Square team for their passion and hard work each day in partnering and helping their clients and communities. With that, operator, at this time, please open the line for any and all questions.

Thank you. I would like to remind everyone in order to ask a question, please press star followed by the number one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star followed by the number one on your telephone keypad. Our first question comes from the line of Michael Kopinski from Noble Capital Market. Your line is open.

A couple of questions here. Bill, you indicated that national digital was strong, but that national broadcast spot deteriorated. And I'm wondering... Do you think that there's a shift in national to digital, first of all? And I was just wondering in terms of the national broadcast spot, do you think that ever comes back?

Hey, good morning, Michael. Thank you for the initial question. And I'll throw it back to you for your additional questions. So in terms of national digital, actually in Q3, it still was, I think a student noted it was down over a million dollars. So What we noted is national digital, thankfully, is plateauing in Q4 based on our current forecast. So in Q4, we expect flat to slight growth in national digital, which has been a major drive of decline year-to-date through Q3. We did share in terms of broadcast that national was performing much better in Q2, you know, through the first half of the year was down, you know, call it mid-single digits. That continued in Q3, and we were quite surprised that in Q4, as I noted, national is currently pacing over 20% down. So that obviously is an unwelcome development, and that is obviously baked into our guide, and one of the reasons still within the initial guidance range for EBITDA, but between being under our political expectations by 3 million and that national pressure on broadcasting, we tighten the range to 100 to 101. I think your major question is, do you think national advertisers are switching from broadcast to digital? What I would say is, clearly, I'm sure you heard this from others as well, there was a lot of uncertainty going into the election. We definitely saw broadcasters, I'd say, slow to commit starting after Labor Day, right through the election. Now, obviously, with the election behind us and certainty moving forward, we expect our overall broadcast business to improve. Obviously, there was so much clutter. Radio is the number one reach medium, so it's a tremendous asset for grand awareness, but with all the clutter of political people we're holding back, which is understandable. So overall, I do expect there is some switch in general from broadcast to digital. As you know, we're one of the local first media company focused on digital. We believe that broadcast, although an incredibly valuable asset with tremendous cash flow properties and connections to the community, and we believe we wouldn't have the success that we've had over the last 10 plus years in our digital efforts without that community connection that radio provides. But for many years, we've said, hey, this is a traditional cash cow business, and we expect it to decline. And if you even go back to the The beginning of the year, when we started the year, we said, hey, we believe our broadcast business will be a slow decliner, and that'll continue for the out years. And that's exactly what's transpired this year, right in line with our expectations. So your last question there was, does National ever, you know, recover and grow again from a broadcast perspective? That's not our expectation. Is it possible? Clearly that's possible. But we believe broadcast is a traditional cash cow and will continue to a slow decline and not return to growth.

On the core broadcasting side, ex political, there was a sequential decline. Can you maybe add some color on what you're seeing and maybe the tone of advertising local, you know, you talked about national, but just talk a little bit maybe about local, And maybe as we go into December, you know, getting outside of the political noise, what you're seeing.

Yeah, perfect. You're exactly right. So in the first half of the year, ex-political was a slow decliner. And that was obviously driven by some of that national being down negative single, mid-single digits. With national now, As we just described, broadcasting going down even further in Q4. Ex-political in Q3 was down about 5% per broadcast. And as we look at the rest of the year, I expect that softness to continue, partially because of that national decline that I just mentioned, over 20% broadcast decline in Q4 currently forecasted. And then, as I just noted, local is definitely a little suppressed. Our expectation is that was really driven by the election and the clutter. And that's why, you know, from in essence, October through yesterday, we saw some additional softness in core. But we expect now with the election behind us to see that uptick, not only through the rest of this year, but into next year. But overall, I still expect. ex-political to be declining probably a little bit more than Q3 because national was down in Q3, but no way it was single digits, mid single digits. So national going from mid single digits to over 20% decline in Q4 is putting a lot of pressure on that core broadcast ex-political in Q4. Does that answer your question, Michael, as it relates to core broadcasting and political?

It does. I have one last question. The Summit Media Partnership is really exciting and Ignite is really obviously one of your bright spots. It's just really growing well. Were there any contributions from Summit in Q3? I know it's ramping, you said, until next year. And then when do you anticipate meaningful revenue contributions from Summit to start to kick in? And I was wondering, in terms of the cost, are there costs associated with this agreement and when do those ramp? And then if you could just finally talk a little bit about the margin profile for the white label business and how that affects the margins, the overall margins for the Ignite business.

Now, great questions, Michael. And thank you, as always, for all of your questions. You know, we're quite pleased, tremendously pleased with our digital programmatic advertising as well as our digital advertising overall. As we noted, first half digital advertising growth was plus 1%. That accelerated to plus 5% in Q3, and now we expect approaching plus 15%. So triple Q3's growth rate in Q4, and that's being driven by two things. One, that national digital business that we described we believe now will be flat to slightly up in Q4, and our digital programmatic business is simply on fire. You know, I... Couldn't be more proud of Todd and his team, Kelly, Matt, Aaron, Elise, Justin, Billy, Tony, JC, Kate, Kathy, just so many people driving this differentiation. And we've been talking about it for years, as you know, on this call, as well as in other meetings about our differentiation of our tech stack, our first party data. And I think we're starting to see that flywheel and that momentum really pick up in digital advertising, which is nice to see. And that, in essence, has caused others in the broadcast space, be it TV and radio broadcasters. And quite honestly, since our last call, a lot more local agencies, including local digital agencies, approaching us and saying, hey, is there a way for us to benefit from this expertise and differentiation that you've built in your digital advertising business? And as I shared in the beginning of the year, we created the media partnership business. We started with one broadcaster in one market, tested that as a trial. That's gone tremendously well and gave us the confidence to to then partner with Summit Media. And Carl Palmer is just a tremendous partner in this endeavor. And as it relates to your specific questions, no material revenue in Q3. There is a few hundred thousand dollars expected in Q4, but we would still be growing or approaching plus 15% even without that few hundred thousand dollars of media partnership revenue. In terms of the cost, It's really our personnel. You know, we're partnering with them. We're treating them almost like they were part of our company. So, you know, our buying team, our creative team, our digital campaign managers, our optimization, our reporting, we are doing all of that in conjunction for Summit sales teams and their clients. So the cost is really our personnel and our expertise. And that's one of the reasons I think so many, you know, we're getting now dozens of inbound calls and partnership opportunities. That is quite exciting. The good news for us is digital advertising for many years has been the fastest growing part of our company. Programmatic is the main driver of that, yet our O&O is very healthy because of the first party data. As I noted on in the prepared marks, 60% of our digital advertising is now programmatic. So now you factor in this potential really significant media partnership opportunity where, you know, we can really become the chosen provider of digital programmatic advertising to broadcasters and local agencies, and it's quite exciting. Again, we need to prove success and then continue on. So the margin profile, which was your last question about this exciting media partnership division, is slightly compressed from our overall margins. So our digital advertising margins have been quite strong. I would put this down, you know, maybe in the high teens in terms of margin, because we obviously have other variables to support that and make sure that Summit is benefiting from the partnership just as we are. And most importantly, that the campaigns and the advertising we're running is working for the clients. That is our North Star advantage. regardless if that's broadcast advertising, regardless if that's digital advertising or Town Square Interactive. So we're quite pleased with digital advertising, as you noted. We're also quite pleased that we had sequential improvement across all three of our business segments. But I'll toss it back to you, Michael, in case you have any follow-ups. Otherwise, we'll continue on.

Thank you. Thanks for all the color. That's all I have for now. I'll let others ask questions. Thank you. Thank you, Michael.

Our next question comes from the line of Patrick Shaw from Darrington Research. Please go ahead.

Hi. Good morning. I just had a question about maybe the debt refinancing. I was just wondering if the recent shift in interest rates changes how you are looking at approaching that.

Thank you, Patrick. Good to hear from you this morning, and good morning as well. Our current... expectation is that we will do a variable instrument. So we'll be doing a bank loan instead of our current bonds and that we would be doing that in the beginning of 2025. Obviously, the Fed will be announcing their decision later today based on our partners in the banking industry. And I think the world at large, they expect another 25 basis point cut and then determine based on future data if there's a cut in December or there'll be a pause until December. Q1 of 2025. So the interest rates, our expectation is between now and a year from now, they continue to come down. Obviously the 10 years gone up with the Trump trade and really spiked to where we were last August. But in terms of the short term and the one month, three months over, that's come down quite nicely, which lends itself to our refinancing in Q1 before our bonds become current in February. Stu, I'll just pause there in case you want to add anything else for Patrick.

No, that is it. And as over the years, as interest rates come down, we'll benefit from them. And as our leverage comes down, you know, with the bank loan, we'll hopefully be able to reprice our spread in, you know, six months and going forwards.

Okay. And then maybe on the digital advertising side, you mentioned the, you just mentioned in answering Mike's question about, you know, the national digital websites being a part of that improvement. I was just wondering if there was like any specific like ad formats or different like inventory that you're serving, helping your local advertisers access or helping support that growth rate?

Yeah, no, great question. So, you know, there's definitely been a lot of change in just digital media in terms of the algorithms and what Meta's done and what Google's done. Some people have speculated that that was leading up to the election and You're probably very familiar with if you go into a search engine, you're getting a lot more ready content up the top versus other things in the past. So I'm very pleased that our national digital business as we go into Q4 is no longer suffering those losses that we've experienced from a revenue as well as a profit perspective through the first three quarters. And that, to your point, is driven really by a few factors. One is social. You know, our social footprint on our national is quite strong in terms of our brands like Taste of Country and XXL and Loudwire and so forth. We're also seeing video advertising improvement. Our video, we have an amazing multi-channel platform through YouTube, and that audience continues to grow across our national brands. And so we're seeing an increase in social advertising, video advertising, as well as a nice at least plateau, if not growth, in core display ads on the websites as well as the mobile apps. And we're also seeing the great news as, you know, we talked about this before, you know, couldn't be more proud of our content contributors locally who are not only driving that connection through our broadcast business, but for our O&O on our local websites. And particularly with the demise of the newspaper industry, we are really serving, A, a community function, but it's a very healthy business, gives us great consumer insights, I believe we have more data on our consumers and our 74 markets than anyone else because of that digital audience that we have. And we're now starting to recover on the national side, and hopefully that answers your question in terms of why and some of the incremental formats of social and video growing more so than they have in the past, Patrick.

Okay. Thank you. You're welcome. Thanks, Patrick. Again? Please press star one to ask the question. There are no questions at this time.

Mr. Wilson, please go ahead.

Thank you, operator, and thank you for all joining to get an update on Town Square's not only Q3 results, but as we look at it the rest of the year and importantly set up for a solid 2025. We look forward to updating you. Next March, if you have any questions between now and then, please don't hesitate to reach out to us and have a great Thanksgiving and holiday season. Thank you all.

This concludes today's conference call. You may now disconnect. Thank you, everyone.