What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 99 added, 58 removed, 165 unchanged (49% of the section changed)

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This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements may be identified by the use of forward-looking terms such as “will,” “may,” “believes,” “intends,” “expects,” “anticipates,” “plans,” “estimates,” “guidance,” and similar expressions that are intended to identify forward-looking statements that are not historical facts.

Forward-looking statements may be identified by the use of forward-looking terms such as “will,” “may,” “believes,” “intends,” “expects,” “anticipates,” “plans,” “projects,” “estimates,” “guidance,” and similar expressions that are intended to identify forward-looking statements that are not historical facts.

These statements are made as of the date of this report or as otherwise indicated, based on current expectations.

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trends in audience behavior;

damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, the failure to meet client or listener expectations and other facts;

damage to our reputation resulting from adverse publicity, regulatory actions, litigation, and operational failures;

the failure to meet client or listener expectations and other facts;

changes in local real estate values;

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terrorist attacks;

the wars in Ukraine and the Middle East, the effects of widespread outbreak of illness or disease, inflation or deflation;

the wars in Ukraine and the Middle East;

the effects of widespread outbreak of illness or disease, inflation or deflation;

increased energy costs;

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

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.

For the six months ended June 30, 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.

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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 2025 to decrease from 2024 levels as a result of less elections at the national, state and local levels.

Furthermore, we expect political revenue in 2025 to decrease from 2024 levels as a result of fewer 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.

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Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers.

The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers.

The rates a station is able to charge along with advertising volume are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers.

In a number of our markets, this is measured by periodic reports generated by independent national rating services.

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There has been a significant increase in digital ad spending.

For the six months ended June 30, 2025, interactive advertising revenue was $8,053,000 compared with $7,333,000 for the six months ended June 30, 2024, an increase of $720,000 or 9.9%.

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.

These are the same local advertisers that studies show say they trust radio account executives the most for market knowledge and advice but are not 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:

During the six months ended June 30, 2025 and 2024 and the twelve months ended December 31, 2024 and 2023, our Charleston, South Carolina;

Columbus, Ohio;

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Net Operating Revenue

the Three Months Ended

the Six Months Ended

for the Years Ended

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Norfolk, Virginia

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.

During the six months ended June 30, 2025 and 2024 and the twelve months ended December 31, 2024 and 2023, the radio stations in our five largest markets, when combined, represented approximately 38%, 36%, 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:

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Station Operating Income(*)

for the Three Months Ended

for the Six Months Ended

for the Years Ended

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Norfolk, Virginia

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

Station operating income is 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 June 30, 2025 Compared to Three Months Ended June 30, 2024

Results of Operations

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

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024.

Three Months Ended

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Other operating expense, net

Operating loss

Operating income

Interest expense

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Income tax (benefit) expense

Net income (loss)

Earnings (loss) per share (diluted)

N/M = Not Meaningful

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;

For the three months ended June 30, 2025, consolidated net operating revenue was $28,229,000 compared with $29,716,000 for the three months ended June 30, 2024, a decrease of $1,487,000 or 5.0%.

We had an increase of approximately $396,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $1,883,000 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 of $1,634,000, gross non-spot revenue of $263,000, gross political revenue of $237,000 and gross national revenue of $182,000, partially offset by an increase in gross interactive revenue of $265,000 and a decrease in agency commissions of $243,000, from the second quarter of 2024.

The decrease in gross local revenues was attributable to decreases at our Columbus, Ohio;

Des Moines, Iowa;

and Norfolk, Virginia markets.

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

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

The gross political revenue decreased due to a decrease in the number of national, state and local elections.

The decrease in non-spot revenue is due to increases at our Columbus, Ohio and Ocala, Florida markets.

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

Station operating expense was $22,226,000 for the three months ended June 30, 2025, compared with $23,305,000 for the three months ended June 30, 2024, a decrease of $1,079,000 or 4.6%.

We had an increase of approximately $390,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $1,469,000 generated by stations we owned or operated for the comparable period in 2024.

The decrease in same station operating expense was primarily a result of decreases in compensation-related expenses, digital services expenses, bad debt expenses, advertising and promotional expenses and maintenance and repairs expenses of $675,000, $283,000, $176,000, $175,000 and $73,000, respectively, from the second quarter of 2024.

We had operating income for the three months ended June 30, 2025 of $1,409,000 compared to $2,143,000 for the three months ended June 30, 2024, a decrease of $734,000.

The decrease in operating income was the result of a decrease in net operating revenue, partially offset by a decrease in station operating expenses noted above, and an increase in corporate general and administrative expenses of $70,000 and an increase in other operating (income) expense, net of $247,000.

The increase in corporate general and administrative expenses was primarily due to additional expenses related to shareholder activism and a potential proxy of contest of $89,000, and increases in stock-based compensation, legal expenses and maintenance and repairs of $84,000, $52,000 and $11,000 partially offset by decreases in insurance related costs, travel related expenses and other consulting expenses of $60,000, $57,000 and $44,000, respectively.

The increase in other operating expenses was due to the loss on disposal of fixed assets in the second quarter 2024.

We generated net income of $1,128,000 ($0.18 per share on a fully diluted basis) during the three months ended June 30, 2025, compared to $2,501,000 ($0.40 per share on a fully diluted basis) for the three months ended June 30, 2024, a decrease of $1,373,000.

The decrease in net income is primarily due to the decrease in operating income, described above, an increase in interest expense of $36,000, a decrease in interest income of $41,000, and a decrease in other income of $1,132,000, partially offset by a decrease in income tax expense of $570,000.

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 decrease in other income is due to a one-time gain in 2024 related to the sale of an investment in BMI.

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

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Results of Operations

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024.

Six Months Ended

(In thousands, except percentages and per share information)

Net operating revenue

Station operating expenses

Corporate general and administrative

Depreciation and amortization

Other operating expense, net

Operating income (loss)

Interest expense

Interest income

Income (loss) before income tax expense

Income tax (benefit) expense

Net income (loss)

Earnings (loss) per share (diluted)

N/M = Not Meaningful

For the six months ended June 30, 2025, consolidated net operating revenue was $52,441,000 compared with $55,010,000 for the six months ended June 30, 2024, a decrease of $2,569,000 or 4.7%.

We had an increase of approximately $979,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $3,548,000 generated by stations we owned or operated for the comparable period in 2024.

The decrease in same station revenue was primarily a result of decreases in gross local revenue of $3,443,000, gross national revenue of $613,000, gross political revenue of $277,000 and gross non-spot revenue of $173,000 partially offset by increases in gross interactive revenue of $609,000 and a decrease in agency commissions of $444,000 from 2024.

The decrease in gross local revenues was attributable to decreases at our Columbus, Ohio;

Des Moines, Iowa;

Ithaca, New York;

and Norfolk, Virginia markets.

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

Manchester, New Hampshire;

Ocala, Florida;

Portland, Maine;

and Springfield, Massachusetts markets.

The decrease in gross national revenue is primarily due to a decrease at our Charleston, South Carolina;

Columbus, Ohio and Portland, Maine markets partially offset by increases at our Milwaukee, Wisconsin and Norfolk, Virginia markets.

The gross political revenue decreased due to a decrease in the number of national, state and local elections partially offset by an increase at our Milwaukee, Wisconsin market.

The decrease in gross non-spot revenue is due to decreases at our Columbus, Ohio market.

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 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%.

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

Station operating expense was $44,189,000 for the six months ended June 30, 2025, compared with $45,764,000 for the six months ended June 30, 2024, a decrease of $1,575,000 or 3.4%.

We had an increase of approximately $1,007,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $2,582,000 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.

The decrease in same station operating expense was primarily a result of decreases in compensation-related expenses, digital services expenses, bad debt expenses, advertising and promotional expenses and maintenance and repairs expenses of $1,308,000, $426,000, $368,000, $238,000 and $125,000, respectively, from the comparable period in 2024.

We had an operating loss for the six months ended June 30, 2025, of $889,000 compared to an operating loss of $274,000 for the six months ended June 30, 2024, an increase of $615,000.

The increase in our operating loss was the result of a decrease in net operating revenue, partially offset by a decrease in station operating expenses noted above, and an increase in corporate general and administrative expenses of $154,000 and an increase in depreciation and amortization of $137,000 partially offset by a decrease other operating (income) expense, net of $670,000.

The increase in corporate general and administrative expenses was primarily due to additional expenses related to shareholder activism and a potential proxy of contest of $199,000, and increases in stock-based compensation, other consulting expenses, and maintenance and repairs of $137,000, $72,000, and $32,000 partially offset by decreases in legal expenses, travel related expenses and insurance related costs of $114,000, $110,000 and $93,000, respectively.

In 2024, we recorded a loss on the sale of fixed assets and intangibles of $977,000 compared to a loss on the sale of fixed assets of $307,000 in 2025.

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 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.

We generated a net loss of $447,000 ($ (0.07) per share on a fully diluted basis) during the six months ended June 30, 2025, compared to net income of $924,000 ($0.15 per share on a fully diluted basis) for the six months ended June 30, 2024 ended, a decrease of $1,371,000.

The decrease in net income is primarily due to the decrease in operating income, described above, an increase in interest expense of $100,000, a decrease in interest income of $122,000 and a decrease in other income of $1,109,000 partially offset by a decrease in income tax expense of $575,000.

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 decrease in other income is due to the $1,133,000 received related to the sale of an investment in BMI in 2024.

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

Liquidity and Capital Resources

Debt Arrangements and Debt Service Requirements

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.

On December 19, 2022, we entered into a Third Amendment (the “Third Amendment”) to our Credit Facility, (the “Credit Facility”), 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.

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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 (4.41% at March 31, 2025), 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 (4.45% at June 30, 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 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 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.

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.

We previously paid quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the Credit Facility.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at June 30, 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 had $5,000,000 debt outstanding at June 30, 2025 and December 31, 2024 that we borrowed in conjunction with our Lafayette acquisition.

We had approximately $45 million of unused borrowing capacity under the Credit Facility at June 30, 2025 and December 31, 2024, respectively.

Sources and Uses of Cash

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.

During the six months ended June 30, 2025 and 2024, we had net cash flows from operating activities of $2,119,000 and $5,047,000, 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.

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There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.

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 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.

In March 2013, our Board of Directors authorized an increase to our 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 June 30, 2025, we have repurchased 2.2 million shares of our Class A Common Stock for $58.1 million.

During the three and six months ended June 30, 2025 we did not repurchase any related to the Buy-Back Program.

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

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).

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 Buy Back Program, which may include open market purchases, block trades or other forms of buybacks.

Our capital expenditures, exclusive of acquisitions, for the six months ended June 30, 2025 were $2,010,000 ($2,574,000 for the six months ended June 30, 2024).

We anticipate capital expenditures in 2025 to be approximately $3.0 million to $3.5 million, which we expect to finance through funds generated from operations.

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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 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.

During the six months ended June 30, 2025, the Company’s Board of Directors have declared two quarterly cash dividends on its Class A Common Stock.

These dividends totaling $0.50 per share and approximately $3.2 million were paid as of June 30, 2025.

During the six months ended June 30, 2024, the Company’s Board of Directors declared two quarterly cash dividends and a variable dividend on its Class A Common Stock.

These dividends totaling $1.10 per share and approximately $6.9 million were paid during 2024.

Additionally, $12.5 million was paid in 2024, relating to the special dividend declared in December 2023.

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.

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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