Edward K. Christian – Chairman, President and Chief Executive Officer Samuel D. Bush – Senior Vice President and Chief Financial Officer

Ladies and gentlemen, thank you for standing by and welcome to the Saga Communications First Quarter 2013 Results Call. For the conference, all the participants are in a listen-only-mode. As a reminder, today’s today this call is being recorded. I’ll turn the conference now to, Mr. Ed Christian. Please go ahead, sir.

Thank you, John. Good morning, good afternoon, wherever you might be in the U.S.A. listening right now. And thank you for joining us. As it has been our historic tradition, Sam Bush will kick it off with his summary of events.

Thank you, Ed. This call will contain certain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the Risk Factors section of our most recent Form 10-K. Actual results may differ materially from those expressed in this conference call. This call will also contain a discussion of certain non-GAAP financial measures within the meaning of Item 10 of Reg S-K. Reconciliations for all the non-GAAP financial measures to the most directly comparable GAAP measure is attached in the selected financial data table. The quarter was challenging from a revenue perspective. During the first quarter last year, we had $500,000 in gross political revenue compared to $62,000 this year. Gross national revenue was down $505,000 for the quarter this year when compared compare to last year. The bright spot was our local revenue efforts. We increased our gross local revenue by $523,000 over first quarter last year, this went a long way to make up for the national decline, but it wasn’t enough to make up for political as well, resulting in our net revenue being down 1.3% for the quarter. National accounted for approximately 11.6% of gross revenue for the quarter compared to 13% for the same period last year. We are anticipating a bit of improvement in revenue growth for the second quarter as currently April finished up mid-single digits, May is relatively flat with last year and June is up low to mid-single-digits as of today. Keep in mind that last year, we did $717,000 of political during the second quarter. Station operating expense decreased $272,000 for the quarter. Going forward, we expect station operating expense to be flat to up 1% for 2013. Retrans revenue from our TV stations was $537,000 in the first quarter, up from…

Have we ever had questions that we couldn’t feel we could appropriately respond?

No, actually not.

I’m just wondering about that. Is that just something which you have to say?

Well, something I said for quite a while now. So, maybe I should look and see whether I really have to say it or not.

I would like to know what an inappropriate question is.

All right. I will look into that.

That would be good. Thanks, Sam. The quarter was interesting. We kind of missed it a little bit because we thought it would break near the end of December that we’re kind of waiting for that moment, what we saw – suddenly saw January would come alive and it didn’t. And we recognize it probably about a week later than we should. But everything has been breaking so late – of late that we weren’t overly concerned about it. And then, February came and that was flat. And then, March came and we got a glimmer of something decent in there, but – and balance it was what I call a grey quarter. And I’m not talking to any shades of grey, but what I’m really thinking about is if you are familiar with being in the north of the United States in a winter and you wake up in the morning and you look out and the sky is all clouds and it’s all slight grey. And that’s all you see all day along, this is grey sky. And that’s kind of how first quarter went. And then, we – I lived with it. It’s over. I can’t point a figure to any seminal event or person. I do think, however, that the winter and weather might have been part of the culprit for the thing. We can’t blame anybody. I couldn’t try and single out any air personalities or something like that and point a finger there. I take responsibility for it. And essentially, when you get down to it, it’s a very simple answer. And that is we essentially didn’t sell enough. And that’s what happened in the first quarter. We miss the cut point and we didn’t sell enough. However, sometimes, we take some short term…

We do. We got a few questions from Eric and Marci over to...

Did I talk too much?

No, you always do very well with that.

Thank you.

We got a few questions from Eric and Marci of Wells Fargo, and also from Aaron at Sidoti. A lot of them we’ve already covered, so I’m just going to go through some of the ones that we haven’t covered. They both kind of asked a question about, in a little different way, but M&A activity has been very active in television. How are you seeing it in radio and what are your thoughts for 2013 in the M&A environment?

A Boy, boy, television has been a kick a, I’m telling you this has been a whirlwind of activity in the television marketplace. And it’s not something that we see in the radio. I think it’s because there’s a lot less TV stations than there are radio stations when you’re dealing with the universe of 12,000. Also television kind of held their value pretty well. I mean, they didn’t have the horrendous switch in valuation that radio has gone through. In television right now, the multiple is still 10 times cash flow, maybe a little bit more, maybe a touch less. But maybe it was 14 and heavy days. And that’s not that much of a disconnect if you push it from 11 to a 14. But when radio, when you go from a 15 times cash flow down to a 5 or 6, it’s a big disconnect. So, we still have a fractured marketplace. Properties have been moving. There have been companies that where their private equity or their investors or whatever said is enough, just take this out to market and see what happens. I think if you flush that inventory out, which is going pretty quick than what you have, is a second wave coming up. And I think you see that more not in 2013 but in 2014. There’s still a tremendous amount of pent-up inventory that where people are hoping that they can get back to the good old days. And I’m talking about big companies that have these levels of expectation that if we just wait, we’ll get back up. And I don’t necessary see that happening right away. And I don’t think they have the expectancy of life and to wait it out to watch this change. So, it’s tough plus you really don’t have the banks who are out maybe three times cash flow right now. And you got private equity, which is in a lot of respects, abandoned the radio industry. I mean they’re that’s the first fickle friends to fly away when this occurs. And that’s what we have happening right now. So, we don’t have debt. We don’t’ have equity. We have pricing where nobody is happy about it. So, we’re still a confused industry right at this moment.

There’s a follow-up question to that, Ed, talking about how we’re going to use the cash that we have on hand in our cash flow, as how do you prioritize uses of free cash flow.

We’re going to buy the amusement park.

I think somebody tried that one and didn’t work so well for them.

Okay. Three flags over Saga. You don’t like that idea?

It would be amusing.

Yeah. Very good. We know that our requirements to run the joint but having $4 million cash on hand. So that leaves again a delta there of 20-some-odd million dollars. And what do we do with it? Well, obviously last year, we looked and we said let’s reward some of the patient stockholders that had been with us for years and years and years. Again, we don’t believe that paying down a debt below a certain point is in the best interest of our cash because I believe that every company needs a certain amount of debt to be a healthy company. So, that’s not something you should probably see. So, if we can do an acquisition? We’d love to. I mean, we’re not out of the acquisition business. We have a temporary hiatus and we’ve actually had kind of our interest peeked on a couple of opportunities that didn’t come off fruition. So, we would consider that. We’d certainly look at doing the dividend again. We certainly look at a stock buyback, if we feel that there is a prudent price point in our stock to do that. Those are really the three options that we’re doing. We’re not trying to hoard our cash because it decreases in value by hoarding it. That’s when the things when, the interest we get on $25 million literally pays our bank fees. And that’s certainly not a prudent use of cash. So, we’re discussing it. And directors are ever vigilant in reviewing which way we go.

Final question, it’s more towards the operations and basically any updates on digital initiatives and what are your thoughts on digital right now?

Well, there’s some very some interesting things going on in digital and especially in the music side right now, where the digital rights are taking on different platforms. Publishers are pulling them from performing rights organizations and keeping digital catalogs for their streaming and are going to source licensing. And if you’re talking in digital about what do we do on our website? I think we’re finding ways to monetize that. We’re not inserting commercials on the streaming because we believe that we can add more value to a peer replication of our analog signal. We do use digital to have additional facilities in the marketplace through the use of translators to enhance a digital signal. And [digital display] is not going away and I’m really proud of ambiguity because now they’re beginning to place more and more HD radios in the dash. And that’s a whole other subject is the new dashboard. And what it’s going to do in the next several years, how it will everything. I have a lot of people come to me and say oh my God, aren’t you afraid of what happens for streaming, once we’re able to do this and you can put your iPhone in there and you can access it and stream whatever might be Pandora or whatever in your car? Well, I know that I can’t keep a cell call for longer than five minutes in certain places. And it’s certainly can’t cannot travel across the United States without losing a signal in a very short period of time. I think digital in terms of that is still problematic in cars. There’s no question we’re seeing it in our markets in terms of digital listening on computers or PCs or tablets or whatever it might be. In fact, I don’t…

I think that’s good and I think, John...

Well, thank you. I appreciate that. And, John, if you think it was good?

That was very good.

Thanks, John. All right. We’re done now. So, it’s your turn.

We’ll turn it back over to you to wrap it up. And thanks, everybody, for calling in today.

And, ladies and gentlemen, that does conclude your conference. Thank you for your participation. You may now disconnect.