Another Quarter of Challenges For Radio Pure-Play Saga

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The final three months of 2020 were robust for many publicly traded media companies. Political advertising, along with digital revenue growth, were key catalysts at the broadcast station owners experiencing growth in Q4.


Unfortunately, Saga Communications, the owner of radio stations in mid-sized and small markets across the U.S., can’t be included in the list of fourth-quarter media industry fiscal success stories.

With the COVID-19 pandemic’s wrath continuing to strangle Saga across its markets, net operating revenue was down to $28.75 million in Q4 2020, from $31.98 million a year ago.

The good news: Sequential quarterly revenue improvement is being seen, as the $28 million bests the Q3 2020 total by 19.1%, Saga says.

Saga didn’t mention that Q3 net revenue fell 22.8% year-over-year.

While operating revenue was down in Q4, so was the company’s station operating expenses, as belt-tightening reduced them to $21.12 million from $23.05 million.

Nevertheless, net income fell to $2.27 million ($0.38 per share), from $3.84 million ($0.64).

Yes, income tax expense impacts this, but even before that expense, net income was off, dipping to $4.95 million from $5.4 million.

Free Cash Flow declined to $5.13 million from $5.43 million in Q4.

Then, there’s the non-GAAP measure of Station Operating Income (SOI). For Saga, it dipped to $9.07 million from $10.49 million.

With $10 million in debt on hand, Saga is in a strong financial position despite the not-so-fantastic 2020. Indeed, Saga’s leverage ratio was 0.89 at the end of 2020. At the end of 2019, it was 0.36. Given COVID-19, that’s admirable. And, there is $56 million in cash on hand as of Monday (3/8).

“Let today be the last day that we discuss 2020,” Saga CEO Ed Christian said, lamenting how January 2021 remained impacted by the pandemic. He even suggested the media drove advertisers right back to where they were in April — not using radio to reach consumers.

“We survived, and some of this is painful, make no mistake,” he noted on the company’s Q4 earnings call held Friday morning, with CFO Sam Bush sharing that political in Q4 totaled $8.3 million. That’s a huge jump from the $3.8 million in Q4 2016 netted by Saga.

Alas, the political bump couldn’t offset the continued challenges that “are slipping out of sight,” Christian believes, with the darkness behind it. “This is the beginning of a proactive recovery,” he said. “Still … the possibility of outside surprises. It is almost like going through a ride in an amusement park where you’d be in a car and all of a sudden a zombie or a hideous elephant jumps out in front of you until the doors open and there is sunlight.”

The comments came during a typically lengthy quarterly earnings call soliloquy from Christian, who took a moment to share an audio clip from WOGK-FM 93.7 “K-Country,” a Saga-owned station in Ocala, Fla., that featured a listener sharing his thanks and how the radio hosts don’t get enough recognition. In this case, a pediatric cancer patient benefited from the FM by having a chemotherapy duct and bears donated to his family in a “Bear-a-Thon.”

Saga purchased WOGK, and three other stations serving Gainesville-Ocala, from Dix Communications for $9.3 million in a deal that closed at the end of 2018.

“We’re not standing by a shredder and throwing Radio into it,” Christian noted ahead of sharing the clip, a rather unusual feature for a quarterly earnings call.

How are investors responding to the Saga earnings? SGA was down 3.4% as of 11:15am, to $23.77. That said, Thursday’s close was its second-highest since mid-August 2020. And, it signals a long-term rebound, as SGA was just under $17 per share right before the 2020 U.S. Presidential Election.