Good morning, everybody, and welcome to the Saga Communications Inc. Second Quarter Earnings Release and Conference Call. [Operator Instructions] And it is now my pleasure to turn the floor over to your host, Mr. Chris Forgy of Saga Communications. Chris, the floor is yours.

Thank you, Jenny. And thanks to all of you on the call for your continued interest in Saga Communications. Welcome to the 2023 Second Quarter Conference Call. And I'm immediately going to turn it over to my partner in crime, Mr. Sam Bush.

Thank you, Chris. I'll start with the obligatory. This call will contain certain forward-looking statements. 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. Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data tables. For the quarter ended June 30, 2023, net revenue decreased 2.2% to $29.2 million compared to $29.8 million last year. It should be noted that political impact to this year's performance. As for the quarter, we had $108,000 in gross political revenue this year compared to $787,000 for the same period last year. Without political, our overall revenue for the quarter would have been flat with last year. Station operating expense increased 2.9% or $621,000 to $22.4 million for the 3-month period. As discussed in the first quarter conference call, after a number of years of giving our employees little to no compensation increases, we made the strategic decision to give our [indiscernible] pay increases in recognition of the tremendous work they do. These pay increases and related payroll taxes amounted to an estimated $446,000 in the first quarter, as previously reported and $444,000 in the second quarter of this year. Similar to the first quarter, other smaller but still meaningful increases in our station operating expenses included increased utility expenses, music licensing fees, office maintenance and repairs, sales costs, including commissions and sales surveys. For the 6-month period ended June 30, 2023, net revenue was down 0.6% to $54.5 million compared to $54.8 million last year. Adjusting for political for the 6-month period, gross revenue increased 0.7% for the 6-month period. Gross political revenue year-to-date was…

Well, thank you, Sam, and thank you all again for being on the call with us today. Sam, if I seem a bit giddy on the call today, it's only because we have now completed the process of building what I consider to be the very best leadership team I've ever been around. And Sam, it starts with you and continues with what we call a seal team of elite leaders at the top from a corporate office standpoint, like indulge me for a moment, I'm going to name some names like Cathy Bobinski, our Senior Vice President and Controller. Wayne Leland, our Senior Vice President of Operations; our Vice President of Engineering, Tom Atkins; our CMO, Eric Christian; our CTO, Tracy Cleeton; our Vice President of Facilities, Angela Parks; VP of Financial Analysts -- and Financial Analyst, [indiscernible]; and Annette Calcaterra, our VP of HR, along with a great group of corporate staff, GM and market employees who are all committed to the mission. And frankly, it's very exciting. Okay. There's a phrase that we've shared with our leadership team over the years. It's been around for a few years at Saga, and it has more context today than ever before. If you've ever had any Latin in high school or college, you may be able to translate this, the phrase goes like this, finis origine pendet or the end hangs on the beginning. In other words, your actions today will impact your future outcomes. That's how we've been behaving at Saga for about the last 8 months or so, focusing on really 3 areas of opportunistic growth that we've talked about before. People, products and perceptions. Not cost cutting, consolidating markets or offloading real estate, leaning into our economic headwinds and making investments, as I said, in people,…

Thank you, Chris. And as you said, it's all in a fast and furious mode. Everything is there. We did have a few questions come in today. The first 1 is about our HD stations as we call our translators and our metro signals and so forth. But the question comes in that the company has a lot of HD-only stations, HD2, HD3. Most of them, not in the question, but most of them associated with translators that we also have, which basically translators are miniature FM radio stations that cover the local market very well in the markets we use them in. But the question is, they were wondering what the economics of these stations are compared to our AM, FM stations, the type of information that they're looking for was, are these stations increasing listeners and engagement for us. Does the company promote these stations in a different way? And what is the overall value of these stations to Saga?

Sam, we could double team on this question, if you like. The revenue really varies by market. Some of the HDs and translators will do more revenue than others. But we did create 3 in-house formats: Outlaw, EZ Favorites and Pure Oldies and they're used strategically to complement our existing full signal formats in those markets and also used to bolster our AM stations primarily with our news talk format. So those are a couple of things that might be helpful to the person posing the question. Sam, if you have anything else you want to add, please, go ahead.

Yes. I was going to say that to some degree, the interest in the translators and the AM, FM HD stations, which go along with them and expand what we're doing signal-wise really started to some extent in Asheville, North Carolina, with The River, which we were not able to have as many signals in the market as we wanted. So we created a signal in there that would reach the market and has done very, very well for us over the years. And that led to, as you pointed out, the creation of the EZ Favorites, Pure Oldies and Outlaw formats as an extension of our operations in many, many markets around the country where we operate. As Chris said, the economics are varied. In some cases, they simulcast to give us bigger reach. In some cases, they take a signal that is in a particular market and expands it to an adjacent market. In some cases, as Chris pointed out, there is a very good way to be -- to put an AM news talk. Our successful AM station on an FM brand so that we can alleviate some of the concerns about what's going on with AM radio as we go forward. And I think the biggest thing that Chris mentioned, and I would just emphasize is it allows us to expand our coverage in a market to reach listeners that may not have listened to our stations are to reach complementary or provide complementary stations to a listener who may want to listen to traditional country at some point, Outlaw country at some point or new country at some point. So it allows you to be more to the folks that are listening give them more choice in the market, but at the same time, continue to be live and local.

And one of the things I thought about Sam is the size of the markets that we're in, 250-watt translator really gives a full market signal in many of our markets. So you really -- the listener can't really tell the difference between a full market signal and a 250-watt translator because of the size of the markets and the area of coverage we're able to achieve.

Absolutely. We did get a question from another long-term holder of Saga stock, and it talked about providing a breakdown of digital revenues, which I think we've done with the growth of what we're doing and where we are with those numbers and so forth as well as what the growth was for Q2 in the digital. And as Chris pointed out, we're seeing a lot of good improvements there. But again, we feel like we're at the -- just out of the starting blocks and there's another 90 yards and the 100 yard days to run, and we're still moving forward, and we still are picking up speed. So I think you'll see a lot more on that, and we'll be reporting more on that as we go forward. There also was a question about how Q3 is trending relative to Q2. And I talked about the pacing being down right now in Q3 as low to mid-single digits. Pointed out again, the comparison to political that we need to take in mind. And I would also say that we should also look and maybe Chris can -- you can speak to this in a minute, but revenue comes in so much later now and it has for the last few years. So when we're looking at September now is the last month in the quarter that we'll have this year, it's really hard to tell what September is going to look like yet because as we went into the second quarter, we looked at certain months and they did great. But by the time the quarter was over, they looked okay. And I think that's something we got to keep in mind that, that old traditional broadcasting from 10 years ago where you looked at a quarter and knew where you were going to finish before you went into it you really can't do that anymore. And we do see some really good things as we get closer to the quarter's end.

Yes, we would normally say we need to go into a month at about 90% of goal to have a shot and the percentages have backed off from there. And the further -- further you go out, the less reliable the pacing is. So you're absolutely right.

Well, I think that wraps it up. As we've always encouraged and Chris and I welcome if you have additional questions, if you have, I would like to get some more information on the questions we've answered or what we presented. We're here, feel free to give us a call. And Jenny, I think we'll turn it back over to you and let you wrap up the session today.

Thank you so much, and thank you, everybody. This does conclude today's conference. You may disconnect at this time. Thank you for your participation.