Salem’s Radio Station Sell-Off Reduces Debt

Salem Media Group Inc. has started the year with a focus on reducing debt by selling off radio stations and other assets. In a conference call with analysts to discuss fourth quarter financial results, Chief Executive Edward Atsinger III said the Camarillo conservative Christian radio broadcaster and online and print content provider has identified assets that are less strategic and that the company would be willing to sell. “We’ve identified prices that would make sense for us,” Atsinger said. “And if those properties can attract those kinds of prices, it’s very likely that we will do some sales.” Between May and October last year, Salem sold five radio stations for a total of $8.8 million. It also sold some land in Los Angeles and San Diego for an additional $1.1 million. Salem reported on March 12 that it had a net loss of $3.1 million (-12 cents a share) for the fourth quarter ending Dec. 31 as compared to net income of $22.4 million (85 cents) in the same period a year earlier. Revenue remained flat at $67.2 million. Shares closed on March 27 at $2.52. The company issued a guidance for the first quarter that revenues would decrease between 3 percent and 5 percent. Michael Kupinski, director of research at Noble Capital Markets, Inc., in Boca Raton, Fla., believes the soft first quarter guidance should not be a trend for the company. In a research note on March 13, Kupinski wrote that the first quarter would be impacted by the absence of political advertising, the timing of book releases, a calendar shift with Easter later in the second quarter, and the absence of the full impact of expense savings. “Subsequent quarters should reflect labor costs savings (annualized at $2.8 million) and a better book release schedule,” he added. “We believe that the lackluster guidance does not portend a trend for the year and investors should look past the quarter.” The $2.8 million in labor cost savings was achieved by eliminating 35 positions. The benefit of those cuts will be seen starting in the second quarter, Kupinski wrote in the note. Additionally, Salem should see improved revenues later this year from its $1.5 million investment in Salem Surround, a multimedia advertising agency to sell ads and digital advertising for Salem’s 116 radio stations and websites in 35 markets, Kupinski said. “This new product suite holds a significant amount of promise for the company to be competitive with local digital products and services, an area of revenue growth,” he added in the note.