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But the Saga Communications CEO did say on Tuesday's earnings call, "I was hoping for a little better in Q4. We can always do a little better." Though he specified that he isn't blaming the weather for Saga's slower Q4 ("You can't really blame weather, it just happens"), he did cite the effects of a brutal winter in the company's Midwestern and New England markets; in Q4, he said, "We learned a new set of sequential words, which was 'polar vortex.'" Christian also addressed the topics of radio streaming, and the potential impact of cost-cutting on the radio industry.
Christian said, "I really don't need to tell you what the last four months have been like in those markets, and cited a manager who told him that people are "irritable -- you can almost hear the outcry of 'I'm just tired of this.'" He went on, "This limited us in Q4, and certainly in the first part of Q1," noting that Q1 is pacing up 2 percent, but adding, "That should be more." With no categories really up, he added that the "stations did a yeoman's job of massaging and expanding the revenue dollars they could capture."
Christian also cited a study that appeared on RAINNews.com that, he said, confirmed that subscription music, with its high royalties, is inherently unprofitable: "Usage growth can never catch up to expenses." Saga does stream, but, said Christian, it is "additive," and Saga "doesn't embrace streaming as a solid revenue model."
He also noted that Pandora "is out trying to sell radio ads," saying, "We came across Pandora soliciting a car store in New Hampshire" -- so its efforts are not limited to the major markets. But, he said, "Radio is free and portable, and we have our streaming rights," and streaming is an "ancillary product" and "an enhancement to our over-the-air product."
Looking ahead to the rest of the year, Christian cited the National Retail Federation and BDO, both of which are predicting increases in retail sales for 2014, and added, "We have a number of initiatives that are coming up, that are on the drawing board right now, to enhance our revenue for the year," though he said it would be premature to be more specific.
After noting that increasing revenue is Saga's top priority, he said, "We are mindful of expenses, and not cutting to the point of injuring the product." About cost-cutting in the industry overall, Christian said, "Cutting and pruning and squeezing -- it always reminds me of the consumer product inventory, where they shrink the product and make the package the same size," or provide "less product in a bigger box." He went on, "After a while, you might start saying [a station] doesn't sound good, or it doesn't sound the same. That's something as an industry we need to be very, very watchful of." Without maintaining quality, he said, "We're no better than a streaming signal on radio."
