Greetings, and welcome to the Townsquare Media Second Quarter 2014 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alex Berkett, Executive Vice President. Thank you, sir. You may begin.

Thank you, operator. And good morning to everyone. Thank you for joining us on -- today, for Townsquare Media's second quarter 2014 financial update. With me on the call today are Steven Price, our Chairman and CEO; and Stuart Rosenstein, our CFO and Executive Vice President. Today, Steven's going to provide an overview of our company and we're going to update you on our second quarter financial results. Please note that during this call we may make statements that provide information other than historical information, including statements related to the company's future 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 those projections. These statements reflect the company's beliefs based on current conditions but are subject to certain risks and uncertainties that are detailed in the company's S-1 filed with the SEC, and we incorporate these by reference for this call. We may also discuss certain non-GAAP financial measures, including direct profit and adjusted EBITDA and make certain pro forma adjustments. Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly and year end reports available on our website. At this time, I would like to turn the call over to Steven Price.

Thank you, Alex. Good morning, everyone. We really appreciate you joining us today. Before I get started, I'd like to take a moment to thank everyone who helped us through our recent IPO process. Our employees, customers and advisers were all essential in this effort. In addition, I would like to thank the new investors, who spent time to learn about our company and who had the opportunity to see what we believe is a tremendous opportunity in Townsquare Media, as we execute in our goal of being a diversified media and entertainment company, focused on small and midsize markets and creating long-term shareholder value along the way. Since this is our first earnings call as a public company, I thought I'd take the opportunity to briefly introduce you to Townsquare Media, for the benefit of our new equity investors and for others we may not have met on the road show. Townsquare Media is a diversified media entertainment and digital marketing services company, focused on small to midsize markets across the United States. We own 311 radio stations and over 325 local companion websites in 66 small to midsize markets. A leading national portfolio of music and entertainment, digital properties, reaching over 75 million U.S. unique visitors monthly and approximately 500 Live Events. These are all great assets and businesses unto themselves, but what we believe makes Townsquare Media unique is our integrated media and entertainment platform, or what we call, Townsquare Everywhere, our go-to-market strategy. We are focused on being relevant to consumer and being everywhere that customer is, whether they are online, on air or on site. We focus on the small and midsize markets, where other large-scale operators don't and I believe this is a key differentiator to our diversified revenue strategy. This strategy enables us…

Thank you, Steven. And good morning, everyone. As a reminder, the results that Steven referred to earlier are not GAAP financial statements. Instead, the results reported reflect pro forma same-store sales for all material M&A activity completed by June 30, as if they had occurred at the beginning of the reporting in the comparison periods. Please refer to the table that we have provided in our earnings release, which provide GAAP results, the abridged to our pro forma results and non-GAAP performance measures. Since we've made several material acquisitions in the past year, we feel it's important to report our comparative results in a more meaningful way. Unless otherwise stated, all of the financial results discussed will be pro forma for these completed acquisitions. For the quarter ended June 30, 2014, net revenue was $106.3 million, up $7.7 million, an increase of 7.8% from the same period last year. Local Advertising revenue was effectively flat at $78 million, a decrease of approximately $200,000. Local Advertising was adversely impacted by underperformance in a few of our newly acquired markets as well as the harsh winter weather and wet spring, particularly in the Northeast. This combined with overall softness in the economy in Q1; led advertisers to pull back on advertising spend in Q2. Other Media and Entertainment revenue increased 39.3% or $8 million to $28.2 million, reflecting strength across our digital marketing services, national digital and Live Events businesses. Total direct operating expenses increased 11.2% or $7.2 million as compared to the same period last year of which Local Advertising accounted for $600, 000 of the increase, which was primarily the result of increased investment in the markets we acquired from Cumulus and Peak at the end of last year. Other Media and Entertainment expenses increased $6.6 million. This resulted in…

Thanks, Stu. Again, we are pleased with our second quarter results and I believe we're off to a good start as a public company. Over the past 4 years, we have worked extremely hard to evolve traditional media assets into an exciting, diversified media and entertainment company focused on small to midsize markets cross America. We believe that we have the right strategy, the right vision, the only scale platform, a terrific team and great products. We believe that we are well-positioned as a cross-platform, multiproduct company with a significant market opportunity. And we believe our strong second quarter results demonstrate the strength of this diversified strategy. We're excited about our future and we hope you agree. As a sign of our commitment and belief in the long-term benefit of our Townsquare Everywhere strategy, you may have seen the recent SEC filings, which indicate the open market purchases of stock by both Oaktree and me. We are believers in the Townsquare story and are fully aligned with shareholders, as we look to grow shareholder value in the future. Thanks, again, for taking the time to learn more about our story. And with that, we're now happy to open the call for questions. Operator, will you please open up the lines?

[Operator Instructions] Our first question comes from the line of Bryan Goldberg with Bank of America Merrill Lynch.

Got a couple, first, on Local Advertising. Could you give us a little bit of color on the categories, ad categories, their strength or weakness in the second quarter and I guess, what are current pacings looking or feeling like, right now, in the third quarter? And then I got a couple of follow-ups.

Okay, sure. Thanks, Brian. The categories that were strongest in the second quarter were real estate, vehicles and equipment, travel, IT services and then a variety of miscellaneous. And some of the weaker categories were retail, entertainment, auto, in some sectors, in some parts of the country food and beverage and services.

And asked as -- I mean, what does the current pacing feel like in the third quarter? I mean, that thing's changed much sequentially or...

So in terms of pacings, our guidance policy is going to be to give a range and we expect, as Stu said, net revenue to grow in the mid to high single digits in the third quarter, that's as a company. And I would say we haven't seen anything in our pacings that would make us feel differently from that guidance.

Okay, fair enough. And then with respect to the 4 recently acquired markets that you identified is underperforming, where you've changed management. I'm just curious, had you already attempted to integrate or implement the Townsquare strategy in these markets and it wasn't being executed satisfactorily or is this more of a function of just completing the initial integration process from the deal? Meaning, you're really yet to deploy your strategy in the market, so just kind of curious with what's going on there? And then are there any other markets from the recent acquisitions where you may have more work to do from an integration standpoint?

So I wouldn't call it integration because we relatively quickly put new markets on our -- we've done this a number of times, put new markets on our platforms and on our systems. To some extent it's getting -- seeing if you have the right local talent. As you know, we are a pretty decentralized company and we rely heavily on our local in-market talent and when that local talent, either isn't used to doing what we want them to do or isn't up-to-speed or in some cases incapable, that's when you want to make a change. So it's not like they didn't have sort of the, I guess, the playbook. Although, it's not actually a playbook it's, sort of, the training from of all of our folks. It's that they just -- that local team couldn't do it so we changed our management. And I think in a number -- and in one of those cases it wasn't the manager, it was -- that it did slipped through some poor ratings over the past couple of years and it caught up with it. So in that case, in that one case, it wasn't that the local manager, we don't think, could do the job, it was just some things going on in the market. As you know, in our company it's sort of 66 different stories, each market's a little different. But in the 3, we feel very good about the people that we brought on. In some cases, we've known them for a while. And in those particular markets, those 3 in particular, we're seeing much better results in July and in August. As of now, we don't foresee other situations with the new markets, where we have a problem with the local team that we have to do a wholesale change, but we constantly monitor that. And this is not -- the only thing I'd say is Bryan, this is somewhat typical. In a sense, unfortunately, a couple of these markets are some of the larger markets in this acquisition. But in every acquisition, there are some markets that take longer and to, in our view, get it and some that are shorter. But in all other cases, we think that -- but we will see significant improvement by the end of the year.

Okay. And then my final one, my final question is on media entertainment or Other Media and Entertainment. It seems like Live was the largest driver of growth this quarter, can you just give a little more color on the components of the growth in Live? Just really, was it more weighted towards adding new events or improved yield per event? And then, just kind of following up on another comment you made earlier about syndicatable Live Events, can you help us think roughly what portion of your events today you believe are syndicatable and then, how far along are you in actually syndicating them so we can kind of think about the opportunity there?

Yes, we think many of the -- as we've talked about -- when we talked to folks during the roadshow, we think many of the concepts, obviously not all, but many of them are syndicatable and many of those are syndicatable everywhere. Obviously, if you do pond hockey tournaments, you're not going to do that in the South. But that's sort of for our local producers and promoters to figure out what makes sense in those markets. We did increase the number of events in the second quarter of 2013, we did a 120 Live Events, in the second quarter of 2014, we did a 157 Live Events, so it gives you a little bit of sense on how, sort of, the addition. And that's what we -- consistently what we have said, which is, one of the growth strategies is to grow the number of events. Obviously, other is to grow the revenues within the existing events and we'll continue to do that and did that in the second quarter as well. So Live Events had quite a strong quarter. Second quarter does tend to be a little bigger for Live Events, because the ability to do outdoor things and the likes. But I would say that, that the segments of media and entertainment had strong quarters as well.

Our next question comes from the line of David Bank with RBC Capital Markets.

So I just kind of have 2 follow-up questions. The first is, in the markets where you said you saw the hangover of the weather, can you -- in Q2, can you talk about the sequential acceleration that you're seeing, hopefully, on a delayed basis, in those markets in the 3Q? And I'll give you the second question, which is, as you're looking at the political dollars starting to pace or whatever your view of the political dollars is today, how do you benefit versus other players in the broader radio industry right now, given the digital platforms that you're able to complement, traditional radio spots would like -- if you look at how the political dollars are being spent, are you -- how are they being distributed? Is there anything surprising about it? Do you -- does the platform offer something that's really enabling you to capture more share of political dollars because of that cross-platform, say, at the local markets?

So, thanks, David. I'll answer your second on political. Political, as you know, is not a huge driver for us so we do expect sort of a 1% of revenue kind of number. So it's not something that we spend -- that we, unfortunately, get a lot of feedback from the campaigns and the like, although we try. Historically, I think broadcasters, our company among them, was pretty reactive. You get an order on Monday; you got to run it Thursday. So as the Cumulus folks said on their call, I think, yesterday, someone said that it books late which we totally agree with. It does book late, so it's hard to know exactly what it's going to look like in the third quarter. Clearly, our play -- clearly, we are trying to move all of our advertisers, including political advertisers, not only to broadcast but to digital. And I say, candidly, we've taken baby steps towards that and we'll get a little, but it's clearly something that we'd like to focus on a little bit more. And we do actually have an internal team that started up about 3 months ago to focus on this issue. Now obviously, that's not going to help us this year but it will in '15 and '16. So generally, on Local Advertising, I'll make one general comment and then I'll answer specifically. No one in media and entertainment was immune from the difficult advertising market in the second quarter and it did affect a number of our markets, although not all of our markets. But in general, we believe that our diversified revenue strategy, our emerging growth businesses and our focus on smaller, less competitive markets allowed us to significantly outperform in the second quarter and we expect will continue to do so in the future. Now as to the hangover in a couple of markets that we had, I think it's twofold. Candidly, it's -- some of it is the local leadership in the market, and my view is great local leadership in some cases can significantly mitigate what's going on, either economically or weather-wise, not all of it. So I think we've done something there. But we have seen, I would say, things get better in the markets, in a couple of northeastern legacy markets where we saw some real softness. I would not say it's great, but getting better in the third quarter.

[Operator Instructions] Our next question comes from the line of Amy Yong with Macquarie.

One for Steven and one for Stu. So Steven, can you just talk a little bit about some of the longer-term digital mobile initiatives? Anything particularly that's resonating well, either from a sales perspective or different brands that you're seeing in the marketplace? And then, Stu, can you just prioritize uses of the free cash flow at this point, I guess, deleveraging and also any particular Investments that you would highlight? And then I guess, what are your plans for the credit facility, any thoughts on that?

Sure, thanks, Amy. I would say that our -- bucketing our digital products, it's the local digital businesses that are within Local Advertising and then our digital marketing services and our national digital business. And I would say they're all growing nicely and on track, just like we had talked about during the roadshow and in our S-1. We don't see, in any case, any of those either doing significantly better or significantly worse than our plan. So I think we're executing -- we have a diversified revenue strategy, our Townsquare Everywhere go-to-market strategy, and we're executing along that plan and that's -- have a wide variety of products for different advertisers there and we don't see anything different than that. Stu, do you want to talk about the cash flow?

Sure. Thanks, Amy. So uses of our excess cash flow. First, we're going to look for accretive acquisitions and absent any accretive acquisitions, we will look to pay down our bank debt. That said, Alex is very good at finding real good accretive acquisitions, so my first -- my estimate is that we're going to basically make good accretive acquisitions, both in the events space and someplace else. Our credit facility, as you know, we just increased our revolver. We have no immediate plans to use our revolver. We also have coming due in April, the end of our no-call period is up in April of 2015, so we're going to, hopefully, look to refinance our entire debt facility. Fund and then bank and then rebalance it. That will give us the ability to actually save between $10 million and $14 million or $15 million of interest expense, should the markets stay the same, on an annual basis.

Mr. Price, it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Great. Thank you so much. Thanks, everyone, for joining us on our first quarterly conference call. If people have thoughts or suggestions, please let us know. Things you'd like to hear or like us to do on subsequent calls because these calls are really for you. And if you have any questions, you not need to wait 90 days to hear from us again, feel free to give us a call. And with that appreciate your time this morning and we'll talk soon.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.