Salem ahead of expectations, but tough sledding ahead


Salem Communications reported Q4 revenues of 59.1 million, down only 0.2% from a year ago and better than the 58 million projected by the Thomson/First Call analysts consensus. Net broadcasting revenue was down 1.8% to 52.2 million, but non-broadcast revenue shot up 14.1% to 6.9 million. Broadcasting station operating income declined 7.7% to 18 million and non-broadcast operating income rose 23.5% to 500K.

CEO Ed Atsinger told analysts he expected those non-broadcasting revenues, particularly form the company’s Internet operations, to continue to grow. But he noted the challenges facing the radio industry and said Salem had previously had many advertisers from the hard-hit mortgage business and that business is no more. But unlike other publicly traded broadcasters, Salem gets a large chunk of its radio revenues from sales of block time. The company reported yesterday that it had renewed 90% of its block programming contracts for 2008, with average rate increases of 4%.

Might Salem look at a going private buyout because of its beaten down stock price? Atsinger said the board might look at that option at some point, but there is nothing in the works right now.

He did reiterate that Salem management is constantly re-evaluating its station portfolio and has recently completed several divestitures. He noted that the sale of two stations in Milwaukee worked out to a 24 times multiple for Salem. Other stations sales are in negotiation now, he said, without divulging any details.

For Q1, Salem is telling Wall Street to expect revenues to be down in the low single digits.