Saga Communications, Inc. (NASDAQ:SGA) Q2 2024 Earnings Call August 8, 2024 11:00 AM ET
Company Participants
Chris Forgy - President and Chief Executive Officer
Samuel Bush - Chief Financial Officer
Operator
Good morning, everyone, and welcome to the Saga Communications Second Quarter 2024 Earnings Release and Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Chris Forgy. Sir, the floor is yours.
Chris Forgy
Thank you, Matt and thank you to everyone who’s taking time to join the Saga Q2 earnings call. We appreciate your continued interest, your questions, your support and your participation in what we believe is the best media company on the planet.
It’s been an interesting week this week. Monday marked the largest single day decline in stocks in Japan since 1987. There’s been talks of a recession – the U.S. recession, they continue. Tech stocks are overpriced. There’s political uncertainty and there’s a rising risk of a wider conflict in the Middle East. The speed and depth of this recent global sell-off is compounded by both the aforementioned and thinner than usual volumes in the month of August, which traditionally is a quiet trading funds. And the Fed’s delay in lower interest rates is probably indicated and impacted the media sector more than any of the other previous countervailing forces I mentioned.
Interest rates influence two of the main economic indicators in the media sector, housing starts and automotive purchases. Media tends to feel the impact of this going into and coming out of the economic downturn earlier than other businesses. In other words, we saw this coming. Excuse me. But guess what? We don’t control any of it. So we don’t spend a lot of time with it. We focus on the things we can control, which we will share with you shortly. But make no mistake, what we are experiencing is not a Wall Street thing. It’s a Main Street thing. To illustrate, the categories that experienced the largest decline in Saga during Q2 were restaurants, recruitment, automotive and grocery, consumers eating out less and business is cutting back on hiring and, in many cases, laying off employees, buying fewer cars and going to the grocery less often.
Recently, one of Saga’s top-performing leaders shared with me that after 20 months of pristine performance, his market was now starting to experience some economic downdraft, particularly in one of Saga’s core revenue verticals being local direct. He said it’s not the big spending local clients who are holding back, it’s the clients who spend that $2,000 to $4,000 per month or in that $36,000 per year range who have taken a pause. He said they’ve assured us they’ll be back and will return. So it’s not a question of if, but when they will return. That being said, this level of spend makes up the largest percentage of business in our Saga markets, those customers who invest that $2,000 to $4,000 per month in advertising.