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Salem Media Group Financial Position Continues To Deteriorate

Warren Cole Smith

Salem Media Group, one of the nation’s largest Christian radio broadcasters, and the only one that’s publicly traded, recently announced second quarter financial results.

For the quarter ended March 31, 2020, total revenue decreased 3.7 percent to $58.3 million.  That’s down from from $60.5 million for the same period a year ago.

While revenue was going down, expenses increased significantly, from $61.5-million a year ago to $76.3-million this year.  That’s an increase of 24.1 percent.

Overall, Salem lost significantly less money than the same period a year ago.  The first quarter operating loss decreased to $18.0 million from $1.0 million.  However the net loss was $55.2 million, or $2.07 net loss per share compared to net income of $0.3 million, or $0.01 net income per diluted share in the same quarter a year ago.

Salem experienced deteriorated performance in almost every area of its business.  Net broadcast revenue decreased 2.0 percent to $45.2 million from $46.1 million.  Most of its broadcast revenue comes from Christian ministries that buy block programming time on Salem stations.

Digital media revenue decreased 11.1 percent to $9.1 million, and publishing revenue decreased 4.1 percent to $4.0 million from $4.1 million.

The first quarter report also revealed that the company is selling assets.  On April 6, the company closed on the sale of radio station WBZW-AM and an FM translator construction permit in Orlando, Florida, for $0.2 million in cash.  Pending transactions include the sale of three radio stations to Word Broadcasting.  Those stations include WFIA-AM, WFIA-FM and WGTK-AM in Louisville, Ken., for $4.0 million, plus other considerations.

As MinistryWatch previously reported, Moody’s Investors Service downgraded Salem Media Group’s “corporate family rating” and senior secured notes rating to Caa1 from B3. The future-looking outlook was also lowered from stable to negative.  According to Moody’s, any company with a “C” rating is a “poor quality and very high credit risk.”

Salem Media Group owns one of the largest chains of Christian radio stations in the country.  Its 2019 revenue was more than $250-million.  It owns about a hundred radio stations.  Salem also owns the conservative book imprint Regnery Publishing and the popular website Townhall.com.

According to Moody’s, “The downgrade reflects weaker than expected performance that Moody’s projects will persist in the next few quarters.”  Revenue has fallen at Salem in recent quarters due to “the shift of ad dollars to digital mobile and social media, competitive conditions for local radio ad dollars, and declines in local block programming revenue.”

Block programming is primarily revenue from Christian ministries who air programs on Salem.  Among Salem’s largest purchasers of block programming time are David Jeremiah’s Turning Point Ministries, Charles Stanley’s In Touch Ministries, and Focus on the Family.  “National block programming is less reliant on advertising dollars due to its recurring nature,” the Moody’s report said, “although its local block programing has declined.”

Moody’s said, “While the company has a broad footprint, Salem’s top two markets (Los Angeles and Dallas) accounted for approximately 22 percent of net broadcasting revenue in 2019.  The station portfolio is largely in the top 25 markets with the vast majority of signals on the less attractive AM band.”

The rating service also noted that though the company has very little cash and “weak performance in recent years.”

On May 4, 2020, Salem Media Group (SALM) was trading for about $.83 per share.  In 2004 it traded for more than $30 per share.  Aside from a few rallies along the way, the stock has been on a steady slide since then.

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Warren Cole Smith
Warren Cole Smith

Warren previously served as Vice President of WORLD News Group, publisher of WORLD Magazine and has more than 30 years of experience as a writer, editor, marketing professional, and entrepreneur. Before launching a career in Christian journalism 20 years ago, Smith spent more than seven years as the Marketing Director at PricewaterhouseCoopers.

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