Saga Communications, Inc.

What they do

Saga owns and operates radio stations in 28 markets, generating revenue primarily from local advertising sales (about 91% of gross revenue in 2025). The company also offers digital advertising services such as paid search, display, streaming, and social media ads, typically bundled with radio campaigns. Station operating income is its key management metric, and it manages operations as a single reportable segment.

Revenue drivers

• Local radio advertising — Primary revenue source, representing roughly 91% of gross radio revenue in 2025; sold by station sales staffs in each market.
• National advertising — Sold through independent rep firms; complements local sales but is a smaller portion of revenue.
• Political advertising — Variable and event-driven; gross political revenue was $650,000 in 2025, down from $3.263 million in 2024, expected to rise in 2026.
• Digital and non-traditional services — Includes paid search, display, streaming, social, and online video ads; integrated with radio and part of the company's growth strategy.

Recent performance

For Q2 2026, net revenue fell 6.5% to $26.4 million from $28.2 million a year earlier, with operating income of $623,000 versus $1.4 million. Station operating income dropped 50.6% to $3.0 million, and net income was $960,000 ($0.15 diluted EPS) versus $1.1 million. For the six months ended June 30, 2026, net revenue was $49.3 million, operating loss was $2.6 million, and net loss was $1.4 million ($0.23 per share). Full-year 2025 revenue was $107.1 million with a net loss of $7.9 million.

Strategy

Management focuses on operating top-billing stations in mid-sized markets and bundling radio with digital advertising to offset traditional radio declines. The company also sold 24 telecommunication towers for $10.7 million in cash in late 2025, retaining long-term access under lease agreements. Capital expenditures for 2026 are expected to be $3.0 to $3.5 million. Regular quarterly dividends are intended to continue; a $0.25 per share dividend was paid in June 2026.

Risks

• Debt covenant breach — As of March 31, 2026, the company was not in compliance with the minimum fixed charge coverage ratio; a waiver was obtained on May 7, 2026, but future compliance is uncertain without an amendment.
• Digital transformation execution — Failure to scale digital revenue quickly enough to offset the decline in traditional radio advertising could increase costs and reduce revenue.
• Economic sensitivity — Advertising revenue is tied to local economic conditions, including unemployment, inflation, energy prices, and consumer interest rates.
• Political revenue volatility — Political advertising is uneven, and 2025 saw a sharp drop from 2024; results can swing significantly between election cycles.

Outlook

Management expects political revenue to increase in 2026 due to more elections. The company is in discussions with lenders to amend its credit agreement and modify the fixed charge coverage ratio covenant; no assurance of success. It expects to report non-cash rent expense of about $154,000 per quarter and non-cash interest income of $127,000 per quarter in 2026. Capital expenditures for 2026 are planned at $3.0 to $3.5 million.