“Q3 results were a little light,” Wells Fargo Securities analyst Marci Ryvicker told clients of the quarterly report by Saga Communications. She’s revised her revenue estimates downward a bit for the company.
The analyst noted that Saga was a bit shy of expectations in both radio and TV for Q3, with mixed results for its markets. But, she said, the core business is stable in Q4.
“SGA is currently pacing down mid single digits for the Q4. Removing the $2.4 million in political revenue in Q4 2010, Q4 2011 is pacing up low single digits. On a month-to-month basis, management’s expectations are for a continuously volatile environment. Auto’s improvement sequentially is ‘good’ so far while fears from the 50-year flood in Thailand affecting supply is a concern,” Ryvicker wrote in a research piece.
For radio, rather than a 3.5% decline in Q4 revenues the analysts is now projecting a 4.5% decline, which would bring the quarter in at $27.7 million. But, with lower expenses reported in Q3, she’s expecting station operating income (SOI) of $9 million, down only slight from her previous $9.1 million estimate. (But still down double digits from politically-fueled Q4 of 2010.)
The much smaller TV operation is seen as having revenues fall 2%, rather than 1%, to $5 million. SOI is projected to be $1.8 million – actually up from her previous estimate of $1.7 million. (But also down double digits from a year earlier.)
Looking ahead to 2012, Ryvicker is still expecting Saga’s total revenues to be up 4.5% — but from a slightly smaller 2011 benchmark. She’s projecting that radio will grow 4% and TV 7.5% in the presidential election year.
RBR-TVBR observation: While investor Daniel Tisch is a long-term bull on Saga and keeps adding to his substantial stake, now 842,596 shares, Ryvicker isn’t recommending the stock to her clients. And you can’t really argue with her logic. “We believe SGA possesses excellent management personnel. However, given overall weakness in the economy, we maintain our Market Perform.” That’s a “hold” rating.