Salem Media Group, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SEGMENT DATA

SEGMENT DATA

12 Months Ended

Dec. 31, 2017

NOTE 20. SEGMENT DATA

FASB ASC Topic 280, Segment Reporting, requires companies to provide certain information about their operating segments. We have three operating segments: (1) Broadcast, (2) Digital Media and (3) Publishing.

Our operating segments reflect how our chief operating decision makers, which we define as a collective group of senior executives, assess the performance of each operating segment and determine the appropriate allocations of resources to each segment. We continue to review our operating segment classifications to align with operational changes in our business and may make future changes as necessary.

We measure and evaluate our operating segments based on operating income and operating expenses that do not include allocations of costs related to corporate functions, such as accounting and finance, human resources, legal, tax and treasury; nor do they include costs such as amortization, depreciation, taxes or interest expense. Changes to our operating segments did not impact the reporting units used to test non-amortizable assets for impairment. All prior periods presented are updated to reflect the new composition of our operating segments. Segment performance, as defined by Salem, is not necessarily comparable to other similarly titled captions of other companies.

The table below presents financial information for each operating segment as of December 31, 2017, 2016 and 2015 based on the new composition of our operating segments:

	Broadcast		Digital Media		Publishing		Unallocated Corporate		Consolidated
	(Dollars in thousands)
Year Ended December 31, 2017
Net revenue	$	196,197	$	43,096	$	24,443	$		$	263,736
Operating expenses		145,494		33,675		24,475		16,255		219,899
Net operating income (loss) before depreciation, amortization, impairments, change in estimated fair value of contingent earn-out consideration and (gain) loss on the sale or disposal of assets	$	50,703	$	9,421	$	(32)	$	(16,255)	$	43,837
Depreciation		7,754		3,166		644		805		12,369
Amortization		56		3,414		1,121		2		4,593
Impairment of indefinite-lived long-term assets other than goodwill						19				19
Change in estimated fair value of contingent earn-out consideration				(23)						(23)
(Gain) loss on the sale or disposal of assets		3,898				(5)		12		3,905
Operating income (loss)	$	38,995	$	2,864	$	(1,811)	$	(17,074)	$	22,974

Year Ended December 31, 2016
Net revenue	$	202,016	$	46,777	$	25,528	$		$	274,321
Operating expenses		146,283		36,290		26,209		14,994		223,776
Net operating income (loss) before depreciation, amortization, impairments, change in estimated fair value of contingent earn-out consideration and (gain) loss on the sale or disposal of assets	$	55,733	$	10,487	$	(681)	$	(14,994)	$	50,545
Depreciation		7,592		3,092		675		846		12,205
Amortization		86		4,304		680		1		5,071
Impairment of long-lived assets		700								700
Impairment of indefinite-lived long-term assets other than goodwill		6,540				501				7,041
Impairment of goodwill				32						32
Impairment of amortizable intangible assets				8						8
Change in estimated fair value of contingent earn-out consideration				(146)		(543)				(689)
(Gain) loss on the sale or disposal of assets		(2,122)		236		(21)		6		(1,901)
Operating income (loss)	$	42,937	$	2,961	$	(1,973)	$	(15,847)	$	28,078

Year Ended December 31, 2015
Net revenue	$	197,184	$	44,761	$	23,842	$		$	265,787
Operating expenses		140,819		35,380		24,774		15,146		216,119
Net operating income (loss) before depreciation, amortization, impairments, change in estimated fair value of contingent earn-out consideration and (gain) loss on the sale or disposal of assets	$	56,365	$	9,381	$	(932)	$	(15,146)	$	49,668
Depreciation		7,726		3,091		637		963		12,417
Amortization		96		4,685		542		1		5,324
Impairment of goodwill		439								439
Change in estimated fair value of contingent earn-out consideration				(478)		(1,237)				(1,715)
(Gain) loss on the sale or disposal of assets		219		11		(58)		9		181
Operating income (loss)	$	47,885	$	2,072	$	(816)	$	(16,119)	$	33,022

	Broadcast		Digital Media		Publishing		Unallocated Corporate		Consolidated
	(Dollars in thousands)
As of December 31, 2017
Inventories, net	$		$	313	$	417	$		$	730
Property and equipment, net		83,901		6,173		1,281		8,125		99,480
Broadcast licenses		380,914								380,914
Goodwill		3,581		20,947		1,888		8		26,424
Other indefinite-lived intangible assets						313				313
Amortizable intangible assets, net		351		9,801		2,947		5		13,104
As of December 31, 2016
Inventories, net	$		$	300	$	370	$		$	670
Property and equipment, net		86,976		6,634		1,779		7,401		102,790
Broadcast licenses		388,517								388,517
Goodwill		3,581		20,136		1,888		8		25,613
Other indefinite-lived intangible assets						332				332
Amortizable intangible assets, net		407		9,927		4,069		5		14,408