Ed Christian – Chairman, President and CEO Sam Bush – SVP, Treasurer, and CFO.

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter and Year-End for Saga Communications Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s call is being recorded.

I would now like to turn the conference over to your host, President and CEO, Ed Christian. Please go ahead..

Thank you, Sean, and a very quick welcome all to the call and with that we will get right into it with Sam with his, as always, focused and [pissy] [ph] comments. .

Thank you, Ed. .

I didn’t say, I said [pissy] [ph]. .

I understand. This call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the Risk Factors section of our most recent Form 10-K. This call will also contain a discussion of certain non-GAAP financial measures.

Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data table. During the quarter, net revenues increased 7.7% to $36.4 million. Station operating expenses increased $1.8 million.

The increase along with the station operating expense increase of $2.8 million reported in the third quarter were primarily due to the expense attributable to agreements entered into by the company to license historic Nielson data in selected markets in conjunction with entering into licenses to receive Nielson reports and services during future periods in those markets.

Free cash flow for the quarter was $6.7 million compared to $5.6 million for the same period last year. For the year, net revenues increased 3.5% to $134 million; station operating expenses increased $5.4 million.

In addition to the Nielson expense impact on our operating expenses which we’ve already talked about, our healthcare cost also contributed to the increased expenses for the year with an approximate $510,000 increase year-over-year. Our 10-K will give more details as to various other expense increases.

Free cash flow for the year was $21 million compared to $21.6 million for the same period last year. National accounted for approximately 13.9% of gross revenue for the quarter compared to 14.5% for the same period last year and 13% this year compared to 13.4% last year.

Gross political revenue for the quarter was $3 million compared to $345,000 for the same period last year. Radio was $2.2 million this quarter versus $342,000 last year. Television was $888,000, compared to $3000 last year. Total political for the year was $4.7 million versus $785,000 last year.

During the quarter we paid quarterly cash dividends of $0.20 per share on October 17 and again on December 29. On December 29, we also paid our third annual special dividend of $1.20 per share. We have now returned over $27 million in cash to our shareholders through dividends.

We intend to pay regular quarterly cash dividends in the future as well as considering special cash and stock dividends as declared by our Board of Directors. At the end of the quarter, we had $36.1 million debt outstanding. Our current debt structure includes $30 million term loan and $90 million revolver. The term loan is fully drawn.

The revolver can be drawn up again at any time for used in an acquisition, dividend or buyback subject to pro forma covenant compliance with our leverage is not an issue. Cash on hand at the end of the quarter was $17.9 million. Retransmission revenue was $635,000 in the quarter, up from $574,000 last year.

Retrans payments to the networks were $389,000 in the quarter compared to $153,000 last year. For the year, Retrans revenue was $2.5 million compared to $2.3 million last year and our network payments were $729,000 compared to $590,000 last year. We are currently involved in Retrans negotiations in both our TV markets.

I will update you as to the impact of these negotiations will have on our 2015 Retrans revenue with our first quarter conference call in May. During the quarter, we closed on the sale of four of our five radio networks. We continue to own the Illinois Radio Network.

On our financial statements, we reported a $1.2 million gain on the sale as other operating income. Interest expense for the year declined to $1.1 million from $1.3 million last year primarily due to a reduction in the debt outstanding. Capital expenditures were $5.5 million for the year, compared to $5.2 million last year.

We currently expect our CapEx for 2015 to be between $4.5 million and $5 million. We expect station operating expenses to be flat to up 1% for 2015.

This includes the ongoing license expenses attributable to the Nielson reports and services we will be using in select markets as well as the change in expenses anticipated from the sale of four of our five radio networks.

We expect interest expense for the 2015 year to be between $1.1 million and $1.3 million given the existing interest rate environment. Our anticipated total tax rate going forward will be between 40% and 41% with our anticipated deferred taxes for 2015 to be between $2.6 million and $2.8 million.

First quarter is currently pacing down 1.5% to 1% from a revenue perspective. .

Don’t scare me there..

No, 1.5% to 1%, I’ll say that again, so I get it right. Ed, back to you. .

Thank you, Sam, for the brief and cogent summary on both 2014 and Q4 and a little visibility into our first quarter right here. Perhaps, I can offer some additional clarity to certain [clausal] [ph] relationships. Certainly, 2014 was not a jump-up and shout-out year.

The [indiscernible] certainly helped and we always appreciate that every other year when it comes in. 2014 wasn’t a great year for other industry and a lot of other industries and product categories, well, candidly admit that it was [buy] [ph] year. 2015 is starting up the same way.

I kind of refer to it as a calm river of business with no apparent rapids or rocks [indiscernible]. Let’s take a minute and kind of look at the broader picture unless we paint with a small brush and perhaps single out broadcasting. Columnist Jonathon Trugman said it so well.

How in a world can you do that, while gas prices have fallen 40% and the way these job numbers show growth, retail sales for January and February came up negative? And even in January, when people used most of the gift cards, it’s still didn’t help stimulate January and the sales were negative.

Historically, falling prices at the pump have been very beneficial for retail sales. So, where is all of that extra money saved at fill-up going if it’s not finding its way into the retail tail. Retail sales are one of more specifically powered gauges of economic prosperity, is they are not based on sentiment or expectation or any other BS.

We look at retail sales and that’s the mirror for us. Trugman by the way is positing that healthcare increases for individuals have soaked up this money and that additionally consumers are setting aside the gas premium for a rainy day. More and more people are saying that, then I think there is a very strong position of truth in that statement.

Couple this with the knowledge that 2014 was the ninth straight year where the economy has grown less than 3% a year. New business formations, they are at a 35 year low. And yet with all of this negative information, broadcasting revenue was up and we’re flat. Like it or not, that’s a win at a vote of confidence in what we do for our advertisers.

Radio and TV advertising works and it offers a great return on investment. Now, there is another conundrum that I’d like to take a minute on, all this really ties back into radio and TV as I said earlier, we are the mirror of the economy and the feelings of the nation.

We really get such conflicting information at times that it’s hard to really understand and that’s one of the quickest rushes to judgment as to reach out and label the broadcast industry as outdated, outmoded, obsolete, whatever.

We get slammed and as those pundits associate no correlation between economy and our performance, in truth, I can understand a little bit of why that occurs as we do receive such conflicting information. Let me give you an example. Last week, the Fed announced that the job market boomed in February.

This announcement contradicted literally all of the other economic information that has recently been released. The Atlanta Federal Reserve released information that its GDP now indicator were showing at the end of the first week of March annualized growth for the first quarter was just 1.2%.

And now about that booming job market, George Will, excellent columnist, in a column shows that in the late 60’s, there was 300,000 plus jobs created over nine months. In the 80’s, the 80’s had 23 months of 300,000 plus jobs and the population in 1989 was 73 million smaller than today’s 320 million.

Nicole Gelinas writes in City Journal, a healthy economy should add 200,000 new jobs every month even when it’s not recovering from a recession. By that standard, America should have 133 million people working in the private sector right now, not the 118 million.

We used to have – [we went] [ph] through slow growth and we will, and even without our industry has the ability to have substantial free cash – substantial free cash. In fact, when Sam gave you the figure that we were at $17 million that was the end of Q4, we were at $23 million in cash on hand right now.

This is all predicated on the fact that we don’t screw up our operations. That means, operating your stations with maximum community involvement and integration and super serving our client advertisers. Thus, I am really asking you to realize and admit what is really going on in the US and not view broadcasting as a non-responsive industry.

Paul Sperry, a Hoover Institute media fellow comments on the current happy illusion of good times are here again. And he says, pay no attention to the real economy behind the curtain. I really like that as being a fan of the Wizard of Oz.

As for Saga, we have some stations that are rough, and some that are soft, but nothing that isn’t manageable or substantial enough to jeopardize our economic balance.

Now, those of you who have listened to our calls before know that at times I can be slightly [irreverent] [ph] and today I thought I would try to be very kind of cute and clever and start off in a pretty light mode and blame the West Coast dock workers strike on Q4 by saying that we had pre-ordered a number of spots from Asia and they were held in hostage in containers in the West Coast and we couldn’t get them into the distribution system in time for Thanksgiving and Christmas.

However, I was advised by Sam that somebody might actually believe this and suggested I’d finally lost it, that I can understand. Sometimes being cute and clever is not the best approach on a conference call. I also [indiscernible] by the way, that Saga in 2015 will be offering only antibiotic free commercials.

Now, with that said, we do have one station that is carbon neutral WCLZ in Portland, Maine. I have no idea what that means, but we do have the bragging rights on that, thanks to Atlantic Records.

What about 2015? Well, it could look like 2014 with a caveat that elections come next year and things could be changing near the end of 2015, hopefully for better. Couple of other open items and then I am finished here.

We are seeing some interesting opportunities, yes, after all these years of getting a high, huge rush on buying translators, metro signals, we are actually seeing some real buying opportunities and these are in markets which we have previously defined is fitting our acquisition parameters.

Any acquisition that we would make are both strategic and structural. It has always been our mantra that buying for the sake of buying has never been a philosophy for Saga. It’s after all, when the thrill of looking at your new shiny coin evaporates you still have to run the enterprise. We just don’t jeopardize our advantage on bragging rights.

Sam also mentioned that we’ve reduced our networks to just one state and that’s in Illinois, picked the winner there.

It’s – I am sorry, Illinois, it is proper for us there that we already have successful [indiscernible] in Champaign, Illinois and especially Springfield, Illinois which is the capital and fits well with the network station relationship.

Finally, Sam and I have been asked by investors about the TV spectrum report from Greenhill as commissioned by the Federal Communications Commission and what if any is Saga’s participation? We have evaluated and because of our operational set up, there is an opportunity for participation and we are studying this and this week we’ll be attending an FCC meeting to receive and evaluate further information.

The spectrum auction, actually reversal auction is scheduled for 2016. And finally, we have our challenges and we have our opportunities. We’ll work through both and continue to reward all of you, our investment partners with confident results from Saga. Thank you for being a Saga stockholder. Thank you for being interested in Saga.

Thank you for attending our conference. Is that enough? Thank you, Sam..

And I think that covers pretty much everything. .

And do we have any questions? And I know we have already….

We had a number of questions, but all those that we can talk specifically about, we’ve already answered and some like Retrans, more specific about what’s going on with Retrans in 2015, I indicated we’d give more color into that in our May conference call for first quarter. So I think….

I think we’re close in ramping up Retrans. .

We are, we’ve got a couple of contracts we are still negotiating. They should come out very favorable to Saga. But I don’t want to quote any numbers now until we wrap up a couple of big ones. .

Those are the secrets you are talking about, we can’t talk about. .

That’s correct. We’ll talk more about that in May. .

Okay.

We are done till May?.

We are done till May. .

Okay. Thanks, and Sean, it’s your turn. .

Thank you. Ladies and gentlemen, thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect..