10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2017

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission file number 1-11588

Saga Communications, Inc.

(Exact name of registrant as specified in its charter)

Delaware	38-3042953
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
73 Kercheval Avenue
Grosse Pointe Farms, Michigan	48236
(Address of principal executive offices)	(Zip Code)

(313) 886-7070

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer  þ	Non-accelerated filer ¨	Smaller Reporting Company ¨	Emerging growth company ¨
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares of the registrant’s Class A Common Stock, $.01 par value, and Class B Common Stock, $.01 par value, outstanding as of November 2, 2017 was 5,024,862 and 882,141, respectively.

INDEX

	Page
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Condensed consolidated balance sheets — September 30, 2017 and December 31, 2016	3
Condensed consolidated statements of income — Three and nine months ended September 30, 2017 and 2016	4
Condensed consolidated statements of cash flows — Nine months ended September 30, 2017 and 2016	5
Notes to unaudited condensed consolidated financial statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures about Market Risk	30
Item 4. Controls and Procedures	31
PART II OTHER INFORMATION	31
Item 1. Legal Proceedings	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6. Exhibits	32
Signatures	33

EX-31.1

EX-31.2

EX-32

EX-101 INSTANCE DOCUMENT

EX-101 SCHEMA DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

EX-101 LABELS LINKBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2017			2016
	(Unaudited)			(Note)
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	81,035		$	26,697
Accounts receivable, net		18,880			17,735
Prepaid expenses and other current assets		2,026			2,397
Barter transactions		1,721			1,318
Current assets of discontinued operations		—			4,625
Total current assets		103,662			52,772
Property and equipment		135,644			134,680
Less accumulated depreciation		79,299			85,506
Net property and equipment		56,345			49,174
Other assets:
Broadcast licenses, net		94,708			86,622
Goodwill		15,417			7,407
Other intangibles, deferred costs and investments, net		7,822			5,975
Assets of discontinued operations		—			18,048
	$	277,954		$	219,998
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,211		$	1,618
Payroll and payroll taxes		6,836			6,954
Other accrued expenses		26,348			3,198
Barter transactions		1,394			1,304
Current portion of long term debt		10,287			—
Current liabilities of discontinued operations		292			2,971
Total current liabilities		47,368			16,045
Deferred income taxes		31,762			29,741
Long-term debt		25,000			35,287
Other liabilities		2,269			2,885
Liabilities of discontinued operations		—			1,058
Total liabilities		106,399			85,016
Commitments and contingencies		—			—
Stockholders’ equity:
Common stock		75			74
Additional paid-in capital		62,157			59,557
Retained earnings		143,308			108,733
Treasury stock		(33,985	)		(33,382	)
Total stockholders’ equity		171,555			134,982
	$	277,954		$	219,998

Note: The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Certain prior period amounts have been reclassified to conform to the current year presentation.

See notes to unaudited condensed consolidated financial statements. 

3

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(Unaudited)
	(In thousands, except per share data)
Net operating revenue	$	30,269		$	29,878		$	86,685		$	88,208
Station operating expense		21,755			21,775			64,521			64,757
Corporate general and administrative		3,132			2,728			8,875			8,065
Other operating expense		(127	)		(1,393	)		(69	)		(1,388	)
Operating income from continuing operations		5,509			6,768			13,358			16,774
Interest expense		254			187			691			548
Income from continuing operations before tax		5,255			6,581			12,667			16,226
Income tax expense		2,290			2,678			5,280			6,665
Income from continuing operations, net of tax		2,965			3,903			7,387			9,561
Income from discontinued operations, net of tax (Note 5)		30,451			1,511			32,501			3,688
Net income	$	33,416		$	5,414		$	39,888		$	13,249
Basic Earnings per share:
From continuing operations	$	.50		$	.66		$	1.25		$	1.63
From discontinued operations		5.16			.26			5.51			.63
Basic earnings per share	$	5.66		$	.92		$	6.76		$	2.26
Weighted average common shares		5,807			5,755			5,800			5,753
Diluted Earnings per share:
From continuing operations	$	.50		$	.66		$	1.25		$	1.62
From discontinued operations		5.16			.26			5.51			.63
Diluted earnings per share	$	5.66		$	.92		$	6.76		$	2.25
Weighted average common and common equivalent shares		5,807			5,764			5,804			5,762
Dividends declared per share	$	.30		$	.30		$	.90		$	.80

See notes to unaudited condensed consolidated financial statements.

4

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
	2017			2016
	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Cash provided by operating activities	$	18,677		$	21,020
Cash flows from investing activities:
Acquisition of property and equipment		(4,850	)		(4,149	)
Acquisition of broadcast properties		(25,856	)		(12,733	)
Proceeds from sale of television stations		69,528			—
Proceeds from disposals of fixed assets		417			1,644
Other investing activities		—			11
Net cash provided by (used in) investing activities		39,239			(15,227	)
Cash flows from financing activities:
Cash dividends paid		(3,541	)		(4,688	)
Purchase of treasury shares		(37	)		(5	)
Other financing activities		—			—
Net cash used in financing activities		(3,578	)		(4,693	)
Net increase in cash and cash equivalents		54,338			1,100
Cash and cash equivalents, beginning of period		26,697			21,614
Cash and cash equivalents, end of period	$	81,035		$	22,714

See notes to unaudited condensed consolidated financial statements.

5

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2017 and the results of operations for the three and nine months ended September 30, 2017 and 2016. Results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

We own or operate broadcast properties in 26 markets, including 75 FM and 33 AM radio stations.

On May 9, 2017 the Company entered into an agreement to sell the Joplin, Missouri and Victoria, Texas television stations. The disposition closed on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s continuing operations. As a result of the Company’s television stations sale, the Company only has one reportable segment at September 30, 2017.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. Annual Report on Form 10-K for the year ended December 31, 2016.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2017, for items that should potentially be recognized in these financial statements or discussed within the notes to the financial statements.

6

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

Earnings Per Share Information

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. The Company has participating securities related to restricted stock units, granted under the Company’s Second Amended and Restated 2005 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:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)
Numerator:
Income from continuing operations	$	2,965	$	3,903	$	7,387	$	9,561
Less: Income allocated to unvested participating securities		51		72		126		176
Income from continuing operations available to common stockholders	$	2,914	$	3,831	$	7,261	$	9,385
Income from discontinued operations	$	30,451	$	1,511	$	32,501	$	3,688
Less: Income allocated to unvested participating securities		520		28		556		68
Income from discontinued operations available to common stockholders	$	29,931	$	1,483	$	31,945	$	3,620
Net income available to common stockholders	$	32,845	$	5,314	$	39,206	$	13,005
Denominator:
Denominator for basic earnings per share — weighted average shares		5,807		5,755		5,800		5,753
Effect of dilutive securities:
Common stock equivalents		—		9		4		9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,807		5,764		5,804		5,762
Basic earnings per share:
From continuing operations	$	.50	$	.66	$	1.25	$	1.63
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.66	$	.92	$	6.76	$	2.26
Diluted earnings per share
From continuing operations	$	.50	$	.66	$	1.25	$	1.62
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.66	$	.92	$	6.76	$	2.25

The number of stock options outstanding that had an antidilutive effect on our earnings per share calculation, and therefore have been excluded from diluted earnings per share calculation, was 0 for the three and nine months ended September 30, 2017 and 0 for the three and nine months ended September 30, 2016, respectively. All stock options were exercised during the second quarter of 2017 and there were no stock options outstanding at September 30, 2017.

7

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

Financial Instruments

Our financial instruments are comprised of cash and cash equivalents, 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 euro-dollar rate, prime rate or have been reset at the prevailing market rate at September 30, 2017.

Income Taxes

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.

Time Brokerage Agreements/Local Marketing Agreements

We have entered into Time Brokerage Agreements (“TBA’s”) or Local Marketing Agreements (“LMA’s”) 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 their own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBA’s/LMA’s are included in the accompanying unaudited Condensed Consolidated Statements of Income. At September 30, 2017 we had no TBA’s/LMA’s in place.

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This amendment was adopted on January 1, 2017 on a retrospective basis. As a result we have reclassified approximately $1,022,000 of current deferred tax assets into the noncurrent deferred tax liability line item within the Condensed Consolidated Balance Sheet for the period ended December 31, 2016.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), which includes multiple amendments intended to simplify aspects of share-based payment accounting. Amendments to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeitures will be applied using a modified retrospective transition method through a cumulative-effect adjustment to equity as of the beginning of the period of adoption. Amendments to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement will be applied retrospectively, and amendments requiring the recognition of excess tax benefits and tax deficiencies in the income statement are to be applied prospectively. This amendment was adopted on January 1, 2017 and did not have a material impact on our consolidated financial statements.

8

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

Recent Accounting Pronouncements – Not Yet Adopted

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting)” (“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350)” (“ASU 2017-04”) which removes step 2 from the goodwill impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds it fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 will be applied prospectively and is effective for fiscal years and interim impairment tests performed in periods beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230): Statement of Cash Flows” (“ASU 2016-15”), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU 2016-15 also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”)¸which requires that all leases with a term of more than one year, covering leased assets such as real estate, broadcasting towers and equipment, be reflected on the balance sheet as assets and liabilities for the rights and obligations created by these leases. ASU 2016-02 is effective for fiscal years fiscal years and interim periods beginning after December 15, 2018. While the Company is currently reviewing the effects of this guidance, the Company believes that this would result in an increase in the assets and liabilities reflected on the Company’s consolidated balance sheets. We are still evaluating the impact on our consolidated statements of operations.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under GAAP. The FASB has also issued a number of updates to this standard. This standard is effective for the fiscal and interim periods beginning January 1, 2018. The Company has completed our preliminary analysis of the standard, our evaluation of contracts and the potential impact of this standard on our consolidated financial statements. Based on our preliminary assessment, which is subject to change, the impact of this guidance should not be material to the Company’s financial position, results of operations or cash flows. We plan to adopt the new guidance using the modified retrospective method. 

9

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

3. Intangible Assets

We evaluate our FCC licenses and goodwill for impairment annually as of October 1^st or more frequently if events or circumstances indicate that the asset might be impaired. FCC licenses are evaluated for impairment at the market level using a direct method. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value.

Intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the lives of the leases ranging from four to twenty-six years. Other intangibles are amortized over one to fifteen years.

4. Common Stock and Treasury Stock

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2017:

	Common Stock Issued
	Class A			Class B
	(Shares in thousands)
Balance, January 1, 2016		6,603			865
Conversion of shares		12			(12	)
Issuance of restricted stock		23			25
Balance, December 31, 2016		6,638			878
Exercise of stock options		21			8
Conversion of shares		4			(4	)
Forfeiture of restricted stock		(1	)		—
Balance, September 30, 2017		6,662			882

We have a Stock Buy-Back Program to allow us to purchase up to $75.8 million of our Class A Common Stock. As of September 30, 2017, we have remaining authorization of $23.3 million for future repurchases of our Class A Common Stock. On September 14, 2017, the Board of Directors authorized the repurchase of its Class A Common Stock under its trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1. The Rule 10b5-1 repurchase plan allows the Company to repurchase its shares during periods when it would normally not be active in the market due to its internal trading blackout periods.  Under the plan, the Company may repurchase its Class A Common Stock in any combination of open market, block transactions and privately negotiated transactions subject to market conditions, legal requirements including applicable SEC regulations (which include certain price, market, volume and timing constraints), specific repurchase instructions and other corporate considerations.  Purchases under the plan will be funded by cash on the Company's balance sheet.  The plan does not obligate Saga to acquire any particular amount of Class A Common Stock.  The authorization is effective until September 1, 2018, but may be suspended, extended or amended at any time at the Company's discretion.

10

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

5. Discontinued Operations

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations (“Television Sale”) for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand. The Company recognized a pretax gain of $50.8 million as a result of the Television Sale in the third quarter of 2017. The gain net of tax for the Television Sale was $29.9 million. Effective September 1, 2017, the Company used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina, which included the purchase price of $23 million, the purchase of $1.3 million in accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000 (as described in Note 6). On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000 respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 8).

In accordance with authoritative guidance we have reported the results of operations of the Joplin, Missouri and Victoria, Texas television stations as discontinued operations in the accompanying consolidated financial statements. For all previously reported periods, certain amounts in the consolidated financial statements have been reclassified. All of the assets and liabilities of the Joplin, Missouri and Victoria, Texas television stations have been classified as discontinued operations and the net results of operations have been reclassified from continuing operations to discontinued operations. These were previously included in the Company’s television segment.  

The following table shows the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017 (4)		2016		2017 (4)		2016
Net operating revenue	$	3,296	$	6,241	$	14,238	$	17,094
Station operating expense (1)		2,372		3,684		9,727		10,807
Other operating (income) expense		—		—		31		3
Operating income		924		2,557		4,480		6,284
Interest Expense (2)		5		9		21		26
Income before income taxes		919		2,548		4,459		6,258
Pretax gain on the disposal of discontinued operations		50,842		—		50,842		—
Total pretax gain on discontinued operations		51,761		2,548		55,301		6,258
Income tax expense (3)		21,310		1,037		22,800		2,570
Income from discontinued operations, net of tax	$	30,451	$	1,511	$	32,501	$	3,688

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.

⁽²⁾ Interest expense related to Surtsey Media, LLC debt that is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

⁽³⁾ The effective tax rates on pretax income from discontinued operations were 41%.

⁽⁴⁾ Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

11

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

The following table is a summary of the assets and liabilities of discontinued operations (in thousands):

	September 30, 2017			December 31, 2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable	$	—		$	3,868
Prepaid expenses and other current assets		—			625
Barter transactions		—			132
Total of current assets of discontinued operations	$	—		$	4,625
Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net (1)	$	—		$	7,388
Broadcast licenses, net (1)		—			9,607
Other intangibles, deferred costs and investments, net (1)		—			1,053
Total of non-current assets of discontinued operations	$	—		$	18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	—		$	22,673
Major Classes of Current Liabilities of Discontinued Operations
Accounts payable	$	84		$	759
Barter transactions		—			163
Current portion of long term debt		—			1,078
Other liabilities (1)		208			971
Total of current liabilities of discontinued operations	$	292		$	2,971
Major Classes of Current Liabilities of Discontinued Operations
Other liabilities (1)	$	—		$	1,058
Total of non-current liabilities of discontinued operations	$	—		$	1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	292		$	4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	(292	)	$	18,644

(1) For prior periods, the current and long-term classification of assets and liabilities does not change as they did not meet the held-for-sale criteria the prior periods. We closed the disposition on September 1, 2017, therefore all amounts in the current year are considered current assets or liabilities of discontinued operations.

12

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

The following table represents the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

	September 30, 2017		September 30,  2016
Significant operating non-cash items
Depreciation and amortization (1)	$	445	$	1,023
Broadcast program rights amortization		418		467
Barter revenue, net		18		58
Loss on sale of assets		31		3
Significant investing items
Acquisition of property and equipment	$	125	$	717
Proceeds from sale and disposal of assets		—		13
Net proceeds from sale of television stations (2)		69,528		—

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

⁽²⁾ Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

6. Acquisitions and Dispositions

We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill. The Company accounts for acquisition under the provisions of FASB ASC Topic 805, Business Combinations.

Management assigned fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach.

2017 Acquisitions and Disposals

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

On May 9, 2017, the Company entered into an Asset Purchase Agreement with Apex Media Corporation and Pearce Development, LLC f/k/a Apex Real Property, LLC, both Companies of which a member of our Board of directors, G. Dean Pearce, is President of, to purchase radio stations principally serving the South Carolina area for approximately $23 million (subject to certain purchase price adjustments) plus the right to air certain radio commercials, substantially all the assets related to the operation of the following radio stations: WCKN(FM), WMXF(FM), WXST(FM), WAVF(FM), WSPO(AM), W261DG, W257BQ, WVSC(FM), WLHH(FM), WOEZ(FM), W256CB, W293BZ. The Company closed this transaction effective September 1, 2017, simultaneously with the closing of the Television Sale using funds generated from the Television Sale for $24.2 million, which included the purchase price of $23 million, and the purchase of $1.3 million in related accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Charleston, South Carolina and Hilton Head, South Carolina market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

13

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

On January 16, 2017, we entered into an asset purchase agreement to purchase an FM radio station (WCVL) from WUVA, Incorporated, serving the Charlottesville, Virginia market for approximately $1,658,000, which included $8,000 in transactional costs. Simultaneously, we entered into a TBA to begin operating the station on February 1, 2017. We completed this acquisition on April 18, 2017. This acquisition was financed through funds generated from operations. Unaudited proforma results of operations for this acquisition are not required, as such information is not material to our financial statements and therefore is not presented in the pro forma tables in the following pages.

2016 Acquisitions

On November 2, 2015, we entered into an agreement to acquire an FM radio station (WLVQ) from Wilks Broadcast - Columbus, LLC, serving the Columbus, Ohio market for approximately $13,791,000, which included $734,000 in accounts receivable and $57,000 in transactional costs. We completed this acquisition on February 3, 2016. We operated this station under an LMA from November 16, 2015 through our completion of the acquisition. This acquisition was financed through funds generated from operations. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Columbus, Ohio market as well as the synergies and growth opportunities expected through the combination with the Company’s existing stations.

On March 16, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $50,000. 

On March 25, 2016 we acquired an FM translator serving the Milwaukee, Wisconsin market for approximately $50,000. 

On April 8, 2016 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $100,000.

On April 11, 2016 we acquired an FM translator serving the Clarksville, Tennessee market for approximately $30,000.

On June 3, 2016 we acquired an FM translator serving the Spencer, Iowa market for approximately $35,000.

On August 11, 2016 we acquired two FM translators serving the Bellingham, Washington market for approximately $50,000.

On September 12, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $45,000.

On October 11, 2016 we acquired a FM Translator serving the Bellingham, Washington market for approximately $25,000.

On November 8, 2016 we acquired a FM Translator serving the Des Moines, Iowa market for approximately $25,000.

On November 14, 2016 we acquired a FM Translator serving the Springfield, Illinois market for approximately $23,000.

On December 2, 2016 we acquired a FM Translator serving the Ithaca, New York market for approximately $35,000.

14

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

Condensed Consolidated Balance Sheet of 2017 and 2016 Acquisitions:

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2017 and 2016 acquisitions at their respective acquisition dates. The allocation of the purchase price for the 2017 and 2016 acquisitions is preliminary at September 30, 2017.

Saga Communications, Inc.  

Condensed Consolidated Balance Sheet of 2017 and 2016 Acquisitions

	Acquisitions in
	2017		2016
	(In thousands)
Assets Acquired:
Current assets	$	1,440	$	814
Property and equipment		6,678		375
Other assets:
Broadcast licenses		8,086		8,123
Goodwill		8,011		4,533
Other intangibles, deferred costs and investments		2,019		398
Total other assets		18,116		13,054
Total assets acquired		26,234		14,243
Liabilities Assumed:
Current liabilities		378		41
Total liabilities assumed		378		41
Net assets acquired	$	25,856	$	14,202

15

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

Pro Forma Results of Operations for Acquisitions (Unaudited)

The following unaudited pro forma results of our operations for the three and nine months ended September 30, 2017 and 2016 assume the 2017 and 2016 acquisitions occurred as of January 1, 2016. The translators are start-up stations and therefore, have no pro forma revenue and expenses. The pro forma results give effect to certain adjustments, including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2017			2016			2017			2016
ProForma Results of Operation
Net operating revenue	$	31,546		$	31,888		$	92,187		$	93,993
Station operating expense		23,000			23,478			69,325			69,874
Corporate general and administrative		3,132			2,728			8,875			8,065
Other operating (income) expense, net		(127	)		(1,393	)		(69	)		(1,388	)
Operating income		5,541			7,075			14,056			17,442
Interest expense		254			187			691			548
Income from continuing operations, before tax		5,287			6,888			13,365			16,894
Income tax expense		2,430			2,804			5,566			6,939
Income from continuing operations, net of tax		2,857			4,084			7,799			9,955
Income from discontinued operations, net of tax		30,451			1,511			32,501			3,688
Net income	$	33,308		$	5,595		$	40,300		$	13,643
Basic earnings per share:
From continuing operations	$	.47		$	.70		$	1.32		$	1.70
From discontinued operations		5.16			.26			5.51			.63
Basic earnings per share	$	5.63		$	.96		$	6.83		$	2.33
Diluted earnings per share:
From continuing operations	$	.47		$	.70		$	1.32		$	1.70
From discontinued operations		5.16			.26			5.51			.63
Diluted earnings per share	$	5.63		$	.96		$	6.83		$	2.33

16

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

7. Stock-Based Compensation

2005 Incentive Compensation Plan

On October 16, 2013 our stockholders approved the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan (the “Second Restated 2005 Plan”). The 2005 Incentive Compensation Plan was first approved by stockholders in 2005 and replaced our 2003 Stock Option Plan (the “2003 Plan”). The 2005 Incentive Compensation Plan was re-approved by stockholders in 2010. The changes made in the Second Restated 2005 Plan (i) increases the number of authorized shares by 233,334 shares of Common Stock, (ii) extends the date for making awards to September 6, 2018, (iii) includes directors as participants, (iv) targets awards according to groupings of participants based on ranges of base salary of employees and/or retainers of directors, (v) requires participants to retain 50% of their net annual restricted stock awards during their employment or service as a director, and (vi) includes a clawback provision. The Second Restated 2005 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors.

The number of shares of Common Stock that may be issued under the Second Restated 2005 Plan may not exceed 280,000 shares of Class B Common Stock, 900,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock may be issued pursuant to incentive stock options and 280,000 Class A Common Stock issuable upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock may be granted to any employee or director under the Second Restated 2005 Plan. However, awards denominated in Class B Common Stock may only be granted to Edward K. Christian, President, Chief Executive Officer, Chairman of the Board of Directors, and the holder of 100% of the outstanding Class B Common Stock of the Company. Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten years from the date of grant and may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant.

Stock-Based Compensation

All stock options granted were fully vested and expensed at December 31, 2012, therefore there was no compensation expense related to stock options for the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, respectively.

The following summarizes the stock option transactions for the Second Restated 2005 Plan and 2003 Plan for the nine months ended September 30, 2017:

						Weighted Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual Term		Intrinsic
	Options			Exercise Price		(Years)		Value
Outstanding at January 1, 2017		29,035		$	28.47		0.4	$	633,834
Exercised		(29,035	)		28.47
Outstanding at September 30, 2017		—		$	—		—	$	—
Exercisable at September 30, 2017		—		$	—		—	$	—

17

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

The following summarizes the restricted stock transactions for the nine months ended September 30, 2017:

				Weighted Average
				Grant Date Fair
	Shares			Value
Outstanding at January 1, 2017		103,262		$	43.73
Vested		(3,434	)		43.10
Forfeited		(594	)		45.39
Non-vested and outstanding at September 30, 2017		99,234		$	43.75

For the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, we had $629,000, $1,761,000, $536,000 and $1,594,000, respectively, of total compensation expense related to restricted stock-based compensation arrangements. This expense is included in corporate general and administrative expenses in our results of operations. The associated tax benefit recognized for the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, was $252,000, $704,000, $214,000 and $638,000, respectively.

8. Long-Term Debt

Long-term debt consisted of the following:

	September 30,		December 31,
	2017		2016
	(In thousands)
Revolving credit facility	$	35,287	$	35,287
Secured debt of affiliate		—		1,078
		35,287		36,365
Amounts payable within one year		10,287		—
	$	25,000	$	36,365

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P. Morgan Securities LLC. In connection with the execution of the Credit Facility, the credit agreement in place at June 30, 2015 (the “Old Credit Agreement”) was terminated, and all outstanding amounts were paid in full. The Credit Facility consists of a $100 million five-year revolving facility (the “Revolving Credit Facility”) and matures on August 18, 2020.

We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.

Approximately $266,000 of transaction fees related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. Those deferred debt costs are included in other assets, net in the condensed consolidated balance sheets.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR (1.25% at September 30, 2017), plus 1% to 2% or the base rate plus 0% to 1%. The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25% per annum payable to the issuing bank. We also pay quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the Revolving Credit Facility.

18

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS — (Continued)

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 2017) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We had approximately $65 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2017.

On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility. Those amounts were classified as current portion of long term debt at September 30, 2017.

The loan agreement of approximately $1.1 million of secured debt of affiliate was amended in April, 2017 to extend the due date of the loan for three years to mature on May 1, 2020. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

9. Litigation

The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements.

10. Dividends

On September 13, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, which is recorded within Other accrued expenses as of September 30, 2017 was paid on October 13, 2017 to shareholders of record on September 25, 2017.

On May 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on June 9, 2017 to shareholders of record on May 22, 2017.

On March 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, was paid on April 14, 2017 to shareholders of record on March 28, 2017.

On November 21, 2016 the Company’s Board of Directors declared a quarterly cash dividend of $0.30 per share and a special cash dividend of $0.20 per share on its Classes A and B shares. This dividend totaling $2.9 million was paid on December 23, 2016 to shareholders of record on December 5, 2016.

On August 30, 2016, the Company’s Board of Directors declared a regular cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on September 30, 2016 to shareholders of record on September 14, 2016.

On June 1, 2016, the Company’s Board of Directors declared a regular cash dividend of $0.25 per share on its Classes A and B Common Stock. This dividend, totaling $1.5 million, was paid on July 8, 2016 to shareholders of record on June 15, 2016.

On March 2, 2016, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.25 per share on its Classes A and B Common Stock. This dividend, totaling $1.5 million, was paid on April 15, 2016 to shareholders of record on March 28, 2016.

19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto of Saga Communications, Inc. and its subsidiaries contained elsewhere herein and the audited financial statements and Management Discussion and Analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2016. The following discussion is presented on a consolidated basis. On May 9, 2017 the Company entered into an agreement to sell its Joplin, Missouri and Victoria, Texas television stations and subsequently closed on this transaction on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). As a result of the Company’s television stations being reported as discontinued operations the Company only has one reportable segment at September 30, 2017. Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s continuing operations.

We use certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) to assess our financial performance. For example, we evaluate the performance of our markets based on “station operating income” (operating income plus corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets). Station operating income is generally recognized by the broadcasting industry as a measure of performance, is used by analysts who report on the performance of the broadcasting industry and it serves as an indicator of the market value of a group of stations. In addition, we use it to evaluate individual stations, market-level performance, overall operations and as a primary measure for incentive based compensation of executives and other members of management. Station operating income is not necessarily indicative of amounts that may be available to us for debt service requirements, other commitments, reinvestment or other discretionary uses. Station operating income is not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to, and not a substitute for our results of operations presented on a GAAP basis.

General

We are a broadcast company primarily engaged in acquiring, developing and operating broadcast properties. We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. We review acquisition opportunities on an ongoing basis. For additional information with respect to acquisitions, see “Liquidity and Capital Resources” below. We own or operate broadcast properties in 26 markets, including 75 FM and 33 AM radio stations.

Continuing Operations - Radio Stations

Our radio station’s primary source of revenue is from the sale of advertising for broadcast on our stations. Depending on the format of a particular radio station, there are a predetermined number of advertisements available to be broadcast each hour. We have twenty-six radio station markets, which include all 108 of our radio stations. The discussion of our operating performance focuses on operating income because we manage our stations primarily on operating income. Operating performance is evaluated for each individual market.

Most advertising contracts are short-term and generally run for a few weeks only. The majority of our revenue is generated from local advertising, which is sold primarily by each radio markets’ sales staff. For the nine months ended September 30, 2017 and 2016, approximately 89% and 89%, respectively, of our radio segment’s gross revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representative firms that specialize in national sales for each of our broadcast markets.

Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year. We expect a decrease in political advertising for 2017 due to the decreased number of national, state and local elections in most of our markets as compared to prior year. 

Our net operating revenue, station operating expense and operating income varies from market to market based upon the market’s rank or size which is based upon population and the available radio advertising revenue in that particular market.

The broadcasting industry, and advertising in general, are influenced by the state of the overall economy, including unemployment rates, inflation, energy prices and consumer interest rates. Our stations primarily broadcast in small to midsize markets. Historically, these markets have been more stable than major metropolitan markets during downturns in advertising spending, but may not experience increases in such spending as significant as those in major metropolitan markets in periods of economic improvement.

20

Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers. In a number of our markets this is measured by periodic reports generated by independent national rating services. In the remainder of our markets it is measured by the results advertisers obtain through the actual running of an advertising schedule. Advertisers measure these results based on increased demand for their goods or services and/or actual revenues generated from such demand. Various factors affect the rate a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming, local market competition, target marketing capability of radio compared to other advertising media and signal strength.

When we acquire and/or begin to operate a station or group of stations we generally increase programming and advertising and promotion expenses to increase our share of our target demographic audience. Our strategy sometimes requires levels of spending commensurate with the revenue levels we plan on achieving in two to five years. During periods of economic downturns, or when the level of advertising spending is flat or down across the industry, this strategy may result in the appearance that our cost of operations are increasing at a faster rate than our growth in revenues, until such time as we achieve our targeted levels of revenue for the acquired station or group of stations.

The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings) is limited in part by the format of a particular radio station. Our stations strive to maximize revenue by constantly managing the number of commercials available for sale and adjusting prices based upon local market conditions and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of inventory sell out ratios and pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.

Our radio stations employ a variety of programming formats. We periodically perform market research, including music evaluations, focus groups and strategic vulnerability studies. Because reaching a large and demographically attractive audience is crucial to a station’s financial success, we endeavor to develop strong listener loyalty. Our stations also employ audience promotions to further develop and secure a loyal following. We believe that the diversification of formats on our radio stations helps to insulate us from the effects of changes in musical tastes of the public on any particular format.

The primary operating expenses involved in owning and operating radio stations are employee salaries, sales commissions, programming expenses, depreciation, and advertising and promotion expenses.

The radio broadcasting industry is subject to rapid technological change, evolving industry standards and the emergence of new media technologies and services. These new technologies and media are gaining advertising share against radio and other traditional media.

We are continuing to expand our digital initiative to provide a seamless experience across numerous platforms to allow our listeners and viewers to connect with our products where and when they want. We continue to create opportunities through targeted digital advertising and an array of digital services that include online promotions, mobile messaging, and email marketing.

In addition, we continue the rollout of HD radio™. HD radio™ utilizes digital technology that provides improved sound quality over standard analog broadcasts and also allows for the delivery of additional channels of diversified programming or data streaming in each radio market.

21

During the nine months ended September 30, 2017 and 2016 and the years ended December 31, 2016 and 2015, our Columbus, Ohio; Des Moines, Iowa; Manchester, New Hampshire; Milwaukee, Wisconsin; and Norfolk, Virginia markets, when combined, represented approximately 43%, 43%, 43% and 41%, respectively, of our consolidated net operating revenue. An adverse change in any of these radio markets or our relative market position in those markets could have a significant impact on our operating results as a whole.

The following tables describe the percentage of our consolidated net operating revenue represented by each of these markets:

	Percentage of Consolidated						Percentage of Consolidated
	Net Operating Revenue for						Net Operating Revenue
	the Nine Months Ended						for the Years Ended
	September 30,						December 31,
	2017			2016			2016			2015
Market:
Columbus, Ohio		12	%		12	%		12	%		9	%
Des Moines, Iowa		8	%		8	%		8	%		8	%
Manchester, New Hampshire		5	%		6	%		6	%		6	%
Milwaukee, Wisconsin		12	%		12	%		12	%		12	%
Norfolk, Virginia		6	%		5	%		5	%		6	%

During the nine months ended September 30, 2017 and 2016 and the years ended December 31, 2016 and 2015, the radio stations in our five largest markets when combined, represented approximately 48%, 48%, 49% and 44%, respectively, of our consolidated station operating income. The following tables describe the percentage of our consolidated station operating income represented by each of these markets:

	Percentage of Consolidated						Percentage of Consolidated
	Station Operating Income (*)						Station Operating Income (*)
	for the Nine Months Ended						for the Years Ended
	September 30,						December 31,
	2017			2016			2016			2015
Market:
Columbus, Ohio		15	%		15	%		15	%		10	%
Des Moines, Iowa		7	%		7	%		7	%		8	%
Manchester, New Hampshire		6	%		8	%		9	%		8	%
Milwaukee, Wisconsin		14	%		14	%		14	%		13	%
Norfolk, Virginia		6	%		4	%		4	%		5	%

* Operating income plus corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets.

22

Discontinued Operations - Television Stations

Our television station’s primary source of revenue is from the sale of advertising for broadcast on our stations. The number of advertisements available for broadcast on our television stations is limited by network affiliation and syndicated programming agreements and, with respect to children’s programs, federal regulation. Our television stations’ local market managers determine the number of advertisements to be broadcast in locally produced programs only, which are primarily news programming and occasionally local sports or information shows.

Our net operating revenue, station operating expense and operating income vary from market to market based upon the market’s rank or size, which is based upon population, available television advertising revenue in that particular market, and the popularity of programming being broadcast.

Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by periodic reports by independent national rating services. Various factors affect the rate a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming through locally produced news, sports and weather and as a result of syndication and network affiliation agreements, local market competition, the ability of television broadcasting to reach a mass appeal market compared to other advertising media, and signal strength including cable/satellite coverage, and government regulation and policies.

Our stations strive to maximize revenue by constantly adjusting prices for our commercial spots based upon local market conditions, advertising demands and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.

Because audience ratings in the local market are crucial to a station’s financial success, we endeavor to develop strong viewer loyalty by providing locally produced news, weather and sports programming. We believe that this emphasis on the local market provides us with the viewer loyalty we are trying to achieve.

Most of our revenue is generated from local advertising, which is sold primarily by each television markets’ sales staff. For the eight months ended August 31, 2017 and the nine months ended September 30, 2016, approximately 83% and 85%, respectively, of our television segment’s gross revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representatives that specialize in national sales for each of our television markets.

Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year. We had a decrease in political advertising for 2017 due to the decreased number of national, state and local elections in most of our markets as compared to prior year. 

The primary operating expenses involved in owning and operating television stations are employee salaries, sales commissions, programming expenses, including news production and the cost of acquiring certain syndicated programming, depreciation and advertising and promotion expenses.

23

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

Results of Operations

The following tables summarize our results of operations for the three months ended September 30, 2017 and 2016.

Consolidated Results of Operations

	Three Months Ended
	September 30,						$ Increase			% Increase
	2017			2016			(Decrease)			(Decrease)
	(In thousands, except percentages and per share information)
Net operating revenue	$	30,269		$	29,878		$	391			1.3	%
Station operating expense		21,755			21,775			(20	)		(0.1	)%
Corporate general and administrative		3,132			2,728			404			14.8	%
Other operating expense		(127	)		(1,393	)		1,266			N/M
Operating income from continuing operations		5,509			6,768			(1,259	)		(18.6	)%
Interest expense		254			187			67			35.8	%
Income from continuing operations before taxes		5,255			6,581			(1,326	)		(20.1	)%
Income tax expense		2,290			2,678			(388	)		(14.5	)%
Income from continuing operations, net of tax		2,965			3,903			(938	)		(24.0	)%
Income from discontinued operations, net of tax		30,451			1,511			28,940			N/M
Net income	$	33,416		$	5,414		$	28,002			N/M
Earnings per share:
From continuing operations	$	.50		$	.66		$	(.16	)		(24.2	)%
From discontinued operations		5.16			.26			4.90			N/M
Earnings per share (diluted)	$	5.66		$	.92		$	4.74			N/M

Results of Discontinued Operations

	Three Months Ended
	September 30,				$ Increase			% Increase
	2017 (1)		2016		(Decrease)			(Decrease)
	(In thousands, except percentages)
Net operating revenue	$	3,296	$	6,241	$	(2,945	)		(47.2	)%
Station operating expense		2,372		3,684		(1,312	)		(35.6	)%
Operating income from discontinued operations		924		2,557		(1,633	)		(63.9	)%
Interest expense		5		9		(4	)		(44.4	)%
Income before income taxes from discontinued operations		919		2,548		(1,629	)		(63.9	)%
Pretax gain on the disposal of discontinued operations		50,842		—		50,842			N/M
Total pretax gain on discontinued operations		51,761		2,548		49,213			N/M
Income tax expense		21,310		1,037		20,273			N/M
Income from discontinued operations	$	30,451	$	1,511	$	28,940			N/M

(1) Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

N/M =      Not Meaningful 

24

For the three months ended September 30, 2017, consolidated net operating revenue was $30,269,000 compared with $29,878,000 for the three months ended September 30, 2016, an increase of $391,000 or 1.3%. We had an increase of approximately $717,000 that was attributable to stations that we did not own or operate for the entire comparable period, partially offset by a decrease of $326,000 generated by stations we owned or operated for the comparable period in 2016 (“same station”). The decrease in same station revenue was primarily the result of decreases in gross local revenue of $311,000, gross political revenue of $197,000 partially offset by a decrease in agency commissions of approximately $123,000 from the third quarter of 2016. The decrease in gross local revenue was due to decreases in our Bellingham, Washington and Springfield, Illinois markets. The decrease in gross political revenue was due to a lower number of national, state and local elections in most of our markets. The decrease in agency commissions is due to lower gross local agency and political revenue.

Station operating expense was $21,755,000 for the three months ended September 30, 2017, compared with $21,775,000 for the three months ended September 30, 2016, a decrease of $20,000 or 0.1%. We had an increase of approximately $581,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of approximately $601,000 generated by stations we owned or operated for the comparable period in 2016. The decrease is primarily attributable to a decrease of $203,000 in compensation costs, a decrease of $191,000 in licensing agreements and a decrease in music licensing fees of $128,000 due to a credit received in the 3^rd quarter of 2017 resulting from SESAC arbitration partially offset by an increase in other music licensing fees.

Operating income for the three months ended September 30, 2017 was $5,509,000 compared to $6,768,000 for the three months ended September 30, 2016, a decrease of $1,259,000 or 18.6%. The decrease was a result of the increase in net operating revenue partially offset by a decrease in station operating expense, described above, an increase in our corporate general and administrative expenses of $404,000 or 14.8%, and a decrease in other operating income of $1,266,000 from the third quarter of 2016. The increase in corporate expenses is due to an increase in key man life insurance of $103,000, an increase in non-cash compensation related to the amortization of restricted stock grants of $93,000, an increase of $80,000 in legal and other fees due to the Charleston/Hilton Head South Carolina acquisition, an increase of $42,000 in compensation costs, an increase in transportation costs of $35,000 and an increase in healthcare costs of $24,000. In 2016, we had other operating income of $1,393,000 due to the gain of $1,415,000 received from the sale of a tower in Norfolk, Virginia.

Income from continuing operations, net of tax for the three months ended September 30, 2017 was $2,965,000 compared to $3,903,000 for the three months ended September 30, 2016, a decrease of $938,000 or 24.0%. The decrease in income from continuing operations, net of tax is due to the decrease of operating income, described above, an increase in interest expense of $67,000 due to an increase in our interest rates partially offset by a decrease in income taxes of $388,000.

Income from discontinued operations, net of tax for the two months ended August 31, 2017 was $30,451,000 compared to $1,511,000 for the three months ended September 30, 2016 an increase of $28,940,000. The increase was a direct result of the pretax gain on the disposal of the Television stations of $50,842,000, a decrease in station operating expense of $1,312,000 or 35.6%, partially offset by a decrease in net operating revenue of $2,945,000 or $47.2% and an increase in income tax related to the gain on the sale of $20,273,000. For the two months ended August 31, 2017, net operating revenue of our television stations was $3,296,000 compared with $6,241,000 for the three months ended September 30, 2016, a decrease of $2,945,000 or 47.2% primarily due to only operating the television stations for two months in 2017 and a decrease in gross political revenue in our Joplin, Missouri market. Station operating expense of the television stations for the two months ended August 31, 2017 was $2,372,000, compared with $3,684,000 for the three months ended September 30, 2016, a decrease of $1,312,000 or 35.6%. The decrease is primarily due to only operating the television stations for two months in 2017 compared to the whole quarter in 2016.

We generated net income of $33,416,000 ($5.66 per share on a fully diluted basis) during the three months ended September 30, 2017, compared to $5,414,000 ($.92 per share on a fully diluted basis) for the three months ended September 30, 2016, an increase of $28,002,000. This is a direct result of the increase of $28,940,000 from discontinued operations partially offset by a decrease in income from continuing operations of $938,000. 

25

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Results of Operations

The following tables summarize our results of operations for the nine months ended September 30, 2017 and 2016.

Consolidated Results of Operations

	Nine Months Ended
	September 30,						$ Increase			% Increase
	2017			2016			(Decrease)			(Decrease)
	(In thousands, except percentages and per share information)
Net operating revenue	$	86,685		$	88,208		$	(1,523	)		(1.7	)%
Station operating expense		64,521			64,757			(236	)		(0.4	)%
Corporate general and administrative		8,875			8,065			810			10.0	%
Other operating expense		(69	)		(1,388	)		1,319			N/M
Operating income		13,358			16,774			(3,416	)		(20.4	)%
Interest expense		691			548			143			26.1	%
Income from continuing operations before taxes		12,667			16,226			(3,559	)		(21.9	)%
Income tax expense		5,280			6,665			(1,385	)		(20.8	)%
Income from continuing operations, net of tax		7,387			9,561			(2,174	)		(22.7	)%
Income from discontinued operations, net of tax		32,501			3,688			28,813			N/M
Net income	$	39,888		$	13,249		$	26,639			N/M
Earnings per share:
From continuing operations	$	1.25		$	1.62		$	(.37	)		(22.8	)%
From discontinued operations		5.51			.63			4.88			N/M
Earnings per share (diluted)	$	6.76		$	2.25		$	4.50			N/M

Results of Discontinued Operations

	Nine Months Ended
	September 30,				$ Increase			% Increase
	2017 (1)		2016		(Decrease)			(Decrease)
	(In thousands, except percentages)
Net operating revenue	$	14,238	$	17,094	$	(2,856	)		(16.7	)%
Station operating expense		9,727		10,807		(1,080	)		(10.0	)%
Other operating		31		3		28			N/M
Operating income from discontinued operations		4,480		6,284		(1,804	)		(28.7	)%
Interest expense		21		26		(5	)		(19.2	)%
Income before income taxes from discontinued operations		4,459		6,258		(1,799	)		(28.7	)%
Pretax gain on the disposal of discontinued operations		50,842		—		50,842			N/M
Total pretax gain on discontinued operations		55,301		6,258		49,043			N/M
Income tax expense		22,800		2,570		20,230			N/M
Income from discontinued operations	$	32,501	$	3,688	$	28,813			N/M

(1) Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

N/M =        Not Meaningful

26

For the nine months ended September 30, 2017, consolidated net operating revenue was $86,685,000 compared with $88,208,000 for the nine months ended September 30, 2016, a decrease of $1,523,000 or 1.7%. We had an increase of approximately $874,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of approximately $2,397,000 generated by stations we owned or operated for the comparable period in 2016 (“same station”). On a same station basis gross political revenue, gross local revenue and gross national revenue decreased $1,289,000, $1,097,000 and $505,000 respectively from 2016. These decreases were partially offset by a decrease in agency commissions of $470,000. The decrease in gross political revenue was due to the decreased number of national, state and local elections in most of our markets as compared to prior year. The decrease in gross local revenue was due to decreases in our Bellingham, Washington; Charlottesville, Virginia; Columbus, Ohio; Ithaca, New York; Springfield, Illinois and Springfield, Massachusetts markets. The decrease in gross national revenue is due to decreases in our Champaign, Illinois and Yankton, South Dakota markets. The decrease in agency commissions is due to lower local agency, national and political revenues.

Station operating expense was $64,521,000 for the nine months ended September 30, 2017, compared with $64,757,000 for the nine months ended September 30, 2016, a decrease of $236,000 or 0.4%. We had an increase of approximately $696,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of approximately $932,000 generated by stations we owned or operated for the comparable period in 2016. The decrease is primarily attributable to a $568,000 decrease in licensing agreements, a $206,000 decrease in sales commission expense and a decrease in compensation costs of $138,000.

Operating income for the nine months ended September 30, 2017 was $13,358,000 compared to $16,774,000 for the nine months ended September 30, 2016, a decrease of $3,416,000 or 20.4%. The decrease was a result of the decrease in net operating revenue partially offset by a decrease in station operating expense, described above, an increase in our corporate general and administrative expenses of $810,000 or 10.0%, and a decrease in other operating income of $1,319,000 from 2016. The increase in corporate expenses is due to an increase in key man life insurance of $286,000, an increase in non-cash compensation related to the amortization of restricted stock grants of $167,000, an increase in transportation costs of $110,000, and increase in compensation costs of $91,000, an increase in legal expenses of $87,000 and an increase of $50,000 in healthcare costs. In 2016, we had other operating income of $1,393,000 due to the gain of $1,415,000 received from the sale of a tower in Norfolk, Virginia.

Income from continuing operations, net of tax for the nine months ended September 30, 2017 was $12,667,000 compared to $16,226,000 for the nine months ended September 30, 2016, a decrease of $3,559,000 or 21.9%. The decrease in income from continuing operations, net of tax is due to the decrease of operating income, described above, an increase in interest expense of $143,000 due to an increase in our interest rates partially offset by a decrease in income taxes of $1,385,000.

Income from discontinued operations, net of tax for the eight months ended August 31, 2017 was $32,501,000 compared to $3,688,000 for the nine months ended September 30, 2016 an increase of $28,813,000. The increase was a direct result of the pretax gain on the disposal of the Television stations of $50,842,000, a decrease in station operating expense of $1,080,000 or 10%, partially offset by a decrease in net operating revenue of $2,856,000 or $16.7% and an increase in income tax related to the gain on the sale of $20,230,000. For the eight months ended August 31, 2017, net operating revenue of our television stations was $14,238,000 compared with $17,094,000 for the nine months ended September 30, 2016, a decrease of $2,856,000 or 16.7% primarily due to only operating the television stations for eight months in 2017 and a decrease in gross political revenue in our Joplin, Missouri market. Station operating expense of the television stations for the eight months ended August 31, 2017 was $9,727,000, compared with $10,807,000 for the nine months ended September 30, 2016, a decrease of $1,080,000 or 10%. The decrease is primarily due to only operating the television stations for eight months in 2017 compared to the nine months in 2016.

We generated net income of $39,888,000 ($6.76 per share on a fully diluted basis) during the nine months ended September 30, 2017, compared to $13,249,000 ($2.25 per share on a fully diluted basis) for the nine months ended September 30, 2016, an increase of $26,639,000. This is a direct result of the increase in income from discontinued operations of $28,813,000 partially offset by a decrease in income from continuing operations of $2,174,000.

27

Forward-Looking Statements

Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as “believes,” “anticipates,” “estimates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. These statements are made as of the date of this report or as otherwise indicated, based on current expectations. We undertake no obligation to update this information. A number of important factors could cause our actual results for 2017 and beyond to differ materially from those expressed in any forward-looking statements made by or on our behalf. Forward-looking statements are not guarantees of future performance as they involve a number of risks, uncertainties and assumptions that may prove to be incorrect and that may cause our actual results and experiences to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks, uncertainties and assumptions that may affect our performance include our financial leverage and debt service requirements, dependence on key personnel, dependence on key stations, U.S. and local economic conditions, our ability to successfully integrate acquired stations, regulatory requirements, new technologies, natural disasters and terrorist attacks. We cannot be sure that we will be able to anticipate or respond timely to changes in any of these factors, which could adversely affect the operating results in one or more fiscal quarters. Results of operations in any past period should not be considered, in and of itself, indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of our stock.

For a more complete description of the prominent risks and uncertainties inherent in our business, see Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Liquidity and Capital Resources

Debt Arrangements and Debt Service Requirements

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with a group of banks. In connection with the execution of the Credit Facility, the credit agreement in place at June 30, 2015 (the “Old Credit Agreement”) was terminated, and all outstanding amounts were paid in full. The Credit Facility consists of a $100 million five-year revolving facility (the “Revolving Credit Facility”) and matures on August 18, 2020.

We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.

Approximately $266,000 of transaction fees related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. Those deferred debt costs are included in other assets, net in the condensed consolidated balance sheets.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR (1.25% at September 30, 2017), plus 1% to 2% or the base rate plus 0% to 1%. The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rates applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25% per annum payable to the issuing bank. We also pay quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the Revolving Credit Facility.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 2017) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We had approximately $65 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2017.

On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility. Those amounts were classified as current portion of long term debt at September 30, 2017.

The loan agreement of approximately $1.1 million of secured debt of affiliate was amended in April, 2017 to extend the due date of the loan for three years to mature on May 1, 2020. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

28

Sources and Uses of Cash

During the nine months ended September 30, 2017 and 2016, we had net cash flows from operating activities of $18,677,000 and $21,020,000, respectively. We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for interest and payments of principal under our Credit Facility. However, if such cash flow is not sufficient we may be required to sell additional equity securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled payments. There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.

Our capital expenditures, exclusive of acquisitions, for the nine months ended September 30, 2017 were $4,850,000 ($4,149,000 in 2016). We anticipate capital expenditures in 2017 to be approximately $6.5 million, including approximately $750 thousand relating to our recent acquisitions in Charleston and Hilton Head, which we expect to finance through funds generated from operations.

On September 13, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, which is recorded within Other accrued expenses as of September 30, 2017 was paid on October 13, 2017 to shareholders of record on September 25, 2017.

On May 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on June 9, 2017 to shareholders of record on May 22, 2017and funded by cash on the Company’s balance sheet.

On March 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, was paid on April 14, 2017 to shareholders of record on March 28, 2017 and funded by cash on the Company’s balance sheet.

On January 16, 2017, we entered into an asset purchase agreement to purchase an FM radio station (WCVL) from WUVA, Incorporated, serving the Charlottesville, Virginia market for approximately $1,650,000. Simultaneously, we entered into a TBA to begin operating the station on February 1, 2017. We completed this acquisition on April 18, 2017. This acquisition was financed through funds generated from operations.

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sales of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand. The Company recognized a pretax gain of $50.8 million as a result of the Television Sale in the third quarter of 2017. The gain net of tax for the Television Sale was $29.9 million. Effective September 1, 2017, the Company used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina (as described in Note 6). On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 8).

On May 9, 2017, the Company entered into an Asset Purchase Agreement with Apex Media Corporation and Pearce Development, LLC f/k/a Apex Real Property, LLC to purchase, for approximately $23 million (subject to certain purchase price adjustments) plus the right to air certain radio commercials, substantially all the assets related to the operation of the following radio stations principally serving the South Carolina area: WCKN (FM), WMXF(FM), WXST(FM), WAVF(FM), WSPO(AM), W261DG, W257BQ, WVSC(FM), WLHH(FM), WOEZ(FM), W256CB, W293BZ. The Company closed this transaction effective September 1, 2017, simultaneously with the closing of the Television Sale using funds generated from the Television Sale.

We continue to actively seek and explore opportunities for expansion through the acquisitions of additional broadcast properties.

We anticipate that any future acquisitions of radio and television stations and dividend payments will be financed through funds generated from operations, borrowings under the Credit Agreement, proceeds from the Television Sale, additional debt or equity financing, or a combination thereof. However, there can be no assurances that any such financing will be available on acceptable terms, if at all.

29

Summary Disclosures About Contractual Obligations and Commercial Commitments

We have future cash obligations under various types of contracts, including the terms of our Credit Facility, operating leases, programming contracts, employment agreements, and other operating contracts. For additional information concerning our future cash obligations see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation — Summary Disclosures About Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2016.

We anticipate that our contractual cash obligations will be financed through funds generated from operations or additional borrowings under the Credit Facility, or a combination thereof.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates, judgments and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures and contingencies. We evaluate estimates used in preparation of our financial statements on a continual basis. There have been no significant changes to our critical accounting policies that are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

Recent accounting pronouncements are described in Note 2 to the accompanying financial statements.

Inflation

The impact of inflation on our operations has not been significant to date. There can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk and Risk Management Policies” in our Annual Report on Form 10-K for the year ended December 31, 2016 for a complete discussion of our market risk. There have been no material changes to the market risk information included in our 2016 Annual Report on Form 10-K.

30

Item 4. Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to cause the material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2017, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes our repurchases of our Class A Common Stock during the three months ended September 30, 2017. Shares repurchased during the quarter were from the retention of shares for cashless exercise of stock options and the payment of the withholding taxes related to those stock option exercises.

							Approximate
					Total Number		Dollar
					of		Value of
					Shares		Shares
					Purchased		that May Yet
					as Part of		be
	Total Number		Average Price		Publicly		Purchased
	of Shares		Paid per		Announced		Under the
Period	Purchased		Share		Program		Program(a)
July 1 – July 31, 2017		—	$	—		—	$	23,352,857
August 1 – August 31, 2017		916	$	40.60		—	$	23,315,667
September 1 – September 30, 2017		—	$	—		—	$	23,315,667
Total		916	$	40.60		—	$	23,315,667

(a) We have a Stock Buy-Back Program which allows us to purchase our Class A Common Stock. In February 2013, our Board of Directors authorized an increase in the amount committed to the Buy-Back Program from $60 million to approximately $75.8 million.

31

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SAGA COMMUNICATIONS, INC.
Date: November 9, 2017	/s/ SAMUEL D. BUSH
	Samuel D. Bush
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Date: November 9, 2017	/s/ CATHERINE A. BOBINSKI
	Catherine A. Bobinski
	Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

33

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)

AND RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Edward K. Christian, Chief Executive Officer of Saga Communications, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Saga Communications, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2017	/s/ Edward K. Christian
	Edward K. Christian
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)

AND RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Samuel D. Bush, Chief Financial Officer of Saga Communications, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Saga Communications, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2017	/s/ Samuel D. Bush
	Samuel D. Bush
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Saga Communications, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Edward K. Christian, Chief Executive Officer of the Company, and Samuel D. Bush, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2017	/s/ Edward K. Christian
	Edward K. Christian
	Chief Executive Officer
Dated: November 9, 2017	/s/ Samuel D. Bush
	Samuel D. Bush
	Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 02, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Entity Registrant Name	SAGA COMMUNICATIONS INC
Entity Central Index Key	0000886136
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	SGA
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		5,024,862
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		882,141

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 81,035	$ 26,697
Accounts receivable, net	18,880	17,735
Prepaid expenses and other current assets	2,026	2,397
Barter transactions	1,721	1,318
Current assets of discontinued operations	0	4,625
Total current assets	103,662	52,772
Property and equipment	135,644	134,680
Less accumulated depreciation	79,299	85,506
Net property and equipment	56,345	49,174
Other assets:
Broadcast licenses, net	94,708	86,622
Goodwill	15,417	7,407
Other intangibles, deferred costs and investments, net	7,822	5,975
Assets of discontinued operations	0	18,048
Total assets	277,954	219,998
Current liabilities:
Accounts payable	2,211	1,618
Payroll and payroll taxes	6,836	6,954
Other accrued expenses	26,348	3,198
Barter transactions	1,394	1,304
Current portion of long term debt	10,287	0
Current liabilities of discontinued operations	292	2,971
Total current liabilities	47,368	16,045
Deferred income taxes	31,762	29,741
Long-term debt	25,000	35,287
Other liabilities	2,269	2,885
Liabilities of discontinued operations	0	1,058
Total liabilities	106,399	85,016
Commitments and contingencies
Stockholders' equity:
Common stock	75	74
Additional paid-in capital	62,157	59,557
Retained earnings	143,308	108,733
Treasury stock	(33,985)	(33,382)
Total stockholders' equity	171,555	134,982
Total liabilities and stockholders' equity	$ 277,954	$ 219,998

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net operating revenue	$ 30,269	$ 29,878	$ 86,685	$ 88,208
Station operating expense	21,755	21,775	64,521	64,757
Corporate general and administrative	3,132	2,728	8,875	8,065
Other operating expense	(127)	(1,393)	(69)	(1,388)
Operating income from continuing operations	5,509	6,768	13,358	16,774
Interest expense	254	187	691	548
Income from continuing operations before tax	5,255	6,581	12,667	16,226
Income tax expense	2,290	2,678	5,280	6,665
Income from continuing operations, net of tax	2,965	3,903	7,387	9,561
Income from discontinued operations, net of tax (Note 5)	30,451	1,511	32,501	3,688
Net income	$ 33,416	$ 5,414	$ 39,888	$ 13,249
Basic Earnings per share:
From continuing operations	$ 0.50	$ 0.66	$ 1.25	$ 1.63
From discontinued operations	5.16	0.26	5.51	0.63
Basic earnings per share	$ 5.66	$ 0.92	$ 6.76	$ 2.26
Weighted average common shares	5,807	5,755	5,800	5,753
Diluted Earnings per share:
From continuing operations	$ 0.50	$ 0.66	$ 1.25	$ 1.62
From discontinued operations	5.16	0.26	5.51	0.63
Diluted earnings per share	$ 5.66	$ 0.92	$ 6.76	$ 2.25
Weighted average common and common equivalent shares	5,807	5,764	5,804	5,762
Dividends declared per share	$ 0.30	$ 0.30	$ 0.90	$ 0.80

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Cash provided by operating activities	$ 18,677	$ 21,020
Cash flows from investing activities:
Acquisition of property and equipment	(4,850)	(4,149)
Acquisition of broadcast properties	(25,856)	(12,733)
Proceeds from sale of television stations	69,528	0
Proceeds from disposals of fixed assets	417	1,644
Other investing activities	0	11
Net cash provided by (used in) investing activities	39,239	(15,227)
Cash flows from financing activities:
Cash dividends paid	(3,541)	(4,688)
Purchase of treasury shares	(37)	(5)
Other financing activities	0	0
Net cash used in financing activities	(3,578)	(4,693)
Net increase in cash and cash equivalents	54,338	1,100
Cash and cash equivalents, beginning of period	26,697	21,614
Cash and cash equivalents, end of period	$ 81,035	$ 22,714

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2017 and the results of operations for the three and nine months ended September 30, 2017 and 2016. Results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

We own or operate broadcast properties in 26 markets, including 75 FM and 33 AM radio stations.

On May 9, 2017 the Company entered into an agreement to sell the Joplin, Missouri and Victoria, Texas television stations. The disposition closed on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s continuing operations. As a result of the Company’s television stations sale, the Company only has one reportable segment at September 30, 2017.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. Annual Report on Form 10-K for the year ended December 31, 2016.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2017, for items that should potentially be recognized in these financial statements or discussed within the notes to the financial statements.

Earnings Per Share Information

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. The Company has participating securities related to restricted stock units, granted under the Company’s Second Amended and Restated 2005 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:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)
Numerator:
Income from continuing operations	$	2,965	$	3,903	$	7,387	$	9,561
Less: Income allocated to unvested participating securities		51		72		126		176
Income from continuing operations available to common stockholders	$	2,914	$	3,831	$	7,261	$	9,385
Income from discontinued operations	$	30,451	$	1,511	$	32,501	$	3,688
Less: Income allocated to unvested participating securities		520		28		556		68
Income from discontinued operations available to common stockholders	$	29,931	$	1,483	$	31,945	$	3,620
Net income available to common stockholders	$	32,845	$	5,314	$	39,206	$	13,005
Denominator:
Denominator for basic earnings per share — weighted average shares		5,807		5,755		5,800		5,753
Effect of dilutive securities:
Common stock equivalents		—		9		4		9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,807		5,764		5,804		5,762
Basic earnings per share:
From continuing operations	$	.50	$	.66	$	1.25	$	1.63
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.66	$	.92	$	6.76	$	2.26
Diluted earnings per share
From continuing operations	$	.50	$	.66	$	1.25	$	1.62
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.66	$	.92	$	6.76	$	2.25

The number of stock options outstanding that had an antidilutive effect on our earnings per share calculation, and therefore have been excluded from diluted earnings per share calculation, was 0 for the three and nine months ended September 30, 2017 and 0 for the three and nine months ended September 30, 2016, respectively. All stock options were exercised during the second quarter of 2017 and there were no stock options outstanding at September 30, 2017.

Financial Instruments

Our financial instruments are comprised of cash and cash equivalents, 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 euro-dollar rate, prime rate or have been reset at the prevailing market rate at September 30, 2017.

Income Taxes

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.

Time Brokerage Agreements/Local Marketing Agreements

We have entered into Time Brokerage Agreements (“TBA’s”) or Local Marketing Agreements (“LMA’s”) 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 their own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBA’s/LMA’s are included in the accompanying unaudited Condensed Consolidated Statements of Income. At September 30, 2017 we had no TBA’s/LMA’s in place.   

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This amendment was adopted on January 1, 2017 on a retrospective basis. As a result we have reclassified approximately $1,022,000 of current deferred tax assets into the noncurrent deferred tax liability line item within the Condensed Consolidated Balance Sheet for the period ended December 31, 2016.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), which includes multiple amendments intended to simplify aspects of share-based payment accounting. Amendments to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeitures will be applied using a modified retrospective transition method through a cumulative-effect adjustment to equity as of the beginning of the period of adoption. Amendments to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement will be applied retrospectively, and amendments requiring the recognition of excess tax benefits and tax deficiencies in the income statement are to be applied prospectively. This amendment was adopted on January 1, 2017 and did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements – Not Yet Adopted

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting)” (“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350)” (“ASU 2017-04”) which removes step 2 from the goodwill impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds it fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 will be applied prospectively and is effective for fiscal years and interim impairment tests performed in periods beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230): Statement of Cash Flows” (“ASU 2016-15”), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU 2016-15 also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. The Company is currently evaluating the impact that this standard will have on our consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”)¸which requires that all leases with a term of more than one year, covering leased assets such as real estate, broadcasting towers and equipment, be reflected on the balance sheet as assets and liabilities for the rights and obligations created by these leases. ASU 2016-02 is effective for fiscal years fiscal years and interim periods beginning after December 15, 2018. While the Company is currently reviewing the effects of this guidance, the Company believes that this would result in an increase in the assets and liabilities reflected on the Company’s consolidated balance sheets. We are still evaluating the impact on our consolidated statements of operations. 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under GAAP. The FASB has also issued a number of updates to this standard. This standard is effective for the fiscal and interim periods beginning January 1, 2018. The Company has completed our preliminary analysis of the standard, our evaluation of contracts and the potential impact of this standard on our consolidated financial statements. Based on our preliminary assessment, which is subject to change, the impact of this guidance should not be material to the Company’s financial position, results of operations or cash flows. We plan to adopt the new guidance using the modified retrospective method. 

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Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

3. Intangible Assets

We evaluate our FCC licenses and goodwill for impairment annually as of October 1^st or more frequently if events or circumstances indicate that the asset might be impaired. FCC licenses are evaluated for impairment at the market level using a direct method. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value.

Intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the lives of the leases ranging from four to twenty-six years. Other intangibles are amortized over one to fifteen years.

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Common Stock and Treasury Stock

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Common Stock and Treasury Stock

4. Common Stock and Treasury Stock

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2017:

	Common Stock Issued
	Class A		Class B
	(Shares in thousands)
Balance, January 1, 2016		6,603		865
Conversion of shares		12		(12)
Issuance of restricted stock		23		25
Balance, December 31, 2016		6,638		878
Exercise of stock options		21		8
Conversion of shares		4		(4)
Forfeiture of restricted stock		(1)		—
Balance, September 30, 2017		6,662		882

We have a Stock Buy-Back Program to allow us to purchase up to $75.8 million of our Class A Common Stock. As of September 30, 2017, we have remaining authorization of $23.3 million for future repurchases of our Class A Common Stock. On September 14, 2017, the Board of Directors authorized the repurchase of its Class A Common Stock under its trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1. The Rule 10b5-1 repurchase plan allows the Company to repurchase its shares during periods when it would normally not be active in the market due to its internal trading blackout periods.  Under the plan, the Company may repurchase its Class A Common Stock in any combination of open market, block transactions and privately negotiated transactions subject to market conditions, legal requirements including applicable SEC regulations (which include certain price, market, volume and timing constraints), specific repurchase instructions and other corporate considerations.  Purchases under the plan will be funded by cash on the Company's balance sheet.  The plan does not obligate Saga to acquire any particular amount of Class A Common Stock.  The authorization is effective until September 1, 2018, but may be suspended, extended or amended at any time at the Company's discretion.

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Discontinued Operations

9 Months Ended

Sep. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

5. Discontinued Operations

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations (“Television Sale”) for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand. The Company recognized a pretax gain of $50.8 million as a result of the Television Sale in the third quarter of 2017. The gain net of tax for the Television Sale was $29.9 million. Effective September 1, 2017, the Company used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina, which included the purchase price of $23 million, the purchase of $1.3 million in accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000 (as described in Note 6). On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000 respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 8).

In accordance with authoritative guidance we have reported the results of operations of the Joplin, Missouri and Victoria, Texas television stations as discontinued operations in the accompanying consolidated financial statements. For all previously reported periods, certain amounts in the consolidated financial statements have been reclassified. All of the assets and liabilities of the Joplin, Missouri and Victoria, Texas television stations have been classified as discontinued operations and the net results of operations have been reclassified from continuing operations to discontinued operations. These were previously included in the Company’s television segment.  

The following table shows the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017 (4)		2016		2017 (4)		2016
Net operating revenue	$	3,296	$	6,241	$	14,238	$	17,094
Station operating expense (1)		2,372		3,684		9,727		10,807
Other operating (income) expense		—		—		31		3
Operating income		924		2,557		4,480		6,284
Interest Expense (2)		5		9		21		26
Income before income taxes		919		2,548		4,459		6,258
Pretax gain on the disposal of discontinued operations		50,842		—		50,842		—
Total pretax gain on discontinued operations		51,761		2,548		55,301		6,258
Income tax expense (3)		21,310		1,037		22,800		2,570
Income from discontinued operations, net of tax	$	30,451	$	1,511	$	32,501	$	3,688

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.

⁽²⁾ Interest expense related to Surtsey Media, LLC debt that is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

⁽³⁾ The effective tax rates on pretax income from discontinued operations were 41%.

⁽⁴⁾ Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

The following table is a summary of the assets and liabilities of discontinued operations (in thousands):

	September 30,		December 31,
	2017		2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable	$	—	$	3,868
Prepaid expenses and other current assets		—		625
Barter transactions		—		132
Total of current assets of discontinued operations	$	—	$	4,625
Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net (1)	$	—	$	7,388
Broadcast licenses, net (1)		—		9,607
Other intangibles, deferred costs and investments, net (1)		—		1,053
Total of non-current assets of discontinued operations	$	—	$	18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	—	$	22,673
Major Classes of Current Liabilities of Discontinued Operations
Accounts payable	$	84	$	759
Barter transactions		—		163
Current portion of long term debt		—		1,078
Other liabilities (1)		208		971
Total of current liabilities of discontinued operations	$	292	$	2,971
Major Classes of Current Liabilities of Discontinued Operations
Other liabilities (1)	$	—	$	1,058
Total of non-current liabilities of discontinued operations	$	—	$	1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	292	$	4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	(292)	$	18,644

(1) For prior periods, the current and long-term classification of assets and liabilities does not change as they did not meet the held-for-sale criteria the prior periods. We closed the disposition on September 1, 2017, therefore all amounts in the current year are considered current assets or liabilities of discontinued operations.

The following table represents the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

	September 30,		September 30,
	2017		2016
Significant operating non-cash items
Depreciation and amortization (1)	$	445	$	1,023
Broadcast program rights amortization		418		467
Barter revenue, net		18		58
Loss on sale of assets		31		3
Significant investing items
Acquisition of property and equipment	$	125	$	717
Proceeds from sale and disposal of assets		—		13
Net proceeds from sale of television stations (2)		69,528		—

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

⁽²⁾ Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

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Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Acquisitions and Dispositions

6. Acquisitions and Dispositions

We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill. The Company accounts for acquisition under the provisions of FASB ASC Topic 805, Business Combinations.

Management assigned fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach.

2017 Acquisitions and Disposals

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and the Company received net proceeds of $69.5 million which included the sales price of $66.6 million, and the proceeds from sale of related accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

On May 9, 2017, the Company entered into an Asset Purchase Agreement with Apex Media Corporation and Pearce Development, LLC f/k/a Apex Real Property, LLC, both Companies of which a member of our Board of directors, G. Dean Pearce, is President of, to purchase radio stations principally serving the South Carolina area for approximately $23 million (subject to certain purchase price adjustments) plus the right to air certain radio commercials, substantially all the assets related to the operation of the following radio stations: WCKN(FM), WMXF(FM), WXST(FM), WAVF(FM), WSPO(AM), W261DG, W257BQ, WVSC(FM), WLHH(FM), WOEZ(FM), W256CB, W293BZ. The Company closed this transaction effective September 1, 2017, simultaneously with the closing of the Television Sale using funds generated from the Television Sale for $24.2 million, which included the purchase price of $23 million, and the purchase of $1.3 million in related accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Charleston, South Carolina and Hilton Head, South Carolina market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

On January 16, 2017, we entered into an asset purchase agreement to purchase an FM radio station (WCVL) from WUVA, Incorporated, serving the Charlottesville, Virginia market for approximately $1,658,000, which included $8,000 in transactional costs. Simultaneously, we entered into a TBA to begin operating the station on February 1, 2017. We completed this acquisition on April 18, 2017. This acquisition was financed through funds generated from operations. Unaudited proforma results of operations for this acquisition are not required, as such information is not material to our financial statements and therefore is not presented in the pro forma tables in the following pages.

2016 Acquisitions

On November 2, 2015, we entered into an agreement to acquire an FM radio station (WLVQ) from Wilks Broadcast - Columbus, LLC, serving the Columbus, Ohio market for approximately $13,791,000, which included $734,000 in accounts receivable and $57,000 in transactional costs. We completed this acquisition on February 3, 2016. We operated this station under an LMA from November 16, 2015 through our completion of the acquisition. This acquisition was financed through funds generated from operations. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Columbus, Ohio market as well as the synergies and growth opportunities expected through the combination with the Company’s existing stations.

On March 16, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $50,000. 

On March 25, 2016 we acquired an FM translator serving the Milwaukee, Wisconsin market for approximately $50,000. 

On April 8, 2016 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $100,000.

On April 11, 2016 we acquired an FM translator serving the Clarksville, Tennessee market for approximately $30,000.

On June 3, 2016 we acquired an FM translator serving the Spencer, Iowa market for approximately $35,000.

On August 11, 2016 we acquired two FM translators serving the Bellingham, Washington market for approximately $50,000.

On September 12, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $45,000.

On October 11, 2016 we acquired a FM Translator serving the Bellingham, Washington market for approximately $25,000.

On November 8, 2016 we acquired a FM Translator serving the Des Moines, Iowa market for approximately $25,000.

On November 14, 2016 we acquired a FM Translator serving the Springfield, Illinois market for approximately $23,000.

On December 2, 2016 we acquired a FM Translator serving the Ithaca, New York market for approximately $35,000.

Condensed Consolidated Balance Sheet of 2017 and 2016 Acquisitions:

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2017 and 2016 acquisitions at their respective acquisition dates. The allocation of the purchase price for the 2017 and 2016 acquisitions is preliminary at September 30, 2017.

Saga Communications, Inc.

Condensed Consolidated Balance Sheet of 2017 and 2016 Acquisitions

	Acquisitions in
	2017		2016
	(In thousands)
Assets Acquired:
Current assets	$	1,440	$	814
Property and equipment		6,678		375
Other assets:
Broadcast licenses		8,086		8,123
Goodwill		8,011		4,533
Other intangibles, deferred costs and investments		2,019		398
Total other assets		18,116		13,054
Total assets acquired		26,234		14,243
Liabilities Assumed:
Current liabilities		378		41
Total liabilities assumed		378		41
Net assets acquired	$	25,856	$	14,202

Pro Forma Results of Operations for Acquisitions (Unaudited)

The following unaudited pro forma results of our operations for the three and nine months ended September 30, 2017 and 2016 assume the 2017 and 2016 acquisitions occurred as of January 1, 2016. The translators are start-up stations and therefore, have no pro forma revenue and expenses. The pro forma results give effect to certain adjustments, including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
ProForma Results of Operation
Net operating revenue	$	31,546	$	31,888	$	92,187	$	93,993
Station operating expense		23,000		23,478		69,325		69,874
Corporate general and administrative		3,132		2,728		8,875		8,065
Other operating (income) expense, net		(127)		(1,393)		(69)		(1,388)
Operating income		5,541		7,075		14,056		17,442
Interest expense		254		187		691		548
Income from continuing operations, before tax		5,287		6,888		13,365		16,894
Income tax expense		2,430		2,804		5,566		6,939
Income from continuing operations, net of tax		2,857		4,084		7,799		9,955
Income from discontinued operations, net of tax		30,451		1,511		32,501		3,688
Net income	$	33,308	$	5,595	$	40,300	$	13,643
Basic earnings per share:
From continuing operations	$	.47	$	.70	$	1.32	$	1.70
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.63	$	.96	$	6.83	$	2.33
Diluted earnings per share:
From continuing operations	$	.47	$	.70	$	1.32	$	1.70
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.63	$	.96	$	6.83	$	2.33

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Share-based Compensation [Abstract]

Stock-Based Compensation

7. Stock-Based Compensation

2005 Incentive Compensation Plan

On October 16, 2013 our stockholders approved the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan (the “Second Restated 2005 Plan”). The 2005 Incentive Compensation Plan was first approved by stockholders in 2005 and replaced our 2003 Stock Option Plan (the “2003 Plan”). The 2005 Incentive Compensation Plan was re-approved by stockholders in 2010. The changes made in the Second Restated 2005 Plan (i) increases the number of authorized shares by 233,334 shares of Common Stock, (ii) extends the date for making awards to September 6, 2018, (iii) includes directors as participants, (iv) targets awards according to groupings of participants based on ranges of base salary of employees and/or retainers of directors, (v) requires participants to retain 50% of their net annual restricted stock awards during their employment or service as a director, and (vi) includes a clawback provision. The Second Restated 2005 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors.

The number of shares of Common Stock that may be issued under the Second Restated 2005 Plan may not exceed 280,000 shares of Class B Common Stock, 900,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock may be issued pursuant to incentive stock options and 280,000 Class A Common Stock issuable upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock may be granted to any employee or director under the Second Restated 2005 Plan. However, awards denominated in Class B Common Stock may only be granted to Edward K. Christian, President, Chief Executive Officer, Chairman of the Board of Directors, and the holder of 100% of the outstanding Class B Common Stock of the Company. Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten years from the date of grant and may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant.

Stock-Based Compensation

All stock options granted were fully vested and expensed at December 31, 2012, therefore there was no compensation expense related to stock options for the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, respectively.

The following summarizes the stock option transactions for the Second Restated 2005 Plan and 2003 Plan for the nine months ended September 30, 2017:

					Weighted Average
			Weighted		Remaining		Aggregate
	Number of		Average		Contractual Term		Intrinsic
	Options		Exercise Price		(Years)		Value
Outstanding at January 1, 2017		29,035	$	28.47		0.4	$	633,834
Exercised		(29,035)		28.47
Outstanding at September 30, 2017		—	$	—		—	$	—
Exercisable at September 30, 2017		—	$	—		—	$	—

The following summarizes the restricted stock transactions for the nine months ended September 30, 2017:

			Weighted
			Average
			Grant Date
			Fair
	Shares		Value
Outstanding at January 1, 2017		103,262	$	43.73
Vested		(3,434)		43.10
Forfeited		(594)		45.39
Non-vested and outstanding at September 30, 2017		99,234	$	43.75

For the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, we had $629,000, $1,761,000, $536,000 and $1,594,000, respectively, of total compensation expense related to restricted stock-based compensation arrangements. This expense is included in corporate general and administrative expenses in our results of operations. The associated tax benefit recognized for the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, was $252,000, $704,000, $214,000 and $638,000, respectively.

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Long-Term Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

8. Long-Term Debt

Long-term debt consisted of the following:

	September 30,		December 31,
	2017		2016
	(In thousands)
Revolving credit facility	$	35,287	$	35,287
Secured debt of affiliate		—		1,078
		35,287		36,365
Amounts payable within one year		10,287		—
	$	25,000	$	36,365

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P. Morgan Securities LLC. In connection with the execution of the Credit Facility, the credit agreement in place at June 30, 2015 (the “Old Credit Agreement”) was terminated, and all outstanding amounts were paid in full. The Credit Facility consists of a $100 million five-year revolving facility (the “Revolving Credit Facility”) and matures on August 18, 2020.

We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.

Approximately $266,000 of transaction fees related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. Those deferred debt costs are included in other assets, net in the condensed consolidated balance sheets.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR (1.25% at September 30, 2017), plus 1% to 2% or the base rate plus 0% to 1%. The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25% per annum payable to the issuing bank. We also pay quarterly commitment fees of 0.2% to 0.3% per annum on the unused portion of the Revolving Credit Facility.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 2017) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We had approximately $65 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2017.

On October 5, 2017 and November 3, 2017, the Company used $5,287,000 and $5,000,000, respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility. Those amounts were classified as current portion of long term debt at September 30, 2017.

The loan agreement of approximately $1.1 million of secured debt of affiliate was amended in April, 2017 to extend the due date of the loan for three years to mature on May 1, 2020. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

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Litigation

9 Months Ended

Sep. 30, 2017

Loss Contingency, Information about Litigation Matters [Abstract]

Litigation

9. Litigation

The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements.

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Dividends

9 Months Ended

Sep. 30, 2017

Dividends [Abstract]

Dividends

10. Dividends

On September 13, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, which is recorded within Other accrued expenses as of September 30, 2017 was paid on October 13, 2017 to shareholders of record on September 25, 2017.

On May 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on June 9, 2017 to shareholders of record on May 22, 2017.

On March 3, 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million, was paid on April 14, 2017 to shareholders of record on March 28, 2017.

On November 21, 2016 the Company’s Board of Directors declared a quarterly cash dividend of $0.30 per share and a special cash dividend of $0.20 per share on its Classes A and B shares. This dividend totaling $2.9 million was paid on December 23, 2016 to shareholders of record on December 5, 2016.

On August 30, 2016, the Company’s Board of Directors declared a regular cash dividend of $0.30 per share on its Classes A and B Common Stock. This dividend, totaling $1.8 million was paid on September 30, 2016 to shareholders of record on September 14, 2016.

On June 1, 2016, the Company’s Board of Directors declared a regular cash dividend of $0.25 per share on its Classes A and B Common Stock. This dividend, totaling $1.5 million, was paid on July 8, 2016 to shareholders of record on June 15, 2016.

On March 2, 2016, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.25 per share on its Classes A and B Common Stock. This dividend, totaling $1.5 million, was paid on April 15, 2016 to shareholders of record on March 28, 2016.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2017 and the results of operations for the three and nine months ended September 30, 2017 and 2016. Results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

We own or operate broadcast properties in 26 markets, including 75 FM and 33 AM radio stations.

On May 9, 2017 the Company entered into an agreement to sell the Joplin, Missouri and Victoria, Texas television stations. The disposition closed on September 1, 2017. The historical results of operations for the television stations are presented in discontinued operations for all periods presented (see Note 5). Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s continuing operations. As a result of the Company’s television stations sale, the Company only has one reportable segment at September 30, 2017.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. Annual Report on Form 10-K for the year ended December 31, 2016.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2017, for items that should potentially be recognized in these financial statements or discussed within the notes to the financial statements.

Earnings Per Share Information

Earnings Per Share Information

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. The Company has participating securities related to restricted stock units, granted under the Company’s Second Amended and Restated 2005 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:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)
Numerator:
Income from continuing operations	$	2,965	$	3,903	$	7,387	$	9,561
Less: Income allocated to unvested participating securities		51		72		126		176
Income from continuing operations available to common stockholders	$	2,914	$	3,831	$	7,261	$	9,385
Income from discontinued operations	$	30,451	$	1,511	$	32,501	$	3,688
Less: Income allocated to unvested participating securities		520		28		556		68
Income from discontinued operations available to common stockholders	$	29,931	$	1,483	$	31,945	$	3,620
Net income available to common stockholders	$	32,845	$	5,314	$	39,206	$	13,005
Denominator:
Denominator for basic earnings per share — weighted average shares		5,807		5,755		5,800		5,753
Effect of dilutive securities:
Common stock equivalents		—		9		4		9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,807		5,764		5,804		5,762
Basic earnings per share:
From continuing operations	$	.50	$	.66	$	1.25	$	1.63
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.66	$	.92	$	6.76	$	2.26
Diluted earnings per share
From continuing operations	$	.50	$	.66	$	1.25	$	1.62
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.66	$	.92	$	6.76	$	2.25

The number of stock options outstanding that had an antidilutive effect on our earnings per share calculation, and therefore have been excluded from diluted earnings per share calculation, was 0 for the three and nine months ended September 30, 2017 and 0 for the three and nine months ended September 30, 2016, respectively. All stock options were exercised during the second quarter of 2017 and there were no stock options outstanding at September 30, 2017.

Financial Instruments

Financial Instruments

Our financial instruments are comprised of cash and cash equivalents, 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 euro-dollar rate, prime rate or have been reset at the prevailing market rate at September 30, 2017.

Income Taxes

Income Taxes

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.

Time Brokerage Agreements/Local Marketing Agreements

Time Brokerage Agreements/Local Marketing Agreements

We have entered into Time Brokerage Agreements (“TBA’s”) or Local Marketing Agreements (“LMA’s”) 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 their own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBA’s/LMA’s are included in the accompanying unaudited Condensed Consolidated Statements of Income. At September 30, 2017 we had no TBA’s/LMA’s in place.   

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)
Numerator:
Income from continuing operations	$	2,965	$	3,903	$	7,387	$	9,561
Less: Income allocated to unvested participating securities		51		72		126		176
Income from continuing operations available to common stockholders	$	2,914	$	3,831	$	7,261	$	9,385
Income from discontinued operations	$	30,451	$	1,511	$	32,501	$	3,688
Less: Income allocated to unvested participating securities		520		28		556		68
Income from discontinued operations available to common stockholders	$	29,931	$	1,483	$	31,945	$	3,620
Net income available to common stockholders	$	32,845	$	5,314	$	39,206	$	13,005
Denominator:
Denominator for basic earnings per share — weighted average shares		5,807		5,755		5,800		5,753
Effect of dilutive securities:
Common stock equivalents		—		9		4		9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		5,807		5,764		5,804		5,762
Basic earnings per share:
From continuing operations	$	.50	$	.66	$	1.25	$	1.63
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.66	$	.92	$	6.76	$	2.26
Diluted earnings per share
From continuing operations	$	.50	$	.66	$	1.25	$	1.62
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.66	$	.92	$	6.76	$	2.25

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Common Stock and Treasury Stock (Tables)

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Schedule of Stock by Class

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2017:

	Common Stock Issued
	Class A		Class B
	(Shares in thousands)
Balance, January 1, 2016		6,603		865
Conversion of shares		12		(12)
Issuance of restricted stock		23		25
Balance, December 31, 2016		6,638		878
Exercise of stock options		21		8
Conversion of shares		4		(4)
Forfeiture of restricted stock		(1)		—
Balance, September 30, 2017		6,662		882

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2017

Disposal Groups, Including Discontinued Operations

The following table is a summary of the assets and liabilities of discontinued operations (in thousands):

	September 30,		December 31,
	2017		2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable	$	—	$	3,868
Prepaid expenses and other current assets		—		625
Barter transactions		—		132
Total of current assets of discontinued operations	$	—	$	4,625
Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net (1)	$	—	$	7,388
Broadcast licenses, net (1)		—		9,607
Other intangibles, deferred costs and investments, net (1)		—		1,053
Total of non-current assets of discontinued operations	$	—	$	18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	—	$	22,673
Major Classes of Current Liabilities of Discontinued Operations
Accounts payable	$	84	$	759
Barter transactions		—		163
Current portion of long term debt		—		1,078
Other liabilities (1)		208		971
Total of current liabilities of discontinued operations	$	292	$	2,971
Major Classes of Current Liabilities of Discontinued Operations
Other liabilities (1)	$	—	$	1,058
Total of non-current liabilities of discontinued operations	$	—	$	1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	292	$	4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets	$	(292)	$	18,644

(1) For prior periods, the current and long-term classification of assets and liabilities does not change as they did not meet the held-for-sale criteria the prior periods. We closed the disposition on September 1, 2017, therefore all amounts in the current year are considered current assets or liabilities of discontinued operations.

Joplin, Missouri and Victoria, Texas Television Stations [Member]

Disposal Groups, Including Discontinued Operations

The following table shows the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017 (4)		2016		2017 (4)		2016
Net operating revenue	$	3,296	$	6,241	$	14,238	$	17,094
Station operating expense (1)		2,372		3,684		9,727		10,807
Other operating (income) expense		—		—		31		3
Operating income		924		2,557		4,480		6,284
Interest Expense (2)		5		9		21		26
Income before income taxes		919		2,548		4,459		6,258
Pretax gain on the disposal of discontinued operations		50,842		—		50,842		—
Total pretax gain on discontinued operations		51,761		2,548		55,301		6,258
Income tax expense (3)		21,310		1,037		22,800		2,570
Income from discontinued operations, net of tax	$	30,451	$	1,511	$	32,501	$	3,688

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.

⁽²⁾ Interest expense related to Surtsey Media, LLC debt that is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

⁽³⁾ The effective tax rates on pretax income from discontinued operations were 41%.

⁽⁴⁾ Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

Disclosure Of Condensed Consolidated Statements of Cash Flows

The following table represents the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

	September 30,		September 30,
	2017		2016
Significant operating non-cash items
Depreciation and amortization (1)	$	445	$	1,023
Broadcast program rights amortization		418		467
Barter revenue, net		18		58
Loss on sale of assets		31		3
Significant investing items
Acquisition of property and equipment	$	125	$	717
Proceeds from sale and disposal of assets		—		13
Net proceeds from sale of television stations (2)		69,528		—

⁽¹⁾ No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

⁽²⁾ Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

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Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2017 and 2016 acquisitions at their respective acquisition dates. The allocation of the purchase price for the 2017 and 2016 acquisitions is preliminary at September 30, 2017.

Saga Communications, Inc.

Condensed Consolidated Balance Sheet of 2017 and 2016 Acquisitions

	Acquisitions in
	2017		2016
	(In thousands)
Assets Acquired:
Current assets	$	1,440	$	814
Property and equipment		6,678		375
Other assets:
Broadcast licenses		8,086		8,123
Goodwill		8,011		4,533
Other intangibles, deferred costs and investments		2,019		398
Total other assets		18,116		13,054
Total assets acquired		26,234		14,243
Liabilities Assumed:
Current liabilities		378		41
Total liabilities assumed		378		41
Net assets acquired	$	25,856	$	14,202

Business Acquisition, Pro Forma Information

The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
ProForma Results of Operation
Net operating revenue	$	31,546	$	31,888	$	92,187	$	93,993
Station operating expense		23,000		23,478		69,325		69,874
Corporate general and administrative		3,132		2,728		8,875		8,065
Other operating (income) expense, net		(127)		(1,393)		(69)		(1,388)
Operating income		5,541		7,075		14,056		17,442
Interest expense		254		187		691		548
Income from continuing operations, before tax		5,287		6,888		13,365		16,894
Income tax expense		2,430		2,804		5,566		6,939
Income from continuing operations, net of tax		2,857		4,084		7,799		9,955
Income from discontinued operations, net of tax		30,451		1,511		32,501		3,688
Net income	$	33,308	$	5,595	$	40,300	$	13,643
Basic earnings per share:
From continuing operations	$	.47	$	.70	$	1.32	$	1.70
From discontinued operations		5.16		.26		5.51		.63
Basic earnings per share	$	5.63	$	.96	$	6.83	$	2.33
Diluted earnings per share:
From continuing operations	$	.47	$	.70	$	1.32	$	1.70
From discontinued operations		5.16		.26		5.51		.63
Diluted earnings per share	$	5.63	$	.96	$	6.83	$	2.33

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

The following summarizes the stock option transactions for the Second Restated 2005 Plan and 2003 Plan for the nine months ended September 30, 2017:

					Weighted Average
			Weighted		Remaining		Aggregate
	Number of		Average		Contractual Term		Intrinsic
	Options		Exercise Price		(Years)		Value
Outstanding at January 1, 2017		29,035	$	28.47		0.4	$	633,834
Exercised		(29,035)		28.47
Outstanding at September 30, 2017		—	$	—		—	$	—
Exercisable at September 30, 2017		—	$	—		—	$	—

Summary of restricted stock transactions

The following summarizes the restricted stock transactions for the nine months ended September 30, 2017:

			Weighted
			Average
			Grant Date
			Fair
	Shares		Value
Outstanding at January 1, 2017		103,262	$	43.73
Vested		(3,434)		43.10
Forfeited		(594)		45.39
Non-vested and outstanding at September 30, 2017		99,234	$	43.75

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-term debt consisted of the following:

	September 30,		December 31,
	2017		2016
	(In thousands)
Revolving credit facility	$	35,287	$	35,287
Secured debt of affiliate		—		1,078
		35,287		36,365
Amounts payable within one year		10,287		—
	$	25,000	$	36,365

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Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Income from continuing operations	$ 2,965	$ 3,903	$ 7,387	$ 9,561
Less: Income allocated to unvested participating securities	51	72	126	176
Income from continuing operations available to common stockholders	2,914	3,831	7,261	9,385
Income from discontinued operations	30,451	1,511	32,501	3,688
Less: Income allocated to unvested participating securities	520	28	556	68
Income from discontinued operations available to common stockholders	29,931	1,483	31,945	3,620
Net income available to common stockholders	$ 32,845	$ 5,314	$ 39,206	$ 13,005
Denominator:
Denominator for basic earnings per share— weighted average shares	5,807	5,755	5,800	5,753
Effect of dilutive securities:
Common stock equivalents	0	9	4	9
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions	5,807	5,764	5,804	5,762
Basic earnings per share:
From continuing operations	$ 0.50	$ 0.66	$ 1.25	$ 1.63
From discontinued operations	5.16	0.26	5.51	0.63
Basic earnings per share	5.66	0.92	6.76	2.26
Diluted Earnings per share:
From continuing operations	0.50	0.66	1.25	1.62
From discontinued operations	5.16	0.26	5.51	0.63
Diluted earnings per share	$ 5.66	$ 0.92	$ 6.76	$ 2.25

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Summary of Significant Accounting Policies (Details Textual) - shares	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Summary Of Significant Accounting Policies [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance	0	29,035,000	0

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Recent Accounting Pronouncements (Details Textual)	Dec. 31, 2016 USD ($)
Deferred Tax Assets, Net of Valuation Allowance, Current	$ 1,022,000

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Intangible Assets (Details Textual)	9 Months Ended
	Sep. 30, 2017
Maximum [Member] | Favorable Lease Agreements [Member]
Finite-Lived Intangible Asset, Useful Life	26 years
Maximum [Member] | Other Intangible [Member]
Finite-Lived Intangible Asset, Useful Life	15 years
Minimum [Member] | Favorable Lease Agreements [Member]
Finite-Lived Intangible Asset, Useful Life	4 years
Minimum [Member] | Other Intangible [Member]
Finite-Lived Intangible Asset, Useful Life	1 year

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Common Stock and Treasury Stock (Details) - shares shares in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Common Stock [Line Items]
Exercise of stock options	29,035
Class A Common Stock [Member]
Common Stock [Line Items]
Balance, shares	6,638	6,603
Exercise of stock options	21
Conversion of shares	4	12
Forfeiture of restricted stock	(1)
Issuance of restricted stock		23
Balance, shares	6,662	6,638
Class B Common Stock [Member]
Common Stock [Line Items]
Balance, shares	878	865
Exercise of stock options	8
Conversion of shares	(4)	(12)
Forfeiture of restricted stock	0
Issuance of restricted stock		25
Balance, shares	882	878

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Common Stock and Treasury Stock (Details Textual) $ in Millions	Sep. 30, 2017 USD ($)
Common Stock [Line Items]
Share repurchase program, authorized amount	$ 75.8
Stock repurchase program, remaining authorization amount	$ 23.3

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Discontinued Operations (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
		Sep. 30, 2017		Sep. 30, 2016	Sep. 30, 2017		Sep. 30, 2016
Income from discontinued operations, net of tax		$ 30,451		$ 1,511	$ 32,501		$ 3,688
Joplin, Missouri and Victoria, Texas Television Stations [Member]
Net operating revenue		3,296	[1]	6,241	14,238	[1]	17,094
Station operating expense	[2]	2,372	[1]	3,684	9,727	[1]	10,807
Other operating (income) expense		0	[1]	0	31	[1]	3
Operating income		924	[1]	2,557	4,480	[1]	6,284
Interest Expense	[3]	5	[1]	9	21	[1]	26
Income before income taxes		919	[1]	2,548	4,459	[1]	6,258
Pretax gain on the disposal of discontinued operations		50,842	[1]	0	50,842	[1]	0
Total pretax gain on discontinued operations		51,761	[1]	2,548	55,301	[1]	6,258
Income tax expense	[4]	21,310	[1]	1,037	22,800	[1]	2,570
Income from discontinued operations, net of tax		$ 30,451	[1]	$ 1,511	$ 32,501	[1]	$ 3,688

[1] Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

[2] No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

[3] Interest expense related to Surtsey Media, LLC debt that is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

[4] The effective tax rates on pretax income from discontinued operations were 41%

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Discontinued Operations (Details 1) - USD ($) $ in Thousands		Sep. 30, 2017	May 09, 2017	Dec. 31, 2016
Major Classes of Current Assets of Discontinued Operations
Accounts receivable		$ 1,300
Total of current assets of discontinued operations		0		$ 4,625
Major Classes of Non-Current Assets of Discontinued Operations
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets		0		18,048
Major Classes of Current Liabilities of Discontinued Operations
Total of current liabilities of discontinued operations		292		2,971
Major Classes of Current Liabilities of Discontinued Operations
Total of non-current liabilities of discontinued operations		0		1,058
Joplin, Missouri and Victoria, Texas Television Stations [Member]
Major Classes of Current Assets of Discontinued Operations
Accounts receivable		0	$ 1,300	3,868
Prepaid expenses and other current assets		0		625
Barter transactions		0		132
Total of current assets of discontinued operations		0		4,625
Major Classes of Non-Current Assets of Discontinued Operations
Property and equipment, net	[1]	0		7,388
Broadcast licenses, net	[1]	0		9,607
Other intangibles, deferred costs and investments, net	[1]	0		1,053
Total of non-current assets of discontinued operations		0		18,048
Total Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets		0		22,673
Major Classes of Current Liabilities of Discontinued Operations
Accounts payable		84		759
Barter transactions		0		163
Current portion of long term debt		0		1,078
Other liabilities	[1]	208		971
Total of current liabilities of discontinued operations		292		2,971
Major Classes of Current Liabilities of Discontinued Operations
Other liabilities	[1]	0		1,058
Total of non-current liabilities of discontinued operations		0		1,058
Total Liabilities Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets		292		4,029
Net Assets Classified as Part of Discontinued Operations in the Condensed Consolidated Balance Sheets		$ (292)		$ 18,644

[1] For prior periods, the current and long-term classification of assets and liabilities does not change as they did not meet the held-for-sale criteria the prior periods. We closed the disposition on September 1, 2017, therefore all amounts in the current year are considered current assets or liabilities of discontinued operations.

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Discontinued Operations (Details 2) - USD ($) $ in Thousands			9 Months Ended
		May 09, 2017	Sep. 30, 2017		Sep. 30, 2016
Significant investing items
Acquisition of property and equipment			$ 4,850		$ 4,149
Net proceeds from sale of television stations			69,528		0
Joplin, Missouri and Victoria, Texas Television Stations [Member]
Significant operating non-cash items
Depreciation and amortization	[1]		445		1,023
Broadcast program rights amortization			418		467
Barter revenue, net			18		58
Loss on sale of assets			31		3
Significant investing items
Acquisition of property and equipment			125		717
Proceeds from sale and disposal of assets			0		13
Net proceeds from sale of television stations		$ 69,500	$ 69,500	[2]	$ 0	[2]

[1] No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

[2] Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

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Discontinued Operations (Details Textual) - USD ($)						9 Months Ended
		Nov. 03, 2017	Oct. 05, 2017	Sep. 01, 2017	May 09, 2017	Sep. 30, 2017		Sep. 30, 2016		Dec. 31, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration					$ 23,000,000
Disposal Group, Including Discontinued Operation, Income Tax Rate	[1]					41.00%
Discontinued Operation, Disposal of Discontinued Operation ,Transaction Costs						$ 50,000
Proceeds from Divestiture of Businesses, Net of Cash Divested						69,528,000		$ 0
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net						1,300,000
Payments to Acquire Businesses, Net of Cash Acquired				$ 24,200,000		24,200,000
Subsequent Event [Member] | Revolving Credit Facility [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Repayments of Lines of Credit		$ 5,000,000	$ 5,287,000
Joplin, Missouri and Victoria, Texas Television Stations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Recognized gain on net of tax						29,900,000
Disposal Group, Including Discontinued Operation, Consideration					66,600,000
Discontinued Operation, Disposal of Discontinued Operation ,Transaction Costs					500,000
Proceeds from Divestiture of Businesses, Net of Cash Divested					69,500,000	69,500,000	[2]	$ 0	[2]
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net					$ 1,300,000	0				$ 3,868,000
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal						$ 50,800,000

[1] No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment’s assets were held for sale.

[2] Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

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Acquisitions and Dispositions (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets Acquired:
Current assets	$ 1,440	$ 814
Property and equipment	6,678	375
Other assets:
Broadcast licenses	8,086	8,123
Goodwill	8,011	4,533
Other intangibles, deferred costs and investments	2,019	398
Total other assets	18,116	13,054
Total assets acquired	26,234	14,243
Liabilities Assumed:
Current liabilities	378	41
Total liabilities assumed	378	41
Net assets acquired	$ 25,856	$ 14,202

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Acquisitions and Dispositions (Details 1) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Acquisition [Line Items]
Net operating revenue	$ 31,546	$ 31,888	$ 92,187	$ 93,993
Station operating expense	23,000	23,478	69,325	69,874
Corporate general and administrative	3,132	2,728	8,875	8,065
Other operating (income) expenses, net	(127)	(1,393)	(69)	(1,388)
Operating income	5,541	7,075	14,056	17,442
Interest expense	254	187	691	548
Income from continuing operations, before tax	5,287	6,888	13,365	16,894
Income tax expense	2,430	2,804	5,566	6,939
Income from continuing operations, net of tax	2,857	4,084	7,799	9,955
Income from discontinued operations, net of tax	30,451	1,511	32,501	3,688
Net income	$ 33,308	$ 5,595	$ 40,300	$ 13,643
Basic earnings per share:
From continuing operations	$ 0.47	$ 0.70	$ 1.32	$ 1.70
From discontinued operations	5.16	0.26	5.51	0.63
Basic earnings per share (in dollars per share)	5.63	0.96	6.83	2.33
Diluted earnings per share:
From continuing operations	0.47	0.70	1.32	1.70
From discontinued operations	5.16	0.26	5.51	0.63
Diluted earnings per share (in dollars per share)	$ 5.63	$ 0.96	$ 6.83	$ 2.33

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Acquisitions and Dispositions (Details Textual) - USD ($)			9 Months Ended
	Sep. 01, 2017	May 09, 2017	Sep. 30, 2017		Sep. 30, 2016		Jan. 16, 2017	Dec. 31, 2016	Dec. 02, 2016	Nov. 14, 2016	Nov. 08, 2016	Oct. 11, 2016	Sep. 12, 2016	Aug. 11, 2016	Jun. 03, 2016	Apr. 11, 2016	Apr. 08, 2016	Mar. 25, 2016	Mar. 16, 2016	Nov. 02, 2015
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total			$ 26,234,000					$ 14,243,000
Disposal Group, Including Discontinued Operation, Consideration		$ 23,000,000
Proceeds from Divestiture of Businesses, Net of Cash Divested			69,528,000		$ 0
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net			1,300,000
Discontinued Operation, Disposal of Discontinued Operation ,Transaction Costs			50,000
Payments to Acquire Businesses, Net of Cash Acquired	$ 24,200,000		24,200,000
Joplin, Missouri and Victoria, Texas Television Stations [Member]
Business Acquisition [Line Items]
Disposal Group, Including Discontinued Operation, Consideration		66,600,000
Proceeds from Divestiture of Businesses, Net of Cash Divested		69,500,000	69,500,000	[1]	$ 0	[1]
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net		1,300,000	$ 0					$ 3,868,000
Discontinued Operation, Disposal of Discontinued Operation ,Transaction Costs		500,000
Apex Real Property, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total		$ 23,000,000
FM Translator [Member] | Portland, Maine market [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles																			$ 50,000
FM Translator [Member] | Milwaukee, Wisconsin Market [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles																		$ 50,000
FM Station [Member] | Wilks Broadcast - Columbus, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total																				$ 13,791,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables																				734,000
Business Acquisition, Transaction Costs																				$ 57,000
Tennessee Market [Member] | FM Translator Serving the Charlottesville [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles																$ 30,000
Iowa Market [Member] | FM Translator Serving the Spencer [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles															$ 35,000
Iowa Market [Member] | FM Translator Serving Des Moines [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles											$ 25,000
Virginia Market [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total							$ 1,658,000
Business Acquisition, Transaction Costs							$ 8,000
Virginia Market [Member] | FM Translator Serving the Charlottesville [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles																	$ 100,000
Washington Market [Member] | FM Translator Serving the Bellingham [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles												$ 25,000		$ 50,000
Maine market [Member] | FM Translator Serving the Portland [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles													$ 45,000
Illinois Market [Member] | FM Translator Serving Springfield [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles										$ 23,000
New York Market [Member] | FM Translator Serving Ithaca [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles									$ 35,000

[1] Net proceeds from the sale of the television stations reflect the sale price of $66.6 million, and the proceeds from sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.

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Stock-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Summary the stock option transactions
Number of Options, Outstanding	29,035
Number of Options, Exercised	(29,035)
Number of Options, Outstanding	0	29,035
Number of Options, Exercisable	0
Weighted Average Exercise Price, Outstanding	$ 28.47
Weighted Average Exercise Price, Exercised	28.47
Weighted Average Exercise Price, Outstanding	0	$ 28.47
Weighted Average Exercise Price, Exercisable	$ 0
Weighted Average Remaining Contractual Term (Years), Outstanding	0 years	4 months 24 days
Weighted Average Remaining Contractual Term (Years) Exercisable	0 years
Aggregate Intrinsic Value, Outstanding	$ 0	$ 633,834
Aggregate Intrinsic Value, Exercisable	$ 0

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Stock-Based Compensation (Details 1) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Summary of the restricted stock transactions
Shares, Outstanding | shares	103,262
Shares, Vested | shares	(3,434)
Shares, Forfeited | shares	(594)
Shares, Outstanding | shares	99,234
Weighted Average Grant Date Fair Value, Outstanding | $ / shares	$ 43.73
Weighted Average Grant Date Fair Value, Vested | $ / shares	43.1
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	45.39
Weighted Average Grant Date Fair Value, Outstanding | $ / shares	$ 43.75

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Stock-Based Compensation (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 16, 2013	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock Based Compensation [Abstract]
Increase in number of common stock shares authorized	233,334
Percentage to retain annual restricted stock awards	50.00%
Stock options exercise price description				may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant.
Stock options grant term				10 years
Restricted stock [Member]
Stock Based Compensation [Abstract]
Stock-Based Compensation expense		$ 629,000	$ 536,000	$ 1,761,000	$ 1,594,000
Recognized tax benefits		$ 252,000	$ 214,000	$ 704,000	$ 638,000
Common Class A [Member] | Convert For Class B [Member]
Stock Based Compensation [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	280,000
Common Class A [Member] | Stock Option [Member]
Stock Based Compensation [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	900,000
Common Class A [Member] | Incentive Compensation Plan [Member]
Stock Based Compensation [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	620,000
Common Class B [Member] | Stock Option [Member]
Stock Based Compensation [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	280,000

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Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Aug. 18, 2015
Total debt
Long-term debt	$ 35,287	$ 36,365
Amounts payable within one year	10,287	0
Long-term debt, noncurrent	25,000	35,287
Revolving credit facility [Member]
Total debt
Long-term debt	35,287	35,287	$ 100,000
Secured debt of affiliate [Member]
Total debt
Long-term debt	$ 0	$ 1,078

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Long-Term Debt (Details Textual) - USD ($)			1 Months Ended	9 Months Ended
	Nov. 03, 2017	Oct. 05, 2017	Aug. 18, 2015	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term Debt, Total				$ 35,287,000	$ 36,365,000
Amortization of Acquisition Costs				266,000
Affiliated Entity [Member]
Debt Instrument [Line Items]
Repayments of Secured Debt				$ 1,100,000
Secured Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date				May 01, 2020
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage				0.25%
Maximum [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Commitment Fee Percentage				0.30%
Maximum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate				1.00%
Minimum [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Commitment Fee Percentage				0.20%
Minimum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate				0.00%
Libor Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage				1.25%
Libor Rate [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate				2.00%
Libor Rate [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate				1.00%
Revolving credit facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date			Aug. 18, 2020
Long-term Debt, Total			$ 100,000,000	$ 35,287,000	$ 35,287,000
Line of Credit Facility, Remaining Borrowing Capacity				$ 65,000,000
Revolving credit facility [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Repayments of Long-term Lines of Credit	$ 5,000,000	$ 5,287,000

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Dividends (Details Textual) - USD ($) $ / shares in Units, $ in Thousands									1 Months Ended					3 Months Ended		9 Months Ended
	Sep. 13, 2017	Jun. 09, 2017	May 03, 2017	Apr. 14, 2017	Mar. 03, 2017	Jul. 08, 2016	Jun. 01, 2016	Mar. 02, 2016	Dec. 23, 2016	Nov. 21, 2016	Sep. 30, 2016	Aug. 30, 2016	Apr. 15, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Common Stock, Dividends, Per Share, Declared														$ 0.30	$ 0.30	$ 0.90	$ 0.80
Dividends Payable, Date to be Paid	Oct. 13, 2017
Dividends Payable, Date of Record														Sep. 25, 2017
Dividends				$ 1,800		$ 1,500			$ 2,900		$ 1,800		$ 1,500
Dividends Payable														$ 1,800		$ 1,800
Payments of Ordinary Dividends, Common Stock		$ 1,800														$ 3,541	$ 4,688
Dividends Payable, Date Declared	Sep. 13, 2017
Common Class A [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.30		$ 0.30		$ 0.30		$ 0.25	$ 0.25		$ 0.30		$ 0.30
Common Class B [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.30									$ 0.20