Salem Communications Corp. Reports Operating Results (10-Q)

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May 07, 2010
Salem Communications Corp. (SALM, Financial) filed Quarterly Report for the period ended 2010-03-31.

Salem Communications Corp. has a market cap of $106.8 million; its shares were traded at around $4.5 with a P/E ratio of 7.6 and P/S ratio of 0.5. Salem Communications Corp. had an annual average earning growth of 6.1% over the past 10 years.SALM is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

NET BROADCAST REVENUE. Net broadcast revenue decreased $1.0 million, or 2.3%, to $41.4 million for the three months ended March 31, 2010, from $42.4 million for the same period of the prior year. On a same station basis, net broadcast revenue declined $1.0 million, or 2.5%, to $41.3 million for the three months ended March 31, 2010, from $42.3 million for the same period of the prior year. The decline in net broadcast revenue is comprised of a $1.2 million decrease in local advertising revenues from all station formats, a $0.8 million decrease in national program revenue primarily on our Christian Teaching and Talk stations and a $0.1 million decrease in infomercial revenue primarily on our Christian Teaching and Talk and News Talk formats, offset by a $0.5 million increase in network revenue and a $0.6 million increase in national spots on all station formats. Revenue from advertising as a percentage of our net broadcast revenue decreased to 41.3% for the three months ended March 31, 2010, from 41.8% for the same period of the prior year. Revenue from block program time as a percentage of our net broadcast revenue decreased to 41.2% for the three months ended March 31, 2010, from 42.2% for the same period of the prior year.

BROADCAST OPERATING EXPENSES. Broadcast operating expenses decreased $0.6 million, or 2.3%, to $26.0 million for the three months ended March 31, 2010, from $26.6 million for the same period of the prior year. On a same station basis, broadcast operating expense decreased $0.6 million, or 2.4%, to $25.9 million for the three months ended March 31, 2010, compared to $26.5 million for the same period of the prior year. The decline in broadcast operating expenses includes a $1.2 million decrease in bad debt

NON-BROADCAST OPERATING EXPENSES. Non-broadcast operating expenses increased $0.6 million, or 10.2%, to $6.4 million for the three months ended March 31, 2010, compared to $5.8 million for the same period of the prior year. The increase is comprised of a $0.4 million increase in personnel-related costs including commissions based on higher revenues, a $0.1 million increase in advertising expenses to promote our internet businesses, and a $0.1 million increase in royalties generated from our Salem Consumer Products business.

CORPORATE EXPENSES. Corporate expenses increased $1.0 million, or 27.7%, to $4.3 million for the three months ended March 31, 2010, compared to $3.3 million for the same period of the prior year. The increase includes $0.3 million of accrued management bonuses not applicable to the prior year, a $0.3 million increase in non-cash stock based compensation expense associated with new option grants, and a $0.2 million increase in personnel-related costs associated with the non-recurring favorable impact of the mandatory vacation redemption applicable on the prior year.

OTHER INCOME (EXPENSE). Interest income of $0.1 million for the three months ended March 31, 2010 and 2009 was interest earned on excess cash. Interest expense increased $3.3 million, or 76.5%, to $7.7 million for the three months ended March 31, 2010, compared to $4.4 million for the same period of the prior year due to the issuance of our new 95/8% Notes issued in December 2009 as compared to the prior capital structure. Other expense, net of $31,000 for the three months ended March 31, 2010 includes the APA termination fee of $0.2 million received from escrow upon the termination of the sale agreement for WRFD-AM, Columbus, Ohio offset by a $0.2 million loss related to debt forgiveness on a promissory note not associated with our operating activities.

NET INCOME. We recognized net income of $0.2 million for the three months ended March 31, 2010 compared to $2.9 million for the same period of the prior year. The decline of $2.7 million is primarily due to a $0.8 million decrease in net operating income and a $3.3 million increase in interest expense associated with our new debt, partially offset by a $1.6 million decrease in our tax provision and $0.2 million of other income associated with the termination fee on the sale agreement for WRFD-AM, in Columbus, Ohio.

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