Townsquare Media, Inc.TSQ
Townsquare Media, Inc. Commitments Disclosure
Lease and Other Commitments
Our lease agreements are primarily for facilities, land, radio towers and other equipment used in our operations and contain renewal options through 2088, escalating rent provisions and/or cost of living adjustments. The majority of our leases are operating leases, although we have several finance leases for equipment as the lease term represents a significant portion of the useful life. In several cases, we have lease arrangements where the lease payment is based upon the consumer price index. Our lease agreements generally do not contain guarantees of the residual value at the end of the lease term or restrictive financial or other covenants.
Total rental expense, including costs incurred for live events such as venue and equipment rentals, for our operating leases was $13.8 million and $14.7 million for the years ended December 31, 2024 and 2023, respectively, and is included in Income from operations.
In September 2015, the Company closed on the sale of 43 towers located on 41 sites in 28 markets to a subsidiary of Vertical Bridge, LLC ("Vertical Bridge") (the "Tower Sale"). The divested towers house antenna that broadcast certain of the Company’s radio stations. As part of this transaction, the Company leased a portion of the space on the sold towers that house certain of the Company's antenna. The lease is for a period of 35 years, including an initial term of twenty years and three optional 5-year renewal periods. The Company pays $41 of rent per annum ($1 per site per annum) to Vertical Bridge for the right to house its existing antenna on the divested towers. In addition, the Company determined that the lease is an operating lease and is amortizing the long-term prepaid rent asset and deferred gain on the sale of towers as offsetting amounts over the lease term. The ending balances of the prepaid rent asset and deferred gain, including the current portion of $0.2 million, as of December 31, 2024 and 2023 were $5.4 million and $5.6 million, respectively. The Company will continue to amortize these balances over the remaining lease term.
Weighted-average remaining lease term (in years) and discount rate related to leases were as follows:
| Weighted Average Remaining Lease Term | December 31, 2024 | December 31, 2023 | |||||||||
| Finance Leases | 24.12 years | 24.28 years | |||||||||
| Operating leases | 8.38 years | 6.71 years | |||||||||
| Weighted Average Discount Rate | |||||||||||
| Finance Leases | 7.41% | 7.40% | |||||||||
| Operating leases | 6.93% | 6.98% | |||||||||
Maturities of lease liabilities for operating leases are as follows as of December 31, 2024 (in thousands):
| 2025 | $ | 11,729 | |||
| 2026 | 9,196 | ||||
| 2027 | 7,423 | ||||
| 2028 | 6,531 | ||||
| 2029 | 5,427 | ||||
| Thereafter | 23,549 | ||||
Total operating lease payments | 63,855 | ||||
| Less: imputed interest | (16,014) | ||||
| Add: deferred gain sale leaseback transaction | 5,362 | ||||
| Total | $ | 53,203 | |||
Maturities of lease liabilities for financing leases are as follows as of December 31, 2024 (in thousands):
| 2025 | $ | 191 | |||
| 2026 | 152 | ||||
| 2027 | 120 | ||||
| 2028 | 108 | ||||
| 2029 | 101 | ||||
| Thereafter | 2,909 | ||||
Total financing lease payments | 3,581 | ||||
| Less: imputed interest | (2,093) | ||||
| $ | 1,488 | ||||
Finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on our Consolidated Balance Sheets.
The components of lease costs recorded to operating and corporate expense where the short-term lease measurement and recognition exemption was not applied are as follows (dollars in thousands):
Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||
| Operating lease cost | $ | 11,309 | $ | 11,831 | |||||||
| Short-term lease cost | 5 | 33 | |||||||||
| Variable lease cost | 10 | 13 | |||||||||
| Total lease cost | $ | 11,324 | $ | 11,877 | |||||||
Other Commitments: The radio broadcast industry’s principal ratings service is Nielsen Holdings N.V. (“Nielsen”), which publishes surveys for domestic radio markets. The Company’s remaining aggregate fixed obligation under the agreements with Nielsen as of December 31, 2024 is approximately $8.5 million and is expected to be paid in accordance with the agreements through September 2026. In addition, the Company has aggregate commitments of $3.7 million for a business management platform through October 2026.
Future expected payments under these agreements as of December 31, 2024 are as follows (in thousands):
| 2025 | $ | 9,165 | |||
| 2026 | 3,062 | ||||
| 2027 | — | ||||
| 2028 | — | ||||
| 2029 | — | ||||
| Thereafter | — | ||||
Total purchase obligations | $ | 12,227 | |||
Total payments made under these agreements were $9.1 million and $8.7 million for the years ended December 31, 2024 and 2023, respectively.
Commitments and ContingenciesThe Company is involved in legal proceedings in which damages and claims have been asserted against us. The Company believes that we have valid defenses to such proceedings and claims and intends to vigorously defend the Company. Management does not believe that any such matters will have a material adverse effect on our financial position, results of operations, or liquidity. The Company records a loss contingency if the potential loss from a proceeding or claim is considered probable and the amount can be reasonably estimated or a range of loss can be determined. The Company provides disclosure when it is reasonably possible that a loss will be incurred in excess of any recorded provision. Significant judgment is required in these determinations. As additional information becomes available, the Company reassesses prior determinations and may change its estimates. Litigation is subject to many uncertainties, and the outcome of litigation is not predictable with assurance.About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.