When the New York Stock Exchange opens today, shares in Saga Communications stock will be worth about four times what they closed at yesterday. But shareholders didn't hit the lottery: they'll own only a quarter of the number of shares. (Sidebar inside: Updates on Citadel and Regent delisting threats)
According to a corporate press release, the "1-for-4 reverse stock split" of Saga's Class A Common Stock and Class B Common Stock became effective at 11:59pm last night, but the split won't be reflected on stock tickers until the markets open this morning.
In any instances where the split would leave a shareholder with a fraction of a share, Saga will round up that shareholder's stake to the next full number of shares.
National radio industry journalist Tom Taylor noted yesterday, the strategy is a good one on Saga's part. Since the reverse split will quadruple Saga's stock price (it closed Wednesday at $1.03), the company may avoid falling below the $1.00 mark which can trigger delisting warnings.
Saga owns a cluster of five radio stations in the Ithaca-Cortland market. They include rocker I-100 (WIII), News-Talk 870 WHCU, Progressive Talk 1470 WNYY, Q-Country 103.7 (WQNY) and Lite Rock 97.3 (WYXL).
Last year, two other companies that own stations in CNYRadio.com territory were threatened with delisting from their respective trading venues. In their cases, a 1-for-4 reverse stock split still wouldn't be enough to meet the requirements to remain listed, based on Wednesday's closing prices.
In August, NASDAQ threatened to drop Regent Communications (RGCI) unless it could bring its price above $1.00 for at least 10 consecutive days before February 9, 2009. It appears that means the last possible day for the stock to begin that 10-day streak above $1.00 would have been this past Monday -- but Regent hasn't issued any recent comment on the situation. Regent was originally warned because the stock hasn't closed above $1.00 since July. Wednesday's closing price was 17 cents.
Last month, Citadel (CDL) said it was working to avoid being delisted on the NYSE, but cautioned "there can be no assurance" any turnaround effort would be successful in bringing stock prices back above $1.00. Citadel was originally warned by NYSE in September. Its stock hasn't closed above $1.00 since August 11, 2008... and closed Wednesday at just 20 cents.
Broadcasting companies have been suffering as major sources of advertising revenue (most particularly, the automotive industry) have sharply cut back on advertising budgets over the past several months.