What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-12 · 65 added, 108 removed, 158 unchanged (52% of the section changed)

56 unchanged sentences

The majority of our revenue is generated from local advertising, which is sold primarily by each radio market’s sales staff.

For the nine months ended September 30, 2024 and 2023, approximately 90% and 89%, respectively, of our radio stations’ gross revenue was from local advertising.

For the three months ended March 31, 2025 and 2024, approximately 90% and 90%, respectively, of our radio stations’ gross revenue was from local advertising.

To generate national advertising sales, we engage independent advertising sales representative firms that specialize in national sales for each of our broadcast markets.

1 unchanged sentence

Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year.

Furthermore, we expect political revenue in 2024 to increase from 2023 levels as a result of more elections at the national, state and local levels.

Furthermore, we expect political revenue in 2025 to decrease from 2024 levels as a result of less elections at the national, state and local levels.

Our net operating revenue, station operating expense and operating income varies from market to market based upon each market’s rank or size which is based upon population and the available radio advertising revenue in that particular market.

23 unchanged sentences

These new technologies and media are gaining advertising share against radio and other traditional media.

We are continuing to expand our digital initiative to provide a seamless experience across multiple platforms.

Our goal is to allow our listeners to connect with our brands on demand, wherever, however and whenever they choose.

We continue to create and expand opportunities through targeted digital advertising, online community news, entertainment and events and an array of digital services that include online promotions, mobile messaging, and email marketing.

During the nine months ended September 30, 2024 and 2023 and the twelve months ended December 31, 2023 and 2022, our Columbus, Ohio;

We continue to execute Saga’s digital strategy focused on the consumer as opposed to the product-oriented, low margin, high attrition offerings that many third-party providers deliver.

There has been a significant increase in digital ad spending.

Saga’s “Blended Advertising” process focuses on providing our customers with simple digital advertising solutions (SEM, SEO, Targeted Display among others) that are easy to understand and buy in conjunction with radio.

These are the same local advertisers that studies show say they trust radio account executives the most for market knowledge and advice but aren’t currently buying digital from us.

Our digital strategy focuses on the consumer journey as they Click, Visit, Call and Search.

Our Radio Station’s get the advertiser wanted and our digital platform gets the advertiser found and chosen.

During the three months ended March 31, 2025 and 2024 and the years ended December 31, 2024 and 2023, our Charleston, South Carolina:

Columbus, Ohio;

Des Moines, Iowa;

Milwaukee, Wisconsin;

Norfolk, Virginia;

and Portland, Maine markets, when combined, represented approximately 37%, 36%, 37% and 39%, respectively, of our consolidated net operating revenue.

and Norfolk, Virginia markets, when combined, represented approximately 34%, 36%, 36% and 37%, respectively, of our consolidated net operating revenue.

An adverse change in any of these radio markets or our relative market position in those markets could have a significant impact on our operating results as a whole.

4 unchanged sentences

Net Operating Revenue

the Nine Months Ended

the Three Months Ended

for the Years Ended

September 30,

Charleston, South Carolina

3 unchanged sentences

Norfolk, Virginia

During the nine months ended September 30, 2024 and 2023 and the twelve months ended December 31, 2023 and 2022, the radio stations in our five largest markets, when combined, represented approximately 36%, 41%, 40% and 43%, respectively, of our consolidated station operating income.

During the three months ended March 31, 2025 and 2024 and the years ended December 31, 2024 and 2023, the radio stations in our five largest markets, when combined, represented approximately 37%, 38%, 37% and 40%, respectively, of our consolidated station operating income.

The following table describes the percentage of our consolidated station operating income represented by each of these markets:

3 unchanged sentences

Station Operating Income(*)

for the Nine Months Ended

for the Three Months Ended

for the Years Ended

September 30,

Charleston, South Carolina

3 unchanged sentences

Norfolk, Virginia

Operating income adjusted for corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Operating income adjusted for corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets (a non-GAAP measure).

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Results of Operations

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023.

Consolidated Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024.

Three Months Ended

September 30,

(In thousands, except percentages and per share information)

2 unchanged sentences

Corporate general and administrative

Depreciation and amortization

Other operating expense, net

Operating income

Operating loss

Interest expense

Interest income

Income before income tax expense

Income tax provision

Loss before income tax expense

Income tax (benefit) expense

Earnings (loss) per share (diluted)

N/M = Not Meaningful

For the three months ended September 30, 2024, consolidated net operating revenue was $28,118,000 compared with $29,149,000 for the three months ended September 30, 2023, a decrease of $1,031,000 or 3.5%.

We had an increase of approximately $666,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $1,697,000 generated by stations we owned or operated for the comparable period in 2023 (“same station”).

The decrease in same station revenue was primarily a result of decreases in gross local revenue of $2,635,000 and gross national revenue of $107,000, partially offset by increases in gross political revenue of $442,000, non-spot revenue of $240,000 and gross interactive revenue of $95,000 and a decrease in agency commissions of $226,000, from the third quarter of 2023.

The decrease in gross local revenues was attributable to decreases at our Clarksville, Tennessee;

For the three months ended March 31, 2025, consolidated net operating revenue was $24,212,000 compared with $25,294,000 for the three months ended March 31, 2024, a decrease of $1,082,000 or 4.3%.

We had an increase of approximately $595,000 that was attributable to stations that we did not own or operate for the comparable period, offset by a decrease of $1,677,000 generated by stations we owned or operated for the comparable period in 2024 (“same station”).

The decrease in same station revenue was primarily a result of decreases in gross local revenue and gross national revenue of $1,815,000 and $432,000 respectively partially offset by increases in gross interactive revenue and non-spot revenue of $342,000 and $97,000, respectively, and a decrease in agency commissions of $198,000 for the comparable period of 2024.

The most significant decreases in gross local revenue were at our Clarksville, Tennessee;

Columbus, Ohio;

Des Moines, Iowa;

Manchester, New Hampshire;

Milwaukee, Wisconsin;

Ithaca, New York;

and Norfolk, Virginia markets.

The decrease in gross national revenue is primarily due to a decrease at our Norfolk, Virginia market partially offset by an increase at our Columbus, Ohio market.

The decrease in agency commissions is due to the decrease in national and local agency revenue.

The gross political revenue increased due to an increase in the number of national, state and local elections.

The increase in non-spot revenue is due to increases at our Manchester, New Hampshire;

Milwaukee, Wisconsin;

Portland, Maine;

and Yankton, South Dakota markets.

The increase in gross interactive revenue is primarily due to an increase in our streaming and website advertising revenue.

Station operating expense was $23,458,000 for the three months ended September 30, 2024, compared with $22,760,000 for the three months ended September 30, 2023, an increase of $698,000 or 3.1%.

We had an increase of approximately $775,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $77,000 generated by stations we owned or operated for the comparable period in 2023.

The decrease in same station operating expense was primarily a result of decreases in compensation-related expenses and music licensing expenses of $363,000 and $90,000, respectively, partially offset by increases in bad debt expenses, interactive consulting and content expenses, sales survey expenses and advertising and promotion expenses of $165,000, $115,000, $40,000 and $35,000, respectively, from the third quarter of 2023.

We had operating income for the three months ended September 30, 2024 of $1,645,000 compared to $3,492,000 for the three months ended September 30, 2023, a decrease of $1,847,000.

The decrease in operating income was the result of a decrease in net operating revenue and an increase in station operating expenses noted above, and an increase in corporate general and administrative expenses of $114,000 and an increase in other operating (income) expense, net of $4,000.

The increase in corporate general and administrative expenses was primarily due to increases in stock-based compensation, computer software and cyber security expenses and compensation-related expenses of $224,000, $110,000, and $29,000, respectively, partially offset by decreases in insurance related costs and other consulting expenses of $132,000 and $101,000, respectively.

We generated net income of $1,267,000 ($0.20 per share on a fully diluted basis) during the three months ended September 30, 2024, compared to $2,729,000 ($0.45 per share on a fully diluted basis) for the three months ended September 30, 2023, a decrease of $1,462,000.

The decrease in net income is primarily due to the decrease in operating income, described above, an increase in interest expense of $77,000, a decrease in interest income of $136,000, partially offset by an increase in other income of $78,000 and a decrease in income tax expense of $520,000.

The increase in interest expense is due to an increase in debt outstanding.

The decrease in interest income is related to the decrease in the amount of short-term investment accounts.

The increase in other income is due to the gain on insurance claims of $78,000 received as a result of weather-related damages.

The gain on insurance claim is recorded in other (income) expense, net in the Company’s Condensed Consolidated Statement of Operation.

The decrease in our income tax expense is due to lower income before income tax expense from the third quarter of 2024.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Results of Operations

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023.

Nine Months Ended

September 30,

(In thousands, except percentages and per share information)

Net operating revenue

Station operating expenses

Corporate general and administrative

Other operating expense, net

Operating income

Interest expense

Interest income

Income before income tax expense

Income tax provision

Earnings (loss) per share (diluted)

N/M = Not Meaningful

For the nine months ended September 30, 2024, consolidated net operating revenue was $81,524,000 compared with $83,628,000 for the nine months ended September 30, 2023, a decrease of $2,104,000 or 2.5%.

We had an increase of approximately $926,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $3,030,000 generated by stations we owned or operated for the comparable period in 2023.

The decrease in same station revenue was primarily a result of decreases in gross local revenue of $5,552,000, and gross national revenue of $163,000, partially offset by increases in gross interactive revenue of $1,470,000 and gross political revenue of $735,000, and a decrease in agency commissions of $371,000 from 2023.

The decrease in gross local revenues was attributable to decreases at our Clarksville, Tennessee;

Columbus, Ohio;

Des Moines, Iowa;

The markets with the most significant decreases in gross national revenue were at our Charleston, South Carolina;

Manchester, New Hampshire;

and Milwaukee, Wisconsin markets.

The decrease in gross national revenue is primarily due to a decrease at our Norfolk, Virginia market partially offset by increases at our Bellingham, Washington;

Columbus, Ohio and Springfield, Illinois markets.

Ocala, Florida;

Portland, Maine;

and Springfield, Massachusetts markets.

The decrease in agency commissions is due to the decrease in national and local agency revenue.

The increase in gross interactive revenue is primarily due to an increase in our streaming and website advertising revenue.

The gross political revenue increased due to an increase in the number of national, state and local elections.

Station operating expense was $69,983,000 for the nine months ended September 30, 2024, compared with $66,870,000 for the nine months ended September 30, 2023, an increase of $3,113,000 or 4.7%.

We had an increase of approximately $998,000 that was attributable to stations that we did not own or operate for the entire comparable period, combined with an increase of $2,115,000 generated by stations we owned or operated for the comparable period in 2023.

The increase in same station operating expense was primarily a result of increases in compensation-related expense, bad debt expenses, interactive consulting and content expenses, sales rating survey expenses, and advertising and promotion expenses of $938,000, $659,000, $360,000, $219,000, and $116,000, respectively, partially offset by decreases in music licensing expenses of $146,000, respectively, from the comparable period in 2023.

We had operating income for the nine months ended September 30, 2024, of $1,371,000 compared to $8,693,000 for the nine months ended September 30, 2023, a decrease of $7,322,000.

The decrease in operating income was the result of a decrease in net operating revenue and an increase in station operating expenses noted above, and an increase in corporate general and administrative expenses of $1,204,000 and an increase in other operating (income) expense, net of $901,000.

The increase in corporate general and administrative expenses was primarily due to increases in stock-based compensation, compensation-related expenses, computer software and cyber security expenses and travel-related expenses of $704,000, $414,000, $255,000 and $153,000, respectively, partially offset by decreases in insurance related costs and other consulting expenses of $196,000 and $74,000, respectively.

The increase in gross interactive revenue is primarily due to an increase in our streaming revenue and our website advertising revenue.

The increase in our non-spot revenue is mainly due to increases at our Manchester, New Hampshire and Milwaukee, Wisconsin markets.

Station operating expense was $21,963,000 for the three months ended March 31, 2025, compared with $22,459,000 for the three months ended March 31, 2024, a decrease of $496,000 or 2.2%.

We had an increase of approximately $619,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $1,115,000 generated by stations we owned or operated for the comparable period in 2024.

The decrease in same station operating expense was primarily the result of decreases in compensation-related expenses, bad debt expenses, digital services expenses, advertising and promotional expenses and repairs and maintenance expenses of $633,000, $198,000, $143,000, $63,000 and $52,000, respectively, for the comparable period of 2024.

We had an operating loss for the three months ended March 31, 2025 of $2,298,000 compared to an operating loss of $2,417,000 for the three months ended March 31, 2024, an increase of $119,000.

The increase was a result of the decrease in net operating revenue partially offset by a decrease in station operating expense, as noted above, along with an increase in corporate general and administrative expenses of $84,000, and an increase in depreciation and amortization of $128,000 offset by a decrease in other operating expense of $917,000.

The increase in corporate general and administrative expenses was primarily comprised of increases in consulting and audit related fees of $116,000, additional expenses related to shareholder activism and a potential proxy contest of $110,000, and computer software and cybersecurity expenses of $48,000 partially offset by a decrease in other legal fees of $166,000 and a decrease in compensation related expenses of $25,000.

In addition to the $110,000 spent in the first quarter related to shareholder activism and related matters, we expect to spend additional amounts in the second quarter of 2025.

The increase in depreciation and amortization is primarily attributable to stations that we did not own or operate for the entire comparable period.

In 2025, we recorded a loss on the sale of fixed assets and intangibles of $54,000 compared to a loss on the sale of fixed assets of $971,000 in 2024.

The loss on sale of fixed assets and intangibles recorded in other operating expense in 2024 primarily relates to the sale of WYSE-AM, W275CP translator and W248CM translator located in our Asheville, North Carolina market and the relinquishment of our FCC license for KBAI-AM located in our Bellingham, Washington market, described in footnote 7 (Acquisitions and Dispositions).

We generated net income of $2,191,000 ($0.35 per share on a fully diluted basis) during the nine months ended September 30, 2024, compared to $6,999,000 ($1.15 per share on a fully diluted basis) for the nine months ended September 30, 2023 ended, a decrease of $4,808,000.

The decrease in net income is primarily due to the decrease in operating income, described above, an increase in interest expense of $105,000, a decrease in interest income of $218,000 partially offset by an increase in other income of $1,092,000 and a decrease in income tax expense of $1,745,000.

The increase in interest expense is due to an increase in debt outstanding.

The decrease in interest income is related to the decrease in the amount of short-term investment accounts.

The increase in other income is due to the $1,133,000 received related to the sale of an investment in BMI and $78,000 in insurance proceeds received as a result of weather-related damages.

The gain on sale of investment and gain on insurance claims are recorded in other (income) expense, net in the Company’s Condensed Consolidated Statement of Operation.

The decrease in our income tax expense is due to lower income before income tax expense for the comparable period.

We generated a net loss of $1,575,000 ($ (0.25) per share on a fully diluted basis) during the three months ended March 31, 2025, compared to a net loss of $1,577,000 ($ (0.25) per share on a fully diluted basis) for the three months ended March 31, 2024, an increase of $2,000.

The increase in net income or decrease in net loss is primarily due to the increase in operating income, described above, an increase in other income of $23,000, and an increase in income tax benefit of $5,000 partially offset by an increase in interest expense of $64,000 and a decrease in interest income of $81,000.

The increase in other income was due to insurance proceeds.

The increase in the tax benefit is due to a minor increase in our loss before income taxes in 2025.

The increase in interest expense is due to the increase in debt outstanding.

The decrease in interest income is due to lower interest rates on our short-term investments.

Liquidity and Capital Resources

Debt Arrangements and Debt Service Requirements

On December 19, 2022, we entered into the Third Amendment to our Credit Facility, (the “Third Amendment”), which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the Huntington National Bank (the “Lenders”), established an interest rate equal to the secured overnight financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank of New York) as the interest base, and increased the basis points.

On December 19, 2022, we entered into a Third Amendment to our Credit Facility, (the “Third Amendment”), which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the Huntington National Bank (the “Lenders”), established an interest rate equal to the secured overnight financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank of New York) as the interest base and increased the basis points.

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.

1 unchanged sentence

These debt issuance costs are included in other assets, net in the consolidated balance sheets.

As a result of the Second Amendment to our Credit Facility, the Company incurred an additional $120,000 of transaction fees related to the Credit Facility that were capitalized.

As a result of the Second Amendment, the Company incurred an additional $120,000 of transaction fees related to the Credit Facility that were capitalized.

As a result of the Third Amendment, the Company incurred an additional $161,000 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 SOFR (5.16% at September 30, 2024), plus 1% to 2% or the base rate plus 0% to 1%.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR (4.41% at March 31, 2025), plus 1% to 2% or the base rate plus 0% to 1%.

The spread over SOFR and the base rate vary from time to time, depending upon our financial leverage.

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.

Under the Third Amendment, we now pay quarterly commitment fees of 0.25% per annum on the unused portion of the Credit Facility.

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.

Under the Third Amendment, we now pay quarterly commitment fees of 0.25% per annum on the used portion of the Credit Facility.

We previously paid 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 September 30, 2024) 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.

We had $5,000,000 debt outstanding at September 30, 2024 that we borrowed in conjunction with our Lafayette acquisition and no debt outstanding at December 31, 2023.

We had approximately $45 million and $50 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2024 and December 31, 2023, respectively.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at March 31, 2025) 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.

We have $5,000,000 debt outstanding at December 31, 2024 and March 31, 2025 that we borrowed in conjunction with our Lafayette acquisition.

We have approximately $45 million of unused borrowing capacity under the Revolving Credit Facility at both March 31, 2025 and December 31, 2024.

Sources and Uses of Cash

During the nine months ended September 30, 2024 and 2023, we had net cash flows from operating activities of $10,141,000 and $13,921,000, respectively.

We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for payments of interest and principal under our Credit Facility if we borrow in the future.

During the three months ended March 31, 2025 and 2024, we had net cash flows from operating activities of $1,364,000 and $3,803,000, respectively.

We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for payments of interest and scheduled payments of principal under our Credit Facility if we borrow in the future.

However, if such cash flow is not sufficient, we may be required to sell additional equity securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled payments.

1 unchanged sentence

In March 2013, our Board of Directors authorized an increase to our Stock Buy-Back Program (the “Buy-Back Program”) to allow us to purchase up to $75.8 million of our Class A Common Stock.

From its inception in 1998 through September 30, 2024, we have repurchased 2.2 million shares of our Class A Common Stock for $57.8 million.

During the three and nine months ended September 30, 2024, 715 shares were retained for the payment of withholding taxes for $11,000 related to the vesting of restricted stock.

From its inception in 1998 through March 31, 2025, we have repurchased 2.2 million shares of our Class A Common Stock for $58.1 million.

During the three months ended March 31, 2025, we did not repurchase any shares related to the Buy-Back Program.

We halted the directions issued for any additional buybacks under our plan in 2020.

We continue to monitor economic conditions to determine if and when it makes sense to make additional buybacks under our plan.

Our capital expenditures, exclusive of acquisitions, for the nine months ended September 30, 2024 were $3,199,000 ($3,397,000 in 2023).

As part of our overall capital allocation plan for fiscal year 2025, we intend to use a portion of the proceeds from the potential sale of non-core assets to fund stock buybacks under the Stock Buy-Back Program, which may include open market purchases, block trades or other forms of buybacks.

Our capital expenditures, exclusive of acquisitions, for the three months ended March 31, 2025 were $696,000 ($1,050,000 in 2024).

We anticipate capital expenditures in 2025 to be approximately $4.0 million to $4.5 million, which we expect to finance through funds generated from operations.

2 unchanged sentences

The Company closed on this transaction on May 31, 2024, using funds from operations and borrowings under our credit agreement of $5,832,000, which included the purchase price of $5,300,000, the purchase of $499,000 in accounts receivable and transactional costs of approximately $121,000 offset by $88,000 in certain closing adjustments.

During 2024, the Company’s Board of Directors has declared three quarterly cash dividends and a variable dividend on its Class A Common Stock.

These dividends totaling $1.35 per share and approximately $8.5 million were paid or accrued as of September 30, 2024.

During 2023, the Company’s Board of Directors declared four quarterly cash dividends and one special dividend on its Class A Common Stock.

These dividends totaling $3.00 per share and approximately $18.6 million were accrued or paid during 2023.

We continue to actively seek and explore opportunities for expansion through the acquisitions of additional broadcast properties.

During 2025, the Company’s Board of Directors declared a quarterly cash dividend on its Class A Common Stock.

This dividend totaling approximately $1.6 million was paid during the first quarter of 2025.

During 2024, the Company’s Board of Directors declared four quarterly cash dividends and a variable dividend on its Class A Common Stock.

These dividends totaling $1.60 per share and approximately $10.0 million were paid during 2024.

We anticipate that any future acquisitions of radio stations and dividend payments will be financed through funds generated from operations, borrowings under the Credit Agreement, additional debt or equity financing, cash on hand, or a combination thereof.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis