Thank you. Just to introduce myself, I'm Sam Bush with Saga Communications. I'm the Chief Financial Officer, Chris Forgy, the President and CEO of Saga Communications.
Morning
Some of you may know a little bit about Saga. A lot of you may not know much about Saga, so I'm going to take just a few minutes to talk about Saga. We were founded in 1986, went public in 1992. We're currently traded on the Nasdaq Stock Exchange. We started on the American Exchange.
We were on the New York Exchange for a while and felt Nasdaq was a better home for us. We historically were a radio and television station operator. We sold all our television back in 2017. So from 2017 on, we began to focus strictly on radio, and then most recently, particularly under Chris's guidance, we've moved into the digital realm as well, doing a lot of things that augment the radio business we do. The markets we're in, 28 markets across the various states.
We work in and out of a lot of different markets. We are very local focused. We want to know the people we're doing business with to a great extent, and it allows us to be on a first-name basis with most of our clients. We are, as I said, on the Nasdaq Stock Exchange. We've got approximately about 6.4 million shares outstanding that are traded. We have a $40 million revolving credit facility.
We are very, very conservative from a financial perspective. We've only got $5 million drawn against the facility, and as of a few weeks ago, we had about $32 million in cash. Some of that money has been spent on dividends. We have a quarterly dividend that we currently pay out at $0.25 a share.
We have done special dividends and other types of dividends, variable dividends in the past, and continue to have a plan to do that. We have not done a lot of stock repurchases in the past few years. We've done a few, but that is in the process of being ramped up. And you are going to see some more stock repurchases from us from the proceeds of the cash that we have on hand, as well as we sold some of our tower sites to maximize the return on that.
We still have the ability to use those tower sites for the radio aspect of it at no cost to us. A lot of our peer companies sold tower sites and signed crazy high lease on the towers that they sold. And we did not want to harm our cash flow from that standpoint.
So we took quite a while putting the deal together that was comfortable. And again, as we've talked in the past, and you'll begin to see here in the near future, some of that money is going into stock repurchases, which we're working on currently. Basically, our model with Chris's guidance, and Chris took over in December of 2022. Our former founder and chairman passed away in August of 2022.
Chris was our COO at the time, and after a search, stepped up as President. And we've become more than a radio company. We had dabbled in the digital business in the past, but now we are very, very focused on bringing digital to our radio customers and bringing radio to our digital customers. Chris is going to talk a little bit now and tell me when.
Yeah, thanks. Thank you, Sam. Good morning, everybody. How are you?
Good.
Good that you're here. My name is Chris Forgy. I'm the President and CEO of Saga Communications. I assume that most of you are here looking for a creative investment. Am I correct?
Yeah.
We believe that Saga is that investment. You'll hear us talk a little bit about virtually having no debt, a significant amount of cash on hand, a rich history of capital allocation, a solid stock price, and a pristine balance sheet, as Michael likes to refer to it from time to time. But there's a lot more to that than just those things.
As Sam mentioned, there's been a lot of discussion and interest in something else that Saga is building and working on, and that's our digital transformation. It's been getting a lot of attention lately. Although we were late to the digital party, we did benefit from the iterations and reiterations of our broadcast brethren and learned a lot. As they say, the second mouse gets the cheese. And so we did benefit from that perspective.
In slide number one, if you can see that, you'll see including political ad rev for Q3 and change in core revenue from 2025- 2024. Can you all see that okay? I know it might be a little difficult. Q3 change in digital revenue as well from 2024- 2025. I think the one thing that I want to point out for you is the black on the bottom.
As you can see, Saga is the one station that is up high double digits in digital growth year over year and quarter over quarter, 32.6%. And you'll see other established broadcasters who have been in the digital space for some time in high double-digit decline in that same space. So Saga's momentum is really building, as you'll see in a moment, not just month over month and quarter over quarter, but year over year.
Then the next slide here, you can see this all together for adding core radio and digital revenue altogether, which we refer to as the blend. Make sure that's the right one. Yes. Saga's decline is just 2.1% in a sector that is having some challenges versus the higher double-digit declines that our broadcast brethren are experiencing. Then the next slide, Sam. The year-to-date change in core revenue from 2025- 2024. Again, this all includes political advertising, just so you know. Political is not pulled out.
Digital ad revenue increased 17.1% year-to-date. Remember from the earlier slide that Sam just showed a minute ago, increased 32.9% in Q3. Again, you can see there's an increase over the year, but the real growth is we go through quarter by quarter by quarter. The more recent we are, the higher the growth rate is.
So the momentum is continuing to build. And then finally, this is it, yeah. Year-to-date growth in core radio and digital ad rev is down just 3.9%, including political, much lower than other digitally active broadcast brethren. Again, Saga's momentum continues to build month over month, quarter over quarter, and year over year. We're beginning to see the impact of blending radio together with search and display.
We found that local direct advertisers who have not been pitched, this is an interesting piece of research. We did this internally with a number of our markets. We found that local direct advertisers who are not pitched the blend, we lost 29% of the existing radio business we had. Conversely, with local direct advertisers who were pitched and bought a blended campaign, their radio spend increased by 9.1%, and the overall radio and blended spend together increased by 27%.
So we're seeing both anecdotal and balance sheet impact from what we've done and started on about two years ago. So after being about, as we mentioned earlier, about 10-12 years late to the digital party because we were ones who were very slow. We are a traditionalist company. I guess what's the sports broadcaster? Bob Costas. We were to radio as Bob Costas is the baseball, the purist.
And so we were a little late to the game. But now that radio first strategy has been carefully curated to focus on the needs of a couple of things: the needs of a consumer based on a deep understanding of consumer behavior and a digital advertising market that's broken and ripe for disruption. How is it broken and how is it ripe for disruption?
In the advertising community today, in case you haven't noticed, advertisers are spending more and more every year in digital, and it's not working. Buyers are frustrated. They're confused. They know they have to buy this, but they don't know who to buy it from or even if it's working, and everybody's an expert.
These advertisers are throwing down a credit card to somebody they don't even know, hoping that they'll have a different or better experience with this call center or digital provider than they did with the last one that they worked with, and advertising isn't working the way it used to or the way advertisers think it should. Advertising isn't working because it's not getting enough people to click on the advertiser's website or call or visit their business or to search online for their business.
What they really want to do today is they want to have a real person who they can trust, who they can count on, that they know to learn and lead them through the confusion and the uncertainty, and that's where Saga comes in. As Sam mentioned, we are in small to medium markets. We're in 27 small to medium markets. Our largest market is Columbus, Ohio, and Milwaukee, Wisconsin.
That's where we come in with our media advisors and our leaders because at its core, Saga is built to serve. We're a hyper-local, hyper-community-involvement approach organization to build trust and confidence with city leaders, listeners, and advertisers alike. Saga's click, visit, call, and search digital approach provides the advertiser with easy-to-understand, easy-to-use solutions that improve sales and retain customers. I know we're sensitive on time, so I want to be okay. I want to make sure.
The company's digital strategy will help differentiate us, already has, from other digital solutions by providing higher margins, customer-focused solutions versus the product-oriented offerings that currently exist in much of this disruptible digital market, so much so that by disrupting just 5% of all of the search and display that's spent in our 27 markets, we believe that we can ultimately double our annual gross income by impacting just 5% of that money being spent in just search and display,
and most of it being digital, so as we close and start to answer some questions for you because you may have some, I want to let you know that at this point, the company has a digital strategy that's working.
There's a lot of naysayers out there that didn't believe we could do it, and it's starting to happen, and we're doing this in a very disruptible advertising market. Saga is a good investment, and as we go through the question process and through the day, I'd like to invite you to think of Saga as a cash flush startup. Thank you very much for your time.
Thanks, Chris. I would like to start off with Q&A. You had made previous comments about how big digital can be for Saga. Other radio companies thought that digital can be as much as 75% of the business. And I was wondering, you had said that you thought that that might be a little bit aggressive for Saga. And I was wondering if your thoughts have changed in terms of how big digital can be in relation to your total revenue mix for Saga.
Yes, Michael. So when we started this process, we were challenging just our own belief system. And some of you may be familiar with the Borrell digital data reports that come out. And we saw them. And we saw the money that Gordon Borrell said was available in these markets. I, at that time, three years ago, didn't believe that there was 50% of that money that he claimed would be available in those markets.
Today, I was asked recently, "What's the five-year plan?" And I said, "The five-year plan for Saga is in five years to be one-third radio, one-third search, one-third display." If you do the math on that, that's 67%. I didn't really think about it that way at the time. But it is.
So in a five-year period of time, Michael, to answer your question, my thoughts and the company's thoughts have changed drastically, where we now believe that to reach our five-year goal, that it would be approaching the 67% mark.
Gotcha. And then obviously, right now, the shares offer an eye-popping 9% dividend yield. And a lot of investors have asked me, "Do you think that 9% is sustainable?" And obviously, I know the answer, but I thought maybe it would be a good idea for you to answer that question.
Yeah, and Sam, I'll let you start, and I'll finish.
Yeah. We feel very comfortable with where we are with our dividend. Obviously, that dividend was set when our stock price was significantly higher than it is. We believe we are an undervalued stock because we're a misunderstood stock in certain cases, and as we showed, I showed and talked in one of the slides kind of quickly so we could get to what Chris was saying about operations.
We are a very, very solid financially company from a financial standpoint with $5 million in debt, $32 million in cash. Now, some of that cash is going to go away as we do stock buyback. But we are always going to be a conservative company and keep a very, very clean balance sheet, which allows us to continue to do the type of dividend we're doing.
And hopefully, what I would say is, as I expect, as we continue doing what we're doing, the stock price is going to grow into the dividend as opposed to the dividend being continued at 9% or 8% or whatever the number is on any given day. But effectively, it will grow into that dividend and become more of a normal-sized return.
Quick question. The radio business is very competitive. As you've noticed over the years, Beasley, Cox, iHeart, all going through financial problems. Streaming now, AVOD platforms, SVOD platforms. The younger audience, millennials, Generation Z, they're flipping their phone more than kind of listening to the radio. Spotify, all these other subscription platforms are kind of taking the market share now.
It took you a while to kind of catch up with this new AVOD platform. And I know you're an old-fashioned company, and now you kind of get it. What's going to keep this company moving forward as we grow into the next phase of entertainment, music-oriented? Because it's very competitive now. And I'd love to know what your niche is. I love your float is very small. You got a dividend, which is fantastic. But what is that X factor that would make me, as an investor, want to buy your stock?
So as I mentioned earlier, the digital marketplace is disrupted. It's broken. Search and display is broken. And to your point earlier, what they listen to hasn't really changed a lot. Radio listening is really at an all-time high. Believe it or not, you probably don't know it's not. Yeah, it really is. But here's how they're consuming it.
And so they're consuming it via stream, via their apps. One of the—you've probably read a little bit about what's going on with AM in all cars. That was really an attack on FM. FM's next. And so our perspective is to get all of our broadcast properties on the app. And so they're in the cars and on CarPlay when people want to get into their cars. So in terms of distribution and the use of the product, that's kind of what we're looking at.
But from a digital perspective, this is critical because there are so many digital providers out there, and so what we found is, because we have the opportunity in the size markets that we operate in, we have 21 of our 27.
21 of your markets.
So yeah, Sam, I'll put that back up. 21 of our 27 markets are smaller than market 100. We're in markets that we can impact and make a difference in a market, both whether we're raising money for a cause, whether we're working with a government agency, whether we've had some of our market managers and leaders be asked to run for city council and mayor in some cases.
We're really active in the community. That also lets us get belly to belly with our advertisers. The process that we provide is very simple to understand. It's simple to attribute. It's easy to understand and not confusing. It's customer-focused. The consumer is always the star, the end user.
I totally see this. And I see you in these mom-and-pop cities and towns and so forth. And you've got a lot of cash. Wouldn't it be advantageous for you to break into some of the bigger markets and start competing with more of the big boys down the road?
Let me say something I was going to say first is one of the differences between us, besides the balance sheet and a lot of our peers, is the fact that we are very local to the market. It's very hard to be local to New York City because there are five boroughs. There's all these different, the Italian section, the Chinese section, the whatever. And it's not the competition so much. I'll give you a quick story.
I've got a real good friend, and his wife—who's a good friend as well—was the head of finance for a private school in Plymouth, Michigan. And she was getting pitched by a couple of the big AM stations, which in Detroit, WWJ and WJR are still huge stations in revenue and listenership for them. And she was getting pitched this big ad campaign that she should do.
And I said to her, "You don't want to buy radio in Detroit. You want to buy something else because nobody's going to drive from Grosse Pointe, Michigan, or nobody's going to drive from Troy, Michigan, to put the kid in school in Plymouth, Michigan. It's a 40-minute drive." Well, in Springfield, Illinois, or Portland, Maine, you can reach the whole market and connect with the whole market with radio.
And that then allows us, because of that localism, to connect with the whole market on what their digital streaming and other aspects are and actually grow beyond the market. If you do business with somebody in that market and they have a regional business, we can do business with them elsewhere, even though radio isn't involved in the elsewhere part of it.
Are you even a positive at this point?
What's that?
Are you making money?
Oh, yes.
Do you mind what the revs are?
I don't have the numbers right in front of me, and I don't want to quote numbers without doing that. I'd be glad to talk to you off the record, but all that's out there. We did have one. When you look at our financial statements for 2025, one of the things that you will see is there is an adjustment in there because of our music licensing.
And so we took approximately a $1.7 million hit in going back. And the whole industry did. It's not just us, but about a $1.7 million. So you have to take that number out when you're looking at us on basically a year-over-year same apples-to-apples comparison. Our business is on Channelcheck.com. All of our research is on there for free. Yeah.