Q3 2025 Saga Communications Inc Earnings Call
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Good day, everyone.
And welcome to the third quarter 2025 earnings release and conference call.
At this time all participants are placed on a listen-only mode.
It is now my pleasure to hand the floor over to your host. Chris forgi. Sir, the floor is yours.
Thank you Matt and thank you to your dulet tones and uh thank you to everyone who was taking the time to join sagas 2025 Q3 earnings call.
Uh, we appreciate your continued interest and support and your participation in Saga Communications, what we believe is the best media company on the planet. Uh, I'm here with Sam Bush and um, today represents Sam 28 years of Sam doing Saga earnings calls so Sam, congratulations. And, uh, with that, I'm going to relinquish the floor to you for now, and I'll save my remarks for later in the call.
Thank you, Chris.
Li comparable gaap measure or attached in the selected financial data tables.
For the quarter ended, September 30th, 2025 net, revenue, decreased 528,000, or 1.8% to 28.2 million. Compared to 28.7 Million last year.
Station operating expense increased 2 million to 24.7 million for the 3-month period.
As reported in the press release. This increase was primarily result of an industry-wide settlement, with 2 of the musical licensing organizations. We are licensed by in mid August. The radio music license committee, which saw is a member of announced separate rate settings settlements with ASCAP and BMI the settlements established licenses, which applied retroactively for the periods from January 1st 2022, through September 30th 2025 and on a go forward basis through December 31st 2029.
In September, we booked 1.7 million for the periods from January, 1st 2022, to December, 31st 2024 and another 407,000. For the 9-month period, ending September 30th. 2025 the fourth quarter impact of the increased rates will be approximately 135,000 over our previously, projected music, licensing, fees,
We reported an operating loss of 626,000 for the quarter, which without the settlement would have been an operating income of 1.5 million compared to 1.6 million for the same period last year. We also reported station, operating income, which is a non-gaap financial measure of 3.5 million for the quarter.
Without the settlement station, operating income would have been 5.6 million for the quarter compared to 6 million for the same period last year. It is important to note that the company would have reported net income for the quarter without the musical licensing State settlement.
For the quarter, gross broadcast Revenue included in TR non-traditional Revenue which is mostly events. We are involved in decreased 1.8 million or 6.8% while our gross interactive Revenue increased 1.1 million. Our 32.6% gross political Revenue was 73,000 for the quarter this year compared to 6777 last year.
For the third quarter of this year, the increase in our interactive Revenue made up almost the entire decrease in our broadcast Revenue when adjusted for political I think Chris is going to emphasize this again but uh we're in radio. So repetition is always a good thing. Um and I just want to say again for the third quarter, this year, the increase in our interactive Revenue made up almost the entire decrease in our broadcast Revenue when adjusted for political
For the 9-month period, ended September 30th 2025 net revenue decreased 3.1 million or 3.7% to 80.6 million compared to 83.7 Million last year, I won't go through the 9 months numbers that were reported in the press release other than to indicate that without the music licensing settlements station, operating expense would have decreased 1.7 million instead of the reported increase of 390,000.
Without the settlement operating income would have been 574,000 and instead of an operating loss of 1.5 million and station operating incap. Again, a non-gaap measure would have been 13.8 million instead of 11.7 million.
Also, without the settlement on a same station basis for the 9 months, ended September 30th 2025 station operating expense would have decreased 3.9% or 2.6 million.
Corporate expenses decreased 80,000 for the quarter and increased 74,000 for the 9 months. Ended September 30th 2025
Corporate expenses included 226,000 for the 9-month period relating to a potential proxy contest initiated earlier. This year by 1 Saba shareholder. This has been disclosed in our previous public filings.
The decrease in other operating expense, for the 9 months, ended September 30th 2025 compared to the same period in 2024 is primarily due to the sale of a non-productive AM station along with 2 translations in Asheville, North Carolina, the sale of wnd and FM and Chiefland Florida. And the shutting down of a non-productive AM station in Bellingham Washington in 2024
The decrease in other income is due to a 1-time gain in 2024 related to the sale of saga's equity investment in BMI when the organization was sold.
In addition to what Saga, I have already said, in addition to what I've already said, I want to emphasize that for the quarter total interactive Revenue was up 32.6% and for the 9-month period up 17.1% with a 54% profit margin for both the quarter and the 9-month period excluding sales commissions for the quarter and for the year.
Facing for the fourth quarter is currently tough as we are up against 2 million in political we booked in the fourth quarter of last year. This was 1.6 million in October.
389,000 in November and 10,000 in December.
for the fourth quarter, we are currently facing down approximately 11% including political and 4.7% when political is is excluded
on a positive note, our interactive facing is strong for the fourth quarter being up 32%, as of now.
The company paid a quarterly dividend of $0.25 per share on September 9, 2025.
The total dividend paid was approximately 1.6 million.
To date. Saga has paid over 140 million in dividends to shareholders since the first special dividend was paid in 2012, as well as has bought back over 58 million in Saga stock.
The company intends to pay regular quarterly cash dividends in the future.
Further, as part of our overall capital allocation plan for 2025 and beyond, and as stated in the press release on October 17th, 2025, the company entered into an agreement to sell telecommunications towers and related property and other assets located at 22 sites for a total cash purchase price of approximately $10.7 million.
Sales proceeds, net of brokerage commissions and certain adjustments in the amount of approximately.
In the amount of approximately 8.7 million were paid to the company with the remaining cash proceeds, of 1.8 million representing, 4 sites, being deposited into an escrow account pending final landlord, consents to assign the ground leases, where the towers are located.
We also entered into long-term, leases at each of the sites to allow us continued use of the towers at a nominal cost. We are continuing to work through the tax and accounting implications of the transaction, which will be disclosed in our future filings.
As we have previously stated, we intend to use a portion of the proceeds from the sale to fund stock buybacks, which may include open market purchases, block trades, or other forms of buybacks.
All said, We Believe Saga is in a strong financial position to improve profitability as our digital initiative improves both local radio and interactive Revenue.
The company's balance sheet, reflects 26.3 million in cash and short-term Investments as of September 30th, 2025 and 34.2 million as of November 3rd 2025.
We currently expect to spend between $3.25 million and $3.75 million for capital expenditures in 2025.
We currently expect that our station operating expense will be flat for the year as compared to 2024. This takes into consideration the expense reductions we have made, offset by the music license fees settlement with ASCAP and BMI, as well as for our continued investment in our ongoing revenue initiatives. Without the music licensing settlement expense, we would expect station operating expense to decrease by 2% to 3%.
We anticipate that the annual corporate General and administrative expense will be approximately 12 million for 2025 compared to 1 2. 4, 2 4.
And with crash with that Chris, I'll turn it back over to you.
Did you say crafts? That's kind of Crash Sam. Um, congratulations. Anyway, on your 28 years of earnings calls, um, over the past several years and uh, uh, we have passed several months. I'm sorry. Saga's Elite group of leaders and employees.
Focus, corporate team and sagas board of directors, have been extremely busy in the Saga verse. Um, since early this year, we have been diligently, installing saga's Blended digital strategy, including the comprehensive training and development of saga's Market. Leaders sales managers media advisors on are content creators and our directors of content content creation.
We've made additional strategic investments in R&D.
And resources to assist our team members to run faster in the sagas Blended strategy.
This in order to achieve our objective of 2x gross revenue, most of it digital in 18, to 24 months by capturing, just 5% of the available, search and display dollars available in our 27, Saga markets.
We've added Acumen and expertise to our Saga board of directors, with expertise in digital m&a and the financial audit and Consulting space.
We are committed to sell 1 Tower and the land. The tower is on to a local developer.
As well as some excess Land We own. And we are also in the process of listing and selling the company-owned home in Sarasota, Florida, following multiple hurricanes that pounded Florida's, West Coast.
And we have completed a Sam said, the sale of several Saga Towers not because we needed the money.
This while continuing saga's robust, quarterly dividend strategy.
As a part of the tower sale. I would like to personally thank and show our appreciation to Executive Vice President, CFO, Sam Bush, senior vice president controller, Kathy Babinski.
Vice president of engineering Tom Atkins, Vice President of Finance and board. Secretary Katie, semien.
And financial analysts Cindy laureline, and Amy lumber for the reference to help us complete. The sale of these towers. This was a Herculean effort and it's much appreciated and it's still continuing, we're not quite done yet.
Um, finally, we have a we finally have and continue to make strategic expense reductions at the market and the corporate levels.
To allow us to reinvest in our transformational digital strategy to enable us to be more nimble.
We're also selectively utilizing. As we've stated earlier, a in AI to help improve affect efficiency and performance, and to cut costs and to increase margins.
And over the next few months we will continue to bring much of our digital deliverables uh into the house uh to allow us to better serve our team members and ultimately our customers. Again to provide efficiencies, increase scalability and increase margins all of which will require the acquisition of people to accomplish this this feet.
Targets come a long way in a very short period of time.
Yet, we are far from finished.
To fully understand how far we've come and why we believe saga's Blended strategy will work.
We really need to go back to the beginning, to the principles of what Saga was built on in the first place. When Ed Christian founded, the company.
Internally, we refer to this with an old Latin phrase Fane originated. Pendet, which means the end hangs on the beginning.
To focus is on small and medium markets.
case in point 21 of our 27 markets are smaller than Market 100,
our acquisition strategy focused on markets with state capitals, state universities non-class,
Egg business, large retirement communities with high net worth like we have in the villages in Ocala, Florida.
And on the ground saga's Market employees are known liked and trusted in the local communities in which they serve, we pour ourselves into the local Marketplace.
Our leaders get involved in city, government raise money for important causes where money, uh, raised stays in the local community. We get belly to belly with influencers and decision makers to move, local business forward.
Saga is really woven into the fabric of the communities, in which we serve. But the name sag has never mentioned. It's all about our local media groups and the name, like the Columbus Media Group, for example.
Finally Saga does on average a million to a million and a half dollars. More a month in local direct Revenue than we do in local agency Revenue.
And as we stated local direct revenue is the primary driver to saga's Blended strategy. I hope this is starting to make sense to you now.
Saga was 10 years late to the digital party. We started this digital transformation way behind the curve.
And we have the luxury of observing and learning from iterations and reiterations of our broadcast Brethren from a digital advertising. Forum. Saga is really a cache. Flush startup
and what we know is this,
the local advertising Market is overdue for disruption.
And it just so happens that Saga Communications operates in the size markets, where we can have strong impact and influence on the local communities in which we operate.
and that includes,
The advertising community.
These local advertising markets are ripe for disruption.
Why?
Because businesses are pouring more and more money into digital advertising every year. But the rapid growth of digital budgets has outpaced the ability of advertisers to completely understand them and to use them effectively
There are too many digital providers and too many conflicting Solutions businesses don't know who to trust in this case trust Simplicity uh Clarity with a click visit calling search approach focused on the consumer Journey. Not the product base selling that usually takes place wins
and advertisers are fed up with ineffective campaigns and empty promises. They don't really like what they are buying know what they're buying and they don't really like, who they're buying it from.
And there's a shift in consumer behavior.
Advertising strategies haven't caught up with the journey people take when they buy. In other words, search and display is broken.
and there is a gap where Tech meets human behavior,
will allow us, we believe,
To not only win the market, but also redefine it.
And internally. We have begun seeing measurable Returns on the Y's efforts that our team members have put into this transformation and I want to underscore yelan's efforts.
We have found that local direct advertisers who were not pitched the blend.
We lose 29% of our existing radio business that we had.
And with local direct advertisers that bought a blended product their radio spending by 9% and their overall radio and Blended spend increased by 27%.
Now, we just simply need to scale it.
And finally,
this biggest and most encouraging news comes from Sam's report that he mentioned not once but twice and I'm going to mention it a third time because frequency sales
And again, the biggest and most encouraging news comes from Sam's report during today's earnings call.
And to make sure you didn't miss it.
I'm going to make sure you didn't miss it.
This Above All Else, proves that there are green shoots popping up as it relates to our digital transformation.
The blend is gaining momentum.
Again, for the third quarter, 2025 the increase in saga's interactive Revenue made up almost completely the decrease in our broadcast Revenue. When you adjust for political
The question has always been: Can we run fast enough in the blend to outrun the downdraft in the sector?
Well, hope is not a strategy.
And this may be an indication that perhaps we can.
But make no mistake, although we are still in the infant stages of our digital transformation.
This transformation is hard.
Really hard. It's taxing and it's working.
We have a very best most committed and passionate team of broadcasters. I have ever had the pleasure of working with and serving.
And they are the engine that make the Blended transformation a reality.
Thank you to all of you again.
For your time and your interest in your support and involvement in Saga Communications, what we believe to be the best media company on the planet.
Sam. Do we have any questions?
We did we got questions from uh 3 different shareholders, um and and analysts. Um and I'll start with uh Michael kaminski's questions from Noble capital.
Uh, the first 2, he had 3 questions, but the first 2 are are interrelated. So I'm going to read both of them and and let you address them jointly.
Can you give us some color on the tone of the market? Pacings into the upcoming quarter, local spot, versus digital versus National
And then the second part of that is, while Saga does not get a lot of national advertising. It had been a key Revenue growth driver for the company. How is this category performing going forward?
So, I'll address the last vertical first. Um, National is weak in the fourth quarter.
and it has had a, um,
a, a little bit of a tradition in coming in later and later,
Which impacts our forward pacing.
And Saga has 2 outstanding. National sales, managers, and Tom, howal and Bruce Warner and a really proactive partner in cats radio.
Unfortunately, we don't really control a lot of what happens in that vertical.
As Sam mentioned, overall total revenue pacing, excluding political, is down 4.7% for the quarter. Local pacing is consistent across the quarter.
And digital pacing is still pacing plus 32% for the quarter, which is why we are running to the saga's digital transformation in the first place.
I hope that answered the question.
Thank you. Let's make a great start towards it. Historically, advertisers reacted favorably in anticipation of Fed rate cuts, given the favorable influence they had on the economy, as we have seen in many radio company results. However, the Fed rate action has had no impact, and the radio spot advertising remains weak. Any thoughts on why there is this anomaly?
Well, first of all, Sam, I don't believe it's an anomaly. And by no means is what I'm about to say directed at the person who asked this question.
And it's the economy stupid.
Um, on Main Street, there's a delayed reaction.
In, in my opinion uh to rate cuts by the FED in our world rate, Cuts impact are 2 largest economic indicators. As to how radio will perform going forward and they are housing, starts and auto purchases.
The 50 basis points reduction in the FED, uh, has dribbled out kicking and screaming. Simply it's not gotten the main street just yet. Uh, we believe spot radios downdraft is more, a function of the macro decline in the sector.
Uh, and not the rate Cuts or lack thereof. Um,
and,
Not really based on the uh, on the interest rate reduction.
Very good, thank you, Chris, we did have 2 additional questions from, uh, 2 share holders, and and I'm going to combine them because they were similar in nature or a augmented each other. Um, there was a question as to why there was an a concrete plan for a buyback.
uh, including timing and amounts, uh, once the tower sale closed,
And I would say there were a number of complexities to the tower sale, and we saw the very specific expectations for the final terms and conditions. Additionally, there were certain real estate transfer issues that had to be dealt with and are still being dealt with.
Shown by the fact that 4 of our uh our Towers. The sites are still in escrow and we're working through uh which we will work through. But we're working through the timing and the complexities of getting the real estate aspects. So those transactions those pieces of the transactions closed.
It wasn't until days before the closing that we actually felt comfortable with the final sale proceeds, as Chris stated, we didn't sell the towers because we needed the money. We sold them because it was the right thing to do from a capital, allocation standpoint. So, again, we we didn't feel comfortable with the amount, uh, until a couple of days before the closing. Uh, and, uh, as to what the final sales proceeds would be and when the closing would take place and, and that's information that was necessary is necessary for the board, uh, to know when
Considering final buyback plans, BuyBacks are still a priority for a portion of these proceeds, as we have previously stated, uh, there will be more clarity to this in the near future. As the board continues to look at the amount and timing and make some final decisions.
Good. And I think that's it.
We appreciate all of you joining and uh, I think we can turn it back over to Matt to wrap up the call.
Thank you, Matt.
Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.