It’s been a full week since Salem Media Group released what most consider to be a disappointing Q3 earnings report.
The religious and conservative talk-focused radio station owner saw its Q3 net revenue slip to $65.43 million, from $71.27 million. While broadcast operating expenses slipped to $37.04 million, from $37.43 million, Salem swung to a net loss of $46,000 (0 cents per diluted share), from net income of $2.2 million (8 cents) in Q3 2016.
For Q4, Salem is projecting total revenue to decline between 4% to 6% year-over-year, moving to $70.7 million.
Now, Salem stocks are at their lowest point since January 2016, and the sell-off continued on Wednesday. As of 2:58pm Eastern, Salem shares were down another 1.1%, to $4.70.
Then, a rally of sorts started, and just before the Closing Bell Salem shares finished up 0.5%, to $4.75.
Speaking to the financial community on the Nov. 7 call, Salem founder and CEO Ed Atsinger said his company wasn’t alone with respect to fiscal troubles in Q3.
“The third quarter was a challenging quarter for us, and for that matter, for the industry as a whole,” he said. “Three months ago, when we gave guidance for the third quarter, we described the key challenges that we were facing, which would contribute to this decline. To remind you, they were a lack of political revenue in a nonpolitical year; a reduced book release schedule, again, due to the fact that 2017 is not an election year; the elimination of our four loss-making magazines; and the continued softness at KLTY-FM in Dallas.”
These challenges were exacerbated for Salem by the negative impact on us from Hurricane Harvey in Houston and Hurricane Irma in Miami, Tampa and Orlando. But, by far, “The biggest challenge was the lack of political revenue, which impacted all three divisions of our company and was responsible for about $1.3 million of the revenue decline in broadcast and digital,” Atsinger said.
EVP/CFO Evan Masyr noted that the impact of the hurricanes “was probably about $350,000 in the quarter.”
Addressing the situation at KLTY, a heritage Christian AC in one of the nation’s biggest CCM markets, Atsinger noted, “We’ve changed management, we began working to address the issues leading to the lower ratings, and we’re now starting to see some good success.”
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