SGA — Saga Communications, Inc.

Summary of Saga Communications Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Revenue: Decreased by $528,000 (1.8%) to $28.2 million compared to $28.7 million in Q3 2024.
• Station Operating Expense: Increased by $2 million to $24.7 million, primarily due to a retroactive music licensing settlement with ASCAP and BMI.
• Operating Loss: Reported at $626,000; without the settlement, operating income would have been $1.5 million.
• Station Operating Income: Non-GAAP measure reported at $3.5 million; would have been $5.6 million without the settlement.
• Gross Broadcast Revenue: Decreased by $1.8 million (6.8%); however, gross interactive revenue increased by $1.1 million (32.6%).
• Political Revenue: Dropped significantly to $73,000 from $677,000 in the prior year.
• Nine-Month Results: Net revenue down $3.1 million (3.7%) to $80.6 million compared to $83.7 million in the same period last year.

2. Strategic Updates and Business Highlights

• Digital Strategy: Saga is implementing a blended digital strategy aimed at doubling gross revenue, primarily through digital channels, within 18 to 24 months.
• Tower Sales: Completed the sale of telecommunications towers for approximately $10.7 million, with plans to use proceeds for stock buybacks and other capital allocations.
• Dividend: Paid a quarterly dividend of $0.25 per share, totaling approximately $1.6 million, with over $140 million paid in dividends since 2012.
• Corporate Expenses: Decreased by $80,000 for the quarter; annual corporate expenses expected to be around $12 million for 2025.

3. Forward Guidance and Outlook

• Fourth Quarter Pacing: Currently pacing down approximately 11% overall, including political revenue, and 4.7% when excluding political.
• Interactive Revenue Growth: Strong pacing for interactive revenue, up 32% for the fourth quarter.
• Station Operating Expenses: Expected to remain flat for 2025, with potential decreases if excluding the music licensing settlement.
• Capital Expenditures: Anticipated to be between $3.25 million to $3.75 million for 2025.

4. Bad News, Challenges, or Points of Concern

• Revenue Decline: Overall revenue decline due to decreased broadcast revenue and significantly lower political revenue.
• Operating Loss: The company reported an operating loss largely attributed to the music licensing settlement, which impacted profitability.
• Market Conditions: National advertising revenue is weak, impacting overall pacing and revenue growth.
• Economic Sensitivity: Concerns about the delayed impact of Fed rate cuts on local advertising markets, with broader economic factors affecting performance.

5. Notable Q&A Insights

• Market Tone: Local pacing remains consistent, but national advertising is weak, with digital pacing showing strong growth.
• Buyback Plans: Uncertainty regarding timing and amounts for stock buybacks post-tower sale due to complexities in the transaction.
• Economic Factors: Discussion on how broader economic conditions, including housing starts and auto purchases, influence radio advertising performance.

Overall, while Saga Communications is facing challenges with revenue declines and operating losses due to external factors, the company is actively pursuing a digital transformation strategy and remains committed to shareholder returns through dividends and potential stock buybacks.