“Not on my watch,” said Saga CEO Ed Christian of making even deeper cuts just to improve cash flow margins. Saga reported same station revenues down 16.3%, with both radio and TV lower.
Saga’s Q2 net revenues fell 15.3% to $31.6 million and operating income was down 20.2% to $6.2 million. On a same station basis, revenues dropped 16.3% and operating income 22.9%.
Radio revenues were down 15.6% to $27.5% and operating income was off 15.1% to $7.8 million. On a same stations basis, revenues were down 16.8% and operating income 17.4%.
Actual and same station were the same for TV: revenues down 12.9% to $4.1 million and operating income down 53.5% to $506K.
CFO Sam Bush detailed that April revenues were down 16.5%, May 18.1% and June 10.9%. As for Q3 pacings, July was down 18%, August is now at about minus 19% and September is off 20%. However, with business being placed late, Bush said pacings are improving by about five percentage points from the first of each month until the end.
Yes, Christian said in answer to an analyst’s question, it feels like we are running at a bottom – but he also warned that when you are on the bottom of the ocean there is also a risk that you could fall off a cliff into a deep ravine. “So, where we’re traveling right now seems to be in kind of a floor area,” he said.
Cash flow margins at Saga have fallen to the 26-27% range, so Christian was asked if Saga can pull more cost-cutting levels to get those back up as some other radio groups have bragged about of late. “Yeah, we could, but probably not on my watch, because we’ve already instituted substantive reductions and we’re not seeking a short-term spike that we believe would weaken long-term health and the profitability of the company. That’s the difference. There are some companies that are, in the need for immediate margin and revenue gratification, are perilously close to eating their seed corn. We’re not going to get to that level,” Christian said.