SAGA COMMUNICATIONS INC [SGA] Filings

10-Q 1 sga-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended June 30, 2024


☐	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	38-3042953
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

73 Kercheval Avenue Grosse Pointe Farms, Michigan (Address of principal executive offices)	48236 (Zip Code)

(313) 886-7070

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $.01 per share	SGA	NASDAQ Global Market

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 þ 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 þ No ◻.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 þ

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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of the registrant’s Class A Common Stock, $.01 par value, outstanding as of August 5, 2024 was 6,261,481.

Table of Contents

INDEX

	Page
PART I. FINANCIAL INFORMATION	3

Item 1. Financial Statements (Unaudited)	3

Condensed consolidated balance sheets — June 30, 2024 and December 31, 2023	3

Condensed consolidated statements of operations — Three and six months ended June 30, 2024 and 2023	4

Condensed consolidated statements of stockholders’ equity – Three and six months ended June 30, 2024 and 2023	5

Condensed consolidated statements of cash flows — Six months ended June 30, 2024 and 2023	6

Notes to unaudited condensed consolidated financial statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3. Quantitative and Qualitative Disclosures about Market Risk	30

Item 4. Controls and Procedures	30

PART II OTHER INFORMATION	30

Item 1. Legal Proceedings	30

Item 1A. Risk Factors	30

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	30

Item 5. Other Information	31

Item 6. Exhibits	31

Signatures	32

EX-31.1

EX-31.2

EX-32

EX-101 INSTANCE DOCUMENT

EX-101 SCHEMA DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 LABELS LINKBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,		December 31,
	2024		2023
	(Unaudited)		(Note)

	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	15,392	$	29,582
Short-term investments		8,708		10,595
Accounts receivable, net		16,728		17,173
Prepaid expenses and other current assets		4,172		2,451
Barter transactions		1,045		843
Total current assets		46,045		60,644
Property and equipment		151,461		148,265
Less accumulated depreciation		98,210		96,860
Net property and equipment		53,251		51,405
Other assets:
Broadcast licenses, net		90,558		90,240
Goodwill		20,281		19,236
Other intangibles, right of use assets, deferred costs and investments, net		11,482		10,688
Total assets	$	221,617	$	232,213

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	4,164	$	2,802
Accrued expenses:
Accrued payroll and payroll taxes		4,780		5,318
Dividend payable		—		12,505
Other accrued expenses		7,106		6,480
Barter transactions		1,075		924
Total current liabilities		17,125		28,029
Deferred income taxes		26,197		26,122
Long-term debt		5,000		—
Other liabilities		7,468		7,513
Total liabilities		55,790		61,664
Commitments and contingencies		—		—
Shareholders’ equity:
Common stock		80		80
Additional paid-in capital		73,359		72,593
Retained earnings		128,808		134,771
Treasury stock		(36,420)		(36,895)
Total shareholders’ equity		165,827		170,549
Total liabilities and shareholders' equity	$	221,617	$	232,213

Note: The balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

	(Unaudited)
	(In thousands, except per share data)
Net operating revenue	$	28,742	$	29,175	$	53,406	$	54,479
Station operating expenses		23,544		22,407		46,525		44,110
Corporate general and administrative		3,049		2,472		6,178		5,088
Other operating expense, net		6		—		977		80
Operating income (loss)		2,143		4,296		(274)		5,201
Interest expense		71		43		114		86
Interest income		(251)		(347)		(554)		(636)
Other income		(1,133)		—		(1,133)		(119)
Income before income tax expense		3,456		4,600		1,299		5,870
Income tax provision
Current		815		905		300		1,185
Deferred		140		345		75		415
		955		1,250		375		1,600
Net income	$	2,501	$	3,350	$	924	$	4,270

Earnings per share:
Basic	$	0.40	$	0.55	$	0.15	$	0.70
Diluted	$	0.40	$	0.55	$	0.15	$	0.70

Weighted average common shares		6,072		6,032		6,068		6,030
Weighted average common and common equivalent shares		6,072		6,032		6,068		6,030

Dividends declared per share	$	0.25	$	0.25	$	1.10	$	0.50

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and six months ended June 30, 2024 and 2023


	Class A			Class B			Additional						Total
	Common Stock			Common Stock			Paid-In		Retained		Treasury		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Stock		Equity

	(Unaudited) (In thousands)

Balance at December 31, 2022	7,867	$	78	—	$	—	$	71,664	$	143,896	$	(37,109)	$	178,529
Net income, three months ended March 31, 2023	—		—	—		—		—		920		—		920
Dividends declared per common share	—		—	—		—		—		(1,531)		—		(1,531)
Compensation expense related to restricted stock awards	—		—	—		—		245		—		—		245
401(k) plan contribution	—		—	—		—		(185)		—		441		256
Balance at March 31, 2023	7,867	$	78	—	$	—	$	71,724	$	143,285	$	(36,668)	$	178,419
Net income, three months ended June 30, 2023	—		—	—		—		—		3,350		—		3,350
Forfeiture of restricted stock	—		—	—		—		—		—		—		—
Dividends declared per common share	—		—	—		—		—		(1,531)		—		(1,531)
Compensation expense related to restricted stock awards	—		—	—		—		248		—		—		248
Purchase of shares held in treasury	—		—	—		—		—		—		—		—
Balance at June 30, 2023	7,867	$	78	—	$	—	$	71,972	$	145,104	$	(36,668)	$	180,486


	Class A			Class B			Additional						Total
	Common Stock			Common Stock			Paid-In		Retained		Treasury		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Stock		Equity

	(Unaudited) (In thousands)

Balance at December 31, 2023	8,007	$	80	—	$	—	$	72,593	$	134,771	$	(36,895)	$	170,549
Net loss, three months ended March 31, 2024	—		—	—		—		—		(1,577)		—		(1,577)
Dividends declared per common share	—		—	—		—		—		(5,321)		—		(5,321)
Compensation expense related to restricted stock awards	—		—	—		—		453		—		—		453
401(k) plan contribution	—		—	—		—		(207)		—		475		268
Balance at March 31, 2024	8,007	$	80	—	$	—	$	72,839	$	127,873	$	(36,420)	$	164,372
Net income, three months ended June 30, 2024	—		—	—		—		—		2,501		—		2,501
Forfeiture of restricted stock	(1)		—	—		—		—		—		—		—
Dividends declared per common share	—		—	—		—		—		(1,566)		—		(1,566)
Compensation expense related to restricted stock awards	—		—	—		—		520		—		—		520
Balance at June 30, 2024	8,006	$	80	—	$	—	$	73,359	$	128,808	$	(36,420)	$	165,827

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	June 30,
	2024		2023

	(Unaudited)
	(In thousands)
Statement of Cash Flows
Cash flows from operating activities:
Net income	$	924	$	4,270
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,456		2,475
Deferred income tax expense		75		415
Amortization of deferred costs		18		18
Compensation expense related to restricted stock awards		973		493
Loss on sale of assets, net		977		80
Other (gain), net		(1,133)		(119)
Barter (revenue) expense, net		(32)		(1)
Deferred and other compensation		(82)		(242)
Changes in assets and liabilities:
Decrease in receivables and prepaid expenses		(453)		(1,643)
Increase in accounts payable, accrued expenses, and other liabilities		1,324		292
Total adjustments		4,123		1,768
Net cash provided by operating activities		5,047		6,038
Cash flows from investing activities:
Purchase of short-term investments		(10,817)		(10,241)
Redemption of short-term investments		12,928		10,237
Acquisition of property and equipment (Capital Expenditures)		(2,574)		(2,637)
Acquisition of broadcast properties		(5,705)		—
Proceeds from sale and disposal of assets		175		616
Proceeds from other gains and losses		1,143		—
Other investing activities		4		117
Net cash used in investing activities		(4,846)		(1,908)
Cash flows from financing activities:
Proceeds from long-term debt		5,000		—
Cash dividends paid		(19,391)		(16,816)
Net cash used in financing activities		(14,391)		(16,816)
Net decrease in cash and cash equivalents		(14,190)		(12,686)
Cash and cash equivalents, beginning of period		29,582		36,802
Cash and cash equivalents, end of period	$	15,392	$	24,116

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of June 30, 2024 and the results of operations for the three and six months ended June 30, 2024 and 2023. Results of operations for three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

We own or operate broadcast properties in 28 markets, including 82 FM and 32 AM radio stations and 79 metro signals.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. annual report on Form 10-K for the year ended December 31, 2023.

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2024, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

Earnings Per Share Information

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. The Company has participating securities related to restricted stock units, granted under the Company’s Second Amended and Restated 2005 Incentive Compensation Plan and the Company’s 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.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

	(In thousands, except per share data)
Numerator:
Net income	$	2,501	$	3,350	$	924	$	4,270
Less: Income allocated to unvested participating securities		78		51		29		63
Net income available to common shareholders	$	2,423	$	3,299	$	895	$	4,207

Denominator:
Denominator for basic earnings per share — weighted average shares		6,072		6,032		6,068		6,030
Effect of dilutive securities:
Common stock equivalents		—		—		—		—
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		6,072		6,032		6,068		6,030

Earnings per share:
Basic	$	0.40	$	0.55	$	0.15	$	0.70
Diluted	$	0.40	$	0.55	$	0.15	$	0.70

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and six months ended June 30, 2024 and 2023, respectively. The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on the fluctuation in the stock price.

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 June 30, 2024 and December 31, 2023, we have recorded $8.7 million and $10.6 million, respectively, of held-to-maturity U.S. Treasury Bills and Treasury Notes at amortized cost basis that have a fair market value of $8.7 million and $10.6 million, respectively. Our held-to-maturity U.S. Treasury Bills and Treasury Notes all have original maturity dates ranging from July 2024 to December 2024.

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 finance rate (“SOFR”), prime rate or have been reset at the prevailing market rate at June 30, 2024.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Allowance for Doubtful Accounts

A provision for doubtful accounts is recorded based on our judgment of collectability of receivables. Amounts are written off when determined to be fully uncollectible. Delinquent accounts are based on contractual terms. We maintain a specific allowance for estimated losses resulting from the inability of certain customers to make required payments. We also consider factors external to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of uncertain economic conditions. In the event we recover amounts previously written off, we will reduce the specific allowance for credit loss. Our allowance for doubtful accounts was $1,009,000 and $618,000 at June 30, 2024 and December 31, 2023, respectively.

Income Taxes

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 related to executive compensation. We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

Segments

We serve twenty-eight 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.

Time Brokerage Agreements/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 their own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Statements of Income. Assets and liabilities related to the TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Balance Sheets.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. 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.

3. 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 an 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.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Disaggregation of Revenue

Revenues from contracts with customers comprised the following for three and six months ended June 30, 2024 and 2023:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

	(in thousands)				(in thousands)
Types of Revenue
Broadcast Advertising Revenue, net	$	23,167	$	24,384	$	43,649	$	45,852
Digital Advertising Revenue		3,280		2,473		5,729		4,383
Other Revenue		2,295		2,318		4,028		4,244
Net Revenue	$	28,742	$	29,175	$	53,406	$	54,479

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 recorded as 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 Condensed Consolidated Financial Statements and are immaterial.

Transaction Price Allocated to the Remaining Performance Obligations

As the majority of our sales 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 sales contracts which have original expected durations of one year or less.

4. 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.

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.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company considered the current and expected future economic and market conditions, and other potential indicators of impairment and determined a triggering event had not occurred which would necessitate any interim impairment tests during the six months ended June 30, 2024. We will continue to monitor changes in economic and market conditions, and if any event or circumstances indicate a triggering event has occurred, we will perform an interim impairment test of our intangible assets at the appropriate time.

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 impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements.

Intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the lives of the leases ranging from five to twenty-six years. Other intangibles are amortized over one to fifteen years. Customer relationships are amortized over three years.

5. Common Stock and Treasury 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 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 stockholders 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 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. 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.

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 stockholder, 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 seven 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 stockholder or an affiliate of the principal stockholder, with each share of each class of Common Stock entitled to one vote per share.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through June 30, 2024:


	Common Stock Issued
	Class A	Class B

	(Shares in thousands)
Balance, January 1, 2023	7,867	—
Issuance of restricted stock	140	—
Balance, December 31, 2023	8,007	—
Forfeiture of restricted stock	(1)	—
Balance, June 30, 2024	8,006	—

We have a Stock Buy-Back Program to allow us to purchase up to $75.8 million of our Class A Common Stock. As of June 30, 2024, we have remaining authorization of $18.0 million for future repurchases of our Class A Common Stock. On September 14, 2017, the Board of Directors authorized the repurchase of our Class A Common Stock under our trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1. The Rule 10b5-1 repurchase plan allows us to repurchase our shares during periods when we would normally not be active in the market due to our internal trading blackout periods. Under the plan, we may repurchase our Class A Common Stock in any combination of open market, block transactions and privately negotiated transactions subject to market conditions, legal requirements including applicable SEC regulations (which include certain price, market, volume and timing constraints), specific repurchase instructions and other corporate considerations. Purchases under the plan are funded by cash on our balance sheet. The plan does not obligate us to acquire any particular amount of Class A Common Stock. Our original purchase authorization was effective until September 1, 2018 and has been extended several times, with the most recent authorization instructions extension being through May 28, 2020. 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. During the three and six months ended June 30, 2024 and 2023, no shares were repurchased under the Stock Buy-Back Program.

6. 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 June 30, 2024, we do not have any non-cancellable operating lease commitments that have not yet commenced.

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 $6.5 million and $7.0 million at June 30, 2024 and December 31, 2023 respectively. Lease liabilities were $6.8 million and $7.3 million at June 30, 2024 and December 31, 2023, respectively. During the six months ended June 30, 2024, we recorded additional ROU assets under operating leases of $282,000. Payments on

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

lease liabilities during the three and six months ended June 30, 2024 and 2023 totaled $445,000, $973,000, $415,000, and $941,000, respectively.

Lease expense includes cost for leases with terms in excess of one year. For the three and six months ended June 30, 2024 and 2023, our total lease expense was $475,000, $950,000, $457,000 and $917,000, respectively. Short-term lease costs are de minimis in nature.

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at June 30, 2024 (in thousands):


Years Ending December 31,
2024 (a)	$	897
2025		1,723
2026		1,502
2027		1,313
2028		904
Thereafter		1,784
Total lease payments (b)		8,123
Less: Interest (c)		1,357
Present value of lease liabilities (d)	$	6,766

(a)	Remaining payments are for the six-months ending December 31, 2024.

(b)	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 June 30, 2024.

(c)	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.

(d)	The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.3 years and 5.5%, respectively, at June 30, 2024.

7. 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 acquisitions 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.

2024 Acquisitions and Dispositions

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, subject to certain purchase price adjustments. The Company closed on this transaction on May 31, 2024, using funds from operations and borrowings under our credit agreement, of $5,850,000, which included the purchase price of $5,300,000, the purchase of $482,000 in accounts receivable and certain closing adjustments and transactional costs of approximately $68,000. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in Lafayette, Indiana as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On May 31, 2024, we closed on an agreement to sell WNDN-FM located in our Ocala-Gainesville, Florida market to Suncoast Radio, Inc. for $150,000. We recorded a $20,000 loss on the sale in our other operating (income) expense, net line on our Condensed Consolidated Statement of Operations.

On March 29, 2024, we closed on an agreement to sell WYSE-AM, W275CP translator and W248CM translator located in our Asheville, North Carolina market to EZ Radio LLC for $10,000. We recorded a $147,000 loss on the sale in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations.

On March 22, 2024, we submitted a request to the FCC to cancel our FCC license for KBAI-AM located in our Bellingham, Washington market. We recorded an $800,000 loss on the disposal in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations.

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 Condensed 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 item on our Condensed Consolidated Statement of Operations.

Condensed Consolidated Balance Sheet of 2024 and 2023 Acquisitions:

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2024 and 2023 acquisitions. The allocation of the purchase price for the 2024 acquisition is preliminary at June 30, 2024.

Saga Communications, Inc.

Condensed Consolidated Balance Sheet of 2024 and 2023 Acquisitions


	Acquisitions in
	2024		2023

	(In thousands)
Assets Acquired:
Current assets	$	542	$	—
Property and equipment		1,861		—
Other assets:
Broadcast licenses		1,211		—
Goodwill		1,127		—
Other intangibles, deferred costs and investments		1,082		—
Total other assets		3,420		—
Total assets acquired		5,823		—
Liabilities Assumed:
Current liabilities		118		—
Total liabilities assumed		118		—
Net assets acquired	$	5,705	$	—

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Pro Forma Results of Operations for Acquisitions (Unaudited)

The following unaudited pro forma results of our operations for the three months ended June 30, 2024 and 2023 assume the 2024 acquisitions occurred as of January 1, 2023. The pro forma results give effect to certain adjustments, including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations that would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

	(In thousands, except per share data)
Pro forma Consolidated Results of Operations
Net operating revenue	$	29,282	$	29,976	$	54,574	$	55,987
Station operating expense		24,023		23,095		47,669		45,482
Corporate general and administrative		3,049		2,472		6,178		5,088
Other operating expense, net		6		—		977		80
Operating income (loss)		2,204		4,409		(250)		5,337
Interest expense		123		122		245		244
Interest income		(251)		(347)		(554)		(636)
Other income, net		(1,133)		—		(1,133)		(