2023 Annual Report
2023 Annual Letter
My first year as your President and CEO has been a dynamic and productive one. THANKS to all of you
who helped make 2023 a remarkable year for Saga. Your continued support of Saga does not go unnoticed
or unappreciated. During the holidays, I received a package in the mail from Joe Meinecke, Saga’s Production
Director in Milwaukee, Wisconsin. It was a collection of breathtaking photographs Joe had taken from
different parts of Wisconsin. These photos were curated into a collection and presented in the form of a 2024
calendar. As I opened the package my eyes were drawn to the cover of the calendar which carried the
phrase “Looking Back While Moving Forward”.
I was reminded of all of us in Saga and a phrase we use frequently, “Finis Origine Pendet” or “The End
Depends On The Beginning”. I am told when a pilot is bearing down the runway at 200 + MPH, they are
not focused on the ground but what is ahead…the final destination. This is also the way we see our business.
However, there are benefits in looking back in order to see where you have been and to look forward to see
where you are going.
So, as we begin to navigate a new year, I thought it important and helpful to look back 15 months and see
why we are all so optimistic going into 2024.
When we started this New “Saga” (the loose Icelandic translation for “Saga” is an ongoing adventure), we
dialed into four areas of opportunistic growth. They are:
*PEOPLE
*PRODUCTS
*PROCESSES
*PERCEPTIONS
There are 37 data points that are present in Saga today that were not present 15 months ago. Please
indulge me as I chronicle some of what we accomplished in 2023 to propel Saga into 2024 and beyond!
Hence, The End Depends On The Beginning.
IN THE AREA OF PEOPLE
We promoted a number of team members from within the Company to Leadership Positions at the
Corporate level to champion newly created company initiatives.
In addition to the in company elevations, we added 4 Leadership Positions to the Corporate Team. These
additions have already begun to bear fruit.
IN THE AREA OF PRODUCTS
We have created several new partnerships and galvanized long-term relationships with several vendors. We
are also building and developing self-sufficient solutions all designed to better serve our customers and our
business.
We introduced an on-line news product and have begun to deploy this product in 18 of our Saga Markets
and will have on-line news sites in all of these 18 markets by the end of June, 2024.
WHEN IT COMES TO PROCESSES
We held our first Saga Leadership Conference in over 5 years and are in the process of planning our 2024
Leadership Conference.
We completed 26 very productive and streamlined Budget Meetings and enhanced Saga’s own robust
Cybersecurity Policy. We also augmented and improved our processes of Saga’s annual companywide one
day sale and experienced a 33% year over year increase in revenue.
IN ORDER TO ENHANCE SAGA’S ALREADY STRONG IMAGE AND ITS OUTSIDE PERCEPTIONS
We rejoined and are engaged with the National Association of Broadcasters and attended the NAB
Convention last spring and will do so again in 2024. As the President and CEO of Saga, I have joined the
RAB Board of Directors and am planning to become an NAB and Broadcasters Foundation of America
Board Member in 2024. Wayne Leland, Saga’s Senior VP of Operations is now on the Nielsen Advisory
Council. We contracted with Noble Capital Markets to take the “Saga story” to the financial markets, and
we will be with Noble again in 2024. Our Board declared a $2.00 per share special dividend as well as four
quarterly dividends of $0.25 cents per share in 2023. The Board also declared Saga’s first variable dividend
of $0.60 per share to be paid on April 5, 2024. We conducted countless in person appearances, fund raisers
and community events in all of our Saga Markets in which we so diligently serve. We entered into an
agreement to purchase a coveted cluster of radio stations in Lafayette, Indiana from Neuhoff Media.
THE SUCCESS OF THE PROCESS REQUIRES ONE THING ABOVE ALL ELSE… TRUST!
Steve Jobs once said that a happy successful life comes down to this rare mindset: Trust in something. Trust
in people. Trust in the process.
In his legendary 2005 commencement address delivered to Stanford University graduates, Jobs encouraged
the students venturing out into the world to be bold and take risks – but also have faith that things will work
out, because the road may be bumpy. He explained his journey from being fired by Apple and publicly
humiliated to returning years later to disrupt several industries with the iPhone. He told the students that
“You can’t connect the dots looking forward in life; you can only connect them looking backward. This
requires a whole new level of trust in something greater than yourself. So you have to trust that the dots will
somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, your
faith!”. Jobs’ approach has never let me down and it has made all the difference in my life. This kind of trust
is counterintuitive for type-A entrepreneurs and leaders who relentlessly focus on speed, drive, and scaling
a business. Because it means having to surrender. Sound weak? Maybe, maybe not.
SPEAKING OF SURRENDER
The business world has put a negative spin on the word “surrender” and labeled it as a sign of leadership
weakness, like waving the white flag on the battlefield. On the contrary, surrendering can be among the
greatest of leadership strengths. In Saga we refer to it as vulnerability. It’s not giving in or giving up; it’s about
learning the ever-so-subtle art of letting go.
Surrendering to the outcome takes the belief and mindset that things will work out according to your
vision. But it takes faith regardless of your belief system – one that comes from a deep spiritual connection
with a power greater than yours. A power that gives you grace during the tough times. It’s this faith that
strengthens you and makes you endure your trials. A faith that helps you realize it’s no longer about you.
When doubt, fear or uncertainty sets in, we replace those emotions by consciously and intentionally trusting
the process. We choose faith, surrender, servanthood and then take action! When we do, we control our
sense of well-being, purpose, happiness and ultimately our success.
So, as we embark on another year of serving our communities, our customers, our employees and our
shareholders – we do so with a sense of purpose and trust in our processes and each other, we choose faith
and hope over cynicism and despair. We will run like our hair is on fire and set sail with a very optimistic belief
for an epic 2024. Look back and move forward… AND THEN SOME.
All the very best,
Chris Forgy
President and CEO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☑☑
For the fiscal year ended December 31, 2023
or
☐☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________________________ to_______________________________
Commission file number 1-11588
SAGA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
73 Kercheval Avenue
Grosse Pointe Farms, Michigan
(Address of principal executive offices)
38-3042953
(I.R.S. Employer
Identification No.)
48236
(Zip Code)
Registrant’s telephone number, including area code:
(313) 886-7070
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, $.01 par value
Trading Symbol
SGA
Name of each exchange on which registered
NASDAQ Global Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated
filer
Non-accelerated filer
Smaller Reporting
Company ☑
Emerging growth company
☐☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by checkmark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm
that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐☐ No
On June 30, 2023 the aggregate market value of the shares of Class A Common Stock held by nonaffiliates of the registrant, computed on the
basis of the closing stock price of the Class A Common Stock on the NASDAQ was $81,896,718.
The number of shares of the registrant’s Class A Common Stock, $.01 par value outstanding as of March 2, 2024 was 6,263,236.
Portions of the Proxy Statement for the 2024 Annual Meeting of Shareholders (to be filed with the Securities and Exchange Commission not later
than 120 days after the end of the Company’s fiscal year) are incorporated by reference in Part III hereof.
DOCUMENTS INCORPORATED BY REFERENCE
Saga Communications, Inc.
2023 Form 10-K Annual Report
Table of Contents
PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1C. Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Item 9.
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Item 12.
Item 13.
Item 14.
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15.
Exhibits and Financial Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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2
Forward-Looking Statements
Statements contained in this Form 10-K that are not historical facts are forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as
“will,” “may,” “believes,” “intends,” “expects,” “anticipates,” “plans,” “estimates,” “guidance,” and similar expressions
are intended to identify forward-looking statements. These statements are made as of the date of this report or as
otherwise indicated, based on current expectations. We undertake no obligation to update this information. A number of
important factors could cause our actual results for 2023 and beyond to differ materially from those expressed in any
forward-looking statements made by or on our behalf. Forward-looking statements are not guarantees of future
performance as they involve a number of risks, uncertainties and assumptions that may prove to be incorrect and that
may cause our actual results and experiences to differ materially from the anticipated results or other expectations
expressed in such forward-looking statements. The risks, uncertainties and assumptions that may affect our performance,
which are described in Item 1A of this report, include our financial leverage and debt service requirements, dependence
on key personnel, dependence on key stations and advertising revenue they generate, global, U.S. and local economic
conditions, including the effects of inflation, our ability to successfully integrate acquired stations, regulatory
requirements including royalties we pay, new technologies, health epidemics, natural disasters, terrorist attacks,
information technology and cybersecurity failures and data security breaches. We cannot be sure that we will be able to
anticipate or respond timely to changes in any of these factors, which could adversely affect the operating results in one
or more fiscal quarters. Results of operations in any past period should not be considered, in and of itself, indicative of
the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price
of our stock.
3
Item 1. Business
PART I
We are a media company primarily engaged in acquiring, developing and operating broadcast properties including
opportunities complimentary to our core radio business including digital, e-commerce and non-traditional revenue
initiatives. As of February 29, 2024, we owned seventy-nine FM, thirty-three AM radio stations and eighty metro signals
serving twenty-seven markets. Our principal executive offices are located at 73 Kercheval, Grosse Pointe Farms,
Michigan 48236. We are a Florida corporation, reorganized in 2020. We were originally organized as a Delaware
corporation in 1986.
During 2022, our founder and former Chief Executive Officer (“CEO”), Edward K. Christian passed away. As of
the date of his passing, Mr. Christian held approximately 65% of the combined voting power of the Company’s
Common Stock. His passing resulted in the conversion of his Class B Shares into Class A Shares that were transferred
to an estate planning trust that now owns approximately 16% of the common stock outstanding. We were also required
to make certain payments to his estate as outlined in his employment agreement.
Strategy
Our strategy is to operate top billing radio stations, including opportunities complimentary to our core radio
business including digital, e-commerce and non-traditional revenue initiatives, in mid-sized markets, which we define as
markets ranked from 20 to 200 out of the markets summarized by Investing in Radio Market Report.
Local programming and marketing are key components in our strategy to achieve top ratings in our radio operations.
In many of our markets, the three or four most highly rated radio stations receive a disproportionately high share of the
market’s advertising revenues. As a result, a station’s revenue is dependent upon its ability to maximize its number of
listeners within an advertiser’s given demographic parameters. In certain cases we use attributes other than specific
market listener data for sales activities. We also use our strong local presence and community involvement to develop
strong relationships with our listeners, advertising clients and community organizations.
The radio stations that we own and/or operate employ a variety of programming formats, including Classic Hits,
Country, Classic Country, Hot/Soft/Urban Adult Contemporary, Oldies, Classic Rock, Rock and News/Talk. We
regularly perform extensive market research, including music evaluations, focus groups and strategic vulnerability
studies. Our stations also employ audience promotions to further develop and secure a loyal following.
We concentrate on the development of strong decentralized local management, which is responsible for the day-to-
day operations, including local community development, of the stations we own and/or operate. We compensate local
management based on the station’s financial performance, as well as other performance factors that are deemed to affect
the long-term ability of the stations to serve their local communities and to achieve financial performance objectives.
Corporate management is responsible for long-range planning, establishing policies and procedures, resource allocation
and monitoring the activities of the stations.
Under the Telecommunications Act of 1996 (the “Telecommunications Act”), we are permitted to own up to eight
radio stations in a single market. See “Federal Regulation of Radio Broadcasting”. We seek to acquire reasonably priced
broadcast properties with significant growth potential that are located in markets with well-established and relatively
stable economies. We often focus on local economies supported by a strong presence of state or federal government or
one or more major universities. Future acquisitions will be subject to the availability of financing, the terms of our credit
facility, and compliance with the Communications Act of 1934 (the “Communications Act”) and Federal
Communications Commission (“FCC”) rules.
4
Advertising Sales
Our primary source of revenue is from the sale of advertising for broadcast on our stations. Depending on the format
of a particular radio station, there are a predetermined number of advertisements broadcast each hour. We determine the
number of advertisements broadcast hourly that can maximize a station’s available revenue dollars without jeopardizing
listening levels. While there may be shifts from time to time in the number of advertisements broadcast during a
particular time of the day, the total number of advertisements broadcast on a particular station generally does not vary
significantly from year to year. Any change in our revenue, with the exception of those instances where stations are
acquired or sold, is generally the result of pricing adjustments, which are made to ensure that the station efficiently
utilizes available inventory.
Advertising rates charged by radio stations are based primarily on a station’s ability to attract audiences in the
demographic groups targeted by advertisers, the number of stations in the market competing for the same demographic
group, the supply of and demand for radio advertising time, and other qualitative factors including rates charged by
competing radio stations within a given market. Radio rates are generally highest during morning and afternoon drive-
time hours. Most advertising contracts are short-term, generally running for only a few weeks. This allows broadcasters
the ability to modify advertising rates as dictated by changes in station ownership within a market, changes in listener
ratings and changes in the business climate within a particular market.
Approximately $108,509,000 or 90% of our gross revenue for the year ended December 31, 2023 (approximately
$108,999,000 or 89% in fiscal 2022 and approximately $102,367,000 or 89% in fiscal 2021) was generated from the sale
of local advertising. Additional revenue is generated from the sale of national advertising, network compensation
payments, barter and other miscellaneous transactions. In all of our markets, we attempt to maintain a local sales force
that is generally larger than our competitors. The principal goal in our sales efforts is to develop long-standing customer
relationships through frequent direct contacts, which we believe represents a competitive advantage. We also typically
provide incentives to our sales staff to seek out new opportunities resulting in the establishment of new client
relationships, as well as new sources of revenue, not directly associated with the sale of broadcast time.
Each of our stations also engages independent national sales representatives to assist us in obtaining national
advertising revenues. These representatives obtain advertising through national advertising agencies and receive a
commission from us based on our net revenue from the advertising obtained. Total gross revenue resulting from national
advertising in fiscal 2023 was approximately $11,880,000 or 10% of our gross revenue (approximately $13,657,000 or
11% in fiscal 2022 and approximately $13,138,000 or 11% in fiscal 2021). Gross national political revenue is included
in these numbers.
Competition
Radio broadcasting is a highly competitive business. Our stations compete for listeners and advertising revenues
directly with other radio stations, as well as other media, within their markets. Our radio stations compete for listeners
primarily on the basis of program content and by employing on-air talent which appeals to a particular demographic
group. By building a strong listener base comprised of a specific demographic group in each of our markets, we are able
to attract advertisers seeking to reach these listeners.
Other media, including broadcast television and/or radio (as applicable), cable television, newspapers, magazines,
direct mail, the Internet, coupons and billboard advertising, also compete with us for advertising revenues.
The radio broadcasting industry is also subject to competition from new media technologies, such as the delivery of
audio programming by cable and satellite television systems, satellite radio systems, direct reception from satellites, and
streaming of audio on the Internet.
5
Seasonality
Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, is generally
lowest in the first quarter.
Environmental Compliance
As the owner, lessee or operator of various real properties and facilities, we are subject to various federal, state and
local environmental laws and regulations. Historically, compliance with these laws and regulations has not had a
material adverse effect on our business. There can be no assurance, however, that compliance with existing or new
environmental laws and regulations will not require us to make significant expenditures of funds.
Human Capital Resources
Our key human capital management objectives are to attract, develop and retain top industry talent that reflects the
diversity of the communities in which we broadcast. To support this goal, our human resources programs are designed
to develop talent to prepare for key roles and leadership positions for the future; reward employees through competitive
industry pay, benefits and other programs, instill our culture with a focus on ethical behavior and enhance our
employees’ performance through investment in current technology, tools and training to enable our employees to operate
at a high level.
As of December 31, 2023, we had approximately 589 full-time employees and 244 part-time employees, none of
whom are represented by unions. We believe that our relations with our employees are good.
We employ several high-profile personalities with large loyal audiences in their respective markets. We have
entered into employment and non-competition agreements with our President and with most of our on-air personalities,
as well as non-competition agreements with our commissioned sales representatives.
We are committed to hiring, developing and supporting a diverse and inclusive workplace. Our management teams
are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must
adhere to a code of conduct that sets standards for appropriate ethical behavior.
Available Information
You can find more information about us at our Internet website www.sagacom.com. Our Annual Report on
Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those
reports are available free of charge on our Internet website as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).
Federal Regulation of Radio Broadcasting
Introduction. The ownership, operation and sale of radio stations, including those licensed to us, are subject to the
jurisdiction of the FCC, which acts under authority granted by the Communications Act. Among other things, the FCC
assigns frequency bands for broadcasting; determines the particular frequencies, locations and operating power of
stations; issues, renews, revokes and modifies station licenses; determines whether to approve changes in ownership or
control of station licenses; regulates equipment used by stations; adopts and implements regulations and policies that
directly or indirectly affect the ownership, operation and employment practices of stations; and has the power to impose
penalties for violations of its rules or the Communications Act. For additional information on the impact of FCC
regulations and the introduction of new technologies on our operations, see “Forward Looking Statements” and “Risk
Factors” contained elsewhere in this report.
6
The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations
and policies. Reference should be made to the Communications Act, FCC rules (Title 47 Code of Federal Regulation,
Chapter I, Subchapters A and C) and the public notices and rulings of the FCC for further information concerning the
nature and extent of federal regulation of broadcast stations.
License Renewal. Radio broadcasting licenses are granted for maximum terms of eight years, and are subject to
renewal upon application to the FCC. Under its “two-step” renewal process, the FCC must grant a renewal application if
it finds that during the preceding term the licensee has served the public interest, convenience and necessity, and there
have been no serious violations of the Communications Act or the FCC’s rules which, taken together, would constitute a
pattern of abuse. If a renewal applicant fails to meet these standards, the FCC may either deny its application or grant the
application on such terms and conditions as are appropriate, including renewal for less than the full 8-year term. In
making the determination of whether to renew the license, the FCC may not consider whether the public interest would
be served by the grant of a license to a person other than the renewal applicant. If the FCC, after notice and opportunity
for a hearing, finds that the licensee has failed to meet the requirements for renewal and no mitigating factors justify the
imposition of lesser sanctions, the FCC may issue an order denying the renewal application, and only thereafter may the
FCC accept applications for a construction permit specifying the broadcasting facilities of the former licensee. Petitions
may be filed to deny the renewal applications of our stations, but any such petitions must raise issues that would cause
the FCC to deny a renewal application under the standards adopted in the “two-step” renewal process. Failure to renew a
license could have a material adverse effect on the Company’s business. Radio station licenses generally expire along
with the licenses of all other radio stations in a given state. The FCC accepts renewal applications for various groups of
radio stations every two months. The last cycle having begun in June 2019, concluded for the Company’s stations in
June 2022. All the Company’s renewal applications were routinely granted by the FCC. In January 2018 and again in
February 2022, the FCC designated the renewal applications of radio stations (not the Company’s) for hearing based on
the stations’ records of extended periods of silence during and following their respective license renewal terms. Under
the Communications Act, if a broadcast station fails to transmit signals for any consecutive 12-month period, the FCC
license expires at the end of that period, unless the FCC exercises its discretion to extend or reinstate the license “to
promote equity and fairness.” The FCC, to date, has rarely exercised such discretion. Further, the FCC has revoked the
licenses of broadcast stations that failed to pay regulatory fees. The Company is current in the payment of regulatory
fees to the FCC.
7
The following table sets forth information about our radio stations, including the markets they serve, their format,
and the FCC class of each of the broadcast stations that we own or operate with an attributable interest and the date on
which each such station’s FCC license expires:
Station
Market (1)
Station
Format
FCC Station Expiration Date of
FCC Authorization
Class (2)
FM:
WOXL
WTMT
KISM
KAFE
WRSY
WKVT
WQEL
WLRW
WIXY
WREE
WYXY
WAVF
WCKN
WMXZ
WXST
WWWV
WQMZ
WCNR
WCVL
WCVQ
WZZP
WVVR
WRND
WSNY
WNNP
WNND
WVMX
WLVQ
KSTZ
KIOA
KAZR
KOEZ
WHAI
WPVQ
WMQR
WQPO
WSIG
WWRE
WOEZ
WLHH
WVSC
WYXL
WQNY
WIII
WFIZ
Hot Adult Contemporary
Classic Rock
Classic Rock
Adult Contemporary
Adult Album Alternative
Classic Hits
Classic Rock
Hot Adult Contemporary
Country
Classic Hits
Classic Country
Adult Variety Hits
Country
Hot Adult Contemporary
Urban Adult Contemporary
Classic Rock
Adult Contemporary
Adult Album Alternative
Country
Asheville, NC
Asheville, NC
Bellingham, WA
Bellingham, WA
Brattleboro, VT
Brattleboro, VT
Bucyrus, OH
Champaign, IL
Champaign, IL
Champaign, IL
Champaign, IL
Charleston, SC
Charleston, SC
Charleston, SC
Charleston, SC
Charlottesville, VA
Charlottesville, VA
Charlottesville, VA
Charlottesville, VA
Clarksville, TN/Hopkinsville, KY Hot Adult Contemporary
Clarksville, TN/Hopkinsville, KY Rock
Clarksville, TN/Hopkinsville, KY Country
Clarksville, TN/Hopkinsville, KY Classic Hits
Columbus, OH
Columbus, OH
Columbus, OH
Columbus, OH
Columbus, OH
Des Moines, IA
Des Moines, IA
Des Moines, IA
Des Moines, IA
Greenfield, MA
Greenfield, MA
Harrisonburg, VA
Harrisonburg, VA
Harrisonburg, VA
Harrisonburg, VA
Hilton Head Island, SC
Hilton Head Island, SC
Hilton Head Island, SC
Ithaca, NY
Ithaca, NY
Ithaca, NY
Ithaca, NY
Adult Contemporary
Classic Hits
Classic Hits
Hot Adult Contemporary
Classic Rock
Hot Adult Contemporary
Classic Hits
Rock
Soft Adult Contemporary
Adult Contemporary
Country
Hot Adult Contemporary
Contemporary Hits
Classic Country
Classic Hits
Soft Adult Contemporary
Classic Hits
Adult Variety Hits
Adult Contemporary
Country
Classic Rock
Contemporary Hits
8
C2 December 1, 2027
C2 December 1, 2027
February 1, 2030
C
February 1, 2030
C
April 1, 2030
A
April 1, 2030
A
A
October 1, 2028
B December 1, 2028
B1 December 1, 2028
B1 December 1, 2028
B December 1, 2028
C December 1, 2027
C1 December 1, 2027
C2 December 1, 2027
C1 December 1, 2027
October 1, 2027
B
October 1, 2027
A
October 1, 2027
A
October 1, 2027
A
August 1, 2028
C1
August 1, 2028
A
August 1, 2028
C0
August 1, 2028
A
October 1, 2028
B
October 1, 2028
A
October 1, 2028
A
October 1, 2028
A
October 1, 2028
B
February 1, 2029
C
February 1, 2029
C1
February 1, 2029
C1
February 1, 2029
C1
April 1, 2030
A
April 1, 2030
A
October 1, 2027
B1
October 1, 2027
B
October 1, 2027
B1
A
October 1, 2027
C3 December 1, 2027
C3 December 1, 2027
C3 December 1, 2027
June 1, 2030
B
June 1, 2030
B
June 1, 2030
B
June 1, 2030
A
Station
Market (1)
Jonesboro, AR
Jonesboro, AR
Jonesboro, AR
Keene, NH
Keene, NH
Keene, NH
Manchester, NH
Manchester, NH
Milwaukee, WI
Milwaukee, WI
Milwaukee, WI
Milwaukee, WI
Mitchell, SD
Mitchell, SD
Norfolk, VA
Norfolk, VA
Ocala, FL
Ocala, FL
Ocala, FL
Ocala, FL
Northampton, MA
Portland, ME
Portland, ME
Portland, ME
Portland, ME
Spencer, IA
Spencer, IA
Springfield, MA
Springfield, MA
Springfield, IL
Springfield, IL
Springfield, IL
Springfield, IL
Yankton, SD
KEGI
KDXY
KJBX
WKNE
WSNI
WINQ
WZID
WMLL
WKLH
WHQG
WRXS
WJMR
KMIT
KUQL
WNOR
WAFX
WOGK
WYND
WNDD
WNDN
WRSI
WPOR
WCLZ
WMGX
WYNZ
KICD
KMRR
WLZX
WAQY
WYMG
WLFZ
WDBR
WTAX
WNAX
AM:
WISE
WYSE
KGMI
KPUG
KBAI
WINQ
WBCO
WSPO
WINA
WVAX
WQEZ
WKFN
WNZE
KRNT
KPSZ
Station
Format
Classic Rock
Country
Adult Contemporary
Hot Adult Contemporary
Adult Contemporary
Country
Adult Contemporary
Country
Classic Rock
Rock
Oldies
Urban Adult Contemporary
Country
Classic Hits
Rock
Classic Rock
Country
Classic Rock
Classic Rock
Classic Rock
Adult Album Alternative
Country
Adult Album Alternative
Hot Adult Contemporary
Classic Hits
Country
Adult Contemporary
Rock
Classic Rock
Classic Rock
Country
Contemporary Hits
News/Talk
Country
Class (2)
FCC Station Expiration Date of
FCC Authorization
June 1, 2028
C2
June 1, 2028
C3
June 1, 2028
C3
April 1, 2030
B
April 1, 2030
A
April 1, 2030
A
April 1, 2030
B
A
April 1, 2030
B December 1, 2028
B December 1, 2028
A December 1, 2028
A December 1, 2028
April 1, 2029
C1
April 1, 2029
C1
October 1, 2027
B
October 1, 2027
C
February 1, 2028
C0
February 1, 2028
A
February 1, 2028
A
February 1, 2028
A
April 1, 2030
A
April 1, 2030
B
April 1, 2030
B
April 1, 2030
B
April 1, 2030
B1
February 1, 2029
C1
February 1, 2029
C3
A
April 1, 2030
April 1, 2030
B
B December 1, 2028
B December 1, 2028
B December 1, 2028
B1 December 1, 2028
April 1, 2029
C1
Sports/Talk
Sports/Talk
News/Talk
Sports/Talk
Classic Hits
Country
Classic Country
Gospel
News/Talk
Sports/Talk
Asheville, NC
Asheville, NC
Bellingham, WA
Bellingham, WA
Bellingham, WA
Brattleboro, VT
Bucyrus, OH
Charleston, SC
Charlottesville, VA
Charlottesville, VA
Clarksville, TN/Hopkinsville, KY Soft Adult Contemporary
Clarksville, TN
Clarksville, TN
Des Moines, IA
Des Moines, IA
Sports/Talk
News/Talk
Sports/Talk
Christian
B December 1, 2027
D December 1, 2027
February 1, 2030
B
February 1, 2030
B
February 1, 2030
B
April 1, 2030
C
D
October 1, 2028
B December 1, 2027
October 1, 2027
B
October 1, 2027
C
August 1, 2028
D
August 1, 2028
D
August 1, 2028
C
February 1, 2029
B
February 1, 2029
B
9
Station
Market (1)
WIZZ
WSVA
WHBG
WHCU
WNYY
WKBK
WZBK
WFEA
WJOI
WHMP
WGAN
WZAN
WBAE
WVAE
KICD
WLZX
WTAX
WNAX
Greenfield, MA
Harrisonburg, VA
Harrisonburg, VA
Ithaca, NY
Ithaca, NY
Keene, NH
Keene, NH
Manchester, NH
Milwaukee, WI
Northampton, MA
Portland, ME
Portland, ME
Portland, ME
Portland, ME
Spencer, IA
Springfield, MA
Springfield, IL
Yankton, SD
Station
Format
Oldies
News/Talk
Sports/Talk
News/Talk
Oldies
News/Talk
Classic Hits
News/Talk
Christian
News/Talk
News/Talk
Classic Country
Soft Adult Contemporary
Soft Adult Contemporary
News/Talk
Rock
News/Talk
News/Talk
Class (2)
FCC Station Expiration Date of
FCC Authorization
April 1, 2030
October 1, 2027
October 1, 2027
June 1, 2030
June 1, 2030
April 1, 2030
April 1, 2030
April 1, 2030
December 1, 2028
April 1, 2030
April 1, 2030
April 1, 2030
April 1, 2030
April 1, 2030
February 1, 2029
April 1, 2030
December 1, 2028
April 1, 2029
D
B
D
B
B
B
D
B
C
C
B
B
C
C
C
D
C
B
(1) Some stations are licensed to a different community located within the market that they serve.
(2) In order of increasing power, AM stations are classified as: Class D, C, B or A. (See Title 47 C.F.R. §73.21 for a
definition of AM station class information, including operating power.) In order of increasing power and antenna
height, FM stations are classified as: Class A, B1, C3, B, C2, C1, C0 or C. (See Title 47 C.F.R. §73.210 for a
definition of FM station class information, including effective radiated power [“ERP”] and antenna height.) WISE,
KPSZ, KPUG, KGMI, KBAI, WNYY, WHCU, WINQ(AM) and WSVA operate with lower power at night than
during daytime. WYSE, WBCO, WQEZ, WKFN, WHBG, WZBK and WLZX(AM) are “Class D” stations that
operate daytime only or with greatly reduced power at night.
Ownership Matters. The Communications Act prohibits the assignment of a broadcast license or the transfer of
control of a broadcast licensee without the prior approval of the FCC. In determining whether to grant or renew a
broadcast license, the FCC considers a number of factors pertaining to the licensee, including compliance with the
Communications Act’s limitations on alien ownership; compliance with various rules limiting common ownership of
broadcast, cable and newspaper properties; and the “character” and other qualifications of the licensee and those persons
holding “attributable or cognizable” interests therein.
Under the Communications Act (Section 310(b)), broadcast licenses may not be granted to any corporation having
more than one-fifth of its issued and outstanding capital stock owned or voted by aliens (including non-
U.S. corporations), foreign governments or their representatives (collectively, “Aliens”). The Communications Act also
prohibits a corporation, without FCC waiver, from holding a broadcast license if that corporation is controlled, directly
or indirectly, by another corporation in which more than 25% of the issued and outstanding capital stock is owned or
voted by Aliens. The FCC has issued interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. We serve as a holding company for our various
radio station subsidiaries (and as such we cannot have more than 25% of our stock owned or voted by Aliens).
The FCC has adopted rules to extend to broadcast licensees the same rules and procedures that common carrier
wireless licensees use to seek approval for foreign ownership, with broadcast-specific modifications.
10
The rules and procedures allow a broadcast licensee to request in a petition for declaratory ruling under Title 47
U.S.C. Section 310(b)(4):
(1) approval of up to and including 100 percent aggregate foreign ownership of its controlling U.S. parent;
(2) approval for a proposed, controlling foreign investor to increase its equity and/or voting interests in the
U.S. parent up to and including 100 percent at some future time without filing a new petition—this applies
where the foreign investor would acquire an initial controlling interest of less than 100 percent; and
(3) approval for a non-controlling foreign investor named in the petition to increase its equity and/or voting
interests in the U.S. parent at some future time, up to and including a non-controlling 49.99 percent equity
and/or voting interest.
The rules require the Company to seek specific approval only of foreign individuals or entities with a greater than 5
percent ownership interest (or, in certain situations, an interest greater than 10 percent).
The rules allow broadcast licensees that have foreign ownership rulings to apply those rulings to all radio and
television broadcast licenses then held or subsequently proposed to be acquired by the same licensee and its covered
subsidiaries and affiliates, regardless of the broadcast service (e.g., AM, FM, or TV) or the geographic area in which the
stations are located.
The methodology provides a framework for a publicly traded licensee or controlling U.S. parent to ascertain its
foreign ownership using information that is “known or reasonably should be known” to the company in the ordinary
course of business.
For publicly traded licensees and U.S. parent companies (like the Company), the rules formalize the current
equitable practice of recognizing a licensee’s good faith efforts to comply with Section 310(b) where the non-
compliance was due solely to circumstances beyond the licensee’s control that were not known or reasonably
foreseeable to the licensee.
We are permitted to own an unlimited number of radio stations on a nationwide basis (subject to the local ownership
restrictions described below).
Under the rules, the number of radio stations one party may own in a local Nielsen Audio-rated radio market is
determined by the number of full-power commercial and noncommercial educational (“NCE”) radio stations in the
market as determined by Nielsen Audio and BIA Advisory Services, LLC d/b/a BIA/Kelsey. Radio markets that are not
Nielsen Audio rated are determined by analysis of the broadcast coverage contours of the radio stations involved.
Under the Communications Act, and the FCC’s “Local Radio Ownership Rule,” we are permitted to own radio
stations (without regard to the audience shares of the stations) based upon the number of full-power commercial and
NCE radio stations in the relevant radio market as follows:
Number of Stations
In Radio Market
14 or Fewer
15-29
30-44
45 or More
Number of Stations We Can Own
Total of 5 stations, not more than 3 in the same service (AM or FM),
except the Company cannot own more than 50% of the stations in the
market.
Total of 6 stations, not more than 4 in the same service (AM or FM).
Total of 7 stations, not more than 4 in the same service (AM or FM).
Total of 8 stations, not more than 5 in the same service (AM or FM).
11
The FCC is required by the Telecommunications Act of 1996 to review its media ownership rules every four years
to determine whether they remain “necessary in the public interest as the result of competition.” The FCC’s 2010/2014
Quadrennial Review Order on Reconsideration, 32 FCC Rcd 9802 (2017), modified the FCC’s media ownership
rules by: (1) eliminating the newspaper/broadcast cross-ownership and radio/television cross-ownership rules;
(2) revising the local television ownership rule by eliminating the “eight voices” test and permitting applicants to seek
the combination of two top-four ranked stations in a given market on a case-by-case basis; and (3) deeming joint sales
agreements between television stations to be non-attributable. In FCC v. Prometheus Radio Project, 141 S. Ct. 1150
(2021), the U. S. Supreme Court reversed a decision of the Court of Appeals for the Third Circuit which had vacated the
FCC’s 2017 order. On December 12, 2018, the FCC adopted a Notice of Proposed Rulemaking (“NPRM”) to initiate
the 2018 Quadrennial Review proceeding. On June 4, 2021, the FCC released a Public Notice seeking to refresh the
record in the 2018 Quadrennial Review proceeding. In 2018 Quadrennial Regulatory Review—Review of the
Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications
Act of 1996, FCC 23-117, released December 26, 2023, the FCC found that its existing rules, with some minor
modifications, remain necessary in the public interest. The FCC retained the “dual network rule” and the “local radio
ownership rule,” the latter of which was modified only to make permanent the interim contour-overlap methodology
long used to determine ownership limits in areas outside the boundaries of defined Nielsen Audio Metro markets and in
Puerto Rico. The FCC retained its local television ownership rule with adjustments to reflect changes that have occurred
in the television marketplace to update the methodology for determining station ranking within a market to better reflect
current industry practices, and expanded the existing prohibition on use of affiliation to circumvent the restriction on
acquiring a second top-four ranked station in a market.
New rules that could be promulgated under the Communications Act may permit us to own, operate, control or have
a cognizable interest in additional radio broadcast stations if the FCC determines that such ownership, operation, control
or cognizable interest will result in an increase in the number of radio stations in operation. No firm date has been
established for initiation of this rule-making proceeding. New rules could restrict the Company’s ability to acquire
additional radio and television stations in some markets. The Court and FCC proceedings are ongoing and we cannot
predict what action, if any, the Court or the FCC may take to further modify its rules. Due to changes in local radio
markets, the ownership of some of our radio stations, in the future, could exceed the current ownership limits imposed
by the Local Radio Ownership Rule. Their current ownership structure is “grandfathered” by the FCC. Absent a waiver,
it might not be possible to sell all of them as currently configured in “clusters” to a single purchaser. The statements
herein are based solely on the FCC’s multiple ownership rules in effect as of the date hereof and do not include any
forward-looking statements concerning compliance with any future multiple ownership rules.
12
All commercial broadcasters were required to file a “biennial” ownership report, by December 1, 2023, describing
the ownership of its stations as of October 1, 2023. The Company timely filed its reports. The FCC eliminated the prior
requirement to file with the FCC paper copies of certain agreements, corporate organization documents, and the like.
Instead, a broadcaster is required to upload copies of these documents to the station’s online public inspection file
(“OPIF”), or provide a list of such documents and make them available to a requesting party. The FCC generally applies
its ownership limits to “attributable” interests held by an individual, corporation, partnership or other association. In the
case of corporations holding broadcast licenses, the interests of officers, directors and those who, directly or indirectly,
have the right to vote 5% or more of the corporation’s stock (or 20% or more of such stock in the case of certain passive
investors that are holding stock for investment purposes only) are generally attributable, as are positions of an officer or
director of a corporate parent of a broadcast licensee. Currently, one of our directors has an attributable interest or
interests in companies applying for or licensed to operate broadcast stations other than the Company.
The FCC’s ownership attribution rules (a) apply to limited liability companies and registered limited liability
partnerships the same attribution rules that the FCC applies to limited partnerships; and (b) include an equity/debt plus
(“EDP”) rule that attributes the other media interests of an otherwise passive investor if the investor is (1) a “major-
market program supplier” that supplies over 15% of a station’s total weekly broadcast programming hours, or (2) a
same-market media entity subject to the FCC’s multiple ownership rules (including broadcasters, cable operators and
newspapers) so that its interest in a licensee or other media entity in that market will be attributed if that interest,
aggregating both debt and equity holdings, exceeds 33% of the total asset value (equity plus debt) of the licensee or
media entity. We could be prohibited from acquiring a financial interest in stations in markets where application of the
EDP rule would result in us having an attributable interest in the stations.
In addition to the FCC’s multiple ownership rules, the Antitrust Division of the United States Department of Justice
and the Federal Trade Commission and some state governments have the authority to examine proposed transactions for
compliance with antitrust statutes and guidelines. The Antitrust Division has issued “civil investigative demands” and
obtained consent decrees requiring the divestiture of stations in a particular market based on antitrust concerns.
13
Programming and Operation. The Communications Act requires broadcasters to serve the “public interest.”
Licensees are required to present programming that is responsive to community problems, needs and interests and to
maintain certain records demonstrating such responsiveness. Complaints from listeners concerning a station’s
programming often will be considered by the FCC when it evaluates renewal applications of a licensee, although such
complaints may be filed at any time and generally may be considered by the FCC at any time. Stations also must follow
various rules promulgated under the Communications Act that regulate, among other things, political advertising,
sponsorship identification, the advertisement of contests and lotteries, obscene and indecent broadcasts, and technical
operations, including limits on radio frequency radiation. In 2020, the FCC entered into a Consent Decree with Sinclair
Broadcast Group, which agreed to pay a $48 million dollar fine to settle issues related to sponsorship identification
violations, among other matters. The FCC also entered into a Consent Decree with Cumulus Radio to settle violations of
the sponsorship identification requirements in connection with the broadcast of issue ads promoting a construction
project in New Hampshire. In an Order and Consent Decree, Townsquare Media, Inc., DA 24-54, released January 17,
2024, the licensee of AM radio stations in Idaho agreed to pay a civil penalty of $500,000 to resolve an investigation into
violations of the FCC’s rules relating to on-air sponsorship identification and the maintenance of online political files.
There are other examples of FCC enforcement action for violation of the sponsorship identification requirements. A
licensee that broadcasts or advertises information about a contest it conducts must fully and accurately disclose the
material terms of the contest, and conduct the contest substantially as announced or advertised over the air or on the
Internet. The disclosure of material terms must be made by either periodic disclosures broadcast on the station or written
disclosures on the station's Internet web site. Violation of the rule can result in significant fines. In 2020, the FCC fined
a broadcaster $5,200 for failing to conduct its contests as advertised by failing to award prizes in a timely manner.
Another licensee entered into a Consent Decree with the FCC, paying a fine of $125,000 for, among other things,
predetermining the outcome of a contest. The FCC requires the owners of antenna supporting structures (towers) to
register them with the FCC. As an owner of such towers, our subsidiaries are subject to the registration requirements. On
January 13, 2020, the FCC released an Order confirming a Consent Decree whereby the owner of several antenna
structures agreed to pay the government a civil penalty of $1,130,000 and develop a Compliance Plan requiring reports
for two years as a result of (1) failing to conduct required daily inspections of the lighting systems at 10 towers,
(2) failing to completely log lighting failures at 7 towers, and (3) failing to timely notify the FCC of its acquisition of 2
towers. In 2017, the FCC eliminated the broadcast main studio rule. The FCC retained the requirement that stations
maintain a local or toll-free telephone number to ensure consumers have ready access to their local stations. The FCC’s
rules require cable operators, direct satellite TV providers, broadcast radio licensees, and satellite radio licensees to post
public inspection files to the FCC's online database (the “OPIF” referred to above) rather than maintaining them in a
local public inspection file. The FCC believes posting these files to the OPIF renders the materials more widely
accessible to the public. The Company’s radio stations post their public inspection files to the FCC’s website. The FCC
has warned licensees of possible enforcement action if these files are found not to be in compliance at the time of license
renewal. Because of inadvertent untimely posting to the OPIF of certain political records at stations owned by one of the
Company’s subsidiaries, that subsidiary was obliged to enter into a Consent Decree with the FCC (FCC Order, DA
20-1263, released October 26, 2020). The Consent Decree required Company employees responsible for performing,
supervising, overseeing, or managing activities related to the maintenance of online political files to thoroughly
understand the Company’s obligation to comply with laws regulating political broadcasting and to promptly report to the
FCC any noncompliance with those laws. The affected subsidiary filed a report with the FCC on December 8, 2021,
regarding its record of compliance with the political laws and the Company’s obligations under the Consent Decree
terminated as of February 7, 2022. The FCC in 2020 revised its rules governing the publication of local notice of the
filing of certain broadcast applications. FCC licensees, like the Company’s subsidiaries, must maintain a tab on their
station websites where the public can view the OPIF and a tab where notices describing pending applications must be
posted, rather than printing such notices in local newspapers. In an NPRM, Priority Application Review for Broadcast
Stations that Provide Local Journalism or Other Locally Originated Programming, FCC 24-1 (MB Docket No. 24-14),
released January 17, 2024, the FCC proposed to prioritize processing review of certain applications filed by commercial
and noncommercial radio and television broadcast stations that provide locally originated programming. The FCC stated
that its goal is “to provide additional incentive to stations to provide programming that responds to the needs and
interests of the communities they are licensed to serve.” The FCC stated that the program would be “voluntary” and that
such prioritization would be granted to renewal applicants, as well as applicants for assignment or transfer of license,
that certify they provide locally originated programming, thereby advancing the FCC’s efforts to promote localism and
serve local communities across the nation. If the Company were not to certify that its stations provide local
programming, actions on its applications to acquire new facilities might be deferred until applications containing such
14
certifications had been earlier processed. However, there is some risk in certifying since competitors or members of the
public might file adverse petitions challenging the accuracy of such certifications. The FCC is seeking comment on the
proposal and the Company cannot predict whether such rules will be adopted and become effective.
The Company is required to pay (1) FCC filing fees in connection with its applications and (2) annual regulatory
fees determined by the number and character of the radio stations the Company owns as of October 1 of each prior year.
The Company timely paid its regulatory fees for Fiscal Year 2023.
Equal Employment Opportunity Rules. Equal employment opportunity (EEO) rules and policies for broadcasters
prohibit discrimination by broadcasters and multichannel video programming distributors. They also require
broadcasters to provide notice of job vacancies and to undertake additional outreach measures, such as job fairs and
scholarship programs. The rules mandate a “three prong” outreach program; i.e., Prong 1: widely disseminate
information concerning each full-time (30 hours or more) job vacancy, except for vacancies filled in exigent
circumstances; Prong 2: provide notice of each full-time job vacancy to recruitment organizations that have requested
such notice; and Prong 3: complete two (for broadcast employment units with five to ten full-time employees or that are
located in smaller markets) or four (for employment units with more than ten full-time employees located in larger
markets) longer-term recruitment initiatives within a two-year period. These include, for example, job fairs, scholarship
and internship programs, and other community events designed to inform the public as to employment opportunities in
broadcasting. The rules mandate extensive record keeping and reporting requirements. In 2017, the FCC issued a
Declaratory Ruling permitting broadcast stations to use the internet for job postings as their sole means of recruiting
employees (so long as the postings reach all segments of the station’s community). The EEO rules are enforced through
review at renewal time, and through random audits and targeted investigations resulting from information received as to
possible violations. The FCC has not yet decided on whether and how to apply the EEO rule to part-time positions.
Failure to observe these or other rules and policies can result in the imposition of various sanctions, including monetary
forfeitures, the grant of “short” (less than the full eight-year) renewal terms or, for particularly egregious violations, the
denial of a license renewal application or the revocation of a license. As announced in an NPRM released June 21, 2019
(MB Docket No. 19-177), the FCC is reviewing the EEO rules. In the NPRM, the FCC seeks comment on its track
record on EEO enforcement, whether the agency should make improvements to EEO compliance and enforcement, and
invites comment on its audit program. In a Further NPRM (MB Docket No. 98-204), released July 23, 2021, the FCC
sought to refresh the existing record regarding the statutorily mandated collection of data on the FCC Form 395-B, as
contemplated by the Act. This employment report form is intended to gather workforce composition data from
broadcasters on an annual basis but the filing of the form was suspended in 2001 in the wake of a decision by the U.S.
Court of Appeals (MD/DC/DE Broadcasters Association v. FCC, Case No. 1094, 236 F.3d 13 (2001); rehearing denied,
253 F. 3d 732 (2001), cert. denied, 534 U.S. 1113 (2002)) vacating certain aspects of the EEO requirements. While the
FCC in 2004 adopted revised regulations regarding the filing of Form 395-B and updated the form, the requirement that
broadcasters once again submit the form to the FCC was suspended until issues were resolved regarding confidentiality
of the employment data. On February 22, 2024, the FCC released its Fourth Report and Order, Order on
Reconsideration, and Second Further Notice of Rulemaking, FCC 24-18, reinstating the filing of Form 395-B. The
Company cannot predict the impact of the reinstated form on the Company or its operations.
15
Time Brokerage Agreements. As is common in the industry, we have previously entered into what have
commonly been referred to as Time Brokerage Agreements (“TBAs”) which are sometimes termed “Local Marketing
Agreements.” Such arrangements are an extension of the concept of agreements under which a licensee of a station sells
(or “leases”) blocks of time on its station to an entity or entities which purchase the blocks of time and use the time to
broadcast material the lessee has produced, or which sell their own commercial advertising announcements during the
time periods in question. While these agreements may take varying forms, under a typical TBA, separately owned and
licensed radio or television stations agree to enter into cooperative arrangements of varying sorts, subject to compliance
with the requirements of antitrust laws and with the FCC’s rules and policies. Under these types of arrangements,
separately-owned stations agree to function cooperatively in terms of programming, advertising sales, and other matters,
subject to the licensee of each station maintaining independent control over the financing, programming and station
operations of its own station. One typical type of TBA is a programming agreement between two separately-owned radio
or television stations serving a common service area, whereby the licensee of one station purchases substantial portions
of the broadcast day on the other licensee’s station, subject to ultimate editorial and other controls being exercised by the
latter licensee, and sells advertising time during such program segments. The Company’s stations currently are not
parties to any TBAs.
The FCC’s rules provide that a station purchasing (brokering or leasing) time on another station serving the same
market will be considered to have an attributable ownership interest in the brokered station for purposes of the FCC’s
multiple ownership rules. As a result, under the rules, a broadcast station will not be permitted to enter into a time
brokerage agreement giving it the right to purchase more than 15% of the broadcast time, on a weekly basis, of another
local station that it could not own under the local ownership rules of the FCC’s multiple ownership rules. Effective
October 22, 2020, the FCC eliminated Title 47 C.F.R. § 73.3556, a rule that prohibited the duplication of programming
on co-owned radio stations in the same market. A petition for reconsideration of that action as to FM duplication is
pending. Reports have circulated that some members of the FCC are considering a proposal that would reinstate the rule
in some form. If the non-duplication rule were reinstated, it could require the Company to expend additional funds to
program separately some currently simulcast stations. The Company cannot predict how the FCC may act on the
petition.
The FCC has adopted rules that require the broadcast of a specific disclosure at the time of broadcast if material
aired pursuant to a lease of time on a station has been sponsored, paid for, or furnished by a foreign governmental entity.
Consistent with the Communications Act and the FCC’s sponsorship identification rules, the Company’s stations are
required to disclose political programming or programming involving the discussion of a controversial issue if such
programming is provided by a foreign governmental entity for free, or for nominal compensation, as an inducement to
air. The rule requires the Company to exercise reasonable diligence (and obtain certifications from lessees) to ascertain
whether the foreign sponsorship disclosure requirements apply at the time of the lease agreement and at any renewal
thereof. A station must place in its OPIF on a quarterly basis certain information if the station broadcasts such foreign-
sponsored programming. On October 6, 2022, the FCC released a Second NPRM, seeking comment on establishing a
requirement that licensees require a lessee to use a specific certification form to disclose whether a lessee is or is not a
foreign governmental entity and whether it knows of any entity or individual further back in the programming
production or distribution chain that qualifies as a foreign governmental entity. By Public Notice, released
December 13, 2022, the FCC extended the Comment and Reply Comment Deadlines in this proceeding. If adopted, the
proposed rules would require the Company to upload the certifications to the OPIF whether or not the lessee has a
connection to a foreign government. The Company cannot predict whether such new rules will be adopted, and if so, the
form they might take.
16
Other FCC Requirements.
Low Power FM Radio. There exists a “low power radio service” on the FM band (“LPFM”) in which the FCC
authorizes the construction and operation of NCE FM stations with up to 100 watts ERP with antenna height above
average terrain (“HAAT”) at up to 30 meters (100 feet). This combination is calculated to produce a service area radius
of approximately 3.5 miles. The FCC’s rules will not permit any broadcaster or other media entity subject to the FCC’s
ownership rules to control or hold an attributable interest in an LPFM station or enter into related operating agreements
with an LPFM licensee. Thus, absent a waiver, we could not own or program an LPFM station. LPFM stations are
allocated throughout the FM broadcast band, (i.e., 88.1 to 107.9 MHz), although they must operate with an NCE format.
The FCC has established allocation rules that require FM stations to be separated by specified distances to other stations
on the same frequency, and stations on frequencies on the first, second and third channels adjacent to the center
frequency. As required by the Local Community Radio Act of 2010, the FCC in 2012 modified its rules to maintain its
existing minimum distance separation requirements for full-service FM stations, FM translator stations, and FM booster
stations that broadcast radio reading services via an analog subcarrier frequency to avoid potential interference by LPFM
stations; and when licensing new FM translator stations, FM booster stations, and LPFM stations, to ensure that:
(i) licenses are available to FM translator stations, FM booster stations, and LPFM stations; (ii) such decisions are made
based on the needs of the local community; and (iii) FM translator stations, FM booster stations, and LPFM stations
remain equal in status and secondary to existing and modified full-service FM stations. By Report and Order, released
April 23, 2020, the FCC modified the LPFM technical rules in four main ways: (1) expanding the permissible use of
directional antennas; (2) expanding the definition of minor change applications for LPFM stations; (3) allowing LPFM
stations to own FM boosters; and (4) permitting LPFM and Class D FM stations operating on the NCE FM reserved
band (channels 201 to 220) to propose facilities short-spaced to television stations operating on channel 6 (TV6) with the
consent of the potentially affected stations. The FCC also took other less significant actions affecting the LPFM service.
On January 5, 2012, the FCC released a Report to Congress on the impact that LPFM stations would have on full-
service commercial FM stations. The FCC “found no statistically reliable evidence that low-power FM stations have a
substantial or consistent economic impact on full-service commercial FM stations,” and that “low-power FM stations
generally do not have, and in the future are unlikely to have, a demonstrable economic impact on full-service
commercial FM radio stations.” Some LPFM stations that broadcast commercial announcements in violation of the law
could have a negative economic impact on the Company’s stations. On July 31, 2023, the FCC’s Media Bureau
announced a filing window for applications for LPFM new station construction permits. The filing window opened on
Wednesday, December 6, 2023, and was extended to close on December 15, 2023. More than 1,000 LPFM applications
were received during the filing window. Although rule-compliant LPFM stations compete for audience with the
Company’s full-power and FM translator stations, the Company cannot predict whether there will be future negative
economic impact on its stations.
17
As part of the transition of television stations from analog to digital operations, the FCC sought comment in a 2014
NPRM on whether to allow low power television (“LPTV”) stations (so-called “Franken FM” or “FM6” radio stations)
on digital television channel 6 to continue to operate analog FM radio-type services on an ancillary or supplementary
basis on 87.75 MHz at the lower end of the portion of the FM band reserved for NCE stations. On June 7, 2022 (MB
Docket No. 03-185), the FCC released a Fifth NPRM seeking comment on whether FM6 operations serve the public
interest and should be authorized to continue in any capacity. The FCC limited the scope of FM6 operations to only
those LPTV channel 6 stations with "active" FM6 engineering special temporary authority on the release date of the
Fifth NPRM. In its Fifth Report and Order, Amendment of Parts 73 & 74 of the Commission's Rules to Establish Rules
for Digital Low Power TV & TV Translator Stations, FCC 23-58, released July 20, 2023, the FCC concluded that the
public interest will be served by allowing the continued operation of existing analog FM6 LPTV radio stations subject to
certain conditions. The FCC declined to adopt a proposal discussed in the Fifth NPRM that would allow new FM radio
stations to be licensed on 82-88 MHz across the United States, for lack of record support. There are only 14 authorized
FM6 stations. There is an FM6 station in the Norfolk, Virginia, radio market where the Company operates two
commercial radio stations. The Company cannot predict whether the FM6 station will have any impact on the
Company’s stations in that market.
As a broadcaster, the Company is required to comply with the FCC rules implementing the Emergency Alert System
(“EAS”). The Company’s stations must transmit Presidential messages during national emergencies and may transmit
local messages, such as severe weather alerts and AMBER (America’s Missing: Broadcast Emergency Response) alerts.
On January 7, 2021, the FCC’s Enforcement Bureau issued an “Enforcement Advisory” which highlighted EAS
participants’ obligations, identified measures to improve the EAS, and warned that failure to comply with the EAS rules
may subject a violator to sanctions including, but not limited to, substantial monetary forfeitures. Our stations are
required periodically to file with the FCC forms reporting on the results of EAS tests. In September, 2022, the FCC
adopted new EAS requirements directing EAS participants to check whether certain types of alerts are available in
common alerting protocol (“CAP”) format and, if so, to transmit the CAP version of the alert rather than the legacy-
formatted version. The FCC also prescribed text that EAS participants must broadcast using plain language terms. In an
NPRM adopted October 27, 2022, the FCC proposed to require EAS participants to report to the FCC compromises of
EAS equipment, communications systems, and services. The FCC proposed to require EAS participants to annually
certify to having a cybersecurity risk management plan in place and to employ sufficient security measures to ensure the
confidentiality, integrity, and availability of their respective alerting systems.
Use of FM Boosters for Geo-Targeting. By NPRM released December 1, 2020, the FCC sought comment on
whether to modify the FCC’s rules governing the operation of FM booster stations by FM radio broadcasters in certain
limited circumstances. Through its NPRM, the FCC sought comment regarding changes to the booster station rules that
could enable FM broadcasters to use FM booster stations to air “geo-targeted” content (e.g., news, weather, and
advertisements) independent of the signals of the booster’s primary station within different portions of the primary
station's protected service contour for a limited period of time during the broadcast hour. The FCC has solicited public
comment on tests of the proposed system. The Company cannot predict whether the FCC will adopt the proposed rules,
and if adopted, whether the Company would use FM booster stations in this manner. The Company currently has no FM
booster stations.
18
Digital Audio Radio Satellite Service and Internet Radio. In adopting its rules for the Digital Audio Radio
Satellite Service (“DARS”) in the 2310-2360 MHz frequency band, the FCC stated, “although healthy satellite DARS
systems are likely to have some adverse impact on terrestrial radio audience size, revenues and profits, the record does
not demonstrate that licensing satellite DARS would have such a strong adverse impact that it threatens the provision of
local service.” The FCC granted two nationwide licenses, one to XM Satellite Radio, which began broadcasting in
May 2001, and a second to Sirius Satellite Radio, which began broadcasting in February 2002. The satellite radio
systems provide multiple channels of audio programming in exchange for the payment of a subscription fee. The FCC
approved the application of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. to transfer control of the
licenses and authorizations held by the two companies to one company, which is now known as Sirius XM Radio, Inc.
Various companies have introduced devices that permit the reception of audio programming streamed over the Internet
on home computers and on portable receivers such as cell phones, in automobiles, and through so-called “smart
speakers” like Amazon’s Alexa service. A number of digital music providers have developed and are offering their
product through the Internet. Terrestrial radio operators (including the Company) are also making their product available
through the Internet. Due to interference generated by their electric motors, some manufacturers of all-electric vehicles
do not market vehicles that can receive AM broadcasts over the air (although AM broadcasts can be heard over digital
streaming services, such as Tunein Radio). In the U. S. Senate, a Bill, S.1669 bill would require the Department of
Transportation to issue a rule that requires all new motor vehicles to have devices that can access AM broadcast stations
installed as standard equipment. The Company cannot predict whether the bill will be enacted into law. To date, the
Company has not perceived negative economic impact from DARS or Internet-streamed audio on the Company’s full-
service stations and FM translators, possibly due, in part, to the possibility of confusion in the digital advertising market,
but the Company cannot predict whether there will be future negative economic impact.
In-Band On-Channel “Hybrid Digital” Radio. The FCC’s rules permit radio stations to broadcast using in-band,
on-channel (IBOC) technology that allows AM and FM stations to operate using the IBOC system developed by iBiquity
Digital Corporation. This technology has become commonly known as “hybrid digital” or HD radio. Stations broadcast
the same main channel program material in both analog and digital modes. HD radio technology permits “hybrid”
operations, the simultaneous transmission of analog and digital signals with a single AM and FM channel. HD radio
technology can provide near CD-quality sound on FM channels and FM quality on AM channels. HD radio technology
also permits the transmission of up to four additional program streams over FM stations and one over AM stations
(which streams do not count as separate radio stations under the multiple ownership rules.) At the present time, we are
configured to broadcast in HD radio on 55 stations. In an Order and NPRM, the FCC proposed changes to its digital
audio broadcasting technical rules that would permit additional FM stations to increase FM HD effective radiated power
beyond the existing levels without the need for individual Commission authorization. In addition, the FCC proposed to
allow digital FM stations to operate with asymmetric power on the digital sidebands. This would allow stations to
operate with different power levels on the upper and lower digital sidebands, as a way to facilitate greater digital FM
radio coverage without interfering with adjacent channel FM stations. The Company cannot predict whether the
proposed rules will be adopted.
On October 28, 2020, the FCC released a Report and Order, in which it adopted rules (effective January 4, 2021) to
allow AM radio stations to broadcast an all-digital signal using the HD Radio IBOC mode termed “MA3.” In adopting
the new rules, the FCC said that a voluntary conversion to all-digital broadcasting will benefit many AM stations and
their listeners by improving reception quality and listenable coverage in stations' service areas. At this time, the
Company has not made a decision on whether to convert any of its AM radio stations to all-digital operation.
19
Use of FM Translators by AM Stations and Digital Program Streams. FM translator stations are relatively low
power radio stations (maximum ERP: 250 Watts) that rebroadcast the programs of full-power AM and FM stations on a
secondary basis, meaning they must terminate or modify their operation if they cause interference to a full-power station.
The FCC permits AM stations to be rebroadcast on FM translator stations in order to improve reception of programs
broadcast by AM stations. The Company intends to continue to use some of its existing FM translators in connection
with some of its AM stations. The Company is using some of its existing FM translators to rebroadcast HD radio
program streams generated by some of its FM stations, which is permitted by the FCC. In a 2015 Report and Order,
Revitalization of the AM Service, the FCC announced an opportunity, restricted to AM licensees and permittees, to apply
for and receive authorizations to relocate existing FM translator stations within 250 miles for the sole and limited
purpose of enhancing their existing service to the public. To implement this policy, the FCC opened “filing windows,”
the last one closing October 31, 2016. Some of the Company’s subsidiaries that are AM licensees, acquired FM
translators during the filing window, and relocated them to their local markets to pair with some of the Company’s AM
broadcast stations. The FM translators so acquired were obligated to rebroadcast the related AM station for at least four
years, not counting any periods of silence. The FCC later opened two windows for the filing of applications for
construction permits for new FM translators, the final window closing January 31, 2018. In the filing windows,
qualifying AM licensees could apply for one, and only one, new FM translator station, in the non-reserved FM band to
be used solely to re-broadcast the licensee’s AM signal to provide fill-in and/or nighttime service on a permanent basis.
The Company filed applications in both windows and obtained some construction permits as a result. If the Company
should decide that a subsidiary should sell or suspend operations of an AM station with such an FM construction permit
or license, the subsidiary would also be required to concurrently sell or suspend operations of the FM translator. The
FCC has adopted rules regarding FM translator interference (1) allowing FM translators to resolve interference issues by
changing channels to any available same-band frequency using a minor modification application; (2) standardizing the
information that must be compiled and submitted by a station claiming interference from an FM translator, including a
required minimum number of listener complaints; (3) establishing interference complaint resolution procedures; and
(4) establishing an outer contour limit (45 dBμ) for the affected station within which interference complaints will be
considered actionable while providing for a process to waive that limit in special circumstances. Because FM translators
are “secondary services,” they could be displaced by full power stations.
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Federal Trade Commission and the Department of
Justice, the federal agencies responsible for enforcing the federal antitrust laws, may investigate certain acquisitions.
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, an acquisition meeting certain size thresholds
requires the parties to file Notification and Report Forms with the Federal Trade Commission and the Department of
Justice and to observe specified waiting period requirements before consummating the acquisition. Any decision by the
Federal Trade Commission or the Department of Justice to challenge a proposed acquisition could affect our ability to
consummate the acquisition or to consummate it on the proposed terms. We cannot predict whether the FCC will adopt
rules that would restrict our ability to acquire additional stations.
20
Changes to Application and Assignment Procedures. FCC rules give Native American tribes a priority to obtain
broadcast radio licenses in tribal communities. The rules provide an opportunity for tribes to establish new service
specifically designed to offer programming that meets the needs of tribal citizens. In addition, the rules modify the
FCC’s radio application and assignment procedures, assisting qualified applicants to more rapidly introduce new radio
service to the public. These modifications (1) prohibit an AM applicant that obtains a construction permit through a
dispositive Section 307(b) preference from downgrading the service level that led to the dispositive preference;
(2) require technical proposals for new or major change AM facilities filed with Form 175 (i.e., FCC “short-form”
Auction) applications to meet certain minimum technical standards to be eligible for further auction processing; and
(3) give FCC operating bureaus authority to cap filing window applications. In 2011, the FCC released its Third Report
and Order which limits eligibility for authorizations associated with allotments added to the FM Table of Allotments
using the “Tribal Priority” to the tribes whom the Tribal Priority was intended to benefit. In October 2018, the FCC
released a “Second Further Notice of Proposed Rulemaking” as part of its ongoing effort to assist AM broadcast stations
in providing full-time service to their communities. The FCC sought comment on technical proposals to reduce
nighttime interference afforded to wide-area “Class A” AM radio stations to enable more local AM stations to increase
their nighttime service. The Company has no Class A AM radio stations, but has Class B, Class C and Class D AM radio
stations, some of which might benefit if the FCC changes its rules as proposed. In 2018, the FCC issued a Notice of
Inquiry on whether to issue an NPRM that could lead to creation of a new Class C4 FM station that would allow use of
power of up to 12 kW ERP, but the matter remains pending before the FCC.
The Company pays for the use of music broadcast on its stations by obtaining licenses from organizations called
performing rights organizations (“PRO”) (e.g. Broadcast Music, Inc., American Society of Composers, Authors and
Publishers SESAC, LLC, and Global Music Rights LLC), which, in turn pay composers, authors and publishers for their
works. Federal law grants a performance right for sound recordings in favor of recording companies and performing
artists for non-interactive digital transmissions and Internet radio. As a result, users of music, including the Company,
are required to pay royalties for these uses through Sound Exchange, a non-profit performance rights organization.
(Other PROs could be formed, which could increase the royalties we pay.) Periodically, bills have been introduced in
Congress, that if passed, would have required the Company to pay additional fees to an organization called MusicFirst
which would distribute the money to other entities. Efforts continue by certain organizations to persuade Congress to
enact a law that would require such payments. Periodically, bills have been introduced in Congress that, if adopted,
would require the Company to pay additional fees to one or more organizations that would distribute the money to
performers or other entities. The American Music Fairness Act was introduced on February 2, 2023, in both the Senate
and House of Representatives (118th Congress). (A similar Bill died in the 117th Congress.) The Act would require radio
stations to have an additional license to publicly perform certain sound recordings. The Copyright Royalty Board would
periodically determine the royalty rates for such a license. Terrestrial broadcast stations, and the owners of such stations,
that fall below certain revenue thresholds would pay certain flat fees, instead of the board-established rate, for a license.
In late 2018, Congress passed the “Music Modernization Act” which was signed into law by the President. The law
(1) improves compensation to songwriters and streamlined how their music is licensed; (2) enables legacy artists (who
recorded music before 1972) to be paid royalties when their music is played on digital radio; and (3) provides a
consistent legal process for studio professionals, including record producers and engineers to receive royalties for their
contributions to music that they help to create. The law creates a blanket license for digital music providers to make
permanent downloads, limited downloads, and interactive streams, creates a collective (“Mechanical Rights Collective”)
to administer the blanket license, and makes various improvements to royalty rate proceedings. This law could impose
an additional financial burden on the Company, but the extent of the burden depends on how the fee payment
requirement is structured.
21
Proposal to Mandate Broadcasters to Participate in the Disaster Information Reporting System (“DIRS”) and
Network Outage Reporting System (“NORS”). In an NPRM, Resilient Networks; Amendments to Part 4 of the
Commission’s Rules Concerning Disruptions to Communications; New Part 4 of the Commission’s Rules Concerning
Disruptions to Communications, 36 FCC Rcd 14802 (2021), the FCC sought comment on measures to help ensure that
communications services remain operational when disasters strike. The NPRM asks whether the FCC should adopt rules
making participation in the DIRS and NORS mandatory. On January 4, 2024, the FCC made public a proposed “Second
Further NPRM” to inquire whether to require TV and radio broadcasters, satellite providers, and broadband Internet
access service providers to report in NORS and/or DIRS. Implementation of DIRS and NORS by the Company could
result in significant costs, but the Company cannot predict whether the rules will be adopted and if so, the form they may
take.
Proposed Changes. The FCC has under consideration, and may in the future consider and adopt, new laws,
regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect us and the operation
and ownership of our broadcast properties. Application processing rules adopted by the FCC might require us to apply
for facilities modifications to our standard broadcast stations in future “window” periods for filing applications or result
in the stations being “locked in” with their present facilities. The FCC is authorized to use auctions for the allocation of
radio broadcast spectrum frequencies for commercial use. The implementation of this law could require us to bid for the
use of certain frequencies.
Information About Our Executive Officers
Our current executive officers are:
Name
Age
Position
Christopher S. Forgy
Samuel D. Bush
Catherine A. Bobinski
Wayne Leland
63 President, Chief Executive Officer; Director
66 Senior Vice President, Treasurer and Chief Financial Officer
64 Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller
59 Senior Vice President of Operations
Officers are elected annually by our Board of Directors and serve at the discretion of the Board. Set forth below is
information with respect to our executive officers.
Mr. Forgy has been President and Chief Executive Officer since December 2022. He was previously our Senior
Vice President of Operations from May 2018 until his appointment to President and Chief Executive Officer. He was
President/General Manager of our Columbus, Ohio market from 2010 to 2018 and was Director of Sales of our
Columbus, Ohio market from 1995 to 2006. He has been with Saga for over 20 years..
Mr. Bush has been Senior Vice President since 2002 and Chief Financial Officer and Treasurer since
September 1997. He was Vice President from 1997 to 2002. From 1988 to 1997 he held various positions with the
Media Finance Group at AT&T Capital Corporation, including senior vice president.
Ms. Bobinski has been Senior Vice President/Finance since March 2012 and Chief Accounting Officer and
Corporate Controller since September 1991. She was Vice President from March 1999 to March 2012. Ms. Bobinski is a
certified public accountant.
Mr. Leland was promoted to Senior Vice President of Operations effective January 2023. He was President/General
Manager of our Norfolk, Virginia market from 2011 to 2022. He has been with Saga for 11 years and has been in the
broadcasting industry since 1986.
22
Item 1A. Risk Factors
The more prominent risks and uncertainties inherent in our business are described in more detail below. However,
these are not the only risks and uncertainties we face. Our business may also face additional risks and uncertainties that
are unknown to us at this time.
General Risks Related to the Economy
Continued Uncertain Financial and Economic Conditions may have an Adverse Impact on our Business, Results of
Operations or Financial Condition
We derive revenues from the sale of advertising and expenditures by advertisers tend to be cyclical and are
reflective of economic conditions. Periods of a slowing economy, recession or economic uncertainty may be
accompanied by a decrease in advertising. Financial and economic conditions continue to be uncertain over the longer
term and the continuation or worsening of such conditions, including prolonged or increased inflationary developments,
could reduce consumer confidence and have an adverse effect on our business, results of operations and/or financial
condition. If consumer confidence were to decline, this decline could negatively affect our advertising customers'
businesses and their advertising budgets. In addition, volatile economic conditions could have a negative impact on our
industry or the industries of our customers who advertise on our stations, resulting in reduced advertising sales.
Furthermore, it may be possible that actions taken by any governmental or regulatory body for the purpose of stabilizing
the economy or financial markets will not achieve their intended effect. In addition to any negative direct consequences
to our business or results of operations arising from these financial and economic developments, some of these actions
may adversely affect financial institutions, capital providers, advertisers or other consumers on whom we rely, including
our access to future capital or financing arrangements necessary to support our business. Our inability to obtain
financing in amounts and at times necessary could make it more difficult or impossible to meet our obligations or
otherwise take actions in our best interests.
We May be Adversely Affected by the Effects of Inflation
Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by
increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we
charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher
interest rates, increased cost of labor and other similar effects. As a result of inflation, we have experienced and may
continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these
measures are not effective, our business, financial condition, results of operations and liquidity could be materially
adversely affected. Even if such measures are effective, there could be a difference between the timing of when these
beneficial actions impact our results of operation and when the cost of inflation is incurred.
Our Business and Operations Could be Adversely Affected by Health Epidemics, Pandemics or Similar Outbreaks,
Natural Disasters and Other Catastrophes, Impacting the Markets and Communities in which we and our Partners,
Advertisers, and Users Operate
We face various risks related to health epidemics, pandemics, or similar outbreaks, natural disasters and other
catastrophes that are beyond our control, which have materially and adversely affected our business and may continue to
materially and adversely affect our results of operations, liquidity and financial condition. The extent of the impact of
health epidemics, pandemics or similar outbreaks, natural disasters and other catastrophes in the future, on our business,
including our ability to execute our near-term and long-term business strategies and initiatives in the expected time
frame, will depend on numerous factors that we may not be able to accurately predict or assess, including the negative
impact on the economy and economic activity, changes in advertising customers and consumer behavior, short and
longer-term impact on the levels of consumer confidence; actions governments, businesses and individuals take in
response to such outbreaks, and any resulting macroeconomic conditions; and how quickly economies recover after such
outbreaks or pandemics subside.
23
The effects of health epidemics, pandemics or similar outbreaks, natural disasters and other catastrophes in the
future, may also impact financial markets and corporate credit markets which could adversely impact our access to
financing or the terms of any such financing. To the extent pandemics or outbreaks adversely affect our business and
financial results, it may also have the effect of heightening many of the other risks described herein.
The Success of Our Business is Dependent Upon Advertising Revenues, which are Seasonal and Cyclical, and also
Fluctuate as a Result of a Number of Factors, Some of Which are Beyond Our Control.
Our primary source of revenue is the sale of advertising. Our ability to sell advertising depends, among other things,
on:
•
•
•
•
•
•
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economic conditions in the areas where our stations are located and in the nation as a whole;
national and local demand for radio and digital advertising;
the popularity of our programming;
changes in the population demographics in the areas where our stations are located;
local and national advertising price fluctuations, which can be affected by the availability of programming,
the popularity of programming, and the relative supply of and demand for commercial advertising;
the capability and effectiveness of our sales organization;
our competitors' activities, including increased competition from other advertising-based mediums;
decisions by advertisers to withdraw or delay planned advertising expenditures for any reason; and
other factors beyond our control.
Our operations and revenues also tend to be seasonal in nature, with generally lower revenue generated in the first
quarter of the year and generally higher revenue generated in the second and fourth quarters of the year. This seasonality
causes and will likely continue to cause a variation in our quarterly operating results. Such variations could have a
material effect on the timing of our cash flows. In addition, our revenues tend to fluctuate between years, consistent with,
among other things, increased advertising expenditures in even-numbered years by political candidates, political parties
and special interest groups.
We Depend on Key Stations
Historically our top five markets when combined represented 36%, 38%, and 39% of our net operating revenue for
the years ended December 31, 2023, 2022 and 2021, respectively. Accordingly, we may have greater exposure to
adverse events or conditions that affect the economy in any of these markets, which could have a material adverse effect
on our revenue, results of operations and financial condition.
Local, National and Global Economic Conditions May Affect our Advertising Revenue
Our financial results are dependent primarily on our ability to generate advertising revenue through rates charged to
advertisers. The advertising rates a station is able to charge are affected by many factors, including the general strength
of the local and national economies. Generally, advertising declines during periods of economic recession or downturns
in the economy. Our revenue has been and is likely to be adversely affected during such periods, whether they occur on a
global level, national level or in the geographic markets in which we operate. During such periods we may also be
required to reduce our advertising rates in order to attract available advertisers. Such a decline in advertising rates could
also have a material adverse effect on our revenue, results of operations and financial condition.
The ongoing supply chain and labor shortage issues could result in an adverse impact on our business due to our
customer’s reduction in advertising spending as their businesses are negatively impacted by low inventories, product
delays, and labor shortages resulting in reduced revenue.
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The Russia-Ukraine war and the conflict in Gaza have created not only great devastation but also a worldwide
instability that could impact economies across the globe. While direct impacts to our business are limited, the indirect
impacts to our customers could impact demand for advertising and other indirect impacts could arise. In addition, the
impact of other current macro-economic factors on our business, including inflation, supply chain constraints and
geopolitical events, is uncertain.
Risks Related to Our Financing
We May Have Substantial Indebtedness and Debt Service Requirements
While we currently have no debt outstanding at December 31, 2023 we have previously borrowed and may borrow
to finance acquisitions and for other corporate purposes. If we borrow in the future, our leverage could make us
vulnerable to an increase in interest rates, particularly related to the Secured Overnight Financing Rate (“SOFR”) as
outlined in our new credit facility amendment, a downturn in our operating performance, or a decline in general
economic conditions. Our credit facility is subject to mandatory prepayment requirements, including but not limited to,
certain sales of assets, certain insurance proceeds, certain debt issuances and certain sales of equity. Any outstanding
balance under the credit facility will be due on the maturity date of December 19, 2027. We believe that cash flows from
operations will be sufficient to meet any debt service requirements for interest and scheduled payments of principal
under the credit facility in the future. However, if such cash flow is not sufficient, we may be required to sell additional
equity securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled
payments. We cannot be sure that we would be able to affect any such transactions on favorable terms, if at all.
Variable-Rate Indebtedness Exposes us to Interest Rate Risk, which could Cause Our Debt Service Obligations to
Increase Significantly.
Certain of our secured indebtedness, including borrowings under our existing credit facility, is or is expected to be,
as applicable, subject to variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt
service obligations on the variable-rate indebtedness would increase and our net loss would increase, even though the
amount borrowed under the facility remained the same. As of December 31, 2022, we had no outstanding variable-rate
debt. However, if and to the extent we borrow in the future, an unfavorable movement in interest rates, primarily SOFR,
could result in higher interest expense and cash payments for us. Although we may enter into interest rate hedges,
involving the partial or full (i) exchange of floating for fixed-rate interest payments or (ii) obtaining an interest rate cap,
to reduce interest rate volatility, we cannot provide assurance that we will enter into such arrangements or that they will
successfully mitigate such interest rate volatility. SOFR is a broad measure of the cost of borrowing cash in the
overnight U.S treasury repo market, and the Federal Reserve Bank of New York has published the daily rate since 2018.
Our Debt Covenants Restrict our Financial and Operational Flexibility
Our credit facility contains a number of financial covenants which, among other things, require us to maintain
specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness,
dividends, distributions, guarantees, liens and encumbrances. Our ability to meet these financial ratios can be affected by
operating performance or other events beyond our control, and we cannot assure you that we will meet those ratios.
Certain events of default under our credit facility could allow the lenders to declare all amounts outstanding to be
immediately due and payable and, therefore, could have a material adverse effect on our business. We have pledged
substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the credit facility and
each of our subsidiaries has guaranteed the credit facility and has pledged substantially all of their assets (excluding their
FCC licenses and certain other assets) in support of the credit facility.
25
Risks Related to the Radio Broadcasting Industry
Our Stations Must Compete for Advertising Revenues in Their Respective Markets
Radio broadcasting is a highly competitive business. Our stations compete for listeners and advertising revenues
within their respective markets directly with other radio stations, as well as with other media, such as broadcast radio (as
applicable), cable television and/or radio, satellite television and/or satellite radio systems, newspapers, magazines,
direct mail, the Internet, coupons and billboard advertising. Audience ratings and market shares are subject to change,
and any change in a particular market could have a material adverse effect on the revenue of our stations located in that
market. While we already compete in some of our markets with other stations with similar programming formats, if
another radio station in a market were to convert its programming format to a format similar to one of our stations, or if a
new station were to adopt a comparable format or if an existing competitor were to strengthen its operations, our stations
could experience a reduction in ratings and/or advertising revenue and could incur increased promotional and other
expenses. Other radio broadcasting companies may enter into the markets in which we operate or may operate in the
future. These companies may be larger and have more financial resources than we have. We cannot assure you that any
of our stations will be able to maintain or increase their current audience ratings and advertising revenues.
We Depend on Key Personnel
Our business is partially dependent upon the performance of certain key individuals, particularly
Christopher S. Forgy, our President and CEO. Although we have entered into employment and non-competition
agreements with Mr. Forgy, which terminate on December 7, 2025, and certain other key personnel, including on-air
personalities, we cannot be sure that such key personnel will remain with us. We can give no assurance that all or any of
these employees will remain with us or will retain their audiences. Many of our key employees are at-will employees
who are under no legal obligation to remain with us. Our competitors may choose to extend offers to any of these
individuals on terms which we may be unwilling to meet. In addition, any or all of our key employees may decide to
leave for a variety of personal or other reasons beyond our control. Furthermore, the popularity and audience loyalty of
our key on-air personalities is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience
loyalty is beyond our control and could limit our ability to generate revenues.
Our Success Depends on our Ability to Identify and Integrate Acquired Stations
As part of our strategy, we have pursued and may continue to pursue acquisitions of additional radio stations,
subject to the terms of our credit facility. Competitors may be able to outbid us for acquisitions. As a result of these and
other factors, our ability to identify and consummate future acquisitions is uncertain.
Our consummation of all future acquisitions is subject to various conditions, including FCC and other regulatory
approvals. The FCC must approve any transfer of control or assignment of broadcast licenses. Such acquisitions could be
delayed by shutdowns of the U.S. Government. In addition, acquisitions may encounter intense scrutiny under federal
and state antitrust laws. Our future acquisitions may be subject to notification under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and to a waiting period and possible review by the Department of Justice and the Federal
Trade Commission. Any delays, injunctions, conditions or modifications by any of these federal agencies could have a
negative effect on us and result in the abandonment of all or part of otherwise attractive acquisition opportunities. We
cannot predict whether we will be successful in identifying future acquisition opportunities or what the consequences
will be of any acquisitions.
Certain of our acquisitions may prove unprofitable and fail to generate anticipated cash flows. In addition, the
success of any completed acquisition will depend on our ability to effectively integrate the acquired stations. The process
of integrating acquired stations may involve numerous risks, including difficulties in the assimilation of operations, the
diversion of management’s attention from other business concerns, risk of entering new markets, and the potential loss
of key employees of the acquired stations.
26
The Royalties We Pay to Copyright Owners Could Increase Significantly, and Proposed Legislation Could Require
Radio Broadcasters to Pay Royalties to Record Labels and Recording Artists
We pay royalties to copyright owners of musical compositions (typically song composers and publishers) whenever
we broadcast or stream musical compositions. These royalties are paid through ASCAP, BMI, SESAC, GMR and
Sound Exchange. The rates at which we pay royalties to copyright owners are privately negotiated or set pursuant to a
regulatory process. Increased royalty rates could significantly increase our expenses, which could adversely affect our
business. There is no guarantee that the licenses and associated royalty rates that currently are available to us will be
available to us in the future. In addition, legislation has been previously introduced in Congress that would require radio
broadcasters to pay a performance royalty to record labels and performing artists for use of their recorded songs. The
proposed legislation would add an additional layer of royalties to be paid directly to the record labels and artists. It is
currently unknown what proposed legislation, if any, will become law, whether industry groups will enter into an
agreement with respect to performance fees, and what significance this royalty would have on our results from
operations, cash flows or financial position.
Risks Related to Regulation of Our Business
Future Impairment of our FCC Broadcasting Licenses Could Affect our Operating Results
As of December 31, 2023, our FCC broadcasting licenses represented 39% of our total assets. We are required to
test our FCC broadcasting licenses for impairment on an annual basis, or more frequently if events or changes in
circumstances indicate that our FCC broadcasting licenses might be impaired which may result in future impairment
losses. For further discussion, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Critical Accounting Policies and Estimates included with this Form 10-K.
Our Business is Subject to Extensive Federal Regulation
The broadcasting industry is subject to extensive federal regulation which, among other things, requires approval by
the FCC of transfers, assignments and renewals of broadcasting licenses, limits the number of broadcasting properties
that may be acquired within a specific market, and regulates programming and operations. For a detailed description of
the material regulations applicable to our business, see “Federal Regulation of Radio Broadcasting” and “Other FCC
Requirements” in Item 1 of this Form 10-K. Failure to comply with these regulations could, under certain circumstances
and among other things, result in the denial of renewal or revocation of FCC licenses, shortened license renewal terms,
monetary forfeitures or other penalties which would adversely affect our profitability. Changes in ownership
requirements could limit our ability to own or acquire stations in certain markets.
New Federal Regulations or Fees Could Affect our Broadcasting Operations
There has been proposed legislation in the past and there could be again in the future that requires radio broadcasters
to pay additional fees such as a spectrum fee for the use of the spectrum or a royalty fee to record labels and performing
artists for use of their recorded music. Currently, we pay royalties to song composers, publishers, and performers
indirectly through third parties. Any proposed legislation that becomes law could add an additional layer of royalties to
be paid directly to the record labels and artists. These proposed royalties have been the subject of considerable debate
and activity by the broadcast industry and other parties affected by the legislation. It is currently unknown what impact
any potential required royalty payments would have on our results of operations, cash flows or financial position.
27
The FCC’s Vigorous Enforcement of Indecency Rules Could Affect our Broadcasting Operations
Federal law regulates the broadcast of obscene, indecent or profane material. The FCC has increased its enforcement
efforts relating to the regulation of indecency violations, and Congress has increased the penalties for broadcasting
obscene, indecent or profane programming, and these penalties may potentially subject broadcasters to license
revocation, renewal or qualification proceedings in the event that they broadcast such material. The FCC has expanded
the scope of items considered indecent to include material that could be considered “blasphemy,” “personally reviling
epithets,” “profanity” and vulgar or coarse words, amounting to a nuisance. Effective January 15, 2024, the maximum
forfeiture penalty (after 2024 annual inflation adjustment) for an indecency violation is $495,500 per incident and
$4,573,840 for a continuing violation arising from a single act or failure to act. In March 2015, the FCC issued a Notice
of Apparent Liability for the then maximum forfeiture amount of $325,000 against a television station for violation of
the indecency laws. In addition, the FCC’s heightened focus on the indecency regulations against the broadcast industry
may encourage third parties to oppose our license renewal applications or applications for consent to acquire broadcast
stations. Because the FCC may investigate indecency complaints prior to notifying a licensee of the existence of a
complaint, a licensee may not have knowledge of a complaint unless and until the complaint results in the issuance of a
formal FCC letter of inquiry or notice of apparent liability for forfeiture. We may in the future become subject to
inquiries or proceedings related to our stations’ broadcast of obscene, indecent or profane material. To the extent that
any inquiries or other proceedings result in the imposition of fines, a settlement with the FCC, revocation of any of our
station licenses or denials of license renewal applications, our result of operations and business could be materially
adversely affected.
We are Subject to a Series of Risks Regarding Scrutiny of Environmental, Social and Governance Matters
Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their
environmental, social, and governance (“ESG”) practices. For example, various groups produce ESG scores or ratings
based at least in part on a company’s ESG disclosures, and certain market participants, including institutional investors,
use such ratings to assess companies’ ESG profiles. There are also increasing regulatory expectations for ESG matters.
Various policymakers, including the SEC, have adopted (or are considering adopting) requirements to disclose certain
climate-related or other ESG information, which may require additional costs to comply. This and other stakeholder
expectations will likely lead to increased costs as well as scrutiny that could heighten the risk. Additionally, many of our
customers, business partners, and suppliers may be subject to similar expectations, which may augment or create
additionally risks, including risks that may not be known to us.
Risks Related to Technology and Cybersecurity
New Technologies May Affect our Broadcasting Operations
The FCC has and is considering ways to introduce new technologies to the broadcasting industry, including satellite
and terrestrial delivery of digital audio broadcasting and the standardization of available technologies which significantly
enhance the sound quality of AM broadcasters. We are unable to predict the effect such technologies may have on our
broadcasting operations. The capital expenditures necessary to implement such technologies could be substantial.
Information Technology and Cybersecurity Failures or Data Security Breaches Could Harm Our Business
Any internal technology error or failure impacting systems hosted internally or externally, or any large-scale
external interruption in technology infrastructure we depend on, such as power, telecommunications or the Internet, may
disrupt our technology network. Any individual, sustained or repeated failure of technology could impact our customer
service and result in increased costs or reduced revenues. Our technology systems and related data also may be
vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist
attacks, telecommunications failures, computer viruses, hackers and other security issues. While we have in place, and
continue to invest in, technology security initiatives and disaster recovery plans, these measures may not be adequate or
implemented properly to prevent a business disruption and its adverse financial impact and consequences to our
business' reputation.
28
In addition, as a part of our ordinary business operations, we may collect and store sensitive data, including personal
information of our clients, listeners and employees. The secure operation of the networks and systems on which this type
of information is stored, processed and maintained is critical to our business operations and strategy. Any compromise of
our technology systems resulting from attacks by hackers or breaches due to employee error or malfeasance could result
in the loss, disclosure, misappropriation of or access to clients’, listeners’, employees’ or business partners’ information.
Any such loss, disclosure, misappropriation or access could result in legal claims or proceedings, liability or regulatory
penalties under laws protecting the privacy of personal information, disrupt operations and damage our reputation, any
or all of which could adversely affect our business.
To meet business objectives, the Company relies on both internal information technology (IT) systems and
networks, and those of third parties and their vendors, to process and store sensitive data, including confidential
research, business plans, financial information, intellectual property, and personal data that may be subject to legal
protection. The extensive information security and cybersecurity threats, which affect companies globally, pose a risk
to the security and availability of these IT systems and networks, and the confidentiality, integrity, and availability of
the Company’s sensitive data. The Company continually assesses these threats and makes investments to increase
internal protection, detection, and response capabilities, as well as ensure the Company’s third-party providers have
required capabilities and controls, to address this risk.
In September 2021, one of our third-party service providers of a critical application used in our business, was the
victim of a ransomware cyberattack. However, the Company’s data was not breached in connection with this incident
and the incident did not have a material impact on the Company’s business or operations.
To date, the Company has not experienced any material impact to the business or operations resulting from
information or cybersecurity attacks; however, because of the frequently changing attack techniques, along with the
increased volume and sophistication of the attacks, there remains the potential for the Company to be adversely
impacted. This impact could result in reputational, competitive, operational or other business harm as well as financial
costs and regulatory action. The Company currently maintains cybersecurity insurance in the event of an information
security or cyber incident; however, the coverage may not be sufficient to cover all financial losses nor may it be
available in the future.
29
Risks Related to the Ownership of Our Stock
The Company is No Longer Controlled by our President, Chief Executive Officer and Chairman
Edward K. Christian, our founder and former President, Chief Executive Officer and Chairman, passed away on
August 19, 2022. Mr. Christian held approximately 65% of the combined voting power of our Common Stock (based on
Class B Common Stock generally being entitled to ten votes per share, with certain exceptions, but not including options
to acquire Class B Common Stock). As a result, Mr. Christian was generally able to control the vote on most matters
submitted to the vote of shareholders and, therefore, was able to direct our management and policies, except with respect
to (i) the election of the two Class A directors, (ii) those matters where the shares of our Class B Common Stock are only
entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of
incorporation, bylaws or applicable law. Upon Mr. Christian’s passing on August 19, 2022, his Class B shares were
transferred into an estate planning trust and that transfer resulted in an automatic conversion of each Class B share he
held into one fully paid and non-assessable Class A Share. Those Class A Shares have the same voting rights as all other
Class A Shares, and the estate has approximately 16% voting rights after the conversion of the shares from Class B
Shares to Class A Shares. The Company’s subsidiaries holding FCC licenses timely applied to the FCC for consent to
transfer of control of the subsidiaries from Mr. Christian to the shareholders of the Company, and those applications
were routinely approved by the FCC on December 20, 2023. As a result of the change in voting control, the Company
has entered into a period of significant transition and is potentially more vulnerable to activist investors or hostile
takeover attempts. If the Company is unable to manage this transition effectively, it may have an adverse impact on the
Company and its shareholders.
We May Experience Volatility in the Market Price of our Common Stock
The market price of our common stock has fluctuated in the past and may continue to be volatile. In addition to
stock market fluctuations due to economic or other factors, the volatility of our shares may be influenced by lower
trading volume and concentrated ownership relative to many of our publicly-held competitors. Because several of our
shareholders own significant portions of our outstanding shares, our stock is relatively less liquid and therefore more
susceptible to price fluctuations than many other companies’ shares. If these shareholders were to sell all or a portion of
their holdings of our common stock, then the market price of our common stock could be negatively affected. Investors
should be aware that they could experience short-term volatility in our stock if such shareholders decide to sell all or a
portion of their holdings of our common stock at once or within a short period of time.
We are a Smaller Reporting Company and Intend to Avail Ourselves of Certain Reduced Disclosure Requirements
Applicable to Smaller Reporting Companies, which could make our Common Stock Less Attractive to Investors.
We are a smaller reporting company, as defined in the Exchange Act, and we intend to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not applicable to
smaller reporting companies, including reduced disclosure obligations regarding executive compensation. We cannot
predict if investors will find our common stock less attractive because we may rely on these exemptions. If some
investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile. We intend to take advantage of certain of these reporting exemptions
until we are no longer a smaller reporting company. We will remain a smaller reporting company until the aggregate
market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently
completed second fiscal quarter is $250 million or more.
Item 1B. Unresolved Staff Comments
None.
30
Item 1C. Cybersecurity
Risk Management and Strategy
We have established processes and policies for assessing, identifying and managing material risks posed by
cybersecurity threats. Our processes and policies are based upon the National Institute of Standards and Technology
(NIST) Cybersecurity Framework and include a Cybersecurity Incident Response Plan (“CIRP”). This does not imply
that we meet any particular technical standards, specifications, or requirements, only that we use the NIST as a guide
to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management processes, policies and CIRP are focused on (1) developing organizational
understanding to manage cybersecurity risks, (2) applying safeguards to protect our systems, (3) detecting the
occurrence of a cybersecurity incident, (4) responding to a cybersecurity incident and (5) recovering from a
cybersecurity incident. Where appropriate, these processes and policies are integrated into our overall risk
management systems and processes. For instance, all of our employees with network access are required to complete
information security and privacy training on an annual basis. We are continuously working to improve our
information technology systems and provide employee awareness training around phishing, malware, and other cyber
risks to enhance our levels of protection. We have engaged independent consultants and other third-parties to assist us
in establishing and improving our policies. Our processes and policies include the identification of those third-party
relationships which have the greatest potential to expose us to cybersecurity threats and, upon identification, we
conduct additional due diligence as a part of establishing those relationships. We also maintain insurance coverage for
cybersecurity insurance as part of our overall insurance portfolio. For additional information concerning cybersecurity
risks we face, see Item lA Risk Factors - Information Technology and Cybersecurity Failures or Data Security
Breaches Could Harm Our Business.
Governance
Cybersecurity and risks related to our information technology and other computer resources are an important focus
of our Board of Directors' risk oversight. The Board has created a Cybersecurity Sub Committee of our Audit
Committee for oversight of cybersecurity and other information technology risks. Our Cybersecurity Sub Committee of
our Audit Committee receives materials on a frequent basis to address the identification and status of information
technology cybersecurity risks, and management, including our Chief Technology Officer (CTO), provides periodic
updates to our Cybersecurity Sub Committee. The Sub Committee reports to the full Board regarding its activities. The
full Board also receives briefings from management on our cyber risk management program.
The CTO is responsible for managing our information security team to ensure they are assessing and managing
cybersecurity risks in accordance with our processes and procedures. Our CTO has approximately 25 years' experience
managing enterprise information technology systems.
Our management team supervises efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents
through various means, which may include briefings from internal security personnel; threat intelligence and other
information obtained from governmental, public or private sources, including external consultants engaged by us; and
alerts and reports produced by security tools deployed in the IT environment.
Pursuant to our CIRP, when a cybersecurity event has been identified through our detection processes, it is assessed
in order to determine whether the event is a cybersecurity incident. Our CIRP designates the primary manager of a
cybersecurity incident, describes the parties who should be informed about the incident and outlines the processes for
containment, eradication, recovery and resolution of the incident. Depending on the severity and impact of a cybersecurity
threat, members of our senior management team and Board of Directors are notified of an incident and kept informed of
the mitigation and remediation of the incident.
31
Item 2. Properties
Our corporate headquarters is located in Grosse Pointe Farms, Michigan. The types of properties required to support
each of our stations include offices, studios, and transmitter and antenna sites. A station’s studios are generally housed
with its offices in business districts. The transmitter sites and antenna sites are generally located so as to provide
maximum market coverage for our stations’ broadcast signals.
As of December 31, 2023, the studios and offices of 25 of our 28 operating locations, including our corporate
headquarters in Michigan, are located in facilities we own. The remaining studios and offices are located in leased
facilities with lease terms that expire in 1.7 years to 8.0 years. We own or lease our transmitter and antenna sites, with
lease terms that expire in 1 year to 67 years. We do not anticipate any difficulties in renewing those leases that expire
within the next five years or in leasing other space, if required.
No one property is material to our overall operations. We believe that our properties are in good condition and
suitable for our operations.
We own substantially all of the equipment used in our broadcasting business.
Item 3. Legal Proceedings
The Company is subject to various outstanding claims which arise in the ordinary course of business, and to other
legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with
respect to these matters, will not materially affect the Company’s financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities
Our Class A Common Stock trades on the NASDAQ Global Market of the NASDAQ Stock Market LLC under the
ticker symbol SGA.
The closing price for our Class A Common Stock on March 5, 2024 as reported by the NASDAQ was $23.39. As of
March 5, 2024, there were approximately 168 holders of record of our Class A Common Stock. This figure does not
include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage
firms and clearing agencies.
Dividends
During 2023, our Board of Directors declared four quarterly cash dividends and one special dividend totaling $3.00
per share on our Classes A shares. These dividends totaling approximately $18.6 million were accrued or paid during
2023. See Note 1 of the financial statements for specific details on the dividends.
During 2022, our Board of Directors declared four quarterly cash dividends and two special dividends totaling $4.86
per share on our Classes A and B shares. These dividends totaling approximately $29.6 million were accrued or paid
during 2022. In December 2022, the Board of Directors adopted a new variable dividend policy for the allocation of
cash flows aligned with the Company’s goals of maintaining a strong balance sheet, increasing cash returns to
shareholders, and continuing to grow the Company through strategic acquisitions. See Note 1 of the financial statements
for specific details on the dividends.
32
During 2021, our Board of Directors declared three quarterly cash dividends and a special dividend totaling $0.98
per share on our Classes A and B shares. These dividends totaling approximately $5.9 million were accrued or paid
during 2021. See Note 1 of the financial statements for specific details on the dividends.
The Company currently intends to declare regular quarterly cash dividends as well as variable dividends in
accordance with the terms of its variable dividend policy. As previously reported, our Board adopted a variable dividend
policy for the allocation of available cash aligned with the goals of maintaining a strong balance sheet, increasing cash
returns to shareholders, and continuing to grow the Company through strategic acquisitions. The Company may also
declare special dividends and implementation of stock buybacks in future periods. The declaration and payment of any
future dividend, whether fixed, special, or based on the variable policy, or the implementation of any stock buyback
program will remain at the full discretion of the Board and will depend on the Company’s financial results, cash
requirements, future expectations, and other pertinent factors.
Recent Sales of Unregistered Securities
Not applicable.
Issuer Purchases of Equity Securities
The following table summarizes our repurchases of our Class A Common Stock during the three months ended
December 31, 2023. Shares repurchased during the quarter were from the retention of shares for the payment of
withholding taxes related to the vesting of restricted stock.
Total Number Approximate
Period
October 1 - October 31, 2023 . . . . . . . . . . . . . . . . . . . . .
November 1 - November 30, 2023 . . . . . . . . . . . . . . . . .
December 1 - December 31, 2023 . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $ —
$ 20.02
$ 21.37
$ 20.12
10,475
799
11,274
of
Shares
Purchased
as Part of
Publicly
Average
Price
Paid per Announced
Total
Number
of Shares
Purchased (1) Share Program
Dollar
Value of
Shares
that May Yet be
Purchased
Under the
Program (2)
18,203,509
17,993,800
17,976,728
17,976,728
— $
— $
— $
— $
(1) All shares were purchased other than through a publicly announced plan or program. The shares were forfeited to
the Company for payment of tax withholding obligations related to the vesting of restricted stock.
(2) We have a Stock Buy-Back Program which allows us to purchase our Class A Common Stock. In February 2013,
our Board of Directors authorized an increase in the amount committed to the Buy-Back Program from $60 million
to approximately $75.8 million.
Performance Graph
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are no
longer required to provide a performance graph.
Item 6. [Reserved]
33
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Item 1. Business and the consolidated financial
statements and notes thereto of Saga Communications, Inc. and its subsidiaries contained elsewhere herein. The
following discussion is presented on a consolidated basis. We serve twenty-seven radio markets (reporting units) that
aggregate into one operating segment (Radio), which also qualifies as a reportable segment. We operate under one
reportable business segment for which segment disclosure is consistent with the management decision-making process
that determines the allocation of resources and the measuring of performance. Corporate general and administrative
expenses, interest expense, write-off debt issuance costs, other (income) expense, and income tax provision are managed
on a consolidated basis.
The discussion of our operating performance focuses on station operating income because we manage our stations
primarily on station operating income. Operating performance is evaluated for each individual market.
We use certain financial measures that are not calculated in accordance with generally accepted accounting
principles in the United States of America (GAAP) to assess our financial performance. For example, we evaluate the
performance of our markets based on “station operating income” (operating income plus corporate general and
administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible
assets). Station operating income is generally recognized by the broadcasting industry as a measure of performance, is
used by analysts who report on the performance of the broadcasting industry, and it serves as an indicator of the market
value of a group of stations. In addition, we use it to evaluate individual stations, market-level performance, overall
operations and as a primary measure for incentive based compensation of executives and other members of management.
Station operating income is not necessarily indicative of amounts that may be available to us for debt service
requirements, other commitments, reinvestment or other discretionary uses. Station operating income is not a measure of
liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to, and not a substitute for,
our results of operations presented on a GAAP basis.
General
We are a media company primarily engaged in acquiring, developing and operating broadcast properties including
opportunities complimentary to our core radio business including digital, e-commerce and non-traditional revenue
initiatives. We actively seek and explore opportunities for expansion through the acquisition of additional broadcast
properties. We review acquisition opportunities on an ongoing basis.
34
Radio Stations
Our radio stations’ primary source of revenue is from the sale of advertising for broadcast on our stations.
Depending on the format of a particular radio station, there are a predetermined number of advertisements available to be
broadcast each hour.
Most advertising contracts are short-term and generally run for a few weeks only. The majority of our revenue is
generated from local advertising, which is sold primarily by each radio market’s sales staff. For the years ended
December 31, 2023, 2022 and 2021, approximately 90%, 89% and 89%, respectively, of our radio stations’ gross
revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales
representative firms that specialize in national sales for each of our broadcast markets.
Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have
been lowest during the winter months, which include the first quarter of each year. Political revenue was significantly
lower in 2023 and 2021 due to the decreased number of national, state, and local elections in most of our markets as
compared to 2022. Our gross political revenue for the years ended December 31, 2023, 2022 and 2021 was $944,000,
$3,625,000 and $1,780,000, respectively. We expect political revenue in 2024 to increase from 2023 levels as a result of
more elections in 2024 at the local, state and national levels.
Our net operating revenue, station operating expense and operating income vary from market to market based upon
the market’s rank or size which is based upon population and the available radio advertising revenue in that particular
market.
The broadcasting industry and advertising in general is influenced by the state of the overall economy, including
unemployment rates, inflation, energy prices and consumer interest rates. Our stations broadcast primarily in small to
midsize markets. Historically, these markets have been more stable than major metropolitan markets during downturns
in advertising spending, but may not experience increases in such spending as significant as those in major metropolitan
markets in periods of economic improvement.
Our financial results are dependent on a number of factors, the most significant of which is our ability to generate
advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a
station’s ability to attract audiences in the demographic groups targeted by its advertisers. In a number of our markets,
this is measured by periodic reports generated by independent national rating services. In the remainder of our markets it
is measured by the results advertisers obtain through the actual running of an advertising schedule. Advertisers measure
these results based on increased demand for their goods or services and/or actual revenues generated from such demand.
Various factors affect the rate a station can charge, including the general strength of the local and national economies,
population growth, ability to provide popular programming, local market competition, target marketing capability of
radio compared to other advertising media, and signal strength.
When we acquire and/or begin to operate a station or group of stations we generally increase programming and
advertising and promotion expenses to increase our share of our target demographic audience. Our strategy sometimes
requires levels of spending commensurate with the revenue levels we plan on achieving in two to five years. During
periods of economic downturns, or when the level of advertising spending is flat or down across the industry, this
strategy may result in the appearance that our cost of operations are increasing at a faster rate than our growth in
revenues, until such time as we achieve our targeted levels of revenue for the acquired station or group of stations.
The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings)
is limited in part by the format of a particular radio station. Our stations strive to maximize revenue by constantly
managing the number of commercials available for sale and by adjusting prices based upon local market conditions and
ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time
of the day, the total number of advertisements broadcast on a particular station generally does not vary significantly from
year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is
generally the result of inventory sell out ratios and pricing adjustments, which are made to ensure that the station
efficiently utilizes available inventory.
35
Our radio stations employ a variety of programming formats. We periodically perform market research, including
music evaluations, focus groups and strategic vulnerability studies. Because reaching a large and demographically
attractive audience is crucial to a station’s financial success, we endeavor to develop strong listener loyalty. Our stations
also employ audience promotions to further develop and secure a loyal following. We believe that the diversification of
formats on our radio stations helps to insulate us from the effects of changes in musical tastes of the public on any
particular format.
The primary operating expenses involved in owning and operating radio stations are employee salaries and related
benefit costs, sales commissions, programming expenses, depreciation, and advertising and promotion expenses.
The radio broadcasting industry is subject to rapid technological change, evolving industry standards and the
emergence of new media technologies and services. These new technologies and media are gaining advertising share
against radio and other traditional media.
We are continuing to expand our digital initiative to provide a seamless experience across multiple platforms. Our
goal is to allow our listeners to connect with our brands on demand wherever, however, and whenever they choose. We
continue to create and expand opportunities for revenue generation through targeted digital advertising, online
community news, entertainment and events and an array of digital services that include online promotions, mobile
messaging, and email marketing.
During the years ended December 31, 2023, 2022 and 2021, our Columbus, Ohio; Des Moines, Iowa; Milwaukee,
Wisconsin; Norfolk, Virginia and Portland, Maine markets, when combined, represented approximately 36%, 38%, and
39%, respectively, of our consolidated net operating revenue. An adverse change in any of these radio markets or
relative market position in those markets could have a significant impact on our operating results as a whole.
The following tables describe the percentage of our consolidated net operating revenue represented by each of these
markets:
Percentage of Consolidated
Net Operating Revenue
for the Years
Ended December 31,
2022
2021
2023
Market:
Columbus, Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Des Moines, Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Milwaukee, Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Norfolk, Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portland, Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 %
5 %
11 %
6 %
5 %
10 %
5 %
12 %
6 %
5 %
10 %
6 %
11 %
6 %
6 %
36
During the years ended December 31, 2023, 2022 and 2021, the radio stations in our five largest markets when
combined, represented approximately 40%, 44% and 43%, respectively, of our consolidated station operating income.
The following tables describe the percentage of our consolidated station operating income represented by each of these
markets:
Percentage of Consolidated
Station Operating Income(*)
for the Years Ended
December 31,
2022
2021
2023
Market:
Columbus, Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Des Moines, Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Milwaukee, Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Norfolk, Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portland, Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 %
4 %
12 %
9 %
5 %
13 %
4 %
14 %
7 %
6 %
12 %
5 %
12 %
7 %
7 %
(*) Operating income plus corporate general and administrative expenses, depreciation and amortization, other
operating (income) expenses, and impairment of intangible assets.
Results of Operations
The following tables summarize our results of operations for the three years ended December 31, 2023, 2022 and
2021.
Consolidated Results of Operations
Years Ended December 31,
2021
2022
2023
$ Increase % Increase $ Increase % Increase
(Decrease) (Decrease) (Decrease) (Decrease)
2023 vs. 2022
2022 vs. 2021
Net operating revenue . . . . . . . $ 112,773 $ 114,893 $ 108,343 $
Station operating expense . . . .
Corporate general and
90,199
87,537
83,245
(In thousands, except %’s and per share information)
(2,120)
2,662
(1.8)% $
3.0 %
6,550
4,292
6.0 %
5.2 %
administrative . . . . . . . . . . . .
10,966
14,300
10,040
(3,334)
(23.3)%
4,260
42.4 %
134
(1,582)
43
(1,031)
533
(1,127)
(1,425)
298
N/M
(12.1)%
33.1 %
N/M
(82)%
(21)
(1,981)
(154)
(394)
(18)
(8.0)%
(29.7)%
3.2 % $
(1,415)
540
(1,955)
N/M
(13.2)%
(54.2)%
N/M
N/M
(9.2)%
12.7 %
(17.5)%
0.03
2.0 % $
(0.33)
(17.8)%
$
$
Other operating expense
(income), net . . . . . . . . . . . . .
Operating income . . . . . . . . . .
Interest expense . . . . . . . . . . . .
Interest income . . . . . . . . . . . .
Other income . . . . . . . . . . . . . .
Income before income
120
11,488
173
(1,441)
(119)
(14)
13,070
130
(410)
(652)
7
15,051
284
(16)
(634)
tax expense . . . . . . . . . . . . . .
Income tax provision . . . . . . . .
Net income . . . . . . . . . . . . . . . . $
12,875
3,375
9,500 $
14,002
4,800
9,202
15,417
4,260
$ 11,157
Earnings per share (diluted) . . $
1.55 $
1.52
$
1.85
N/M = Not Meaningful
37
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
For the year ended December 31, 2023, consolidated net operating revenue was $112,773,000 compared with
$114,893,000 for the year ended December 31, 2022, a decrease of $2,120,000 or 1.8%. The decrease in revenue in 2023
was due to decreases in gross political revenue of $2,681,000, and gross local revenue of $2,401,000 partially offset by
increases in gross interactive revenue of $1,890,000, non-spot revenue of $679,000 and gross national revenue of
$385,000 from 2022. The gross political revenue decreased due to a decrease in the number of national, state and local
elections. The most significant decreases in gross local revenue occurred in our Charleston, South Carolina; Columbus,
Ohio; Ithaca, New York; Milwaukee, Wisconsin; Portland, Maine and Springfield, Illinois markets partially offset by
increases at our Asheville, North Carolina; Harrisonburg, Virginia and Ocala, Florida markets. The increase in gross
interactive results is primarily due to an increase in our streaming revenue. The markets with the most significant
increases in 2023 in non-spot events were Bellingham, Washington; Charleston, South Carolina; Ithaca, New York and
Yankton, South Dakota. The most significant increases in gross national revenue occurred in our Charleston, South
Carolina; Charlottesville, Virginia; Des Moines, Iowa; Ocala, Florida and Springfield, Massachusetts markets.
Station operating expense was $90,199,000 for the year ended December 31, 2023, compared with $87,537,000 for
the year ended December 31, 2022, an increase of $2,662,000 or 3.0%. The increase in operating expenses was primarily
a result of increases in compensation-related expenses, healthcare costs, sales survey expenses, utility expenses, building
maintenance and repairs, and programming rights expenses of $1,605,000, $469,000, $314,000, $248,000, $235,000, and
$172,000, respectively, partially offset by decreases in commission expenses of $383,000 from 2022.
We had operating income for the year ended December 31, 2023 of $11,488,000 compared to $13,070,000 for the
year ended December 31, 2022, a decrease of $1,582,000. The decrease was a result of the decrease in net operating
revenue and the increase in station operating expense, described above, a increase in other operating expense of
$134,000 partially offset by a decrease in our corporate general and administrative expenses of $3,334,000 or 23.3%.
We recorded a loss on sale of fixed assets of $120,000 in 2023 compared to a gain on sale of fixed assets of $14,000 in
2022. The decrease in corporate general and administrative expenses was primarily attributable to the $3.8 million
expense recorded in the third quarter of 2022 related the employment agreement we had with our founder and former
CEO, Mr. Christian, that was required upon his death. Additionally, we had a decrease of $1,020,000 in compensation-
related expense partially offset by increase of $416,000 in insurance costs, $407,000 in directors’ fees, $379,000 in legal
and other consulting fees, and $30,000 in travel and seminar related expenses.
We generated net income of $9,500,000 ($1.55 per share on a fully diluted basis) during the year ended
December 31, 2023, compared to $9,202,000 ($1.52 per share on a fully diluted basis) for the year ended
December 31, 2022, an increase of $298,000. The increase in net income is due to the decrease of operating income,
described above, an increase in interest expense of $43,000, a decrease of other income of $533,000 offset by an increase
in interest income of $1,031,000 and a decrease in income taxes of $1,425,000. The increase in interest expense is due to
an increase in the interest rates attributable to our unused commitment fees and amortization of bank fees. The decrease
in other income is primarily due to reimbursements from the FCC related to their spectrum auction of $115,000 in 2023
versus insurance proceeds in 2022 of $535,000 and reimbursements from the FCC related to their spectrum auction of
$116,000 in 2022 as described in footnote 16 (Other Income). The increase in interest income is related to higher rates
of return on money market accounts reflected as cash equivalents and from our short-term investment accounts which
began in May 2022. The decrease in our income tax expense is due to the decreased in net income before income tax
combined with the increase in rate in 2022 as a result of the permanent difference between book and taxable income
related to the compensation paid to our founder and former CEO as described above and in footnote 6 (Income Taxes).
38
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
For the year ended December 31, 2022, consolidated net operating revenue was $114,893,000 compared with
$108,343,000 for the year ended December 31, 2021, an increase of $6,550,000 or 6.0%. The increase in revenue in 2022
was due to increases in gross local revenue of $2,284,000, gross political revenue of $1,846,000, non-spot revenue of
$1,689,000, gross interactive revenue of $1,577,000, and gross barter revenue of $302,000 partially offset by a decrease in
gross national revenue of $697,000 and an increase in agency commissions of $598,000 from 2021. The most significant
increases in gross local revenue and in agency commissions occurred in our Asheville, North Carolina; Charleston, South
Carolina; Ithaca, New York; and Manchester, New Hampshire markets. The gross political revenue increased due to an
increase in the number of national, state and local elections. The increase in non-spot revenue is primarily due to us
hosting more events again in 2022. The markets with the most significant increases in 2022 in non-spot events were
Charleston, South Carolina; Clarksville, Tennessee; Hilton Head, South Carolina; Jonesboro, Arkansas; Milwaukee,
Wisconsin; Portland, Maine and Yankton, South Dakota. The increase in gross interactive results is primarily due to an
increase in our streaming and website content revenue. The decrease in gross national revenue was attributable to
decreases at the majority of markets due to the focus on local market advertisers offset by increases at our Columbus,
Ohio; Manchester, New Hampshire; and Portland, Maine markets.
Station operating expense was $87,537,000 for the year ended December 31, 2022, compared with $83,245,000 for
the year ended December 31, 2021, an increase of $4,292,000 or 5.2%. The increase in operating expenses was primarily
a result of increases in sales survey expenses, compensation related expenses, commission expense, bad debt expenses,
barter expenses, music licensing fees, utilities, merchant account fees, and promotional expenses of $1,407,000,
$965,000, $840,000, $352,000, $346,000, $311,000, $286,000, $153,000 and $113,000, respectively, partially offset by
decreases in healthcare costs of $530,000 from 2021.
We had operating income for the year ended December 31, 2022 of $13,070,000 compared to $15,051,000 for the
year ended December 31, 2021, a decrease of $1,981,000. The decrease was a result of the increase in net operating
revenue partially offset by the increase in station operating expense, described above, a decrease in other operating
(income) expense of $21,000 offset by an increase in our corporate general and administrative expenses of $4,260,000 or
42.4%. The increase in corporate general and administrative expenses was primarily attributable to expenses under the
employment agreement we had with our founder and CEO, Mr. Christian upon his death of which $3,900,000 was
recorded in the third quarter of 2022. In addition, we had an increase in legal expenses, and transportation related costs
of $207,000, and $156,000, respectively, from 2021. For our other operating (income) expense, net in 2022 we recorded
a gain on the sale of fixed assets of $14,000 compared to a loss on the sale of fixed assets of $7,000 in 2021.
We generated net income of $9,202,000 ($1.52 per share on a fully diluted basis) during the year ended
December 31, 2022, compared to $11,157,000 ($1.85 per share on a fully diluted basis) for the year ended December 31,
2021, a decrease of $1,955,000. The decrease in net income is due to the decrease of operating income, described above,
an increase income taxes of $540,000, offset by a decrease in interest expense of $154,000, an increase in interest
income of $394,000 and an increase in other income of $18,000. The decrease in interest expense is due to no longer
having any debt outstanding, after paying off the remaining balance in the fourth quarter of 2021. The increase in interest
income is related to our short-term investments as described in footnote 1 (Summary of Significant Accounting Policies).
The increase in other income is primarily due to insurance proceeds for weather-related damages of $535,000 and
reimbursements from the FCC related to their spectrum auction of $116,000 in 2022 versus insurance proceeds in 2021
of $589,000 and other gains of $45,000 in 2021 as described in footnote 16 (Other Income). The increase in our income
tax expense is due to the permanent difference between book and taxable income related to the compensation paid to our
founder and CEO as described above and in footnote 6 (Income Taxes).
39
Liquidity and Capital Resources
Debt Arrangements and Debt Service Requirements
On December 19, 2022, we entered into a Third Amendment to our Credit Facility, (the “Third Amendment”),
which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the
Huntington National Bank (collectively, the “Lenders”), established an interest rate equal to the secured overnight
financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank
of New York) as the interest base and increased the basis points.
We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of
the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of
their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.
Approximately $266,000 of debt issuance costs related to the Credit Facility were capitalized and are being
amortized over the life of the Credit Facility. These debt issuance costs are included in other assets, net in the
consolidated balance sheets. As a result of the Second Amendment, the Company incurred an additional $120,000 of
transaction fees related to the Credit Facility that were capitalized. As a result of the Third Amendment, the Company
incurred an additional $161,000 of transaction fees related to the Credit Facility that were capitalized. The cumulative
transaction fees are being amortized over the remaining life of the Credit Facility.
Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR (5.38% at
December 31, 2023), plus 1% to 2% or the base rate plus 0% to 1%. The spread over SOFR and the base rate vary from
time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a
participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit
Agreement) payable to each of the Lenders and a fronting fee equal to 0.25% per annum payable to the issuing bank.
Under the Third Amendment, we now pay quarterly commitment fees of 0.25% per annum on the unused portion of the
Credit Facility. We previously paid quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the
Credit Facility.
The Credit Facility contains a number of financial covenants (all of which we were in compliance with at
December 31, 2023) which, among other things, require us to maintain specified financial ratios and impose certain
limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and
encumbrances.
We had no debt outstanding at December 31, 2022 or December 31, 2023.
We had approximately $50 million of unused borrowing capacity under the Revolving Credit Facility at both
December 31, 2022 and December 31, 2023.
40
Sources and Uses of Cash
During the years ended December 31, 2023, 2022 and 2021, we had net cash flows from operating activities of
$15,379,000, $17,125,000 and $19,104,000, respectively. We believe that cash flow from operations will be sufficient to
meet any quarterly debt service requirements for interest and scheduled payments of principal under the Credit Facility if
we borrow in the future. However, if such cash flow is not sufficient, we may be required to sell additional equity
securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled
payments. There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.
In March 2013, our Board of Directors authorized an increase to our Stock Buy-Back Program (the “Buy-Back
Program”) to allow us to purchase up to $75.8 million of our Class A Common Stock. From the Buy-Back Program’s
inception in 1998 through December 31, 2023, we have repurchased 2.2 million shares of our Class A Common Stock
for $57.8 million. During the year ended December 31, 2023, approximately 11,274 shares were retained for payment of
withholding taxes for $226,781 related to the vesting of restricted stock. We halted the directions for any additional
buybacks under our plan in 2020. We continue to monitor economic conditions to determine if and when it makes sense
to make additional buybacks under our plan.
Our capital expenditures, exclusive of acquisitions, for the year ended December 31, 2023 were $4,356,000
($5,994,000 in 2022). We anticipate capital expenditures in 2024 to be approximately $5.0 million to $5.5 million, which
we expect to finance through funds generated from operations.
On February 13, 2024, we entered into an agreement to purchase the assets of WKOA (FM), WKHY (FM), WASK
(FM), WXXB (FM), WASK (AM) and W269DJ from Neuhoff Communications, Inc. serving the Greater Lafayette,
Indiana radio market for $5.3 million which we expect to finance through funds generated from operations or
borrowings under our credit agreement. We expect to close on this acquisition in the second quarter of 2024.
On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator from P. & M. Radio for
$61,800 of which $5,000 was paid in 2021 and the remainder was paid on April 6, 2022 when we closed on the
transaction. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the
Greenfield, Massachusetts market as well as synergies and growth opportunities expected through the combination with
the Company’s existing stations. The translators are start-up stations and therefore, have no pro forma revenue and
expenses.
On January 8, 2021, we closed on an agreement to purchase WBQL and W288DQ from Consolidated Media, LLC,
for an aggregate purchase price of $175,000, of which $25,000 was paid in 2020 and the remaining $150,000 paid in
2021. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the
Clarksville, Tennessee market as well as synergies and growth opportunities expected through the combination with the
Company’s existing stations.
On December 7, 2023, the Company’s Board of Directors declared a special cash dividend of $2.00 per share on its
Classes A Common Stock. This dividend, totaling approximately $12,500,000, was paid on January 12, 2024 to
shareholders of record on December 20, 2023 and is recorded in dividends payable in our Consolidated Balance Sheet at
December 31, 2023.
On November 16, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on
its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on December 15, 2023 to
shareholders of record on November 27, 2023.
On September 27, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on
its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on November 3, 2023 to
shareholders of record on October 11, 2023.
41
On May 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its
Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on June 16, 2023 to shareholders
of record on May 22, 2023.
On March 1, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its
Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on April 7, 2023 to shareholders
of record on March 20, 2023.
On December 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and
a special cash dividend of $2.00 per share on its Class A Common Stock. This dividend, totaling approximately
$13,800,000, was paid on January 13, 2023 to shareholders of record on December 21, 2022 and is recorded in dividends
payable in our Consolidated Balance Sheet at December 31, 2022.
On September 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share
and a special cash dividend of $2.00 per share on its Class A Common Stock. This dividend, totaling approximately
$13,600,000, was paid on October 21, 2022 to shareholders of record on October 3, 2022.
On June 6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $1,200,000, was paid to our transfer agent on
June 29, 2022. The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on June 13, 2022.
On March 1, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $970,000, was paid on April 8, 2022 to
shareholders of record on March 21, 2022.
On December 14, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share
and special cash dividend of $0.50 per share on its Classes A and B Common Stock. This dividend, totaling
approximately $3,988,000, was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was
recorded in dividends payable on the Company’s Consolidated Balance Sheet at December 31, 2021.
On September 28, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on
its Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on October 22, 2021 to
shareholders of record on October 8, 2021.
On June 18, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on July 16, 2021 to
shareholders of record on June 30, 2021 and was recorded in dividends payable on the Company’s Condensed
Consolidated Balance Sheet at June 30, 2021. The Company had previously temporarily suspended the quarterly cash
dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020.
On October 27, 2021, we used $10 million from funds generated by operations to voluntarily pay down the
remaining amount on our Revolving Credit Facility.
On May 3, 2022, we used $10 million in cash to purchase U.S. Treasury Bills to be held to maturity with maturity
dates between July 2022 and February 2023. During 2022, $8 million of those $10 million were redeemed and we used
the proceeds to purchase an additional $8 million of U.S. Treasury Bills to be held to maturity. At December 31, 2022,
we had recorded $10.1 million of held-to-maturity U.S. Treasury Bills at amortized cost basis that have a fair market
value of $10 million.
During 2023, we used the proceeds from our U.S. Treasury Bills to purchase additional U.S. Treasury Bills when
they were up for redemption at various times through the year. We redeemed $20.7 million in U.S. Treasury Bills and
purchase an additionally $20.7 million in U.S. Treasury Bills. At December 2023, we have recorded $10.6 million of
held-to-maturity U.S. Treasury Bills at amortized cost basis that have a fair market value of $10.6 million. Our held-to-
maturity U.S. Treasury Bills all have original maturity dates ranging from March 2024 to July 2024.
42
We continue to actively seek and explore opportunities for expansion through the acquisitions of additional
broadcast properties.
We anticipate that any future acquisitions of radio stations and dividend payments will be financed through funds
generated from operations, borrowings under the Credit Agreement, additional debt or equity financing, or a
combination thereof. However, there can be no assurances that any such financing will be available on acceptable terms,
if at all.
Summary Disclosures About Contractual Obligations
We have future cash obligations under various types of contracts, including the terms of our Credit Facility,
operating leases, programming contracts, employment agreements, and other operating contracts. The following table
reflects a summary of our contractual cash obligations and other commercial commitments as of December 31, 2023:
Contractual Obligations:
Payments Due By Period
Total
Less Than
1 Year
1 to 3 Years 4 to 5 Years 5 Years
More Than
Interest Payments on Long-Term Debt(1) . . . . . . . . .
Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Obligations(2) . . . . . . . . . . . . . . . . . . . . . . .
$
564
8,803
31,791
$
135
1,857
18,081
(In thousands)
299 $
$
3,180
10,585
130 $
2,166
3,125
—
1,600
—
Total Contractual Cash Obligations . . . . . . . . . . . . .
$ 41,158
$ 20,073
$
14,064 $
5,421 $
1,600
(1)
(2)
Interest payments on our Credit Facility are based on unused commitment of the credit facility and scheduled debt
maturities, if we were to borrow in the future and the interest rates are held constant over the remaining terms.
Includes $13,708,000 in obligations under employment agreements and contracts with on-air personalities, other
employees, and our President, and CEO, Christopher S. Forgy and $5,300,000 in obligations under the asset
purchase agreement for the acquisition of radio stations in the Lafayette, Indiana market.
We anticipate that the above contractual cash obligations will be financed through funds generated from operations
or additional borrowings under our Credit Facility, or a combination thereof.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States, which require us to make estimates, judgments and assumptions that affect the reported
amounts of certain assets, liabilities, revenues, expenses and related disclosures and contingencies. We evaluate
estimates used in preparation of our financial statements on a continual basis, including estimates related to the
following:
Revenue Recognition: Revenue from the sale of commercial broadcast time to advertisers is recognized when
commercials are broadcast. Revenue is reported net of advertising agency commissions. Agency commissions, when
applicable, are based on a stated percentage applied to gross billing. All revenue is recognized in accordance with the
Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, Revenue
Recognition Revised and Updated and the Accounting Standards Codification (ASC) Topic 606, Revenue from
Contracts with Customers.
43
Carrying Value of Accounts Receivable and Related Allowance for Credit Losses: We evaluate the
collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a
specific customer’s inability to meet its financial obligations to us (e.g., bankruptcy filings, credit history, COVID-19
potential impact on our customers’ business, etc.), we record a specific reserve for bad debts against amounts due to
reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we
recognize reserves for bad debts based on past loss history and the length of time the receivables are past due, ranging
from 50% for amounts 90 days outstanding to 100% for amounts over 120 days outstanding. If our evaluations of the
collectability of our accounts receivable differ from actual results, additional bad debt expense and allowances may be
required. Our historical estimates have been a reliable method to estimate future allowances and our reserves have
averaged approximately 2-5% of our outstanding receivables. The effect of an increase in our allowance of 1% of our
outstanding receivables as of December 31, 2023, from 3.8% to 4.8% or from $618,000 to $781,000 would result in a
decrease in net income of $158,000, net of taxes for the year ended December 31, 2023. In the event we recover
amounts previously written off, we will reduce the specific allowance for credit loss.
Purchase Accounting: We account for our acquisitions under the purchase method of accounting. The total cost
of acquisitions is allocated to the underlying net assets, based on their respective estimated fair values as of the
acquisition date. The excess of consideration paid over the estimated fair values of the net assets acquired is recorded as
goodwill. Determining the fair values of the net assets acquired and liabilities assumed requires management’s judgment
and often involves the use of significant estimates including assumptions with respect to future cash inflows and
outflows, discount rates, asset lives and market multiples, among other items.
Broadcast Licenses and Goodwill: As of December 31, 2023, we have recorded approximately $90,240,000 in
broadcast licenses and $19,236,000 in goodwill, which represents 47% of our total assets. In assessing the recoverability
of these assets, we must conduct impairment testing and charge to operations an impairment expense only in the periods
in which the carrying value of these assets is more than their fair value. We conduct the impairment testing of broadcast
licenses and goodwill annually or more frequently if events or changes in circumstances indicate that the asset might be
impaired.
There was no impairment of broadcast licenses in 2021, 2022 or 2023.
We believe our estimate of the value of our broadcast licenses is a critical accounting estimate as the value is
significant in relation to our total assets, and our estimate of the value uses assumptions that incorporate variables based
on past experiences and judgments about future operating performance of our stations. These variables include but are
not limited to: (1) the forecast growth rate of each radio market, including population, household income, retail sales and
other expenditures that would influence advertising expenditures; (2) market share and profit margin of an average
station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted
discount rate; (5) the likely media competition within the market area; and (6) terminal values. Changes in our estimates
of the fair value of these assets could result in material future period write-downs in the carrying value of our broadcast
licenses. For illustrative purposes only, during our 2023 impairment test had the fair values of each of our broadcasting
licenses been lower by 10%-30%, we would not have had to record any additional broadcast license impairment.
44
Tax Provisions: Our estimates of income taxes and the significant items giving rise to the deferred tax assets and
liabilities are shown in the notes to our consolidated financial statements and reflect our assessment of actual future taxes
to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these
estimates. Actual income taxes could vary from these estimates due to future changes in income tax law or results from
the final review of our tax returns by federal, state or foreign tax authorities. We use our judgment to determine whether
it is more likely than not that our deferred tax assets will be realized. Deferred tax assets are reduced by valuation
allowances if the Company believes it is more than likely than not that some portion or the entire asset will not be
realized.
Litigation and Contingencies: On an ongoing basis, we evaluate our exposure related to litigation and
contingencies and record a liability when available information indicates that a liability is probable and estimable. We
also disclose significant matters that are reasonably possible to result in a loss or are probable but not estimable.
Market Risk and Risk Management Policies
Our earnings are affected by changes in short-term interest rates as a result of our long-term debt arrangements. If
we had borrowings against our long-term debt arrangements, in the event of an adverse change in interest rates,
management may take actions to mitigate our exposure.
Inflation
The impact of inflation on our operations has not been significant to date. We are however, starting to see the
effects of higher inflation starting to impact costs of most goods and services. There can be no assurance that a high rate
of inflation in the future would not have an adverse effect on our operations.
Recent Accounting Pronouncements
Recent accounting pronouncements are described in Note 1 to the accompanying financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Information appearing under the caption “Market Risk and Risk Management Policies” in Item 7 is hereby
incorporated by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements attached hereto are filed as part of this annual report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
45
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and
with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to
Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures
over financial reporting were effective to ensure that material information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act will be recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting during the year ended December 31, 2023
that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the framework as set forth in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Based on our evaluation, management concluded that our internal control over financial reporting was effective as
of December 31, 2023. Our internal control over financial reporting as of December 31, 2023 has been audited by UHY
LLP, an independent registered public accounting firm, as stated in its report which appears below.
46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors Saga Communications, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Saga Communications, Inc.’s (the Company’s) internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of Saga Communications, Inc. as of December 31, 2023 and 2022,
and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the
period ended December 31, 2023 and the related notes and financial statement schedule, and our report dated March 15,
2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ UHY LLP
Sterling Heights, Michigan
March 15, 2024
47
Item 9B. Other Information
None.
Items 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item is incorporated by reference from the information contained in our Proxy
Statement for the 2024 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the
Company’s fiscal year. See also Item 1. Business — Information About Our Executive Officers.
Item 11. Executive Compensation
The information required by this item is incorporated by reference from the information contained in our Proxy
Statement for the 2024 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the
Company’s fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The information required by this item is incorporated by reference from the information contained in our Proxy
Statement for the 2024 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the
Company’s fiscal year.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference from the information contained in our Proxy
Statement for the 2024 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the
Company’s fiscal year.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the information contained in our Proxy
Statement for the 2024 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the
Company’s fiscal year.
48
Item 15. Exhibits and Financial Statement Schedules
(a)
1. Financial Statements
PART IV
The following consolidated financial statements attached hereto are filed as part of this annual report:
Report of Independent Registered Public Accounting Firm (PCAOB ID 1195) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements:
— Consolidated Balance Sheets as of December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 . . . . . . . . . . . . . .
— Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021 . .
— Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
52
53
54
55
56
2. Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts is disclosed in Note 1 to the Consolidated Financial Statements
attached hereto and filed as part of this annual report. All other schedules for which provision are made in the applicable
accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are
inapplicable and therefore have been omitted.
3. Exhibits
The Exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index, which is incorporated
herein by reference.
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Saga Communications, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Saga Communications, Inc. (the “Company”) as of
December 31, 2023 and 2022, and the related consolidated statements of income, shareholders’ equity, and cash flows
for each of the three years in the period ended December 31, 2023, and the related notes and financial statement
Schedule II, Valuation and Qualifying Accounts, listed in the index at item 15(a)(2) (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated
financial position of Saga Communications, Inc. at December 31, 2023 and 2022, and the consolidated results of its
operations and its cash flows for each of the three years in the period December 31, 2023, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), and our report dated March 15, 2024 expressed an unqualified opinion
thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to an account or
disclosure that is material to the financial statements and (2) involved especially challenging, subjective, or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
50
Critical Audit Matter – Broadcast License Impairment Analysis
As disclosed in Notes 1 and 3 to the financial statements, the Company evaluates Federal Communications Commission
licenses (or “broadcast licenses”) for impairment on an annual basis as of October 1st or, more frequently, if events or
changes in circumstances indicate that the carrying value of the Company’s broadcast licenses may not be recoverable.
The broadcast license balance as of December 31, 2023 was $90.2 million. The Company considers potential impairment
by comparing the fair value of a market’s broadcast license to its carrying value. Fair value is estimated by management
using the Greenfield method at the market level, which is a discounted cash flow approach assuming a start-up scenario
in which the only assets held by an investor are broadcasting licenses. Management’s cash flow projections include
significant judgments and assumptions related to market growth rates and market profit margin, estimated available
market revenue including market share, terminal values and discount rates.
We identified broadcast license impairment as a critical audit matter because of the significant judgments made by
management to estimate the fair value of the Company’s broadcast licenses. This required a high degree of auditor
judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of inputs
into the discounted cash flow model driven by management’s estimates.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures performed to evaluate the reasonableness of management’s estimates and assumptions included
assessing the methodologies used by the Company and testing the significant assumptions used in the quantitative
models. We tested the effectiveness of the control over management’s evaluation and determination of estimates and
assumptions used as the inputs in the impairment models. We compared the cash flow models prepared by management
to historical revenues and profit margins as well as third-party market data to evaluate the reasonableness of the
assumptions. We evaluated historical trends in assessing the reasonableness of growth rate assumptions and performed
sensitivity analysis of significant assumptions to evaluate the changes in the fair value of the reporting units that would
result from changes in these assumptions. We performed procedures to verify the mathematical accuracy of the
calculations of broadcast license impairment used by management. We involved our valuation specialists to assist us in
identifying the significant assumptions underlying the models, assessing the rationale and supporting documents related
to these assumptions and determining the appropriateness and reasonableness of the methodologies employed.
Furthermore, we assessed the appropriateness of the disclosures in the consolidated financial statements.
/s/ UHY LLP
We have served as the Company’s auditor since 2015.
Sterling Heights, Michigan
March 15, 2024
51
Saga Communications, Inc.
Consolidated Balance Sheets
(In thousands, except par value)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, less allowance of $618, ($519 in 2022). . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Barter transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets:
29,582
10,595
17,173
2,451
843
60,644
148,265
96,860
51,405
Broadcast licenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, right of use assets, deferred costs and investments, net of
90,240
19,236
$
36,802
10,123
17,440
2,479
1,015
67,859
146,054
92,856
53,198
90,307
19,236
accumulated amortization of $15,984 ($15,944 in 2022) . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,688
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 232,213
10,153
$ 240,753
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued expenses:
2,802
$
2,654
Accrued payroll and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Barter transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity:
Preferred stock, 1,500 shares authorized, none issued and outstanding . . . . . . . . . . . . . . . . . .
Common stock:
Class A common stock, $.01 par value, 35,000 shares authorized, 8,007 issued
5,318
12,505
6,480
924
28,029
26,122
7,513
61,664
—
5,623
13,754
6,359
987
29,377
25,737
7,110
62,224
—
—
—
80
(7,867 in 2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Class B common stock, $.01 par value, 3,500 shares authorized, 0 issued (0 in 2022) . . .
72,593
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134,771
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(36,895)
Treasury stock (1,754 shares in 2023 and 1,753 shares in 2022, at cost) . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
170,549
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 232,213
78
—
71,664
143,896
(37,109)
178,529
$ 240,753
See accompanying notes.
52
Saga Communications, Inc.
Consolidated Statements of Income
Net operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Station operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense (income), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (income) expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
Years Ended December 31,
2022
(In thousands, except per share data)
114,893 $ 108,343
2021
$ 112,773 $
90,199
10,966
120
101,285
11,488
173
(1,441)
(119)
12,875
2,990
385
3,375
9,500
87,537
14,300
(14)
101,823
13,070
130
(410)
(652)
14,002
3,865
935
4,800
9,202 $
$
83,245
10,040
7
93,292
15,051
284
(16)
(634)
15,417
4,065
195
4,260
11,157
1.85
1.85
5,917
5,917
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1.55 $
1.55 $
1.52 $
1.52 $
Weighted average common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common and common equivalent shares . . . . . . . . . . . . .
6,045
6,045
5,973
5,973
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3.00 $
4.86 $
0.98
See accompanying notes.
53
Saga Communications, Inc.
Consolidated Statements of Shareholders’ Equity
Years ended December 31, 2023, 2022 and 2021
Class A
Class B
Additional
Total
Common Stock Common Stock
Shares Amount Shares Amount Capital
Paid-In Retained Treasury Shareholders’
Earnings Stock
Equity
(In thousands)
$ 68,900
—
$ 158,990 $ (37,425)
—
11,157
Balance at January 1, 2021 . . . . . . . . . 6,785 $
Net income . . . . . . . . . . . . . . . . . . . . .
Conversion of shares from Class B
—
to Class A . . . . . . . . . . . . . . . . . . . . .
Forfeiture of restricted stock . . . . . . . .
Dividends declared per common
12
38
share . . . . . . . . . . . . . . . . . . . . . . . . .
—
Compensation expense related to
restricted stock awards . . . . . . . . . . .
Purchase of shares held in treasury . . .
401(k) plan contribution . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . 6,835 $
Net income . . . . . . . . . . . . . . . . . . . . .
Conversion of shares from Class B
—
—
—
—
to Class A . . . . . . . . . . . . . . . . . . . .
Issuance of restricted stock . . . . . . . . .
Dividends declared per common
965
67
share . . . . . . . . . . . . . . . . . . . . . . . . .
—
Compensation expense related to
restricted stock awards . . . . . . . . . . .
Purchase of shares held in treasury . . .
401(k) plan contribution . . . . . . . . . . .
Balance at December 31, 2022 . . . . . . 7,867 $
Net income . . . . . . . . . . . . . . . . . . . . .
Conversion of shares from Class B
—
—
—
—
to Class A . . . . . . . . . . . . . . . . . . . .
Issuance of restricted stock . . . . . . . . .
Dividends declared per common
—
140
share . . . . . . . . . . . . . . . . . . . . . . . . .
—
Compensation expense related to
restricted stock awards . . . . . . . . . . .
Purchase of shares held in treasury . . .
401(k) plan contribution . . . . . . . . . . .
Balance at December 31, 2023 . . . . . . 8,007 $
—
—
—
68
—
—
—
—
—
—
—
68
—
9
1
—
—
—
—
78
—
—
2
—
—
—
—
80
$
938
—
(12)
39
—
—
—
—
965
—
(965)
—
—
$
9
—
—
—
—
—
—
—
9
—
(9)
—
—
—
—
—
1,335
—
(200)
$ 70,035
—
—
(1)
—
—
(5,901)
—
—
—
—
—
—
—
(435)
421
$ 164,246 $ (37,439) $
9,202
—
—
— (29,552)
9,500
—
—
—
(2)
— (18,625)
—
—
—
—
—
—
—
—
—
—
—
1,858
—
—
—
—
(228)
— $ — $ 71,664
—
—
—
—
—
—
—
(147)
477
$ 143,896 $ (37,109) $
—
—
—
—
—
—
1,116
—
—
—
—
(185)
— $ — $ 72,593
—
—
—
—
—
—
—
(227)
441
$ 134,771 $ (36,895) $
190,542
11,157
—
—
(5,901)
1,335
(435)
221
196,919
9,202
—
—
(29,552)
1,858
(147)
249
178,529
9,500
—
—
(18,625)
1,116
(227)
256
170,549
See accompanying notes.
54
Saga Communications, Inc.
Consolidated Statements of Cash Flows
2023
Years Ended December 31,
2022
(In thousands)
2021
Statement of Cash Flows
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation expense related to restricted stock awards . . . . . . . . . . . . . . . .
Loss on sale of assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) on insurance claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (gain) loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Barter (revenue) expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and other compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
(Increase) decrease in receivables and prepaid expenses . . . . . . . . . . . . . . .
Increase (decrease) in accounts payable, accrued expenses, and other
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Purchase of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of property and equipment (Capital Expenditures) . . . . . . . . . . .
Acquisition of broadcast properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale and disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from insurance claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See accompanying notes.
$
9,500
$
9,202
$
11,157
5,055
385
36
1,116
120
—
(119)
50
(100)
5,171
935
10
1,858
(14)
(534)
(118)
46
1,425
5,749
195
37
1,335
7
(589)
(45)
(2)
(215)
(1,303)
(1,135)
507
639
5,879
15,379
(20,728)
20,723
(4,356)
—
1,747
—
117
(2,497)
—
(19,875)
—
(227)
(20,102)
(7,220)
36,802
29,582
279
7,923
17,125
(18,000)
8,000
(5,994)
(57)
411
534
116
(14,990)
—
(19,785)
(161)
(147)
(20,093)
(17,958)
54,760
36,802
$
968
7,947
19,104
—
—
(3,969)
(150)
142
589
40
(3,348)
(10,000)
(1,914)
—
(435)
(12,349)
3,407
51,353
54,760
$
$
55
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Business
Saga Communications, Inc. is a media company whose business is devoted to acquiring, developing and operating
broadcast properties including opportunities complimentary to our core radio business including digital, e-commerce and
non-traditional revenue initiatives. We currently own or operated seventy-nine FM, thirty-three AM radio stations and
eighty metro signals, serving twenty-seven markets throughout the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of Saga Communications, Inc. and our wholly-owned
subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the
United States (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Our accounting estimates require the use of judgment as future events and the
effect of these events cannot be predicted with certainty. The accounting estimates may change as new events occur, as
more experience is acquired and as more information is obtained. We evaluate and update assumptions and estimates on
an ongoing basis and may use outside experts to assist in the our evaluation, as considered necessary. Actual results may
differ from estimates provided and there may be changes to those estimates in the future periods.
Concentration of Risk
Certain cash deposits with financial institutions may at times exceed FDIC insurance limits.
Our top five markets when combined represented 36%, 38% and 39% of our net operating revenue for the years
ended December 31, 2023, 2022 and 2021, respectively.
We sell advertising to local and national companies throughout the United States. We perform ongoing credit
evaluations of our customers and generally do not require collateral. We maintain an allowance for credit losses at a
level which we believe is sufficient to cover potential credit losses.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and time deposits with original maturities of three months or less.
We did not have any time deposits at December 31, 2023 and 2022.
Financial Instruments
We account for marketable securities in accordance with ASC 320, “Investments – Debt Securities,” which require
that certain debt securities be classified into one of three categories: held-to-maturity, available-for-sale, or trading
securities, and depending upon the classification, value the security at amortized cost or fair market value. At
December 31, 2023 and 2022, we have recorded $10.6 million and $10.1 million, respectively, of held-to-maturity U.S.
Treasury Bills at amortized cost basis that have a fair market value of $10.6 million and $10.0 million respectively. Our
held-to-maturity U.S. Treasury Bills all have original maturity dates ranging from March 2024 to July 2024.
56
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Our financial instruments are comprised of cash and cash equivalents, short-term investments, accounts receivable,
accounts payable and long-term debt. The carrying value of cash and cash equivalents, accounts receivable and accounts
payable approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair
value as it carries interest rates that either fluctuate with the secured overnight financing rate (“SOFR”), prime rate or
have been reset at the prevailing market rate at December 31, 2023.
Allowance for Credit Losses
A provision for credit losses is recorded based on our judgment of the collectability of receivables. Amounts are
written off when determined to be fully uncollectible. Delinquent accounts are based on contractual terms. The activity
in the allowance for credit losses during the years ended December 31, 2023, 2022 and 2021 was as follows:
Year Ended
Balance
Write Off of
Charged to Uncollectible
Balance at
at Beginning Costs and Accounts, Net of End of
Period
Expenses Recoveries
of Period
December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
519
469
648
$
$
$
(in thousands)
$
397
$
408
$
56
(298) $
(358) $
(235) $
618
519
469
Barter Transactions
Our radio stations trade air time for goods and services used principally for promotional, sales and other business
activities. An asset and a liability are recorded at the fair market value of goods or services received. Barter revenue is
recorded when commercials are broadcast, and barter expense is recorded when goods or services received are used.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and repairs are expensed as incurred.
When property and equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed
from the respective accounts and the gain or loss realized on disposition is reflected in earnings. Depreciation is provided
using the straight-line method based on the estimated useful life of the assets. We review our property and equipment for
impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted
cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be
recognized equals the amount by which the carrying value of the assets exceeds its fair market value. We did not record
any impairment of property and equipment during 2023, 2022 and 2021.
57
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Property and equipment consisted of the following:
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Towers and antennae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated
Useful Life
December 31,
2023
2022
(In thousands)
31.5 years
7-15 years
3-15 years
7-20 years
5 years
— $ 15,239
40,460
27,145
54,747
7,907
2,767
148,265
(96,860)
$ 51,405
$ 15,259
40,823
26,992
52,459
7,741
2,780
146,054
(92,856)
$ 53,198
Depreciation expense for the years ended December 31, 2023, 2022 and 2021, was $5,013,000, $5,133,000 and
$5,362,000, respectively.
Intangible Assets
Intangible assets deemed to have indefinite useful lives, which include broadcast licenses and goodwill, are not
amortized and are subject to impairment tests which are conducted as of October 1 of each year, or more frequently if
impairment indicators arise.
We have 112 broadcast licenses serving 27 markets, which require renewal over the period of 2027-2030. In
determining that the Company’s broadcast licenses qualified as indefinite-lived intangible assets, management
considered a variety of factors including our broadcast licenses may be renewed indefinitely at little cost; our broadcast
licenses are essential to our business and we intend to renew our licenses indefinitely; we have never been denied the
renewal of an FCC broadcast license nor do we believe that there will be any compelling challenge to the renewal of our
broadcast licenses; and we do not believe that the technology used in broadcasting will be replaced by another
technology in the foreseeable future.
Separable intangible assets that have finite lives are amortized over their useful lives using the straight-line method.
Favorable lease agreements are amortized over the leases length, ranging from one to twenty-six years. Other intangibles
are amortized over one to fifteen years. Customer relationships are amortized over three years.
Deferred Costs
The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the Credit
Facility. During the years ended December 31, 2023, 2022 and 2021, we recognized interest expense related to the
amortization of debt issuance costs of $36,000, $10,000 and $37,000, respectively.
At December 31, 2023 and 2022 the net book value of debt issuance costs related to our line of credit was $130,000,
and $166,000, respectively, and was presented in other intangibles, deferred costs and investments in our Consolidated
Balance Sheets.
58
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Leases
We determine whether a contract is or contains a lease at inception. The lease liabilities and right-of-use assets are
recorded on the balance sheet for all leases with an expected term of at least one year, based on the present value of the
lease payments using (1) the rate implicit in the lease or (2) our incremental borrowing rate (“IBR”). Our IBR is defined
as the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to
the lease payments in a similar economic environment. We follow the accounting guidance for leases, which includes the
recognition of lease expense for leases on a straight-line basis over the lease term. See Note 12 – Commitments and
Contingencies for more information on Leases.
Common Stock
Our founder and former Chairman, President, and CEO, Edward K. Christian, passed away on August 19,
2022. As of the date of his passing, Mr. Christian, who was also our principal shareholder, held approximately
65% of the combined voting power of the Company’s Common Stock based on our Class B Common Stock
(together with the Class A Common Stock, collectively, the “Common Stock”) generally being entitled to ten
votes per share. As a result, Mr. Christian was generally able to control the vote on most matters submitted to the
vote of shareholders and, therefore, was able to direct our management and policies, except with respect to (i) the
election of two Class A directors, (ii) those matters where the shares of our Class B Common Stock were only
entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of
incorporation, bylaws or applicable law. Mr. Christian’s passing resulted in the conversion of his Class B Shares into
Class A Shares that were transferred to an estate planning trust that now owns approximately 16% of the common stock
outstanding. As a result, we no longer have any shares of Class B Common Stock issued or outstanding.
Treasury Stock
In March 2013, our Board of Directors authorized an increase in the amount committed to our Stock Buy-Back
Program (the “Buy-Back Program”) from $60 million to $75.8 million. The Buy-Back Program allows us to repurchase
our Class A Common Stock. As of December 31, 2023, we had remaining authorization of $18.0 million for future
repurchases of our Class A Common Stock.
Repurchases of shares of our Common Stock are recorded as Treasury stock and result in a reduction of
Shareholders’ equity. During 2023, 2022 and 2021, we acquired 11,274 shares at an average price of $20.12 per share,
6,044 shares at an average price of $24.27 per share and 16,577 shares at an average price of $26.25 per share,
respectively.
Revenue Recognition
Revenue from the sale of commercial broadcast time to advertisers is recognized when commercials are broadcast.
Revenue is reported net of advertising agency commissions. Agency commissions, when applicable are based on a
stated percentage applied to gross billing. All revenue is recognized in accordance with the Securities and Exchange
Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, Revenue Recognition Revised and
Updated and The Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.
59
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Local Marketing Agreements
We have entered into Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMAs”) in certain
markets. In a typical TBA/LMA, the FCC licensee of a station makes available, for a fee, blocks of air time on its station
to another party that supplies programming to be broadcast during that air time and sells its own commercial advertising
announcements during the time periods specified. Revenue and expenses related to TBAs/LMAs are included in the
accompanying Consolidated Statements of Income. Assets and liabilities related to the TBAs/LMAs are included in the
accompanying Consolidated Balance Sheets.
Advertising and Promotion Costs
Advertising and promotion costs are expensed as incurred. Such costs amounted to $1,705,000, $1,646,000 and
$1,396,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
Income Taxes
The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets
and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are
expected to reverse. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is primarily
dependent upon the generation of future taxable income. Our effective tax rate is higher than the federal statutory rate as
a result of the inclusion of state taxes in the income tax amount and permanent differences primarily relating to executive
compensation.
Dividends
The Company currently intends to declare regular quarterly cash dividends, we well as variable dividends in
accordance with the terms of our variable dividend policy. The Company may also declare special dividend in future
periods. The declaration and payment of any future dividend, whether fixed, special or based on the variable policy will
remain at the full discretion of the Board and will depend on the Company’s financial results, cash requirements, future
expectations and other pertinent factors.
On December 7, 2023, the Company’s Board of Directors declared a special cash dividend of $2.00 per share on its
Classes A Common Stock. This dividend, totaling approximately $12,500,000, was paid on January 12, 2024 to
shareholders of record on December 20, 2023 and is recorded in dividends payable in our Consolidated Balance Sheet at
December 31, 2023.
On November 16, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on
its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on December 15, 2023 to
shareholders of record on November 27, 2023.
On September 27, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on
its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on November 3, 2023 to
shareholders of record on October 11, 2023.
On May 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its
Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on June 16, 2023 to shareholders
of record on May 22, 2023.
60
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
On March 1, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its
Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on April 7, 2023 to shareholders
of record on March 20, 2023.
On December 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and
a special cash dividend of $2.00 per share on its Classes A Common Stock. This dividend, totaling approximately
$13,800,000, was paid on January 13, 2023 to shareholders of record on December 21, 2022 and is recorded in dividends
payable in our Consolidated Balance Sheet at December 31, 2022.
On September 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share
and a special cash dividend of $2.00 per share on its Classes A Common Stock. This dividend, totaling approximately
$13,600,000, was paid on October 21, 2022 to shareholders of record on October 3, 2022.
On June 6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $1,200,000, was paid to our transfer agent on
June 29, 2022. The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on June 13, 2022.
On March 1, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $970,000, was paid on April 8, 2022 to
shareholders of record on March 21, 2022.
On December 14, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share
and special cash dividend of $0.50 per share on its Classes A and B Common Stock. This dividend, totaling
approximately $3,990,000, was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was
recorded in dividends payable on the Company’s Consolidated Balance Sheet at December 31, 2021.
On September 28, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on
its Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on October 22, 2021 to
shareholders of record on October 8, 2021.
On June 18, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its
Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on July 16, 2021 to
shareholders of record on June 30, 2021 and was recorded in dividends payable on the Company’s Condensed
Consolidated Balance Sheet at June 30, 2021. The Company had previously temporarily suspended the quarterly cash
dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020.
Stock-Based Compensation
Stock-based compensation cost for stock option awards is estimated on the date of grant using a Black-Scholes
valuation model and is expensed on a straight-line method over the vesting period of the options. Stock-based
compensation expense is recognized net of estimated forfeitures. The fair value of restricted stock awards is determined
based on the closing market price of our Class A Common Stock on the grant date and is adjusted at each reporting date
based on the amount of shares ultimately expected to vest. See Note 7 — Stock-Based Compensation for further details
regarding the expense calculated under the fair value based method.
61
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Segments
We serve twenty-seven radio markets (reporting units) that aggregate into one operating segment (Radio), which
also qualifies as a reportable segment. We operate under one reportable business segment for which segment disclosure
is consistent with the management decision-making process that determines the allocation of resources and the
measuring of performance. The Chief Operating Decision Maker (“CODM”) evaluates the results of the radio operating
segment and makes operating and capital investment decisions based at the Company level. Furthermore, technological
enhancements and system integration decisions are reached at the Company level and applied to all markets rather than
to specific or individual markets to ensure that each market has the same tools and opportunities as every other market.
Managers at the market level do not report to the CODM and instead report to other senior management, who are
responsible for the operational oversight of radio markets and for communication of results to the CODM. We
continually review our operating segment classification to align with operational changes in our business and may make
changes as necessary.
Earnings Per Share
Earnings per share is calculated using the two-class method. The two-class method is an earnings allocation formula
that determines earnings per share for each class of common stock and participating security. We have participating
securities related to restricted stock units, granted under our Second Amended and Restated 2005 Incentive
Compensation Plan and our 2023 Incentive Compensation Plan, that earn dividends on an equal basis with common
shares. In applying the two-class method, earnings are allocated to both common shares and participating securities.
The following table sets forth the computation of basic and diluted earnings per share:
Years Ended December 31,
2022
2023
(In thousands, except per share data)
2021
Numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Income allocated to unvested participating securities . . . . . .
Net income available to common shareholders . . . . . . . . . . . . . . . .
$
$
9,500
149
9,351
$
$
9,202 $
140
9,062 $
11,157
190
10,967
Denominator:
Denominator for basic earnings per share — weighted
average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,045
5,973
Effect of dilutive securities:
Common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denominator for diluted earnings per share — adjusted
—
—
weighted-average shares and assumed conversions . . . . . . . . . . .
6,045
5,973
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1.55
1.55
$
$
1.52 $
1.52 $
5,917
—
5,917
1.85
1.85
There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for
the years ended December 31, 2023, 2022, and 2021, respectively. The actual effect of these shares, if any, on the diluted
earnings per share calculation will vary significantly depending on fluctuations in the stock price.
62
Saga Communications, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (Continued)
Recent Accounting Pronouncements
New Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting
(Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires expanded disclosure
of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for
us for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025. We are
currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income rate reconciliation and income taxes
paid. ASU 2023-09 is effective for us for annual periods beginning after January 1, 2025. We are currently evaluating
the impact ASU 2023-09 will have on our financial statement disclosures.
2. Revenue
Nature of goods and services
The following is a description of principal activities from which we generate our revenue:
Broadcast Advertising Revenue
Our primary source of revenue is from the sale of advertising for broadcast on our stations. We recognize revenue
from the sale of advertising as performance obligations are satisfied upon airing of the advertising; therefore, revenue is
recognized at a point in time when each advertising spot is transmitted. Agency commissions are calculated based on a
stated percentage applied to gross billing revenue for our advertising inventory placed by agency and are reported as a
reduction of advertising revenue.
Digital Advertising Revenue
We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising,
online promotions, advertising on our websites and digital audio streams, mobile messaging, email marketing and other
e-commerce. Revenue is recorded when each specific performance obligation in the digital advertising campaign takes
place, typically within a one month period.
Other Revenue
Other revenue includes revenue from concerts, promotional events, tower rent and other miscellaneous items.
Revenue is generally recognized when the event is completed, as the promotional events are completed or as each
performance obligation is satisfied.
63
Saga Communications, Inc.
Notes to Consolidated Financial Statements
2. Revenue (Continued)
Disaggregation of Revenue
The following table presents revenues disaggregated by revenue source:
Years Ended
December 31,
2022
(in thousands)
2023
2021
Types of Revenue
Broadcast Advertising Revenue, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Digital Advertising Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 94,228 $ 98,709
7,912
8,272
$ 112,773 $ 114,893
9,623
8,922
$ 95,573
6,337
6,433
$ 108,343
Contract Liabilities
Payments from our advertisers are generally due within 30 days although certain advertisers are required to pay in
advance. When an advertiser pays for the services in advance of the performance obligations these prepayments are
contract liabilities. Typical contract liabilities relate to prepayments for advertising spots not yet run; prepayments from
sponsors for events that have not yet been held; and gift cards sold on our websites used to finance a broadcast
advertising campaign. Generally all contract liabilities are expected to be recognized within one year and are included in
accounts payable in the Company’s Consolidated Financial Statements and are immaterial.
Transaction Price Allocated to the Remaining Performance Obligations
As the majority of our contracts are one year or less, we have utilized the optional exemption under ASC
606-10-50-14 and will not disclose information about the remaining performance obligations for contracts which have
original expected durations of one year or less.
3. Broadcast Licenses, Goodwill and Other Intangible Assets
We evaluate our FCC licenses for impairment annually, or more frequently if events or changes in circumstances
indicate that the asset might be impaired. We operate our broadcast licenses in each market as a single asset and
determine the fair value by relying on a discounted cash flow approach assuming a start-up scenario in which the only
assets held by an investor are broadcast licenses. The fair value calculation contains assumptions incorporating variables
that are based on past experiences and judgments about future operating performance using industry normalized
information for an average station within a market. These variables include, but are not limited to: (1) the forecasted
growth rate of each radio market, including population, household income, retail sales and other expenditures that would
influence advertising expenditures; (2) the estimated available advertising revenue within the market and the related
market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses
incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area;
and (6) terminal values. If the carrying amount of FCC licenses is greater than their estimated fair value in a given
market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value.
We also evaluate goodwill for impairment annually, or more frequently if certain circumstances are present. If the
carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a
hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in
that reporting unit is reduced to its implied value.
64
Saga Communications, Inc.
Notes to Consolidated Financial Statements
3. Broadcast Licenses, Goodwill and Other Intangible Assets (Continued)
We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have
occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset
are less than net book value, then the net book value is reduced to the estimated fair value. Amortizable intangible assets
are included in other intangibles, deferred costs and investments in the consolidated balance sheets.
Broadcast Licenses
We have recorded the changes to broadcast licenses for the years ended December 31, 2023 and 2022 as follows:
Total
(in thousands)
Balance at January 1, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
90,277
30
90,307
(67)
90,240
2023 Impairment Test
We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2023 and
determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our
markets and, accordingly, no impairment was recorded.
The following table reflects certain key estimates and assumptions used in the impairment tests during the fourth
quarter of 2023, the fourth quarter of 2022 and the fourth quarter of 2021. The ranges for operating profit margin and
market long-term revenue growth rates vary by market. In general, when comparing between 2023, 2022 and 2021:
(1) the market specific operating profit margin range remained relatively consistent; (2) the market long-term revenue
growth rates were relatively consistent; (3) the discount rate decreased from 2021 and remained relatively consistent
after that; and (4) current year revenue projections decreased with amounts previously projected for 2023.
Fourth
Quarter
2023
Fourth
Quarter
2022
Fourth
Quarter
2021
Discount rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit margin ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market long-term revenue growth rates . . . . . . . . . . . . . . . . . . . . . . .
10.0 %
9.5 % 12.3% - 12.6 %
17.8% - 36.4 % 17.8% - 36.4 % 17.8% - 36.4 %
0.2% - 2.6 %
1.0% - 2.0 %
1.0% - 2.0 %
If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change
that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize
additional impairment charges in future periods. Such a charge could have a material effect on our consolidated financial
statements. We will continue to monitor potential triggering events and perform the appropriate analysis when deemed
necessary.
65
Saga Communications, Inc.
Notes to Consolidated Financial Statements
3. Broadcast Licenses, Goodwill and Other Intangible Assets (Continued)
2022 Impairment Test
During the fourth quarter of 2022, we completed our annual impairment test of broadcast and determined that the
fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and,
accordingly, no impairment was recorded.
2021 Impairment Test
During the fourth quarter of 2021, we completed our annual impairment test of broadcast and determined that the
fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and,
accordingly, no impairment was recorded.
Goodwill
During the fourth quarter of 2023, 2022 and 2021, the Company performed its annual impairment test of goodwill in
accordance with ASC 350 and determined that the fair value was in excess of its carrying value and, accordingly, no
impairment was recorded.
We have recorded the changes to goodwill for each of the years ended December 31, 2023 and 2022 as follows:
Balance at January 1, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
19,209
27
19,236
—
19,236
Total
(in thousands)
66
Saga Communications, Inc.
Notes to Consolidated Financial Statements
3. Broadcast Licenses, Goodwill and Other Intangible Assets (Continued)
Other Intangible Assets
We have recorded amortizable intangible assets at December 31, 2023 as follows:
Gross
Carrying Accumulated
Amount Amortization Amount
Net
Non-competition agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Favorable lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total amortizable intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,861
5,965
4,660
1,844
$ 16,330
We have recorded amortizable intangible assets at December 31, 2022 as follows:
(In thousands)
$
3,861
5,652
4,660
1,811
15,984
$
$
—
313
—
33
346
$
Gross
Carrying Accumulated
Amount Amortization Amount
Net
(In thousands)
Non-competition agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Favorable lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total amortizable intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,861 $
5,965
4,660
1,829
$ 16,315 $
3,861
5,624
4,660
1,799
15,944
$
$
—
341
—
30
371
Aggregate amortization expense for these intangible assets for the years ended December 31, 2023, 2022 and 2021,
was $42,000, $48,000 and $387,000, respectively. Our estimated annual amortization expense for the years ending
December 31, 2024, 2025, 2026, 2027 and 2028 is $71,000, $67,000, $66,000, $61,000 and $31,000, respectively.
67
Saga Communications, Inc.
Notes to Consolidated Financial Statements
4. Long-Term Debt
The Company has no debt outstanding at December 31, 2023 or December 31, 2022.
On December 19, 2022, we entered into a Third Amendment to our Credit Facility, (the “Third Amendment”),
which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the
Huntington National Bank (collectively, the “Lenders”), established an interest rate equal to the secured overnight
financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank
of New York) as the interest base and increased the basis points.
We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of
the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of
their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.
Approximately $266,000 of debt issuance costs related to the Credit Facility were capitalized and are being
amortized over the life of the Credit Facility. These debt issuance costs are included in other assets, net in the
consolidated balance sheets. As a result of the Second Amendment, we incurred an additional $120,000 of transaction
fees related to the Credit Facility that were capitalized. As a result of the Third Amendment, the Company incurred an
additional $161,000 of transaction fees related to the Credit Facility that were capitalized. The cumulative transaction
fees are being amortized over the remaining life of the Credit Facility.
Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR (5.38% at
December 31, 2023), plus 1% to 2% or the base rate plus 0% to 1%. The spread over SOFR and the base rate vary from
time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a
participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit
Agreement) payable to each of the Lenders and a fronting fee equal to 0.25% per annum payable to the issuing bank.
Under the Third Amendment, we now pay quarterly commitment fees of 0.25% per annum on the unused portion of the
Credit Facility. We previously paid quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the
Revolving Credit Facility.
The Credit Facility contains a number of financial covenants (all of which we were in compliance with at
December 31, 2023) which, among other things, require us to maintain specified financial ratios and impose certain
limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and
encumbrances.
We had approximately $50 million of unused borrowing capacity under the Revolving Credit Facility at both
December 31, 2023 and December 31, 2022.
68
Saga Communications, Inc.
Notes to Consolidated Financial Statements
5. Supplemental Cash Flow Information
2023
Years Ended December 31,
2022
(In thousands)
2021
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash transactions:
Barter revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Barter expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of treasury shares for 401(k) match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
100 $
2,790 $
145
4,160
2,402 $
2,452 $
55 $
256 $
2,431
2,477
2
249
$
$
$
$
$
$
253
3,450
2,125
2,124
—
221
6. Income Taxes
An income tax expense of $3,375,000 was recorded for the year ended December 31, 2023 compared to income tax
expense of $4,800,000 for the year ended December 31, 2022. The effective tax rate was approximately 26.2% for the
year ended December 31, 2023 compared to 34.3% for the year ended December 31, 2022. The 2022 year to date tax
rate was impacted by $3.8 million in expenses in the third quarter related to the compensation of our CEO upon his
death, in accordance with his employment agreement that are permanent differences between our book and taxable
income.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of
the Company’s deferred tax liabilities and assets are as follows:
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets:
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current portion of deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
69
December 31,
2023
2022
(In thousands)
$
3,976 $
23,006
490
27,472
4,218
22,355
477
27,050
81
1,107
162
1,350
—
1,350
26,122 $
296 $
(26,418)
(26,122) $
56
1,134
123
1,313
—
1,313
25,737
341
(26,078)
(25,737)
Saga Communications, Inc.
Notes to Consolidated Financial Statements
6. Income Taxes (Continued)
Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion
or all of the deferred tax asset will not be realized. At December 31, 2023 and December 31, 2022, we do not have a
valuation allowance for net deferred tax assets.
At December 31, 2023 and 2022, net deferred tax liabilities include a deferred tax asset of $1,350,000 and
$1,313,000, respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation,
the allowance for credit losses, and other accrued expenses.
The significant components of the provision for income taxes are as follows:
2023
Years Ended December 31,
2022
(In thousands)
2021
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Income Tax Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2,240 $
750
2,990
385
3,375 $
2,800
1,065
3,865
935
4,800
$
$
3,080
985
4,065
195
4,260
The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows:
Tax expense (benefit) at U.S. statutory rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State tax expense, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2023
Years Ended December 31,
2022
(In thousands)
$
2021
2,694 $
637
44
3,375 $
2,927
939
934
4,800
$
3,209
815
236
4,260
The 2023, 2022 and 2021 effective tax rates exceed the federal statutory rate primarily due to non-deductible
compensation related expenses and state income taxes.
The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The
Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to
2020. The Company is subject to examination for income and non-income tax filings in various states.
As of December 31, 2023, and 2022 there were no accrued balances recorded related to uncertain tax positions.
We classify income tax-related interest and penalties that are related to income tax liabilities as a component of
income tax expense. For the years ended December 31, 2023, 2022 and 2021, we had $-, $-, and $600, respectively, tax-
related interest and penalties and had $0 accrued at December 31, 2023 and 2022.
70
Saga Communications, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation
2005 Incentive Compensation Plan
On May 13, 2019 our shareholders approved an amendment to the Second Amended and Restated Saga
Communications, Inc. 2005 Incentive Compensation Plan (as amended, “The Second Restated 2005 Plan”). This plan
was first approved in 2005, and subsequently re-approved in 2010 and 2013. The amendment to the Second Restated
2005 Plan (i) extended the date for making awards to September 6, 2023 and (ii) increased the number of authorized
shares under the Plan by 90,000 shares of Class B Common Stock. The Second Restated 2005 Plan allowed for the
granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance
awards to eligible employees and non-employee directors.
The number of shares of Common Stock that was allowed to be issued under the Second Restated 2005 Plan may
not exceed 370,000 shares of Class B Common Stock, 990,000 shares of Class A Common Stock of which up to 620,000
shares of Class A Common Stock were to be issued pursuant to incentive stock options and 370,000 Class A Common
Stock were to be issued upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock
were to be granted to any employee or director under the Second Restated 2005 Plan. Upon the passing of
Mr. Christian, we no longer have any holders of Class B Common Stock, as those awards denominated in Class B
Common Stock were only able to be granted to Mr. Christian. Stock options granted under the Second Restated 2005
Plan were to be for terms not exceeding ten years from the date of grant and could not be exercised at a price which was
less than 100% of the fair market value of shares at the date of grant.
2023 Incentive Compensation Plan
On May 8, 2023 our shareholders approved the 2023 Incentive Compensation Plan (the “2023 Plan”). The 2023
Plan replaces the Second Restated 2005 Plan. The Board of Directors does not intend to make any further awards under
the Second Restated 2005 Plan. However, each outstanding award under the Second Restated 2005 Plan will remain
outstanding under the Second Restated 2005 Plan and will continue to be governed under its terms and any applicable
award agreement. The 2023 Plan allows for the granting of restricted stock, restricted stock units, incentive stock
options, nonqualified stock options, and performance awards, including cash to eligible employees and non-employee
directors of the Company and its subsidiaries. The number of shares of Common Stock that may be issued under the
2023 Plan may not exceed 600,000 shares of Class A Common Stock.
Stock-Based Compensation
Our stock-based compensation expense is measured and recognized for all stock-based awards to employees using
the estimated fair value of the award. Compensation expense is recognized over the period during which an employee is
required to provide service in exchange for the award. For these awards, we have recognized compensation expense
using a straight-line amortization method. Accounting guidance requires that stock-based compensation expense be
based on awards that are ultimately expected to vest; therefore stock-based compensation has been adjusted for
estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of
actual option forfeitures.
All stock options were fully vested and expensed at December 31, 2012, therefore there was no compensation
expense related to stock options for the years ended December 31, 2023, 2022 and 2021. We calculated the fair value of
each option award on the date of grant using the Black-Scholes option pricing model. The estimated expected volatility,
expected term of options and estimated annual forfeiture rate were determined based on historical experience of similar
awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of
future employee behavior. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of
grant.
71
Saga Communications, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation (Continued)
There were no options granted during 2023, 2022 and 2021 and there were no stock options outstanding as of
December 31, 2023.
The following summarizes the restricted stock transactions for the year ended December 31:
Weighted
Average
Grant Date
Fair Value
Shares
Outstanding at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/canceled/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/canceled/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/canceled/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested and outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average remaining contractual life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,755 $
77,913
(41,059)
—
100,609 $
66,274
(75,763)
—
91,120 $
139,663
(37,224)
—
193,559 $
2.5
32.90
23.00
33.85
-
24.85
28.70
25.45
—
27.15
20.41
26.74
—
22.36
The weighted average grant date fair value of restricted stock that granted during 2023, 2022 and 2021 was
$2,850,000, $1,902,000, and $1,792,000 respectively. The net value of unrecognized compensation cost related to
unvested restricted stock awards aggregated $4,132,000, $2,397,000 and $2,354,000 at December 31, 2023, 2022 and
2021, respectively.
For the years ended December 31, 2023, 2022 and 2021 we had $1,116,000, $1,858,000 and $1,335,000, respectively, of
total compensation expense related to restricted stock-based arrangements. The expense is included in corporate general
and administrative expenses in our results of operations. The associated tax benefit recognized for the years ended
December 31, 2023, 2022 and 2021 was $294,000, $149,000 and $121,000, respectively.
72
Saga Communications, Inc.
Notes to Consolidated Financial Statements
8. Employee Benefit Plans
401(k) Plan
We have a defined contribution pension plan (“401(k) Plan”) that covers substantially all employees. Employees can
elect to have a portion of their wages withheld and contributed to the plan. The 401(k) Plan also allows us to make a
discretionary contribution. Total administrative expense under the 401(k) Plan was $-, $3,500 and $1,550 in 2023, 2022
and 2021, respectively. The Company’s discretionary contribution to the plan was approximately $268,000, $256,000
and $250,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
Deferred Compensation Plan
In 1999 we established a Nonqualified Deferred Compensation Plan which allows officers and certain management
employees to annually elect to defer a portion of their compensation, on a pre-tax basis, until their retirement. The
retirement benefit to be provided is based on the amount of compensation deferred and any earnings thereon. Deferred
compensation expense for the years ended December 31, 2023, 2022 and 2021 was $226,000, $135,000 and $100,000,
respectively. We invest in company-owned life insurance policies to assist in funding these programs. The cash
surrender values of these policies are in a rabbi trust and are recorded as our assets.
Split Dollar Officer Life Insurance
We provide split dollar insurance benefits to certain executive officers and record an asset equal to the cumulative
premiums paid on the related policies, as we will fully recover these premiums under the terms of the plan. We retain a
collateral assignment of the cash surrender values and policy death benefits payable to insure recovery of these
premiums.
9. Acquisitions and Dispositions
We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties.
The consolidated statements of income include the operating results of the acquired stations from their respective dates
of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was
allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates.
The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill.
The Company accounts for acquisition under the provisions of FASB ASC Topic 805, Business Combinations.
Management assigned fair values to the acquired property and equipment through a combination of cost and market
approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired
intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach.
73
Saga Communications, Inc.
Notes to Consolidated Financial Statements
9. Acquisitions and Dispositions (Continued)
Pending Acquisitions
On February 13, 2024, we entered into an agreement to purchase the assets of WKOA (FM), WKHY (FM), WASK
(FM), WXXB (FM), WASK (AM) and W269DJ from Neuhoff Communications, Inc. serving the Greater Lafayette,
Indiana radio market for $5.3 million which we expect to finance through funds generated from operations or
borrowings under our credit agreement. We expect to close on this acquisition in the second quarter of 2024.
2023 Dispositions
On February 28, 2023, we closed on an agreement to sell WPVQ-AM located in our Greenfield, Massachusetts
market to Hampden Communications Corp for $2,000. We recorded a $43,000 loss on the sale in our other operating
(income) expense, net line item on our Consolidated Statement of Operations.
On March 20, 2023, we submitted a request to the FCC to cancel our FCC license for WHMQ-AM located in our
Greenfield, Massachusetts market. We recorded a $22,000 loss on the disposal in our other operating (income) expense,
net line items in our Consolidated Statement of Operations.
2022 Acquisitions
On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator from P. & M. Radio for
$61,800 of which $5,000 was paid in 2021 and the remainder was paid on April 6, 2022 when we closed on the
transaction. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the
Greenfield, Massachusetts market as well as synergies and growth opportunities expected through the combination with
the Company’s existing stations. The translators are start-up stations and therefore, have no pro forma revenue and
expenses.
2021 Acquisitions
On January 8, 2021, the Company closed on an agreement to purchase WBQL and W288DQ from Consolidated
Media, LLC, for an aggregate purchase price of $175,000, of which $25,000 was paid in 2020 and the remaining
$150,000 paid in 2021. Management attributes the goodwill recognized in the acquisition to the power of the existing
brands in the Clarksville, Tennessee market as well as synergies and growth opportunities expected through the
combination with the Company’s existing stations. The translators are start-up stations and therefore, have no pro forma
revenue and expenses.
74
Saga Communications, Inc.
Notes to Consolidated Financial Statements
9. Acquisitions and Dispositions (Continued)
Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions:
The following condensed balance sheets represent the estimated fair value assigned to the related assets and
liabilities of the 2023 and 2022 acquisitions at their respective acquisition dates.
Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions
Assets Acquired:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets:
Broadcast licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities Assumed:
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions in
2023
2022
(In thousands)
$
— $
—
—
—
—
—
—
— $
$
5
30
27
57
62
—
—
62
75
Saga Communications, Inc.
Notes to Consolidated Financial Statements
10. Related Party Transactions
Mr. Christian’s Employment Agreement
On January 25, 2022, we entered into a third amendment (the “2022 Amendment”) to the employment agreement
with Edward K. Christian dated June 1, 2011 (the “2011 employment agreement”), which had previously been amended
on February 12, 2016 (the “2016 amendment”) and on February 26, 2019 (the “2019 amendment”). The 2011
employment agreement, as amended by the 2016 amendment, the 2019 amendment, and the 2022 amendment, is referred
to herein as the “amended 2011 employment agreement.” The 2022 amendment extended Mr. Christian’s employment
with the Company from March 31, 2025 to March 31, 2027 and made certain changes to the 2011 employment agreement
to cause it to be compliant with Section 409A of the Internal Revenue Code. Pursuant to the amended 2011 employment
agreement, we paid Mr. Christian a salary at the rate of $860,000 per year, adjusted as discussed in the next paragraph
below. Mr. Christian was permitted to defer any or all of his annual salary. Additionally, the Company was authorized to
pay for Mr. Christian’s tax preparation services on an annual basis, the amount of which was subject to income tax as
additional compensation.
Pursuant to the 2011 employment agreement, commencing on June 1, 2012, and each anniversary thereafter, the
Compensation Committee was required to determine in its discretion the amount of any increase in Mr. Christian’s then
existing annual salary; provided, however, that such increase would not be less than the greater of 3% or a cost of living
increase based on the consumer price index. Pursuant to the 2016 amendment, the amended 2011 employment agreement
provided that such increase in Mr. Christian’s then existing salary would not be less than the greater of 4% or a cost of
living increase based on the consumer price index.
The amended 2011 employment agreement also provided that Mr. Christian was eligible for equity awards under the
2005 Incentive Compensation Plan as shall be approved by the Compensation Committee and bonuses in such amounts as
shall be determined pursuant to the terms of the CEO Plan or as otherwise determined by the Compensation Committee in
its discretion based on the performance of the Company and the accomplishments of objectives established by the
Compensation Committee in consultation with Mr. Christian.
Under the amended 2011 employment agreement, Mr. Christian was eligible to participate, in accordance with their
terms, in all medical and health plans, life insurance, profit sharing, 401(k) Plan, pension, and such other employment
benefits as are maintained by the Company or its affiliates for other key employees performing services. During the term
of the employment agreement, the Company was required to maintain all existing policies of insurance on Mr. Christian’s
life, including the existing split dollar policy. The Company was also required to pay for Mr. Christian to participate in an
executive medical plan and to maintain its existing medical reimbursement policy. Mr. Christian was also furnished with
an automobile and other fringe benefits as have been afforded him in the past or as are consistent with his position. In
addition, the Company agreed to maintain an office for Mr. Christian in Sarasota County, Florida. The 2016 amendment
increased the paid vacation time awarded to Mr. Christian on the anniversary date of the 2011 employment agreement
from four weeks to six weeks of paid vacation.
76
Saga Communications, Inc.
Notes to Consolidated Financial Statements
10. Related Party Transactions (Continued)
Payments Under the Principal Shareholder Employment Agreement
The amended 2011 employment agreement terminated upon Mr. Christian’s death on August 19, 2022. As a result of
his passing the Company was required to make several payments to his estate as outlined in his employment agreement,
and described above. In accordance with ASC 712-10-25, Nonretirement Postemployment Benefits, we accrued all
necessary expenses as of September 30, 2022. As a result of our contractual obligations under the Mr. Christian’s
agreement, Mr. Christian’s estate was the beneficiary of a gross amount of approximately $5.8 million in cash, common
stock and a life insurance policy of which $3.9 million was recorded upon his passing in the third quarter of 2022, and
$1.9 million had been accrued for in previous periods. The estate was the beneficiary of a lump-sum payment of his
current base salary plus accrued unused vacation time totaling $1.9 million which was paid in October 2022.
Mr. Christian’s estate was also provided with a prorated bonus that Mr. Christian earned of approximately $633,000
which was paid in March 2023. Mr. Christian had approximately $65,000 withheld as deferred compensation that was
paid to the estate in January 2023. Additionally, under the agreement, any award previously granted under the
Company’s 2005 Incentive Compensation Plan were immediately vested and provided to the estate. At the date of
Mr. Christian’s passing, he had approximately 55,000 shares of unvested restricted stock that immediately vested at a
price of $24.80 for a total of $1.4 million in common stock received by the estate. Mr. Christian’s estate is now the
beneficiary of the Split Dollar life insurance policy that has a cash surrender value of approximately $971,000. Under
the agreement, the Company will be responsible to pay the estate’s income tax obligation relating to the payout of the
life insurance policy. The estimate of the possible loss related to that tax obligation cannot be made at this time due to
uncertainties related to the timing of the transfer. Lastly, under the agreement, the Company shall continue to pay for the
healthcare coverage and life insurance premiums for Mr. Christian’s spouse for ten years which totals approximately
$800,000.
Mr. Lada’s Letter Agreement
On August 21, 2022, we entered into a letter employment agreement with Warren S. Lada, a member of our
Board, to serve as our Interim President and CEO following the death of Mr. Christian, to serve in this capacity
while the Company conducted a formal search for a permanent successor to Mr. Christian. Under the terms of the
letter agreement we paid Mr. Lada an annualized base salary of $750,000 during his service as Interim President
and CEO; provided local transportation to the Company offices for up to three days a week and he was eligible to
participate in the Company’s benefit plans, including the 401(k) plan, as an employee, upon completion of the
eligibility requirements.
Mr. Forgy’s Employment Agreement
On November 16, 2022, we entered into an employment agreement with Christopher S. Forgy, who was
appointed as our President and CEO effective December 7, 2022. Mr. Forgy’s employment agreement has an
initial term of three years, and we and Mr. Forgy may mutually agree to extend the term for an additional two
years. Either party may provide written notice of its intent not to extend the initial term at least one year prior to
the end of the initial term.
Under the agreement, Mr. Forgy’s base salary is set at $670,000 for the first year and will increase 4%
annually. If the Company and Mr. Forgy mutually agree to renew the term of Mr. Forgy’s employment for an
additional two years, Mr. Forgy’s base salary would increase in the fourth and fifth year by 4% as well.
77
Saga Communications, Inc.
Notes to Consolidated Financial Statements
10. Related Party Transactions (Continued)
Mr. Forgy will have the opportunity to earn an annual performance bonus under the CEO Plan. His bonus in
any fiscal year will be in a minimum of 35% and a maximum of 100% of his annual base salary as of January 1 of
the fiscal year, and will be based on his performance and the achievement of performance goals established by the
Compensation Committee within the first 90 days of the fiscal year. The Board may instead grant Mr. Forgy a
discretionary bonus in the case of a financial, national or global occurrence, or a generally difficult year. Mr. Forgy
was granted a $50,000 discretionary bonus for the 2022 fiscal year and a $245,000 discretionary bonus for
the 2023 fiscal year. Mr. Forgy is also eligible for equity awards under the 2005 Incentive Compensation Plan, or
any successor equity incentive plan, in accordance with the provisions of that plan that apply to the CEO.
Mr. Forgy will continue to participate in our employee benefit plans, including the medical reimbursement
plan, 401(k) plan, deferred compensation plan, and other health and welfare benefit plans. He will be entitled to
five weeks of paid vacation days per calendar year. The Company will furnish him with an automobile, pay the
initiation fee and monthly dues for a non-golf country club membership and provide Mr. Forgy with a split dollar
life insurance agreement with premiums payable by the Company.
Either the Company or Mr. Forgy may terminate the employment term for any reason generally with 30 days
advance notice. If Mr. Forgy’s employment is terminated by us for cause, if he resigns without good reason, or if
his employment terminates by reason of death or disability, he will receive any accrued but unpaid base salary and
any benefits under the Company’s benefit plans (the “accrued amounts.”)
If Mr. Forgy’s employment is terminated by us without cause or if he resigns for good reason, he will receive
the accrued amounts; continuation of his base salary for the longer of 18 months or the remainder of the three year initial
term or the two-year renewal term, as applicable; any awarded but unpaid annual bonus with respect to any completed
fiscal year preceding the termination date; immediate and full vesting of any unvested shares of restricted stock then held
by Mr. Forgy; and payment or reimbursement of COBRA premiums for Mr. Forgy and his spouse for up to 18 months.
If Mr. Forgy consents to the renewal term and the Company does not consent, Mr. Forgy will be entitled to the
accrued amounts; an amount equal to 150% of the sum of (i) Mr. Forgy’s base salary paid in the prior calendar year plus
(ii) his annual bonus earned for the previous fiscal year, immediate and full vesting of any unvested shares of restricted
stock then held by Mr. Forgy; and payment or reimbursement of COBRA premiums for Mr. Forgy and his spouse for up
to 18 months.
Mr. Forgy agreed that, for a period of 12 months after the termination of his employment, he will not (i) solicit
business of the type performed by the Company anywhere in the United States; (ii) solicit from any person who
has purchased services from the Company during the three years preceding his termination for business of the type
performed by the Company in the United States, or in any other location; or (iii) offer employment to any person
employed by the Company, or entice any such person to leave employment with the Company. The employment
agreement also contains customary confidentiality and non-disparagement covenants.
78
Saga Communications, Inc.
Notes to Consolidated Financial Statements
10. Related Party Transactions (Continued)
Change in Control Agreements
In December 2007, Samuel D. Bush, Senior Vice President and Chief Financial Officer, and Catherine Bobinski,
Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller, entered into Change in Control
Agreements. In September 2018, Christopher S. Forgy, Senior Vice President of Operations entered into a Change in
Control Agreement. In July 2020, Eric Christian, Chief Marketing Officer entered into a Change in Control Agreement.
Eric Christian is the son of Edward K. Christian, our former President, CEO and Chairman. A change in control is
defined to mean the occurrence of (a) any person or group becoming the beneficial owner, directly or indirectly, of more
than 30% of the combined voting power of the Company’s then outstanding securities and Mr. Christian ceasing to be
Chairman and CEO of the Company; (b) the consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which results in the voting securities of the Company outstanding
immediately prior thereto continuing to represent more than 50% of the combined voting securities of the Company or
such surviving entity; or (c) the approval of the shareholders of the Company of a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets.
If there is a change in control, the Company shall pay a lump sum payment within 45 days of 1.5 times the average
of the executive’s last three full calendar years of such executive’s base salary and any annual cash bonus paid. In the
event that such payment constitutes a “parachute payment” within the meaning of Section 280G subject to an excise tax
imposed by Section 4999 of the Internal Revenue Code, the Company shall pay the executive an additional amount so
that the executive will receive the entire amount of the lump sum payment before deduction for federal, state and local
income tax and payroll tax. In the event of a change in control (other than the approval of plan of liquidation), the
Company or the surviving entity may require as a condition to receipt of payment that the executive continue in
employment for a period of up to six months after consummation of the change in control. During such six months,
executive will continue to earn his pre-existing salary and benefits. In such case, the executive shall be paid the lump
sum payment upon completion of the continued employment. If, however, the executive fails to remain employed during
this period of continued employment for any reason other than (a) termination without cause by the Company or the
surviving entity, (b) death, (c) disability or (d) breach of the agreement by the Company or the surviving entity, then
executive shall not be paid the lump sum payment. In addition, if the executive’s employment is terminated by the
Company without cause within six months prior to the consummation of a change in control, then the executive shall be
paid the lump sum payment within 45 days of such change in control.
Other Related Party Transactions
Effective June 19, 2019, we employed Eric Christian, son of Edward K. Christian, our President, CEO and
Chairman at the time, as our Director of Solution Architecture. Eric Christian was promoted to Vice President of Digital
Solutions in July 2020 and was subsequently was promoted to Chief Marketing Officer in February 2023. The Board of
Directors approved the employment of Eric Christian and subsequent promotions. As previously disclosed, Edward K.
Chrisian passed away in August 2022 and resulted in the conversion of his Class B Shares into Class A Shares that were
transferred to an estate planning trust, of which Edward K. Christian’s surviving spouse, and Eric Christian’s mother is
the trustee of. The estate owns approximately 16% of the Common Stock outstanding.
79
Saga Communications, Inc.
Notes to Consolidated Financial Statements
11. Common Stock
As previously disclosed, as a result of the passing of our founder and former Chairman, President and CEO, Edward
K. Christian and the resultant transfer of his Class B shares into an estate planning trust resulted in an automatic
conversion of each Class B share he held into one fully paid and non-assessable Class A share. We no longer have any
shares of Class B Common Stock issued or outstanding, nor will there be any issued in the future.
Dividends. Shareholders are entitled to receive such dividends as may be declared by our Board of Directors out of
funds legally available for such purpose. However, no dividend may be declared or paid in cash or property on any share
of any class of Common Stock unless simultaneously the same dividend is declared or paid on each share of the other
class of common stock. In the case of any stock dividend, holders of Class A Common Stock are entitled to receive the
same percentage dividend (payable in shares of Class A Common Stock) as the holders of Class B Common Stock
receive (payable in shares of Class B Common Stock).
Voting Rights. Holders of shares of Common Stock vote as a single class on all matters submitted to a vote of the
shareholders, with each share of Class A Common Stock entitled to one vote. Prior to Mr. Christian’s passing, each
share of Class B Common Stock was entitled to ten votes, except (i) in the election for directors, (ii) with respect to any
“going private” transaction between the Company and the principal shareholder, and (iii) as otherwise provided by law.
Prior to Mr. Christian’s passing, in the election of directors, the holders of Class A Common Stock, voting as a
separate class, were entitled to elect twenty-five percent, or two, of our directors. The holders of the Common Stock,
voting as a single class with each share of Class A Common Stock entitled to one vote and each share of Class B
Common Stock entitled to ten votes, were entitled to elect the remaining directors. The Board of Directors consisted of
eight members at December 31, 2023. Currently, our Board of Directors consists of eight members. Holders of
Common Stock are not entitled to cumulative voting in the election of directors.
The holders of the Common Stock vote as a single class with respect to any proposed “going private” transaction
with the principal shareholder or an affiliate of the principal shareholder, with each share of each class of Common
Stock entitled to one vote per share.
Under Florida law, the affirmative vote of the holders of a majority of the outstanding shares of any class of
common stock is required to approve, among other things, a change in the designations, preferences and limitations of
the shares of such class of common stock.
Liquidation Rights. Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock are
entitled to share ratably in accordance with the number of shares held in all assets available for distribution after
payment in full of creditors.
12. Commitments and Contingencies
Leases
We lease certain land, buildings and equipment for use in our operations. We recognize lease expense for these
leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Right-of-
use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least
one year. Some leases include one or more options to renew. The exercise of lease renewal options is generally at our
discretion. The depreciable lives of ROU assets are limited to the expected lease term. Our lease agreements do not
contain any residual value guarantees or material restrictive covenants. As of December 31, 2023, we do not have any
non-cancellable operating lease commitments that have not yet commenced.
80
Saga Communications, Inc.
Notes to Consolidated Financial Statements
12. Commitments and Contingencies (Continued)
ROU assets are classified within other intangibles, deferred costs and investments, net on the condensed
consolidated balance sheet while current lease liabilities are classified within other accrued expenses and long-term lease
liabilities are classified within other liabilities. Leases with an initial term of 12 months or less are not recorded on the
balance sheet. ROU assets were $7.0 million and $6.5 million at December 31, 2023 and 2022, respectively. Lease
liabilities were $7.3 million and $6.8 million at December 31, 2023 and 2022, respectively. During the year ended
December 31, 2023, we recorded additional ROU assets under operating leases of $2,171,000, which is a non-cash
transaction. Payments on lease liabilities during the year ended December 31, 2023 and 2022 totaled $1,826,000 and
$1,797,000,respectively.
Lease expense includes cost for leases with terms in excess of one year. For the years ended December 31, 2023,
2022 and 2021, our total lease expense was $1,864,000, $1,807,000 and $1,765,000, respectively. Short-term lease costs
are de minimus.
We have no financing leases and minimum annual rental commitments under non-cancellable operating leases
consisted of the following at December 31, 2023 (in thousands):
Years Ending December 31,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Interest (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of lease liabilities (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,857
1,701
1,479
1,290
876
1,600
8,803
1,455
7,348
(a) Lease payments include options to extend lease terms that are reasonably certain of being exercised. There were no
legally binding minimum lease payments for leases signed but not yet commenced at December 31, 2023.
(b) Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our discount rate for
such leases to determine the present value of lease payments at the lease commencement date.
(c) The weighted average remaining lease term and weighted average discount rate used in calculating our lease
liabilities were 6.5 years and 5.4%, respectively, at December 31, 2023.
81
Saga Communications, Inc.
Notes to Consolidated Financial Statements
12. Commitments and Contingencies (Continued)
Performance Fees and Royalties
We incur fees from performing rights organizations (“PRO”) to license our public performance of the musical works
contained in each PRO’s repertory. The Radio Music Licensing Committee (“RMLC”), of which we are a represented
participant, (1) entered into an Interim License Agreement with American Society of Composers, Authors and Publishers
that was effective January 1, 2022 and will remain in effect until the date on which the parties reached agreement as to,
or there is court determination of, new interim or final fees, terms, and conditions of a new license for the five year
period commencing on January 1, 2022 and concluding on December 31, 2026; (2) entered into an Interim License
Agreement with Broadcast Music, Inc. that was effective January 1, 2022 and will remain in effect until the date on
which the parties reached agreement as to, or there is court determination of, new interim or final fees, terms, and
conditions of a new license for the five year period commencing on January 1, 2022 and concluding on December 31,
2026; (3) reached an agreement with the Society of European Stage Authors and Composers that is retroactive to
January 1, 2016 and is currently on an interim license at the rate that was in place at the end of 2022 and (4) in
February 2022, RMLC and Global Music Rights (“GMR”) announced that the conditions of their agreement to settle the
GMR-RMLC antitrust and/or unfair competition litigations had been reached and we have entered into an agreement
with GMR.
To secure the rights to stream music content over the Internet, we also must obtain performance rights licenses and
pay public performance royalties to copyright owners of sound recordings (typically, performing artists and record
companies). We pay the applicable royalty rates to SoundExchange, the organization designated by the Copyright
Royalty Board (“CRB”) to collect and distribute royalties under these statutory licenses. From time to time,
SoundExchange notifies us that certain calendar years are subject to routine audits of our royalty payments. The results
of such audits could result in higher royalty payments for the subject years. There is no guarantee that the licenses and
associated royalty rates that currently are available to us will be available to us in the future. In addition, Congress may
consider and adopt legislation that would require us to pay royalties to sound recording copyright owners for
broadcasting those recordings on our terrestrial radio stations.
Contingencies
In 2003, in connection with our acquisition of one FM radio station, WJZK-FM serving the Columbus, Ohio market,
we entered into an agreement whereby we would pay the seller up to an additional $1,000,000 if we obtain approval
from the FCC for a city of license change.
13. Fair Value Measurements
As defined in ASC Topic 820, fair value is defined as the price that would be received from selling an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the
comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to
measure fair value:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted
prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can
be corroborated by observable market data.
Level 3 — Unobservable inputs in which there is little or no market data available, which requires management to
develop its own assumptions in pricing the asset or liability.
82
Saga Communications, Inc.
Notes to Consolidated Financial Statements
13. Fair Value Measurements (Continued)
Our assets and liabilities disclosed at fair value are summarized below ($000’s omitted):
Financial Instrument
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair Value
Fair Value December 31, December 31,
Hierarchy
2023
2022
Level 1
Level 1
Level 2
$
29,582 $
10,596
—
36,802
10,090
—
Our financial instruments are comprised of cash and cash equivalents, short-term investments and long-term debt.
The carrying value of cash and cash equivalents approximate fair value due to their short maturities. The fair value of
cash and cash equivalents and short-term investments are derived from quoted market prices and are considered a level
1. Interest on the Credit Facility is at a variable rate, and as such the debt obligation outstanding approximates fair value
and is considered a level 2.
Non-Recurring Fair Value Measurements
We have certain assets that are measured at fair value on a non-recurring basis under the circumstances and events
described in Note 3 — Broadcast Licenses, Goodwill and Other Intangibles, and are adjusted to fair value only when the
carrying values are more than the fair values.
During the fourth quarter of 2023, we reviewed the fair value of the assets that are measured at fair value on a non-
recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded
their carrying values.
During the fourth quarter of 2022, we reviewed the fair value of the assets that are measured at fair value on a non-
recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded
their carrying values.
During the fourth quarter of 2021, we reviewed the fair value of the assets that are measured at fair value on a non-
recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded
their carrying values.
83
Saga Communications, Inc.
Notes to Consolidated Financial Statements
14. Quarterly Results of Operations (Unaudited)
March 31,
June 30,
2023
2022
2023
2022
September 30,
2023
2022
December 31,
2023
2022
$
$
25,304
21,703
2,616
24,967
20,568
2,694
$
29,175
22,407
2,472
29,821
21,786
2,609
29,149
22,760
2,852
$
29,980
22,295
6,667
29,145
23,329
3,026
$
30,125
22,888
2,330
(in thousands, except per share data)
$
$
$
Net operating revenue . . . . . . . . .
Station operating expenses . . . . . .
Corporate G&A . . . . . . . . . . . . . .
Other operating expense
(income), net . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . .
Other (income) expenses:
Interest expense . . . . . . . . . . . .
Interest (income) . . . . . . . . . . .
Other (income) expense . . . . . . .
Income before income taxes . . . . .
Income tax provision (benefit)
Current . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . .
$
Basic earnings(loss) per
share . . . . . . . . . . . . . . . . . . .
$
0.15
$
0.20
Weighted average common
shares . . . . . . . . . . . . . . . . . . .
6,028
5,948
Diluted earnings (loss) per
80
905
43
(289)
(119)
1,270
280
70
350
920
$
(5)
1,710
32
(4)
(2)
1,684
400
80
480
1,204
—
4,296
43
(347)
—
4,600
905
345
1,250
3,350
0.55
6,032
$
$
45
5,381
32
(49)
—
5,398
1,260
315
1,575
3,823
0.63
5,952
$
$
45
3,492
44
(391)
—
3,839
835
275
1,110
2,729
0.45
6,032
$
$
(37)
1,055
32
(134)
(34)
1,191
730
565
1,295
(104)
$
(5)
2,795
43
(414)
—
3,166
970
(305)
665
2,501
(0.01)
$
0.40
5,961
6,030
$
$
(17)
4,924
34
(223)
(616)
5,729
1,475
(25)
1,450
4,279
0.70
6,013
$
$
share . . . . . . . . . . . . . . . . . . .
$
0.15
$
0.20
$
0.55
$
0.63
$
0.45
$
(0.01)
$
0.40
$
0.70
Weighted average common
and common equivalent
shares . . . . . . . . . . . . . . . . . . .
15. Litigation
6,028
5,948
6,032
5,952
6,032
5,961
6,030
6,013
The Company is subject to various outstanding claims which arise in the ordinary course of business and to other
legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with
respect to these matters, will not materially affect the Company’s financial statements.
84
Saga Communications, Inc.
Notes to Consolidated Financial Statements
16. Other Income
In 2012, Congress mandated that the FCC conduct an incentive auction of broadcast television spectrum as set forth
in the Middle Class Tax Relief and Job Creation Act of 2012 ("Spectrum Act"). The Spectrum Act authorized the FCC
to conduct incentive auctions in which licensees could voluntarily relinquish their spectrum usage rights in order to
permit the assignment by auction of new initial licenses subject to flexible use service rules, in exchange for a portion of
the resulting auction proceeds. The Spectrum Act appropriated $1.75 billion to the TV Broadcaster Relocation Fund
("Reimbursement Fund") for costs reasonably incurred by Full Power and Class A broadcast television licensees
reassigned to new channels ("repack"), as well as Multichannel Video Programming Distributors ("MVPDs") that
incurred costs related to continuing to carry the signals of reassigned broadcast stations. The 2018 Reimbursement
Expansion Act appropriated $1 billon in additional funds for the Reimbursement Fund and expanded eligible entities for
reimbursement to include FM stations affected by the repack. During 2022, the Company received approximately
$116,000 in reimbursement for our FM stations. During the first quarter of 2023, we received approximately $115,000
in reimbursement for our FM stations. Both of these reimbursements are recorded in other (income) expense, net in the
Company’s Consolidated Statement of Operations. We do not anticipate receiving any additional reimbursements
related to this.
During the first quarter of 2022, there was fire damage to a transmission line in our Des Moines, Iowa market. The
Company’s insurance policy provided coverage for removal and replacement of the transmission line and related
equipment. As part of the insurance settlement during the fourth quarter of 2022, the Company received cash proceeds
of $445,000, resulting in a gain of $445,000 which is recorded in the other (income) expense, net, in the Company’s
Consolidated Statements of Income.
During the first quarter of 2021, there was weather-related damage to an antenna in our Des Moines, Iowa market.
The Company’s insurance policy provided coverage for removal and replacement of the antenna and related equipment.
As part of the initial insurance settlement during the first quarter of 2021, the Company received cash proceeds of
$250,000, resulting in a gain of $250,000. We received additional cash proceeds of $290,000 in the third quarter,
resulting in a gain of $290,000. The total gain of $540,000 is recorded in other (income) expense, net, in the Company’s
Consolidated Statements of Income.
17. Subsequent Events
On February 7, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its
Class A Common Stock. This dividend, totaling approximately $1,600,000, will be paid on March 8, 2024 to
shareholders of record on February 20, 2024.
On March 6, 2024 the Company’s Board of Directors declared a variable cash dividend of $0.60 per share on its
Class A Common Stock. This dividend, totaling approximately $3,800,000, will be paid on April 5, 2024 to
shareholders of record on March 18, 2024.
85
Exhibit No. Location
Description
EXHIBIT INDEX
3.1
3.2
4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
5
5
14
1
2
5
3
7
7
6
4
9
8
10
11
12
13
15
16
10.17
17
10.18
10.19
10.20
10.21
10.22
18
18
19
20
21
10.23
21
21
23
31.1
31.2
32
*
*
*
*
*
Articles of Incorporation of Saga Communications Reincorporation, Inc.
Bylaws, as amended April 16, 2020.
Description of the Company’s Securities
Summary of Executive Insured Medical Reimbursement Plan.
Saga Communications, Inc. 2003 Employee Stock Option Plan.
Chief Executive Officer Annual Incentive Plan.
Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan
Form of Stock Option Agreement under the Second Amended and Restated Saga
Communications, Inc. 2005 Incentive Compensation Plan.
Form of Restricted Stock Option Agreement under the Second Amended and Restated
Saga Communications, Inc. 2005 Incentive Compensation Plan.
Employment Agreement of Edward K. Christian dated as of June 17, 2011.
Change in Control Agreement of Samuel D. Bush dated as of December 28, 2007.
Change in Control Agreement of Catherine A. Bobinski dated as of December 28, 2007.
Amendment to Employment Agreement of Edward K. Christian dated as of February 12,
2016.
Amendment to the Second Amendment and Restated Saga Communications, Inc. 2005
Incentive Compensation Plan as of April 16, 2018.
Letter of Employment for Christopher S. Forgy, Senior Vice President / Operations effective
May 28, 2018.
Change in Control Agreement of Christopher Forgy dated as of September 28, 2018.
Amendment to Employment Agreement of Edward K. Christian dated as of February 26,
2019.
Change in Control Agreement of Eric Christian dated as of July 6, 2020.
Third Amendment to Employment Agreement dated January 25, 2022 between Saga
Communications, Inc, and Edward K. Christian.
Letter of Agreement regarding employment of Warren S. Lada as Interim President and CEO
dated August 21, 2022.
Employment Agreement of Christopher Forgy dated as of November 16, 2022.
Letter of Employment of Wayne Leland dated as of November 16, 2022.
Third Amendment to Credit Agreement dated December 19, 2022 between the Company and
JPMorgan Chase Bank, N.A., and The Huntington National Bank.
Saga Communications, Inc. 2023 Incentive Compensation Plan
Form of Restricted Stock Option Agreement for Employees under the Saga Communications,
Inc. 2023 Incentive Compensation Plan
Form of Restricted Stock Option Agreement for Directors under the Saga Communications,
Inc. 2023 Incentive Compensation Plan
Subsidiaries.
Consent of UHY LLP.
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
101.INS
101.SCH
101.CAL
*
*
*
*
Saga Communications, Inc. Policy for Recovery of Erroneously Awarded Compensation
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Calculation Linkbase Document
86
101.DEF
101.LAB
101.PRE
104
*
*
*
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy
extension information contained in Exhibits 101)
*
Filed herewith.
1 Exhibit filed with the Company’s Registration Statement on Form S-1 (File No. 33-47238) filed on December 10,
1992 and incorporated by reference herein.
2 Exhibit filed with the Company’s Registration Statement on From 8-A (File No. 333-107686) filed on August 5,
2003 and incorporated by reference herein.
3 Exhibit filed as Appendix A to the Company’s Consent Solicitation (Filed No: 001-11588) filed on September 17,
2013 and incorporated by reference herein.
4 Exhibit filed with the Company’s Form 8-K filed on January 4, 2008 and incorporated by reference herein.
5 Exhibit filed with the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders and incorporated
by reference herein.
6 Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2011 and incorporated by reference
herein.
7 Exhibit filed with the Company’s Form 8-K filed on October 16, 2013 and incorporated by reference herein.
8 Exhibit filed with the Company’s Form 8-K/A filed on April 8, 2016 and incorporated by reference herein.
9 Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2015 and incorporated by reference
herein.
10 Exhibit filed as Appendix A to the Corporation’s Definitive Proxy Statement (File No. 001-11588) filed on
April 16, 2018 and incorporated by reference herein.
11 Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2018 and incorporated by reference
herein.
12 Exhibit filed with the Company’s Form 8-K filed on September 28, 2018 and incorporated by reference herein.
13 Exhibit filed with the Company’s Form 8-K filed on March 1, 2019 and incorporated by reference herein.
14 Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2019 and incorporated by reference
herein.
15 Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2020 and incorporated by reference
herein.
16 Exhibit filed with the Company’s Form 8-K filed on January 27, 2022 and incorporated by reference herein.
17 Exhibit filed with the Company’s Form 8-K filed on August 25, 2022 and incorporated by reference herein.
18 Exhibits filed with the Company’s Form 8-K filed on November 16, 2022 and incorporated by reference herein.
87
19 Exhibit filed wit the Company’s Form 10-K for the year ended December 31, 2022 and incorporated by reference
herein.
20 Exhibit filed with the Company’s Form S-8 filed on August 10, 2023 and incorporated by reference herein.
21 Exhibits filed with the Company’s Form 10-Q for the quarter ended September 30, 2023 and incorporated by
reference herein.
23
88
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 15, 2024.
SIGNATURES
SAGA COMMUNICATIONS, INC.
By:
/s/ Christopher S. Forgy
Christopher S. Forgy
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on March 15, 2024.
Signatures
/s/ Christopher S. Forgy
Christopher S. Forgy
/s/ Samuel D. Bush
Samuel D. Bush
/s/ Catherine A. Bobinski
Catherine A. Bobinski
/s/ Clarke R. Brown, Jr.
Clarke R. Brown, Jr.
/s/ Timothy J. Clarke
Timothy J. Clarke
/s/ Roy F. Coppedge III
Roy F. Coppedge
/s/ Warren Lada
Warren Lada
/s/ Marcia K. Lobaito
Marcia K. Lobaito
/s/ Michael W. Schechter
Michael W. Schechter
President, Chief Executive Officer and
Director
Senior Vice President,
Chief Financial Officer and Treasurer
Senior Vice President/Finance,
Chief Accounting Officer and
Corporate Controller
Director
Director
Director
Chairman of the Board and Director
Director
Director
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Shareholder Information
AUDITORS
UHY LLP, Farmington Hills, MI
PUBLICATIONS
TRANSFER AGENT
Computershare, Canton, MA
The Company’s Annual Report Form 10-K and Quarterly Reports to Shareholders are available free of
charge to shareholders. Inquiries are welcome by letter or telephone to Samuel D. Bush, Senior Vice President,
Treasurer and CFO, at the Saga Corporate Office.
Shareholders whose stock is held in street name are encouraged to write to the company to have their names
placed on the financial mailing list, enabling them to receive annual and interim reports without delay.
You may find more information about us at our Internet website located at www.sagacom.com. Our Annual
report on Form 10-K, our Quarterly Reports on Form 10-Q, our current reports on Form 8-K and any amendments
to those reports are available free of charge on our Internet website as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC.
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Monday, May 13, 2024 at 10:00 am Eastern Daylight
Time, at the Company’s corporate offices located at 73 Kercheval Avenue, Grosse Pointe Farms, MI, 48236.
This press release contains certain forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 that are based upon current expectations and involve certain risks
and uncertainties. Words such as “will,” “may,” “believes,” “intends,” “expects,” “anticipates,” “guidance,”
and similar expressions are intended to identify forward-looking statements. The material risks facing our
business are described in the reports Saga periodically files with the U.S. Securities and Exchange Commission,
including, in particular, Item 1A of our Annual Report on Form 10-K. Readers should note that forward-
looking statements may be impacted by several factors, including global, national, and local economic changes
and changes in the radio broadcast industry in general as well as Saga’s actual performance. Actual results
may vary materially from those described herein and Saga undertakes no obligation to update any information
contained herein that constitutes a forward-looking statement.
CORPORATE OFFICERS
Christopher S. Forgy
President and Chief Executive Officer
Samuel D. Bush
Senior Vice President, Treasurer
and Chief Financial Officer
Wayne P. Leland
Senior Vice President/Operations
Catherine A. Bobinski
Senior Vice President/Finance, Chief Accounting
Officer and Corporate Controller
Pat Paxton
Senior Vice President/Content
Eric Christian
Chief Marketing Officer
Angela Parks
Vice President/Facilities
Annette Calcaterra
Vice President/Human Resources
Katherine Semivan
Vice President, Corporate Secretary
Tom Atkins
Vice President/Engineering
Tracy Cleeton
Chief Technology Officer
BOARD OF DIRECTORS
Warren S. Lada
Chairman of the Board
Christopher S. Forgy
President and Chief Executive Officer
Clarke R. Brown Jr.
Former President – Radio Division,
Jefferson – Pilot Communications
Timothy J. Clarke
Former President and Owner,
Clarke Advertising & Public Relations, Inc.
Roy F. Coppedge III
Founder & Former Managing Director,
BV Investment Partners
Marcia K. Lobaito
Former SVP/Business Affairs, Corporate Secretary
Saga Communications, Inc.
Michael Schechter
Partner, TowerView, LLC
Gary G. Stevens
Managing Director
Gary Stevens & Co.