Flat quarter for Saga


Radio revenues were down a bit, but the small television unit saved the day and brought Saga’s Q3 revenues even with a year ago. Free cash flow for the quarter was also flat. Yes, times are challenging, but CEO Ed Christian says “we’re not newspapers” and neither are radio companies announcing shutdowns of hundreds of stations as some retail chains are with store locations.

By the numbers, here is how Saga did in Q3:

Total revenues slipped 0.1% to $36.2 million and operating income declined 7.2% to $7.4 million. On a same station basis, the revenue decline was 0.8% and operating income 7.8%.

Radio net operating revenues were down 1.9% to $31.3 million and operating income dropped 8.7% to $8.6 million. On a same station basis, the revenue decline was 3.6% and operating income 9.3%.

Television revenues rose 13.3% to $4.9 million and operating income rose 56.1% to $1.3 million. Television properties did not change from a year ago, so there was no difference in the same station results.

Total political revenues for the quarter were $1.9 million, up sharply from $224,000 a year ago. Unlike most companies with holding in both media, radio is so much bigger at Saga that it had more political advertising on radio, $1.1 million, than television, $671,000. Also, Saga’s radio networks booked $163,000 in political advertising.

In his quarterly commentary, CEO Ed Christian shared the response he’s been giving to people who ask him how his business is going: “It’s not easy, but it definitely isn’t over.” Christian says it is harder now and requires a different skill set and different approaches to revenue. “We’re not newspapers,” said Christian, calling it an overreaction to paint such negativism on the entire media sector.

“During times of adversity smart retailers buy and build share – and they do that through advertising,” Christian said. But when traditional sources of revenues dry up, he noted that the problem is figuring out how to go out and create new business. Yes, you have to have good creative, god follow-through and good presentation, but Christian worries that many sellers are being sent out to seek out new business without any guidance. What Saga has begun doing is targeting categories that are “one-off” from sagging categories. So, if auto dealers are down, go after tire stores, “because people are still buying tires.” Find a category, put together a presentation, make a list of potential clients and divide it up among the sellers. Also, the sellers get a premium for selling that new category.

Asked about his company’s markets where Saga doesn’t subscribe to Arbitron versus those where it does, Christian said he believes those markets where Saga is not selling based on ratings accounts in part for it outperforming its peers. The CEO says “life is good” in markets where his company no longer relies on “the sale of bulk people” and rather on what the company’s radio stations can do to build business for the advertiser.

RBR/TVBR observation: Saga has historically been more conservative about leverage than some of its broadcasting brethren, which is paying off now. Those with healthy balance sheets are in the best position to make it through this downturn.