Why Did Townsquare, MSG Form Partnership?

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Townsquare CEO Steven Price’s philosophy has always been to diversify. Townsquare uses the power of radio to promote, execute and drive attendance to local concerts, fun runs, craft beer festivals and other events. A good example of that philosophy was the 2015 purchase of NAME, a company that operates amusement attractions at 150 fairs every year. Townsquare operates in small and mid-sized markets and this new relationship with MSG would seem to add the opportunity to step up into larger cities and add to Townsquare’s live event business. How will that relationship work exactly? We spoke to Townsquare CEO Steven Price yesterday about the new partnership.

RI: Why do this deal with MSG?
Price: Technically, we didn’t do a deal with MSG. GE did a deal with MSG. GE owns 12% of our company from the beginning, and when they sold the rest, they sold GE Capital, of which this stake was a part. They held the Townsquare stake and a few other stakes and had said about 8 months ago that it was an asset held for sale because they were getting out of all of their financial investments. And when they approached us quite recently about selling the stake, we introduced them to one or two folks who we had a relationship with, who we thought might be interested. This isn’t a transaction with the company. It’s a sale of a block from one shareholder to another shareholder. That said, we were involved. We are super excited. MSG is going to have an observer on our board. We think there are lots of potential strategic things we could go do with them. It’s a shared vision, whether they have a venue and want to build content around a venue, or we have radio stations and want to build a community around that. They tend to focus, as you know, on the larger markets — New York, L.A., Boston, Chicago — and we tend to focus on smaller to mid-size markets. So it’s a nice complement, and we think, a natural partnership to collaborate.

RI: Irving Azoff. Do you have a previous friendship there that made this all come together? Price: Yes. I do. And we do. We’ve had a relationship… I have, personally and am a huge fan of Irving and everything that he’s done and the business he’s built and the credibility and integrity that he has. He has been a partner with Townsquare for the past year or so, helping us think through different parts of our business. So, we are very excited to be working even closer with Irving, as well as with MSG.

RI: You say he’s been working with you guys over the last year. Can you tell us anything more about that?
Price: Strategic advice. We’re in and around music, entertainment, media. So is he. He has terrific insights, relationships, and we talk with him about various parts of our business and he’s given us advice and counsel and other things along those lines.

We’ve been growing our live event business for a number of years across vertical, both music and non-music. We hope to continue to do that on our own, and now with MSG’s involvement, hopefully that will accelerate and allow us to continue to build out content and live entertainment.

RI: Do you have any specific markets that you’ve discussed that you would want to have a first collaboration in?
Price: It’s probably early for that. My guess is we will walk before we will run, which is generally my business philosophy.

RI: What do you want all Townsquare employees to take away from this announcement?Price: I think this validates our company, our operating thesis, and our employees. And it has validated our strategy by one of our world’s foremost entertainment companies. We are really excited to work with Irving and the folks at MSG to collaborate on various projects and partner in a number of ways.

RI: In your last earnings call, you mentioned the events business was going through some challenges. Is it looking better?
Price: I was referring to the music festival part of our business. And as everyone knew, there was a large explosion in the number of festivals. And people knew there was going to be some shakeout. And that happened this year. And we were a survivor, as we said. At our major music festivals, out attendance was flat this year, which we view as quite impressive. Our festivals didn’t perform as well as we had hoped, but we have very strong brands. Pacings for next year, because we put tickets on sale at this year’s festival… next year’s festivals are very strong. The strongest we’ve seen in a number of years. So, we are optimistic that whatever short-term issues in the festival business are behind us. We like to protect the franchises we have in northern Minnesota, western Colorado, and upstate New York and Montana, and the places where we have what we think is a competitive advantage, given our footprint.

RI: And putting the MSG name next to some of them would undoubtedly help in the future?Price: We will have to figure out how we brand things and if we use their name. That’s down the road. But today, we are excited. They took an ownership interest, an equity interest in us, a financial interest, and we hope to figure out great ways to work with them.

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