Saga Communications posted third-quarter profit of $3.3 million, but CEO Ed Christian wasn’t doing any celebratory dances, instead expressing disappointment and calling the results “unsatisfying.”
The company’s same-station revenue fell $1.4 million to $30.3 million versus a year earlier, leaving Christian to point at least a partial finger at larger radio companies that he says are grabbing more national business by willingly sacrificing price in favor of market share. But in a broader message, the executive made a let’s-get-back-to-basics appeal during Thursday’s earnings call.
“Basically, we’ve been doing over and over again the same things,” Christian said. “We have to find new and different ways to expand our knowledge and our abilities, and to not shirk or shrink our duties. We need to research and invent ways to expand and increase all parts of radio.”
He also called for a renewed focus on local direct businesses—building brands for companies that, Christian says, were alienated by the demise of the Yellow Pages.
“I’m speaking specifically about hundreds and hundreds of categories that have not been either approached or well mined,” he said. “It’s not about reach and frequency, or even rates. It’s about achieving results for local service providers and local merchants. I’m not talking about the proverbial mom-and-pop stores, but an electrical company or a plumbing company with a dozen trucks. The list goes on and on.”
Third-quarter political revenue came in at $96,000, down from $486,000 a year ago—a swing of $390,000. For the first nine months of 2019, political was $351,000. That’s down from $1.3 million last year.
“I really thought political would pick up as we went through the year, but so far that hasn’t happened,” CFO Sam Bush said on the earnings call. “We’re facing a soft fourth quarter with the headwinds of last year’s political spending. In 2018, we had $1.6 million of political in the fourth quarter. So far this year, fourth quarter’s political has been very disappointing.”
Station operating expense increased $171,000 to $23.6 million, while operating income fell $520,000 to $4.8 million. That's compared with $5.3 million for the same period last year.
Free cash flow decreased $697,000 to $4.5 million for the quarter. Saga says $385,000 of that decrease was the result of a reduction in the company's deferred tax provision.
On a per-share basis, the Grosse Pointe Farms, Mich.-based company had profit of 56 cents and revenues of $31.3 million. That's compared with 62 cents and $31.7 million for the same quarter last year.
Saga's shares have dropped roughly 9% since the start of the year. The stock has dropped 19% over the last 12 months.