Saga Communications (SGA) Q3 2026 earnings review
Saga sells more election ads, but its station profit drops
Saga Communications, a radio station owner, leaned on election advertising while its regular advertising business kept shrinking. Revenue fell 5%, as finance chief Samuel Bush had signaled last quarter. By our math, sales without election ads and lost tower rents dropped 9%. Saga also cut the value of its broadcast licenses by $9 million.
| Sales without election ads and lost tower rents | −8.7% −5.4% as reported |
|---|---|
| Station profit before head-office costs | $2.4M −57% against last year without a one-time charge |
| Cash and short-term investments | $22.4M on November 9 $31.8M at the start of the year |
| Election ads already sold for Q4 | $3.6M $254K in Q4 last year |
⚖️ Verdict: 🔴 Bearish
The story got worse because station costs rose while regular advertising shrank, so station profit more than halved, excluding last year's one-time charge. Saga also paid its dividend from savings and property sales. One positive: election ads already sold for the fourth quarter will bring in cash.
The question now is what remains when the election money stops next year. Either online ads and new sales managers slow the fall in regular advertising, or the decline steepens and threatens the dividend. Revenue in the first quarter of 2027 will tell.
🐂 Bull Case
Election Ads Bring In Cash Before Year-End
US election years bring political advertising to local radio, and 2026 has midterm races. Saga, which owns radio stations in 28 US markets, sold $1.2 million of political ads in the third quarter. A year earlier, with no national races, the radio group sold $73,000.
The larger effect comes next. Saga said it has already sold about $3.6 million of political ads for the fourth quarter, against $254,000 a year earlier. That money arrives while operations are using cash, so it helps pay for the dividend and equipment without another property sale.
What to watch: political revenue in the fourth-quarter report, against the amount already sold. None of it repeats next year, because no national election takes place, so it covers one year rather than changing the trend in regular advertising.
Positives this quarter didn't test
Saga's plan to stop the decline rests on selling online advertising alongside radio airtime, and on hiring managers to sell and run those campaigns. The release mentions only "strategic priorities and digital transformation" and gives no figure for either, so this quarter neither helped nor hurt that case.
- Digital advertising, the online ads Saga sells with its radio spots: no growth figure; a rising share of revenue would show the mix moving, though last quarter digital costs grew faster than digital sales.
- Sales and campaign managers hired over the past year: no headcount or cost figure; growth in regular advertising outside election ads would show the hires paying off.
What to watch: digital revenue in Saga's quarterly filing. Digital sales outgrowing the costs the radio group adds to earn them would show the plan starting to pay for itself.
🐻 Bear Case
Without Election Ads, Sales Fell About 9%
Saga earns most of its money from local businesses that buy radio advertising. Net revenue fell 5.4% from a year ago, close to the mid-single-digit decline that finance chief Samuel Bush had pointed to last quarter.
Two items distort that figure, and they pull in opposite directions. Election ads added about $1.1 million over last year. The sale of Saga's broadcast towers took away $188,000 of rent it used to collect from tenants. Without either item, by our math, sales dropped about 8.7%.
This matters because the regular business shows no sign of improving. Reported revenue declined 5.6% and 6.5% in the first two quarters, when election spending was much smaller. Online advertising, which Saga sells alongside radio airtime, has not closed that gap. The election money also ends next year, so the second half of 2027 will compare against a much stronger base.
What to watch: fourth-quarter sales without political ads, due early next year. A decline near 9% again would mean the core business keeps losing close to a tenth of its revenue each year, whatever the election adds.
Excluding a One-Off, Station Costs Rose 7%
Station operating expense is what Saga spends to run its stations, from staff to music royalties. Saga said it fell 1.7%, but the year-ago quarter carried a one-time charge of about $2.1 million. That charge covered back payments to the music licensing groups ASCAP and BMI.
Without that charge, by our math, station costs rose about 7.4% while sales fell. So station operating income, the profit before head-office costs, ended about 57% below last year's comparable figure. The weaker margin also reached the balance sheet: Saga cut the value of its FCC licenses, the federal permits that let it broadcast.
- Station profit before head-office costs: $2.4 million, down 31% as reported
- Station costs: 91.0% of revenue, up 3.4 percentage points
- License write-down: $9.2 million
Saga blamed higher interest rates, lower revenue projections for its markets and "a decrease in operating margins in our business and the industry as a whole". Without the write-down, the radio group's operating loss narrowed slightly, but that figure includes a $990,000 gain from selling property.
What to watch: fourth-quarter station costs, when election ads lift revenue. Costs still rising near 7% would leave station profit falling even in an election quarter.
Saga's Dividend Comes From Savings and Property Sales
Saga pays shareholders $0.25 a share each quarter, about $1.6 million in total. Its board kept that payment and said the financial position "provides flexibility to continue returning capital to shareholders". Supporters see the sale of property Saga no longer needs as a sensible use of idle assets.
The cash flow statement tells a different story. Over nine months, operations used $1.4 million of cash, and equipment spending took $2.9 million more. Saga still paid $3.2 million in dividends and also repaid its bank loan. Property sales brought in $4.0 million, but the radio group can sell each building only once.
The timing also flatters the September balance. Saga paid the third-quarter dividend on October 16, after the quarter closed, while a year earlier it paid in September. Cash and short-term investments reached $22.4 million in early November, down from $31.8 million at the start of the year.
What to watch: cash at the end of December, after two dividend payments in the fourth quarter. Saga no longer has a bank credit line, so if election money does not cover those payments, the dividend depends on property it has yet to sell.
Risks this quarter didn't answer
Several standing worries got no new figures this quarter, because Saga's press release covers only headline results and leaves the detail to its quarterly filing.
- Digital payback: no figure for online ad sales or their costs; digital revenue growing faster than digital costs would show the spending paying off.
- Sales-team overhaul: no hiring or staff-turnover data; growth in regular advertising outside election ads would show it working.
- Profit by market: no breakdown; a smaller share of station profit from the five largest markets would show the rest recovering.
- Revenue goal: Saga has not repeated its aim of doubling gross revenue in 18 to 24 months for a year; a new date or a withdrawal would settle it.
- Buybacks: Saga bought almost no stock this year; the board said it will keep weighing buybacks against dividends.
What to watch: the quarterly filing's tables on digital revenue and departmental costs. Digital sales outpacing digital costs would ease the largest of these worries.
👓 Other Themes
Tower Sale Adds Rent Costs Without Cash
Saga sold its broadcast towers in October 2025 and still uses them under leases. It now records about $154,000 a quarter of rent it never pays in cash, because notes the buyer owes Saga offset the lease payments. Those notes also produce $127,000 a quarter of interest income that the radio group books without collecting cash.
💲 Other KPIs
Saga's earnings before interest, taxes, depreciation and amortization over the past year shrank again. The figure stood at $7.3 million a year ago and $1.7 million in June. By our math, it now equals less than 1% of a year's sales, so operations leave almost nothing for dividends or equipment.
Working capital, the short-term assets left after short-term bills, dropped 23.7% from a year ago. It stood at $30.7 million in March and $25.6 million in June, so the decline has run all year. The cash Saga spent on dividends and on repaying its bank loan accounts for most of the drop.
The average share count edged down 1.0% from a year ago, which reflects buybacks the radio group made in 2025. Saga repurchased only $30,000 of stock in the first nine months of this year, so the count has stayed near 6.1 million all year.
🔮 Guidance
Unchanged. Saga still plans $3.0–3.5 million of spending on equipment and buildings this year. By our math, that leaves about $0.3 million for the fourth quarter after $2.9 million in nine months. Last year's fourth quarter took $0.4 million. The plan came down twice earlier this year, from $3.5–4.5 million to $3.5 million and then to today's range.
Unchanged. Saga expects to keep booking rent on the towers it sold without paying cash for it. The charge sits inside station costs, so by our math it trims reported station profit by about 0.6 percentage points of sales each quarter. Interest the company books on notes from the buyer offsets most of it lower down the income statement.
Raised. Election ads already sold for the fourth quarter now total more than three times what Saga had booked for the entire second half three months ago. By our math, the gain over last year's fourth quarter equals about 13% of that quarter's sales. The money stops in 2027, a year with no national election.
❓ Key Questions
How fast did digital advertising grow this quarter?
Saga gave no digital figure, though finance chief Samuel Bush had pointed to growth in the mid-to-high single digits. Online advertising is the business meant to offset shrinking radio sales, so its growth rate decides whether the plan works.
How are regular ad bookings running for the fourth quarter?
Election ads will lift fourth-quarter sales. Shareholders need the trend without them to judge how fast the core radio business is shrinking before the election money ends.
Why did the third-quarter dividend move to October?
A year earlier Saga paid in September. The later date kept about $1.6 million out of the quarter's cash outflow, so the September cash balance looks stronger than the trend.
At what cash level would the board revisit the dividend?
Operations used cash over nine months, and Saga has no bank credit line. The board says it weighs dividends against other uses of cash, but it has not said how much property remains to sell.
Does Saga still aim to double gross revenue?
Management set a goal of doubling gross revenue in 18 to 24 months and has not repeated it for a year while sales declined. Shareholders should know whether the goal still stands, has a new date, or is gone.