PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31,
2017 2016
(Unaudited) (Note)
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 81,035 $ 26,697
Accounts receivable, net 18,880 17,735
Prepaid expenses and other current assets 2,026 2,397
Barter transactions 1,721 1,318
Current assets of discontinued operations — 4,625
Total current assets 103,662 52,772
Property and equipment 135,644 134,680
Less accumulated depreciation 79,299 85,506
Net property and equipment 56,345 49,174
Other assets:
Broadcast licenses, net 94,708 86,622
Goodwill 15,417 7,407
Other intangibles, deferred costs and investments, net 7,822 5,975
Assets of discontinued operations — 18,048
$ 277,954 $ 219,998

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 2,211 $ 1,618
Payroll and payroll taxes 6,836 6,954
Other accrued expenses 26,348 3,198
Barter transactions 1,394 1,304
Current portion of long term debt 10,287 —
Current liabilities of discontinued operations 292 2,971
Total current liabilities 47,368 16,045
Deferred income taxes 31,762 29,741
Long-term debt 25,000 35,287
Other liabilities 2,269 2,885
Liabilities of discontinued operations — 1,058
Total liabilities 106,399 85,016
Commitments and contingencies — —
Stockholders’ equity:
Common stock 75 74
Additional paid-in capital 62,157 59,557
Retained earnings 143,308 108,733
Treasury stock (33,985 ) (33,382 )
Total stockholders’ equity 171,555 134,982
$ 277,954 $ 219,998


	June 30,		December 31,
	2022		2021
	(Unaudited)		(Note)

	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	42,321	$	54,760
Short-term investments		10,019		—
Accounts receivable, net		16,288		16,269
Prepaid expenses and other current assets		4,351		2,449
Barter transactions		1,156		971
Total current assets		74,135		74,449
Property and equipment		147,012		144,719
Less accumulated depreciation		92,661		91,375
Net property and equipment		54,351		53,344
Other assets:
Broadcast licenses, net		90,307		90,277
Goodwill		19,236		19,209
Other intangibles, right of use assets, deferred costs and investments, net		9,944		10,653
Total assets	$	247,973	$	247,932

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,204	$	2,347
Accrued payroll and payroll taxes		6,960		6,202
Dividend payable		0		3,988
Other accrued expenses		5,652		5,758
Barter transactions		1,027		901
Total current liabilities		15,843		19,196
Deferred income taxes		25,197		24,802
Other liabilities		6,240		7,015
Total liabilities		47,280		51,013
Commitments and contingencies		—		—
Stockholders’ equity:
Common stock		77		77
Additional paid-in capital		70,483		70,035
Retained earnings		167,095		164,246
Treasury stock		(36,962)		(37,439)
Total stockholders’ equity		200,693		196,919
Total liabilities and stockholders' equity	$	247,973	$	247,932

Note: The balance sheet at December 31, ~~2016~~2021 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. ~~Certain prior period amounts have been reclassified to conform to the current year presentation.~~

See ~~notes to unaudited condensed consolidated financial statements.~~

~~SAGA COMMUNICATIONS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(Unaudited)
(In thousands, except per share data)

Net operating revenue $ 30,269 $ 29,878 $ 86,685 $ 88,208
Station operating expense 21,755 21,775 64,521 64,757
Corporate general and administrative 3,132 2,728 8,875 8,065
Other operating expense (127 ) (1,393 ) (69 ) (1,388 )
Operating income from continuing operations 5,509 6,768 13,358 16,774
Interest expense 254 187 691 548
Income from continuing operations before tax 5,255 6,581 12,667 16,226
Income tax expense 2,290 2,678 5,280 6,665
Income from continuing operations, net of tax 2,965 3,903 7,387 9,561
Income from discontinued operations, net of tax (Note 5) 30,451 1,511 32,501 3,688
Net income $ 33,416 $ 5,414 $ 39,888 $ 13,249
Basic Earnings per share:
From continuing operations $ .50 $ .66 $ 1.25 $ 1.63
From discontinued operations 5.16 .26 5.51 .63
Basic earnings per share $ 5.66 $ .92 $ 6.76 $ 2.26

Weighted average common shares 5,807 5,755 5,800 5,753

Diluted Earnings per share:
From continuing operations $ .50 $ .66 $ 1.25 $ 1.62
From discontinued operations 5.16 .26 5.51 .63
Diluted earnings per share $ 5.66 $ .92 $ 6.76 $ 2.25

Weighted average common and common equivalent shares 5,807 5,764 5,804 5,762

Dividends declared per share $ .30 $ .30 $ .90 $ .80

~~See~~accompanying notes to unaudited condensed consolidated financial statements.

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SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~OPERATIONS

Nine Months Ended
September 30,
2017 2016
(Unaudited)
(In thousands)
Cash flows from operating activities:
Cash provided by operating activities $ 18,677 $ 21,020
Cash flows from investing activities:
Acquisition of property and equipment (4,850 ) (4,149 )
Acquisition of broadcast properties (25,856 ) (12,733 )
Proceeds from sale of television stations 69,528 —
Proceeds from disposals of fixed assets 417 1,644
Other investing activities — 11
Net cash provided by (used in) investing activities 39,239 (15,227 )
Cash flows from financing activities:
Cash dividends paid (3,541 ) (4,688 )
Purchase of treasury shares (37 ) (5 )
Other financing activities — —
Net cash used in financing activities (3,578 ) (4,693 )
Net increase in cash and cash equivalents 54,338 1,100
Cash and cash equivalents, beginning of period 26,697 21,614
Cash and cash equivalents, end of period $ 81,035 $ 22,714


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

	(Unaudited)
	(In thousands, except per share data)
Net operating revenue	$	29,821	$	28,046	$	54,788	$	50,347
Station operating expenses		21,786		21,017		42,354		39,940
Corporate general and administrative		2,609		2,494		5,303		4,932
Other operating (income) expense, net		45		(80)		40		(23)
Operating income		5,381		4,615		7,091		5,498
Interest expense		32		72		64		145
Interest income		(49)		(4)		(53)		(10)
Other income		—		(31)		(2)		(303)
Income before income tax expense		5,398		4,578		7,082		5,666
Income tax expense		1,575		1,325		2,055		1,655
Net income	$	3,823	$	3,253	$	5,027	$	4,011

Earnings per share:
Basic	$	0.63	$	0.54	$	0.83	$	0.67
Diluted	$	0.63	$	0.54	$	0.83	$	0.67

Weighted average common shares		5,952		5,917		5,950		5,915
Weighted average common and common equivalent shares		5,952		5,917		5,950		5,915

Dividends declared per share	$	0.20	$	0.16	$	0.36	$	0.16

See accompanying notes to unaudited condensed consolidated financial statements.

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SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and six months ended June 30, 2022 and 2021


	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, 2020	6,785	$	68	938	$	9	$	68,900	$	158,990	$	(37,425)	$	190,542
Net income, three months ended March 31, 2021	0		0	0		0		0		758		0		758
Compensation expense related to restricted stock awards	0		0	0		0		343		0		0		343
401(k) plan contribution	0		0	0		0		(200)		0		421		221
Balance at March 31, 2021	6,785	$	68	938	$	9	$	69,043	$	159,748	$	(37,004)	$	191,864
Net income, three months ended June 30, 2021	0		0	0		0		0		3,253		0		3,253
Dividends declared per common share	0		0	0		0		0		(956)		0		(956)
Compensation expense related to restricted stock awards	0		0	0		0		357		0		0		357
Balance at June 30, 2021	6,785	$	68	938	$	9	$	69,400	$	162,045	$	(37,004)	$	194,518


	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, 2021	6,835	$	68	965	$	9	$	70,035	$	164,246	$	(37,439)	$	196,919
Net income, three months ended March 31, 2022	0		0	0		0		0		1,204		0		1,204
Dividends declared per common share	0		0	0		0		0		(968)		0		(968)
Compensation expense related to restricted stock awards	0		0	0		0		339		0		0		339
401(k) plan contribution	0		0	0		0		(229)		0		477		248
Balance at March 31, 2022	6,835	$	68	965	$	9	$	70,145	$	164,482	$	(36,962)	$	197,742
Net income, three months ended June 30, 2022	0		0	0		0		0		3,823		0		3,823
Dividends declared per common share	0		0	0		0		0		(1,210)		0		(1,210)
Compensation expense related to restricted stock awards	0		0	0		0		338		0		0		338
Balance at June 30, 2022	6,835	$	68	965	$	9	$	70,483	$	167,095	$	(36,962)	$	200,693

See accompanying notes to unaudited condensed consolidated financial statements.

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SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	June 30,
	2022		2021

	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net cash provided by operating activities	$	7,340	$	9,203
Cash flows from investing activities:
Purchase of Short-term investments		(9,999)		—
Acquisition of property and equipment		(3,563)		(1,455)
Acquisition of broadcast properties		(57)		(150)
Proceeds from sale and disposal of assets		7		130
Proceeds from insurance claims		—		272
Other investing activities		—		31
Net cash used in investing activities		(13,612)		(1,172)
Cash flows from financing activities:
Cash dividends paid		(6,167)		—
Net cash used in financing activities		(6,167)		—
Net increase (decrease) in cash and cash equivalents		(12,439)		8,031
Cash and cash equivalents, beginning of period		54,760		51,353
Cash and cash equivalents, end of period	$	42,321	$	59,384

See accompanying notes to unaudited condensed consolidated financial statements.

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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 ~~September~~June 30, ~~2017~~2022 and the results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021. Results of operations for ~~the~~ three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~

2022.

We own or operate broadcast properties in 2627 markets, including 7579 FM and 3335 AM radio ~~stations.~~

~~On May 9, 2017 the Company entered into an agreement to sell the Joplin, Missouri~~stations and Victoria, Texas television stations. The disposition closed on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s continuing operations. As a result of the Company’s television stations sale, the Company only has one reportable segment at September 30, 2017.

80 metro signals.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2016.~~2021.

~~The Company has~~We have evaluated events and transactions occurring subsequent to the balance sheet date of ~~September~~June 30, ~~2017,~~2022, for items that should potentially be recognized in these financial statements or discussed within the notes to ~~the~~these financial statements.

~~SAGA COMMUNICATIONS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~

~~STATEMENTS — (Continued)~~

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, 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.

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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
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(In thousands, except per share data)
Numerator:
Income from continuing operations $ 2,965 $ 3,903 $ 7,387 $ 9,561
Less: Income allocated to unvested participating securities 51 72 126 176
Income from continuing operations available to common stockholders $ 2,914 $ 3,831 $ 7,261 $ 9,385

Income from discontinued operations $ 30,451 $ 1,511 $ 32,501 $ 3,688
Less: Income allocated to unvested participating securities 520 28 556 68
Income from discontinued operations available to common stockholders $ 29,931 $ 1,483 $ 31,945 $ 3,620

Net income available to common stockholders $ 32,845 $ 5,314 $ 39,206 $ 13,005

Denominator:
Denominator for basic earnings per share — weighted average shares 5,807 5,755 5,800 5,753
Effect of dilutive securities:
Common stock equivalents — 9 4 9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions 5,807 5,764 5,804 5,762

Basic earnings per share:
From continuing operations $ .50 $ .66 $ 1.25 $ 1.63
From discontinued operations 5.16 .26 5.51 .63
Basic earnings per share $ 5.66 $ .92 $ 6.76 $ 2.26

Diluted earnings per share
From continuing operations $ .50 $ .66 $ 1.25 $ 1.62
From discontinued operations 5.16 .26 5.51 .63
Diluted earnings per share $ 5.66 $ .92 $ 6.76 $ 2.25


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

	(In thousands, except per share data)
Numerator:
Net income	$	3,823	$	3,253	$	5,027	$	4,011
Less: Income allocated to unvested participating securities		65		35		85		43
Net income available to common stockholders	$	3,758	$	3,218	$	4,942	$	3,968

Denominator:
Denominator for basic earnings per share — weighted average shares		5,952		5,917		5,950		5,915
Effect of dilutive securities:
Common stock equivalents		0		0		0		0
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,952		5,917		5,950		5,915

Earnings per share:
Basic	$	0.63	$	0.54	$	0.83	$	0.67
Diluted	$	0.63	$	0.54	$	0.83	$	0.67

~~The number of~~There were 0 stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three months ended June 30, 2022 and ~~therefore have been excluded from~~2021, respectively. The actual effect of these shares, if any, on the diluted earnings per share calculation ~~was 0 for~~will vary significantly depending on the ~~three and nine months ended September 30, 2017 and 0 for~~fluctuation in the ~~three and nine months ended September 30, 2016, respectively. All~~ stock ~~options were exercised during the second quarter of 2017 and there were no stock options outstanding at September 30, 2017.~~price.

~~SAGA COMMUNICATIONS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~

~~STATEMENTS — (Continued)~~

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, 2022, we have recorded $10 million of held-to-maturity United States’ Treasury Bills at amortized cost basis, that has a fair market value of $10 million. Our held-to-maturity United States’ Treasury Bills all have original maturity dates ranging from July 2022 to February 2023. We had 0 marketable securities at December 31, 2021.

Our financial instruments are comprised of cash and cash equivalents, 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 euro-dollar rate, prime rate or have been reset at the prevailing market rate at ~~September~~June 30, ~~2017.~~2022.

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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 have included in our calculation of our allowance for doubtful accounts, the potential impact of the COVID-19 pandemic on our customers’ businesses and their ability to pay their accounts receivable. 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 $359,000 and $469,000 at June 30, 2022 and December 31, 2021, 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. 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 NaN radio markets (reporting units) that aggregate into 1 operating segment (Radio), which also qualifies as a reportable segment. We operate under 1 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 (“~~TBA’s”~~TBAs”) or Local Marketing Agreements (“~~LMA’s”~~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 ~~TBA’s/LMA’s~~TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Statements of Income. ~~At September 30, 2017 we had no TBA’s/LMA’s~~Assets and liabilities related to the TBAs/LMAs are included in ~~place.~~the accompanying unaudited Condensed Consolidated Balance Sheets.

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

~~In November 2015, the FASB issued Accounting Standards Update No. 2015-17,~~~~“Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes”~~ ~~(“ASU 2015-17”), which requires companies to classify~~Management has considered all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This amendment was adopted on January 1, 2017 on a retrospective basis. As a result we have reclassified approximately $1,022,000 of current deferred tax assets into the noncurrent deferred tax liability line item within the Condensed Consolidated Balance Sheet for the period ended December 31, 2016.

~~In March 2016, the FASB issued ASU No. 2016-09,~~~~"Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting"~~ ("ASU 2016-09"), which includes multiple amendments intended to simplify aspects of share-based payment accounting. Amendments to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeituresrecent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will be applied using a modified retrospective transition method through a cumulative-effect adjustment to equity as of the beginning of the period of adoption. Amendments to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement will be applied retrospectively, and amendments requiring the recognition of excess tax benefits and tax deficiencies in the income statement are to be applied prospectively. This amendment was adopted on January 1, 2017 and did not have a material ~~impact~~effect on ~~our consolidated~~the Company’s financial statements.

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SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS —– (Continued)

~~Recent Accounting Pronouncements – Not Yet Adopted~~

3. Revenue
~~In May 2017,~~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 ~~FASB issued ASU 2017-09,~~~~“Compensation – Stock Compensation (Topic 718), Scope~~sale of ~~Modification Accounting)”~~ ~~(“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted~~advertising for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this standard will havebroadcast on our ~~consolidated financial statements.~~
~~In January 2017, the FASB issued ASU 2017-04, “~~~~Intangibles – Goodwill and Other (Topic 350)”~~~~(“ASU 2017-04”) which removes step 2~~stations. We recognize revenue from the ~~goodwill impairment test. Under~~sale of advertising as performance obligations are satisfied upon airing of the ~~new guidance, if~~advertising; therefore, revenue is recognized at a ~~reporting unit’s carrying amount exceeds it fair value, an entity will record an impairment charge~~point in time when each advertising spot is transmitted. Agency commissions are calculated based on ~~that difference. The impairment charge will be limited~~a stated percentage applied to ~~the amount~~gross billing revenue for our advertising inventory placed by an agency and are reported as a reduction of goodwill allocated to that reporting unit. ASU 2017-04 will be applied prospectively and is effective for fiscal years and interim impairment tests performed in periods beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the impact of adopting this standardadvertising revenue.
Digital Advertising Revenue
We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our ~~consolidated financial statements.~~
~~In August 2016, the FASB issued ASU No. 2016-15, “~~~~Classification of Certain Cash Receipts~~websites and ~~Cash Payments (Topic 230): Statement of Cash Flows”~~~~(“ASU 2016-15”), which clarifies how entities should classify certain cash receipts~~online streams, mobile messaging, email marketing and ~~cash payments on the statement of cash flows. ASU 2016-15 also clarifies how the predominance principle should be applied~~other e-commerce. Revenue is recorded when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.
~~In June 2016, the FASB issued ASU No. 2016-13, “~~~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”~~(“ASU 2016-13”), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.
~~In February 2016, the FASB issued Accounting Standards Update No. 2016-02,~~~~“Leases (Topic 842)”~~ (“ASU 2016-02”)¸which requires that all leases with a term of more than one year, covering leased assets such as real estate, broadcasting towers and equipment, be reflected on the balance sheet as assets and liabilities for the rights and obligations created by these leases. ASU 2016-02 is effective for fiscal years fiscal years and interim periods beginning after December 15, 2018.~~While the Company is currently reviewing the effects of this guidance, the Company believes that this would result in an increase~~each specific performance obligation in the ~~assets~~digital advertising campaign takes place, typically within a one month period.
Other Revenue
Other revenue includes revenue from concerts, promotional events, tower rent and ~~liabilities reflected on~~other miscellaneous items. Revenue is generally recognized when the ~~Company’s consolidated balance sheets. We~~event is completed, as the promotional events are ~~still evaluating the impact on our consolidated statements~~completed or as each performance obligation is satisfied.
Disaggregation of ~~operations.~~Revenue
~~In May 2014, the FASB issued Accounting Standards Update No. 2014-09,~~~~“Revenue from Contracts with Customers”~~~~(“ASU 2014-09”), which provides guidance for the recognition, measurement and disclosure of revenue resulting~~Revenues from contracts with customers comprised the following for three and ~~will supersede virtually all~~six months ended June 30, 2022 and 2021:

Three Months Ended

Six Months Ended

June 30,

June 30,


2022

2021

2022

2021


(in thousands)

(in thousands)

Types of Revenue




Broadcast Advertising Revenue, net

$
25,436

$
24,944

$
47,023

$
44,951

Digital Advertising Revenue

2,233

1,636

3,982

2,636

Other Revenue

2,152

1,466

3,783

2,760

Net Revenue

$
29,821

$
28,046

$
54,788

$
50,347

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 ~~current revenue recognition guidance under GAAP. The FASB has also issued a number of updates~~performance obligations these prepayments are recorded as contract liabilities. Typical contract liabilities relate to ~~this standard. This standard is effective~~prepayments for ~~the fiscal~~advertising spots not yet run; prepayments from sponsors for events that have not yet been held; and ~~interim periods beginning January 1, 2018. The Company has completed our preliminary analysis of the standard, our evaluation of contracts and the potential impact of this standard~~gift cards sold on our ~~consolidated financial statements. Based on our preliminary assessment, which is subject~~websites used to ~~change, the impact of this guidance should not~~finance a broadcast advertising campaign. Generally all contract liabilities are expected to be ~~material to~~recognized within one year and are included in accounts payable in the Company’s ~~financial position, results~~Condensed Consolidated Financial Statements and are immaterial.

Table of ~~operations or cash flows. We plan to adopt the new guidance using the modified retrospective method.~~ Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~STATEMENTS — (Continued)~~

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.

3.

4. Broadcast Licenses, Goodwill and Other Intangible Assets
We evaluate our FCC licenses ~~and goodwill~~ for impairment annually ~~as of October 1~~^st or more frequently if events or changes in circumstances indicate that the asset might be impaired. ~~FCC~~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 ~~evaluated~~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 ~~impairment at~~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 ~~level using~~and the related market share and profit margin of an average station within a ~~direct method.~~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.

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, 2022. 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 ~~four~~five to twenty-six years. Other intangibles are amortized over one to fifteen years. Customer relationships are amortized over three years.

Table of Contents

4.SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. Common Stock and Treasury Stock
The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through ~~September~~June 30, ~~2017:~~2022:

Common Stock Issued
Class A Class B
(Shares in thousands)
Balance, January 1, 2016 6,603 865
Conversion of shares 12 (12 )
Issuance of restricted stock 23 25
Balance, December 31, 2016 6,638 878
Exercise of stock options 21 8
Conversion of shares 4 (4 )
Forfeiture of restricted stock (1 ) —
Balance, September 30, 2017 6,662 882

Common Stock Issued

Class A

Class B

(Shares in thousands)
Balance, January 1, 2021

6,785

938
Conversion of shares

12

(12)
Issuance of restricted stock

38

39
Balance, December 31, 2021

6,835

965
Balance, June 30, 2022

6,835

965

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 ~~September~~June 30, ~~2017,~~2022, we have remaining authorization of ~~$23.3~~$18.4 million for future repurchases of our Class A Common Stock. On September 14, 2017, the Board of Directors authorized the repurchase of ~~its~~our Class A Common Stock under ~~its~~our trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1.The Rule 10b5-1 repurchase plan allows ~~the Company~~us to repurchase ~~its~~our shares during periods when itwe would normally not be active in the market due to ~~its~~our internal trading blackout periods. Under the plan, ~~the Company~~we may repurchase ~~its~~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 ~~will be~~are funded by cash on ~~the Company's~~our balance sheet. The plan does not obligate ~~Saga~~us to acquire any particular amount of Class A Common Stock. ~~The~~Our original purchase authorization iswas effective until September 1, 2018 ~~but may be suspended,~~and has been extended several times, with the most recent authorization instructions extension being through May 28, 2020. Given the unprecedented uncertainty surrounding the COVID-19 virus and the resulting economic issues we have halted the directions for any additional buybacks under our plan. During the three and six months ended June 30, 2022 and 2021 0 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 ~~amended~~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 ~~time~~residual value guarantees or material restrictive covenants. As of June 30, 2022, 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 $5.5 million and $6.1 million at June 30, 2022 and December 31, 2021 respectively. Lease liabilities were $5.8 million and $6.4 million at June 30, 2022 and December 31, 2021, respectively. During the ~~Company's discretion.~~six months ended June 30, 2022, we recorded additional ROU assets under operating leases of $219,000. Payments on lease liabilities during the three and six months ended June 30, 2022 and 2021 totaled $428,000, $906,000, $415,000, and $884,000, respectively.
Lease expense includes cost for leases with terms in excess of one year. For the three and six months ended June 30, 2022 and 2021, our total lease expense was $449,000, $893,000, $442,000 and $882,000, respectively. Short-term lease costs are de minimus.
10
12

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~STATEMENTS — (Continued)~~

~~5. Discontinued Operations~~
~~On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri~~We have no financing leases and Victoria, Texas television stations (“Television Sale”) for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand. The Company recognized a pretax gain of $50.8 million as a resultminimum annual rental commitments under non-cancellable operating leases consisted of the Television Sale in the third quarter of 2017. The gain net of tax for the Television Sale was $29.9 million. Effective September 1, 2017, the Company used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina, which included the purchase price of $23 million, the purchase of $1.3 million in accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000 (as described in Note 6). On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000 respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 8).
In accordance with authoritative guidance we have reported the results of operations of the Joplin, Missouri and Victoria, Texas television stations as discontinued operations in the accompanying consolidated financial statements. For all previously reported periods, certain amounts in the consolidated financial statements have been reclassified. All of the assets and liabilities of the Joplin, Missouri and Victoria, Texas television stations have been classified as discontinued operations and the net results of operations have been reclassified from continuing operations to discontinued operations. These were previously included in the Company’s television segment.
~~The~~ following ~~table shows the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Operations~~at June 30, 2022 (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017⁽⁴⁾ 2016 2017⁽⁴⁾ 2016

Net operating revenue $ 3,296 $ 6,241 $ 14,238 $ 17,094
Station operating expense⁽¹⁾ 2,372 3,684 9,727 10,807
Other operating (income) expense — — 31 3
Operating income 924 2,557 4,480 6,284
Interest Expense⁽²⁾ 5 9 21 26
Income before income taxes 919 2,548 4,459 6,258
Pretax gain on the disposal of discontinued operations 50,842 — 50,842 —
Total pretax gain on discontinued operations 51,761 2,548 55,301 6,258
Income tax expense⁽³⁾ 21,310 1,037 22,800 2,570
Income from discontinued operations, net of tax $ 30,451 $ 1,511 $ 32,501 $ 3,688

Years Ending December 31,

2022 (a)

$
885
2023

1,608
2024

1,293
2025

906
2026

700
Thereafter

1,321
Total lease payments (b)

6,713
Less: Interest (c)

895
Present value of lease liabilities (d)

$
5,818

(a) ⁽¹⁾ ~~No depreciation expense was recorded by~~Remaining payments are for the ~~Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.~~nine-months ending December 31, 2022
(b) ⁽²⁾ ~~Interest expense related~~Lease payments include options to ~~Surtsey Media, LLC debt~~extend lease terms that ~~is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations~~are reasonably certain of being exercised. There were ~~sold on September 1, 2017.~~no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2022.
(c) ⁽³⁾ ~~The effective tax rates on pretax income from discontinued operations were 41%.~~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) ⁽⁴⁾ ~~Results of operations for the Television stations are reflected through August 31, 2017.~~ The ~~effective date of the sale was September 1, 2017.~~weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.1 years and 4.2%, respectively, at June 30, 2022.
11

~~SAGA COMMUNICATIONS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~

~~The following table is a summary of the assets and liabilities of discontinued operations (in thousands):~~
September 30,
2017 December 31,
2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable $ — $ 3,868
Prepaid expenses and other current assets — 625
Barter transactions — 132
Total of current assets of discontinued operations $ — $ 4,625

Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net⁽¹⁾ $ — $ 7,388
Broadcast licenses, net⁽¹⁾ — 9,607
Other intangibles, deferred costs and investments, net⁽¹⁾ — 1,053
Total of non-current assets of discontinued operations $ — $ 18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets $ — $ 22,673

Major Classes of Current Liabilities of Discontinued Operations
Accounts payable $ 84 $ 759
Barter transactions — 163
Current portion of long term debt — 1,078
Other liabilities⁽¹⁾ 208 971
Total of current liabilities of discontinued operations $ 292 $ 2,971

Major Classes of Current Liabilities of Discontinued Operations
Other liabilities⁽¹⁾ $ — $ 1,058
Total of non-current liabilities of discontinued operations $ — $ 1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets $ 292 $ 4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets $ (292 ) $ 18,644
~~(1)~~ For prior periods, the current and long-term classification of assets and liabilities does not change as they did not meet the held-for-sale criteria the prior periods. We closed the disposition on September 1, 2017, therefore all amounts in the current year are considered current assets or liabilities of discontinued operations.
12
~~SAGA COMMUNICATIONS, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~
The following table represents the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Cash Flows (in thousands):
September 30,
2017 September 30,
2016
Significant operating non-cash items
Depreciation and amortization⁽¹⁾ $ 445 $ 1,023
Broadcast program rights amortization 418 467
Barter revenue, net 18 58
Loss on sale of assets 31 3

Significant investing items
Acquisition of property and equipment $ 125 $ 717
Proceeds from sale and disposal of assets — 13
Net proceeds from sale of television stations⁽²⁾ 69,528 —
⁽¹⁾ ~~No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.~~
⁽²⁾ Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.
6.7. 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 ~~acquisition~~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.
2022 Acquisitions
~~2017 Acquisitions and Disposals~~
On ~~May 9, 2017~~July 12, 2021, we entered into ~~a definitive~~an agreement to ~~sell our Joplin, Missouri~~acquire WIZZ-AM and ~~Victoria, Texas television stations~~a translator from P. & M. Radio for ~~approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale~~$61,800 of which $5,000 was ~~completed on September 1, 2017~~paid in 2021 and the ~~Company received net proceeds of $69.5 million which included~~remainder was paid on April 6, 2022 when we closed on the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.
On May 9, 2017, the Company entered into an Asset Purchase Agreement with Apex Media Corporation and Pearce Development, LLC f/k/a Apex Real Property, LLC, both Companies of which a member of our Board of directors, G. Dean Pearce, is President of, to purchase radio stations principally serving the South Carolina area for approximately $23 million (subject to certain purchase price adjustments) plus the right to air certain radio commercials, substantially all the assets related to the operation of the following radio stations: WCKN(FM), WMXF(FM), WXST(FM), WAVF(FM), WSPO(AM), W261DG, W257BQ, WVSC(FM), WLHH(FM), WOEZ(FM), W256CB, W293BZ. The Company closed this transaction effective September 1, 2017, simultaneously with the closing of the Television Sale using funds generated from the Television Sale for $24.2 million, which included the purchase price of $23 million, and the purchase of $1.3 million in related accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000.transaction. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the ~~Charleston, South Carolina and Hilton Head, South Carolina~~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.

13
13

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~STATEMENTS — (Continued)~~

2021 Acquisitions
On January ~~16, 2017, we entered into~~8, 2021, the Company closed on an ~~asset purchase~~ agreement to purchase WBQL and W288DQ from Consolidated Media, LLC, for an ~~FM radio station (WCVL) from WUVA, Incorporated, serving~~aggregate purchase price of $175,000, of which $25,000 was paid in 2020 and the ~~Charlottesville, Virginia market for approximately $1,658,000, which included $8,000~~remaining $150,000 paid in transactional costs. Simultaneously, we entered into a TBA to begin operating the station on February 1, 2017. We completed this acquisition on April 18, 2017. This acquisition was financed through funds generated from operations. Unaudited proforma results of operations for this acquisition are not required, as such information is not material to our financial statements and therefore is not presented in the pro forma tables in the following pages.
~~2016 Acquisitions~~
On November 2, 2015, we entered into an agreement to acquire an FM radio station (WLVQ) from Wilks Broadcast - Columbus, LLC, serving the Columbus, Ohio market for approximately $13,791,000, which included $734,000 in accounts receivable and $57,000 in transactional costs. We completed this acquisition on February 3, 2016. We operated this station under an LMA from November 16, 2015 through our completion of the acquisition. This acquisition was financed through funds generated from operations.2021. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the ~~Columbus, Ohio~~Clarksville, Tennessee market as well as ~~the~~ 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 March 16, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $50,000.~~
~~On March 25, 2016 we acquired an FM translator serving the Milwaukee, Wisconsin market for approximately $50,000.~~
~~On April 8, 2016 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $100,000.~~
~~On April 11, 2016 we acquired an FM translator serving the Clarksville, Tennessee market for approximately $30,000.~~
~~On June 3, 2016 we acquired an FM translator serving the Spencer, Iowa market for approximately $35,000.~~
~~On August 11, 2016 we acquired two FM translators serving the Bellingham, Washington market for approximately $50,000.~~
~~On September 12, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $45,000.~~
~~On October 11, 2016 we acquired a FM Translator serving the Bellingham, Washington market for approximately $25,000.~~
~~On November 8, 2016 we acquired a FM Translator serving the Des Moines, Iowa market for approximately $25,000.~~
~~On November 14, 2016 we acquired a FM Translator serving the Springfield, Illinois market for approximately $23,000.~~
~~On December 2, 2016 we acquired a FM Translator serving the Ithaca, New York market for approximately $35,000.~~
14
~~SAGA COMMUNICATIONS, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~
Condensed Consolidated Balance Sheet of ~~2017~~2022 and ~~2016~~2021 Acquisitions:
The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the ~~2017~~2022 and ~~2016 acquisitions at their respective acquisition dates. The allocation of the purchase price for the 2017 and 2016 acquisitions is preliminary at September 30, 2017.~~
2021 acquisitions.
Saga Communications, Inc.
Condensed Consolidated Balance Sheet of ~~2017~~2022 and ~~2016~~2021 Acquisitions

Acquisitions in

2022

2021
Acquisitions in
2017 2016
(In thousands)

(In thousands)
Assets Acquired:

Current assets $ 1,440 $ 814
Property and equipment 6,678 375

$
5

$
3
Other assets:

Broadcast licenses 8,086 8,123

29

69
Goodwill 8,011 4,533

28

103
Other intangibles, deferred costs and investments 2,019 398
Total other assets 18,116 13,054

57

172
Total assets acquired 26,234 14,243

62

175
Liabilities Assumed:

Current liabilities 378 41

0

0
Total liabilities assumed 378 41

0

0
Net assets acquired $ 25,856 $ 14,202

$
62

$
175

15

8. Income taxes
On March 18, 2020, the Families First Coronavirus Response Act ("FFCR Act"), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous tax provisions, such as deferring payroll payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property. This legislation currently has no material impact to the Company’s financial statements.
An income tax expense of $1,575,000 was recorded for the three months ended June 30, 2022 compared to $1,325,000 for the three months ended June 30, 2021. The effective tax rate was approximately 29.2% for the three months ended June 30, 2022 compared to 28.9% for the three months ended June 30, 2021. An income tax expense of $2,055,000 was recorded for the six months ended June 30, 2022 compared to $1,655,000 for the three months ended June 30, 2021. The effective tax rate was approximately 29.0% for the three months ended June 30, 2022 compared to 29.2% for the three months ended June 30, 2021. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period.

14

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 and nine months ended September 30, 2017 and 2016 assume the 2017 and 2016 acquisitions occurred as of January 1, 2016. The translators are start-up stations and therefore, have no pro forma revenue and expenses. 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 which would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

ProForma Results of Operation
Net operating revenue $ 31,546 $ 31,888 $ 92,187 $ 93,993
Station operating expense 23,000 23,478 69,325 69,874
Corporate general and administrative 3,132 2,728 8,875 8,065
Other operating (income) expense, net (127 ) (1,393 ) (69 ) (1,388 )
Operating income 5,541 7,075 14,056 17,442
Interest expense 254 187 691 548
Income from continuing operations, before tax 5,287 6,888 13,365 16,894
Income tax expense 2,430 2,804 5,566 6,939
Income from continuing operations, net of tax 2,857 4,084 7,799 9,955
Income from discontinued operations, net of tax 30,451 1,511 32,501 3,688
Net income $ 33,308 $ 5,595 $ 40,300 $ 13,643

Basic earnings per share:
From continuing operations $ .47 $ .70 $ 1.32 $ 1.70
From discontinued operations 5.16 .26 5.51 .63
Basic earnings per share $ 5.63 $ .96 $ 6.83 $ 2.33

Diluted earnings per share:
From continuing operations $ .47 $ .70 $ 1.32 $ 1.70
From discontinued operations 5.16 .26 5.51 .63
Diluted earnings per share $ 5.63 $ .96 $ 6.83 $ 2.33
16

~~SAGA COMMUNICATIONS, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~
7.9. Stock-Based Compensation
2005 Incentive Compensation Plan
On ~~October 16, 2013~~May 13, 2019 our stockholders approved an amendment to the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan ~~(the~~(as amended, the “Second Restated 2005 Plan”). ~~The 2005 Incentive Compensation Plan~~This plan was first approved ~~by stockholders~~ in 2005, and ~~replaced our 2003 Stock Option Plan (the “2003 Plan”).~~subsequently re-approved in 2010 and 2013. The ~~2005 Incentive Compensation Plan was re-approved by stockholders in 2010. The changes made in~~amendment to the Second Restated 2005 Plan (i) ~~increases the number of authorized shares by 233,334 shares of Common Stock, (ii) extends~~extended the date for making awards to September 6, ~~2018, (iii) includes directors as participants, (iv) targets awards according to groupings~~2023 and (ii) increased the number of ~~participants based on ranges~~authorized shares under the Plan by 90,000 shares of base salary of employees and/or retainers of directors, (v) requires participants to retain 50% of their net annual restricted stock awards during their employment or service as a director, and (vi) includes a clawback provision.Class B Common Stock. The Second Restated 2005 Plan allows 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 may be issued under the Second Restated 2005 Plan may not exceed ~~280,000~~370,000 shares of Class B Common Stock, ~~900,000~~or 990,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock may be issued pursuant to incentive stock options and ~~280,000~~370,000 shares of Class A Common Stock may be issuable upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock may be granted to any employee or director under the Second Restated 2005 Plan. However, awards denominated in Class B Common Stock may only be granted to Edward K. Christian, President, Chief Executive Officer, Chairman of the Board of Directors, and the holder of 100% of the outstanding Class B Common Stock of the Company. Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten (10) years from the date of grant and may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant.
Stock-Based Compensation
All stock options granted were fully vested and expensed at December 31, ~~2012,~~2012; therefore, there was no0 compensation expense related to stock options for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~the three~~2021, respectively.
There were 0 stock options granted during 2022 or 2021 and ~~nine months ended September~~there were 0 stock options outstanding as of June 30, ~~2016, respectively.~~
~~The following summarizes the~~2022. All outstanding stock ~~option transactions for the Second Restated 2005 Plan and 2003 Plan for the nine months ended September 30, 2017:~~
Weighted Average
Weighted Remaining Aggregate
Number of Average Contractual Term Intrinsic
Options Exercise Price (Years) Value
Outstanding at January 1, 2017 29,035 $ 28.47 0.4 $ 633,834
Exercised (29,035 ) 28.47
Outstanding at September 30, 2017 — $ — — $ —
Exercisable at September 30, 2017 — $ — — $ —
17
~~SAGA COMMUNICATIONS, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~
options were exercised in 2017.
The following summarizes the restricted stock transactions for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017:~~2022:

Weighted
Average
Grant Date
Fair
Shares Value
Outstanding at January 1, 2017 103,262 $ 43.73

Weighted

Average

Grant Date

Fair


Shares

Value
Outstanding at January 1, 2022

100,609

$
24.85
Vested (3,434 ) 43.10

0

0
Forfeited (594 ) 45.39

0

0
Non-vested and outstanding at September 30, 2017 99,234 $ 43.75
Non-vested and outstanding at June 30, 2022

100,609

$
24.85

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~the three and nine months ended September 30, 2016,~~2021, we had ~~$629,000, $1,761,000, $536,000~~$338,000, $677,000, $357,000 and ~~$1,594,000,~~$700,000, respectively, of total compensation expense related to restricted stock-based compensation arrangements. This expense is included in corporate general and administrative expenses in our results of operations. The associated tax benefit recognized for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~the three~~2021 was $37,000, $74,000, $33,000 and ~~nine months ended September 30, 2016, was $252,000, $704,000, $214,000 and $638,000,~~$64,000, respectively.

8.10. Long-Term Debt

On October 27, 2021, we used $10 million from funds generated by operations to voluntarily pay down the remaining amounts on our Revolving Credit Facility and as such, have 0 debt outstanding at June 30, 2022.

~~Long-term debt consisted of the following:~~

September 30, December 31,
2017 2016
(In thousands)

Revolving credit facility $ 35,287 $ 35,287
Secured debt of affiliate — 1,078
35,287 36,365
Amounts payable within one year 10,287 —
$ 25,000 $ 36,365

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P. Morgan Securities ~~LLC. In connection with~~LLC (collectively, the ~~execution of the Credit Facility, the~~“Lenders”) pursuant to a credit agreement ~~in place at June 30, 2015~~of even date (the ~~“Old Credit~~“Credit Agreement”) ~~was terminated, and all outstanding amounts were paid in full.~~. The Credit Facility ~~consists~~consisted of a ~~$100~~$100 million five-year revolving facility (the “Revolving Credit Facility”) and ~~matures~~originally matured on August 18, 2020.
On June 27, 2018, the Company entered into a Second Amendment to its Credit Facility, (the “Second Amendment”), which had first been amended on September 1, 2017, extending the revolving credit maturity date under the Credit Agreement for five years after the date of the amendment to June 27, 2023. On July 1, 2019, we elected to reduce our Revolving Credit Facility to $70 million. On May 11, 2020, as part of our reincorporation as a Florida corporation, we entered into an assumption agreement and amendment of loan documents. The amendment also included an alternative benchmark rate as a replacement to LIBOR in the event LIBOR is no longer available. On November 2, 2021, we elected to further reduce our Revolving Credit Facility to $50 million.
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 ~~transaction fees~~debt issuance costs related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. ~~Those deferred~~These debt issuance costs are included in other assets, net in the ~~condensed~~ 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. 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 LIBOR ~~(1.25%~~(1.579% at ~~September~~June 30, ~~2017)~~2022), plus 1% to 2% or the base rate plus 0% to 1%. The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. As previously noted, the May 11, 2020 amendment to the Credit Facility includes an alternative benchmark to LIBOR in the event LIBOR is no longer available. 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. We also pay quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the Revolving Credit Facility.
18
~~SAGA COMMUNICATIONS, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL~~
~~STATEMENTS — (Continued)~~
The Credit Facility contains a number of financial covenants (all of which we were in compliance with at ~~September~~June 30, ~~2017)~~2022) 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 ~~$65~~$50 million of unused borrowing capacity under the Revolving Credit Facility at ~~September~~June 30, ~~2017.~~2022.

Table of Contents

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11. Litigation

From time to time, the Company may be involved in various legal proceedings that are incidental to the Company’s business. In management’s opinion, the Company is not a party to any current legal proceedings that are material to its financial condition, either individually or in the aggregate.

12. Dividends

On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility. Those amounts were classified as current portion of long term debt at September 30, 2017.

The loan agreement of approximately $1.1 million of secured debt of affiliate was amended in April, 2017 to extend the due date of the loan for three years to mature on May 1, 2020. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

~~9. Litigation~~

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.

~~10. Dividends~~

On September 13, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, which is recorded within Other accrued expenses as of September 30, 2017 was paid on October 13, 2017 to shareholders of record on September 25, 2017.

~~On May 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on~~ June ~~9, 2017 to shareholders of record on May 22, 2017.~~

On March 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, was paid on April 14, 2017 to shareholders of record on March 28, 2017.

~~On November 21, 2016~~6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of ~~$0.30 per share and a special cash dividend of~~ $0.20 per share on its Classes A and B ~~shares.~~ Common Stock. This dividend, totaling ~~$2.9 million~~approximately $1,200,000, was paid to our transfer agent on ~~December 23, 2016~~June 29, 2022. The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on ~~December 5, 2016.~~

June 13, 2022.

On ~~August 30, 2016,~~March 1, 2022, the Company’s Board of Directors declared a ~~regular~~quarterly cash dividend of ~~$0.30~~$0.16 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.8 million~~approximately $970,000, was paid on ~~September 30, 2016~~April 8, 2022 to shareholders of record on ~~September 14, 2016.~~

March 21, 2022.

On ~~June 1, 2016,~~December 14, 2021, the Company’s Board of Directors declared a ~~regular~~quarterly cash dividend of ~~$0.25~~$0.16 per share and special cash dividend of $0.50 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.5 million,~~approximately $3,990,000, was paid on ~~July 8, 2016~~January 14, 2022 to shareholders of record on ~~June 15, 2016.~~

December 27, 2021.

On ~~March 2, 2016,~~September 28, 2021, the Company’s Board of Directors declared a ~~regular~~ quarterly cash dividend of ~~$0.25~~$0.16 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.5 million,~~approximately $960,000, was paid on ~~April 15, 2016~~October 22, 2021 to shareholders of record on ~~March 28, 2016.~~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, 2020.

13. Other 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 which was recorded in other (income) expense, net in the Company’s Condensed Consolidated Statements of Income at March 31, 2021. We received additional cash proceeds of $290,000 in the third quarter of 2021, resulting in a gain of $290,000. The total gain of $540,000 was recorded in other (income) expense, net, at December 31, 2021 in the Company’s Consolidated Statements of Income in our most recent Form 10-K.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
~~Results~~This report contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the radio broadcasting industry, the economy, and the Company. Words such as “anticipates,” “believes,” “expects,” “intends,” “is likely,” “plans,” “projects,” and variations of ~~Operations~~such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. We undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events (whether anticipated or unanticipated), or otherwise.
Future Factors include, among others, adverse changes in interest rates and interest rate relationships; our financial leverage and debt service requirements; dependence on key personnel; dependence on key stations; U.S. national and local economic conditions or an economic recission; market volatility; demand for our services; the degree of competition by traditional and non-traditional competitors; our ability to successfully integrate acquired stations; regulatory requirements; governmental and regulatory policy changes; changes in tax laws; the impact of technological advances; risks associated with cyber-attacks on our computer systems and those of our vendors; the outcomes of contingencies; trends in audience behavior; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, the failure to meet client or listener expectations and other facts; changes in local real estate values; natural disasters; terrorist attacks; the war in Ukraine, the effects of the ongoing COVID-19 pandemic, inflation; increased energy costs; and risk factors described in our annual report on Form 10-K for the year ended December 31, 2021 or in this Report. These are representative of the Future Factors that could cause a difference between an ultimate actual outcome and a forward-looking statement.
Introduction
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes thereto of Saga Communications, Inc. and its subsidiaries contained elsewhere herein and the audited financial statements and ~~Management~~Management’s Discussion and Analysis contained in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2016.~~2021. The following discussion is presented on a consolidated basis. ~~On May 9, 2017 the Company entered into an agreement to sell its Joplin, Missouri~~
Critical Accounting Policies and Victoria, Texas television stations and subsequently closed on this transaction on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). As a result of the Company’s television stations being reported as discontinued operations the Company only has one reportable segment at September 30, 2017. Unless indicated otherwise, the information in the notes to the accompanying unaudited condensedEstimates
Our consolidated financial statements ~~relates~~have been prepared in conformity with accounting principles generally accepted in the United States (GAAP), which require us to make estimates, judgments and assumptions that affect the ~~Company’s continuing operations.~~
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. There have been no significant changes to our critical accounting policies that are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in our annual report on Form 10-K for the year ended December 31, 2021.
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.

Table of Contents

COVID-19 Impact and Response

~~General~~As the circumstances around the COVID-19 pandemic remain fluid, we continue to actively monitor the pandemic’s impact to the Company, including our financial position, liquidity, results of operations and cash flows, while managing our response to the impacts and developments relating to the pandemic through collaboration with employees, customers, government authorities, health officials and other business partners. Please see Part I, Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding the current and potential impact of health epidemics, including the COVID-19 pandemic on the Company.

Financial Condition and Results of Operations

General

We are a broadcast company primarily engaged in acquiring, developing and operating broadcast properties. We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. We review acquisition opportunities on an ongoing basis. For additional information with respect to acquisitions, see “Liquidity and Capital Resources” below. We own or operate broadcast properties in 2627 markets, including 7579 FM and 3335 AM radio ~~stations.~~stations and 80 metro signals.

~~Continuing Operations -~~ Radio Stations

Our radio ~~station’s~~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. We have twenty-six radio station markets, which include all 108 of our radio stations. The discussion of our operating performance focuses on operating income because we manage our stations primarily on operating income. Operating performance is evaluated for each individual market.

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 ~~markets’~~market’s sales staff. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, approximately ~~89%~~90% and 89%, respectively, of our radio ~~segment’s~~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 course of 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. WeFurthermore, we expect ~~a decrease~~an increase in political advertising for ~~2017~~2022 due to the ~~decreased~~increased number of national, state and local elections in most of our markets as compared to the prior year.

Our net operating revenue, station operating expense and operating income varies from market to market based upon ~~the~~each 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, ~~are~~is influenced by the state of the overall economy, including unemployment rates, inflation, energy prices and consumer interest rates. Our stations primarily broadcast in small to midsize markets. Historically, ~~these~~such 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.

Table of Contents

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~~is 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 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 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~~sell-out ratios and pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.

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, 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 ~~numerous platforms~~multiple platforms. Our goal is to allow our listeners ~~and viewers~~ to connect with our ~~products where~~brands on demand, wherever, however and ~~when~~whenever they ~~want.~~choose. We continue to create opportunities through targeted digital advertising and an array of digital services that include online promotions, mobile messaging, and email marketing.

~~In addition, we continue the rollout~~20

Table of HD radio™. HD radio™ utilizes digital technology that provides improved sound quality over standard analog broadcasts and also allows for the delivery of additional channels of diversified programming or data streaming in each radio market.Contents

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and the years ended December 31, ~~2016~~2021 and ~~2015,~~2020, our Columbus, Ohio; Des Moines, Iowa; ~~Manchester, New Hampshire;~~ Milwaukee, ~~Wisconsin;~~Wisconsin, Norfolk; Virginia and ~~Norfolk, Virginia~~Portland, Maine markets, when combined, represented approximately ~~43%~~38%, ~~43%~~39%, ~~43%~~39% and ~~41%~~40%, respectively, of our consolidated net operating revenue. An adverse change in any of these radio markets or our relative market position in those markets could have a significant impact on our operating results as a whole.

The following ~~tables describe~~table describes the percentage of our consolidated net operating revenue represented by each of these markets:

Percentage of Consolidated

Percentage of Consolidated

Net Operating Revenue for

Net Operating Revenue

the Six Months Ended

for the Years Ended

June 30,

December 31,


2022

2021

2021

2020


Market:


Columbus, Ohio

10
%
10
%
10
%
10
%

Des Moines, Iowa

5
%
6
%
6
%
7
%

Milwaukee, Wisconsin

12
%
11
%
11
%
11
%

Norfolk, Virginia

6
%
7
%
6
%
6
%

Portland, Maine

5
%
5
%
6
%
6
%

Percentage of Consolidated Percentage of Consolidated
Net Operating Revenue for Net Operating Revenue
the Nine Months Ended for the Years Ended
September 30, December 31,
2017 2016 2016 2015
Market:
Columbus, Ohio 12 % 12 % 12 % 9 %
Des Moines, Iowa 8 % 8 % 8 % 8 %
Manchester, New Hampshire 5 % 6 % 6 % 6 %
Milwaukee, Wisconsin 12 % 12 % 12 % 12 %
Norfolk, Virginia 6 % 5 % 5 % 6 %

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and the years ended December 31, ~~2016~~2021 and ~~2015,~~2020, the radio stations in our five largest markets, when combined, represented approximately ~~48%~~43%, ~~48%~~41%, ~~49%~~43% and ~~44%~~52%, respectively, of our consolidated station operating income. We note that the percentage of consolidated station operating income at December 31, 2020 is higher than what would normally be expected due to the impact of the COVID-19 pandemic on our markets. The following ~~tables describe~~table describes the percentage of our consolidated station operating income represented by each of these markets:

Percentage of Consolidated

Percentage of Consolidated

Station Operating Income (*)

Station Operating Income(*)

for the Six Months Ended

for the Years Ended

June 30,

December 31,


2022

2021

2021

2020


Market:

Columbus, Ohio

13
%
13
%
12
%
16
%

Des Moines, Iowa

3
%
4
%
5
%
7
%

Milwaukee, Wisconsin

15
%
11
%
12
%
15
%

Norfolk, Virginia

7
%
7
%
7
%
6
%

Portland, Maine

5
%
6
%
7
%
8
%

Percentage of Consolidated Percentage of Consolidated
Station Operating Income (*) Station Operating Income (*)
for the Nine Months Ended for the Years Ended
September 30, December 31,
2017 2016 2016 2015
Market:
Columbus, Ohio 15 % 15 % 15 % 10 %
Des Moines, Iowa 7 % 7 % 7 % 8 %
Manchester, New Hampshire 6 % 8 % 9 % 8 %
Milwaukee, Wisconsin 14 % 14 % 14 % 13 %
Norfolk, Virginia 6 % 4 % 4 % 5 %

*
Operating income ~~plus~~adjusted for corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets.

22

21

~~Discontinued Operations - Television Stations~~

~~Our television station’s primary source~~Table of revenue is from the sale of advertising for broadcast on our stations. The number of advertisements available for broadcast on our television stations is limited by network affiliation and syndicated programming agreements and, with respect to children’s programs, federal regulation. Our television stations’ local market managers determine the number of advertisements to be broadcast in locally produced programs only, which are primarily news programming and occasionally local sports or information shows.Contents

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, available television advertising revenue in that particular market, and the popularity of programming being broadcast.

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, as measured principally by periodic reports by independent national rating services. 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 through locally produced news, sports and weather and as a result of syndication and network affiliation agreements, local market competition, the ability of television broadcasting to reach a mass appeal market compared to other advertising media, and signal strength including cable/satellite coverage, and government regulation and policies.

Our stations strive to maximize revenue by constantly adjusting prices for our commercial spots based upon local market conditions, advertising demands and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of 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.

Because audience ratings in the local market are crucial to a station’s financial success, we endeavor to develop strong viewer loyalty by providing locally produced news, weather and sports programming. We believe that this emphasis on the local market provides us with the viewer loyalty we are trying to achieve.

Most of our revenue is generated from local advertising, which is sold primarily by each television markets’ sales staff. For the eight months ended August 31, 2017 and the nine months ended September 30, 2016, approximately 83% and 85%, respectively, of our television segment’s gross revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representatives that specialize in national sales for each of our television 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. We had a decrease in political advertising for 2017 due to the decreased number of national, state and local elections in most of our markets as compared to prior year.

The primary operating expenses involved in owning and operating television stations are employee salaries, sales commissions, programming expenses, including news production and the cost of acquiring certain syndicated programming, depreciation and advertising and promotion expenses.

Three Months Ended ~~September~~June 30, ~~2017~~2022 Compared to Three Months Ended ~~September~~June 30, ~~2016~~2021

Results of Operations

The following ~~tables summarize~~table summarizes our results of operations for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~

2021.

Consolidated Results of Operations

Three Months Ended

June 30,

$ Increase

% Increase


2022

2021

(Decrease)

(Decrease)

(In thousands, except percentages and per share information)

Net operating revenue

$
29,821

$
28,046

$
1,775

6.3
%
Station operating expenses

21,786

21,017

769

3.7
%
Corporate general and administrative

2,609

2,494

115

4.6
%
Other operating (income) expense, net

45

(80)

125

N/M

Operating income

5,381

4,615

766

16.6
%
Interest expense

32

72

(40)

(55.6)
%
Interest income

(49)

(4)

(45)

N/M

Other income

—

(31)

31

N/M

Income before income tax expense

5,398

4,578

820

17.9
%
Income tax expense

1,575

1,325

250

18.9
%
Net income

$
3,823

$
3,253

$
570

17.5
%
Earnings per share (diluted)

$
0.63

$
0.54

$
0.09

16.7
%
Three Months Ended
September 30, $ Increase % Increase
2017 2016 (Decrease) (Decrease)
(In thousands, except percentages and per share information)
Net operating revenue $ 30,269 $ 29,878 $ 391 1.3 %
Station operating expense 21,755 21,775 (20 ) (0.1 )%
Corporate general and administrative 3,132 2,728 404 14.8 %
Other operating expense (127 ) (1,393 ) 1,266 N/M
Operating income from continuing operations 5,509 6,768 (1,259 ) (18.6 )%
Interest expense 254 187 67 35.8 %
Income from continuing operations before taxes 5,255 6,581 (1,326 ) (20.1 )%
Income tax expense 2,290 2,678 (388 ) (14.5 )%
Income from continuing operations, net of tax 2,965 3,903 (938 ) (24.0 )%
Income from discontinued operations, net of tax 30,451 1,511 28,940 N/M
Net income $ 33,416 $ 5,414 $ 28,002 N/M

Earnings per share:
From continuing operations $ .50 $ .66 $ (.16 ) (24.2 )%
From discontinued operations 5.16 .26 4.90 N/M
Earnings per share (diluted) $ 5.66 $ .92 $ 4.74 N/M
~~Results of Discontinued Operations~~
Three Months Ended
September 30, $ Increase % Increase
2017⁽¹⁾ 2016 (Decrease) (Decrease)
(In thousands, except percentages)
Net operating revenue $ 3,296 $ 6,241 $ (2,945 ) (47.2 )%
Station operating expense 2,372 3,684 (1,312 ) (35.6 )%
Operating income from discontinued operations 924 2,557 (1,633 ) (63.9 )%
Interest expense 5 9 (4 ) (44.4 )%
Income before income taxes from discontinued operations 919 2,548 (1,629 ) (63.9 )%
Pretax gain on the disposal of discontinued operations 50,842 — 50,842 N/M
Total pretax gain on discontinued operations 51,761 2,548 49,213 N/M
Income tax expense 21,310 1,037 20,273 N/M
Income from discontinued operations $ 30,451 $ 1,511 $ 28,940 N/M
~~(1)~~ ~~Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.~~

N/M =      Not Meaningful
24
For the three months ended ~~September~~June 30, ~~2017,~~2022, consolidated net operating revenue was ~~$30,269,000~~$29,821,000 compared with ~~$29,878,000~~$28,046,000 for the three months ended ~~September~~June 30, ~~2016,~~2021, an increase of ~~$391,000~~$1,775,000 or ~~1.3%~~6.3%. We had ~~an increase~~increases in non-spot gross revenue of ~~approximately $717,000 that was attributable to stations that we did not own or operate for the entire comparable period, partially offset by a decrease~~$623,000, gross interactive revenue of ~~$326,000 generated by stations we owned or operated for the comparable period in 2016 (“same station”). The decrease in same station revenue was primarily the result of decreases in~~$597,000, gross local revenue of ~~$311,000,~~$519,000, gross political revenue of ~~$197,000~~$357,000, and barter revenue of $176,000, partially offset by a decrease in gross national revenue of $409,000 and an increase in agency commissions of ~~approximately $123,000~~$141,000, from the ~~third~~second quarter of ~~2016.~~2021. The ~~decrease~~increase in non-spot gross revenue is primarily due to us hosting events again in 2022, whereas the number of events that were held in the second quarter of 2021 due to the COVID-19 pandemic was relatively very few. The markets with the most significant increases in the second quarter in non-spot events were Clarksville, Tennessee; Harrisonburg, Virginia; Hilton Head, South Carolina; Jonesboro, Arkansas; Milwaukee, Wisconsin; Norfolk, Virginia and Yankton, South Dakota. The increase in gross interactive revenue is primarily due to an increase in our streaming and website content revenue. The most significant increases in gross local revenue ~~was due to decreases~~and agency commissions occurred in our ~~Bellingham, Washington~~Charleston, South Carolina; Columbus, Ohio; Ithaca, New York; Manchester, New Hampshire; Milwaukee, Wisconsin, and ~~Springfield, Illinois~~Norfolk, Virginia markets. The ~~decrease in~~ gross political revenue ~~was~~increased due to ~~a lower~~an increase in the number of national, state and local ~~elections in most of our markets.~~elections. The decrease in ~~agency commissions is~~gross national revenue was attributable to decreases at the majority of markets due to ~~lower gross~~the focus on local ~~agency~~market advertisers offset by increases at our Bellingham, Washington; and ~~political revenue.~~
Milwaukee, Wisconsin markets.
Station operating expense was ~~$21,755,000~~$21,786,000 for the three months ended ~~September~~June 30, ~~2017,~~2022, compared with ~~$21,775,000~~$21,017,000 for the three months ended ~~September~~June 30, ~~2016, a decrease of $20,000 or 0.1%. We had~~2021, an increase of ~~approximately $581,000 that~~$769,000 or 3.7%. The increase in operating expense was ~~attributable to stations that we did not own or operate for the entire comparable period, offset by~~primarily a ~~decrease~~result of ~~approximately $601,000 generated by stations we owned or operated for the comparable period~~increases in ~~2016. The decrease is primarily attributable to a decrease of $203,000 in compensation costs, a decrease of $191,000 in licensing agreements and a decrease in~~sales rating survey expenses, barter expenses, commission expense, music licensing fees, interactive services expenses, and promotional expenses, of ~~$128,000 due to a credit received in~~$303,000, $161,000, $148,000, $95,000, $86,000, and $69,000, respectively, from the 3^rdsecond quarter of ~~2017 resulting from SESAC arbitration partially offset by an increase in other music licensing fees.~~2021.
~~Operating~~We had operating income for the three months ended ~~September~~June 30, ~~2017 was $5,509,000~~2022 of $5,381,000 compared to ~~$6,768,000~~$4,615,000 for the three months ended ~~September~~June 30, ~~2016, a decrease~~2021, an increase of ~~$1,259,000 or 18.6%.~~$766,000. The ~~decrease~~increase was a result of the increase in net operating revenue partially offset by ~~a decrease~~the increase in station operating expense, ~~described~~noted above, an increase in ~~our~~ corporate general and administrative expenses of ~~$404,000 or 14.8%, and a decrease~~$115,000, an increase in other operating ~~income~~(income) expense, net of ~~$1,266,000 from the third quarter of 2016.~~$125,000. The increase in corporate general and administrative expenses ~~is due~~was primarily attributable to an increase in ~~key man life insurance of $103,000, an increase in non-cash~~ compensation related toexpenses from second quarter of 2021. In the ~~amortization~~second quarter of restricted stock grants of $93,000, an increase of $80,000 in legal and other fees due to the Charleston/Hilton Head South Carolina acquisition, an increase of $42,000 in compensation costs, an increase in transportation costs of $35,000 and an increase in healthcare costs of $24,000. In 2016,2022 we ~~had other operating income of $1,393,000 due to the gain of $1,415,000 received from~~recorded a loss on the sale of ~~a tower in Norfolk, Virginia.~~
~~Income from continuing operations, net~~fixed assets of ~~tax for the three months ended September 30, 2017 was $2,965,000~~$45,000 compared to ~~$3,903,000 for the three months ended September 30, 2016,~~ a decrease of $938,000 or 24.0%. The decrease in income from continuing operations, net of tax is due to the decrease of operating income, described above, an increase in interest expense of $67,000 due to an increase in our interest rates partially offset by a decrease in income taxes of $388,000.
Income from discontinued operations, net of tax for the two months ended August 31, 2017 was $30,451,000 compared to $1,511,000 for the three months ended September 30, 2016 an increase of $28,940,000. The increase was a direct result of the pretax gain on the disposal of the Television stations of $50,842,000, a decrease in station operating expense of $1,312,000 or 35.6%, partially offset by a decrease in net operating revenue of $2,945,000 or $47.2% and an increase in income tax related to the gain on the sale of ~~$20,273,000. For~~fixed assets of $80,000 in the ~~two months ended August 31, 2017, net~~second quarter of 2021 in other operating ~~revenue~~(income) expense, net.

Table of our television stations was $3,296,000 compared with $6,241,000 for the three months ended September 30, 2016, a decrease of $2,945,000 or 47.2% primarily due to only operating the television stations for two months in 2017 and a decrease in gross political revenue in our Joplin, Missouri market. Station operating expense of the television stations for the two months ended August 31, 2017 was $2,372,000, compared with $3,684,000 for the three months ended September 30, 2016, a decrease of $1,312,000 or 35.6%. The decrease is primarily due to only operating the television stations for two months in 2017 compared to the whole quarter in 2016.Contents

We generated net income of ~~$33,416,000~~$3,823,000 ($~~5.66~~0.63 per share on a fully diluted basis) during the three months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$5,414,000~~$3,253,000 ($~~.92~~0.54 per share on a fully diluted basis) for the three months ended ~~September~~June 30, ~~2016,~~2021, an increase of ~~$28,002,000. This~~$570,000. The increase in net income is ~~a direct result of~~primarily due to the increase in operating income, described above a decrease in interest expense of ~~$28,940,000 from discontinued operations~~$40,000, an increase in interest income of $45,000, partially offset by a decrease in other income ~~from continuing operations~~ of ~~$938,000.~~ $31,000 and an increase in income tax expense of $250,000. 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 described in footnote 1 (Summary of Significant Accounting Policies). The increase in our income tax expense is due to the increase in income before income tax.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2021

Results of Operations

The following ~~tables summarize~~table summarizes our results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021.

Six Months Ended

June 30,

$ Increase

% Increase


2022

2021

(Decrease)

(Decrease)

(In thousands, except percentages and per share information)

Net operating revenue

$
54,788

$
50,347

$
4,441

8.8
%
Station operating expenses

42,354

39,940

2,414

6.0
%
Corporate general and administrative

5,303

4,932

371

7.5
%
Other operating (income) expense, net

40

(23)

63

N/M

Operating income

7,091

5,498

1,593

29.0
%
Interest expense

64

145

(81)

(55.9)
%
Interest income

(53)

(10)

(43)

430.0
%
Other income

(2)

(303)

301

N/M

Income before income tax expense

7,082

5,666

1,416

25.0
%
Income tax expense

2,055

1,655

400

24.2
%
Net income

$
5,027

$
4,011

$
1,016

25.3
%
Earnings per share (diluted)

$
.83

$
.67

$
.16

23.9
%
~~Consolidated Results of Operations~~
Nine Months Ended
September 30, $ Increase % Increase
2017 2016 (Decrease) (Decrease)
(In thousands, except percentages and per share information)
Net operating revenue $ 86,685 $ 88,208 $ (1,523 ) (1.7 )%
Station operating expense 64,521 64,757 (236 ) (0.4 )%
Corporate general and administrative 8,875 8,065 810 10.0 %
Other operating expense (69 ) (1,388 ) 1,319 N/M
Operating income 13,358 16,774 (3,416 ) (20.4 )%
Interest expense 691 548 143 26.1 %
Income from continuing operations before taxes 12,667 16,226 (3,559 ) (21.9 )%
Income tax expense 5,280 6,665 (1,385 ) (20.8 )%
Income from continuing operations, net of tax 7,387 9,561 (2,174 ) (22.7 )%
Income from discontinued operations, net of tax 32,501 3,688 28,813 N/M

Net income $ 39,888 $ 13,249 $ 26,639 N/M

Earnings per share:
From continuing operations $ 1.25 $ 1.62 $ (.37 ) (22.8 )%
From discontinued operations 5.51 .63 4.88 N/M
Earnings per share (diluted) $ 6.76 $ 2.25 $ 4.50 N/M
~~Results of Discontinued Operations~~
Nine Months Ended
September 30, $ Increase % Increase
2017⁽¹⁾ 2016 (Decrease) (Decrease)
(In thousands, except percentages)
Net operating revenue $ 14,238 $ 17,094 $ (2,856 ) (16.7 )%
Station operating expense 9,727 10,807 (1,080 ) (10.0 )%
Other operating 31 3 28 N/M
Operating income from discontinued operations 4,480 6,284 (1,804 ) (28.7 )%
Interest expense 21 26 (5 ) (19.2 )%
Income before income taxes from discontinued operations 4,459 6,258 (1,799 ) (28.7 )%
Pretax gain on the disposal of discontinued operations 50,842 — 50,842 N/M
Total pretax gain on discontinued operations 55,301 6,258 49,043 N/M
Income tax expense 22,800 2,570 20,230 N/M
Income from discontinued operations $ 32,501 $ 3,688 $ 28,813 N/M

~~(1)~~ ~~Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.~~

N/M =      Not Meaningful
26
For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, consolidated net operating revenue was ~~$86,685,000~~$54,788,000 compared with ~~$88,208,000~~$50,347,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2021, an increase of ~~$1,523,000~~$4,441,000 or ~~1.7%~~8.8%. We had ~~an increase~~increases in gross local revenue of ~~approximately $874,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease~~$2,347,000, gross interactive revenue of ~~approximately $2,397,000 generated by stations we owned or operated for the comparable period in 2016 (“same station”). On a same station basis~~$1,345,000, non-spot gross revenue of $962,000, gross political revenue ~~gross local~~of $267,000, and barter revenue ~~and gross national revenue decreased $1,289,000, $1,097,000 and $505,000 respectively from 2016. These decreases were~~of $262,000 partially offset by a decrease in gross national revenue of $588,000, and an increase in agency commissions of ~~$470,000.~~$219,000 for the comparable period of 2021. The ~~decrease~~most significant increases in gross local revenue and agency commissions occurred in our Charleston, South Carolina; Columbus, Ohio; Ithaca, New York; Manchester, New Hampshire; Milwaukee, Wisconsin; Norfolk, Virginia; and Portland, Maine markets. The increase in gross interactive revenue is primarily due to an increase in our streaming and website content revenue. The increase in non-spot gross revenue is primarily due to us hosting events again in 2022, whereas the number of events that were held in 2021 due to the COVID-19 pandemic was relatively very few. The markets with the most significant increases in 2022 in non-spot events were Clarksville, Tennessee; Harrisonburg, Virginia; Hilton Head, South Carolina; Jonesboro, Arkansas; Milwaukee, Wisconsin; Norfolk, Virginia; Portland, Maine and Yankton, South Dakota. The gross political revenue ~~was~~increased due to an increase in the ~~decreased~~ number of national, state and local elections in most of our markets as compared to prior year. The decrease in gross local revenue was due to decreases in our Bellingham, Washington; Charlottesville, Virginia; Columbus, Ohio; Ithaca, New York; Springfield, Illinois and Springfield, Massachusetts markets.elections. The decrease in gross national revenue iswas attributable to decreases at the majority of markets due to ~~decreases in~~the focus on local market advertisers offset by increases at our ~~Champaign, Illinois~~Columbus, Ohio; Manchester, New Hampshire; and ~~Yankton, South Dakota~~Milwaukee, Wisconsin markets. ~~The decrease in agency commissions is due to lower local agency, national and political revenues.~~

Table of Contents

Station operating expense was ~~$64,521,000~~$42,354,0000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared with ~~$64,757,000~~$39,940,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease of $236,000 or 0.4%. We had~~2021, an increase of ~~approximately $696,000 that~~$2,414,000 or 6.0%. The increase in operating expense was ~~attributable to stations that we did not own or operate for~~primarily the ~~entire comparable period, offset by a decrease~~result of ~~approximately $932,000 generated by stations we owned or operated~~increases in sales survey expenses, commission expenses, barter expenses, interactive services expenses, music licensing fees; bad debt expense, compensation related expenses and promotional expenses of $818,000, $403,000, $294,000, $220,000, $193,000, $186,000, $131,000 and $90,000, respectively, for the comparable period ~~in 2016. The decrease is primarily attributable to a $568,000 decrease in licensing agreements, a $206,000 decrease in sales commission expense and a decrease in compensation costs~~ of ~~$138,000.~~2021.

~~Operating~~We had operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2017 was $13,358,000~~2022 of $7,091,000 compared to ~~$16,774,000~~$5,498,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2021, an increase of ~~$3,416,000 or 20.4%.~~$1,593,000. The ~~decrease~~increase was a result of the ~~decrease~~increase in net operating revenue and partially offset by ~~a decrease~~an increase in station operating expense, ~~described~~noted above, partially offset by an increase in ~~our~~ corporate general and administrative expenses of ~~$810,000 or 10.0%,~~$371,000 and ~~a decrease~~an increase in other operating ~~income~~(income) expense of ~~$1,319,000 from 2016.~~$63,000. The increase in corporate general and administrative expenses ~~is due~~was primarily attributable to ~~an increase~~increases in ~~key man life insurance~~compensation-related expenses of $286,000, an increase in non-cash compensation related to the amortization of restricted stock grants of $167,000, an increase in transportation costs of $110,000, and increase in compensation costs of $91,000, an increase in$136,000, legal expenses of ~~$87,000~~$99,000, travel and ~~an increase~~transportation expenses of ~~$50,000 in healthcare costs.~~$77,000, insurance-related expenses of $63,000, respectively, from the comparable period of 2021. In ~~2016,~~2022 we ~~had other operating income of $1,393,000 due to the gain of $1,415,000 received from~~recorded a loss on the sale of ~~a tower in Norfolk, Virginia.~~

~~Income from continuing operations, net~~fixed assets of ~~tax for the nine months ended September 30, 2017 was $12,667,000~~$40,000 compared to ~~$16,226,000 for the nine months ended September 30, 2016,~~ a decrease of $3,559,000 or 21.9%. The decrease in income from continuing operations, net of tax is due to the decrease of operating income, described above, an increase in interest expense of $143,000 due to an increase in our interest rates partially offset by a decrease in income taxes of $1,385,000.

Income from discontinued operations, net of tax for the eight months ended August 31, 2017 was $32,501,000 compared to $3,688,000 for the nine months ended September 30, 2016 an increase of $28,813,000. The increase was a direct result of the pretax gain on the disposal of the Television stations of $50,842,000, a decrease in station operating expense of $1,080,000 or 10%, partially offset by a decrease in net operating revenue of $2,856,000 or $16.7% and an increase in income tax related to the gain on the sale of ~~$20,230,000. For the eight months ended August 31, 2017, net~~fixed assets of $23,000 in 2021 in other operating revenue of our television stations was $14,238,000 compared with $17,094,000 for the nine months ended September 30, 2016, a decrease of $2,856,000 or 16.7% primarily due to only operating the television stations for eight months in 2017 and a decrease in gross political revenue in our Joplin, Missouri market. Station operating(income) expense, of the television stations for the eight months ended August 31, 2017 was $9,727,000, compared with $10,807,000 for the nine months ended September 30, 2016, a decrease of $1,080,000 or 10%. The decrease is primarily due to only operating the television stations for eight months in 2017 compared to the nine months in 2016.

net.

We generated net income of ~~$39,888,000~~$5,027,000 ($~~6.76~~0.83 per share on a fully diluted basis) during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$13,249,000~~$4,011,000 ($~~2.25~~0.67 per share on a fully diluted basis) for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, an increase of ~~$26,639,000. This~~$1,016,000. The increase in net income is ~~a direct result of~~primarily due to the increase in operating income, ~~from discontinued operations~~described above a decrease in interest expense of ~~$28,813,000~~$81,000, an increase in interest income of $43,000, partially offset by a decrease in other income ~~from continuing operations~~ of ~~$2,174,000.~~

~~Forward-Looking Statements~~

~~Statements contained~~$301,000 and an increase in ~~this Form 10-Q that are not historical facts are forward-looking statements that are made pursuant~~income tax expense of $400,000. 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 described in footnote 1 (Summary of Significant Accounting Policies). The decrease in other income is due to minimal income in 2022 versus a gain on insurance proceeds in the 2021, as described in footnote 13 (Other Income). The increase in our income tax expense is due to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as “believes,” “anticipates,” “estimates,” “plans,” “expects,” 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 2017 and beyond to differ materially from those expressedincrease 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 include our financial leverage and debt service requirements, dependence on key personnel, dependence on key stations, U.S. and local economic conditions, our ability to successfully integrate acquired stations, regulatory requirements, new technologies, natural disasters and terrorist attacks. 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.

For a more complete description of the prominent risks and uncertainties inherent in our business, see Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.

income before income tax.

Liquidity and Capital Resources

Debt Arrangements and Debt Service Requirements

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with ~~a group of banks. In connection with~~JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P. Morgan Securities LLC (collectively, the ~~execution of the Credit Facility, the~~“Lenders”) pursuant to a credit agreement ~~in place at June 30, 2015~~of even date (the ~~“Old Credit~~“Credit Agreement”) ~~was terminated, and all outstanding amounts were paid in full.~~. The Credit Facility ~~consists~~consisted of a $100 million five-year revolving facility (the “Revolving Credit Facility”) and ~~matures~~originally matured on August 18, 2020.

On June 27, 2018, the Company entered into a Second Amendment to its Credit Facility, (the “Second Amendment”), which had first been amended on September 1, 2017, extending the revolving credit maturity date under the Credit Agreement for five years after the date of the amendment to June 27, 2023. On July 1, 2019, we elected to reduce our Revolving Credit Facility to $70 million. On May 11, 2020, as part of our reincorporation as a Florida corporation, we entered into an assumption agreement and amendment of loan documents. This amendment also included an alternative benchmark rate as a replacement to LIBOR in the event LIBOR is no longer available. On November 2, 2021, we elected to further reduce our Revolving Credit Facility to $50 million.

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 ~~transaction fees~~debt issuance costs related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. ~~Those deferred~~These debt issuance costs are included in other assets, net in the ~~condensed~~ 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. The cumulative transaction fees are being amortized over the remaining life of the Credit Facility.

Table of Contents

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR ~~(1.25%~~(1.579% at ~~September~~June 30, ~~2017)~~2022), plus 1% to 2% or the base rate plus 0% to 1%. The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. As previously noted, the May 11, 2020 amendment to the Credit Facility includes an alternative to LIBOR in the event LIBOR is no longer available. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest ~~rates~~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. We also pay 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 ~~September~~June 30, ~~2017)~~2022) 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.

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.

We had approximately ~~$65~~$50 million of unused borrowing capacity under the Revolving Credit Facility at ~~September~~June 30, ~~2017.~~2022.

Sources and Uses of Cash

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, we had net cash flows from operating activities of ~~$18,677,000~~$7,340,000 and ~~$21,020,000,~~$9,203,000, respectively. We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for payments of interest and ~~payments of~~ principal under our Credit ~~Facility.~~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 its inception in 1998 through June 30, 2022, we have repurchased 2.2 million shares of our Class A Common Stock for $57.4 million. During the three and six months ended June 30, 2022, we did not repurchase any shares related to the Buy-Back Program. Given the unprecedented uncertainty surrounding the current economic environment including interest rates, inflation and ongoing global turmoil we currently have no directions issued for any additional buybacks under our plan.

Our capital expenditures, exclusive of acquisitions, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 were ~~$4,850,000~~$3,563,000 ($~~4,149,000~~1,455,000 in ~~2016)~~2021). We anticipate capital expenditures in ~~2017~~2022 to be approximately ~~$6.5~~$5.5 million ~~including approximately $750 thousand relating~~ to ~~our recent acquisitions in Charleston and Hilton Head,~~$6.0 million, which we expect to finance through funds generated from operations.

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 remaining 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 ~~September 13, 2017,~~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.

On June 6, 2022, the Company’s Board of Directors declared a ~~regular~~ quarterly cash dividend of ~~$0.30~~$0.20 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.8 million, which is recorded within Other accrued expenses as of September 30, 2017~~approximately $1,200,000, was paid to our transfer agent on ~~October 13, 2017~~June 29, 2022. The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on ~~September 25, 2017.~~June 13, 2022.

On ~~May 3, 2017,~~March 1, 2022, the Company’s Board of Directors declared a ~~regular~~ quarterly cash dividend of ~~$0.30~~$0.16 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.8 million~~approximately $970,000, was paid on ~~June 9, 2017~~April 8, 2022 to shareholders of record on ~~May 22, 2017and funded by cash on the Company’s balance sheet.~~March 21, 2022.

Table of Contents

On ~~March 3, 2017,~~December 14, 2021, the Company’s Board of Directors declared a ~~regular~~ quarterly cash dividend of ~~$0.30~~$0.16 per share and special cash dividend of $0.50 per share on its Classes A and B Common Stock. This dividend, totaling ~~$1.8 million,~~approximately $3,988,000, was paid on ~~April~~January 14, ~~2017~~2022 to shareholders of record on ~~March~~December 27, 2021.

On September 28, ~~2017~~2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and ~~funded by~~B Common Stock. This dividend, totaling approximately $960,000, was paid on October 22, 2021 to shareholders of record on October 8, 2021.

On January 16, 2017, we entered into an asset purchase agreement to purchase an FM radio station (WCVL) from WUVA, Incorporated, serving the Charlottesville, Virginia market for approximately $1,650,000. Simultaneously, we entered into a TBA to begin operating the station on February 1, 2017. We completed this acquisition on April 18, 2017. This acquisition was financed through funds generated from operations.

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sales of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand.Condensed Consolidated Balance sheet at June 30, 2021. The Company ~~recognized a pretax gain of $50.8 million as a result~~had previously temporarily suspended the quarterly cash dividend in response to the uncertainty of the ~~Television Sale in the third quarter~~ongoing impact of ~~2017. The gain net~~COVID-19 as of tax for the Television Sale was $29.9 million. Effective September 1, 2017, the Company used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina (as described in Note 6). On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 8).

On May 9, 2017, the Company entered into an Asset Purchase Agreement with Apex Media Corporation and Pearce Development, LLC f/k/a Apex Real Property, LLC to purchase, for approximately $23 million (subject to certain purchase price adjustments) plus the right to air certain radio commercials, substantially all the assets related to the operation of the following radio stations principally serving the South Carolina area: WCKN (FM), WMXF(FM), WXST(FM), WAVF(FM), WSPO(AM), W261DG, W257BQ, WVSC(FM), WLHH(FM), WOEZ(FM), W256CB, W293BZ. The Company closed this transaction effective September 1, 2017, simultaneously with the closing of the Television Sale using funds generated from the Television Sale.

June 18, 2020.

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 ~~and television~~ stations and dividend payments will be financed through funds generated from operations, borrowings under the Credit Agreement, ~~proceeds from the Television Sale,~~ additional debt or equity financing, cash on hand, 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 and Commercial Commitments

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. For additional information concerning our future cash obligations see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation — Summary Disclosures About Contractual Obligations” in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

We anticipate that our contractual cash obligations will be financed through funds generated from operations or additional borrowings under the 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. There have been no significant changes to our critical accounting policies that are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

Recent accounting pronouncements are described in Note 2 to the accompanying financial statements.

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk and Risk Management Policies” in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2016~~2021 for a complete discussion of our market risk. There have been no material changes to the market risk information included in our ~~2016 Annual Report~~2021 annual report on Form 10-K.

Table of Contents

Item 4. 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~~our 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. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to cause the material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There ~~were~~have been no changes in the Company’s internal controls over financial reporting during the quarter ended ~~September~~June 30, ~~2017,~~2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION
Item 1. Legal Proceedings
~~The~~From time to time, the Company may be involved in various legal proceedings that are incidental to the Company’s business. In management’s opinion, the Company is ~~subject~~not a party to ~~various outstanding claims which arise~~any current legal proceedings that are material to its financial condition, either individually or in the ~~ordinary course~~aggregate.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in response to Part 1, “Item 1A. Risk Factors,” of ~~business and to other legal proceedings. Management anticipates that any potential liability of~~our annual report on Form 10-K for the ~~Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements.~~year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our repurchases of our Class A Common Stock during the three months ended ~~September~~June 30, ~~2017. Shares repurchased during the quarter were from the retention of shares for cashless exercise of stock options and the payment of the withholding taxes related to those stock option exercises.~~2022.

Total Number

Approximate

of

Dollar

Shares

Value of

Purchased

Shares

Total

Average

as Part of

that May Yet be

Number

Price

Publicly

Purchased

of Shares

Paid per

Announced

Under the
Period

Purchased (1)

Share

Program

Program(2)
April 1 - April 30, 2022

—

$
—

—

$
18,350,169
May 1 - May 31, 2022

—

$
—

—

$
18,350,169
June 1 - June 30, 2022

—

$
—

—

$
18,350,169
Total

—

$
—

—

$
18,350,169
Approximate
Total Number Dollar
of Value of
Shares Shares
Purchased that May Yet
as Part of be
Total Number Average Price Publicly Purchased
of Shares Paid per Announced Under the
Period Purchased Share Program Program(a)
July 1 – July 31, 2017 — $ — — $ 23,352,857
August 1 – August 31, 2017 916 $ 40.60 — $ 23,315,667
September 1 – September 30, 2017 — $ — — $ 23,315,667
Total 916 $ 40.60 — $ 23,315,667

(a)
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.

31
27

Table of Contents

Item 6. Exhibits
~~31.1~~

31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~
32

~~Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
32 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.

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

(104)

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

32

28

Table of Contents

SIGNATURES
Pursuant to the requirements 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.

SAGA COMMUNICATIONS, INC.
Date: ~~November~~August 9, ~~2017~~ 2022
/s/ SAMUEL D. BUSH
Samuel D. Bush
Senior Vice President and Chief Financial Officer
~~(Principal~~ (Principal Financial Officer)
Date: ~~November~~August 9, ~~2017~~ 2022
/s/ CATHERINE A. BOBINSKI
Catherine A. Bobinski
Senior Vice President, Chief Accounting Officer and
Corporate Controller (Principal Accounting Officer)
33

29

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

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


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

~~EX-31.1~~
~~EX-31.2~~ Signatures	29
~~EX-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
~~EX-101 LABELS LINKBASE DOCUMENT~~
~~EX-101 PRESENTATION LINKBASE DOCUMENT~~

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

	¨
☐	TRANSITION REPORT PURSUANT TO SECTION 13 orOR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		Page
PART I. FINANCIAL INFORMATION		3

Item 1. Financial Statements (Unaudited)		3

Condensed consolidated balance sheets — ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021		3

Condensed consolidated statements of ~~income~~operations — Three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021		4

Condensed consolidated statements of stockholders’ equity – Three and six months ended June 30, 2022 and 2021	5

Condensed consolidated statements of cash flows — ~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021		5 6

Notes to unaudited condensed consolidated financial statements		6 7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20 18

Item 3. Quantitative and Qualitative Disclosures about Market Risk		30 26

Item 4. Controls and Procedures		31 27

PART II OTHER INFORMATION		31 27

Item 1. Legal Proceedings		31 27

Item 1A. Risk Factors	27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31 27

Item 6. Exhibits		32 28
~~Signatures~~		33

	September 30,			December 31,
	2017			2016
	(Unaudited)			(Note)
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	81,035		$	26,697
Accounts receivable, net		18,880			17,735
Prepaid expenses and other current assets		2,026			2,397
Barter transactions		1,721			1,318
Current assets of discontinued operations		—			4,625
Total current assets		103,662			52,772
Property and equipment		135,644			134,680
Less accumulated depreciation		79,299			85,506
Net property and equipment		56,345			49,174
Other assets:
Broadcast licenses, net		94,708			86,622
Goodwill		15,417			7,407
Other intangibles, deferred costs and investments, net		7,822			5,975
Assets of discontinued operations		—			18,048
	$	277,954		$	219,998

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,211		$	1,618
Payroll and payroll taxes		6,836			6,954
Other accrued expenses		26,348			3,198
Barter transactions		1,394			1,304
Current portion of long term debt		10,287			—
Current liabilities of discontinued operations		292			2,971
Total current liabilities		47,368			16,045
Deferred income taxes		31,762			29,741
Long-term debt		25,000			35,287
Other liabilities		2,269			2,885
Liabilities of discontinued operations		—			1,058
Total liabilities		106,399			85,016
Commitments and contingencies		—			—
Stockholders’ equity:
Common stock		75			74
Additional paid-in capital		62,157			59,557
Retained earnings		143,308			108,733
Treasury stock		(33,985	)		(33,382	)
Total stockholders’ equity		171,555			134,982
	$	277,954		$	219,998

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(Unaudited)
	(In thousands, except per share data)

Net operating revenue	$	30,269		$	29,878		$	86,685		$	88,208
Station operating expense		21,755			21,775			64,521			64,757
Corporate general and administrative		3,132			2,728			8,875			8,065
Other operating expense		(127	)		(1,393	)		(69	)		(1,388	)
Operating income from continuing operations		5,509			6,768			13,358			16,774
Interest expense		254			187			691			548
Income from continuing operations before tax		5,255			6,581			12,667			16,226
Income tax expense		2,290			2,678			5,280			6,665
Income from continuing operations, net of tax		2,965			3,903			7,387			9,561
Income from discontinued operations, net of tax (Note 5)		30,451			1,511			32,501			3,688
Net income	$	33,416		$	5,414		$	39,888		$	13,249
Basic Earnings per share:
From continuing operations	$	.50		$	.66		$	1.25		$	1.63
From discontinued operations		5.16			.26			5.51			.63
Basic earnings per share	$	5.66		$	.92		$	6.76		$	2.26

Weighted average common shares		5,807			5,755			5,800			5,753

Diluted Earnings per share:
From continuing operations	$	.50		$	.66		$	1.25		$	1.62
From discontinued operations		5.16			.26			5.51			.63
Diluted earnings per share	$	5.66		$	.92		$	6.76		$	2.25

Weighted average common and common equivalent shares		5,807			5,764			5,804			5,762

Dividends declared per share	$	.30		$	.30		$	.90		$	.80

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)
Numerator:
Income from continuing operations	$	2,965	$	3,903	$	7,387	$	9,561
Less: Income allocated to unvested participating securities		51		72		126		176
Income from continuing operations available to common stockholders	$	2,914	$	3,831	$	7,261	$	9,385

Income from discontinued operations	$	30,451	$	1,511	$	32,501	$	3,688
Less: Income allocated to unvested participating securities		520		28		556		68
Income from discontinued operations available to common stockholders	$	29,931	$	1,483	$	31,945	$	3,620

Net income available to common stockholders	$	32,845	$	5,314	$	39,206	$	13,005

Denominator:
Denominator for basic earnings per share — weighted average shares		5,807		5,755		5,800		5,753
Effect of dilutive securities:
Common stock equivalents		—		9		4		9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,807		5,764		5,804		5,762

Basic earnings per share:
From continuing operations	$	.50	$	.66	$	1.25	$	1.63
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.66	$	.92	$	6.76	$	2.26

Diluted earnings per share
From continuing operations	$	.50	$	.66	$	1.25	$	1.62
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.66	$	.92	$	6.76	$	2.25

	Common Stock Issued
	Class A			Class B
	(Shares in thousands)
Balance, January 1, 2016		6,603			865
Conversion of shares		12			(12	)
Issuance of restricted stock		23			25
Balance, December 31, 2016		6,638			878
Exercise of stock options		21			8
Conversion of shares		4			(4	)
Forfeiture of restricted stock		(1	)		—
Balance, September 30, 2017		6,662			882


	Common Stock Issued
	Class A	Class B

	(Shares in thousands)
Balance, January 1, 2021	6,785	938
Conversion of shares	12	(12)
Issuance of restricted stock	38	39
Balance, December 31, 2021	6,835	965
Balance, June 30, 2022	6,835	965

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017⁽⁴⁾		2016		2017⁽⁴⁾		2016

Net operating revenue	$	3,296	$	6,241	$	14,238	$	17,094
Station operating expense⁽¹⁾		2,372		3,684		9,727		10,807
Other operating (income) expense		—		—		31		3
Operating income		924		2,557		4,480		6,284
Interest Expense⁽²⁾		5		9		21		26
Income before income taxes		919		2,548		4,459		6,258
Pretax gain on the disposal of discontinued operations		50,842		—		50,842		—
Total pretax gain on discontinued operations		51,761		2,548		55,301		6,258
Income tax expense⁽³⁾		21,310		1,037		22,800		2,570
Income from discontinued operations, net of tax	$	30,451	$	1,511	$	32,501	$	3,688


Years Ending December 31,
2022 (a)	$	885
2023		1,608
2024		1,293
2025		906
2026		700
Thereafter		1,321
Total lease payments (b)		6,713
Less: Interest (c)		895
Present value of lease liabilities (d)	$	5,818

	September 30, 2017			December 31, 2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable	$	—		$	3,868
Prepaid expenses and other current assets		—			625
Barter transactions		—			132
Total of current assets of discontinued operations	$	—		$	4,625

Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net⁽¹⁾	$	—		$	7,388
Broadcast licenses, net⁽¹⁾		—			9,607
Other intangibles, deferred costs and investments, net⁽¹⁾		—			1,053
Total of non-current assets of discontinued operations	$	—		$	18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	—		$	22,673

Major Classes of Current Liabilities of Discontinued Operations
Accounts payable	$	84		$	759
Barter transactions		—			163
Current portion of long term debt		—			1,078
Other liabilities⁽¹⁾		208			971
Total of current liabilities of discontinued operations	$	292		$	2,971

Major Classes of Current Liabilities of Discontinued Operations
Other liabilities⁽¹⁾	$	—		$	1,058
Total of non-current liabilities of discontinued operations	$	—		$	1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	292		$	4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	(292	)	$	18,644

	September 30, 2017		September 30, 2016
Significant operating non-cash items
Depreciation and amortization⁽¹⁾	$	445	$	1,023
Broadcast program rights amortization		418		467
Barter revenue, net		18		58
Loss on sale of assets		31		3

Significant investing items
Acquisition of property and equipment	$	125	$	717
Proceeds from sale and disposal of assets		—		13
Net proceeds from sale of television stations⁽²⁾		69,528		—


					Acquisitions in
					2022		2021
	Acquisitions in
	2017		2016
	(In thousands)
					(In thousands)
Assets Acquired:
Current assets	$	1,440	$	814
Property and equipment		6,678		375	$	5	$	3
Other assets:
Broadcast licenses		8,086		8,123		29		69
Goodwill		8,011		4,533		28		103
Other intangibles, deferred costs and investments		2,019		398
Total other assets		18,116		13,054		57		172
Total assets acquired		26,234		14,243		62		175
Liabilities Assumed:
Current liabilities		378		41		0		0
Total liabilities assumed		378		41		0		0
Net assets acquired	$	25,856	$	14,202	$	62	$	175

						Weighted Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual Term		Intrinsic
	Options			Exercise Price		(Years)		Value
Outstanding at January 1, 2017		29,035		$	28.47		0.4	$	633,834
Exercised		(29,035	)		28.47
Outstanding at September 30, 2017		—		$	—		—	$	—
Exercisable at September 30, 2017		—		$	—		—	$	—

				Weighted Average
				Grant Date Fair
	Shares			Value
Outstanding at January 1, 2017		103,262		$	43.73

							Weighted
							Average
							Grant Date
							Fair
						Shares	Value
Outstanding at January 1, 2022						100,609	$	24.85
Vested		(3,434	)		43.10	0		0
Forfeited		(594	)		45.39	0		0
Non-vested and outstanding at September 30, 2017		99,234		$	43.75
Non-vested and outstanding at June 30, 2022						100,609	$	24.85


	Percentage of Consolidated				Percentage of Consolidated
	Net Operating Revenue for				Net Operating Revenue
	the Six Months Ended				for the Years Ended
	June 30,				December 31,
	2022		2021		2021		2020
Market:
Columbus, Ohio	10	%	10	%	10	%	10	%
Des Moines, Iowa	5	%	6	%	6	%	7	%
Milwaukee, Wisconsin	12	%	11	%	11	%	11	%
Norfolk, Virginia	6	%	7	%	6	%	6	%
Portland, Maine	5	%	5	%	6	%	6	%

	Percentage of Consolidated						Percentage of Consolidated
	Net Operating Revenue for						Net Operating Revenue
	the Nine Months Ended						for the Years Ended
	September 30,						December 31,
	2017			2016			2016			2015
Market:
Columbus, Ohio		12	%		12	%		12	%		9	%
Des Moines, Iowa		8	%		8	%		8	%		8	%
Manchester, New Hampshire		5	%		6	%		6	%		6	%
Milwaukee, Wisconsin		12	%		12	%		12	%		12	%
Norfolk, Virginia		6	%		5	%		5	%		6	%


	Percentage of Consolidated				Percentage of Consolidated
	*Station Operating Income ()**				*Station Operating Income()**
	for the Six Months Ended				for the Years Ended
	June 30,				December 31,
	2022		2021		2021		2020
Market:
Columbus, Ohio	13	%	13	%	12	%	16	%
Des Moines, Iowa	3	%	4	%	5	%	7	%
Milwaukee, Wisconsin	15	%	11	%	12	%	15	%
Norfolk, Virginia	7	%	7	%	7	%	6	%
Portland, Maine	5	%	6	%	7	%	8	%

	Percentage of Consolidated						Percentage of Consolidated
	Station Operating Income (*)						Station Operating Income (*)
	for the Nine Months Ended						for the Years Ended
	September 30,						December 31,
	2017			2016			2016			2015
Market:
Columbus, Ohio		15	%		15	%		15	%		10	%
Des Moines, Iowa		7	%		7	%		7	%		8	%
Manchester, New Hampshire		6	%		8	%		9	%		8	%
Milwaukee, Wisconsin		14	%		14	%		14	%		13	%
Norfolk, Virginia		6	%		4	%		4	%		5	%


	Three Months Ended
	June 30,				$ Increase		% Increase
	2022		2021		(Decrease)		(Decrease)

	(In thousands, except percentages and per share information)
Net operating revenue	$	29,821	$	28,046	$	1,775	6.3	%
Station operating expenses		21,786		21,017		769	3.7	%
Corporate general and administrative		2,609		2,494		115	4.6	%
Other operating (income) expense, net		45		(80)		125	N/M
Operating income		5,381		4,615		766	16.6	%
Interest expense		32		72		(40)	(55.6)	%
Interest income		(49)		(4)		(45)	N/M
Other income		—		(31)		31	N/M
Income before income tax expense		5,398		4,578		820	17.9	%
Income tax expense		1,575		1,325		250	18.9	%
Net income	$	3,823	$	3,253	$	570	17.5	%
Earnings per share (diluted)	$	0.63	$	0.54	$	0.09	16.7	%

	Three Months Ended
	September 30,						$ Increase			% Increase
	2017			2016			(Decrease)			(Decrease)
	(In thousands, except percentages and per share information)
Net operating revenue	$	30,269		$	29,878		$	391			1.3	%
Station operating expense		21,755			21,775			(20	)		(0.1	)%
Corporate general and administrative		3,132			2,728			404			14.8	%
Other operating expense		(127	)		(1,393	)		1,266			N/M
Operating income from continuing operations		5,509			6,768			(1,259	)		(18.6	)%
Interest expense		254			187			67			35.8	%
Income from continuing operations before taxes		5,255			6,581			(1,326	)		(20.1	)%
Income tax expense		2,290			2,678			(388	)		(14.5	)%
Income from continuing operations, net of tax		2,965			3,903			(938	)		(24.0	)%
Income from discontinued operations, net of tax		30,451			1,511			28,940			N/M
Net income	$	33,416		$	5,414		$	28,002			N/M

Earnings per share:
From continuing operations	$	.50		$	.66		$	(.16	)		(24.2	)%
From discontinued operations		5.16			.26			4.90			N/M
Earnings per share (diluted)	$	5.66		$	.92		$	4.74			N/M


				Total Number	Approximate
				of	Dollar
				Shares	Value of
				Purchased	Shares
	Total	Average		as Part of	that May Yet be
	Number	Price		Publicly	Purchased
	of Shares	Paid per		Announced	Under the
Period	Purchased (1)	Share		Program	Program(2)
April 1 - April 30, 2022	—	$	—	—	$	18,350,169
May 1 - May 31, 2022	—	$	—	—	$	18,350,169
June 1 - June 30, 2022	—	$	—	—	$	18,350,169
Total	—	$	—	—	$	18,350,169

							Approximate
					Total Number		Dollar
					of		Value of
					Shares		Shares
					Purchased		that May Yet
					as Part of		be
	Total Number		Average Price		Publicly		Purchased
	of Shares		Paid per		Announced		Under the
Period	Purchased		Share		Program		Program(a)
July 1 – July 31, 2017		—	$	—		—	$	23,352,857
August 1 – August 31, 2017		916	$	40.60		—	$	23,315,667
September 1 – September 30, 2017		—	$	—		—	$	23,315,667
Total		916	$	40.60		—	$	23,315,667

~~31.1~~


31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~ 32		~~Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32		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.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

(104)		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)