Saga Communications saw a net revenue decline of 3.5% to $28.1 million in the third quarter, compared to $29.1 million in Q3 2023. Station operating expenses increased 3.1% for the quarter to $23.5 million.
CEO Chris Forgy said additional expenses during the quarter are related to the company’s digital expansion. “During a transformational change of this nature, of course, there will be additional expenses,” he told attendees during a Thursday morning conference call discussing the earnings. The additional expenses are temporary, “and as expenses level off and plateau, we grow,” Forgy explained.
The digital expansion is “a philosophy methodology built to achieve better results for our local advertisers based on a journey a consumer embarks on when they are exposed to advertising,” he continued. “It capitalizes on the power of radio to move the consumer to a series of specific actions… We call this philosophy blended advertising.”
Forgy says blended advertising dovetails with the company’s revenue-driving assets and tools, including the Quu in-dash messaging platform, Saga’s 18 online news sites, e-commerce, streaming, and the company’s “Best Of” program.
“As we begin to track our progress of blended advertising and keep in mind, that we’ve only just begun, we are astounded by the early returns,” Forgy remarked. He says the approach does not decrease a client’s radio spend. “In fact, blended advertising significantly increases the radio only spend and increases the total radio and digital spend mid to high double digits.” Forgy says blended advertising has also saved business, and led to a radio and digital outcome “that actually increased the client’s overall spend and results.”
Political, E-Commerce, Interactive, NTR.
The $28.1 million Q3 net revenue “included $677,000 in gross political revenue, compared to $234,000 for the same period last year, EVP/CFO/Treasurer Sam Bush said. E-commerce was up 33% or $153,000 in the third quarter; interactive increased 4.5% or $122,000; NTR events rose by 11% or $246,000; Saga’s “Best Of” programs were up by 11% or $522,000.
Revenue from the company’s online news websites, which are a subset of the interactive division, increased 68% or $242,000 for the quarter, with a total revenue for the quarter of $597,000.
The company, which operates in medium-sized radio markets, reported operating income of $1.6 million compared to $3.5 million last year. Station operating income (a non-GAAP financial measure) decreased 21.2% to $6 million.
Saga had capital expenditures of $625,000 for the quarter vs. $760,000 for the same period last year. The company had a net income of $1.3 million for the quarter compared to $2.7 million for the third quarter of last year. Diluted earnings per share were $0.20 in the third quarter of 2024.
On a same-station basis for the three months ended Sept. 30, net revenue decreased by 5.8% to $27.5 million. Station operating expenses decreased by 0.3% to $22.7 million. Operating income decreased by 49.7% to $1.8 million.
The company paid a quarterly dividend of $0.25 per share on Oct. 18. The aggregate amount of the quarterly dividend was approximately $1.6 million. To date, Saga has paid over $133 million in dividends to shareholders since the first special dividend was paid in 2012.
Bush said pacing for the fourth quarter remained soft and is currently pacing down in the low-to-mid-single digits. “Political did pick up nicely in October,” he added.
“As of November 5, 2024, we had total political for the year of $3.3 million… This year, political for the fourth quarter looks to be $2 million of the $3.3 million total year expectations.”
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