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Tuesday, May 17, 2022

Salem Outperforms During Down Year for Radio

Salem Media Group Inc. outperformed its industry in terms of broadcast revenue in the second quarter, according to executives with the Camarillo Christian and politically conservative radio broadcaster, publisher and online content provider.In an Aug. 6 conference call with analysts, Chief Executive Edward Atsinger said that, according to Miller Kaplan, a North Hollywood accounting firm, in the broadcast markets where Salem operates, the industry was down 56 percent. For the second quarter, Salem’s broadcast revenues declined by 19.6 percent.The company’s outperformance relative to the industry shows the strength and resilience of its business model, Atsinger said.

“Historically, we have focused on paid national and local ministry programming, as well as direct advertisers,” Atsinger added during the call. “This revenue source is very stable, and many of these advertisers and programs have been with us for decades.” Rather than sell individual commercial spots, Salem sells half-hour segments to ministers, many of whom solicit donations or sell sermon downloads to pay for the program. Donors expect to hear the program at the same time during the week, providing a stable revenue stream for Salem.Michael Kupinski, director of research of Noble Capital Markets Inc., in Boca Raton, Fla., an analyst who follows Salem, said in a research note that many radio broadcasters that had already reported earnings had revenue declines in the range of 47 percent to 55 percent.Salem’s above-average revenue reflected its block programming strategy, he added.

“We would also note that each of the company’s operating divisions (Radio, Digital and Publishing), performed better than expected in revenues,” Kupinski wrote in the note. “The company over achieved cash flow expectations due to its aggressive cost cutting actions in the latest quarter.”Salem reported on Aug. 6 that it had narrowed its net loss to $2.5 million (-9 cents a share) for the quarter ending June 30, compared to a net loss of $3.6 million (-14 cents) in the same period a year earlier. Revenue decreased by 18 percent to $52.9 million.The company’s share price has lost about 37 percent of its value since the start of the year when it was at $1.43. Shares closed at $0.84 on Nov. 4.

Low political spendingIn the conference call, Atsinger and Evan Masyr, the chief financial officer, went over the earnings for the quarter.

Political spending was not a factor during the quarter, as it brought in only $600,000, as compared to $400,000 in the second quarter of the previous year.

Kupinski specifically asked about political ad spending and whether the company was seeing any movement on it.Masyr said that on the broadcast side, the political spend was beginning to pick up.

“It was pretty quiet for a while,” Masyr said. “We’ve seen a little bit more political activity picking up both on the terrestrial broadcast side as well as even through our ad-injected streams.”David Evans, president of Interactive and Publishing, added: “And the same is true on the digital side; the political advertising has picked up in recent weeks.”Masyr, however, could not answer a question about where the money was coming from – the presidential race, or House and Senate contests.

“I’m not sure right now if it’s as much presidential money as it is PAC money,” Masyr said.Howard Rosencrans, chief researchanalyst with Value Advisory LLC in New York, asked about political spending in 2016, and how much came in as revenue as a comparison.Masyr said that during the third quarter of that election year, the company took in $1.5 million for political advertising.“All right, not that much. It’s nice to get $1.5 million, but (it’s) not that much,” Rosencrans said in response.Kupinski asked Evans about traffic to the company’s websites and whether there was an uptick due to the election.Without giving any numbers, Evans said that traffic had picked up at the conservative news and talk websites and was at “record levels.”“People, they want to visit news websites, news opinion websites because they want to know what’s going on with COVID from voices they trust,” Evans said. “And then we’ve got the election at the same time. So, all of our concerns in opinion websites, the traffic is fantastic, and continues to be fantastic.”However, he added, the increase in traffic to the websites is offset by a drop in programmatic advertising rates substantially at the same time.

“So it’s not all good news,” Evans said.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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