Saga Communications, Inc. Q3 FY2025 earnings call

• Installed Saga's blended digital strategy including training for market leaders, sales managers, etc., and invested in R&D. - Added digital, M&A, and financial expertise to the Board. - Sold several towers as part of a strategic plan to return value to shareholders via stock buybacks. - Made strategic expense reductions at market and corporate levels and utilized AI for efficiency. - Aims to achieve 2x gross revenue, mostly digital, in 18-24 months by capturing 5% of search and display dollars in 27 markets. - Interactive revenue growth in Q3 2025 almost offset the decrease in broadcast revenue when adjusting for political.

For the quarter ended September 30, 2025, net revenue decreased $528,000 or 1.8% to $28.2 million compared to $28.7 million last year. Gross broadcast revenue included nontraditional revenue (NTR) which decreased $1.8 million or 6.8%, while gross interactive revenue increased $1.1 million or 32.6%. Gross political revenue was $73,000 for Q3 2025 compared to $677,000 last year. For the 9-month period ended September 30, 2025, net revenue decreased $3.1 million or 3.7% to $80.6 million compared to $83.7 million last year. Interactive revenue had a 54% profit margin for both the quarter and 9-month period, excluding sales commissions.

• Fourth quarter pacing is tough with total revenue down approximately 11% including political and 4.7% excluding political; interactive pacing is strong at 32% as of now. - Intends to use proceeds from tower sale for stock buybacks. - Expect station operating expense to be flat for 2025, with corporate expenses anticipated to be approximately $12 million for 2025.

• Music licensing settlements led to increased station operating expense and impacted operating results. - Macro economic factors, particularly delayed reaction of Fed rate cuts on Main Street affecting radio spot advertising. - Complexities in tower sale real estate transfers causing uncertainty in buyback timing and amounts.

Q: Can you give us some color on the tone of the market, pacings into the upcoming quarter, local spot versus digital versus national?

A: National is weak in the fourth quarter. Total revenue pacing, excluding political, is down 4.7% for the quarter. Local pacing is consistent, and digital pacing is up 32% for the quarter.

Q: Historically, advertisers reacted favorably in anticipation of Fed rate cuts given the favorable influence they had on the economy. As we have seen in many radio company results, the Fed rate action has had no impact and the radio spot advertising remains weak. Any thoughts on why there is this anomaly?

A: It's not an anomaly; it's the economy. Spot radio's downdraft is more a function of the macro decline in the sector rather than rate cuts. The 50 basis points reduction by the Fed hasn't reached Main Street yet, affecting housing starts and auto purchases which impact radio performance.

Q: Why wasn't there a concrete plan for a buyback, including timing and amounts once the tower sale closed?

A: There were complexities in the tower sale such as real estate transfer issues and specific expectations for final terms. 4 of the towers' sites are in escrow, and final sale proceeds and terms needed to be finalized for the Board to decide on buyback plans.