Q4 2023 Saga Communications Inc Earnings Call
Operator: I appreciate it. Please hold the line, and we'll be right back with you. Good morning everyone, and welcome to the fourth quarter and year-end earnings release conference call. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to your host, Chris Forgy. Sir, the floor is yours. Thank you, Matt. Have you ever considered a...
<unk> hold the line and we'll be right back with you.
[music].
Good morning, everyone and welcome to the fourth quarter and year end earnings release Conference call.
At this time, all participants have been placed on a listen only mode. It.
It is now my pleasure to turn the floor over to your host crisp Archie Sir the floor is yours.
Thank you Matt have you ever considered a.
The Caribbean broadcasting.
Christopher S. Forgy: Thank you to everyone who has taken the time to join Saga's Q4 and Year End Earnings Call. We do appreciate your continued interest and participation in Saga Communications. A company that we believe is the best broadcast company on the planet. As usual, we have a lot to talk about today, a new variable dividend program, $40 million worth of dry powder on hand, and something else new and different in the broadcast sector these days, an accretive acquisition. Firstly, we are pleased to announce the addition of the Lafayette, Indiana cluster to the Saga family by way of Newhoff Media, and Lafayette is expected to close in mid-May of this year. Lafayette is home to Purdue University, Sam Bush, and now Saga Communications.
Towns you started with this morning, so thanks very much for that and thank you to everyone who has taken the time to join <unk> Q4 and year end earnings call. We do appreciate your continued interest in participation in saga communications.
The company that we believe is the best broadcast company on the planet.
As usual, we have a lot to talk about today.
Variable dividend program $40 million worth of dry powder on hand.
Something else, new and different in the broadcast sector These days and accretive acquisition.
Firstly, we were pleased to announce the addition of Lafayette, Indiana cluster to the saga family.
We have new half media and.
Lafayette is expected to close in mid May.
Or two of this year.
He had his home to Purdue University, Sam Bush and now the Saga communications Lafayette folds beautifully into sagas roster of markets and it's consistent with our target market acquisition strategy.
Christopher S. Forgy: Lafayette folds beautifully into Saga's roster of markets and is consistent with our target market acquisition strategy. And as a market that we have coveted for a number of years, we're acquiring an entity with great brands and a talented group of passionate broadcasters. We're frankly delighted to get started.
And as a market frankly that we have covenant for a number of years, we are acquiring an entity with great brands and a talented group of passionate broadcasters.
And we're frankly delighted to get started.
Christopher S. Forgy: And once Saga-fied, Lafayette has the potential for growth in several verticals, including local, digital, and e-commerce. We previously forecasted a 16 market launch of our new online news service. This was to be completed by the end of 2024. As of today, I'm pleased to announce that we have already generated over $1 million in pre-booked revenue for 2024, and the year-end timeline has been accelerated to have not 16, but 18 markets online by the end of, not the end of the year, but by the end of quarter two. Also, in previous earnings calls, we've reported the intensity with which we utilize AudioSpecSpotCreative to present ideas to customers to use as on-air messaging. In 2021, we produced 21,000 spec spots across the company.
What saga Fide Lafayette as has the potential for growth in several verticals, including local digital and E Commerce.
We previously forecasted of 16 market launch of our new launch online New service.
This was to be completed by the end of 2024 as of today I'm pleased to announce that we have already generated over $1 million in pre booked revenue for 2024 and the year end timeline has been accelerated to have not 16, but 18 markets online by the end of the end of the year, but by the end of Q4.
And are too.
Also in previous earnings calls, we have reported the intensity with which we utilized audio spec spot creative to present ideas to customers to use us on their messaging.
In 2021, we produced 21000 spec spots in the company in 2022 that number rose to 25000 and again I'm pleased to announce that in 2023, we have produced 25500 spec spots for our customers in our marketplaces.
Christopher S. Forgy: In 2022, that number rose to 25,000. And again, I'm pleased to announce that in 2023, we have produced 25,500 spec spots for our customers in our marketplace. The activity level on our Saga markets is at an all-time high, yet our appetite for success is really never satisfied. Are we experiencing the same countervailing forces you frequently hear about on other earnings calls? Absolutely.
The activity level of our saga markets is at an all time high yet we're really never our appetite is really never set for success is really never satisfied.
Are we experiencing the same countervailing forces you frequently hear about another earnings calls absolutely you bet we are.
Christopher S. Forgy: You bet we are. Inflation, interest rates, political upheaval, and general economic headwinds. Oh yes, I almost forgot this one. Business bookings later and later in the year. You've probably heard that one a number of times on the calls you've been on.
Inflation interest rates political upheaval and general economic headwinds Oh, yes, I almost forgot this one business booking later and later in the year you probably heard that one the number of times on these calls you've been on.
Christopher S. Forgy: The truth is that we really don't or can't control any of these things, can we? We have a picture that hangs in the office of every one of our market managers on the wall that reads, "we cannot direct the wind; we can only adjust the sails, which is exactly what we set out to do 13 months ago, adjust the sales." This was done to enable us to navigate in angry economic waters. In fact, we chronicled all that we have implemented in the last 13 months and identified 37 different data points. Now, this isn't like 37 points of light that you may have heard of back in the 80s and 90s.
The truth is that we will.
Don't or can't control any of these things carefully.
We have a picture that hangs on the office of every one of our market managers walls that reads, we cannot direct with the wind.
Can only adjust the sails.
Which is exactly what we set out to do 13 months ago.
The sales.
This was done to enable us to navigate an angry economic waters.
In fact, we chronicle all the we have implemented in the last 13 months and identified 37 different data points. Now this isn't like 37 points of light that you may have heard of back in the Eighty's Ninety's.
Christopher S. Forgy: This is 37 different data points that exist in Saga today that did not exist 13 months ago. If you're interested, you will be able to find all of these data points in the annual president's letter in Saga's 2023 annual report. And a note to make is that we share the year-end and fourth-quarter earnings with you. Please note that many of the processes installed are just now beginning to bear fruit.
This is 37 different data points that exist in saga today that did not exist 13 months ago.
If you're interested you will be able to find all of these data points in the annual President's letter in August 2023 annual report.
And of note to make is we share the year end and fourth quarter earnings with you. Please note that.
Many of the processes installed are just now beginning to bear fruit.
We asked the question where would we be today without the deployment of these growth strategies.
Christopher S. Forgy: You know, we asked the question, where would we be today without the deployment of these growth strategies? Probably right where right where many of our operators in the sector are currently, in double-digit decline. So with that, here are a few of the highlights from Q4, as well as the year ending 12-31-23. National in Q4 was down 4.2%, but for the year ending 12-31-23, it was up 3.7%. Local Q4 was down 1.7% and for the year ending 12-31-23 was down 2.7%. Streaming business, which monetizes the simulcast streams of our over-the-air broadcast through multiple distribution channels, both locally and programmatically, was up 46% for the year ending 12-31-23.
We're right where many of our operators in the sector are currently in.
In double digit decline.
So with that here are a few of the highlights from Q4.
As well as the year ending 12 31 23.
Isn't that a national in Q4 was down four 2%, but for the year ending 12, 31 23 was up three 7%.
Local Q4 was down one 7% and for the year ending 12, 31 23 was down two 7%.
Streaming.
Streaming business, which monetize a simulcast streams of our over the air broadcast through multiple distribution channels, both locally and programmatically was up 46% for the year ending 12 31 23.
Christopher S. Forgy: It was up from 2.6 million in 2022 to 3.9 million in 2023. Total Interactive for the quarter was up 35.4%, and for the year ending 12-31-23 was up 24.6%. These interactive numbers represent 8% of our total net revenue, with a total 2024 goal of achieving 11% in net risk. E-commerce. E-com provides advertisers who have a limited budget or wish to augment an existing ad campaign the opportunity to do so in exchange for gift certificates to their businesses.
It was up from $2 6 million in 2022 to $3 9 million in 2023.
Total interactive for the quarter was up 35, 4% and.
And for the year, ending 12, 31, 23 was up 24, 6%.
These interactive numbers represent 8% of our total net revenue.
With a total of 2024 goal of achieving 11% and net risk.
E Commerce E. Com provides advertisers who had a limited budget or wish to augment an existing AD campaign the opportunity to do so in exchange for gift certificates to their business those.
Christopher S. Forgy: Those certificates are then posted on our station deal sites and sold at a discount. We then retain the revenue, and our customers utilize said revenue to purchase advertising on our market stations. This vertical helped us generate $1.4 million in the year ending 12-31-23. By the way, a 100% increase and still growing. Total net rev Q4 was down 3.2% and for the year ending 12-31-23 was down 1.85%. Again, a note of interest, excluding politics.
Those certificates are then posted on our station deal sites and sold at a discount we didn't retain the revenue and our customers utilize shed revenue to purchase advertising on our market stations.
This vertical helped us generate $1.4 million in the year, ending 12 31 23.
By the way a 100% increase.
And still growing.
Total net Rev Q4 was down three 2% and for the year ending 12, 31 23 was down 1.85%.
Again, a note of interest excluding political.
Christopher S. Forgy: Gross revenue finished flat for the year ending 12-31-23 and was up 1% in Q4 of 2023. With that, I will turn it over to our Boilermaker, Sam Bush. Thank you, Chris.
Gross revenue finished flat for the year, ending 12, 31, 23 and was up 1%.
In Q4 of 2023.
With that I will turn it over to our boiler maker Sam Bush.
Thank you, Chris I'm going to start with the.
The obligatory paragraphs of this call will it already has contained forward looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factors section of our most recent Form 10-K.
Samuel D. Bush: This call will, and already has, contained forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factors section of our most recent Form 10-K. This call will also contain a discussion of certain non-GAAP financial measures. Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure is attached in the selected financial data tables.
We will also contain a discussion of certain non-GAAP financial measures.
Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data tables.
First let me say that Chris and I are quite proud that our board of directors were able to declare our first ever variable dividend along with our first fourth quarter and year end 2023 press release this morning.
Samuel D. Bush: First, let me say that Chris and I are quite proud that our board of directors was able to declare our first ever variable dividend along with our fourth quarter and year-end 2023 press release this morning. The Variable Dividend Policy was adopted and announced on December 7, 2022. The dividend is based on distributing 70% of a calculated amount that starts with net income and adds back non-cash expenses and deducts capital expenditures, dividends declared during the year, as well as, in years where it's applicable, the amount of any stock buyback or any acquisition.
Variable dividend policy was adopted and announced on December 7th 2022.
The dividend is based on distributing to our shareholder 70% of our calculated amount that starts with net income and adds back noncash expenses and deduct capital expenditures dividends declared during the year as well as in years, where it's applicable the amount of any stock buyback or any acquisitions.
Samuel D. Bush: I'll call the result of this calculation cash available for the variable dividend for reference purposes. During 2023, the board declared $6.1 million in quarterly cash dividends and a special cash dividend of $12.5 million. The Board considered the Special Cash Dividend to Capital Allocation Restructuring Dividend based on its previously stated intentions to reduce our cash and liquid security balances over time from approximately $60 million in August of 2022 to a level deemed more appropriate based on Saga's performance as well as economic conditions. As the press release indicated, I wanted to stress that, including the quarterly dividend to be paid tomorrow, as well as the first variable dividend to be paid on April 5th, Saga will have paid out more than $130 million in dividends.
I'll call. The result of this calculation cash about available for the variable dividend for reference purposes. During 2023, the board declared $6 1 million in quarterly cash dividends and a special cash dividend of $12 5 million.
The board considered a special cash dividend of capital allocation restructuring dividend based on its previously stated intention to reduce our cash and liquid security balances over time from approximately $60 million in August of 2022 to a level more appropriate based on sockets performance as well as economic conditions.
As the press release indicated I wanted to stress that including the quarterly dividend to be paid tomorrow.
As well as the first variable dividend to be paid on April 5th Saga will have paid out more than $130 million in dividends again that is over $130 million in dividends since the inception of our dividend policy in 2012.
Samuel D. Bush: Again, that is over $130 million in dividends since the inception of our dividend policy in 2012. All said, we believe Saga is in a strong financial position to continue to return value to our shareholders through our quarterly, special, and variable dividends. The Board continues to have discussions relative to the right level of cash to maintain on our balance sheet, and this may change based on global, national, and local economic conditions, changes in the radio industry, and the potential for strategic acquisition. Also, as Chris indicated, it is exciting to be working towards the closing of our previously announced acquisition of five radio stations in Lafayette, Indiana. We missed out on the opportunity to acquire them a number of years ago when they were sold to the new office.
All said, we believe saga is in a strong financial position to continue to return value to our shareholders through our quarterly special and variable dividends. The board continues to have discussions relative to the right level of cash to maintain on our balance sheet and this may change based on global national and local economic conditions changes in the radio industry.
And the potential for strategic acquisitions.
Also as Chris indicated it is exciting to be working towards closing of our previously announced acquisition of five radio stations in Lafayette, Indiana.
Missed out on the opportunity to acquire them a number of years ago. When they were sold to the new off family.
Samuel D. Bush: The current staff's commitment to serving their local community is a great foundation to build off of as we bring them into the Saga family. I'm especially pleased with this opportunity to purchase some great radio stations that have tremendous opportunities in front of them, as I received my master's degree from the Krannert School at Purdue. Unfortunately, I did promise Chris that I would not break out singing Back Home Again in Indiana or the Purdue School song, and I am glad for that.
The current staff's commitment to serving their local community is a great foundation to build off of as we bring them into the saga family.
I'm, especially pleased with this opportunity to purchase some great radio stations that have tremendous opportunities in front of them as I received my master's degree from the grammar School at Purdue.
Unfortunately, I did promise, Chris that I would not breakout singing back home again in Indiana Arthur.
Two schools salt.
And I am glad for that.
Samuel D. Bush: Thank you, Shane. Now on to the numbers. As Chris said, for the quarter ended December 31, 2023, net revenue decreased 3.3% to $29.1 million compared to $30.1 million last year. Again, as Chris said, the political impact of the performance, as we had $407,000 in gross political revenue this year compared to $1.9 million for the same period last year. Without Politico, our overall gross revenue for the quarter would have increased approximately 1% from last year. Station operating expense increased 1.9% to $23.3 million for the three-month period.
Now onto the numbers.
As Chris said for the quarter ended December 31, 2023, net revenue decreased three 3% to $29 1 million compared to $30 1 million last year.
Again, as Chris said political impacted the performance as we had 407000 in gross political revenue this year compared to $1 9 million for the same period last year.
Without political our overall gross revenue for the quarter would've increased approximately 1% from last year.
Station operating expense increased one 9% to $23 3 million for the three months period.
Samuel D. Bush: Operating Income was $2.8 million, and Station Operating Income, a non-GAAP measure, was $7.1 million for the court. For the 12-month period ended December 31, 2023, net revenue decreased 1.8% to $112.8 million, compared to $114.9 million last year. Again, as Chris pointed out, adjusting for political spending for the year, gross revenue was flat for the same period last year. This year we had gross political reading of 944,000 for the year compared to 3.6 million for the same period last year. Station operating expenses increased 3% for the 12-month period to $90.2 million.
Operating income was $2 8 million and station operating income a non-GAAP measure was $7 1 million for the quarter.
For the 12 months period ended December 31, 2023, net revenue decreased one 8% to $112 8 million compared to $114 9 million last year, a granted again as Chris pointed out adjusting for political for the year gross revenue was flat for the same period last year.
This year, we had a gross political revenue of 944000 for the for the year compared to $3 6 million for the same period last year.
Station operating expense increased 3% for the 12 month period to $90 $2 million operating income was $11 5 million and station operating income again, a non-GAAP measure was 27 4 million.
Samuel D. Bush: Operating income was $11.5 million, and station operating income, again a non-GAAP measure, was $27.4 million. As discussed in previous conference calls, we made a strategic decision in 2023 to give our staff pay increases in recognition of the tremendous work they do. Most of them had not received any compensation increases in the past three to five years.
As discussed in previous conference calls, we made a strategic decision in 2023 to give our staff pay increases in recognition of the tremendous work they do.
Are there had not received any compensation increases in the past three to five years. These pay increases and related payroll taxes amounted to an estimated 372000 or approximately 84% of the increase in the fourth quarter station operating expense and $1 6 million or approximately 60% of the year to date increase.
Samuel D. Bush: These pay increases and related payroll taxes amount to an estimated $372,000, or approximately 84% of the increase in the fourth quarter station operating expense and $1.6 million, or approximately 60% of the year-to-date increase. Similar to previous quarters, other smaller but still meaningful increases in our station operating expenses included increased health insurance, utility expenses, music license fees, maintenance and repair, programming rights, and sales services.
Similar to previous quarters, other smaller, but still meaningful increases in our station operating expenses included increased health insurance utility expenses music license fees maintenance and repairs programming rights and sales surveys.
Samuel D. Bush: You need to keep in mind that our year-end results for 2022 were impacted by a one-time expense of $3.8 million related to Ed Christian's death, which was recorded during the third quarter of that year. The decrease in corporate expense was offset by an approximately $506,000 increase in corporate G&A expense, of which $361,000 was due to the hiring of specific best-of-class individuals to lead our new revenue initiatives that you've heard Chris and I talk about in previous calls and Chris talked about a little bit more in this call already. Capital expenditures for the quarter ended December 31, 2023 were $959,000 compared to $1.3 million for the same period last year. For the 12-month period, capital expenditures were $4.4 million this year compared to $6 million last year.
Need to keep in mind that our year end results for 2022 were impacted by a onetime expense of $3 8 million related to Ed Christians, passing which was recorded during the third quarter of that year the.
The decrease in corporate expense was offset by an approximate approximately 506000 increase in corporate G&A expense of which 361000 was due to the hiring of specific best of class individuals to lead our new revenue initiatives that you've heard Chris and I talked about in previous calls and Chris talked about a little bit more in this call.
Ready.
Capital expenditures for the quarter ended December 31, 2023 were 959000 compared to $1 3 million for the same period last year for the 12 months period capital expenditures were $4 4 million this year compared to $6 million last year. We currently expect to spend between five and $5 5 million for capital.
Samuel D. Bush: We currently expect to spend between $5 and $5.5 million on capital expenditures in 2024. As Chris referenced earlier, for the year, we continued to diversify our revenue as we saw gross revenue growth in national, which was up 385,000, interactive, which was up 1.9 million, and non-traditional revenue, which was up 679,000. While local revenue was down for the year, it's important to note, as Chris did, that e-commerce, which mostly gets recorded as local direct revenue, increased to $1.4 million for the year.
In 2024.
As Chris referenced earlier for the year, we continue to diversify our revenue as we saw gross revenue.
Growth in National which was up 385000, interactive, which was up $1 9 million and non traditional revenue, which was up 679000.
Local revenue was down for the year. It is important to note as Chris did that ecommerce, which mostly gets recorded as local direct revenue increased to $1 4 million for the year.
Samuel D. Bush: We believe that there is still significant growth to be achieved in all these areas as well as in our continued digital efforts. We continue to plan on utilizing our financial strength to strategically invest in our operations, both at a market and corporate level, as we work to grow specific revenue types, including local, national, interactive, e-commerce, and NTR. As discussed in our second quarter earnings call, due to the FCC's renewed focus on the reporting of non-GAAP financial measures and their review of our filings, we have adjusted our quarterly press releases, starting with our second quarter earnings press release, to include a complete statement of cash flows, as opposed to the abbreviated statement we historically have included in our form 10-Q. We continue to include the reconciliation of gap operating income to station operating income, which is The company's balance sheet reflects $40.2 million in cash and short-term investments as of December 31, 2023, and $30.4 million as of March 4, 2024, primarily due to the special dividend that was declared in December of last year and paid early this year. Pacing for the first quarter is soft.
We believe that there is still significant growth to be achieved in all these areas as well as in our continued digital efforts.
We continue to plan on utilizing our financial strength to strategically invest in our operations both at a market and corporate level as we work to grow specific revenue types, including local national Interactive E Commerce and NTR.
As discussed in our second quarter earnings call due to the FCC's renewed focus on the reporting of non-GAAP financial measures and their review of our filings we have adjusted our quarterly press releases, starting with our second quarter earnings press release to include a complete statement of cash flows as opposed to the abbreviated statement. We historically have included in our Form 10-Qs we continue.
To include the reconciliation of GAAP operating income to station operating income, which is a non-GAAP measure, but now also include other financial data.
Table, which allows the users of our press release and filings to make direct comparisons to data reported in previous press releases and filings.
The Companys balance sheet reflects $40 2 million in cash and short term investments as of December 31, 2023, and $30 4 million as of March 4th 2024, primarily due to the special dividend that was declared in December of last year and paid early this year.
Pacing for the first quarter is soft for the quarter were currently pacing down low to mid single digits.
Christopher S. Forgy: For the quarter, we are currently pacing down low to mid single digits. January started out strong, February and March have been much softer, although April and May are currently pacing up low to mid-single digits. It still continues to be an unsettled advertising market given the uncertain economy, the Fed's interest rate policy, the ongoing inflationary environment, in addition to other worldwide issues. We currently expect that our station operating expenses will increase by approximately 3.5 to 4.5 percent for the year as compared to 2023. In addition to the inflationary environment, this is significantly driven by our investments in our staff, sales training, and ongoing interactive development. We anticipate the annual corporate, general, and administrative expense will be approximately $11.3 to $11.8 million for 2020. Our tax rate is expected to be 26-29% with a deferred tax of 3-6% going forward. And now that I've worn you all out, I'll turn you back over to Chris.
January started out strong.
February and March had been much softer although April and May are currently pacing up low to mid single digits. It still continues to be an unsettled advertising market given the uncertain economy. The feds interest rate policy the ongoing inflationary environment. In addition to other worldwide issues.
We currently expect that our station operating expense will increase by approximately three five to four 5% for the year as compared to 2023. In addition to the inflationary environment is significantly driven by our investments in our staff sales training and ongoing interactive development.
We anticipate the annual corporate general and administrative expense will be approximately 11, three to $11 8 million for 2020 for our tax rate is expected to be 26% to 29% with a deferred tax of 3% to 6% going forward.
But I want all of you out I'll turn it back over to Chris. Thank you.
Samuel D. Bush: Thank you. Thank you, Sam. So Sam, your son Brandon is a Delta pilot, yes? He is a Delta pilot flying A330s to international locations as well as a KC-135 refueling tanker pilot for the Air Force Reserve.
Thank you Sam.
So Sam your son brand as a delta pilot yes.
He is a delta.
Flying a $3 32 international locations as well as the KC 135.
Refueling tanker pilot for the Air Force Reserve.
Samuel D. Bush: So when Brandon is barreling down the runway at 200 plus miles an hour, I don't know what that is in knots, but you can probably tell me. What is he typically focused on? I actually called him last night and he was at the uh... DTW Detroit Airport on his way to Frankfurt, and I asked him that question, and he said, well, we're going down the runway at about 180 knots, which is roughly 200 miles an hour, and we are focused on getting the plane lifted off in the air and headed toward our final destination, which in last night's case was Frankfurt, Germany. So he's not No, he is not.
So when Brandon is barreling down the runway at 200, plus miles an hour I don't know what that is it not so you can probably tell me.
What does he typically focused on.
No I actually calling last night and he was at the.
D Tw Detroit Airport on its way to Frankfurt and I, asking that question and he said well, we're going down the runway at about 180 knots, which is roughly 200 miles an hour and we are focused on getting the plane listed off in the air and headed toward our final destination, which in last night's case with Frankfurt, Germany.
So he is not focused on the ground, but what's ahead, yes no. He is not he is focused on what's in front of them.
Christopher S. Forgy: He is focused on what's in front of him. We're going someplace with this. We don't spend a lot of time looking behind us. We choose to focus on the task at hand ahead of us and trust our processes and each other to deliver the enterprise to its desired destination. However, at the same time, sometimes it is also helpful to look back in order to see where you have been and where you are going. I received a package over the holidays from Saga's commercial production director in Milwaukee, Wisconsin, Joe Meineke. It was a collection of really breathtaking photographs Joe had taken from different scenic parts of Wisconsin.
We're going someplace with this.
We don't spend a lot of time with the round behind us we choose to focus on the task at hand ahead of Us and trust our processes and each other to deliver the enterprise to its desired destination.
However at the same time, sometimes it is also helpful to look back in order to see where you have been.
And where you're going.
I received a package over the holidays from.
Saga commercial production director in Milwaukee, Wisconsin, Joe Meineke.
It was a collection of really breathtaking photographs, Joe had taken from different scenic parts of Wisconsin.
Christopher S. Forgy: These photos were then curated into a collection and presented in the form of a 2024 calendar. As I opened the package, my eyes were drawn to the cover of the calendar, which carried the phrase, Looking Back While Moving Forward. The Latin phrase we use goes like this, fine, origine, pendete. Or, translation, the end hangs on the beginning, looking back while moving forward.
These photos were then curated into a collection and presented at the Forum.
The 'twenty 'twenty four calendar.
I opened the package wise were drawn to the cover of the calendar, which carried the phrase looking back while moving forward.
The Latin phrase we use it goes like this finney originated 10 debt.
Or.
Translation the end hangs on the beginning looked.
Looking back while moving forward.
Christopher S. Forgy: That's the reason we are so optimistic, as you heard Sam and I say during this call and others. We're really optimistic about 2024 and beyond. It's simply this. Many of the processes we've put in place are just now starting to bear fruit and are far from reaching the maturation stage. As we begin a somewhat uncertain 2024, serving our communities, our customers, our employees, and our shareholders. We do so with a sense of certainty, purpose, and an unrelenting faith and trust in our process, and without cynicism or despair. We will run like our hair is on fire and set sail with a very optimistic belief for growth in 2024, looking back, yet moving forward, and then some. Thank you all again for your time, and your interest, and your support of Saga Communications, the best broadcast company on the planet.
That's the reason we are so optimistic as you heard saying when I say during this call and others.
We are really optimistic about 2024 and beyond is simply this.
Many of the processes, we've put in place are just now starting to bear fruit.
And are far from reaching Macerich maturation stage.
As we better have something as we began to somewhat uncertain 2020 for serving our communities our customers our employees and our shareholders.
We do so with a sense of certainty.
Purpose with an unrelenting faith and trust in our processes.
And without cynicism or despair.
We will run like our hair is on fire.
And set sail with a very optimistic belief for growth in 2024.
Looking back yet moving forward.
And then some.
Thank you all again for your time and your interest and your support of Saga Communications, The best broadcast company on the planet Sam.
Christopher S. Forgy: Sam, do we have any questions? We did. We got a few questions in, some of them are related, some of them are totally independent. We had a couple of our investors send in questions. The first one is, please give us some more details on the digital growth rates as you enter 2024 and beyond. It notes that we've made great progress, as you pointed out, Chris, but is pointing out that we still like our peers and is wondering what our thoughts are for 2020. I'll start, and then you can add color if you'd like, Sam.
Sam do we have any questions.
We did we got a few questions and some of them are related some of them are a totally independent.
We had a couple of our.
Investors are sending questions and the first one is please give us some more details on the digital.
Growth rates as you enter 2024 and beyond.
So that we've made great progress as you pointed out Chris but is pointing.
Pointing out that we still like our peers and is wondering what our thoughts are for 2024 and beyond.
I'll start and then you can add.
Add color he'd like Sam.
Sam and I touched on this during our remarks during this.
Christopher S. Forgy: Sam and I touched on this during our remarks during this call and others. Currently, our digital represents 8% of total net revenue, and we have forecasted that number going to 11% in 2024. Again, the biggest lift we anticipate is with our blended selling process, which will impact both local and digital, and we're still in the process of implementing this process in our markets. We're just about completed, and we anticipate big gains from this area. No, I think that's good.
This call and others.
Currently our digital represents 8% of total net revenue.
And we have forecasted that number going to 11% in 2024.
Again, the biggest lift that we anticipate as with our blended selling process.
And.
That will impact both local and digital and we're still in the process of implementing this process in our markets. We are just about completed we anticipate.
Big gains from this area.
Tim anything else you want to add though I think that's good and we with my reference to the folks with best of class individuals. We brought on hand, we've got the team to do it we were a little slower as you pointed out with though before and adopting.
Samuel D. Bush: With my reference to the folks, the best-of-class individuals we brought on board, we've got the team to do it. We were a little slower, as you pointed out before, in adapting to the digital marketplace, but we're running at a very fast pace right now, and I think you'll see some very good improvement in 2020. And I want to take this time to recognize somebody who has just done a yeoman's work in the development of this and implementing this. We call him the architect of innovation and change.
Adapting to the digital marketplace, but we're running at a very fast pace right now and I think youll see some very good improvement in 2024.
And I want to take this time to recognize somebody who has just done a yeoman's work in development of this and implementing this we call him the architect of innovation and change. His name is Matt for going and he is the one who is leading the charge on that thus far very excited and very pleased with the progress.
Samuel D. Bush: His name is Matt Burgoyne, and he is the one who is leading the charge on this, and we're thus far very excited and very pleased with the progress. We have shareholders also asking a couple of questions about Lafayette, which we've talked about already. Did have one shareholder ask what the multiple pay for Lafayette and Chris. As I've told you, and told a lot of people, I'm not a fan of multiples because, when I was a banker, I always said there were five multiples in a deal. That's what the buyer said they paid.
We are shareholders also asking a couple of them they ask about.
Lafayette, which we've talked about already.
We did have one shareholder asked what's the multiple paid for Lafayette and Chris as I've told you and told a lot of people I'm not a fan of multiples because when I was a banker I always said there were five multiples on the deal because what the buyer said they paid there's what the seller said they they received there's what the banker finance, there's what the broker.
Samuel D. Bush: There's what the seller said they received. There's what the banker financed. There's what the broker said they got to enhance their position as being the best broker in the business, and then there was the real multiple. So multiples are tough to use because we look at them in a number of different ways. Some people do all sorts of add-backs.
They got to enhance their position as being the best broker in the business and then there was the real multiple.
Multiples are tough to use because we look at them in a number of different ways. Some people do all sorts of add backs when they make a acquisition or here's how we're going to do it and therefore, the multiple changes long and short of it is I think as Chris pointed out.
Samuel D. Bush: When they make an acquisition, oh, here's how we're going to do it, and therefore the multiple changes. Long and short of it is, as Chris pointed out, we believe Lafayette is a great opportunity if you don't know much about the area. Purdue University is growing extremely strongly when you go down there and see the cranes and the new buildings. Lafayette itself has a big Caterpillar plant which has expanded, a Subaru plant which has expanded, Rolls Royce is there with their aviation division because of their relationship with the aviation department at Purdue, and so on.
We believe Lafayette, because a great opportunity is you don't know much about the area of Purdue University is growing extremely.
Strongly when you go down there and see the cranes and the new buildings.
Lafeyette itself has a big Caterpillar plant, which has expanded our Subaru plant, which was expanded roles rules voices there with your aviation division because of their relationship with the aviation Department at Purdue and so on it's just a very exciting market.
Samuel D. Bush: It's just a very exciting market, and the fact that Newhoff has been so locally involved has set up a basis for us to use all our tools and resources to really enhance what we're doing. We're not prepared to give a multiple or give a specific financial impact for 2024, but we are looking forward to closing, and you'll hear more about how they will impact our financials as we go forward. We are prepared to say, "Boiler Up!" We also got a couple of questions or another question from Michael Kopinski at Noble Capital. And I think I've already answered one of his questions. We provided some general pacing data for the first quarter and for the second quarter.
The fact that new half has been so locally involved.
They've set up a basis for us to use all our tools and resources to really enhance what we're doing so well.
Not prepared to give them multiple or give a specific financial impact for 2024, but we are looking forward to closing and you'll hear more about how they impact our financials as we go forward.
We are prepared to say boiler at [laughter] boiler at Amsterdam.
We also got a couple of questions or another question from Michal Krupinski at noble capital and I think I've already answered one of these questions. We provided some general pacing data for the first quarter and for the second quarter.
And he's asking to expand upon Lafayette, Chris is how are we seeing the current M&A market and are there other opportunities.
Christopher S. Forgy: And he asked me to expand upon Lafayette, Chris. How are we seeing the current M&A market, and are there other opportunities? As we said before, there are other opportunities. In fact, we received one yesterday, and they will continue to come.
As we said before there are other opportunities in fact.
We received one yesterday.
And they will continue to come I think is.
Christopher S. Forgy: I think, as we've shown in the marketplace that we are a buyer, not a seller, but we're going to be very prudent and we'll be careful purchases, obviously, when we do make those purchases, and they will need to be consistent with our market acquisition strategy. So, yes, I think there are opportunities going forward. We will just review those on a case-by-case basis and move accordingly.
We've.
As shown in the marketplace that we are a buyer not a seller, but theyre going to be very prudent and.
And we'll be careful purchases, obviously when we do.
Make those purchases and they will need to be consistent with our market acquisitions are market acquisition strategy.
So.
Yes, I think there are opportunities going forward.
We will just review those on a case by case basis and move accordingly.
Very good and then the final question and we've already touched on it to some extent they give you a chance to add a little bit more color to it if he would like Chris.
Christopher S. Forgy: Very good. And then the final question, and we've already touched on it to some extent, but I'll give you a chance to add a little bit more color to it if you'd like, Chris. Again, from Michael Kopinski, in terms of your revenue diversification strategy, what is the outlook for national advertising? And what is classified as national advertising?
But again for Michael <unk>.
<unk> in terms of your revenue diversification strategy, what is the outlook for national advertising.
It's classified as National advertising. This has been a growth area for the company, but it's been tough for your peer group what are you seeing that others are not.
Christopher S. Forgy: This has been a growth area for the company, but it's been tough for your peer group. What are you seeing that others aren't? Well, again, as we've stated in previous earnings calls, because we're very proud of the team that we have that is executing our national initiatives, we have taken more of a local approach to national sales, much like the way, Michael, that we took our Saga story to the investment community with your help, face-to-face, belly-to-belly, with the help of our Director of We're making more compelling presentations, telling better stories, and that has had a huge impact on our success in that vertical. We're also now a part of the CATS network and have forecasted an additional 1.5 to 2 million dollars in revenue in 2024. Very good I think that it had some good color to it.
Well.
Again as we've stated in previous earnings calls because we're very proud of the team that we have.
And then it's executing our national initiatives.
We have taken more of a local approach to national sales much like the way Michael that we've taken our saga story to the investment community with your help.
Face to face belly to belly with.
With the help of our director of research and storytelling Mario Christina.
The Katz team and our Nsm's, Tom how and Bruce where.
We're making more compelling presentations, telling you better stories.
And that has had a huge impact.
On our success in that in that vertical.
We're also now a part of the Katz network and have forecasted.
An additional one $5 million to $2 million in revenue in 2024.
Very good I think that had some good color to it than I did I said that was our last question and it really wasn't we had one more but.
Christopher S. Forgy: And I did. I said that was our last question, but it really wasn't.
Christopher S. Forgy: We had one more, similar to that one. But it's basically, what's the outlook for politics for the remainder of the year? Sam, you haven't got to answer these questions.
Similar to lap that one, but it's basically what's the outlook for political for the remainder of the year.
Sam do you have in that to answer these questions I'll, let you do this okay.
Samuel D. Bush: I'm going to let you do this one because politics is always changing. While we have a projection of where we think we're going to be at the end of the year, we look back at where we were 2 years ago, where we were 4 years ago, where we were 6 years ago, where we were 8 years ago. But we've also had surprises, both good and bad, in the past because it comes down to what's a battleground state, depending on the election. I will also tell you that most of our election money, the political money we get, is not presidential. Whether there's a big senatorial or a big congressional race, a governor's race, sometimes it comes down to a school board race in a small community or in a medium-sized community.
Political has always variable.
While we have a projection of where we think we're going to be at the end of the year. We look back at where we were two years ago, where we were four years ago, where we were six years ago, where we were eight years ago.
But we've also had surprises both good and past bad in the past because it comes down to what's a what's a battleground state depending on the election I will also tell you that most of our election money political money. We get is not presidential oriented it's gonna be whether there's a big senatorial or a big congressional race, a governor's race, sometimes it comes.
Down to a a school board race in a small community or in a medium sized community. It can make a big difference as to what's going on there that.
Samuel D. Bush: It can make a big difference as to what's going on here. So we do have a positive outlook for politics this year. We so far have not seen as much as we had thought we would see, but I've also heard the politics starting later this year, and there's still a big, big belief that there'll be a lot of it out there for radio to pick up on, and it's just hard for us to project any significant confidence numbers at this point because of where they are. We are talking to an outside consultant who we have a call scheduled with here in the next week or two who does have his handle on what's out there in basically every market and can help point us in the right direction if our local managers are not already in tune with what's going on.
So we do have a positive outlook for political this year, we so far have not seen as much as we had thought we would see but I've also heard the political starting later this year and there is still a big big belief that there'll be a lot of it out there for radio to pick up on and it's just hard for us to project.
Any significant.
With any significant confidence numbers at this point because of where they are we are talking to an outside consultant. We have a call we're setting up with here in the next week or two.
Who does have you seen handle on what.
What's out there in basically every market and can help point us in the right direction. If our local managers are not already and in tune with what's going on in those markets. So I think youll see a lot more but I think it's gonna be third quarter and fourth quarter oriented.
Samuel D. Bush: So I think you'll see a lot more, but I think it's going to be third quarter and fourth quarter. You get your popcorn because it will be entertaining, that's for certain. Well, good. I think we're done. I think, Matt, we're ready to turn it back over to you and let you wrap it up.
You get your popcorn because it will be entertaining that's.
That's for certain to say the least.
Well good I think we're done I think that we're ready to turn it back over to you and let you wrap it up.
Operator: Certainly. Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Certainly thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.
Thanks.