Salem Media Earnings Jump in Second Quarter
Salem Media Group’s earnings increased in second quarter despite drop in revenue
Christian broadcasting giant Salem Media Group released its second-quarter results this week with $60.6 million in revenue, down 7.7% year-over-year. However, its net income grew 132% to $2.3 million, reversing its $7 million loss during the same period last year.
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This comes amid aggressive cost cuts for the 50-year-old media brand, which has struggled with the ongoing advertising slump and changing demographics. The company’s operating expenses fell to $54.9 million from $69.8 million in the second quarter of 2023. In turn, its $5.6 million operating income reflects a substantial recovery from last year’s $4 million operating loss.
Salem’s stock (OTC: SALM) dropped by about 11% on Tuesday afternoon after the earnings release. It’s currently trading at around $0.22 as of this writing.
A five-day snapshot of Salem’s stock performance. (Source: MarketWatch)
Segment Performance: Digital Media Up, Publishing and Broadcast Down
Only one operating segment achieved gains in the second quarter. Digital media revenue—generated by Salem’s online content for Christian, political, investing, retirement, streaming, and other audiences—increased by 10% year-over-year to $11.9 million due to digital subscription revenue from the DayTradeSPY and Gilder financial newsletters. In its quarterly report, Salem said this segment is impacted by the rates its websites can charge for ad time and the number of impressions delivered, products sold, and digital subscriptions.
Net publishing revenue plunged by 70% ($3.7 million) due to the sale of Salem’s Regnery Publishing business last December and a “softness in the overall economy” affecting Salem Author Services, the company’s self-publishing arm.
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Salem’s core broadcast business fell by 5.2% due to a nearly $2 million decline in local spot advertising, excluding political ads. Salem noted that spot advertising revenue has decreased across the industry as audiences shift away from conventional radio in favor of streaming services, podcasts, and satellite radio. Some of the downtrend was offset by a 198% increase in political revenue.
“We continue to enhance our digital assets to complement our broadcast content,” the report stated. “The increased use of smart speakers and other voice activated platforms that provide audiences with the ability to access AM and FM radio stations offers potential sources for radio broadcasters to reach audiences.”
Cost Cuts Continue
Like many companies in today’s economy, Salem’s turnaround strategy involves substantial cost cuts, workforce reductions, and selling assets.
Notably, operating expenses from its publishing segment decreased by 78% in the second quarter (nearly $5 million) due to the recent Regnery sale. Also, reduced paper- and sales-related costs boosted Salem Author Services’ profit margin to 81%.
Broadcasting expenses also fell by 2% due to workforce cuts, the suspension of Salem’s 401(k) match program last summer, and lower credit card processing fees, travel and entertainment expenses, among other line items. However, this was partially offset by increased third-party marketing, professional services, and facility-related costs.
However, expenses in Salem’s digital media operations grew 2.2%, including advertising and promotions from email marketing campaigns.
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