Salem Media Reports 2.4% Revenue Dip

Salem Media Group Thursday issued its earning reports for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018:

Consolidated

• Total revenue decreased 2.4% to $64.7 million from $66.3 million;
• Total operating expenses decreased 9.0% to $59.1 million from $64.9 million;
• Operating expenses, excluding gains or losses on the disposition of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, depreciation expense and amortization expense (1) decreased 1.0% to $54.5 million from $55.1 million;
• Operating income increased to $5.6 million from $1.3 million;
• The company’s net loss increased to $3.6 million, or $0.14 net loss per share compared to $2.2 million, or $0.08 net loss per share;
• EBITDA (1) increased 59.9% to $9.6 million from $6.0 million;
• Adjusted EBITDA (1) decreased 9.4% to $10.2 million from $11.2 million; and
• Net cash used by operating activities decreased 57.0% to $1.2 million from $2.8 million.

Broadcast

• Broadcast revenue decreased 2.9% to $49.1 million from $50.6 million;
• Station Operating Income (“SOI”) (1) decreased 14.6% to $11.4 million from $13.3 million;
• Same Station (1) net broadcast revenue decreased 1.9% to $48.9 million from $49.8 million; and
• Same Station SOI (1) decreased 13.8% to $11.5 million from $13.4 million.

Digital Media

• Digital media revenue decreased 2.9% to $10.0 million from $10.3 million; and
• Digital Media Operating Income (1) increased 24.1% to $2.3 million from $1.9 million.

Publishing

• Publishing revenue increased 3.5% to $5.6 million from $5.4 million; and
• Publishing Operating Loss (1) remained consistent at $0.1 million.

Salem reported the following transactions were completed since April 1, 2019:

• On July 25, 2019, the company acquired the Journeyboxmedia.com website and related assets for $0.5 million in cash.
• On July 10, 2019 the company acquired certain assets including a digital content library from Steelehouse Productions, Inc. for $0.1 million in cash.
• On June 27, 2019, the company sold a portion of land on its transmitter site in Miami, Florida, for $0.9 million in cash. The company recognized a pre-tax gain of $0.4 million reflecting the sales price as compared to the carrying value of the land.
• On June 6, 2019, the company acquired the InvestmentHouse.com website and the related financial newsletter assets and deferred subscription liabilities for $0.6 million in cash. 
• On May 14, 2019, the company sold radio station WSPZ-AM (previously WWRC-AM) in Washington D.C. for $0.8 million in cash. The buyer began programming the station under a Time Brokerage Agreement (“TBA”) on April 12, 2019. The company recorded an estimated pre-tax loss of $3.8 million as of March 31, 2019, based on its plan to sell the station and the probability of the sale, which reflects the sales price as compared to the carrying value of the radio station assets and the estimated closing costs. The company recorded an additional loss of $32,000 upon closing based on the actual closing costs incurred.

Pending transactions:

• On July 25, 2019, the company entered into an agreement to sell radio stations WWMI-AM and WLCC-AM in Tampa Florida and WZAB-AM and WKAT-AM in Miami, Florida for $8.2 million in cash. The company recognized an estimated pre-tax loss of $4.7 million on July 25, 2019, which reflects the sales price as compared to the carrying value of the assets of the radio stations and the estimated closing costs. This transaction is subject to the approval of the FCC and is expected to close in the third quarter of 2019.
• On July 10, 2019, the company entered into an agreement to sell radio station WORL-AM in Orlando, Florida for $0.9 million in cash. The company recognized an estimated pre-tax loss of $1.6 million on July 10, 2019, which reflects the sales price as compared to the carrying value of the radio station assets and the estimated closing costs. The company also entered a LMA effective September 2, 2019, under which the radio station will be operated by the buyer pending the closing of the sale of the station. This transaction is subject to the approval of the FCC and is expected to close in the third quarter of 2019.
• On January 3, 2017, Word Broadcasting began operating our Louisville radio stations (WFIA-AM; WFIA-FM; WGTK-AM) under a twenty-four month TBA. We received $0.5 million in cash associated with an option for Word Broadcasting Network to acquire the radio stations during the term. In December 2018, Word Broadcasting notified the company of their intent to purchase our Louisville radio stations. The TBA contained an extension clause that allowed Word Broadcasting to continue operating the station until the purchase agreement was executed and the transaction closed. On June 28, 2019, the TBA was amended to include an additional 24 months under which Word Broadcasting will program the radio stations with the option to acquire the stations extended to December 31, 2020.
• On April 29, 2019 the company entered into an agreement to exchange FM Translator W276CR, in Bradenton, Florida with FM Translator W262CP in Bayonet Point, Florida. No cash will be exchanged for the assets.
• On April 26, 2018, the company entered an agreement to exchange radio station KKOL-AM, in Seattle, Washington for KPAM-AM in Portland, Oregon. The transaction is expected to close in the second half of 2019. No cash will be exchanged for the assets.