Saga Communications reported third‑quarter 2025 results that fell short of analyst expectations, posting a net loss of $532,000 and a diluted loss per share of $0.08 versus the consensus estimate of $0.21. Revenue for the quarter was $28.2 million, a $0.1 million shortfall from the $28.3 million forecast, reflecting a 1.8% year‑over‑year decline. The earnings miss was driven largely by a one‑time $1.5 million music‑licensing settlement that increased operating expenses and compressed margins.
The company’s revenue mix shifted noticeably. Digital interactive revenue grew 32.6% to $9.2 million, driven by higher demand for online advertising and streaming services, while broadcast revenue slipped 3.4% to $18.5 million, partially offset by a decline in political advertising. The strong digital performance helped keep operating income near breakeven, but the settlement’s impact meant operating income fell to $1.5 million from $1.6 million in the same quarter a year earlier.
Operating margins contracted from 10.2% to 9.9% as the settlement added $1.5 million to costs. Without the settlement, the company would have reported an operating income of $1.5 million, essentially flat year‑over‑year, indicating that underlying business performance remained stable. The margin compression underscores the one‑off nature of the settlement and signals that future earnings will likely improve once the expense is absorbed.
Management reiterated its focus on digital transformation, noting that the company aims to double gross revenue from digital channels within 18 to 24 months. CFO Samuel D. Bush highlighted that interactive revenue now accounts for 32% of total revenue, up 17.1% year‑to‑date, and that the company’s 54% profit margin in that segment is a key driver of future profitability. The sale of telecommunications towers for $10.7 million is part of a broader strategy to return value to shareholders while reinvesting in digital initiatives.
Investors reacted negatively to the earnings miss, citing the EPS shortfall and the impact of the music‑licensing settlement as primary concerns. The company’s guidance for the next quarter remains cautious, with no new revenue or earnings targets disclosed, reflecting uncertainty around advertising demand and the ongoing transition to digital platforms.
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