##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period ended June 30, 2008
 or
 o
    
    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(State or other jurisdiction of 
incorporation or organization)
    
    38-3042953(I.R.S. Employer
Identification No.)73 Kercheval Avenue 
Grosse Pointe Farms, Michigan(Address of principal executive offices)
    
    48236(Zip Code)
 (313) 886-7070
 (Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



INDEX
 PagePART I.
    
    FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Financial Statements (Unaudited)
    
    
    3Condensed consolidated balance sheets  June 30, 2008 and December 31, 2007
    
    
    3Condensed consolidated statements of income  Three and six months ended June 30, 2008 and 2007
    
    
    4Condensed consolidated statements of cash flows  Three and six months ended June 30, 2008 and 2007
    
    
    5Notes to unaudited condensed consolidated financial statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    29PART II
    
    OTHER INFORMATION
    
    
    30Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 6.
    
    Exhibits
    
    
    31Signatures
    
    
    
    
    32Ex-31.1 Section 302 Certification of Chief Executive OfficerEx-31.2 Section 302 Certification of Chief Financial OfficerEx-32 Section 906 Certification of C.E.O. and C.F.O.
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.Financial Statements
 SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Note)(In thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    10,179
    
    
    $
    13,343Accounts receivable, net
    
    
    24,136
    
    
    
    23,449Prepaid expenses and other current assets
    
    
    5,256
    
    
    
    4,590Total current assets
    
    
    39,571
    
    
    
    41,382Property and equipment
    
    
    156,836
    
    
    
    153,504Less accumulated depreciation
    
    
    80,990
    
    
    
    77,287Net property and equipment
    
    
    75,846
    
    
    
    76,217Other assets:Broadcast licenses, net
    
    
    167,203
    
    
    
    163,102Goodwill, net
    
    
    54,974
    
    
    
    49,661Other intangibles, deferred costs and investments, net
    
    
    6,798
    
    
    
    7,282Total other assets
    
    
    228,975
    
    
    
    220,045$
    344,392
    
    
    $
    337,644Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    1,280
    
    
    $
    3,017Payroll and payroll taxes
    
    
    7,193
    
    
    
    7,722Other accrued expenses
    
    
    4,513
    
    
    
    4,848Barter transactions
    
    
    2,588
    
    
    
    1,720Current portion of long-term debt
    
    
    1,061
    
    
    
    Total current liabilities
    
    
    16,635
    
    
    
    17,307Deferred income taxes
    
    
    38,755
    
    
    
    36,829Long-term debt
    
    
    133,350
    
    
    
    129,911Other liabilities
    
    
    4,271
    
    
    
    4,521Stockholders equityCommon stock
    
    
    215
    
    
    
    213Additional paid-in capital
    
    
    51,343
    
    
    
    50,600Retained earnings
    
    
    116,464
    
    
    
    112,137Treasury stock
    
    
    (16,641
    )
    
    
    (13,874
    )Total stockholders equity
    
    
    151,381
    
    
    
    149,076$
    344,392
    
    
    $
    337,644
   3




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)(In thousands, except per share data)Net operating revenue
    
    $
    37,342
    
    
    $
    38,421
    
    
    $
    68,874
    
    
    $
    70,304Station operating expenses
    
    
    27,246
    
    
    
    27,016
    
    
    
    52,667
    
    
    
    53,011Corporate general and administrative
    
    
    2,574
    
    
    
    2,606
    
    
    
    5,126
    
    
    
    4,922Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )
    
    
    Operating income
    
    
    7,746
    
    
    
    8,799
    
    
    
    11,305
    
    
    
    12,371Other expenses, net:Interest expense
    
    
    1,876
    
    
    
    2,281
    
    
    
    3,871
    
    
    
    4,578Other expense, net
    
    
    7
    
    
    
    47
    
    
    
    27
    
    
    
    82Income before income tax
    
    
    5,863
    
    
    
    6,471
    
    
    
    7,407
    
    
    
    7,711Income tax provision
    
    
    2,403
    
    
    
    2,661
    
    
    
    3,037
    
    
    
    3,161Net income
    
    $
    3,460
    
    
    $
    3,810
    
    
    $
    4,370
    
    
    $
    4,550Earnings per shareBasic
    
    $
    .17
    
    
    $
    .19
    
    
    $
    .22
    
    
    $
    .23Diluted
    
    $
    .17
    
    
    $
    .19
    
    
    $
    .22
    
    
    $
    .23Weighted average common shares
    
    
    19,800
    
    
    
    20,083
    
    
    
    19,931
    
    
    
    20,066Weighted average common and common equivalent shares
    
    
    19,803
    
    
    
    20,113
    
    
    
    19,937
    
    
    
    20,101
  4




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SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2008
    
    
    2007(Unaudited)(In thousands)Cash flows from operating activities:Cash provided by operating activities
    
    $
    9,839
    
    
    $
    9,233Cash flows from investing activities:Acquisition of property and equipment
    
    
    (3,525
    )
    
    
    (4,563
    )Increase in intangibles and other assets
    
    
    (170
    )
    
    
    (282
    )Acquisition of stations
    
    
    (10,734
    )
    
    
    (2,941
    )Other investing activities
    
    
    1
    
    
    
    26Net cash used in investing activities
    
    
    (14,428
    )
    
    
    (7,760
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    5,500
    
    
    
    Payments on long-term debt
    
    
    (1,000
    )
    
    
    (4,000
    )Purchase of shares held in treasury
    
    
    (3,033
    )
    
    
    (126
    )Other financing activities
    
    
    (42
    )
    
    
    190Net cash provided by (used in) financing activities
    
    
    1,425
    
    
    
    (3,936
    )Net decrease in cash and cash equivalents
    
    
    (3,164
    )
    
    
    (2,463
    )Cash and cash equivalents, beginning of period
    
    
    13,343
    
    
    
    10,799Cash and cash equivalents, end of period
    
    $
    10,179
    
    
    $
    8,336
  5




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation
    Change in Accounting Estimate
 Accounting
Changes and Error Corrections,
 Income Taxes
  Revenue Recognition
 Revenue Recognition Revised and Updated.
 Time Brokerage Agreements
 Accounting for Leases
 6




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 Nonmonetary Asset Exchanges
  2. Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 151
 The Fair Value Option for Financial Assets
and Financial Liabilities
 Fair Value Measurements
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements
 7




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 3. Intangible Assets and Goodwill
 Accounting for Goodwill and Other Intangible Assets,
  
    
    The radio and television broadcasting licenses may be renewed indefinitely at little
cost.
    
    The radio and television broadcasting licenses are essential to our business, and we
intend to renew our licenses indefinitely.
    
    We have never been denied the renewal of a FCC broadcast license.
    
    We do not believe that there will be any compelling challenge to the renewal of our
broadcast licenses.
    
    We do not believe that the technology used in broadcasting will be replaced by another
technology in the foreseeable future.
   4. Common Stock and Treasury Stock
  Common Stock IssuedClass A
    
    Class B(Shares in thousands)Balance, January 1, 2007
    
    
    18,892
    
    
    
    2,396Exercised options
    
    
    43
    
    
    
    Conversion of shares
    
    
    8
    
    
    
    (8
    )Issuance of restricted stock
    
    
    36
    
    
    
    5Forfeiture of restricted stock
    
    
    (2
    )
    
    
    Balance, December 31, 2007
    
    
    18,977
    
    
    
    2,393Exercised options
    
    
    19
    
    
    
    Conversion of shares
    
    
    3
    
    
    
    (3
    )Issuance of restricted stock
    
    
    93
    
    
    
    12Forfeiture of restricted stock
    
    
    (1
    )
    
    
    Balance, June 30, 2008
    
    
    19,091
    
    
    
    2,402
  8




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 5. Acquisitions
  2008 Acquisitions
   2007 Acquisitions
      9




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SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 Condensed Consolidated Balance Sheet of 2008 and 2007 Acquisitions
  Saga Communications, Inc.
 Condensed Consolidated Balance Sheet of 2008 and 2007 Acquisitions
 Acquisitions in2008
    
    
    2007(In thousands)Assets Acquired:Current assets
    
    $
    
    
    
    $
    130Property and equipment
    
    
    56
    
    
    
    931Other assets:Broadcast licenses-Radio segment
    
    
    5,450
    
    
    
    12,210Goodwill-Radio segment
    
    
    5,312
    
    
    
    834Other intangibles, deferred costs and investments
    
    
    
    
    
    
    46Total other assets
    
    
    10,762
    
    
    
    13,090Total assets acquired
    
    
    10,818
    
    
    
    14,151Liabilities Assumed:Current liabilities
    
    
    84
    
    
    
    3,853Total liabilities assumed
    
    
    84
    
    
    
    3,853Net assets acquired
    
    $
    10,734
    
    
    $
    10,298
 Pro Forma Results of Operations for Acquisitions and Dispositions (Unaudited)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share data)Consolidated Results of OperationsNet operating revenue
    
    $
    37,342
    
    
    $
    38,752
    
    
    $
    68,874
    
    
    $
    70,945Station operating expense
    
    
    27,246
    
    
    
    27,284
    
    
    
    52,667
    
    
    
    53,568Corporate general and administrative
    
    
    2,574
    
    
    
    2,606
    
    
    
    5,126
    
    
    
    4,922Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )
    
    
    Operating income
    
    
    7,746
    
    
    
    8,862
    
    
    
    11,305
    
    
    
    12,455Interest expense
    
    
    1,876
    
    
    
    2,281
    
    
    
    3,871
    
    
    
    4,578Other expense, net
    
    
    7
    
    
    
    47
    
    
    
    27
    
    
    
    82Income taxes
    
    
    2,403
    
    
    
    2,686
    
    
    
    3,037
    
    
    
    3,195Net income
    
    $
    3,460
    
    
    $
    3,848
    
    
    $
    4,370
    
    
    $
    4,600Basic earnings per share
    
    $
    .17
    
    
    $
    .19
    
    
    $
    .22
    
    
    $
    .23Diluted earnings per share
    
    $
    .17
    
    
    $
    .19
    
    
    $
    .22
    
    
    $
    .23
 10




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Radio Broadcasting SegmentNet operating revenue
    
    $
    32,629
    
    
    $
    34,174
    
    
    $
    60,010
    
    
    $
    62,377Station operating expense
    
    
    23,398
    
    
    
    23,723
    
    
    
    45,311
    
    
    
    46,525Operating income
    
    $
    9,231
    
    
    $
    10,451
    
    
    $
    14,699
    
    
    $
    15,852
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Television Broadcasting SegmentNet operating revenue
    
    $
    4,713
    
    
    $
    4,578
    
    
    $
    8,864
    
    
    $
    8,568Station operating expense
    
    
    3,848
    
    
    
    3,561
    
    
    
    7,356
    
    
    
    7,043Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )
    
    
    Operating income
    
    $
    1,089
    
    
    $
    1,017
    
    
    $
    1,732
    
    
    $
    1,525
 Reconciliation of pro forma segment operating income to pro forma consolidated operating income:
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2008:Net operating revenue
    
    $
    32,629
    
    
    $
    4,713
    
    
    $
    
    
    
    $
    37,342Station operating expense
    
    
    23,398
    
    
    
    3,848
    
    
    
    
    
    
    
    27,246Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    2,574Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    9,231
    
    
    $
    1,089
    
    
    $
    (2,574
    )
    
    $
    7,746
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2007:Net operating revenue
    
    $
    34,174
    
    
    $
    4,578
    
    
    $
    
    
    
    $
    38,752Station operating expense
    
    
    23,723
    
    
    
    3,561
    
    
    
    
    
    
    
    27,284Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,606
    
    
    
    2,606Operating income (loss)
    
    $
    10,451
    
    
    $
    1,017
    
    
    $
    (2,606
    )
    
    $
    8,862
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2008:Net operating revenue
    
    $
    60,010
    
    
    $
    8,864
    
    
    $
    
    
    
    $
    68,874Station operating expense
    
    
    45,311
    
    
    
    7,356
    
    
    
    
    
    
    
    52,667Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    5,126
    
    
    
    5,126Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    14,699
    
    
    $
    1,732
    
    
    $
    (5,126
    )
    
    $
    11,305
 11




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2007:Net operating revenue
    
    $
    62,377
    
    
    $
    8,568
    
    
    $
    
    
    
    $
    70,945Station operating expense
    
    
    46,525
    
    
    
    7,043
    
    
    
    
    
    
    
    53,568Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    4,922
    
    
    
    4,922Operating income (loss)
    
    $
    15,852
    
    
    $
    1,525
    
    
    $
    (4,922
    )
    
    $
    12,455
 6. Stock Based Compensation
 Share-Based Payment
 Employee Stock Purchase Plan
  2005 Incentive Compensation Plan
  2003 Stock Option Plan
  12




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SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
  Weighted AverageRemaining
    
    
    AggregateNumber of
    
    
    Weighted Average
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Exercise Price
    
    
    (Years)
    
    
    ValueOutstanding at December 31, 2007
    
    
    2,682,752
    
    
    $
    12.81
    
    
    
    4.4
    
    
    $
    Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (4,817
    )
    
    
    10.00Outstanding at June 30, 2008
    
    
    2,677,935
    
    
    $
    12.81
    
    
    
    3.8
    
    
    $
    Exercisable at June 30, 2008
    
    
    2,132,834
    
    
    $
    13.50
    
    
    
    2.8
    
    
    $
    
  Weighted AverageGrant Date FairNumber of Options
    
    
    ValueNon-vested at December 31, 2007
    
    
    738,263
    
    
    $
    5.09Granted
    
    
    
    
    
    
    Vested
    
    
    (188,345
    )
    
    
    5.23Forfeited/canceled
    
    
    (4,817
    )
    
    
    4.96Non-vested at June 30, 2008
    
    
    545,101
    
    
    $
    5.04
  2007
    
    2006Grants
    
    GrantsWeighted average grant date fair value per share
    
    $
    4.82
    
    
    $
    4.49Expected volatility
    
    
    36.50
    %
    
    
    37.19
    %Expected term of options (years)
    
    
    7.9
    
    
    
    7.8Risk-free interest rate
    
    
    4.76
    %
    
    
    4.27
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
  13




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SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
  WeightedAverageGrant DateShares
    
    
    Fair ValueOutstanding at December 31, 2007
    
    
    164,072
    
    
    $
    10.24Granted
    
    
    105,300
    
    
    
    5.99Vested
    
    
    (41,843
    )
    
    
    10.55Forfeited
    
    
    (1,071
    )
    
    
    10.00Non-vested and outstanding at June 30, 2008
    
    
    226,458
    
    
    $
    8.21
  1997 Non-Employee Director Stock Option Plan
    Weighted
    
    
    AggregateNumber of
    
    
    Average Price
    
    
    IntrinsicOptions
    
    
    per Share
    
    
    ValueOutstanding at December 31, 2007
    
    
    23,080
    
    
    $
    0.009
    
    
    $
    135,726Granted
    
    
    
    
    
    
    Exercised
    
    
    (18,945
    )
    
    
    0.009Outstanding and exercisable at June 30, 2008
    
    
    4,135
    
    
    $
    0.009
    
    
    $
    20,681
 7. Long-Term Debt
  June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)Credit Agreement:Reducing revolver facility
    
    $
    133,350
    
    
    $
    128,850Secured debt of affiliate
    
    
    1,061
    
    
    
    1,061134,411
    
    
    
    129,911Amounts payable within one year
    
    
    1,061
    
    
    
    $
    133,350
    
    
    $
    129,911
 14




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
    8. Gain on Asset Exchange
 Accounting for
Nonmonetary Transactions, Exchanges of Nonmonetary Assets.
  15




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##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 9. Segment Information
   CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2008:Net operating revenue
    
    $
    32,629
    
    
    $
    4,713
    
    
    $
    
    
    
    $
    37,342Station operating expense
    
    
    23,398
    
    
    
    3,848
    
    
    
    
    
    
    
    27,246Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    2,574Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    9,231
    
    
    $
    1,089
    
    
    $
    (2,574
    )
    
    $
    7,746Depreciation and amortization
    
    $
    1,591
    
    
    $
    605
    
    
    $
    53
    
    
    $
    2,249
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2007:Net operating revenue
    
    $
    33,843
    
    
    $
    4,578
    
    
    $
    
    
    
    $
    38,421Station operating expense
    
    
    23,455
    
    
    
    3,561
    
    
    
    
    
    
    
    27,016Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,606
    
    
    
    2,606Operating income (loss)
    
    $
    10,388
    
    
    $
    1,017
    
    
    $
    (2,606
    )
    
    $
    8,799Depreciation and amortization
    
    $
    1,539
    
    
    $
    400
    
    
    $
    51
    
    
    $
    1,990
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2008:Net operating revenue
    
    $
    60,010
    
    
    $
    8,864
    
    
    $
    
    
    
    $
    68,874Station operating expense
    
    
    45,311
    
    
    
    7,356
    
    
    
    
    
    
    
    52,667Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    5,126
    
    
    
    5,126Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    14,699
    
    
    $
    1,732
    
    
    $
    (5,126
    )
    
    $
    11,305Depreciation and amortization
    
    $
    3,153
    
    
    $
    1,000
    
    
    $
    106
    
    
    $
    4,259Total assets
    
    $
    298,472
    
    
    $
    32,136
    
    
    $
    13,784
    
    
    $
    344,392
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2007:Net operating revenue
    
    $
    61,736
    
    
    $
    8,568
    
    
    $
    
    
    
    $
    70,304Station operating expense
    
    
    45,968
    
    
    
    7,043
    
    
    
    
    
    
    
    53,011Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    4,922
    
    
    
    4,922Operating income (loss)
    
    $
    15,768
    
    
    $
    1,525
    
    
    $
    (4,922
    )
    
    $
    12,371Depreciation and amortization
    
    $
    3,045
    
    
    $
    789
    
    
    $
    98
    
    
    $
    3,932Total assets
    
    $
    280,308
    
    
    $
    31,612
    
    
    $
    13,748
    
    
    $
    325,668
 16




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Item 2.Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Results of Operations
   General
   Radio Segment
      17




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tm
   18




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Percentage ofConsolidated
    
    Percentage ofOperating
    
    ConsolidatedIncome for
    
    Operatingthe Six
    
    Income forMonths
    
    the YearsEnded
    
    EndedJune 30,
    
    December 31,2008
    
    2007
    
    2007
    
    2006Market:Columbus, Ohio
    
    
    4
    %
    
    
    11
    %
    
    
    7
    %
    
    
    10
    %Manchester, New Hampshire
    
    
    18
    %
    
    
    14
    %
    
    
    15
    %
    
    
    14
    %Milwaukee, Wisconsin
    
    
    37
    %
    
    
    34
    %
    
    
    31
    %
    
    
    30
    %Norfolk, Virginia
    
    
    3
    %
    
    
    6
    %
    
    
    7
    %
    
    
    10
    %
   Percentage ofConsolidated
    
    Percentage ofStation
    
    ConsolidatedOperating
    
    StationIncome (*)
    
    Operatingfor the Six
    
    Income (*)Months
    
    for the YearsEnded
    
    EndedJune 30,
    
    December 31,2008
    
    2007
    
    2007
    
    2006Market:Columbus, Ohio
    
    
    4
    %
    
    
    7
    %
    
    
    6
    %
    
    
    8
    %Manchester, New Hampshire
    
    
    10
    %
    
    
    9
    %
    
    
    10
    %
    
    
    9
    %Milwaukee, Wisconsin
    
    
    21
    %
    
    
    21
    %
    
    
    20
    %
    
    
    21
    %Norfolk, Virginia
    
    
    2
    %
    
    
    4
    %
    
    
    4
    %
    
    
    7
    %
 
 *
    
    Operating income plus corporate general and administrative,
depreciation and amortization. Television Segment
  19




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20




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Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Results of Operations
  Consolidated Results of Operations
 Three Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages and per share information)Net operating revenue
    
    $
    37,342
    
    
    $
    38,421
    
    
    $
    (1,079
    )
    
    
    (2.8
    )%Station operating expense
    
    
    27,246
    
    
    
    27,016
    
    
    
    230
    
    
    
    0.9
    %Corporate G&A
    
    
    2,574
    
    
    
    2,606
    
    
    
    (32
    )
    
    
    (1.2
    )%Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    224
    
    
    
    N/MOperating income
    
    
    7,746
    
    
    
    8,799
    
    
    
    (1,053
    )
    
    
    (12.0
    )%Interest expense
    
    
    1,876
    
    
    
    2,281
    
    
    
    (405
    )
    
    
    (17.8
    )%Other expense, net
    
    
    7
    
    
    
    47
    
    
    
    (40
    )
    
    
    N/MIncome taxes
    
    
    2,403
    
    
    
    2,661
    
    
    
    (258
    )
    
    
    (9.7
    )%Net income
    
    $
    3,460
    
    
    $
    3,810
    
    
    $
    (350
    )
    
    
    (9.2
    )%Earnings per share (basic and diluted)
    
    $
    .17
    
    
    $
    .19
    
    
    $
    (.02
    )
    
    
    (10.5
    )%
 Radio Broadcasting Segment
 Three Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    32,629
    
    
    $
    33,843
    
    
    $
    (1,214
    )
    
    
    (3.6
    )%Station operating expense
    
    
    23,398
    
    
    
    23,455
    
    
    
    (57
    )
    
    
    (0.2
    )%Operating income
    
    $
    9,231
    
    
    $
    10,388
    
    
    $
    (1,157
    )
    
    
    (11.1
    )%
 Television Broadcasting Segment
 Three Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    4,713
    
    
    $
    4,578
    
    
    $
    135
    
    
    
    3.0
    %Station operating expense
    
    
    3,848
    
    
    
    3,561
    
    
    
    287
    
    
    
    8.1
    %Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    224
    
    
    
    N/MOperating income
    
    $
    1,089
    
    
    $
    1,017
    
    
    $
    72
    
    
    
    7.1
    %
 
 N/M = Not Meaningful 21




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Reconciliation of segment operating income to consolidated operating income:
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2008:Net operating revenue
    
    $
    32,629
    
    
    $
    4,713
    
    
    $
    
    
    
    $
    37,342Station operating expense
    
    
    23,398
    
    
    
    3,848
    
    
    
    
    
    
    
    27,246Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    2,574Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    9,231
    
    
    $
    1,089
    
    
    $
    (2,574
    )
    
    $
    7,746
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended June 30, 2007:Net operating revenue
    
    $
    33,843
    
    
    $
    4,578
    
    
    $
    
    
    
    $
    38,421Station operating expense
    
    
    23,455
    
    
    
    3,561
    
    
    
    
    
    
    
    27,016Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,606
    
    
    
    2,606Operating income (loss)
    
    $
    10,388
    
    
    $
    1,017
    
    
    $
    (2,606
    )
    
    $
    8,799
 Consolidated
     22




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Radio Segment
    Television Segment
    23




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Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
  Consolidated Results of Operations
 Six Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages and per share information)Net operating revenue
    
    $
    68,874
    
    
    $
    70,304
    
    
    $
    (1,430
    )
    
    
    (2.0
    )%Station operating expense
    
    
    52,667
    
    
    
    53,011
    
    
    
    (344
    )
    
    
    (0.7
    )%Corporate G&A
    
    
    5,126
    
    
    
    4,922
    
    
    
    204
    
    
    
    4.2
    %Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    224
    
    
    
    N/MOperating income
    
    
    11,305
    
    
    
    12,371
    
    
    
    (1,066
    )
    
    
    (8.6
    )%Interest expense
    
    
    3,871
    
    
    
    4,578
    
    
    
    (707
    )
    
    
    (15.4
    )%Other expense, net
    
    
    27
    
    
    
    82
    
    
    
    (55
    )
    
    
    N/MIncome taxes
    
    
    3,037
    
    
    
    3,161
    
    
    
    (124
    )
    
    
    (3.9
    )%Net income
    
    $
    4,370
    
    
    $
    4,550
    
    
    $
    (180
    )
    
    
    (4.0
    )%Earnings per share (basic and diluted)
    
    $
    .22
    
    
    $
    .23
    
    
    $
    (.01
    )
    
    
    (4.4
    )%
 Radio Broadcasting Segment
 Six Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    60,010
    
    
    $
    61,736
    
    
    $
    (1,726
    )
    
    
    (2.8
    )%Station operating expense
    
    
    45,311
    
    
    
    45,968
    
    
    
    (657
    )
    
    
    (1.4
    )%Operating income
    
    $
    14,699
    
    
    $
    15,768
    
    
    $
    (1,069
    )
    
    
    (6.8
    )%
 Television Broadcasting Segment
 Six Months EndedJune 30,
    
    
    $ Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    8,864
    
    
    $
    8,568
    
    
    $
    296
    
    
    
    3.5
    %Station operating expense
    
    
    7,356
    
    
    
    7,043
    
    
    
    313
    
    
    
    4.5
    %Gain on asset exchange
    
    
    (224
    )
    
    
    
    
    
    
    224
    
    
    
    N/MOperating income
    
    $
    1,732
    
    
    $
    1,525
    
    
    $
    207
    
    
    
    13.6
    %
 
 N/M = Not meaningful 24




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##### Table of Contents



Reconciliation of segment operating income to consolidated operating income:
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2008:Net operating revenue
    
    $
    60,010
    
    
    $
    8,864
    
    
    $
    
    
    
    $
    68,874Station operating expense
    
    
    45,311
    
    
    
    7,356
    
    
    
    
    
    
    
    52,667Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    5,126
    
    
    
    5,126Gain on asset exchange
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (224
    )Operating income (loss)
    
    $
    14,699
    
    
    $
    1,732
    
    
    $
    (5,126
    )
    
    $
    11,305
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Six Months Ended June 30, 2007:Net operating revenue
    
    $
    61,736
    
    
    $
    8,568
    
    
    $
    
    
    
    $
    70,304Station operating expense
    
    
    45,968
    
    
    
    7,043
    
    
    
    
    
    
    
    53,011Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    4,922
    
    
    
    4,922Operating income (loss)
    
    $
    15,768
    
    
    $
    1,525
    
    
    $
    (4,922
    )
    
    $
    12,371
 Consolidated
    25




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Radio Segment
    Television Segment
    26




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##### Table of Contents



Forward-Looking Statements
   Liquidity and Capital Resources
 Debt Arrangements and Debt Service Requirements
     27




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##### Table of Contents



Sources and Uses of Cash
      Summary Disclosures About Contractual Obligations and Commercial Commitments
   Critical Accounting Policies and Estimates
  Inflation
  28




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##### Table of Contents



Item 3.Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.Controls and Procedures
  29




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    
    Approximate DollarShares Purchased
    
    
    Value of SharesTotal Number
    
    
    
    
    
    
    as Part of Publicly
    
    
    that May Yet beof Shares    

    
    Average Price
    
    
    Announced
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Program
    
    
    Program(a)April 1  April 30, 2008
    
    
    105,406
    
    
    $
    5.880
    
    
    
    105,406
    
    
    $
    31,729,193May 1  May 31, 2008
    
    
    101,177
    
    
    $
    5.210
    
    
    
    101,177
    
    
    $
    31,202,038June 1  June 30, 2008
    
    
    90,666
    
    
    $
    5.374
    
    
    
    90,666
    
    
    $
    30,714,831Total
    
    
    297,249
    
    
    $
    5.498
    
    
    
    297,249
    
    
    $
    30,714,831
 
 (a)
    
    On August 7, 1998 our Board of Directors approved a Stock Buy-Back
Program of up to $2,000,000 of our Class A Common Stock. Since August
1998, the Board of Directors has authorized several increases to the
Stock Buy-Back Program, the most recent occurring in January 2008,
which increased the total amount authorized for repurchase of our
Class A Common Stock to $60,000,000. 
 Item 4. Submission of Matters to a Vote of Security Holders
    Name
    
    For
    
    AgainstClarke Brown*
    
    
    12,163,738
    
    
    
    3,132,765Gary Stevens*
    
    
    12,082,510
    
    
    
    3,213,993Donald Alt
    
    
    36,057,297
    
    
    
    3,142,586Brian Brady
    
    
    36,033,223
    
    
    
    3,196,660Edward K. Christian
    
    
    33,214,178
    
    
    
    5,985,705Jonathan Firestone
    
    
    35,993,246
    
    
    
    3,206,637Robert Maccini
    
    
    35,579,979
    
    
    
    3,619,904
 
 *
    
    Elected by the holders of Class A Common Stock.  30




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Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-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)
of the Securities Exchange Act of 1934, 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 13a-14(b) of the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 31




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SIGNATURES
  SAGA COMMUNICATIONS, INCDate: August 8, 2008
    /s/  SAMUEL D. BUSHSamuel D. BushSenior Vice President, Chief Financial Officer and
Treasurer (Principal Financial Officer) Date: August 8, 2008
    /s/  CATHERINE A. BOBINSKICatherine A. BobinskiVice President, Corporate
Controller and
Chief Accounting Officer
(Principal Accounting Officer) 32