Saga Communications reported Q2 net operating revenue increased 1.8% over the comparable period in 2006 to 38.4 million and operating income was approximately flat at 8.8 million. Net income decreased 178 thousand to 3.8 million (.19 per fully diluted share) for the quarter compared to 4.0 million (.19 per fully diluted share) for the comparable period in 2006. Free Cash Flow increased 878 thousand to 5.6 million. For the same period, station operating expense increased 647 thousand to 27.0 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue increased 1.5% to $38.3 million, operating income was approximately flat at $8.8 million and station operating expense increased 486 thousand to 26.9 million.
Capital expenditures in the quarter were 2.2 million of which 420 thousand were as a result of acquisitions and 360 thousand were related to digital radio. For the six months capital expenditures were 4.6 million of which 1.3 million were as a result of acquisitions and 520 thousand were related to digital radio. Currently, saga expects capital expenditures for the year to be approximately 10.5 million.
Said Saga CEO Ed Christian: "On Cap Ex, I think in a couple of years we're going to see that dropping off, because in the last couple of years we've had our TV Hi-def and radio conversions in there. The purchase of a building in Asheville for a million and a half was another. So I do think in 2009 as we finish up with everything, we're going to see that leveling off and start turning down to a more normal relation number."
Christian said Saga has cut some 2 million in expenses, getting back to a base level of 2004. He thinks another 500,000 is possible. It's been tough in some markets, Norfolk for one was down 11%. Small markets have been better, like Jonesboro and Charlottesville, experiencing market dominance. Columbus, OH took at hit on the AC station there. EVP Steve Goldstein is down there now as acting PD in the market.
Read Christian's comments on national business in the Advertising section.
Christian had some interesting commentary on the state of radio stocks as of late: Like the "stop laughing" rate offered to some advertisers, he's hoping broadcast stocks are at that point in time. "I speak for other listed companies. It's amazing that [stock prices can fall for] an industry that has such solid historical bases…[with] great cash flows and great abilities to do things, and solid franchises in our markets. We have weathered all of these other challenges-satellite radio, iPods, internet-we may be flat as an industry, but we're not shedding the dollars that some of these other industries are going through."
To that effect he added, "Yes, we are in a cycle; yes we are in the process of reinventing ourselves; yes we are in the process of finding new product categories-we're adding 5-6 million of new business in our markets this year."