“Radio isn’t broken, it’s just slowing down – maybe a little misunderstood.” Saga Communications CEO Chris Forgy delivered another memorable, if more muted, earnings call on Thursday as the company’s candid leader discussed a “subpar Q1 performance.”
Saga CFO Sam Bush reported a decrease in net revenue to $24.7 million, a 2.5% drop from $25.3 million in Q1 2023, reflecting overarching financial pressures for the industry and an increasingly competitive media landscape. In addition, there was a notable increase in station operating expenses, which rose 5.9% to $23 million.
Due to these mixed factors, Saga reported a loss of $2.4 million compared to an operating income of $905,000 in the prior year’s first quarter. This loss included a $971,000 non-cash write-off related to unproductive assets and licenses. However, the broadcaster slightly reduced its capital expenditures to $1.1 million from $1.4 million year-over-year, aligning its spending with strategic priorities and current financial realities.
A considerable portion of the increase in operating expenses was due to enhanced investment in employee compensation and development, demonstrating Saga’s commitment to retaining and nurturing talent, which is crucial for long-term success.
Bush reassured stakeholders of Saga’s focus on enhancing shareholder value through dividends and strategic acquisitions, like the recent $5.3 million purchase of five radio stations in Lafayette, IN from Neuhoff Communications.
For a company that has long resisted the lure of digital dollars, the call could be ignored no longer. While repeating that Saga’s objective is not to become a digital company, Forgy discussed the overall acceptance that digital media is now a part of radio and vice-versa. “As a forward-facing statement of intention,” Forgy said, “We are renaming all of our radio station groups as media groups and have altered the title of all of our sellers, account managers and account executives to media advisers.”
Despite the overall revenue decline, Saga experienced a positive note in the form of a $572,000 increase in gross interactive revenue from its burgeoning local news websites, signaling growing strength in digital offerings. The company’s strategic focus remains on small to mid-sized markets, which are seen as more stable and potentially lucrative in the long term. This approach is expected to insulate the company from the volatilities of larger markets.
Looking forward, Saga anticipates continued challenges but remains optimistic about its strategic direction. The company expects to spend between $5 million and $5.5 million on capital expenditures in 2024, aiming to bolster its operational capabilities and market competitiveness.
And even if Forgy does enjoy razzing his competition during his earnings calls, he ended on a bit of a history lesson that – whether meant for investors or his radio brethren – held a prescient message for the industry.
“At the signing of the Declaration of Independence, George Washington was in a dubious position…It was not going to be easy. Many of the delegates to the convention did not share his faith…In fact, you may remember Ben Franklin’s quote. During the debate, he said,’Gentlemen, we must now hang together or we shall most assuredly, hang separately’ – we must now hang together or we most assuredly will hang separately.”
