To persevere amid a sluggish advertising market, Saga Communications’ top executive says his stations need to keep hunting for new business while also tending to existing relationships. And he reiterated that Saga is still in the market for new stations.
“We continue to add many businesses to our advertiser list…I know it is hundreds of new companies who advertise on our stations, which is very good, but the ticket is less,” Saga president and CEO Ed Christian said on a conference call with investors Thursday to discuss second-quarter results. “It takes a lot of smaller advertisers to equal one good car store.
“We do seek to build on new foundations and shore up the existing foundations in radio,” Christian added. “You have to constantly reinvent yourself to build your market position and your business.”
In the second quarter, Saga Communications, which owns 68 FM and 32 AM radio stations, fared better than some other station owners who have reported steeper drops in their quarterly revenue. Saga finished Q2 with revenue down 1.9% to $30.3 million, compared to $30.9 million for the same period a year ago.
Saga’s Q2 financial reporting was slightly unusual, as the company is in the process of selling four TV stations and acquiring eight radio stations and four translators in South Carolina. As a result, Saga pulled its TV operations out into discontinued operations, separate from its remaining radio holdings. If the TV stations results were included, Saga said revenue would have been down 1.3% for the quarter, as the TV stations reported $5.7 million, compared to $5.6 million a year ago.
For the first six months of 2017, Saga’s revenue for continuing operations was $56.4 million, down from $58.2 million of the first half of 2016. A steep decline in political advertising spending this year hit Saga stations particularly hard: For the first half of 2016, its stations collected $1.4 million in political ad dollars, compared to $289,000 for the first half of this year.
“Even though we said in advance that Q2 would be choppy, it is still very painful for me to see a down quarter. It is not in my DNA, even though it was not as severe as other companies are reporting,” Christian added.
Both the sale of the TV stations, which totaled $66.6 million, and the company’s $23 million purchase of the new radio stations in Charleston and Hilton Head, SC are expected to close in the third quarter, likely by Sept. 1. Saga says it will use some proceeds from the TV station sale to fund additional radio acquisitions, pay down debt and cover corporate expenses. Christian said Q2 corporate expenses were higher than usual as a result of the TV and radio deals. As Saga hunts for new stations to purchase, he says the company will be very picky and make acquisitions that are complementary to its portfolio.
“I have been spending a lot of time on the acquisition front to try and find things that are proper. We’re a company that doesn’t buy huge quantities or baskets of radio stations,” Christian said. “We select individual markets and add one by one to the mix, so that we’re not left with things in the basket that we didn’t order or want.”
In Q2, Christian noted that auto advertising was soft and national advertising was down about 1%. Regarding national advertising dollars, he said, “There is precious little we can do to influence that. We have to build our other foundations to compensate.
“We can stabilize the business cycle by focusing on new business,” he said.
So far in Q3, Saga says the ad market continues to be choppy, with July revenue down 1% and August currently pacing down about 3.6%. Christian says late-month activity can help swing results, as more advertisers than ever are waiting until the final weeks of a month to buy spot time. “In the old times, we would try to make the month by the 10th or 12th of the month and say, ‘Now, let’s move on to the next.’ Now everything breaks so rapidly,” he said, adding buys come in later and later in the month.
While noting that the market is “wavy and soft and no one likes it,” Christian said his operations are still performing well. “We know what we’re doing and we get it done. We hone our craft and continue to run a solid and profitable soon-to-be-radio-centered company.”