Ed Christian - President and Chief Executive Officer Samuel Bush - Chief Financial Officer.

Ladies and gentlemen thank you for standing by and welcome to the Saga Communications Third Quarter Earnings Call. [Operator Instructions] As a reminder, today’s call is being recorded. With that, I will turn the conference over to Mr. Ed Christian, President and CEO. Please go ahead, sir..

Thank you very much. Welcome everybody to Q3 and our review. And with that, we will start and I will turn this over to, after many, many years, same words that I have stayed the same [indiscernible]. Maybe I should read this..

You could do that and I could do in the introduction, yes..

We can do that. Now I don’t think it will work too well. I would probably screw it up. And that’s why you are here for numbers. And numbers, Bush will now go ahead..

Thank you, Ed. Firstly, obligatory, 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. It was a good quarter. During the quarter, historical net revenue increased 6.8%.

Adjusting for same station, net revenue increased 2.2%. Gross political revenue for the quarter was $1.8 million compared to $130,000 for the third quarter last year. All $130,000 for the quarter last year was radio. For the quarter this year, radio was $529,000, while television was $1.2 million.

I should point out that we reported $1.4 million of other operating income in the quarter. This is the result of our selling a tower in the Norfolk, Virginia market, SBA towers for $1.6 million. We also entered into a favorable long-term lease on the tower for our radio station, one of our radio stations in the market.

Year-to-date through the end of the third quarter historical net revenue increased 8.3%. Adjusting for same station, net revenue increased 3.1%. Gross political revenue through the third quarter was $3.4 million compared to $413,000 for the same period last year. All but $10,000 of last year’s political revenue was radio.

Year-to-date, radio was $1.9 million and television was $1.5 million. Keep in mind that relative to a same station and a historical comparison, we closed on the bulk of our Harrisonburg acquisition last year on August 1 with the final piece closing on September 1.

So Harrisonburg will be fully reported in our historical numbers with the fourth quarter. We started operating our acquisition at WLVQ in Columbus through an LMA on November 1 last year, so it will still be a part of the same station historical reporting in fourth quarter.

National accounted for approximately 11.9% of gross revenue for the quarter compared to 11.5% last year. During the quarter, our Board of Directors director declared a $0.30 per share quarterly cash dividend with the record date of September 14 and a payment date of September 30.

This represented a 20% increase over the previously paid $0.25 per quarter dividend. This is our tenth straight quarterly cash dividend, the first six at $0.20 per share, followed by three of $0.25 per share, and now, the one paid during the third quarter at $0.30 per share.

This brings the total dividend paid including the special dividends over the last 4 years to almost $38.9 million. 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 of the quarter was $22.7 million. Currently, we have cash on hand of approximately $28.4 million. Retrans revenue was $1.2 million in the quarter, up from $1.1 million last year. Retrans payments to the networks were $297,000 in the quarter compared to $256,000 last year.

Capital expenditures were $1.6 million for the quarter compared to $2.2 million last year. We currently expect our CapEx for 2016 to be between $5 million and $5.5 million. One never knows about pacing, but currently we anticipate fourth quarter revenue to be up low to mid single-digits.

We expect station operating expenses to be up 6% to 7% on historical basis and 2.5% to 3.5% on a same station basis for 2016. We expect interest expense for 2016 to be between $700,000 and $800,000 given the existing interest rate environment.

Our anticipated total tax rate going forward will be between 40% and 41%, with deferred taxes for 2016 being between $3.2 million and $3.4 million. And with that, I will turn it back over to Ed..

Did you pick today on purpose to announce?.

I figured with the election, which would make a big difference on who people voted for..

Yes, you think so? Well, I don’t know, I am not sure of that. Well, in one other question, why do you always start out your discussion with using the words, risk and uncertainties? I mean, that’s a really kind of a downer when you start off with that.

Could you try next time to use something happy words for the whole thing?.

I will see if the SEC will let me use happy words. I am not sure they will....

All of your report contains risks and uncertainties. I think our business is somewhat certain. A couple of things I would like to talk to you about today. National is still under pressure, no question about that. We are at – been holding about the 12%, between 11% and 12%.

And I think as you know that if you have been on these calls for years that we used to be able to talk about 18% to 20% national. I don’t think we are spending less in terms of national business, in terms of spots, but what we have seen is an erosion – continued erosion in the rates.

And the pricing nationally was groups in stations, which were under tremendous amount of pressure on that. And it’s about time that the industry needs to understand the pricing paradigm and like other industries that use a small offer demand pricing.

If not, I think in a couple of years, few years down the road, not in the immediate future, but you could see things where spaces say listen, we have a $100 coupon here for you for advertising to give you – to get you back into the – I mean it’s really getting on to the point.

And so I ask others on the call who we know friends of the broadcasting industry to really begin and look at the pricing models and paradigms and shifts and everything. And we are an industry that really just doesn’t embrace that or handle that.

I mean, it’s been attempted over the past they were in companies that you could go in and subscribe to them or user our service for pricing models. We – there was a point in time when one of the largest companies used the hotel revenue models for pricing.

And that’s really stuck, and I think it’s time that somebody start working at how we need to as an industry join with a lot over the people in terms of the pricing on that. Local, still the back bone of what we do.

One of the things with local – and we have done a really great job on this and I am really pleased in terms of local production and local revenue enhancement. And with them, we need to look at the products that we use as enhancements for our revenue generation. We have done a really good job with that.

And I am just going to talk about a few of them here. Events, yes, you will hear this from a lot of companies about events they do, but we do signature events, and for instance, there is about 6 signature events. We owned a couple of them limited [indiscernible] one and there are other ones, about half of them were maybe a little bit more.

We co-sponsored them. And so we do it on a less risk reward basis. While we don’t have the risk and we have a very good return on it without worrying about rain days or any of the other things that we do on that.

So, that’s a model that we are looking on embracing more and more is partnership, partnering with other companies to promote the things and get the reward on that, the events on that. Taking fast, another one of our signature events, we have been doing it in a number of markets. And what I am thinking right now, we have like, they can post in…..

A lot of golf tournaments..

A lot of golf tournaments. Yes, there is lot of things like that.

We are doing one now away when the Norfork did just a G tournament [indiscernible], what was the one that Wayne just talked about?.

The auto....

Auto tours and sort of things like that..

Yes, yes..

But these are the types of things that we find that we can use to enhance exactly what we are doing and the party enhancers that we keep working for different things to do. And new categories, let me just talk a little bit about that. Things that have been very successful initiatives for me, we have gone very deeply into recruitment advertising.

That’s become a very important product category for us. As newspapers have lost the one ends or the hiring, radio has been natural for this. We do recruitment seminars where we invite HR leaders in the community and to attend a meeting where we discussed radio reach or the frequency on a radio and what it can do.

And in some of our markets, there is hundreds of thousands of dollars per market coming in on recruitment advertising that has not been done in the past. It’s a very, very big thing for us. And then there is kind of like the one-offs that we do on that. By the way, we call these like HireMe Columbus, HireMe Des Moines, whatever it might be.

Those are the – how we promoted on the air and also the websites right here. Warren is writing me a note that says, if you can hold the note up, it says, yes, okay, well, that’s a cash back rate and it was something we have talked about before. That’s a company that we use where we have – there are three companies in the United States.

We have market exclusivity on it, which is Creative Services, which we use as revenue enhancers or door openers. It’s huge for local, for us where we already go along with a pre-produced spot which the company does within hours.

So when the person goes in, they have something to discuss and show in a creative process rather than walking in and start call by trying to talk about radio. They actually have a commercial produced. These are the types of things we will look at. Another one that we are working on right now is we are rolling out in Clarksville.

It’s called, I believe, it’s Homes on Open Saturday. And where we are using is to promote a lot of independent realtors are using this service because they are holding open houses, the realtors state companies. Don’t give them money to do this, so they are working for different widespread shotgun approaches to advertisers.

We have operated a website, which maps and it shows exactly where the homes are and what the pricing is and we promote it then on the air and for home showings on Saturday. I can – this is taking a lot of the revenue that historically went to print. It was kind of floating around out there. We are converting it into broadcast revenue.

Our line extensions, tremendous growth and partial now has been very successful for us. It’s in the high 6 years in revenue now. And running is a freestanding, online paper. With just several staff, full-time staff members associated with it. We have rolled this out in two markets.

In 2017, we are rolling it out in two more markets, probably in Bellingham and Ithaca. And we have three additional markets scheduled right now for 2018 roll ups in this. This again is revenue enhancement for us. It’s not used in place with the common product, but as a supplement to it for other people on it. I am going to give another example.

We were talking about this the other day which is kind of we haven’t figured out exactly how to continue to monetize this for the program Main, for instance, we do 40 micro cleansers a year where we actually use space in our building to invite people enduring for a lunchtime concert with artists who are performing in clubs or whatever it might be.

We record them. We will play it back on Club Z on Saturday night or wherever it might be. And we bring in 40, 50 people into the radio station to sit down for a lunchtime concert. We are looking at this for sponsorship opportunities, food opportunities, a lot of other things and venues on this.

This again is with WCLZ, our AAA station that we are looking at enhancing this. And our other AAA markets, which are Northampton, Keane, Ithaca, Asheville and Charlottesville. These are the types of things that are going to keep us focused on what we do. And it’s why we did this last quarter.

Political, certainly nice, it’s also vote of confidence in the radio industry. When you look at that and you look at where political dollars went, historically they still continued to flow into radio.

Last thing I want to talk about – and it occurred to me this morning, for some reason and I am not quite sure why I think Will Rogers, probably because he was such a political pundit, today is election date.

And one of the things that Will Rogers was known for was a wonderful quote that he did, he says, all I know – well all I know is what I read in the papers, Will Rogers. So I got my papers this morning and I am a veteran – still print reader. I have to feel and hold the newspaper, so I really can’t read them online.

And I tried out a few training solutions and upside is up, so I won’t spend a lot of time on it. And here was today’s paper, article for the Golfsmith survives closures. Golfsmith is closing 60 or roughly two-thirds of its U.S. retail stores. Time runs short for Concordia. The data in Concordia industry shows no signs of abating.

The embattled drug maker reports a third quarter loss of $1.4, - $1.47 a share on Monday, missing analyst expectations. Good quarter used to spend its full-year sales and profitability guidance. Sun profit falls, local-based company announcing 27% profit decline. Price high on tickets they are set from open table.

Price line will scale back expansion plans for its OpenTable bank service. Gas prices could fall if oil declines. Gas prices have the potential to plummet, a result of oil hitting a six-week call after unexpected record high in domestic inventories, AAA response. News Corp posted a loss as ad revenue slides. News Corp.

swung to a loss in its September quarter amid a challenging print advertising environment versus news papers. Holiday help on hold, interesting, retailers cut back. Good luck finding help at some of the country’s largest retailers. And during the holidays and shopping season kicks into high gear.

Most retailers are cutting back on sales help in their stores and survey of hiring announcements revealed. Wal-Mart, looks last year probably announced it was hiring 60,000 extra workers for the holiday shopping season this year staying uncharacteristically silent on his plans. So that means reports of loss of $54.5 million.

Trying to overcome a softening art market with an improved focus on private sales and the last one here, this is I understood just a little story to that – is whatever it is – a flat over chicken. Investors say a pricing index used by grocers has kept retail price of poultry high. Thus, prices of grocery stores are lower.

So too our beef prices at grocery stores are lower, so do our pork prices, but chicken, steady as she goes and that’s because of the Georgia doc chicken pricing index also referred to as the owner of Barry index. So we are not alone and having indexes in broadcasting.

So, what does this have to do with us, what does this have to do with radio, you ask yourself now that we hare fairly entertained it with a quick review of the print today.

When was the last time you picked up a newspaper and so I have a line that says something like banana broadcasting or whatever, closed starting radio stations will continue to operate in 60 markets, or something like button that radio down because of electricity cost increases or how about this, radio industry is down because of lack of new products.

What I am trying to tie together here is you don’t find headlines in this. I can’t tell you what our company said, we are shuttering the local radio station.

We are closing it down, we are doing company wide closure of whatever it might be that we – our operating costs are soaring because of raw materials, raw materials or electricity for raw materials other than our people cost.

And the lack of new products and that’s what I just talked about earlier is we constantly look at trying to find and invent new ways for radio. You don’t see this happening in our industry.

And everybody starts painting doom and gloom scenarios about what we do and the minute that I start seeing the fact that people are abandoning their stores and closing their stores and running down and deciding if they are shutting down and moving out of markets, then we might have something to talk about.

But until then, radio is still very strong, as television is still a very strong industry and we do our best in that. And with that, I take – I pretty well have done it, I think..

That’s good. And we always ask for questions. But we must have mailed it. As my 6 year old granddaughter would say after a good event because the questions that we were asked were all covered in your or my comments. Lot of crowd there in the background..

Thank you all for coming today. We appreciate it and thank you for voting the America way today. And we will turn it back to the operator for final summary instructions..

And ladies and gentlemen, that does conclude your conference. Thank you for your participation. You may now disconnect..