SAGA COMMUNICATIONS INC 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures over financial reporting were effective to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act will be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Changes in Internal Control Over Financial Reporting There were no changes in our internal controls over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework as set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021. Our internal control over financial reporting as of December 31, 2021 has been audited by UHY LLP, an independent registered public accounting firm, as stated in its report which appears below. ​ 45 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors Saga Communications, Inc. Opinion on Internal Control over Financial Reporting We have audited Saga Communications, Inc.’s (the Company’s) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Saga Communications, Inc. as of December 31, 2021 and 2020, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021 and the related notes and financial statement schedule, and our report dated March 16, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ UHY LLP Sterling Heights, Michigan March 16, 2022 46 Table of Contents ​ Item 9B. Other Information None. PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year. See also Item 1. Business — Executive Officers. Item 11. Executive Compensation The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year. In addition, the information contained in the “Securities Authorized for Issuance Under Equity Compensation Plan Information” subheading under Item 5 of this report is incorporated by reference herein. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year. ​ 47 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Financial Statements The following consolidated financial statements attached hereto are filed as part of this annual report: ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID 1195 ) 49 Consolidated Financial Statements: — Consolidated Balance Sheets as of December 31, 2021 and 2020 51 — Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 52 — Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019 53 — Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 201 9 54 Notes to Consolidated Financial Statements 57 ​ 2. Financial Statement Schedules Schedule II Valuation and Qualifying Accounts is disclosed in Note 1 to the Consolidated Financial Statements attached hereto and filed as part of this annual report. All other schedules for which provision are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. 3. Exhibits The Exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index, which is incorporated herein by reference. ​ 48 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Saga Communications, Inc. Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Saga Communications, Inc. (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts, listed in the index at item 15(a)(2) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of Saga Communications, Inc. at December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the three years in the period December 31, 2021, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 16, 2022 expressed an unqualified opinion thereon. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to an account or disclosure that is material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ ​ 49 Table of Contents Critical Audit Matter – Broadcast License Impairment Analysis ​ As disclosed in Notes 1 and 3 to the financial statements, the Company evaluates Federal Communications Commission licenses (or “broadcast licenses”) for impairment on an annual basis as of October 1st or, more frequently, if events or changes in circumstances indicate that the carrying value of the Company’s broadcast licenses may not be recoverable. The broadcast license balance as of December 31, 2021 was $90.2 million. The Company considers potential impairment by comparing the fair value of a market’s broadcast license to its carrying value. Fair value is estimated by management using the Greenfield method at the market level, which is a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. Management’s cash flow projections include significant judgments and assumptions related to market growth rates and market profit margin, estimated available market revenue including market share, terminal values and discount rates. ​ We identified broadcast license impairment as a critical audit matter because of the significant judgments made by management to estimate the fair value of the Company’s broadcast licenses. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of inputs into the discounted cash flow model driven by management’s estimates. ​ How the Critical Audit Matter Was Addressed in the Audit ​ Our audit procedures performed to evaluate the reasonableness of management’s estimates and assumptions included assessing the methodologies used by the Company and testing the significant assumptions used in the quantitative models. We tested the effectiveness of the control over management’s evaluation and determination of estimates and assumptions used as the inputs in the impairment models. We compared the cash flow models prepared by management to historical revenues and profit margins as well as third-party market data to evaluate the reasonableness of the assumptions. We evaluated historical trends in assessing the reasonableness of growth rate assumptions and performed sensitivity analysis of certain significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in these assumptions. We performed procedures to verify the mathematical accuracy of the calculations of broadcast license impairment used by management. We involved our valuation specialists to assist us in identifying the significant assumptions underlying the models, assessing the rationale and supporting documents related to these assumptions and determining the appropriateness and reasonableness of the methodologies employed. Furthermore, we assessed the appropriateness of the disclosures in the consolidated financial statements. ​ ​ /s/ UHY LLP ​ We have served as the Company’s auditor since 2015. Sterling Heights, Michigan March 16, 2022 ​ 50 Table of Contents Saga Communications, Inc. Consolidated Balance Sheets (In thousands, except par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 54,760 ​ $ 51,353 Accounts receivable, less allowance of $ 469 ($ 648 in 2020) ​ 16,269 ​ 15,732 Prepaid expenses and other current assets ​ 2,449 ​ 2,988 Barter transactions ​ 971 ​ 895 Total current assets ​ 74,449 ​ 70,968 Property and equipment ​ 144,719 ​ 142,680 Less accumulated depreciation ​ 91,375 ​ 87,795 Net property and equipment ​ 53,344 ​ 54,885 Other assets: ​ ​ ​ ​ ​ ​ Broadcast licenses, net ​ 90,277 ​ 90,208 Goodwill ​ 19,209 ​ 19,106 Other intangibles, right of use assets, deferred costs and investments, net of accumulated amortization of $ 15,906 ($ 15,524 in 2020) ​ 10,653 ​ 11,321 ​ ​ $ 247,932 ​ $ 246,488 ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders’ equity ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable ​ $ 2,347 ​ $ 2,212 Accrued expenses: ​ ​ ​ ​ ​ ​ Payroll and payroll taxes ​ 6,202 ​ 5,660 Dividend payable ​ 3,988 ​ — Other accrued expenses ​ 5,758 ​ 5,267 Barter transactions ​ 901 ​ 795 Total current liabilities ​ 19,196 ​ 13,934 Deferred income taxes ​ 24,802 ​ 24,607 Long-term debt ​ — ​ 10,000 Other liabilities ​ 7,015 ​ 7,405 Total liabilities ​ 51,013 ​ 55,946 Commitments and contingencies ​ — ​ — Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, 1,500 shares authorized, none issued and outstanding Common stock: ​ ​ ​ ​ ​ ​ Class A common stock, $ .01 par value, 35,000 shares authorized, 6,835 issued ( 6,785 in 2020) ​ ​ 68 ​ ​ 68 Class B common stock, $ .01 par value, 3,500 shares authorized, 965 issued and outstanding ( 938 in 2020 ) ​ 9 ​ 9 Additional paid-in capital ​ 70,035 ​ 68,900 Retained earnings ​ 164,246 ​ 158,990 Treasury stock ( 1,758 shares in 2021 and 1,751 in 2020, at cost) ​ ( 37,439 ) ​ ( 37,425 ) Total stockholders’ equity ​ 196,919 ​ 190,542 ​ ​ $ 247,932 ​ $ 246,488 See accompanying notes. 51 Table of Contents ​ Saga Communications, Inc. Consolidated Statements of Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 2020 2019 ​ ​ (In thousands, except per share data) Net operating revenue ​ $ 108,343 $ 95,813 $ 123,072 Operating expenses: ​ ​ ​ ​ ​ Station operating expense ​ 83,245 ​ 81,586 92,692 Corporate general and administrative ​ ​ 10,040 ​ ​ 11,574 ​ 11,460 Other operating (income) expense, net ​ 7 ​ ( 1,247 ) 112 Impairment of intangible assets ​ — ​ 5,149 — ​ ​ 93,292 ​ 97,062 104,264 Operating income (loss) ​ ​ 15,051 ​ ​ ( 1,249 ) ​ ​ 18,808 Other (income) expenses: ​ ​ ​ ​ ​ Interest expense ​ ​ 284 ​ 340 735 Interest income ​ ​ ( 16 ) ​ ​ ( 148 ) ​ ( 610 ) Other income ​ ​ ( 634 ) ​ ​ ( 233 ) ​ ( 16 ) Income (loss) before income tax expense ​ ​ 15,417 ​ ​ ( 1,208 ) ​ 18,699 Income tax provision (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ 4,065 ​ ​ 1,250 ​ 4,000 Deferred ​ ​ 195 ​ ​ ( 545 ) ​ 1,420 ​ ​ ​ 4,260 ​ 705 5,420 Net income (loss) ​ $ 11,157 ​ $ ( 1,913 ) $ 13,279 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.85 ​ $ ( 0.32 ) ​ $ 2.23 Diluted ​ $ 1.85 ​ $ ( 0.32 ) ​ $ 2.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares ​ ​ 5,917 ​ ​ 5,871 ​ ​ 5,834 Weighted average common and common equivalent shares ​ ​ 5,917 ​ ​ 5,871 ​ ​ 5,834 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends declared per share ​ $ 0.98 ​ $ 0.32 ​ $ 1.20 ​ See accompanying notes. ​ 52 Table of Contents Saga Communications, Inc. Consolidated Statements of Stockholders’ Equity Years ended December 31, 2020, 2019 and 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A ​ Class B ​ Additional ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Common Stock ​ Paid-In ​ Retained ​ Treasury ​ Stockholders’ ​ Shares Amount Shares Amount Capital Earnings Stock Equity ​ ​ (In thousands) Balance at January 1, 2019 6,732 ​ $ 67 923 ​ $ 9 ​ $ 64,795 ​ $ 156,689 ​ $ ( 36,561 ) ​ ​ 184,999 Net income — ​ — — ​ — ​ — ​ 13,279 ​ — ​ 13,279 Conversion of shares from Class B to Class A 13 ​ — ( 13 ) ​ — ​ — ​ — ​ — ​ — Issuance of restricted stock 29 ​ 1 44 ​ — ​ — ​ — ​ — ​ 1 Forfeiture of restricted stock ( 3 ) ​ — — ​ — ​ — ​ — ​ — ​ — Dividends declared per common share — ​ — — ​ — ​ — ​ ( 7,146 ) ​ — ​ ( 7,146 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 2,129 ​ — ​ — ​ 2,129 Purchase of shares held in treasury — ​ — — ​ — ​ — ​ — ​ ( 1,172 ) ​ ( 1,172 ) 401(k) plan contribution — ​ — — ​ — ​ ( 113 ) ​ — ​ 375 ​ 262 Balance at December 31, 2019 6,771 ​ $ 68 954 ​ $ 9 ​ $ 66,811 ​ $ 162,822 ​ $ ( 37,358 ) ​ $ 192,352 Net loss — ​ — — ​ — ​ — ​ ( 1,913 ) ​ — ​ ( 1,913 ) Conversion of shares from Class B to Class A 16 ​ — ( 16 ) ​ — ​ — ​ — ​ — ​ — Forfeiture of restricted stock ( 2 ) ​ — — ​ — ​ — ​ — ​ — ​ — Dividends declared per common share — ​ — — ​ — ​ — ​ ( 1,919 ) ​ — ​ ( 1,919 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 2,221 ​ — ​ — ​ 2,221 Purchase of shares held in treasury — ​ — — ​ — ​ — ​ — ​ ( 449 ) ​ ( 449 ) 401(k) plan contribution — ​ — — ​ — ​ ( 132 ) ​ — ​ 382 ​ 250 Balance at December 31, 2020 6,785 ​ $ 68 938 ​ $ 9 ​ $ 68,900 ​ $ 158,990 ​ $ ( 37,425 ) ​ $ 190,542 Net income — ​ — — ​ — ​ — ​ 11,157 ​ — ​ 11,157 Conversion of shares from Class B to Class A 12 ​ — ( 12 ) ​ — ​ — ​ — ​ — ​ — Issuance of restricted stock 38 ​ — 39 ​ — ​ — ​ — ​ — ​ — Dividends declared per common share — ​ — — ​ — ​ — ​ ( 5,901 ) ​ — ​ ( 5,901 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 1,335 ​ — ​ — ​ 1,335 Purchase of shares held in treasury — ​ — — ​ — ​ — ​ — ​ ( 435 ) ​ ( 435 ) 401(k) plan contribution — ​ — — ​ — ​ ( 200 ) ​ — ​ 421 ​ 221 Balance at December 31, 2021 6,835 ​ $ 68 965 ​ $ 9 ​ $ 70,035 ​ $ 164,246 ​ $ ( 37,439 ) ​ $ 196,919 ​ See accompanying notes. ​ 53 Table of Contents Saga Communications, Inc. Consolidated Statements of Cash Flows ​ 54 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2020 ​ ​ 2019 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 11,157 ​ $ ( 1,913 ) ​ $ 13,279 Adjustments to reconcile net income (loss) to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 5,749 ​ ​ 6,524 ​ ​ 6,945 Deferred income tax expense (benefit) ​ ​ 195 ​ ​ ( 545 ) ​ ​ 1,420 Impairment of intangible assets ​ ​ — ​ ​ 5,149 ​ ​ — Amortization of deferred costs ​ ​ 37 ​ ​ 40 ​ ​ 103 Compensation expense related to restricted stock awards ​ ​ 1,335 ​ ​ 2,221 ​ ​ 2,129 (Gain) loss on sale of assets ​ ​ 7 ​ ​ ( 1,247 ) ​ ​ 112 (Gain) on insurance claims ​ ​ ( 589 ) ​ ​ ( 233 ) ​ ​ ( 16 ) Other (gain) losses ​ ​ ( 45 ) ​ ​ — ​ ​ — Barter (revenue) expense, net ​ ​ ( 2 ) ​ ​ ( 133 ) ​ ​ ( 190 ) Deferred and other compensation ​ ​ ( 215 ) ​ ​ 463 ​ ​ ( 634 ) Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ (Increase) decrease in receivables and prepaid expenses ​ ​ 507 ​ ​ 3,016 ​ ​ ( 5,780 ) Increase (decrease) in accounts payable, accrued expenses, and other liabilities ​ ​ 968 ​ ​ ( 1,254 ) ​ ​ 7,967 Total adjustments ​ ​ 7,947 ​ ​ 14,001 ​ ​ 12,056 Net cash provided by operating activities ​ ​ 19,104 ​ ​ 12,088 ​ ​ 25,335 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ​ ( 3,969 ) ​ ( 2,314 ) ​ ​ ( 5,732 ) Acquisition of broadcast properties ​ ​ ( 150 ) ​ ( 190 ) ​ ​ ( 763 ) Proceeds from sale and disposal of assets ​ ​ 142 ​ ​ 1,691 ​ ​ 270 Proceeds from insurance claims ​ ​ 589 ​ ​ 233 ​ ​ — Other investing activities ​ ​ 40 ​ ( 24 ) ​ ​ ( 10 ) Net cash used in investing activities ​ ​ ( 3,348 ) ​ ( 604 ) ​ ​ ( 6,235 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments on long-term debt ​ ​ ( 10,000 ) ​ ​ — ​ ​ ( 10,000 ) Cash dividends paid ​ ​ ( 1,914 ) ​ ( 3,716 ) ​ ​ ( 8,623 ) Purchase of treasury shares ​ ​ ( 435 ) ​ ( 449 ) ​ ​ ( 1,172 ) Net cash used in financing activities ​ ​ ( 12,349 ) ​ ( 4,165 ) ​ ​ ( 19,795 ) Net increase (decrease) in cash and cash equivalents ​ ​ 3,407 ​ 7,319 ​ ​ ( 695 ) Cash and cash equivalents, beginning of period ​ ​ 51,353 ​ 44,034 ​ ​ 44,729 Cash and cash equivalents, end of period ​ $ 54,760 ​ $ 51,353 ​ $ 44,034 ​ 55 Table of Contents See accompanying notes. ​ 56 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements ​ 1. Summary of Significant Accounting Policies Nature of Business Saga Communications, Inc. is a broadcasting company whose business is devoted to acquiring, developing and operating broadcast properties. As of December 31, 2021, we owned or operated seventy-nine FM, thirty-four AM radio stations and seventy-nine metro signals, serving twenty-seven markets throughout the United States. Principles of Consolidation The consolidated financial statements include the accounts of Saga Communications, Inc. and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The full extent to which the effects of COVID-19 will directly or indirectly impact our business, results of operations and financial condition, including but not limited to our future estimates regarding our allowance for doubtful accounts and our valuation of goodwill and broadcast licenses will depend on future developments that are uncertain. Our accounting estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty. The accounting estimates may change as new events occur, as more experience is acquired and as more information is obtained. We evaluate and update assumptions and estimates on an ongoing basis and may use outside experts to assist in the our evaluation, as considered necessary. Actual results may differ from estimates provided and there may be changes to those estimates in the future periods. Concentration of Risk Certain cash deposits with financial institutions may at times exceed FDIC insurance limits. Our top five markets when combined represented 39 %, 40 % and 39 % of our net operating revenue for the years ended December 31, 2021, 2020 and 2019, respectively. We sell advertising to local and national companies throughout the United States. We perform ongoing credit evaluations of our customers and generally do not require collateral. We maintain an allowance for doubtful accounts at a level which we believe is sufficient to cover potential credit losses. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and time deposits with original maturities of three months or less. We did no t have any time deposits at December 31, 2021 and 2020. Financial Instruments Our financial instruments are comprised of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair value as it carries interest rates that either fluctuate with the euro-dollar rate, prime rate or have been reset at the prevailing market rate at December 31, 2021. ​ 57 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Allowance for Doubtful Accounts A provision for doubtful accounts is recorded based on our judgment of the collectability of receivables. Amounts are written off when determined to be fully uncollectible. Delinquent accounts are based on contractual terms. The activity in the allowance for doubtful accounts during the years ended December 31, 2021, 2020 and 2019 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Write Off of ​ ​ ​ Balance ​ Charged to ​ Allowance ​ Uncollectible ​ Balance at ​ ​ at Beginning ​ Costs and ​ From ​ Accounts, Net of ​ End of Year Ended of Period Expenses Acquisitions Recoveries Period ​ ​ (in thousands) December 31, 2021 ​ $ 648 ​ $ 56 ​ $ — ​ $ ( 235 ) ​ $ 469 December 31, 2020 ​ $ 671 ​ $ 420 ​ $ — ​ $ ( 443 ) ​ $ 648 December 31, 2019 ​ $ 759 ​ $ 578 ​ $ — ​ $ ( 666 ) ​ $ 671 ​ Barter Transactions Our radio stations trade air time for goods and services used principally for promotional, sales and other business activities. An asset and a liability are recorded at the fair market value of goods or services received. Barter revenue is recorded when commercials are broadcast, and barter expense is recorded when goods or services received are used. Property and Equipment Property and equipment are carried at cost. Expenditures for maintenance and repairs are expensed as incurred. When property and equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss realized on disposition is reflected in earnings. Depreciation is provided using the straight-line method based on the estimated useful life of the assets. We review our property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. We did not record any impairment of property and equipment during 2021, 2020 and 2019. Property and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated December 31, ​ Useful Life 2021 2020 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Land and land improvements ​ — ​ $ 14,638 ​ $ 14,559 Buildings ​ 31.5 years ​ 38,225 ​ 38,059 Towers and antennae ​ 7 - 15 years ​ 25,918 ​ 25,976 Equipment ​ 3 - 15 years ​ 55,955 ​ 53,547 Furniture, fixtures and leasehold improvements ​ 7 - 20 years ​ 7,129 ​ 7,189 Vehicles ​ 5 years ​ 2,854 ​ 3,350 ​ ​ ​ ​ 144,719 ​ ​ 142,680 Accumulated depreciation ​ ​ ​ ( 91,375 ) ​ ( 87,795 ) Net property and equipment ​ ​ ​ ​ $ 53,344 ​ $ 54,885 ​ Depreciation expense for continuing operations for the years ended December 31, 2021, 2020 and 2019, was $ 5,362,000 , $ 5,711,000 and $ 5,916,000 , respectively. 58 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Intangible Assets Intangible assets deemed to have indefinite useful lives, which include broadcast licenses and goodwill, are not amortized and are subject to impairment tests which are conducted as of October 1 of each year, or more frequently if impairment indicators arise. We have 113 broadcast licenses serving 27 markets, which require renewal over the period of 2022-2030. In determining that the Company’s broadcast licenses qualified as indefinite-lived intangible assets, management considered a variety of factors including our broadcast licenses may be renewed indefinitely at little cost; our broadcast licenses are essential to our business and we intend to renew our licenses indefinitely; we have never been denied the renewal of an FCC broadcast license nor do we believe that there will be any compelling challenge to the renewal of our broadcast licenses; and we do not believe that the technology used in broadcasting will be replaced by another technology in the foreseeable future. Separable intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the leases length, ranging from one to twenty-six years . Other intangibles are amortized over one to fifteen years . Customer relationships are amortized over three years . Deferred Costs The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the Credit Facility. During the years ended December 31, 2021, 2020 and 2019, we recognized interest expense related to the amortization of debt issuance costs of $ 37,000 , $ 40,000 and $ 103,000 , respectively. At December 31, 2021 and 2020 the net book value of debt issuance costs related to our line of credit was $ 17,000 , and $ 64,000 , respectively, and was presented in other intangibles, deferred costs and investments in our Consolidated Balance Sheets. Leases We determine whether a contract is or contains a lease at inception. The lease liabilities and right-of-use assets are recorded on the balance sheet for all leases with an expected term of at least one year, based on the present value of the lease payments using (1) the rate implicit in the lease or (2) our incremental borrowing rate (“IBR”). Our IBR is defined as the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We follow the accounting guidance for leases, which includes the recognition of lease expense for leases on a straight-line basis over the lease term. See Note 12 – Commitments and Contingencies for more information on Leases. Treasury Stock In March 2013, our board of directors authorized an increase in the amount committed to our Stock Buy-Back Program (the “Buy-Back Program”) from $ 60 million to $ 75.8 million. The Buy-Back Program allows us to repurchase our Class A Common Stock. As of December 31, 2021, we had remaining authorization of $ 18.4 million for future repurchases of our Class A Common Stock. Repurchases of shares of our Common Stock are recorded as Treasury stock and result in a reduction of Stockholders’ equity. During 2021, 2020 and 2019, we acquired 16,577 shares at an average price of $ 26.25 per share, 24,255 shares at an average price of $ 18.51 per share and 39,505 shares at an average price of $ 29.68 per share, respectively. 59 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Revenue Recognition Revenue from the sale of commercial broadcast time to advertisers is recognized when commercials are broadcast. Revenue is reported net of advertising agency commissions. Agency commissions, when applicable are based on a stated percentage applied to gross billing. All revenue is recognized in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, Revenue Recognition Revised and Updated and The Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers . Local Marketing Agreements We have entered into Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMAs”) in certain markets. In a typical TBA/LMA, the FCC licensee of a station makes available, for a fee, blocks of air time on its station to another party that supplies programming to be broadcast during that air time and sells its own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBAs/LMAs are included in the accompanying Consolidated Statements of Income. Assets and liabilities related to the TBAs/LMAs are included in the accompanying Consolidated Balance Sheets. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. Such costs amounted to $ 1,396,000 , $ 985,000 and $ 2,442,000 for the years ended December 31, 2021, 2020 and 2019, respectively. Income Taxes The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is primarily dependent upon the generation of future taxable income. Our effective tax rate is higher than the federal statutory rate as a result of the inclusion of state taxes in the income tax amount and permanent differences primarily relating to executive compensation. Dividends On December 14, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share and special cash dividend of $ 0.50 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 3,990,000 , was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance sheet at December 31, 2021 . On September 28, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 960,000 , was paid on October 22, 2021 to shareholders of record on October 8, 2021 . On June 18, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 960,000 , was paid on July 16, 2021 to shareholders of record on June 30, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance sheet at June 30, 2021. The Company had previously temporarily suspended the quarterly cash dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020. 60 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) On June 18, 2020, our Board of Directors announced that it was temporarily suspending the quarterly cash dividend in response to the continued uncertainty of the ongoing impact of COVID-19. On March 4, 2020, our Board of Directors declared a regular quarterly cash dividend of $ 0.32 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 1.9 million, was paid on April 10, 2020 to shareholders of record on March 16, 2020 and funded by cash on the Company’s balance sheet. On December 11, 2019, our Board of Directors declared a quarterly cash dividend of $ 0.30 per share on its Classes A and B shares. This dividend totaling approximately $ 1.8 million was paid on January 17, 2020 to shareholders of record on December 27, 2019 and funded by cash on the Company’s balance sheet. On September 12, 2019, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 1.8 million, was paid on October 11, 2019 to shareholders of record on September 23, 2019 and funded by cash on the Company’s balance sheet. On May 30, 2019, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 1.8 million, was paid on July 5, 2019 to shareholders of record on June 14, 2019 and funded by cash on the Company’s balance sheet. On February 26, 2019, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock. This dividend, totaling approximately $ 1.8 million, was paid on March 29, 2019 to shareholders of record on March 12, 2019 and funded by cash on the Company’s balance sheet. Stock-Based Compensation Stock-based compensation cost for stock option awards is estimated on the date of grant using a Black-Scholes valuation model and is expensed on a straight-line method over the vesting period of the options. Stock-based compensation expense is recognized net of estimated forfeitures. The fair value of restricted stock awards is determined based on the closing market price of our Class A Common Stock on the grant date and is adjusted at each reporting date based on the amount of shares ultimately expected to vest. See Note 7 — Stock-Based Compensation for further details regarding the expense calculated under the fair value based method. Segments We serve twenty-seven radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment. We operate under one reportable busines segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance. The Chief Operating Decision Maker (“CODM”) evaluates the results of the radio operating segment and makes operating and capital investment decisions based at the Company level. Furthermore, technological enhancements and system integration decisions are reached at the Company level and applied to all markets rather than to specific or individual markets to ensure that each market has the same tools and opportunities as every other market. Managers at the market level do not report to the CODM and instead report to other senior management, who are responsible for the operational oversight of radio markets and for communication of results to the CODM. We continually review our operating segment classification to align with operational changes in our business and may make changes as necessary. ​ 61 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Earnings Per Share Earnings per share is calculated using the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security. We have participating securities related to restricted stock units, granted under our Second Amended and Restated 2005 Incentive Compensation Plan, that earn dividends on an equal basis with common shares. In applying the two-class method, earnings are allocated to both common shares and participating securities. The following table sets forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 2019 ​ ​ (In thousands, except per share data) Numerator: ​ ​ ​ ​ ​ ​ Net income (loss) ​ ​ $ 11,157 ​ $ ( 1,913 ) ​ $ 13,279 Less: Income (loss) allocated to unvested participating securities ​ ​ 190 ​ ( 21 ) ​ ​ 292 Net income (loss) available to common stockholders ​ ​ $ 10,967 ​ $ ( 1,892 ) ​ $ 12,987 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ Denominator for basic earnings per share — weighted average shares ​ ​ 5,917 ​ 5,871 ​ ​ 5,834 Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ ​ Common stock equivalents ​ ​ — ​ — ​ ​ — Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions ​ ​ 5,917 ​ 5,871 ​ ​ 5,834 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ 1.85 ​ $ ( 0.32 ) ​ $ 2.23 Diluted ​ ​ $ 1.85 ​ $ ( 0.32 ) ​ $ 2.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the years ended December 31, 2021, 2020, and 2019, respectively. The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on fluctuations in the stock price. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Incomes Taxes” (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items to improve consistent application. ASU 2019-12 is effective for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this standard on January 1, 2021 and there was no material impact as a result of adoption. 62 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 2. Revenue Nature of goods and services The following is a description of principal activities from which we generate our revenue: Broadcast Advertising Revenue Our primary source of revenue is from the sale of advertising for broadcast on our stations. We recognize revenue from the sale of advertising as performance obligations are satisfied upon airing of the advertising; therefore, revenue is recognized at a point in time when each advertising spot is transmitted. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory placed by agency and are reported as a reduction of advertising revenue. Digital Advertising Revenue We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites and digital audio streams, mobile messaging, email marketing and other e-commerce. Revenue is recorded when each specific performance obligation in the digital advertising campaign takes place, typically within a one month period. Other Revenue Other revenue includes revenue from concerts, promotional events, tower rent and other miscellaneous items. Revenue is generally recognized when the event is completed, as the promotional events are completed or as each performance obligation is satisfied. Disaggregation of Revenue The following table presents revenues disaggregated by revenue source: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ December 31, ​ 2021 2020 2019 ​ (in thousands) Types of Revenue ​ ​ ​ ​ ​ ​ ​ ​ Broadcast Advertising Revenue, net ​ ​ $ 95,573 ​ $ 87,481 ​ $ 112,278 Digital Advertising Revenue ​ ​ 6,337 ​ 3,416 ​ 3,783 Other Revenue ​ ​ 6,433 ​ 4,916 ​ 7,011 Net Revenue ​ ​ $ 108,343 ​ $ 95,813 ​ $ 123,072 ​ 63 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Contract Liabilities Payments from our advertisers are generally due within 30 days although certain advertisers are required to pay in advance. When an advertiser pays for the services in advance of the performance obligations these prepayments are contract liabilities. Typical contract liabilities relate to prepayments for advertising spots not yet run; prepayments from sponsors for events that have not yet been held; and gift cards sold on our websites used to finance a broadcast advertising campaign. Generally all contract liabilities are expected to be recognized within one year and are included in accounts payable in the Company’s Consolidated Financial Statements and are immaterial. Transaction Price Allocated to the Remaining Performance Obligations As the majority of our contracts are one year or less, we have utilized the optional exemption under ASC 606-10-50-14 and will not disclose information about the remaining performance obligations for contracts which have original expected durations of one year or less. ​ 3. Broadcast Licenses, Goodwill and Other Intangible Assets We evaluate our FCC licenses for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We operate our broadcast licenses in each market as a single asset and determine the fair value by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcast licenses. The fair value calculation contains assumptions incorporating variables that are based on past experiences and judgments about future operating performance using industry normalized information for an average station within a market. These variables include, but are not limited to: (1) the forecasted growth rate of each radio market, including population, household income, retail sales and other expenditures that would influence advertising expenditures; (2) the estimated available advertising revenue within the market and the related market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area; and (6) terminal values. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value. We also evaluate goodwill for impairment annually, or more frequently if certain circumstances are present. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value. ​ 64 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value. Amortizable intangible assets are included in other intangibles, deferred costs and investments in the consolidated balance sheets. Broadcast Licenses We have recorded the changes to broadcast licenses for the years ended December 31, 2021 and 2020 as follows: ​ ​ ​ ​ ​ ​ Total ​ ​ (in thousands) ​ ​ ​ ​ Balance at January 1, 2020 ​ $ 95,311 Acquisitions ​ 46 Impairment charge ​ ​ ( 5,149 ) Balance at December 31, 2020 ​ $ 90,208 Acquisitions ​ 69 Balance at December 31, 2021 ​ $ 90,277 ​ 2021 Impairment Test We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2021 and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded. The following table reflects certain key estimates and assumptions used in the impairment tests during the fourth quarter ended 2021, the year ended 2020 and in the fourth quarter of 2019. The ranges for operating profit margin and market long-term revenue growth rates vary by market. In general, when comparing between 2021, 2020 and 2019: (1) the market specific operating profit margin range remained relatively consistent with some decreases to our smaller markets due to the cost of operations in a small market; (2) the market long-term revenue growth rates were relatively consistent; (3) the discount rate increased a small percentage due to the COVID-19 pandemic; and (4) current year revenue projections were flat with amounts previously projected for 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fourth Year Fourth ​ ​ Quarter ​ Ended ​ Quarter ​ 2021 2020 2019 Discount rates 12.3 % - 12.6 % 12.6 % - 13.0 % 12.2 % - 12.2 % Operating profit margin ranges 17.8 % - 36.4 % 17.8 % - 36.4 % 19.0 % - 36.4 % Market long-term revenue growth rates 0.2 % - 2.6 % 0.2 % - 2.9 % 0.0 % - 2.9 % ​ If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize additional impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements. We will continue to monitor potential triggering events and perform the appropriate analysis when deemed necessary. ​ 65 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 2020 Impairment Test Due to the impact of the COVID-19 pandemic on the U.S. economy and the related significant negative impact on our revenue for the second, third and fourth quarter of 2020 (excluding political advertising) in the majority of our markets, the Company tested its FCC License for impairment during the second quarter and again in the third quarter of 2020. Our broadcast revenue was significantly negatively impacted in the majority of the states where we operate, due to economic shutdowns and the related decline in advertising spending nationwide as most companies were making massive payroll cuts out of a necessity to survive with their revenues also significantly impacted. We experienced a significant number of cancellations of advertising on our stations, with the greatest decreases in the following industries/categories: Automotive, Entertainment, Home Improvement, Professional Services, Restaurants, and Retail. The only category where we saw an increase over the prior quarters and year to date in 2020 were political advertising and government/public service/issue advertising. We also saw significant declines in our revenue related to events, venues, travel and sports as these types of businesses have been virtually shut down. We started to see increased revenues from our low point in Q2 2020, however, throughout 2020 they were not at the previously expected recovery rate. Based on the trends we were seeing at our markets we believe that our analysis and estimates used during the third quarter 2020 analysis remained our best estimate and we did not believe any further triggering events occurred during the fourth quarter of 2020 since the date of the previous analysis that would require any additional impairment testing for broadcast licenses. ​ As a result of the quantitative impairment test performed as of June 30, 2020, the Company determined that the fair value of the broadcast licenses were less than the carrying amount on the balance sheet and recorded non-cash impairment charges totaling $ 3.8 million related to the FCC licenses in our Bucyrus, Ohio; Champaign, Illinois; Charleston, South Carolina; Columbus, Ohio; Harrisonburg, Virginia; Hilton Head, South Carolina; Mitchell, South Dakota; and Ocala, Florida markets. The impairment charges were primarily due to a decrease in projected revenue in these markets due to the impact of the COVID-19 pandemic, an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry, and a decrease in mature operating margins in small markets due to the cost of operations in a small market. ​ As a result of the quantitative impairment test performed as of September 30, 2020, the Company determined that the fair value of the broadcast licenses were less than the carrying amount on the balance sheet and recorded non-cash impairment charges totaling $ 1.4 million for the quarter ended September 30, 2020 related to the FCC licenses in our Bellingham, Washington; Champaign, Illinois; Charleston, South Carolina; Columbus, Ohio; Harrisonburg, Virginia; Mitchell, South Dakota; Spencer, Iowa and Springfield, Illinois. The impairment charges were primarily due to a decrease in projected revenue in these markets due to the impact of the COVID-19 pandemic, an increase in the discount rate used in 2019 but slightly less than in the second quarter of 2020, in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry, and a decrease in mature operating margins in small markets due to the cost of operations in a small market. ​ 2019 Impairment Test During the fourth quarter of 2019, we completed our annual impairment test of broadcast and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded. ​ 66 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Goodwill During the fourth quarter of 2021, the Company performed its annual impairment test of goodwill in accordance with ASC 350 and determined that the fair value was in excess of its carrying value and, accordingly, no impairment was recorded. We have recorded the changes to goodwill for each of the years ended December 31, 2021 and 2020 as follows: ​ ​ ​ ​ ​ ​ Total ​ ​ (in thousands) ​ ​ ​ ​ Balance at January 1, 2020 ​ $ 18,963 Acquisitions ​ 143 Balance at December 31, 2020 ​ $ 19,106 Acquisitions ​ 103 Balance at December 31, 2021 ​ $ 19,209 ​ Other Intangible Assets We have recorded amortizable intangible assets at December 31, 2021 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Carrying ​ Accumulated ​ Net ​ Amount Amortization Amount ​ ​ (In thousands) Non-competition agreements ​ $ 3,861 ​ $ 3,861 ​ $ — Favorable lease agreements ​ 5,965 ​ 5,597 ​ 368 Customer relationships ​ 4,660 ​ 4,660 ​ — Other intangibles ​ 1,829 ​ 1,788 ​ 41 Total amortizable intangible assets ​ $ 16,315 ​ $ 15,906 ​ $ 409 ​ We have recorded amortizable intangible assets at December 31, 2020 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ Carrying ​ Accumulated ​ Net ​ Amount Amortization Amount ​ (In thousands) Non-competition agreements $ 3,861 $ 3,861 $ — Favorable lease agreements ​ ​ 5,965 ​ ​ 5,570 ​ ​ 395 Customer relationships ​ ​ 4,660 ​ ​ 4,322 ​ ​ 338 Other intangibles ​ ​ 1,834 ​ ​ 1,771 ​ ​ 63 Total amortizable intangible assets $ 16,320 $ 15,524 $ 796 ​ Aggregate amortization expense for these intangible assets for the years ended December 31, 2021, 2020 and 2019, was $ 387,000 , $ 813,000 and $ 1,029,000 , respectively. Our estimated annual amortization expense for the years ending December 31, 2022, 2023, 2024, 2025 and 2026 is $ 39,000 , $ 35,000 , $ 33,000 , $ 33,000 and $ 32,000 , respectively. ​ ​ 67 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 4. Long-Term Debt On October 27, 2021, we used $ 10 million from funds generated by operations to voluntarily pay down the remaining amount on our Revolving Credit Facility and as such, have no debt outstanding at December 31, 2021. Long-term debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 ​ ​ (In thousands) Revolving credit facility ​ $ — ​ $ 10,000 Amounts payable within one year ​ — ​ — ​ ​ $ — ​ $ 10,000 ​ On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P. Morgan Securities LLC. The Credit Facility consisted of a $ 100 million five-year revolving facility (the “Revolving Credit Facility”) and originally matured on August 18, 2020 . On June 27, 2018, the Company entered into a Second Amendment to its Credit Facility, (the “Second Amendment”), which had first been amended on September 1, 2017, extending the revolving credit maturity date under the Credit Agreement for five years after the date of the amendment to June 27, 2023 . On July 1, 2019, we elected to reduce our Revolving Credit Facility to $ 70 million. On May 11, 2020, as part of our reincorporation as a Florida corporation, we entered into an assumption agreement and amendment of loan documents. The amendment also included an alternative benchmark rate as a replacement to LIBOR. On November 1, 2021, we elected to further reduce our Revolving Credit Facility to $ 50 million. We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility. Approximately $ 266,000 of debt issuance costs related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. These debt issuance costs are included in other assets, net in the consolidated balance sheets. As a result of the Second Amendment, we incurred an additional $ 120,000 of transaction fees related to the Credit Facility that were capitalized. The cumulative transaction fees are being amortized over the remaining life of the Credit Facility. Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR ( 0.101 % at December 31, 2021), plus 1 % to 2 % or the base rate plus 0 % to 1 % . The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. As previously noted, the May 11, 2020 amendment to the Credit Facility includes an alternative to LIBOR in the event LIBOR is no longer available. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25 % per annum payable to the issuing bank. We also pay quarterly commitment fees of 0.2 % to 0.3 % per annum on the unused portion of the Revolving Credit Facility. The Credit Facility contains a number of financial covenants (all of which we were in compliance with at December 31, 2021) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances. On June 7, 2019, we used $ 5,000,000 from funds generated by operations to voluntarily pay down a portion of our Revolving Credit Facility. 68 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) On February 4, 2019, we used $ 5,000,000 from funds generated by operations to voluntarily pay down a portion of our Revolving Credit Facility, which was presented in current portion of long-term debt in our balance sheet at December 31, 2018. After we paid down our debt and reduced our Revolving Credit Facility as noted above, we had approximately $ 50 million of unused borrowing capacity under the Revolving Credit Facility at December 31, 2021. ​ 5. Supplemental Cash Flow Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 2019 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 253 ​ $ 311 ​ $ 635 Income taxes ​ $ 3,450 ​ $ 1,099 ​ $ 3,893 Non-cash transactions: ​ ​ ​ ​ ​ ​ ​ ​ ​ Barter revenue ​ $ 2,125 ​ $ 2,014 ​ $ 3,560 Barter expense ​ $ 2,124 ​ $ 1,881 ​ $ 3,370 Acquisition of property and equipment ​ $ — ​ $ 6 ​ $ 28 Use of treasury shares for 401(k) match ​ $ 221 ​ $ 250 ​ $ 262 ​ ​ 6. Income Taxes On March 18, 2020, the Families First Coronavirus Response Act ("FFCR Act"), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous tax provisions, such as deferring payroll payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property. This legislation currently has no material impact to the Company’s financial statements. ​ 69 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) An income tax expense of $ 4,260,000 was recorded for the year ended December 31, 2021 compared to income tax expense of $ 705,000 for the year ended December 31, 2020. The effective tax rate was approximately 27.6 % for the year ended December 31, 2021 compared to ( 58.4 )% for the year ended December 31, 2020. The 2020 year to date tax rate was impacted by permanent differences primarily relating to executive compensation resulting in additional tax expense of approximately $ 1.0 million offset by the broadcast license impairment charge which was a discrete item and contributed approximately $ 1.4 million of tax benefit for the year ended December 31, 2020. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Property and equipment ​ $ 4,242 ​ $ 4,802 Intangible assets ​ 21,425 ​ 20,442 Prepaid expenses ​ 405 ​ 426 Total deferred tax liabilities ​ 26,072 ​ 25,670 Deferred tax assets: ​ ​ ​ ​ ​ ​ Allowance for doubtful accounts ​ 43 ​ 89 Compensation ​ 1,093 ​ 824 Other accrued liabilities ​ 134 ​ 150 ​ ​ 1,270 ​ 1,063 Less: valuation allowance ​ — ​ — Total net deferred tax assets ​ 1,270 ​ 1,063 Net deferred tax liabilities ​ $ 24,802 ​ $ 24,607 Current portion of deferred tax assets ​ $ 361 ​ $ 150 Non-current portion of deferred tax liabilities ​ ( 25,163 ) ​ ( 24,757 ) Net deferred tax liabilities ​ $ ( 24,802 ) ​ $ ( 24,607 ) ​ Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. At December 31, 2021 and December 31, 2020, we do no t have a valuation allowance for net deferred tax assets. At December 31, 2021 and 2020, net deferred tax liabilities include a deferred tax asset of $ 1,270,000 and $ 1,063,000 , respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, the allowance for doubtful accounts, and other accrued expenses. 70 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) The significant components of the provision for income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 2019 ​ ​ (In thousands) Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 3,080 ​ $ 850 ​ $ 2,900 State ​ 985 ​ 400 ​ 1,100 Total current ​ 4,065 ​ 1,250 ​ 4,000 Total deferred ​ 195 ​ ( 545 ) ​ 1,420 Total Income Tax Provision ​ $ 4,260 ​ $ 705 ​ $ 5,420 ​ The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 2019 ​ ​ (In thousands) Tax expense (benefit) at U.S. statutory rates ​ $ 3,209 ​ $ ( 290 ) ​ $ 3,976 State tax expense, net of federal benefit ​ 815 ​ 235 ​ 1,079 Other, net ​ 236 ​ 760 ​ 365 ​ ​ $ 4,260 ​ $ 705 ​ $ 5,420 ​ The 2021 and 2019 effective tax rates exceed the federal statutory rate primarily due to non-deductible compensation related expenses and state income taxes. The 2020 effective tax rate exceeded the federal statutory rate primarily due to non-deductible compensation related expenses, book tax differences in impairment charges and state income taxes. The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to 2018. During the first quarter of 2015, the IRS commenced an examination of the Company’s 2013 U.S. federal income tax return which was completed in the first quarter of 2016 and resulted in no changes to the return. The Company is subject to examination for income and non-income tax filings in various states. As of December 31, 2021, and 2020, there were no accrued balances recorded related to uncertain tax positions. We classify income tax-related interest and penalties that are related to income tax liabilities as a component of income tax expense. For the years ended December 31, 2021, 2020 and 2019, we had $ 0 , $ 600 , and $ 2,100 , respectively, tax-related interest and penalties and had $ 0 accrued at December 31, 2021 and 2020. ​ ​ ​ 71 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 7. Stock-Based Compensation 2005 Incentive Compensation Plan On May 13, 2019 our stockholders approved an amendment to the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan (as amended, The Second Restated 2005 Plan). This plan was first approved in 2005, and subsequently re-approved in 2010 and 2013. The amendment to the Second Restated 2005 Plan (i) extended the date for making awards to September 6, 2023 and (ii) increased the number of authorized shares under the Plan by 90,000 shares of Class B Common Stock. The Second Restated 2005 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors. The number of shares of Common Stock that may be issued under the Second Restated 2005 Plan may not exceed 370,000 shares of Class B Common Stock, 990,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock may be issued pursuant to incentive stock options and 370,000 Class A Common Stock issuable upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock may be granted to any employee or director under the Second Restated 2005 Plan. However, awards denominated in Class B Common Stock may only be granted to Edward K. Christian, President, Chief Executive Officer, Chairman of the Board of Directors, and the holder of 100% of the outstanding Class B Common Stock of the Company. Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten years from the date of grant and may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant . Stock-Based Compensation Our stock-based compensation expense is measured and recognized for all stock-based awards to employees using the estimated fair value of the award. Compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award. For these awards, we have recognized compensation expense using a straight-line amortization method. Accounting guidance requires that stock-based compensation expense be based on awards that are ultimately expected to vest; therefore stock-based compensation has been adjusted for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures. All stock options were fully vested and expensed at December 31, 2012, therefore there was no compensation expense related to stock options for the years ended December 31, 2021, 2020 and 2019. We calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The estimated expected volatility, expected term of options and estimated annual forfeiture rate were determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. There were no options granted during 2021, 2020 and 2019 and there were no stock options outstanding as of December 31, 2021. 72 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) The following summarizes the restricted stock transactions for the year ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ Shares Fair Value ​ ​ ​ ​ ​ ​ Outstanding at January 1, 2019 109,176 ​ $ 40.87 Granted 72,985 ​ 31.18 Vested ( 51,021 ) ​ 42.66 Forfeited/canceled/expired ( 2,916 ) ​ 40.30 Outstanding at December 31, 2019 128,224 ​ $ 34.66 Granted — ​ — Vested ( 62,137 ) ​ 36.50 Forfeited/canceled/expired ( 2,332 ) ​ 33.65 Outstanding at December 31, 2020 63,755 ​ $ 32.90 Granted 77,913 ​ ​ 23.00 Vested ( 41,059 ) ​ ​ 33.85 Forfeited/canceled/expired — ​ ​ — Non-vested and outstanding at December 31, 2021 100,609 ​ $ 24.85 Weighted average remaining contractual life (in years) 2.3 ​ ​ The weighted average grant date fair value of restricted stock that vested during 2021 and 2019 was $ 1,792,000 and $ 2,276,000 , respectively. There were no restricted stock grants awarded in 2020. The net value of unrecognized compensation cost related to unvested restricted stock awards aggregated $ 2,354,000 , $ 1,896,000 and $ 4,195,000 at December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019 we had $ 1,335,000 , $ 2,221,000 and $ 2,129,000 , respectively, of total compensation expense related to restricted stock-based arrangements. The expense is included in corporate general and administrative expenses in our results of operations. The associated tax benefit recognized for the years ended December 31, 2021, 2020 and 2019 was $ 121,000 , $ 235,000 and $ 227,000 , respectively. ​ 8. Employee Benefit Plans 401(k) Plan We have a defined contribution pension plan (“401(k) Plan”) that covers substantially all employees. Employees can elect to have a portion of their wages withheld and contributed to the plan. The 401(k) Plan also allows us to make a discretionary contribution. Total administrative expense under the 401(k) Plan was $ 1,550 , $ 2,900 and $ 2,400 in 2021, 2020 and 2019, respectively. The Company’s discretionary contribution to the plan was approximately $ 250,000 , $ 225,000 and $ 250,000 for the years ended December 31, 2021, 2020 and 2019, respectively. Deferred Compensation Plan In 1999 we established a Nonqualified Deferred Compensation Plan which allows officers and certain management employees to annually elect to defer a portion of their compensation, on a pre-tax basis, until their retirement. The retirement benefit to be provided is based on the amount of compensation deferred and any earnings thereon. Deferred compensation expense for the years ended December 31, 2021, 2020 and 2019 was $ 100,000 , $ 105,000 and $ 135,000 , respectively. We invest in company-owned life insurance policies to assist in funding these programs. The cash surrender values of these policies are in a rabbi trust and are recorded as our assets. 73 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Split Dollar Officer Life Insurance We provide split dollar insurance benefits to certain executive officers and records an asset equal to the cumulative premiums paid on the related policies, as we will fully recover these premiums under the terms of the plan. We retain a collateral assignment of the cash surrender values and policy death benefits payable to insure recovery of these premiums. ​ 9. Acquisitions and Dispositions We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill. The Company accounts for acquisition under the provisions of FASB ASC Topic 805, Business Combinations . Management assigned fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach. 2021 Acquisitions On January 8, 2021, the Company closed on an agreement to purchase WBQL and W288DQ from Consolidated Media, LLC, for an aggregate purchase price of $ 175,000 , of which $ 25,000 was paid in 2020 and the remaining $ 150,000 paid in 2021. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Clarksville, Tennessee market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations. The translators are start-up stations and therefore, have no pro forma revenue and expenses. On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator for $ 61,800 of which $ 5,000 was paid in 2021. We expect to close on this transaction in March 2022. 2020 Acquisitions On January 2, 2020, we closed on an agreement to purchase W295BL from Basic Holdings, LLC, for an aggregate purchase price of $ 200 thousand, of which $ 10 thousand was paid in 2019 and the remaining $ 190 thousand paid in 2020. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Manchester, New Hampshire market as well as synergies and growth opportunities expected through the combination with our existing stations. The translators are start-up stations and therefore, have no pro forma revenue and expenses. 2019 Acquisitions On January 9, 2019, we closed on an agreement to purchase WPVQ-AM and W222CH from County Broadcasting Company, LLC for an aggregate purchase price of $ 210 thousand. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Greenfield, Massachusetts market as well as synergies and growth opportunities expected through the combination with our existing stations. The proforma results for this acquisitions are not deemed material and therefore are not presented in the footnotes. 74 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Condensed Consolidated Balance Sheet of 2021 and 2020 Acquisitions: The following condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2021 and 2020 acquisitions at their respective acquisition dates. Condensed Consolidated Balance Sheet of 2021 and 2020 Acquisitions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisitions in ​ 2021 2020 ​ ​ (In thousands) Assets Acquired: ​ ​ ​ ​ ​ ​ Property and equipment ​ $ 3 $ 11 Other assets: ​ ​ ​ ​ ​ ​ Broadcast licenses ​ 69 ​ 46 Goodwill ​ 103 ​ 143 Total other assets ​ 172 ​ 189 Total assets acquired ​ 175 ​ 200 Liabilities Assumed: ​ ​ ​ ​ ​ ​ Current liabilities ​ — ​ — Total liabilities assumed ​ — ​ — Net assets acquired ​ $ 175 ​ $ 200 ​ ​ ​ ​ 10. Related Party Transactions Principal Stockholder Employment Agreement In June 2011, we entered into a new employment agreement with Edward K. Christian, Chairman, President and CEO, which became effective as of June 1, 2011, and replaced and superseded his prior employment agreement. We entered into amendments to the agreement on February 12, 2016 (the “First Amendment”), February 26, 2019 (the “Second Amendment”) and January 25, 2022 (the “Third Amendment”). The First Amendment extended the term of the employment agreement to March 31, 2021. The First Amendment also states that on each anniversary of the effective date of the employment agreement, the Compensation Committee shall determine in its discretion the amount of any annual increases (which shall not be less than the greater of 4 % or a defined cost of living increase). Mr. Christian may defer any or all of his annual salary. The Second Amendment extends the term of the employment agreement from March 31, 2021 to March 31, 2025 and also makes certain clarifying modifications to the employment agreement.The Third Amendment extends the term of the employment agreement from March 31, 2025 to March 31, 2027 and makes certain changes to the employment agreement pursuant to Section 409A of the Internal Revenue Code. Under the agreement, Mr. Christian is eligible for discretionary and performance bonuses, stock options and/or stock grants in amounts determined by the Compensation Committee and will continue to participate in our benefit plan. We will maintain insurance policies, will furnish an automobile, will pay for an executive medical plan and will maintain an office for Mr. Christian at our principal executive offices and in Sarasota County, Florida. The First Amendment adds that we are authorized to pay for Mr. Christian’s tax preparation services on an annual basis and that this amount will be subject to income tax as additional compensation. The agreement provides certain payments to Mr. Christian in the event of his disability, death or a change in control. Upon a change in control, Mr. Christian may terminate his employment. The agreement also provides generally that, upon a change in control, we will pay Mr. Christian an amount equal to 2.99 times the average of his total annual salary and bonuses for each of the three immediately preceding periods of twelve consecutive months, plus an additional amount for tax liabilities, related to the payment. For the three years ended December 31, 2021 Mr. Christian’s average annual compensation, as defined by the employment agreement, was approximately $ 1,943,000 . 75 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) In addition, if Mr. Christian’s employment is terminated for any reason, other than for cause, we will continue to provide health insurance and medical reimbursement and maintain existing life insurance policies for a period of ten years , and the current split dollar life insurance policy shall be transferred to Mr. Christian and his wife, and we shall reimburse Mr. Christian for any tax consequences of such transfer. The agreement contains a covenant not to compete restricting Mr. Christian from competing with us in any of our markets if he voluntarily terminates his employment with us or is terminated for cause, for a three year period thereafter. The first amendment also entitles Mr. Christian to receive severance pay equal to 100 % of his then base salary for 24 months payable in equal monthly installments and after the date upon which notice of termination is given, any unvested or time-vested stock options previously granted to Mr. Christian by us become immediately one hundred percent ( 100 %) vested to the extent permitted by law. On December 6, 2019, Mr. Christian agreed to defer approximately $ 100,000 of his 2020 salary to be paid 100 % on January 15, 2021. On December 16, 2020, Mr. Christian agreed to defer approximately $ 100,000 of his 2021 salary to be paid 100 % on January 15, 2022. On December 16, 2021, Mr. Christian agreed to defer approximately $ 100,000 of his 2022 salary which will be paid 100 % on January 13, 2023. Change in Control Agreements In December 2007, Samuel D. Bush, Senior Vice President and Chief Financial Officer, Marcia K. Lobaito, at the time, Senior Vice President, Corporate Secretary and Director of Business Affairs, and Catherine Bobinski, Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller, entered into Change in Control Agreements. In September 2018, Christopher S. Forgy, Senior Vice President of Operations entered into a Change in Control Agreement. In July 2020, Eric Christian, Vice President of Digital Strategies entered into a Change in Control Agreement. Eric Christian is the son of Edward K. Christian, our President, CEO and Chairman. A change in control is defined to mean the occurrence of (a) any person or group becoming the beneficial owner, directly or indirectly, of more than 30 % of the combined voting power of the Company’s then outstanding securities and Mr. Christian ceasing to be Chairman and CEO of the Company; (b) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent more than 50 % of the combined voting securities of the Company or such surviving entity; or (c) the approval of the stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets. If there is a change in control, the Company shall pay a lump sum payment within 45 days of 1.5 times the average of the executive’s last three full calendar years of such executive’s base salary and any annual cash bonus paid. In the event that such payment constitutes a “parachute payment” within the meaning of Section 280G subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, the Company shall pay the executive an additional amount so that the executive will receive the entire amount of the lump sum payment before deduction for federal, state and local income tax and payroll tax. In the event of a change in control (other than the approval of plan of liquidation), the Company or the surviving entity may require as a condition to receipt of payment that the executive continue in employment for a period of up to six months after consummation of the change in control. During such six months, executive will continue to earn his pre-existing salary and benefits. In such case, the executive shall be paid the lump sum payment upon completion of the continued employment. If, however, the executive fails to remain employed during this period of continued employment for any reason other than (a) termination without cause by the Company or the surviving entity, (b) death, (c) disability or (d) breach of the agreement by the Company or the surviving entity, then executive shall not be paid the lump sum payment. In addition, if the executive’s employment is terminated by the Company without cause within six months prior to the consummation of a change in control, then the executive shall be paid the lump sum payment within 45 days of such change in control. ​ 76 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Other Related Party Transactions Saga South Communications, LLC (formerly, Saga Quad States), our fully owned subsidiary, completed the acquisition from Apex Media Corporation, a South Carolina corporation (“AMC”), and Pearce Development, LLC f/k/a Apex Real Property, LLC, a South Carolina limited liability company (“ARP” and together with AMC, “Seller”), of substantially all of Seller’s assets related to the operation of certain radio and translator stations, upon the satisfaction of certain closing conditions described in the Asset Purchase Agreement dated May 9, 2017 (the “Apex Agreement”) by and among Seller, Saga South Communications, LLC, and, solely in his role as guarantor under the Apex Agreement, G. Dean Pearce, as further described in the Form 8-K filed by Saga on May 10, 2017. Mr. Pearce is President of AMC and ARP, and served on the Board of Directors of Saga from May 8, 2017 through May 9, 2021. The purchase price under the Apex Agreement was $ 23,000,000 , subject to certain purchase price adjustments, payable in cash. The purchase price was determined through arm’s-length negotiations, and was approved by the Saga Board, and Finance and Audit Committee, in accordance with the requirements of Saga’s Corporate Governance Guidelines for the review of related party transactions. In connection with this agreement, we received 500 hours of service from New Pointe Systems, a subsidiary of Pearce Development and have agreed to provide 1,000, 30 second, spots of airtime to Pearce Development. As of December 31, 2020, the obligations from this agreement have been fulfilled. During 2021, 2020 and 2019, we also paid approximately $ 4,200 , $ 4,100 and $ 4,400 rent per month, respectively to Pearce Development for our Hilton Head studio and office space beginning September 1, 2017. Effective June 19, 2019, we employed Eric Christian, son of Edward K. Christian, our President, CEO and Chairman, as our Director of Solution Architecture. The Audit Committee approved the employment of Mr. Christian and in July 2020 approved his promotion to Vice President of Digital Strategies. ​ 11. Common Stock Dividends. Stockholders are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available for such purpose. However, no dividend may be declared or paid in cash or property on any share of any class of Common Stock unless simultaneously the same dividend is declared or paid on each share of the other class of common stock. In the case of any stock dividend, holders of Class A Common Stock are entitled to receive the same percentage dividend (payable in shares of Class A Common Stock) as the holders of Class B Common Stock receive (payable in shares of Class B Common Stock). Voting Rights. Holders of shares of Common Stock vote as a single class on all matters submitted to a vote of the stockholders, with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, except (i) in the election for directors, (ii) with respect to any “going private” transaction between the Company and the principal stockholder, and (iii) as otherwise provided by law. In the election of directors, the holders of Class A Common Stock, voting as a separate class, are entitled to elect twenty-five percent, or two, of our directors. The holders of the Common Stock, voting as a single class with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, are entitled to elect the remaining directors. The Board of Directors consisted of eight members at December 31, 2021. Holders of Common Stock are not entitled to cumulative voting in the election of directors. The holders of the Common Stock vote as a single class with respect to any proposed “going private” transaction with the principal stockholder or an affiliate of the principal stockholder, with each share of each class of Common Stock entitled to one vote per share. Under Florida law, the affirmative vote of the holders of a majority of the outstanding shares of any class of common stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of common stock. 77 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) Liquidation Rights. Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock are entitled to share ratably with the holders of Class B Common Stock in accordance with the number of shares held in all assets available for distribution after payment in full of creditors. In any merger, consolidation, or business combination, the consideration to be received per share by the holders of Class A Common Stock and Class B Common Stock must be identical for each class of stock, except that in any such transaction in which shares of common stock are to be distributed, such shares may differ as to voting rights to the extent that voting rights now differ among the Class A Common Stock and the Class B Common Stock. Other Provisions. Each share of Class B Common Stock is convertible, at the option of its holder, into one share of Class A Common Stock at any time. One share of Class B Common Stock converts automatically into one share of Class A Common Stock upon its sale or other transfer to a party unaffiliated with the principal stockholder or, in the event of a transfer to an affiliated party, upon the death of the transferor. ​ 12. Commitments and Contingencies Leases We lease certain land, buildings and equipment for use in our operations. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least one year. Some leases include one or more options to renew . The exercise of lease renewal options is generally at our discretion. The depreciable lives of ROU assets are limited to the expected lease term. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As of December 31, 2021, we do not have any non-cancellable operating lease commitments that have not yet commenced. ROU assets are classified within other intangibles, deferred costs and investments, net on the condensed consolidated balance sheet while current lease liabilities are classified within other accrued expenses and long-term lease liabilities are classified within other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ROU assets were $ 6.1 million and $ 6.6 million at December 31, 2021 and 2020, respectively. Lease liabilities were $ 6.4 million and $ 6.9 million at December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, we recorded additional ROU assets under operating leases of $ 1,039,000 , which is a non-cash transaction. Payments on lease liabilities during the year ended December 31, 2021 and 2020 totaled $ 1,777,000 and $ 1,737,000 ,respectively. Lease expense includes cost for leases with terms in excess of one year. For the years ended December 31, 2021, 2020 and 2019, our total lease expense was $ 1,765,000 , $ 1,752,000 and $ 1,801,000 , respectively. Short-term lease costs are de minimus. ​ 78 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at December 31, 2021 (in thousands): ​ ​ ​ ​ ​ Years Ending December 31, ​ ​ 2022 $ 1,778 2023 ​ 1,575 2024 ​ 1,275 2025 ​ 875 2026 ​ 668 Thereafter ​ 1,243 Total lease payments (a) ​ 7,414 Less: Interest (b) ​ 988 Present value of lease liabilities (c) ​ $ 6,426 (a) Lease payments include options to extend lease terms that are reasonably certain of being exercised. There were no legally binding minimum lease payments for leases signed but not yet commenced at December 31, 2021. (b) Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date. (c) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.2 years and 4.2 % , respectively, at December 31, 2021. Performance Fees We incur fees from performing rights organizations (“PRO”) to license our public performance of the musical works contained in each PRO’s repertory. The Radio Music Licensing Committee (“RMLC”), of which we are a represented participant, (1) entered into an Interim License Agreement with American Society of Composers, Authors and Publishers that was effective January 1, 2022 and will remain in effect until the date on which the parties reached agreement as to, or there is court determination of, new interim or final fees, terms, and conditions of a new license for the five year period commencing on January 1, 2022 and concluding on December 31, 2026; (2) is negotiating and will enter into, on behalf of the participating members, an Interim License Agreement with Broadcast Music, Inc.; (3) reached an agreement with the Society of European Stage Authors and Composers that is retroactive to January 1, 2016; and (4) in January 2022, RMLC and Global Music Rights (“GMR”) reach a conditional settlement of the GMR-RMLC antitrust and/or unfair competition litigations and we have entered into an agreement with GMR. Contingencies In 2003, in connection with our acquisition of one FM radio station, WJZK-FM serving the Columbus, Ohio market, we entered into an agreement whereby we would pay the seller up to an additional $ 1,000,000 if we obtain approval from the FCC for a city of license change. ​ ​ ​ 79 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 13. Fair Value Measurements As defined in ASC Topic 820, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs in which there is little or no market data available, which requires management to develop its own assumptions in pricing the asset or liability. Our assets and liabilities disclosed at fair value are summarized below ($000’s omitted): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ Fair Value ​ December 31, ​ December 31, Financial Instrument Hierarchy 2021 2020 Cash and cash equivalents Level 1 ​ $ 54,760 ​ $ 51,353 Revolving Credit Facility Level 2 ​ — ​ 10,000 ​ Our financial instruments are comprised of cash and cash equivalents, and long-term debt. The carrying value of cash and cash equivalents approximate fair value due to their short maturities. The fair value of cash and cash equivalents is derived from quoted market prices and are considered a level 1. Interest on the Credit Facility is at a variable rate, and as such the debt obligation outstanding approximates fair value and is considered a level 2. Non-Recurring Fair Value Measurements We have certain assets that are measured at fair value on a non-recurring basis under the circumstances and events described in Note 3 — Broadcast Licenses, Goodwill and Other Intangibles, and are adjusted to fair value only when the carrying values are more than the fair values. During the fourth quarter of 2021, we reviewed the fair value of the assets that are measured at fair value on a non-recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded their carrying values. During 2020, as a result of our interim impairment tests, we wrote down broadcast licenses with a carrying value of $ 51,448,000 to their fair value of $ 46,299,000 , resulting in a non-cash impairment charge of $ 5,149,000 , which is included in net income for the year ended December 31, 2020. The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. (See Note 3 for the disclosure of certain key assumptions used to develop the unobservable inputs.) During the fourth quarter of 2019, we reviewed the fair value of the assets that are measured at fair value on a non-recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded their carrying values. ​ 80 Table of Contents Saga Communications, Inc. Notes to Consolidated Financial Statements — (Continued) 14. Quarterly Results of Operations (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, June 30, September 30, December 31, ​ 2021 2020 2021 2020 2021 2020 2021 2020 ​ (in thousands, except per share data) Net operating revenue ​ $ 22,301 ​ $ 26,051 ​ $ 28,046 ​ $ 16,866 ​ $ 28,845 ​ $ 24,143 ​ $ 29,151 ​ $ 28,753 Station operating expenses ​ 18,923 ​ 22,199 ​ 21,017 ​ 18,652 ​ 21,690 ​ 19,616 ​ 21,615 ​ 21,119 Corporate G&A ​ 2,438 ​ 3,015 ​ 2,494 ​ 3,070 ​ 2,538 ​ 2,838 ​ 2,570 ​ 2,651 Other operating expense (income), net ​ ​ 57 ​ ( 1,330 ) ​ ( 80 ) ​ 46 ​ ( 2 ) ​ 50 ​ 32 ​ ( 13 ) Impairment of broadcast licenses ​ — ​ ​ — ​ — ​ ​ 3,757 ​ — ​ ​ 1,392 ​ ​ — ​ ​ — Operating income (loss) ​ 883 ​ 2,167 ​ 4,615 ​ ( 8,659 ) ​ 4,619 ​ 247 ​ 4,934 ​ 4,996 Other (income) expenses: ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 73 ​ 108 ​ 72 ​ 82 ​ 73 ​ 75 ​ 66 ​ 75 Interest (income) ​ ( 6 ) ​ ( 108 ) ​ ( 4 ) ​ ( 25 ) ​ ( 4 ) ​ ( 8 ) ​ ( 2 ) ​ ( 7 ) Other (income) expense ​ ( 272 ) ​ ( 213 ) ​ ( 31 ) ​ — ​ ( 279 ) ​ — ​ ( 52 ) ​ ( 20 ) Income before income taxes ​ 1,088 ​ 2,380 ​ 4,578 ​ ( 8,716 ) ​ 4,829 ​ 180 ​ 4,922 ​ 4,948 Income tax provision (benefit) ​ 330 ​ 700 ​ 1,325 ​ ( 3,805 ) ​ 1,375 ​ 1,130 ​ 1,230 ​ 2,680 Net income (loss) ​ $ 758 ​ $ 1,680 ​ $ 3,253 ​ $ ( 4,911 ) ​ $ 3,454 ​ $ ( 950 ) ​ $ 3,692 ​ $ 2,268 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings(loss) per share ​ $ 0.13 ​ $ 0.28 ​ $ 0.54 ​ $ ( 0.82 ) ​ $ 0.58 ​ $ ( 0.16 ) ​ $ 0.60 ​ $ 0.38 Weighted average common shares ​ 5,913 ​ 5,866 ​ 5,917 ​ 5,868 ​ 5,917 ​ 5,869 ​ 5,922 ​ 5,880 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings (loss) per share ​ $ 0.13 ​ $ 0.28 ​ $ 0.54 ​ $ ( 0.82 ) ​ $ 0.58 ​ $ ( 0.16 ) ​ $ 0.60 ​ $ 0.38 Weighted average common and common equivalent shares ​ 5,913 ​ 5,866 ​ 5,917 ​ 5,868 ​ 5,917 ​ 5,869 ​ 5,922 ​ 5,880 ​ ​ 15. Litigation The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements. ​ 16. Other Income During the first quarter of 2021, there was weather-related damage to an antenna in our Des Moines, Iowa market. The Company’s insurance policy provided coverage for removal and replacement of the antenna and related equipment. As part of the initial insurance settlement during the first quarter of 2021, the Company received cash proceeds of $ 250,000 , resulting in a gain of $ 250,000 . We received additional cash proceeds of $ 290,000 in the third quarter, resulting in a gain of $ 290,000 . The total gain of $ 540,000 is recorded in other (income) expense, net, in the Company’s Condensed Consolidated Statements of Income. During the first quarter of 2020, we sold land and a building on one of our tower sites in our Bellingham, Washington market for approximately $ 1,700,000 to Talbot Real Estate, LLC resulting in a $ 1,400,000 gain on the sale of assets. The gain is recorded in the other operating (income) expense, net in the Company’s Consolidated Statements of Income. During the first quarter of 2020, there was weather related damage to an antenna in our Keene, New Hampshire market. The Company’s insurance policy provided coverage for removal and replacement of the antenna and related equipment. The insurance settlement was finalized during the first quarter and we received cash proceeds of $ 208,000 , resulting in a gain of $ 208,000 . The gain is recorded in other (income) expense, net in the Company’s Consolidated Statements of Income. 17. Subsequent Events On March 1, 2022 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock . This dividend, totaling approximately $ 970,000 , will be paid on April 8, 2022 to shareholders of record on March 21, 2022 . ​ ​ 81 Table of Contents EXHIBIT INDEX ​ Exhibit No. Description 3(a) 3 Articles of Incorporation of Saga Communications Reincorporation, Inc . 3(b) 3 Bylaws, as amended April 16, 2020 . 4(a) 17 Description of the Company’s Securities 10(a) 1 Summary of Executive Insured Medical Reimbursement Plan. 10(b) 2 Saga Communications, Inc. 2003 Employee Stock Option Plan . 10(c) 5 Chief Executive Officer Annual Incentive Plan. 10(d) 3 Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan 10(e) 7 Form of Stock Option Agreement under the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan . 10(f) 7 Form of Restricted Stock Option Agreement under the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan . 10(g) 6 Employment Agreement of Edward K. Christian dated as of June 17, 2011. 10(h) 4 Change in Control Agreement of Samuel D. Bush dated as of December 28, 2007. 10(i) 4 Change in Control Agreement of Marcia K. Lobaito dated as of December 28, 2007 . 10(j) 10 Change in Control Agreement of Catherine A. Bobinski dated as of December 28, 2007. 10(k) 9 Amendment to Employment Agreement of Edward K. Christian dated as of February 12, 2016 . 10(l) 8 Credit Agreement dated August 18, 2015 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank . 10(m) 11 Asset Purchase Agreement by and among Saga Broadcasting, LLC, Saga Quad States Communications, LLC, Saga Communications, Inc. and Evening Telegram Company d/b/a Morgan Murphy Media, dated May 9, 2017 . 10(n) 11 Asset Purchase Agreement by and among Apex Media Corporation, Pearce Development, LLC f/k/a Apex Real Property, LLC, Saga Quad States Communications, LLC and G. Dean Pearce, dated May 9, 2017. 10(o) 12 Amendment to the Second Amendment and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan as of April 16, 2018. 10(p) 13 First Amendment to Credit Agreement dated September 1, 2017 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank. 10(q) 13 Letter of Employment for Christopher S. Forgy, Senior Vice President / Operations effective May 28, 2018 . 10(r) 14 Second Amendment to Credit Agreement dated June 27, 2018 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank . 10(s) 15 Change in Control Agreement of Christopher Forgy dated as of September 28, 2018 . 10(t) 16 Amendment to Employment Agreement of Edward K. Christian dated as of February 26, 2019 . 10(u) ​ 18 ​ Assumption Agreement and Amendment of Loan Documents dated May 11, 2020 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank, and Citizens Bank . 10(v) ​ 19 ​ Change in Control Agreement of Eric Christian dated as of July 6, 2020 . 10(w) ​ 20 ​ Third Amendment to Employment Agreement dated January 25, 2022 between Saga Communications, Inc, and Edward K. Christian . 21 * Subsidiaries. 23 * Consent of UHY LLP. 31.1 * Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 * Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 * Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS * Inline XBRL Instance Document 82 Table of Contents 101.SCH * Inline XBRL Taxonomy Extension Schema Document 101.CAL * Inline XBRL Taxonomy Calculation Linkbase Document 101.DEF * Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB * Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE * Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 ​ ​ ​ Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) ​ ​ * Filed herewith. 1 Exhibit filed with the Company’s Registration Statement on Form S-1 (File No. 33-47238) filed on December 10, 1992 and incorporated by reference herein. 2 Exhibit filed with the Company’s Registration Statement on From 8-A (File No. 333-107686) filed on August 5, 2003 and incorporated by reference herein. 3 Exhibit filed as Appendix A to the Company’s Consent Solicitation (Filed No: 001-11588) filed on September 17, 2013 and incorporated by reference herein. 4 Exhibit filed with the Company’s Form 8-K filed on January 4, 2008 and incorporated by reference herein. 5 Exhibit filed with the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders and incorporated by reference herein. 6 Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2011 and incorporated by reference herein. 7 Exhibit filed with the Company’s Form 8-K filed on October 16, 2013 and incorporated by reference herein. 8 Exhibit filed with the Company’s Form 8-K filed on August 18, 2015 and incorporated by reference herein. 9 Exhibit filed with the Company’s Form 8-K/A filed on April 8, 2016 and incorporated by reference herein. 10 Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2015 and incorporated by reference herein. 11 Exhibit filed with the Company’s Form 8-K filed on May 10, 2017 and incorporated by reference herein. 12 Exhibit filed as Appendix A to the Corporation’s Definitive Proxy Statement (File No. 001-11588) filed on April 16, 2018 and incorporated by reference herein. 13 Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2018 and incorporated by reference herein. 14 Exhibit filed with the Company’s Form 8-K filed on June 27, 2018 and incorporated by reference herein. 15 Exhibit filed with the Company’s Form 8-K filed on September 28, 2018 and incorporated by reference herein. 16 Exhibit filed with the Company’s Form 8-K filed on March 1, 2019 and incorporated by reference herein. ​ ​ 17 Exhibit filed with the Company’s Form 10-K filed on March 13, 2020 and incorporated by reference herein. ​ ​ 18 Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2020 and incorporated by reference herein. 83 Table of Contents ​ ​ 19 Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2020 and incorporated by reference herein. ​ ​ 20 Exhibit filed with the Company’s Form 8-K filed on January 27, 2022 and incorporated by reference herein. ​ ​ ​ 84 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 16, 2022. ​ SAGA COMMUNICATIONS, INC. By: /s/ Edward K. Christian Edward K. Christian President ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 16, 2022. ​ Signatures /s/ Edward K. Christian President, Chief Executive Officer and Edward K. Christian Chairman of the Board /s/ Samuel D. Bush Senior Vice President, Samuel D. Bush Chief Financial Officer and Treasurer /s/ Catherine A. Bobinski Senior Vice President/Finance, Catherine A. Bobinski Chief Accounting Officer and Corporate Controller /s/ Michael J. Bergner Director Michael J. Bergner ​ ​ ​ /s/ Clarke R. Brown, Jr. Director Clarke R. Brown, Jr. /s/ Timothy J. Clarke Director Timothy J. Clarke /s/ Roy F. Coppedge III Director Roy F. Coppedge /s/ Warren Lada Director Warren Lada /s/ Marcia K. Lobaito Director Marcia K. Lobaito /s/ Gary G. Stevens Director Gary G. Stevens ​ ​ 85