SAGA COMMUNICATIONS, INC. (Exact Name of Registrant As Specified in Its Charter)
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2016 Annual Report 2016 Annual Letter To our fellow shareholders: Well…. here we go. This letter is supposed to be my turn to tell you about Saga, but this year is a little different because it involves other people telling you about Saga. The following is a letter sent to the staff at WNOR FM 99 in Norfolk, Virginia. Directly or indirectly, I have been a part of this station for 35+ years. Let me continue this train of thought for a moment or two longer. Saga, through its stockholders, owns WHMP AM and WRSI FM in Northampton, Massachusetts. Let me share an experience that recently occurred there. Our General Manager, Dave Musante, learned about a local grocery/deli called Serio’s that has operated in Northampton for over 70 years. The 3rd generation matriarch had passed over a year ago and her son and daughter were having some difficulties with the store. Dave’s staff came up with the idea of a ‘‘cash mob’’ and went on the air asking people in the community to go to Serio’s from 3 to 5PM on Wednesday and ‘‘buy something.’’ That’s it. Zero dollars to our station. It wasn’t for our benefit. Community outpouring was ‘‘just overwhelming and inspiring’’ and the owner was emotionally overwhelmed by the community outreach. As Dave Musante said in his letter to me, ‘‘It was the right thing to do.’’ Even the local newspaper (and local newspapers never recognize radio) made the story front page above the fold. Permit me to do one or two more examples and then we will get down to business. In Clarksville, Tennessee (home to the 101st airborne division and 160th special ops at Fort Campbell) our morning team of Ryan and Gretchen at Q108 are very community centered. One morning they were reading an article about a school in another city that discovered the reason they had such a high absentee rate was because children were embarrassed to come to school in dirty clothes – their families had no way to wash them. They then discovered that a local elementary school in Clarksville was having the same problem. The school shared one story about a child who sometimes only had a meal if he came to school and was missing school because of his dirty clothes. Ryan and Gretchen went on the air and, within minutes, raised enough money to buy that school a top of the line washer and dryer. Fixing a small thing in a child’s life can make such a big difference. I could probably write for the rest of the day with more of these examples. What’s easy to understand is that those who listen to radio (and 93% of the people in the US do so every week) are not statistics or numbers. They are listeners who hear what we do and respect what we do. They also hear the messages from our advertisers. Their lives matter to us as we too are a part of their community. Let me take a moment and recognize just of few of our people who have unselfishly served their communities for years. Dave Luczak, mornings for 30+ years on WKLH in Milwaukee, Wisconsin. Dave has personally raised over 23 MILLION DOLLARS for Milwaukee’s Children’s Hospital during his marathons. Bob Madden and Brian Nelson, mornings on WHQG also in Milwaukee. These two have been on the air together for 30 years and, for the last 21 years, have staged an annual two day radiothon for various children’s charities. Frank Wilt and Jim Britt, the voices of the Shenandoah Valley on WSVA for 30 years. Dave Walker, 30 years in Bellingham, Washington relating to Whatcom County on KAFE and KISM. Dan Mitchell, mornings on WKBK in Keene, New Hampshire for 22 years. He is considered the ‘‘go to’’ person for anything in the Monadnock region of New Hampshire. His counterpart on WKNE is Steve Hamel. He has been reaching out to Western New Hampshire listeners for 21 years. Mike Baxendale and John O’Brien, mornings on WAQY Rock 102 in Springfield, Massachusetts, with over a quarter of a century of literally being the top rated program in the market. Each year they fill 3 large moving vans with food donations for the homeless and hungry. Rick Rumble, 21 years of great morning radio on WNOR in Norfolk, Virginia. Mike Arlo, 42 years on the air at both WNOR and WAFX in Norfolk. Literally known by all the military in Norfolk for his community involvement. Jerry Oster, 41 years as morning news director, Steve Imming 25 years as sports director, and Steve Crawford, 13 years as morning show host all on WNAX in Yankton, South Dakota. This iconic radio station has served America’s heartland agricultural community for 95 years. During the 1920’s Lawrence Welk was the leader of the WNAX studio band. Its signal has the largest daytime land mass coverage of any AM station in the United States. Steve Holstein, 21 years of morning drive entertainment at WIXY in Champaign, Illinois. Jerry Elliot, mornings on WLVQ in Columbus, Ohio. This former standup comedian has entertained and related to our Columbus community for 26 years. Dino Tripodis, mornings on WSNY also in Columbus for almost 23 years. Dino and his cohost Stacy Kallas have raised millions of dollars for Nationwide Children’s hospital in Columbus. Trey Stafford, mornings for 20 plus years on The Fox KDXY in Jonesboro, Arkansas. Trey also serves as our General Manager for the Jonesboro Radio Group and supervises six radio stations. I have been in Jonesboro with Trey many times and, wherever we go, people stop him to ‘‘talk.’’ Our community interaction, fundraising, and involvement are exemplary. Monte Belmonte, 11 years on The River, WRSI, in Northampton, Massachusetts. I sometimes think that Monte could run for Mayor. He raises well over $100,000 a year for Cancer Crusade, and he is also well known for his food basket fund raiser where he pushes a shopping cart throughout the county collecting food. Chris Allinger, 12 years on WQNY in Ithaca, New York. Chris does a 100 mile walk each year with a backpack raising funds for the Southern Tier Food Bank. People seek him out on the walk to stuff money and checks into his back pack. I apologize if I missed anyone as I am doing this from memory and there are too many examples to list them all. The point here is that, to us, radio is a living breathing organism that radiates out. It is passion that makes the difference and it is this passion that encapsulates our listeners into a convivial familiarity with our radio stations and on air presenters. Family becomes family. Familiarity becomes both trust and friendship. With this in mind, our advertisers achieve great results. So, bring on the contenders. We know what works for our audience. They are not numbers or statistics. Our advertisers know that we know what works. REAL RADIO -- that’s what it is all about. That’s why all of those mentioned above get up every morning knowing in their hearts that they are going to do another day of good work. Now, onto the rest of the story: Net Revenue increased 7.3% for the year to $142.6 million. Free cash flow increased 13.5% and net Income increased 35.6%. On a same station basis, net operating revenue increased 3.0%. During the year, we closed on the purchase of WLVQ in Columbus, OH and paid $7.6 million in dividends to our shareholders. We have now returned almost $42 million in cash to our shareholders through dividends since December, 2012. Thus, as you have made it this far in reading my letter, a sincere thank you. Thank you for being part of the Saga family. We didn’t disappoint last year with our business plan. We also didn’t disappoint in our passionate commitment to the cities and towns that we serve with local broadcasting. If I may, let me wander one more time. In 1989 a small group of broadcasters, I among them, along with other invited guests, were invited to the old Executive Office Building to hear from President George H.W. Bush. We had some inclination as to what his speech might be. We had to sit there for some time wiggling in our seats because of security regulations, then he came onto the stage and grabbed control of the audience. He took off on a speech, written by Peggy Noonan and Craig R. Smith, that he delivered as his acceptance speech while accepting the presidential nomination in 1998. I remember it like it was yesterday. He spoke about ‘‘a thousand points of light, of all the community organizations that are spread like stars throughout the Nation doing good.’’ At that moment, a silent map behind him lit up with thousands of individual lights across our country. I probably didn’t see what he did, but I did see all the points on the map representing 12,000 US radio stations (ours among them). It made me know that my years recognizing our communities were appreciated. President Bush ended his speech (as I will) with the following: ‘‘The old ideas are new again because they are not old, they are timeless — duty, sacrifice, commitment and a patriotism that finds its expression in taking part and pitching in.’’ Saga will do its duty. Sincerely and Thank You, Ed Christian President/CEO Saga Communications, an ongoing adventure UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.