Ladies and gentlemen, thank you for standing by. And welcome to the Saga Communications First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode today. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Ed Christian. Please go ahead, sir.

Thank you, Marybeth. Appreciate it, and by the way, you've been a great voiceover person, seriously. Anyway, Sam and I are here as we have done for eons, decades now. So I will turn it over to Sam to begin, and then I have some comments, as usual, right after that.

Thank you, Ed. This call will contain 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. This call will also contain a discussion of certain non-GAAP financial measures. A reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data table. As you look at the first quarter for 2019, keep in mind that we closed on the purchase of four FM radio stations serving the Gainesville-Ocala radio market on December 31, 2018, for $9.3 million. Also note that we reported $251,000 in other operating income in the first quarter of 2018 compared to a $3,000 expense in 2019. The gain in 2018 was principally due to the sale of a tower in Keene, New Hampshire that we no longer were using. As reported in the press release, for the quarter, our net revenue decreased by $193,000 or approximately of 0.7%. There were a number of factors involved, including an increase that we saw in our local revenue. Ed will expand on this in his comments shortly. Free cash flow was up to $2.6 million for the quarter compared to $2.3 million last year. I'm pleased to report that our ongoing focus on expense controls continues to pay off. Station operating expense for the quarter decreased $234,000 on a historical basis and $1.1 million on a same-station basis. We will continue to be diligent about our operating expense levels as we progress through the year. To better understand our calculations of free cash flow, net income and net income per share, we have included a couple of additional reconciliation tables as part of the Supplemental Financial Data section of our…

Thanks, Sam. And as always, I appreciate the work that our analysts and Cathy Bobinski and you put into the quarterly compilation. And when I was thinking this before, I said mentally in my head the quarterly complication, but I thought that really wasn't too appropriate for the whole thing. For the compilation, thank you, Sam. It's about what I expected but not the way that I wanted for Q1. Before I launch into an overview, let's just kind of reaffirm a few things that Sam said. Political is down Q1 by $215,000. There were - we expected this as there were no material political events that were advertised during Q1. What was not anticipated and is always difficult to predict was national sales, which were down by, gulp, $502,600. We were up company-wide in the - on regional by $300,000, but it doesn't help the shortfall in national or the absence of political. What I have said, I must admit that I am not content with our performance compared to our potential. I had set a higher bar for our local sales departments than the company-wide $300,000. We have great assets, great markets. We handpicked the markets over the years for the resiliency of the market and the upside potential of the growing economies in the market. Without going through market by market, we did have many good performers during Q1. Let's make that abundantly clear, many good performers. But those stations who were off their game, frankly, really missed the mark and did indeed misread their compass directions and headings. Back in New Year's, I sent an e-mail to all of our market managers welcoming them to a new sales reality and advise them then that I thought Q1 would be troubling for a number of reasons. And…

We did, Ed. We had two questions that came in. The first one is, what are your thoughts about the potential changes to the FCC's caps on radio ownership and how this could impact the industry and particularly Saga?

It's interesting because the bigger companies don't want more. A few of them have already come on record saying that we - the caps are fine and leave us alone because they already have their thing and don't want to see new entrants coming in and creating clusters. A lot of the small operators are for it, some in some markets are not. It's a mixed bag at this point in time. But I think the interesting thing that will probably come out of this is that we will see caps being lifted to certain levels, but it will be not in the major markets, but more in markets like 50 and above, somewhere in there, I think, that you'll see that. Right now, in a major a market with enough stations, you can have 5 FM stations and [indiscernible] at some point in time. But I do think in some markets where you're limited now to 3 or 4 stations, you might see them increase and do that. Consolidation has not proven, sometimes, to be the best thing for the industry. And there are pros and cons on that, and we could talk about that for hours. But I do think that there is a likelihood, strong likelihood that, that's going to happen, perhaps not so much on TV. The TV caps went well. They could come off, too. But there's a lot more pushback in TV than there is in - from the communities and other interests than there is in radio. Okay. Question? Is there another question?

We had a second question, and you've already talked a little bit about it when you were talking about national dollars and the challenges there as well as the rates there. But the question is, how do you view the potential impact on the industry of the big three getting more rational in their capital structures? And how will this impact advertising rates?

Well, I think you already are beginning to see the fact that - with a couple of AFD [ph] big ones - I don't want to say restructuring their capital or paying it down. They basically have just come out of chapter and reduced their debt that way, which is not the preferred way or choice of making your investors or stockholders happy. But I have noticed - I think it was Radio One just yesterday or Urban One announced that they paid down debt. And more and more people are focusing on that, which I think is very healthy. As we look at the ability for companies to grow, their - and multiples are changing in terms of cash flow multiples for the value of stations, I think it's a very healthy thing to do that. So you're going to start seeing that happen. And hopefully, as the pressure relaxes on some of these groups, they will begin to see the fact that we have such value that we no longer need to create small networks or price the way we do - a way they do, not the way we do, in terms of national dollars. I know one group that specifically has said that they will have no unsold time on their stations. And if you have 12 minutes an hour, you will have 12 minutes of commercials. And it's not a fact on price. It's a fact on filling every available inventory with whatever remnant rate is available in a particular time. And we just don't work that way. So I'm really hopeful that we begin to get some - well, there's a number of words I could use here, but let's just call it integrity and recognize the true value of radio broadcasting. I mean it's tremendous, and it shouldn't happen this way. We should not allow ourselves to be cheap, pushed aside by - into - driven into penance by buyers of our advertising and be told, this is what you will pay. And this is all we will pay. And we have to have some dignity and say, no, we're not - we're worth more than that. We have value. We do good things for your clients, and for you to insult us like this is demeaning, hurtful, and it's not worth our time and energy to do business with you. Wow, I said a lot on that one. That's probably what I had for today.

Well, that's good. I think that wraps it up. So Marybeth, we'll turn it back over to you. Ladies and gentlemen, that does conclude our conference for today. We do thank you for your participation and using AT&T Executive Teleconference services. Host and speakers, you may stand by for debrief. All others, you may now disconnect.