Good morning, ladies and gentlemen, and welcome to the Saga Communications Fourth Quarter and Year-End Earnings Release. At this time, all participants are placed on listen-only mode. It is now my pleasure to turn the floor over to your host, Ed Christian. Sir, the floor is yours.

Good morning, everybody. And let me again, have the pleasure of introducing you to after many years you should all know him. The amazing Sam Bush will dazzle you with numbers as it begins. So [indiscernible] let’s begin. Okay, go ahead.

Let’s go. 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 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. The fourth quarter saw our net revenue increased 19.1% to $28.8 million, up from the $24.1 million we reported for the third quarter of this year of 2020. Our focus on local continues to pay off as the combined local direct and local agency increased 10.4% between the third and fourth quarters of 2020. Net revenue was down less than 10% when compared to the fourth quarter of 2019, which I think is pretty good performance given the ongoing COVID issues that we are all still facing. Free cash flow for the quarter was also good at $5.1 million, compared to $5.4 million for the quarter last year. For the year ended December 31, 2020, net revenue was $95.8 million, station operating income was $20.4 million and free cash flow was $7.6 million. As indicated in the press release, our net loss for the year was $1.3 million, but without the non-cash impairment charge, we would have shown net income of $1.7 million. I’ve heard a number of reports of other companies in the industry having increased bad debt issues in 2020 due to the pandemic. I’m happy to say that our markets have been able to do a great job managing accounts receivable and collections that resulted in actual bad debt expense as a percent of revenue to remain almost the same when comparing 2019 to 2020, at less than 1.5% of 1%. Gross political revenue for the quarter was $3.8 million, for the year it was $6.9 million. Some of you have asked how this compares to our annual political revenue in previous election years. We had gross political revenue of $2.9 million in 2018 and $3.8 million during the last presidential election in 2016. So we saw a nice increase in 2020. We have $51.4 million in cash on hand as of December 31, compared to $44 million at the beginning of the year. Currently as of our last check this week, we have $56 million of cash on hand. At the end of the year, our outstanding debt remain $10 million, which given the cash on hand presents no covenant or liquidity issues. Leverage for our bank covenants is actually negative when you consider the cash we have on hand. And Ed with that short commentary on what was an unprecedented year, I will turn it back over to you.

As always, thank you, Sam. And let today be the last day that we discussed 2020, it is baked and over and truth. I actually thought we would be done with 2020 and then like November. I didn’t use the word pandemic there, but I thought we would be done with that in November, but it was not to be. We were right back in pandemic turn in late November and through December and even January of 2021. And it still kind of is lingering out there. When this was all over the second wave or the third wave, and it was all over the media and it drove our advertisers right back to where they were before. It looks like the economy was improving. What I can say about 2020 as is obviously, as Sam just said we made it. We did structural rearranging of the enterprise, but we never compromise our stated mission of doing excellent broadcasting. We survived, but some of this was painful, make no mistake for one putting a hiatus on the dividend was something that we never before would have considered. And I personally, and I also speak for our Board of Directors on this feel that we’re seeing tiny sprouts emerge of normalcy and that as soon as practical, we can get back on using our funds to reestablish Saga dividends. I do think our shareholder partners for their understanding and appreciation of the difficult situation that we successfully navigated. For me personally, it was a very tough year. I never thought that in the 33 years, that 33 plus years, upside though that I would be having to go back. And frankly, deconstruct albeit lightly that, which we had built all over the years. Fortunately, I do believe that I too now am optimistic that the dark times are slipping outside. I would be remiss if I didn’t thank also all of our Saga staffers for both their understanding and even commitment to keep our operations warm, welcoming to our listeners during the darkness. My feelings are that this is the beginning of a proactive recovery with still the possibility outside surprises. It’s almost like going on a ride in an amusement park. I mean if you think back to the early days of that where you would get in a little car and you would go through these doors that would open up and you would go into this darkness and you’d be riding in a car and suddenly zombie jumps out at you and then you ride further and a hideous skeleton jumps out at you and then another and another until the doors open and your car rides into the sun. Maybe we’re not yet in the sun, but for sure there’s day light ahead. And that makes me feel good. And for awhile there during 2020, I certainly was not feeling good. I was not feeling pessimistic, but I was feeling just so challenged to keep everything going with where we were with the operation and keep it in tiptop shape. But to put it in terms of our well-understood Q1 for this year was still in recovery. But in March, we believe that we’ll be up perhaps 3% from last year. And now you call opportunity yet 3%. Well, wait a minute. And that’s good, as the last two weeks in March last year, well, one giant cascade of advertising cancellations. I can’t tell you about sitting or answering the phones, getting calls from our managers saying, what is going on here? Bam, bam, bam, cancel our advertising, hold our advertising. That’s so 3% is good. And by the way, I don’t want to jinx anything, but right now, April and forward are showing us gaining much momentum as compared to 2020. Sam has always told me, don’t tell figures in advance or anything like that. It’s good at working towards a normalcy of 2019 growth kind of growth that we were experiencing in 2018 and 2019. We do see that. We’re getting calls on from national advertisers wanting to get back on the air, very encouraging, very encouraging. Now, honestly, not all companies are looking this way, but maybe just maybe we can convince them that our model of the – in settlement of our communities with love, laughter, information and caring and concern is the right commitment. Frankly, we are not standing at the shredder and feeding radio into it. That is not in our DNA. We’re proud, very proud of what we do and accomplish. It’s not bragging. It’s not showing off. It really is a caring and going – hold on, hold on, sorry. This is a little unusual, but I’ll try. I’m going to try and do something here. If I can, let me just find it. So my computer here, I’m going to do something a little different and Sam probably is rolling his eyes right now, wondering what’s going on here. Hold on. All right. Let me try this. This is I have to move the computer screen and I have the link, I think. And I have to come up with a Rube Goldberg of sending audio. So just bear with me and I want you to hear something. I want you to listen to something and then we’ll talk about it. So be patient for a sec here. [Video Presentation] Headset back on here. We just got that the other day. And it just – and we get these all the time from our stations, not all the time, but I mean I’ll plot just showing us. And this was something that’s Mr. Bob and Kathy and who have been there for years and years in K-Country, an amazing radio station. Nobody want UK and it’s in Ocala, Florida. And it’s one that I lost it after that’s not sinful, but I wanted a station for many years, because it’s such a great radio station. And we were fortunate enough that the family that owned it who is up North chose us to have the radio station. And I can’t tell you how fulfilling it is to know that this is so real to the community. Mr. Bob and Kathy at WOGK, they are iconic influencers and personalities in the market, essentially, what their dominance. There is no second play station. And this is not just one market, but this happens all the time. And by the way, it’s a perfect example of why good radio will never die, okay. Bring on a skeptics, bring on the podcasts, bring on the satellites, bring on a music streamers, none can compete locally better than great local radio. And you’ve just heard one example, and you’ve got to put yourself into that market to understand it. So we can sit here all day long and go through figures and facts and everything else, but it is the emotion and the commitment that we put into the radio stations to ensure that we’re part of that community to make sure that we own top of mind awareness. And when you hear the outstanding commitment and service to your community, and that occurs every single day in Saga radio stations. I wish something I could do a conference call with just sitting here playing you audio clips of what comments we get from what we do, both outside the radio station and inside the radio station. But it is so important. You can’t measure, by the way, you can’t measure this feeling of good local radio with ratings or cost per point or impressions. You really have to be in the community to feel both the commitment and the passion and the tactile imagery that local radio has the ability to energize. All right. I got off message. I’m sorry. But I’m actually not to worry about it. My job is also kind of to as a teaching position. As radio is the only job that I’ve ever had, I think I understand it pretty well. We as an industry will survive. I mean there are some of the naysayers out there radio is over, right, local radio is not functioning anymore until relevant. Well, I’m sorry, we will prosper because what we do cannot be replaced. Local radio has survived so many attacks. The list is on, starting with TV, outdoor drive-ins, 8-track audio cassettes, digital, local newspapers, magazines, music streaming, podcasts and more. Let me give you a great example, obviously, that another example here. I was talking with the other day with Bill Holst, who’s our General Manager in Yankton, South Dakota. He’s at WNAX Radio. We’re extremely proud of what those accomplished in the Yankton and sell places as part of our portfolio. We’ve had it for many years. Most people would probably say it, ain’t it, well, it’s a speck on the map. But those who know understand that this radio station and steward now for coming up on 100 years, 2022 marks the 100th anniversary of WNAX serving the community. And you think [indiscernible] no, no, no, no, no. This station has an incredible signal. And it’s all agribusiness for the most part. And it’s reaching farmers in five different states. In fact, if you look at it and you understand it, it has the largest WNAX, the signal itself is the largest coverage, the largest land mass coverage in the United States. And as I said, it’s non-stop ag programming from sunrise to late in the afternoon with a lot of people just talking about that. It is a point to the farm community of five states, and it’s been doing this for a 100 years. And by the way, I was mentioning its ability to please, if you use this information. Please tell the people that I am not the original manager. He’s been with us in a lot of years, but he can’t make that claim there. But as a little aside to show you just the power of this and about 80 years ago, WNAX had gas stations. WNAX gas and it was in gas stations in South Dakota and Nebraska and Iowa and Minnesota and elsewhere. And the mono of the gas stations where that you’ll run out of gas before you run out of signal. That’s how powerful it is. And this is a necessity, WNAX is a big example of what the importance of local broadcasting is all about. If you’re ever in South Dakota and you end up in Yankton, please visit our studios, talk to our people. And in the lobby, you’ll actually find a copy of the WNAX gas pump. One other final thing about WNAX and a lot of people won’t even know the name, but the original band of leader for the radio station was Lawrence Welk. This was back in stage of radio when they have studio bands, we are dating ourselves here. Not that I remember that either. What’s in our future? Well, we’ll know it when we hear it and we will adapt to it. We’re very agile and we’ll still be on the air. I have gotten off message. And I apologize, but actually, no, I don’t apologize for my passion and for what we do sometimes outweighs reporting numbers and percentages and EBITDA and all the other BS that goes with it. We have picked middle market Americas and fitting in with the categories that we have and then criteria for looking at radio stations, which are state capitals, big college towns, non-closable military bases, high net worth retirement communities, like Ocala, which also has the villages. And there’s hundreds of thousands of people there. And they’re building another copy of the village right there, which is going to have another – have room for 100,000 new residents to Florida. We have all of this going for us and it’s – and the stations have never been bought in mass or in big numbers, but one at a time with individual understanding of the marketplace and what it can do and when it can have as revenue. And that it’s secure, it’s not going to go away in the long run and it will continue to grow as the marketplace grows itself. And as long as we have that relationship with the marketplace, Saga will continue to be a strong profitable company with excellent perspective in the industry. And as I said, I’m sorry, I got off message. My job is to let the passion flow and let the stations do what is right. With that said, Sam, and I’m sorry if I got – well, enough of that. We still answer questions. And with that I’ll ask Sam, if there are any questions. And by the way, anyone out there who didn’t have an opportunity to ask a question about Saga, our financials, or whatever, you can still call either call me or call Sam, but we’re always accessible. And our managers are at any Saga radio station. Sam, do we have a question?

Yes, we did have one question that came in and it basically was asking about what our policy was or what our future was when we were talking about the internet/podcasting and our activity in web broadcasting, which are mainstreaming and so forth and how we were doing that to defend our enviable dominant position in local markets.

Well, let’s talk about streaming first off. We are doing very well in monetizing it, and I think we’ll be up about 3 times the revenue that we had last year. The issue of course, is it SoundExchange’s rates, their rates, which means that we have to work harder just to meet the delta of servicing the money to SoundExchange for the right to play music on the internet. And that’s a problem there. As far as podcasting goes and you might have some numbers on this, I’m not sure. The way we can look at it and view it is we have – I understand that and I understand it’s great for social media communication, and it certainly has a function and a purpose, but it’s got to the point that it’s almost and it’s getting bigger every day. It’s getting too big to make it economically feasible to make any profit in podcasting. Sam, do you have any numbers at all?

Yes, we’ve done some research on this Ed, and an article that we’d gotten here not long ago from Edison Research had indicated that there are currently, and this changes every day, apparently. But currently over 1,750,000 podcasts that are available as of January of this year. And that includes over 43 million episodes of those podcasts. And I think that what you were pointing out is that the industry – the podcasting issue is just so fragmented that it’s very difficult to monetize the podcast. And I think that’s what some of the others that have gone into podcasting in a significant fashion have found is that you can have a lot of podcasts and a lot of listeners, which there are a lot of folks that listen to podcasts. But it’s just tough to monetize.

I think part of the problem really is to survive, they’re taking remnant inventory and remnant inventory is that which is left up in his soul, very cheaply. It’s like – this is the word remnant reflects on the garment industry. And I think the problem is they can do some really interesting stuff in podcasting, but can they make it – is it anything more than a boutique. Now, there are some that are quite profitable, coupled again, we are ones and a few of the other ones, but for the most part they’re still in the range of boutiques and struggling to find money to do that. And when money is available it’s at a very cheap price point. So I think that’s all that I have. Anything else that we missed today?

Yes. The only thing I would do is add to your streaming comment. That in just recent conversations, I mean, we’re doing a lot of different things on the streaming side to enhance the revenue. As you were saying, Ed we’ve separated our streams from our over the air broadcasts. We’re selling sponsorships on the streams and in our website. We’re selling ad inventory with some streaming injections, but also selling a lot of local inventory to our clients on our streams versus on the air. We’re working with our clients on targeted display, targeting audio advertising, targeted display advertising, targeted video advertising, banner ads, pre-rolls, we’ve got a very active interactive – very active interactive department. So I think we’re seeing a lot of growth in that this year, as you said.

No. And that’s – that was something we purposely designed to revamp probably a year and a half ago. Yes. What we were doing and how we were doing to make that an actual profit center of the company. And it’s turned out that it is becoming that very nicely. So I’m really pleased about what we’ve done on that. So again, if you have questions call Sam, call me. We thank you for your time. We thank you for being interested in Saga. If you’re a Saga’s shareholder, you see that fast 10 times, sums up to you and we promise our commitment to continue to do what we’ve been doing for all these years now. So thank you very much, and that should be it for this time. And we’ll see you all in about 90 days, right? Sam?

Well, a little less than that since we are in March now, and next month in May, the first quarter always sneaks up on us.

Okay. Thanks everybody. We appreciate it very much.

Thank you, Catherine. We’ll turn it back over to you.

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Thank you, ladies and gentlemen, this does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Thank you, Catherine.