Nothing in this document should be construed as investment advice. It is provided to give webs site visitors information about who owns and runs America’s radio stations, and how they may be affected by the global financial problems of 2008/2009
Saga Communications (Website)is a publicly traded (AMEX: SCA) radio and TV company that operates throughout the United States. Saga is headquartered in Grosse Pointe Farms, Michigan, an affluent suburb north of Detroit. The company owns 5 TV stations, 30 AM radio stations, and 61 FM radio stations. The company has about 870 full time and 350 part time employees.
History
Saga was formed in 1986 by Edward K. Christian, who had previously been associated with Josephson Communications. Saga was formed from 3 AM and 5 FM stations he acquired from Josephson. After acquiring 15 stations, Saga did its IPO in 1992. First Boston bank organized the IPO and was a significant equity participant and financed its debt. [First Boston would later be acquired by Bank of America (2004?]]
With IPO money in hand, the company became to acquire more stations. They bought their first TV station in 1994. When the 1996 act relaxed the ownership limits, Saga stuck to its original plan, not buying overpriced stations with more debt.
In June 1998, they bought a 50% interest in a company that operates FM radio stations in Iceland.
The company also acquired regional news networks in Michigan and Illinois.
Saga’s 2008 10-K begins with a sobering statement about how the radio business was caught off guard for the downturn. The company is trying to reduce expenses to stay alive.
Major Stations – top 25 markets
Saga’s stations are medium or small market stations, mostly in New England, Iowa, Washington State and Downstate Illinois. It owns no major market stations.
Ownership
Like many similar publicly traded companies, Saga has a 2 tier stock ownership structure. Class A shares are publicly traded, and non publicly traded Class B shares get 10 votes/share and are controlled by the founder and management of the company, giving him complete control over the management of the company. Mr Christian controls 62% of the votes of the company while only owning 20% of its stock
Following the 4:1 reverse stock split, the equity consists of approximately:
Class A – 2.4 million shares
Class B – 600,000 shares
Management
Edward K. Christian is the President, CEO and Chairman. His experience in radio goes back to 1977 in Michigan. He has been with Saga since he founded it in 1986.
Institutional Owners:
| Class A Owner | Location | Approx # Shares |
|---|---|---|
| T Rowe Price | 591k | |
| Towerview | 449k | |
| Fidelity | 375k | |
| Dimensional Fund | 349k | |
| Avenir | Washington, DC |
Financial Condition as of 2008 (10-K)
Key Balance Sheet Items: (2008)
Total Assets: $221 Million
- Value of Radio/TV Station licenses: $170 million
- Goodwill and other intangible Assets: $0
- Cash: $7 Million
- Accounts Receivable: $20 Million (54 days of revenue)
- Land, Buildings, Equipment (net) $73 Million
Debt:
- Current Liabilities: $15 million
- Long Term Debt: $135 Million
Stockholder Equity: $65 Million
Credit Facility
The company has an $175M of which about $130 million is currently borrowed against the facility. There is about $40 million in unused borrowing capacity, which could be helpful if a large number of really cheap radio properties came on the market suddenly. (pounce pounce)
10-k Notes
Profitability
| All numbers in $million | 2008 | 2007 | 2006 | 2005 | 2004 |
| Radio+TV Revenue | 139 | 144 | 142 | 140 | 134 |
| License Impairment | 116 | — | — | 1 | — |
| Operating Income (Without Impairment) |
25 | 27 | 30 | 27 | 30 |
| Long Term Debt Balance | 135 | 129 | 133 | 148 | 121 |
| Debt Service Cost | 7 | 9 | 9 | 7 | 5 |
Stock Performance
On January 28, 2009, the company did a 4:1 reverse split to avoid being delisted by AMEX. The company is using its cash flow to repurchase stock, not to extinguish debt.
The stock went public in 1988 in 1992 at $17.75/share ($71 reflecting 4:1 reverse split in 2009). The stock hit its peak around $92 a share in June of 2002, and drifted down to about $50 by 2005, and $30 by 2009… and fell off a cliff in November 2008, hitting its low of $3.00 in mid March 2009. The stock closed at $6.41 on May 28th, 2009.
If you had invested at the IPO in 1992, you have lost 63% of your investment. If you invested at the peak, you have lost 93% of your investment. If you bought at the minimum in 2009, you have a 113% profit in 2 months.