Executives:.

Analysts:.

Ladies and gentlemen, thank you for standing by. Welcome you to the fourth quarter and year-end results conference call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, today's conference is being recorded.

I would now like to turn the conference over to our host, President and CEO of Saga Communications, Mr. Ed Christian. Please go ahead..

Thank you and thank you for joining us on today's call as is our history for 60 times now.

Is that about right, 60 times we have been doing this?.

I actually hadn't thought about that, but it has been a while..

Maybe we will change roles next time in the end..

I can do the start and turn it over to you..

No. I will do yours. It is quite easier just to read through, maybe. Sam Bush, ladies and gentlemen..

Thank you, Ed. 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 factor 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 measures are attached in the selected financial data table. During the quarter, gross revenue without political increased 2.1% for the quarter and 0.7% for the year, a little less than 1%.

Gross political revenue for the quarter was $927,000 compared to $3 million for the same period last year. All the political revenue for the quarter was in radio this year. Last year we had $2.1 million in radio and $880,000 in television. Gross political revenue for the year was $1.3 million compared to $4.7 million for the same period last year.

$1.3 million of the political revenue for the year was in radio this year compared to $3.5 million last year. In television, we had $10,000 compared to $1.2 million last year. National accounted for approximately 11% of gross revenue for the quarter compared to 14% last year. It accounted for 11.5% for the year compared to 13% last year.

This was a $2.6 million reduction in national revenue for the year. During the quarter, we entered into an asset purchase agreement to purchase WLVQ-FM in Columbus, Ohio for $13 million. Ed will talk more about this later.

We did start operating LVQ under a Local Marketing Agreement on November 16 and subsequent to the end of the year, we closed on the purchase as of February 3. During the quarter, we declared a quarterly cash dividend of $0.25 per share, as well as declaring a special cash dividend of $0.25 per share. Both were paid on December 1.

Additionally last week our Board of Directors declared a $0.25 per share quarterly cash dividend with a record date of March 28 and a payment date of April 15. 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 $36.4 million debt outstanding. Cash on hand at the end the quarter was $21.6 million. Currently, we have cash on hand of approximately $14.5 million. Subsequent to the end of the quarter, we closed on our LVQ acquisition using $12.4 million of our cash on hand.

Retrans revenue was $1.1 million in the quarter, up from $635,000 last year. Retrans payments to the networks were $244,000 in the quarter compared to $389,000 last year. For the year, retrans revenue was $4.1 million and retrans expense was $986,000. Capital expenditures were $1.1 million for the quarter compared to $1.7 million last year.

For the year, capital expenditures were $5.5 million, which is almost identical to last year. We currently expect our CapEx for 2016 to be between $5 million and $5.5 million. We expect station operating expenses to be up 1% to 2% on a same station basis for 2016.

We expect interest expense for 2016 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%. We anticipate deferred taxes for 2016 to be between $3.4 million and $3.6 million. Pacing is a tough item, because it is a mixed bag.

January was up mid-single digits, flat to up 1%, without political. February was up mid-to high single digits, up mid-single digits without political. And March is currently pacing flat to down 1%, down 1% to 2%, without political. Ed will talk more about our trends in a minute.

As usual, we asked for your questions to be submitted via email prior to the call and I will respond to those questions that we feel we can appropriately respond to later in this call. Ed, back to you..

Thank you, Sam. It does seem to me and I was thinking this as and I don't mean just to say this ingeniously, but my brain sometimes just fogs over. So could you spice it up next time a little bit and do something like --.

I will try..

No. Try something bold, like talk about foreign currency transactions or something that would spice it up, okay. And also probably deliver it in a little bit more engaged audience because I think if suddenly they have to, I don't know, wake up for a good time but thus we begin.

I am not going to amplify what Sam said in his remarks, but I want to tell you the interesting things that set us apart. Well, the fact that we are up does set us apart from some other companies. First off, Sam mentioned that we acquired WLVQ-FM in Columbus.

This iconic rock station has been a factor in the market, literally since the acquisition of WSNY, some 30 plus years ago, when LVQ was just a nonstory in the market and has remained that way. It offers us a male audience to complement and enhance WSNY, Rewind and Mix.

Those sectors are tipped towards females and therefore really solidifies our position with adults over 30 in the market. We closed on LVQ, Sam said a little bit, over a month ago and on a forward-looking basis, we believe the station comes in at about seven multiple or even a tad less than that of the cash flow.

Programmatically, we have tweaked the station and have added needed salespeople since there were some sales issues with registration which we are in the process of fixing. On balance, it's a wonderful acquisition for us and Columbus has always been a very stable and fine radio market.

Also last week, we completed the acquisition, I think you know, of an initial group of five radio stations and one metro signal in Harrisonburg, Virginia. And we added a sixth station, another FM station. So we have four FM and two AM plus actually three metro signals. Two of the metro signals rebroadcast our AM stations and one is new.

It's a classic rock station, It would be 101, the valley's best rock. So we really have all food groups pretty well covered in that market there. And we are very happy with it. On a forward-looking basis, we believe that this acquisition could come in at as six multiple of VCF which is very good for us.

Complementary to Charlottesville, a perfect acquisition for Saga. In subtractions, last year we finished the disposition of our news and farm networks. Our Minnesota and Michigan were sold to Learfield Communications. This company has a very big presence in that arena, in farm and in news networks.

And the Illinois radio network was assimilated into the others news network already operating in Illinois, the Illinois news network. All of this is reported in our year-end report. We also filed and accepted and will be granted new metro signals for four of our markets with a fifth one pending which we will believe will come through any day now.

The markets where we added FM metro signals to our AM stations were Milwaukee, Portland, Maine, Charlottesville, Virginia and Greenfield, Mass where the Clarksville, Tennessee is the one that is pending. In total, over the year, we now operate over 50 metro signals.

Sam, do you remember how many exactly?.

I don't know exactly and we do have a couple more pending as well, but it will be over 50, I think 52, but in that neighborhood..

Yes. 19 of these are rebroadcast our AM news, talk or sports stations on the FM bands. So that has always been a priority to have an FM companion to our big powerhouse AM radio stations. We also, in n Q4, launched a new format which I am really kind of excited about and really enjoyed. Right now, it's on four metro stations. It's called the outlaw.

This is unique blend of music from the 70s on forward. I guess we would best describe it as music heard in honky tonks and saloons. It's on the air in Des Moines, Ashville, Jonesboro and Springfield, Illinois. And we plan on rolling it out to a few other markets. It's a really fun format.

If you would like to listen, if you have got a pen right there, I will give you the URL for the website in Des Moines, where all you have to do is click and listen. It's www.937theoutlaw.com. Bob Lawrence and I came up with this format two months ago and knocked it around and polished it up. We have done some clever things to it.

I think it will show you how you can use metro. If you listen to it you will see how you can use metro signals to really enhance presence of our other stations in the markets and this is just one example and we have done other metro signals with different formats on it.

There are probably only about four or five, maybe six more metro signals that we would like and then I think we will say we have enough. It gets to a point of diminishing returns, Sam would say..

I believe that. I would actually..

No. Seriously, I mean we have three I would like to acquire in Bellingham, two more in Maine and maybe one in Springfield, Mass. We are in the hunt right now for properly priced translators because there has been a silly season out there of late. You have to remember that in the cold light of day, these are still 250 watt translators.

However, if you get good height, they are fine and they are equivalent probably in some cases to a three kilowatt Class A station. They work fine for us and they do exactly what they are intended to do.

We would certainly like to and some of them, in Des Moines, for instance, we are getting emails on the outlaws saying, gee, we wish you had a larger signal. So that's the downside on that. On the TV side, we are also constrained under SEC mandate from discussing the spectrum auction.

But I can assure you that we are monitoring it for its effects to the TV industry. On 2016, Sam told you Q1 is shaping up to be decent, but there is choppiness in March all of a sudden, just out of there, that happened. Visibility is clouded for the near-term. It has been for quite some time. I don't feel about 2016.

But on the other hand, we are not going and high-fiving each other and shouting, we are out of the storm, the seas are no longer calm and we are back with full sails. We monitor it and basically it's almost a little scary, say, about a month-to-month basis. What I can tell you about everything that's going on, so I would just put it straight off.

We were able to raise our quarterly dividend last year, as Sam mentioned. We have a decent cash business and its growing. And we are quietly looking for those special acquisitions that fit our model. No question, there is still some turbulence, especially in the national arena.

I wish that I could tell that sanity has returned, but we continue to gasp at the national pricing of others in the radio space. I do believe that national could well be up instead of down. We look at a down national advertising market. But in truth, the industry has sold more ads at lower prices and surprisingly ridiculously low prices.

It's that simple. And this proves challenging for all of us engaged. Specifically, for the last year, national at Saga was down to 11% in radio. And I remember several years ago, when Warren and I would talk about the fact that our run rate was 18%, maybe 20%.

I remember at 20%, a figure that was used, that this is an 80/20 business, 80% of that is local. But that's not happening right now. On contrast, TV right now runs about 15% and our TV and last year national at Saga in radio was down to 11%. For us, to be up in revenue overall speaks volumes about our local efforts.

So if we are down 11% of our businesses, they are still down from where it was. You can surely see that we are doing our job locally. Even in our largest markets like Milwaukee, 90% of our revenue comes from local sources. Now this does include local agency business, but only 10% is national.

So it kind of shows you how it's shifting and it shows you what we have done. Listen, there is no question, I am old school with new techniques. We believe in relationship sales and crafting superb stations that attract listeners.

There is indeed a symbiotic relationship between sales and programming and money must be spent on both to ensure professionalism, results which therefore beget profits.

Again this is part of, you have got to put money on the table, you have got to push it out there and spend it on programming and promotion and marketing and also on sales and that will ensure the profits coming there.

Our commitment in 2016 and this is what it is and it does help that this is a political year, we want to continually refine our process of what we are doing. One quick example and let me take a minute here and we will wrap this up.

For those of you who have been around with me and know that I preach that we push the local identity at the top of the fold. In Ithaca, New York, Chet Osadchey created a vignette call Business Over Coffee.

Now what Chet does, is he takes a recording device out and interviews business owners about their feeling about the economy, their philosophy about operating a business and a little history of their business.

The interview itself is five to seven minutes which is edited down to a 60-second feature which runs not only on our new start station, but on other stations in the Ithaca radio group. The feature runs in commercial clusters, where there is open inventory. The entire future runs on our websites as a podcast. It is not a commercial.

It is a business feature and we do this for clients and non-clients with the hope that they will become clients because of the feedback of, we heard you on the radio, we heard you on the radio. It's working, by the way.

In Milwaukee, the feature is entitled I love Milwaukee and Henry Chappell does it with both businessmen and women and community leaders. Milwaukee has been panned with negativism lately and our efforts have been lauded by both business and community leaders.

The feature is in the process of appearing in each and every side of market and it is a commitment to professionalism and localism. It is also a very good business practice for us. Frankly, you are going to see more ideas like this in 2016. Creating concepts similar to what I just mentioned is what we rally love about our business.

When we see the results, frankly it's even more powerful and it's what Saga what we are and what allows us to not tremble and shake before we can make conference calls. If we do it right, it's going to work out for us.

Sam, I am not sure if we had any questions at all? Did anything come in?.

No. Everything we got that came in either in your comments..

We already answered it?.

Yes. Either your comments, my comments or the press release already had it answered..

Well, that means good. We did this in 20 minutes today..

Very good timing..

Not bad. All right.

Do we have helpers there?.

Yes, Tricia. We turn it back over to you to wrap it up..

Okay. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive TeleConference service. You may now disconnect..

Thank you, Tricia..

You are welcome..