NORTHVILLE, MICH. — It was not the final three months of 2024 that a company would want to share with investors. Yet, shares were up by nearly 6 percent in early trading on Tuesday, as Saga Communications released its Q4 report — one that saw diminished results from the prior year.
In the fourth quarter, the pure-play radio broadcasting company that has been building its digital assets steadily across the last several quarters reported net operating revenue of $28.77 million, down from $29.15 million in Q4 2023.
At the same time, station operating expenses increased to $24.3 million, from $23.33 million, resulting in lowered operating income of $984,000, dropping from $2.8 million a year earlier.
Total it all up, and Saga’s net income shrank to $1.27 million ($0.20 per share), from $2.5 million ($0.40).
The good news? Operating revenue beat the estimates of the lone analyst polled by Yahoo! Finance, and perhaps that’s what excites institutional investors including the Daniel Tisch-led Towerview LLC, the largest holder of Saga shares. As of 9:48am Eastern, Nasdaq-traded “SGA” was up by 5.9% to $11.77. While that’s welcomed news, Saga shares have experienced a sharp decline in value over the last 12 months, shedding half of their value. Since September 11, 2024, Saga stock has shed 20% of its value.
CEO Chris Forgy and CFO Sam Bush were scheduled to speak about the Q4 2024 report in an earnings call scheduled for 11am Eastern; neither executive commented on the results in a press release distributed just before Tuesday’s Opening Bell for U.S. financial markets. However, as RBR+TVBR reported on Monday, Forgy late Friday addressed the company’s “ongoing execution of its strategic plan” in advance of its earnings call.
“While we are proud of all that we have accomplished, we recognize that in a constantly evolving industry there is always more work to be done,” he said. “As such, we remain committed to building positive relationships with our audiences and clients and positively impacting the local communities we serve, all while delivering robust value to our shareholders. Over the past year, we have taken and continue to take tangible steps to improve our financial results, increase our profitability, and strengthen our corporate governance.”
Additionally, Saga confirmed that shareholder Gate City Capital Management submitted notice nominating four candidates to stand for election to the Board at the company’s annual shareholders meeting. “Saga has attempted to engage constructively with Gate City and will continue to do so,” the company said on Friday. “Regrettably, Gate City appears to misunderstand Saga’s business, the changing landscape in which the company operates, and the strategy Saga is pursuing.”
Saga calls Gate City’s SEC filings regarding the company “based on faulty assumptions and contain numerous unfounded assertions that could mislead the company’s shareholders.”
Two-thirds of Saga shares are held by institutions. Gate City is the No. 2 investor behind Towerview, and as of the end of 2024 held 13.8% equity interest, compared to Towerview’s 18.54%. Saga owns 82 FM radio stations and 31 AM radio stations, serving 28 markets.
FIXING A ‘BROKEN’ LOCAL DIGITAL MARKETPLACE
On the Q4 2024 earnings call, a “transformational change” underway at Saga was explained by Forgy, noting how digital advertising’s rapid growth is being addressed across the company’s stations. In short, Digital is “broken,” and “there’s a gap where tech meets consumer behavior,” noting that several iterations have been seen at its peers while Saga took its time to develop a “blended approach” so that it can get the dollars it needs to substantiate its investment in digital ad assets. Illustrating his point, Forgy points to the fact that “the second mouse gets the cheese.”
Forgy’s comments also explain why expenses rose in Q4 2024 and across 2024, doubling down on his belief that the local digital marketplace is broken and that Saga’s assets are ripe for disruption.
