Q4 2024 Saga Communications Inc Earnings Call
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Operator: Greetings, and welcome to the Saga Communications fourth quarter and year-end conference call.
Speaker Change: Greetings and welcome to the Saga Communications fourth quarter and year end conference call. At this time, all participants have been placed on a listen only mode and we will.
John: At this time, all participants have been placed on a listen-only mode, and we will Excuse me, and it is now my pleasure to turn the floor over to your host, Chris Forgy. The floor is yours.
Excuse me and it is now my pleasure to turn the floor over to your host Chris Borghi.
Speaker Change: The floor is yours.
Chris Forgy: Thank you, John.
Chris Borghi: Thank you John.
Chris Forgy: Good morning and thank you to everyone who's taken time to join the Saga's Q4 and year-end 2024 earnings call. We appreciate your continued interest, your questions, your suggestions. and your support of Saga Communications, what we believe is the best media company on the planet.
Speaker Change: Good morning, and thank you to everyone who's taken time to join the SOG as Q4 and year end 2024 earnings call.
Speaker Change: We appreciate your continued interest your questions your suggestions.
Speaker Change: And your support of Saga Communications, what we believe is the best media company on the planet.
Chris Forgy: We have a lot to cover today, but first I really like to thank those who have been so instrumental in the transformational change Saga has been going through, and continues to go through over the past two years. Our corporate team, our Saga Board of Directors, carefully chosen third-party partners. our shareholders, our leadership teams in each of Saga's 28 markets. our Saga Media Advisors, our nearly 800 Saga employees all over the country who make this engine go, and to our customers. those who trust us with their advertising dollars to bring about outcomes. After all, money does.
Speaker Change: We have a lot to cover today, but first I I really like to thank those who have been so instrumental in the transformation change saga has been going through.
Speaker Change: <unk> continues to go through over the past few years.
Speaker Change: Our corporate team our saga board of directors.
Speaker Change: Carefully chosen third party partners.
Speaker Change: Our shareholders our leadership teams in each of SOG as 28 markets are.
Speaker Change: Her saga media advisors are nearly 800 saga employees all over the country you can make this engine go.
Speaker Change: And to our customers.
Speaker Change: Those who trust us with their advertising dollars to bring about outcomes.
Speaker Change: After all.
Speaker Change: It does.
Chris Forgy: come from customers doesn't Transformational change is really not easy. We're in the midst of it. It takes time, resources, people, training, commitment, and a very strong belief in what you are building will be successful. And we do.
Speaker Change: Come from customers doesn't it.
Speaker Change: Yeah.
Speaker Change: Transformational change is really not easy.
Speaker Change: We're in the midst of it it takes time resources people.
Speaker Change: Training commitment and a very strong belief in what Youre building will be successful and we do.
Chris Forgy: We chose this path of transformational change both out of necessity and because we believe we have identified a local digital advertising market ripe for disruption. We determine these four things. Number one, there's a significant increase in advertising dollars. Businesses are pouring their money, more money into digital advertising each and every year. the rapid growth of digital budgets has outpaced the ability of advertisers to use them effectively. Number two, there are frustrated buyers with unmet needs. Advertisers are just simply fed up with ineffective, evergreen, set-it-and-forget-it campaigns and empty promises. They don't like what they're buying or who they're buying it from.
Speaker Change: We chose this past and transfer more transformational change.
Speaker Change: Out of necessity and because we believe we have identified a local digital advertising market right for disruption.
Speaker Change: We determine these four things.
Speaker Change: Number one there's a significant increase in advertising dollars.
Speaker Change: Businesses are pouring their money more money into digital advertising each and every year.
Speaker Change: With the rapid growth of digital budgets has outpaced the ability of advertisers to use them effectively.
Speaker Change: Number two there were.
Speaker Change: Frustrated buyers with unmet needs.
Speaker Change: Advertisers are just simply fed up with ineffective evergreen set it and forget it campaigns and empty promises.
Speaker Change: They don't like what they are buying or who they are buying it from.
Chris Forgy: These are the same local advertisers who say they trust radio salespeople most for market knowledge and advice, but aren't buying from them.
Speaker Change: These are the same local advertisers, who say they trust radio salespeople, most for market knowledge and advice, but arent buying from us.
Chris Forgy: For example, the RAB recently released a report that in 2024, radio surpassed the $2 billion mark in digital sales. Unfortunately, that is a pedestrian 0.67% of all digital spend in 2020. Radio simply cannot win celebrating less than 1% of the digital ad pie. We cannot simply compare it to where radio came from. We need to lift our eyes and look to the macro digital marketplace for what's available to us.
Speaker Change: For example, the recently released a report.
Speaker Change: In 2024 radio surpassed the $2 billion Mark in digital sales.
Speaker Change: Unfortunately that is a pedestrian.
Speaker Change: Six 7%.
Of all digital spend in 2024.
Speaker Change: Radio simply cannot win celebrating less than 1% of the digital AD pie, we cannot simply compare it to our radio came from we need to lift our eyes and looked at the macro digital marketplace for what's available to us Here's why.
Chris Forgy: Here's why. According to an e-marketer, 2024 excluding politics. There was approximately four hundred and twenty one billion dollars. spent on advertising in the U.S. 73% or $309 billion of those dollars was spent in digital. In 2025, estimated advertising expenditures in the U.S. will top $456 billion, and 75%, or $342 billion, will go into digital advertising. That number is expected to climb to 83% by 2029.
Speaker Change: According to E marketer 'twenty 'twenty four excluding political.
Speaker Change: Approximately $421 billion spent on advertising in the U S.
Speaker Change: 73% or 309 billion of those dollars are spent in digital.
Speaker Change: In 2025.
Speaker Change: Estimated advertising expenditures in the U S will top $456 billion, and 75% or $342 billion will go into digital advertising.
Speaker Change: That number is expected to decline to 83% by 2029 radios approach to digital in our opinion is is broken.
Chris Forgy: Radio's approach to digital, in our opinion, is broken. And number three, there's a fragmented and confusing mark. Too many providers, too many conflicting solutions, businesses don't know who to trust. In this disruptive marketplace, simplicity and clarity win. Just ask the broadcasters who I like and respect that have gone through their own 4th, 5th and 6th iterations of digital strategy. It's frustrating and it's costly.
Speaker Change: And number three there is a fragmented and confusing marketplace.
Speaker Change: Too many providers too many conflicting solutions businesses don't know who to trust.
Speaker Change: And this disruptive marketplace simplicity and clarity win.
Speaker Change: Just ask the broadcasters, who I like and respect that have gone through their own fourth fifth and sixth iterations of digital strategy, It's frustrating and it's costly and finally number four there was a shift in consumer behavior.
Chris Forgy: And finally number 4, there is a shift in consumer behavior. Advertising strategies haven't caught up with the journey people take when they buy. In other words, there's a gap where tech meets human behavior. Focusing the influence of ads on real consumer journeys will allow everyone to win versus the product-focused offerings that exist today.
Speaker Change: Advertising strategies haven't caught up with the journey people take when they buy.
Speaker Change: In other words, there's a gap where tech meet human behavior.
Speaker Change: Focus on the influence of ads on real consumer journeys will allow everyone to win versus the product focused offerings that exists today.
Chris Forgy: As a part of Saga's digital strategy development, we call blended advertising. We've really benefitted from talking with and observing the third party struggles of our brethren. There's an old saying that says this, the second mouse gets the cheese. The second mouse gets the cheese. Blended Advertising focuses on the consumer journey, and for now, the simple and effective product. radio, search, and display. Radio leads to a search, always, and gets the advertiser wanted. Search gets the advertiser found, and display gets the advertiser chosen. We see it, we cannot unsee it. We believe it. We have studied it and trained our media advisors with all of this data in mind.
Speaker Change: As a part of SOG as digital strategy development.
Speaker Change: We call blended advertising.
Speaker Change: We've really benefited from talking with and observing the third party struggles of our brother in.
Speaker Change: There's little saying that says this.
Speaker Change: The second mouse gifts the cheese.
Speaker Change: The second mouse guests the cheese.
Speaker Change: Blended advertising focuses on the consumer journey and for now the.
Speaker Change: The simple and effective products.
Speaker Change: Radio search and display.
Speaker Change: Radio leased to a search always.
Speaker Change: It gets the advertiser wanted search gets the advertiser found and display gets the advertiser chosen.
Speaker Change: We see it we cannot answer it we believe it we have studied it and trained our media advisors with all of this data in mind. The question, we had to ask ourselves what is this.
Chris Forgy: The question we had to ask ourselves was this. Should we build upon our already existing radio infrastructure or start anew? We chose the former. Infrastructure requires training. Training requires time and expense. This is why we forecasted a rise in expenses over a year ago. And by investing in infrastructure versus going brand new, the speed of our growth increases.
Speaker Change: Do we build upon our already existing radio infrastructure or start a new.
Speaker Change: We chose the former.
Speaker Change: Infrastructure requires training training prior to the time and expense.
Speaker Change: This is why we forecasted a rise in expenses over a year ago.
Speaker Change: And by investing in infrastructure versus growing brand new.
Speaker Change: The speed of our growth increases.
Chris Forgy: Unfortunately... The short-term was impacted by the broadcast sector experiencing a significant down-drift.
Speaker Change: Unfortunately.
Speaker Change: The short term was impacted by the broadcaster sector broadcast sector experiencing a significant downdraft.
Chris Forgy: So why should you continue to invest in Saga or maybe perhaps become a new investor? because we see a broken local digital market ripe for disruption and we are the right media company to take advantage of that opportunity. The customers we work with every day already like us and trust us and if we can impact just 5% of the digital dollars available in our 28 Saga markets over the next 18-24 months We could double our total gross annual revenue, most of it digital.
Speaker Change: So why should you continue to invest in SOG or maybe perhaps become a new investor.
Speaker Change: We see a broken local digital market right for disruption.
Speaker Change: And we are the right media company to take advantage of that opportunity.
Speaker Change: The customers we work with every day already like US and trust us and if we can impact just 5% of the digital dollars available in our 28 saga markets over the next 18 to 24 months, we could double our total gross annual revenue most of it digital.
Chris Forgy: while also protecting, preserving, and growing radioactivity. For example, in our 28 markets, there's approximately $2.9 billion available in just search and display. to disrupt just 5% of the available dollars would result in more gross revenue than Saga generates in an entire calendar year.
Speaker Change: While also protecting preserving and growing radio.
Speaker Change: For example, in our 28 markets Theres approximately $2 9 billion available in just search and display.
Speaker Change: To disrupt just 5% of the available dollars would result in more gross revenue than saga generates an entire calendar year.
Chris Forgy: Before I share some of the successes Blended Advertising has helped us create...
Speaker Change: Before I share some of the successes blended advertising yourself is create.
Chris Forgy: Let me take you back to the future for just a moment. to address the comment I made earlier regarding building on an existing infrastructure versus starting anew.
Speaker Change: Let me take you back to the future for just a moment.
Speaker Change: To address the comment I made earlier regarding building on an existing infrastructure versus starting anew.
Chris Forgy: On virtually every quarterly earnings call for the past two years, I have asked this question. Where would Saga be if we had not decided to go down this path and had not added the revenue verticals to our arsenal when we did, to help us launch into this state of transformational change?
Speaker Change: On virtually every quarterly earnings call for the past two years I have asked this question where would saga would be if we had not decided to go down this path and had not added the revenue verticals to our Arsenal when we did to help us launch into this state of transformational change today.
Chris Forgy: Today I can answer that question. In 2024, we generated nearly $7.5 million of revenue that could not have existed before we began this transformation. It consisted of the following revenue verticals. are online news sites. e-commerce, streaming. are market-specific best-of programs, plus a variety of other digital products and services.
Speaker Change: Today I can answer that question.
Speaker Change: In 2024.
Speaker Change: We generated nearly $7 $5 million of revenue that could not have existed before we began this transformation.
Speaker Change: It consisted of the following revenue verticals are online new sites.
Speaker Change: E Commerce streaming.
Speaker Change: Our market specific best up programs.
Speaker Change: A variety of other digital products and services.
Chris Forgy: These strategy additives have served us well in building the infrastructure of transformational change, and will continue to do so as... Again, at the same time, we forecasted a lift in expenses. as we invested in our people, our products, and our process. These efforts are increasingly more important as the broadcast sector faces growing headwinds.
Speaker Change: These strategy additives.
Speaker Change: I have served us well in building the infrastructure of transformational change and we'll continue to do so as we grow.
Speaker Change: Again at the same time, we forecasted a lift in expenses.
Speaker Change: As we invested in our people our products and our processes.
Speaker Change: These efforts are increasingly more important.
Speaker Change: As the broadcast sector faces growing headwinds.
Sam: Following Sam's remarks, I will share with you in some detail. the early success of this disruption. and how they show promise for Saga, its customers, its employees and its financial strength for both the short and the long term.
Sam: Halloween Sam's remarks, I will share with you in some detail.
Speaker Change: The early success of this disruption.
Speaker Change: And how they show promise for saga its customers its employees and its financial strength for both the short and the long term.
Sam: Sam, after a long discussion, the floor is yours. Thank you, Chris.
Sam: Sam after a long discussion the floor is yours.
Speaker Change: Thank you Chris.
Sam: This call will contain 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-CAT. 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 are attached in the selected financial data table. For the quarter ended December 31st, 2024, net revenue decreased 1.3% to $28.8 million. compared to 29.1 million last year.
Speaker Change: This call will contain 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.
Speaker Change: 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 are attached in the selected financial data tables.
Speaker Change: For the quarter ended December 31, 2024, net revenue decreased one 3% to $28 8 million.
Speaker Change: Compared to $29 1 million last year.
Sam: political impact of this year's performance. As for the quarter, we had $2.0 million in gross political revenue this year, compared to $407,000 for the same period last year. Without political, our overall gross revenue for the quarter would have decreased approximately 6.5% from last year. Station operating expense increased 4.1% to $24.3 million for the three-month period. Operating Income was $984,000 and Station Operating Income, a non-GAAP measure, was $5.9 million for the court. Capital expenditures were $600,000 for the quarter compared to $1 million for the fourth quarter last year. Net income from the quarter was $1.3 million, or $0.20, per fully diluted share.
Speaker Change: Political impacted this year's performance for the quarter, we had 2.0 a million dollars in gross political revenue this year compared to 407000 for the same period last year.
Speaker Change: Without political our overall gross revenue for the quarter would have decreased approximately six 5% from last year.
Speaker Change: Station operating expense increased four 1% to $24 3 million for the three months period.
Speaker Change: Operating income was 984000 in station operating income a non-GAAP measure was $5 9 million for the quarter.
Speaker Change: Capital expenditures were 600000 for the quarter compared to $1 million for the fourth quarter last year.
Speaker Change: Net income for the quarter was $1 3 million or <unk> 20 per fully diluted share.
Sam: On a same station basis for the quarter ended December 31st, 2024, net revenue decreased 3.9% to $28 million. station operating expense increased 0.7% to 23.5%.
Speaker Change: On a same station basis for the quarter ended December 31, 2024, net revenue decreased three 9% to $28 million.
Speaker Change: Station operating expense increased 0.7% to $23 5 million operating income decreased to one day.
Sam: Operating Income Decreased to $1. For the 12-month period into December 31, 2024, net revenue decreased 2.2% to $110.3 compared to $112.8 million last year. Political impact of this year's performance, as for the year we had $3.3 million in gross political revenue this year compared to $944,000 for the same period last year. Without political, our overall gross revenue for the year would have decreased approximately 4.3% from last year. Station operating expense increased 4.5% for the 12-month period to 94%. Operating Income was $2.4 million and Station Operating Income, again a non-GAAP measure, was $21.1 million. Capital expenditures for the 12 months were $3.8 million compared to $4.4 million in 2020.
For the 12 months period ended December 31, 2024, net revenue decreased two 2% to $110 3 million compared to $112 8 million last year political.
Speaker Change: Political impacted this year's performance is for the year, we had $3 3 million in political gross political revenue this year compared to 944000 for the same period last year.
Speaker Change: Without political our overall gross revenue for the year would have decreased approximately four 3% from last year.
Speaker Change: Station operating expense increased four 5% for the 12 month period to $94 3 million.
Speaker Change: Operating income was $2 4 million and station operating income.
Speaker Change: On a non-GAAP measure was $21 1 billion.
Speaker Change: Capital expenditures for the 12 months were $3 8 million compared to $4 4 million in 2023.
Sam: Net income for the year was $3.5 million, or $0.55, per fully diluted share. As an additional note regarding political, we did 6.9 million for the year in 2020 compared to 3.3 million in 2020. For the fourth quarter of 2020, we did 3.8 million compared to 2 million in 2020.
Speaker Change: Net income for the year was $3 5 million or <unk> 55 per fully diluted share.
Speaker Change: As an additional note regarding political we did $6 9 million for the year in 2020 compared to $3 3 million in 2024 for.
Speaker Change: For the fourth quarter of 2020, we did $3 8 million compared to $2 million in 2024.
Sam: Unfortunately we were limited as to the states that were considered to be the battleground states for national and to some extent state and local elections.
Speaker Change: Unfortunately, we were limited limited as to the states that were considered to be the battleground states for national and to some extent state and local elections.
Sam: In the strategic update press release we put out last Friday, March 7th, we indicated that we committed during our annual budget review and approval process, going back to the start of the budget process in September of 2024, to work directly with the leadership teams and all of our markets to identify potential efficiencies and operations that can enhance profitability. This initiative is not a stand-alone initiative, as we have been and will continue to analyze specific places where we can improve efficiencies in station operation. We believe that existing expenses can be reduced 1-2% on a proform basis without impacting investments we are making in regard to the revenue initiative that Chris will be talking more about in a moment.
Speaker Change: In the strategic update press release, we put out last Friday March 7th we indicated that we committed during our annual budget review and approval process going back to the start of the budget process in September of 2024 to work directly with the leadership teams in all of our markets to identify potential efficiencies in operations that can enhance.
Speaker Change: <unk> profitability this.
Speaker Change: This initiative is not a standalone initiative as we have been and will continue to analyze specific places, where we can improve efficiencies and station operations. We believe that existing expenses can be reduced 1% to 2% on a pro forma basis.
Speaker Change: Without impacting investments we are making in regards to the revenue initiatives that Chris will be talking more about in a few minutes.
Sam: The increase in our expenses in 2024 compared to 2023 included $1.8 million that was attributable to our acquisition of the radio stations in Lafayette. The increase in same station operating expenses were primarily due to compensation related bad debt, interactive expenses, sales surveys, and advertising and promotion. It should be noted that the increase in same station expenses in 2024 vs. 2023 was primarily in the first and second quarters. The increase in the 1st and 2nd quarters were $1.3 million and $937,000 respectively, as compared to a $50,000 reduction in the 3rd quarter and a $171,000 increase in the 4th In the first and second quarters, $450,000 and $492,000 respectively was due to salary increases that we have spoken about before.
Speaker Change: The increase in our expenses in 2024 compared to 2023 included $1 8 million that was a treat.
Speaker Change: Beatable to our acquisition of the radio stations in Lafayette the.
Speaker Change: The increase in same station operating expenses were primarily due to compensation related bad debt interactive expenses sales surveys and advertising and promotion expenses. It should be noted that the increase in same station expenses in 2024 versus 2023 was primarily in the first and second quarters.
Speaker Change: The increase in the first and second quarters were $1 3 million and 937000, respectively as compared to a $50000 reduction in the third quarter at 871000 increase in the fourth quarter.
Speaker Change: In the first and second quarters 450004 hundred 92000, respectively was due to salary increases that we've spoken about before.
Sam: Most of our staff have not received any salary increases in the past three to five years. Salary increases were $257,000 in the third quarter and $205,000 It should also be noted that approximately half of the salary expense increases were due to our interactive initiative. I also previously spoke about the unusual level of bad debt expenses that we experienced primarily due to one agency we did business with. Again, this was primarily in the first and second quarters. In the fourth quarter, bad debt expense actually decreased $77,000 over the same period. From a revenue perspective, Interactive Revenue, which includes online news, continued to grow in the quarter and in the year.
Speaker Change: Most of our staff and not received any salary increases in the past three to five years salary increases were 257000 in the third quarter and 205000 in the fourth quarter.
Speaker Change: It should also be noted that approximately half of the salary expense increases were due to our interactive initiatives.
Speaker Change: I also previously spoke about the unusual level of bad debt expenses that we experienced primarily due to one agency. We did business with again. This was primarily in the first and second quarters and the fourth quarter bad debt expense actually decreased 77000 over the same period last year.
Speaker Change: From a revenue perspective interactive revenue, which includes online news continued to grow in the quarter ending the year for the year gross interactive revenue increased 29% to $11 6 million and for the fourth quarter increased 19, 5%.
Sam: For the year, Gross Interactive Revenue increased 20.9% to $11.6 million, and for the fourth quarter it increased 19.5% to $3.8 million. Also Gross National Revenue increased 3.3% for the year and 13.1% for the year. E-commerce revenue also increased $904,000 to $2.4 million for the year, and $55,000 to $569,000 for the fourth quarter. As Chris has said previously and will do so again today, we anticipate continued growth for you.
Speaker Change: $3 million also gross national revenue increased three 3% for the year and 13, 1% for the quarter.
Speaker Change: E Commerce revenue also increased 904000 to $2 4 million for the year and 55000 569000 for the fourth quarter.
Speaker Change: As Chris has said previously and we'll do so again today, we anticipate continued growth in these areas.
Sam: We currently expect to spend between $4 and $4.5 million for capital expenditures in 2020. The company paid a quarterly dividend of $0.25 per share on December 13, 2020. and subsequent to the end of the year paid an additional quarterly dividend of $0.25 per share on March 7, 2011. The aggregate amount of each quarterly dividend was approximately $1.6 million. To date, Saga has paid over $137 million in dividends to shareholders since the first special dividend was paid in 2012. The company intends to continue to pay regular quarterly cash dividends as declared by the Board of Directors in the future.
Speaker Change: We currently expect to spend between four and $4 5 million for capital expenditures in 2025.
Speaker Change: Company paid a quarterly dividend of <unk> 25 per share on December 13th 2024, and subsequent to the end of the year paid an additional quarterly dividend of <unk> 25 per share on March seven 2025.
The aggregate amount of each quarterly dividend was approximately $1 6 million.
Speaker Change: To date Saga has paid over 137 million in dividends to shareholders. Since the first special dividend was paid in 2012.
Speaker Change: The company intends to continue to pay regular quarterly cash dividends as declared by the board of directors in the future.
Sam: The company's balance sheet reflects $27.8 million in cash and short-term investments as of December 31, 2024, and $27.3 million as of March 10, 2021.
Speaker Change: The Companys balance sheet reflects $27 8 million in cash and short term investments as of December 31, 2024 and.
Speaker Change: $27 3 million as of March 10, 2025.
Sam: Pacing for the first quarter is soft. For the quarter we are currently pacing down mid to high single digits. It continues to be an unsettled advertising market, particularly in radio. We expect revenue to turn positive from a growth perspective beginning with the second quarter.
Speaker Change: Pacing for the first quarter were soft for the quarter were currently pacing down mid to high single digits.
Speaker Change: It continues to be an unsettled advertising market, particularly in radio.
Speaker Change: We expect revenue to turn positive from a growth perspective, beginning with the second quarter Chris.
Sam: Chris will talk more about the transformational change that Saga has undergone. This change impacted our expenses in 2024 as we invested in the training necessary to allow our media advisors to take on the challenges of altering our standing within our local radio markets with the addition of our online local news service. e-commerce, national network advertising, market specific best of offerings, and digital including streaming and a variety of other digital services. We currently expect our station operating expense will increase by approximately 1.5 to 2.5 percent for the year as compared to 2020. This takes into consideration the pro forma expense reductions we are making in addition to any costs incurred as the expenses are reduced as well as our continued investment in the ongoing revenue initiative.
Speaker Change: Chris will talk more about the transformation transformational change that saga has undertaken.
Speaker Change: This change impacted our expenses in 2024, as we invested in the training necessary to allow our media adviser advisors to take on the challenges of altering our standing within our local radio markets with the addition of online local news service.
Speaker Change: E Commerce National network advertising market specific best of offerings, and digital including streaming and a variety of other digital projects.
Speaker Change: We currently expect our station operating expense will increase by approximately one and a half to two 5% for the year as compared to 2020 for.
Speaker Change: This takes into consideration the pro forma expense reductions we are making in addition to any cost incurred as the expenses are reduced as well as our continued investment in the ongoing revenue initiatives.
Sam: We anticipate that the annual corporate general and administrative expense will be approximately $12 million for 2025 compared to $12.6 million in 2020. Our tax rate is expected to be 26-29% with a deferred tax rate of 5-9% going forward. All said, we believe Saga is in a strong financial position to improve profitability as our digital initiative improves both radio and interaction.
Speaker Change: We anticipate that the annual corporate general and administrative expense will be approximately $12 million for 2025 compared to $12 6 million in 2024.
Speaker Change: Our tax rate is expected to be 26% to 29% with a deferred tax rate of 5% to 9% going forward.
Speaker Change: All said, we believe saga is in a strong financial position to improve profitability as our digital initiative improves both radio and interactive revenue.
Sam: This includes as a part of our capital allocation strategy to continue to evaluate non-core asset sales with an intent to maximize value from these assets. As an example, we've had multiple interactions with companies that have been interested in one or more of the towers. We expect to receive shortly an offer to purchase some of our tower sites, which we will be evaluating.
Speaker Change: This includes as a part of our capital allocation strategy to continue to evaluate noncore asset sales with an intent to maximize value from these assets as.
Speaker Change: As an example, we've had multiple interactions with companies that have been interested in one or more of the towers we own.
Speaker Change: We expect to receive shortly an offer to purchase some of our tower sites, which we will be evaluating I expect that we will know more about this potential asset sale. When we report our first quarter 2025 earnings in early May.
Sam: I expect that we will know more about this potential asset sale when we report our first quarter 2025 earnings in early May. The Board is committed to using a not insignificant portion of the proceeds from such a sale for stock buying. This may include open market, block trades, or other forms of buybacks as a part of our overall capital allocation plans this year.
Speaker Change: The board is committed to using a not insignificant portion of the proceeds from such a sale for stock buybacks. This may include open market block trades or other forms of buybacks as a part of our overall capital allocation plans this year.
Chris Forgy: With that, Chris, I'm going to turn it back over to you. Ooh, thank you for that, Sam.
Speaker Change: And with that Chris I'm going to turn it back over to you.
Chris Borghi: Thank you for that Sam.
Chris Forgy: Allow me to share several data points from a five-market snapshot inside Saga, which further illustrates how blended advertising has already impacted Saga's local, direct, and digital revenue. What we did is using a combination of Saga's Markets on Traffic system and Saga's CRM called Rumpel, we analyzed local direct advertisers who purchased a blended product consisting, as I mentioned earlier, of search, display, OTT, or social. We compared January of 23 through October of 23 to January 24. through October of 2014. Here's what it sounds like. Local direct advertisers who bought a blended product. their radio spend increased by 9% year over year.
Chris Borghi: Allow me to share several data points from five market snapshot inside saga, which further illustrates our blended advertising has already impacted SOG as local direct and digital revenues.
Chris Borghi: What we did is using a combination of SOG as markets on traffic system and saga CRM called Rumble, we analyzed local direct advertisers, who purchased a blended product consisting as I mentioned earlier of search display OTT or social.
Chris Borghi: We compare January of 'twenty three through October of 2003 to January 24.
Chris Borghi: Through October 24.
Chris Borghi: Here's what I found.
Chris Borghi: Local direct advertisers, who bought a blended product.
Chris Borghi: The radio spend increased by 9% year over year.
Chris Forgy: while their overall radio and digital spend increased by 27% year over year. Conversely, over the same period, local direct advertisers who did not buy a blended product, their radio spend dropped by 13% year over year. Furthermore, accounts who were never presented blended advertising at all experienced a 50-55% decrease in their radio spending. And when blended advertising was pitched, but the client didn't buy, the radio spend still increased by 1-2%.
Chris Borghi: While their overall radio and digital spend increased by 27% year over year.
Chris Borghi: Conversely over the same period local direct advertisers, who did not buy a blended product their radio spend dropped by 13% year over year.
Chris Borghi: Furthermore, accounts, who were never presented blended advertising all experienced a $50 to 55% decrease in the radio spend.
Chris Borghi: And when blended advertising was pitched at the client didn't buy the radio spend still increased by 1% to 2%.
Chris Forgy: This is the last time we talk in November 7th. Overall as a company we have written 5.7 million dollars in local direct blended orders involving 203 different customers. Of that, $209 million were digital dollars and $2.8 million were radio dollars. $2.9 million were digital dollars and $2.8 million were radio dollars. During the same period, blended advertising orders yielded us 4.3 times more than non-blended orders. And when examining the radio-only dollars and comparing blended and non-blended orders, we found that those who bought blended spent 96% more on radio. than those who did not buy Blended.
Chris Borghi: Since the last time, we talked on November 7th.
Chris Borghi: Overall as a company, we have written and $5 $7 million in local direct blended orders.
Chris Borghi: Involving 203 different customers.
Chris Borghi: Of that.
Chris Borghi: $209 million were digital dollars and $2 $8 million, where radio dollars.
Chris Borghi: $2 $9 million were digital dollars and $2 $8 million, where radio dollars.
Chris Borghi: During the same period blended advertising orders yielded us listen to this during the same period blended advertising orders yielded us for three times more than non blended orders.
Chris Borghi: When examining the radio only dollars and comparing blended and non blended orders we found that those who bought blended spent 96% more on radio.
Chris Borghi: And those who did not buy blended.
Chris Forgy: building on these results.
Chris Borghi: Building on these results and again, please listen to this.
Chris Forgy: And again, please listen to this.
Chris Forgy: in the last seven days, in just three more. We have inked an additional $2 million in brand new advertising money. These people have never advertised before, ever. and these winds did not even begin to drain our pipes. As a result, digital forward pacing in April and May is up high, very high, double digits. It used to be said in our business, control the creative, control the campaign. Today it's control the strategy, control the campaign. With blended advertising, radio has the opportunity to include itself in the strategy. And we are still infants in this execution of blended strategy.
Chris Borghi: In the last seven days in just three markets.
Chris Borghi: We have inked an additional $2 million in brand new advertising money. These people had never advertised before ever.
Chris Borghi: And these wins did not even begin to drain our pipeline.
Chris Borghi: As a result digital forward pacing in April and May is up high very high double digits.
Chris Borghi: It used to be said in our business control the creative control of the campaign.
Chris Borghi: Okay.
Chris Borghi: Today, it's controlled strategy control the campaign.
Chris Borghi: With blended advertising radio as the opportunity to include itself in the strategy.
Chris Borghi: And we are still infancy. This execution that blended strategy, we're just getting started.
Chris Forgy: We're just getting started. Radio is the star of Saga's digital strategy. Radio with its high consumer trust always leads to a search. Data Shows Radio is the very best, most persuasive, and most efficient top-of-funnel medium available. Radio's role in the strategy is to move consumers to click, visit, call, or search an advertiser's business. As I said earlier, radio gets the advertiser wanted, digital gets the advertiser found and chosen.
Chris Borghi: Radio is the star of SOG as digital strategy radio with its high consumer Trust always leads to a search.
Data shows radio was the very best most persuasive and most efficient top of funnel medium available.
Chris Borghi: Radio's Rolling this strategy is to move consumers to click visit call, our search and advertising business.
Chris Borghi: As I said earlier radio gets the Advertiser wanted digital gets the advertiser found and chosen.
Chris Forgy: In closing someone once said to me, if you're exposed to a product or service that can't tell you the problem they are solving, you need to be absolutely terrified. So, what problem is Saga solving for the customer and for radio through blended advertising? The following. Advertising that is easy to buy and understand instead of confusing, frustrating, and full of attrition. Advertising focused on the real consumers that click, visit, call, and search instead of the broken way it is leveraged by other companies. attribution that is easy to understand and focused on the actions consumers take. that lead to a sale.
Chris Borghi: In closing someone once said to me if you.
Chris Borghi: Youre exposed to a product or service. They can't tell you the problem, they're solving you need to be absolutely terrified.
Chris Borghi: So.
Chris Borghi: What problem is saga solving for the customer and for radio through blended advertising.
Chris Borghi: The following <unk>.
Chris Borghi: Advertising that it's easy to buy and understand instead of confusing frustrating and full of attrition.
Chris Borghi: Advertising focused on the real consumers that click visit call and search instead of the broken way it is leveraged by other companies.
Chris Borghi: Attribution that is easy to understand and focused on the actions consumers take.
Chris Borghi: That lead to a sale.
Chris Forgy: Instead of... confusing, overwhelming pages of nonsense data they get.
Chris Borghi: Stirred up the.
Chris Borghi: The confusing overwhelming pages of nonsense data they get them.
Chris Forgy: and selfishly, radio gets to do the magic it's always been known for. We believe our blended advertising strategy. We believe in it. And we believe so much in it that when executed properly can lead to two times growth in gross revenue, most of it digital. We're excited about the prospects Blended Advertising has to leverage, preserve, and protect the magic that is radio.
Chris Borghi: And selfishly radio gets to do the magic, it's always been known for.
We believe our blended advertising strategy, we believe in it.
Chris Borghi: Well, we believe so much in it that when executed properly can lead to two times growth in gross revenue most of it digital.
Chris Borghi: We are excited about the prospects blended advertising has to leverage preserve and protect the magic that is radio.
Chris Forgy: Look.
Chris Borghi: Look.
Chris Forgy: This was not the rich results earnings call any of us wanted. The good news is we have a plan, and the plan is working. You just heard it.
Speaker Change: This was not the result, the rich results earnings call any of Us wanted.
Chris Borghi: But the good news is we have a plan and the plan is working you just heard it.
Chris Forgy: can't cut your way out of this downdraft because the strong winds will just continue to come. What you can do is adjust your sails, execute impeccably, and sail, and that we will.
Speaker Change: You can't cut your way out of this down dropped because of the strong wins will just continue to come.
Speaker Change: Well you can do is adjust your sales executed impeccably and sale and that we will do.
Chris Forgy: Thank you again for your time and attention during Saga's Q4 and 2024 earnings. and year-end conference call.
Thank you again for your time and attention during August Q4, and 2020 for earnings.
Speaker Change: And year end conference call.
Sam: Sam, do we have any questions?
Sam: Sam do we have any questions.
Chris Forgy: Oh, wait, wait. I'm sorry. I forgot one thing.
Speaker Change: Oh wait wait I'm, sorry, I forgot one thing this.
Chris Forgy: This is materials.
Speaker Change: This is material.
Chris Forgy: Since Ed Christian's passing over the two years ago, the Saga Board of Directors has also been going through a transformation. First, we had two board members step away from the board. Then added a representative from Saga's largest shareholder as a board member and reduced the board count from 8 to 7. As a continuation of this board refresh process, at the board meeting in early December, the NOMGOV committee expressed the need to have a digital expert on the board. We are currently in the process of interviewing and vetting candidates. who have extreme digital expertise. to join the Saga board.
Speaker Change: Since Ed Christians, passing over the two years ago.
Speaker Change: Saga Board of Directors has also been going through a transformation.
Speaker Change: First we had two board members step away from the board.
Speaker Change: And added a representative from SOG as largest shareholder as a board member and reduce the board count from eight to seven.
Speaker Change: As a continuation of this board refresh process at the board meeting in early December.
Speaker Change: Non Gov Committee expressed the need to have a digital expert on the board. We are currently in the process of interviewing and vetting.
Speaker Change: Canada.
Speaker Change: Who have extreme digital expertise to join the Saga Board.
Chris Forgy: Over the next 12 to 18 months, we will continue to refresh the board in order to continue to bring value to Saga and its shareholders.
Speaker Change: Over the next 12 to 18 months, we will continue to refresh the board in order to continue to bring value to saga and its shareholders sorry about that soon but I forgot to make that point.
Chris Forgy: Sorry about that, Sam, but I forgot to make that point. That's an important point to make.
Speaker Change: Point to make thank you Chris.
Sam: Chris, we did get a few questions in, a lot of them we've already answered, so I won't go through those.
Speaker Change: Chris We did get a few questions in a lot of them, we've already answered so I won't go through those.
Sam: We did get one that says, can you give us...
Speaker Change: We did get one that says.
Speaker Change: Can you give us.
Sam: a census of the current advertising market in the first quarter since the quarter is nearly over and a sense of the trends by month in the quarter. What is spot advertising done? Slice pacing.
Speaker Change: Okay.
Speaker Change: As of the current advertising market in the first quarter since the quarter is nearly over and a sense of the trends by month in the quarter.
Speaker Change: Put a spot advertising done slice facing what are you hearing from your local advertisers I'll start. We obviously did I did in my comments talk about the first quarter in general break it down a little bit more January and February were about the same.
Sam: What are you hearing from your local advertisers? I'll start. We obviously did. I did in my comments. Talk about the 1st quarter in general, break it down a little bit more January and February. We're about the same with both being down high single digits. March was a bit better being down mid.
Speaker Change: With both being down high single digits March was a bit better being down mid single digits.
Sam: I'll go beyond the first quarter a little bit and say that April and May and June have all improved and we expect to continue to see improvement in the second quarter. with April starting down mid-single digits and by June appearing to be flat to up a little in pace. still a ways out. So, as we know in radio and digital advertising, everything comes on a much quicker basis.
Speaker Change: I'll go beyond the first quarter, a little bit and say that April and May and June have all improved and we expect to continue to see an improvement in the second quarter.
Speaker Change: With April starting down mid single digits in by June appearing to be flat to up a little.
Speaker Change: In pacing again, Jim still a ways out so as we know in radio and digital advertising everything comes on a much quicker basis. These days.
Chris Forgy: Maybe, Chris, you can talk about what you're hearing from local advertisers and spot advertisers. Well, I don't think it's any secret that the industry is facing a stronger than a downdraft. My fellow CEOs that I speak to are not happy with it. And again, I just come back to one thing. Many of them don't have a plan. Some of them don't, some of them do.
Speaker Change: Maybe Chris you can talk about what youre hearing from local advertisers in spot advertising.
Speaker Change: Well I don't think it's any secret that the industry is facing a stronger than a downdraft.
Speaker Change: The.
Speaker Change: Mike.
Speaker Change: Fellow Ceos that I speak to are not.
Speaker Change: I'm not happy with it.
Speaker Change: And again I just come back to one thing.
Speaker Change: Of them don't have a plan.
Of them don't some of them do some mentioned very good plans, we have an excellent plan and I for one and I think I speak for our team that were very optimistic.
Chris Forgy: Some have some very good We have an excellent plan and I for one, and I think I speak for our team that we're very optimistic, particularly as we get into the second half of this year and beyond.
Speaker Change: Particularly as we get into the second half of this year and beyond.
Sam: Thank you. Many radio stations have turned to central casting to reduce headcount and talent costs, and or looking to regional hub and spoke strategies.
Chris Borghi: Thank you Chris.
Speaker Change: Another question many radio stations have turned to central casting to reduce head count and talent costs and or looking to regional hub and spoke strategies is this something that's August contemplating.
Sam: Is this something that Saga does?
Chris Forgy: I'll take that one, Sam. Massive cuts? We're not going to central casting. Our most important assets are people who walk in and out of the doors of our radio stations every day. That being said, we are always, and continue, to take advantage of operating efficiencies across all platforms in all of our Saga markets. That's something we do on an ongoing basis, be more efficient.
Speaker Change: I'll take that one thing Matt.
Speaker Change: Massive cuts now.
Speaker Change: We're not going to central casting.
Speaker Change: Our most important assets our people.
Speaker Change: Walk in and out of the doors of our radio stations every day.
Speaker Change: That being said, we are always and continue to take advantage of operating efficiencies across all platforms and all of our saga markets. That's something we do on an ongoing basis be more efficient.
Chris Forgy: But our people are most important and are a sustaining resource, and that is not a plan that we have now or in the future. And to add to that, that gives us the extreme localism that we do have that a lot of our brethren don't have, which allows us to continue to connect as a trusted source for advertising both local and digital. in all our markets.
Speaker Change: But our people are our most important.
Speaker Change: Our sustaining resource and that is not a plan that we have now or in the future.
Speaker Change: And to add to that that gives us the extreme localism that we do have that a lot of our brother and don't have which allows us to continue to connect as a trusted source for advertising both local and digital.
Speaker Change: In all our markets.
Speaker Change: There was another question it had to do with changes in terms of your digital strategy I don't think we need to add any more there you spent quite a bit of time talking about that but as we all know.
Sam: There was another question that had to do with changes in terms of your digital strategy. I don't think we need to add any more there. You spent quite a bit of time talking about that, but as we all know. and as you said, you know, radio improves as digital improves and we're on a good transformational strategic plan to move forward.
Speaker Change: And as you said you know radio improves as digital improves and we were on a good transformational.
Speaker Change: Strategic plan to move forward and with that I will turn it back over to John for wrapping up.
John: With that, I will turn it back over to John for wrapping up. John, are you there?
Speaker Change: John are you there.
Operator: Yes, thank you And this does conclude today's conference call. Thank you for your participation, you may disconnect at this time. Thank you. Bye-bye.
John: Oh, yes. Thank you.
John: And this does conclude today's conference call.
John: Thank you for your participation you.
John: You may disconnect at this time.
John: Yes.