Salem reports 6.8% improvement in total Q3 revenue


The top line revenue figure for Salem Communications in Q3 2011 is $54.9M, representing a 6.8% increase in the $51.4M brought in a year earlier. Broadcast revenue accounted for the bulk of the income but only brought home a 3% gain, going to $44.8M from $43.5M the year before. Internet income was a small part of total income but an engine of growth nonetheless.

Edward Atsinger was pleased in particular with the radio performance, which he said was accomplished while the radio industry was gaining less than 1% for the quarter; and if political is excluded (it dropped in broadcast from $900K to $100K), he said radio would have enjoyed a 5% boost in revenue.

Atsinger said that Salem stock is trading at about 6.9 times EBITDA, which is disappointing given an industry average of 8.9 times EBITDA. In fact, Salem is at the bottom of the radio heap in this regard. He believes the company needs to do a better job of telling its story to bring the multiple up to where it belongs.

Salem reported the following highlights in its consolidated report, which includes income from broadcast, internet and publishing assets:

* Total revenue increased 6.8% to $54.9 million from $51.4 million;
* Operating expenses increased 6.2% to $45.9 million from $43.2 million;
* Operating expenses excluding gain or loss on disposal of assets increased 6.2%   to $45.9 million from $43.2 million;
* Operating income increased 10.0% to $9.0 million from $8.2 million;
* Net income increased to $1.5 million, or $0.06 net income per diluted share,   from $0.3 million, $0.01 net income per diluted share in the prior year;
* EBITDA increased 4.8% to $12.5 million from $11.9 million; and
* Adjusted EBITDA increased 5.5% to $13.0 million from $12.3 million.

Overall broadcast revenues, on a same station better, were somewhat better than the total, rising 4.2%.
Internet income increased 40.1% to $7.1M, and publishing increased 6.8% to $3M.

Looking ahead, the company is expecting to build on the $54.1M total it brought in during Q4 2010 by a factor of 2%-4%.

The company recently filed to acquire KTNO-AM Dallas from Mortenson Broadcasting, increasing an already strong presence in the market via the $2.2M deal. It is also running KTEK-AM Houston in an LMA and will be reacquiring the station by forgiving a $3.7M promissory note.