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Radio Station Owner Strengthens Online Presence

Best known for its Christian radio stations, Salem Communications Corp. has boosted its Internet presence and diversification with its acquisition of the online Evangelical Bible Book Store. The Camarillo-based company recently announced that its Salem Consumer Products division has acquired ebiblebookstore.com. Besides the new acquisition, the company already owns an online Christian bookstore with a catalog of more than 100,000 Christian books and other offerings, and an online Conservative bookstore. Anil Gupta, analyst for Imperial Capital LLC, said the move appears to be part of the company’s continued strategy of growing its online business. He added that the non-broadcasting portion of the company’s business, which largely consists of Internet-related outlets, has grown from representing less than 4 percent of revenues in 2005 to 14 percent in 2009. Imperial Capital is projecting that portion will increase even further to 15 percent for 2010. “The Internet is another source of growth for them, and this should help grow that segment,” Gupta said. Salem Communications’ Web network consists of more than a dozen Web sites, and it provides audio and video streaming for more than 250 ministries. As for the company’s expanded focus on online bookstores, Jack Plunkett of Plunkett Research Ltd. said the company will likely have a certain edge because it caters to the Christian market. The Christian publishing market is a high-growth niche that goes hand in hand with the growth of the evangelical Christian movement, he said. “Where the basic book publishing business in general has been hurting, the Christian segment has been pretty strong,” he said. Financial outlook While Salem Communications has not yet released its financial performance results for its fourth quarter, it projected in November that its revenues would increase by 3 percent to 5 percent. The company had third quarter revenues of $51.3 million with net income of $343,000. Gupta expects the company will see some improvement for the full year of 2010 as well. Salem Communications’ revenues were down 10 percent for 2009. Gupta is projecting the company will announce a 2010 revenue increase of three percent. “That in itself can show you that there is some movement in the business,” he said. Imperial Capital has released an in-line rating, which is equivalent to a hold rating, on the company’s stock. The company’s stock price has seen its fluctuations over the past couple of years. It hit a low of $0.34 in March 2009 and hit a high of around $6 at the end of 2009, said Tim Alward, president and CEO of Ford Equity Research Inc. As of Feb. 9, the closing stock price was $3.50, which was 30 percent lower than the same day the previous year. Fluctuations Gupta said the price changes could be a reflection of fluctuations in the overall stock market and in the advertising market which Salem is dependent on. Gupta describes Salem Communications as one of the largest radio broadcasters that targets purely Christian audiences, and he said it is definitely the only publicly traded company of that kind. Salem Communications owns and operates about 95 radio stations, with 58 of those stations in 23 of the nation’s top 25 markets. It owns Salem Radio Network, which provides talk, music and news programming; Salem Radio Representatives, a Christian-focused media advertising sales firm; Salem Web Network; and Salem Publishing, which publishes Christian music and ministry magazines. The company also owns a digital publishing outlet.

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