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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2023
Summary of Significant Accounting Policies |
Summary of Significant Accounting Policies | ​ 1. Summary of Significant Accounting Policies Nature of Business Saga Communications, Inc. is a media company whose business is devoted to acquiring, developing and operating broadcast properties including opportunities complimentary to our core radio business including digital, e-commerce and non-traditional revenue initiatives. We currently own or operated seventy-nine FM, thirty-three AM radio stations and eighty metro signals, serving twenty-seven markets throughout the United States. Principles of Consolidation The consolidated financial statements include the accounts of Saga Communications, Inc. and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our accounting estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty. The accounting estimates may change as new events occur, as more experience is acquired and as more information is obtained. We evaluate and update assumptions and estimates on an ongoing basis and may use outside experts to assist in the our evaluation, as considered necessary. Actual results may differ from estimates provided and there may be changes to those estimates in the future periods. Concentration of Risk Certain cash deposits with financial institutions may at times exceed FDIC insurance limits. Our top five markets when combined represented 36%, 38% and 39% of our net operating revenue for the years ended December 31, 2023, 2022 and 2021, respectively. We sell advertising to local and national companies throughout the United States. We perform ongoing credit evaluations of our customers and generally do not require collateral. We maintain an allowance for credit losses at a level which we believe is sufficient to cover potential credit losses. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and time deposits with original maturities of three months or less. We did not have any time deposits at December 31, 2023 and 2022. Financial Instruments We account for marketable securities in accordance with ASC 320, “Investments – Debt Securities,” which require that certain debt securities be classified into one of three categories: held-to-maturity, available-for-sale, or trading securities, and depending upon the classification, value the security at amortized cost or fair market value. At December 31, 2023 and 2022, we have recorded $10.6 million and $10.1 million, respectively, of held-to-maturity U.S. Treasury Bills at amortized cost basis that have a fair market value of $10.6 million and $10.0 million respectively. Our held-to-maturity U.S. Treasury Bills all have original maturity dates ranging from March 2024 to July 2024. ​ Our financial instruments are comprised of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and long-term debt. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair value as it carries interest rates that either fluctuate with the secured overnight financing rate (“SOFR”), prime rate or have been reset at the prevailing market rate at December 31, 2023. Allowance for Credit Losses A provision for credit losses is recorded based on our judgment of the collectability of receivables. Amounts are written off when determined to be fully uncollectible. Delinquent accounts are based on contractual terms. The activity in the allowance for credit losses during the years ended December 31, 2023, 2022 and 2021 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  |  | ​ |  |  | ​ |  | Write Off of |  |  | ​
​ | ​ | Balance | ​ | Charged to | ​ | Uncollectible | ​ | Balance at
​ | ​ | at Beginning | ​ | Costs and | ​ | Accounts, Net of | ​ | End of
Year Ended |  | of Period |  | Expenses |  | Recoveries |  | Period
​ | ​ | (in thousands)
December 31, 2023 | ​ | $ | 519 | ​ | $ | 397 | ​ | $ | (298) | ​ | $ | 618
December 31, 2022 | ​ | $ | 469 | ​ | $ | 408 | ​ | $ | (358) | ​ | $ | 519
December 31, 2021 | ​ | $ | 648 | ​ | $ | 56 | ​ | $ | (235) | ​ | $ | 469
​ Barter Transactions Our radio stations trade air time for goods and services used principally for promotional, sales and other business activities. An asset and a liability are recorded at the fair market value of goods or services received. Barter revenue is recorded when commercials are broadcast, and barter expense is recorded when goods or services received are used. Property and Equipment Property and equipment are carried at cost. Expenditures for maintenance and repairs are expensed as incurred. When property and equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss realized on disposition is reflected in earnings. Depreciation is provided using the straight-line method based on the estimated useful life of the assets. We review our property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. We did not record any impairment of property and equipment during 2023, 2022 and 2021. ​ Property and equipment consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Estimated |  | December 31,
​ |  | Useful Life |  | 2023 |  | 2022
​ | ​ | (In thousands)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Land and land improvements |  | ​ | — | ​ | $ | 15,239 | ​ | $ | 15,259
Buildings |  | ​ | 31.5 years | ​ |  | 40,460 | ​ |  | 40,823
Towers and antennae |  | ​ | 7-15 years | ​ |  | 27,145 | ​ |  | 26,992
Equipment |  | ​ | 3-15 years | ​ |  | 54,747 | ​ |  | 52,459
Furniture, fixtures and leasehold improvements |  | ​ | 7-20 years | ​ |  | 7,907 | ​ |  | 7,741
Vehicles |  | ​ | 5 years | ​ |  | 2,767 | ​ |  | 2,780
​ |  | ​ | ​ | ​ |  | 148,265 | ​ | ​ | 146,054
Accumulated depreciation |  | ​ | ​ | ​ |  | (96,860) | ​ |  | (92,856)
Net property and equipment | ​ | ​ | ​ | ​ | $ | 51,405 | ​ | $ | 53,198
​ Depreciation expense for the years ended December 31, 2023, 2022 and 2021, was $5,013,000, $5,133,000 and $5,362,000, respectively. Intangible Assets Intangible assets deemed to have indefinite useful lives, which include broadcast licenses and goodwill, are not amortized and are subject to impairment tests which are conducted as of October 1 of each year, or more frequently if impairment indicators arise. We have 112 broadcast licenses serving 27 markets, which require renewal over the period of 2027-2030. In determining that the Company’s broadcast licenses qualified as indefinite-lived intangible assets, management considered a variety of factors including our broadcast licenses may be renewed indefinitely at little cost; our broadcast licenses are essential to our business and we intend to renew our licenses indefinitely; we have never been denied the renewal of an FCC broadcast license nor do we believe that there will be any compelling challenge to the renewal of our broadcast licenses; and we do not believe that the technology used in broadcasting will be replaced by another technology in the foreseeable future. Separable intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the leases length, ranging from one to twenty-six years. Other intangibles are amortized over one to fifteen years. Customer relationships are amortized over three years. Deferred Costs The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the Credit Facility. During the years ended December 31, 2023, 2022 and 2021, we recognized interest expense related to the amortization of debt issuance costs of $36,000, $10,000 and $37,000, respectively. At December 31, 2023 and 2022 the net book value of debt issuance costs related to our line of credit was $130,000, and $166,000, respectively, and was presented in other intangibles, deferred costs and investments in our Consolidated Balance Sheets. ​ Leases We determine whether a contract is or contains a lease at inception. The lease liabilities and right-of-use assets are recorded on the balance sheet for all leases with an expected term of at least one year, based on the present value of the lease payments using (1) the rate implicit in the lease or (2) our incremental borrowing rate (“IBR”). Our IBR is defined as the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We follow the accounting guidance for leases, which includes the recognition of lease expense for leases on a straight-line basis over the lease term. See Note 12 – Commitments and Contingencies for more information on Leases. Common Stock Our founder and former Chairman, President, and CEO, Edward K. Christian, passed away on August 19, 2022. As of the date of his passing, Mr. Christian, who was also our principal shareholder, held approximately 65% of the combined voting power of the Company’s Common Stock based on our Class B Common Stock (together with the Class A Common Stock, collectively, the “Common Stock”) generally being entitled to ten votes per share. As a result, Mr. Christian was generally able to control the vote on most matters submitted to the vote of shareholders and, therefore, was able to direct our management and policies, except with respect to (i) the election of two Class A directors, (ii) those matters where the shares of our Class B Common Stock were only entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of incorporation, bylaws or applicable law. Mr. Christian’s passing resulted in the conversion of his Class B Shares into Class A Shares that were transferred to an estate planning trust that now owns approximately 16% of the common stock outstanding. As a result, we no longer have any shares of Class B Common Stock issued or outstanding. Treasury Stock In March 2013, our Board of Directors authorized an increase in the amount committed to our Stock Buy-Back Program (the “Buy-Back Program”) from $60 million to $75.8 million. The Buy-Back Program allows us to repurchase our Class A Common Stock. As of December 31, 2023, we had remaining authorization of $18.0 million for future repurchases of our Class A Common Stock. Repurchases of shares of our Common Stock are recorded as Treasury stock and result in a reduction of Shareholders’ equity. During 2023, 2022 and 2021, we acquired 11,274 shares at an average price of $20.12 per share, 6,044 shares at an average price of $24.27 per share and 16,577 shares at an average price of $26.25 per share, respectively. Revenue Recognition Revenue from the sale of commercial broadcast time to advertisers is recognized when commercials are broadcast. Revenue is reported net of advertising agency commissions. Agency commissions, when applicable are based on a stated percentage applied to gross billing. All revenue is recognized in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, Revenue Recognition Revised and Updated and The Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. ​ Local Marketing Agreements We have entered into Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMAs”) in certain markets. In a typical TBA/LMA, the FCC licensee of a station makes available, for a fee, blocks of air time on its station to another party that supplies programming to be broadcast during that air time and sells its own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBAs/LMAs are included in the accompanying Consolidated Statements of Income. Assets and liabilities related to the TBAs/LMAs are included in the accompanying Consolidated Balance Sheets. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. Such costs amounted to $1,705,000, $1,646,000 and $1,396,000 for the years ended December 31, 2023, 2022 and 2021, respectively. Income Taxes The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is primarily dependent upon the generation of future taxable income. Our effective tax rate is higher than the federal statutory rate as a result of the inclusion of state taxes in the income tax amount and permanent differences primarily relating to executive compensation. Dividends The Company currently intends to declare regular quarterly cash dividends, we well as variable dividends in accordance with the terms of our variable dividend policy. The Company may also declare special dividend in future periods. The declaration and payment of any future dividend, whether fixed, special or based on the variable policy will remain at the full discretion of the Board and will depend on the Company’s financial results, cash requirements, future expectations and other pertinent factors. On December 7, 2023, the Company’s Board of Directors declared a special cash dividend of $2.00 per share on its Classes A Common Stock. This dividend, totaling approximately $12,500,000, was paid on January 12, 2024 to shareholders of record on December 20, 2023 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2023. On November 16, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on December 15, 2023 to shareholders of record on November 27, 2023. On September 27, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on November 3, 2023 to shareholders of record on October 11, 2023. On May 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on June 16, 2023 to shareholders of record on May 22, 2023. On March 1, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock. This dividend, totaling approximately $1,500,000, was paid on April 7, 2023 to shareholders of record on March 20, 2023. On December 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and a special cash dividend of $2.00 per share on its Classes A Common Stock. This dividend, totaling approximately $13,800,000, was paid on January 13, 2023 to shareholders of record on December 21, 2022 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2022. On September 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and a special cash dividend of $2.00 per share on its Classes A Common Stock. This dividend, totaling approximately $13,600,000, was paid on October 21, 2022 to shareholders of record on October 3, 2022. On June 6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its Classes A and B Common Stock. This dividend, totaling approximately $1,200,000, was paid to our transfer agent on June 29, 2022. The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on June 13, 2022. On March 1, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock. This dividend, totaling approximately $970,000, was paid on April 8, 2022 to shareholders of record on March 21, 2022. On December 14, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share and special cash dividend of $0.50 per share on its Classes A and B Common Stock. This dividend, totaling approximately $3,990,000, was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was recorded in dividends payable on the Company’s Consolidated Balance Sheet at December 31, 2021. On September 28, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on October 22, 2021 to shareholders of record on October 8, 2021. On June 18, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock. This dividend, totaling approximately $960,000, was paid on July 16, 2021 to shareholders of record on June 30, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance Sheet at June 30, 2021. The Company had previously temporarily suspended the quarterly cash dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020. Stock-Based Compensation Stock-based compensation cost for stock option awards is estimated on the date of grant using a Black-Scholes valuation model and is expensed on a straight-line method over the vesting period of the options. Stock-based compensation expense is recognized net of estimated forfeitures. The fair value of restricted stock awards is determined based on the closing market price of our Class A Common Stock on the grant date and is adjusted at each reporting date based on the amount of shares ultimately expected to vest. See Note 7 — Stock-Based Compensation for further details regarding the expense calculated under the fair value based method. ​ Segments We serve twenty-seven radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment. We operate under one reportable business segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance. The Chief Operating Decision Maker (“CODM”) evaluates the results of the radio operating segment and makes operating and capital investment decisions based at the Company level. Furthermore, technological enhancements and system integration decisions are reached at the Company level and applied to all markets rather than to specific or individual markets to ensure that each market has the same tools and opportunities as every other market. Managers at the market level do not report to the CODM and instead report to other senior management, who are responsible for the operational oversight of radio markets and for communication of results to the CODM. We continually review our operating segment classification to align with operational changes in our business and may make changes as necessary. Earnings Per Share Earnings per share is calculated using the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security. We have participating securities related to restricted stock units, granted under our Second Amended and Restated 2005 Incentive Compensation Plan and our 2023 Incentive Compensation Plan, that earn dividends on an equal basis with common shares. In applying the two-class method, earnings are allocated to both common shares and participating securities. The following table sets forth the computation of basic and diluted earnings per share: ​
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​ |  |  | ​ | ​ | ​ | ​
​ |  |  | Years Ended December 31,
​ |  |  | 2023 |  | 2022 |  | 2021
​ | ​ |  | (In thousands, except per share data)
Numerator: | ​ | ​ | ​ |  |  | ​ |  | ​ | ​ |
Net income | ​ | ​ | $ | 9,500 | ​ | $ | 9,202 | ​ | $ | 11,157
Less: Income allocated to unvested participating securities | ​ | ​ |  | 149 | ​ |  | 140 | ​ | ​ | 190
Net income available to common shareholders | ​ | ​ | $ | 9,351 | ​ | $ | 9,062 | ​ | $ | 10,967
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Denominator: | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​
Denominator for basic earnings per share — weighted average shares | ​ | ​ |  | 6,045 | ​ |  | 5,973 | ​ | ​ | 5,917
Effect of dilutive securities: | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​
Common stock equivalents | ​ | ​ |  | — | ​ |  | — | ​ | ​ | —
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions | ​ | ​ |  | 6,045 | ​ |  | 5,973 | ​ | ​ | 5,917
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings per share: | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​
Basic | ​ | ​ | $ | 1.55 | ​ | $ | 1.52 | ​ | $ | 1.85
Diluted | ​ | ​ | $ | 1.55 | ​ | $ | 1.52 | ​ | $ | 1.85
​ There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the years ended December 31, 2023, 2022, and 2021, respectively. The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on fluctuations in the stock price. Recent Accounting Pronouncements New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for us for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025. We are currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income rate reconciliation and income taxes paid. ASU 2023-09 is effective for us for annual periods beginning after January 1, 2025. We are currently evaluating the impact ASU 2023-09 will have on our financial statement disclosures.

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