Salem Media Group, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

SEGMENT DATA

SEGMENT DATA

6 Months Ended

Jun. 30, 2018

NOTE 19. 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 June 30, 2018 and 2017:

	Broadcast			Digital Media			Publishing			Unallocated Corporate Expenses			Consolidated
	(Dollars in thousands)
Three Months Ended June 30, 2018
Net revenue	$	50,563		$	10,260		$	5,449		$	—		$	66,272
Operating expenses		37,243			8,397			5,522			4,030			55,192
Net operating income (loss) before depreciation, amortization and net loss on the disposition of assets	$	13,320		$	1,863		$	(73	)	$	(4,030	)	$	11,080
Depreciation		1,911			767			129			228			3,035
Amortization		10			1,223			242			1			1,476
Change in the estimated fair value of contingent earn-out consideration		—			72			—			—			72
Net loss on the disposition of assets		5,154			—			—			—			5,154
Net operating income (loss)	$	6,245		$	(199	)	$	(444	)	$	(4,259	)	$	1,343

Three Months Ended June 30, 2017
Net revenue	$	49,251		$	10,866		$	5,995		$	—		$	66,112
Operating expenses		35,931			8,370			5,668			3,825			53,794
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairment and net gain on the disposition of assets	$	13,320		$	2,496		$	327		$	(3,825	)	$	12,318
Depreciation		1,929			820			162			198			3,109
Amortization		18			816			308			1			1,143
Change in the estimated fair value of contingent earn-out consideration		—			(43	)		—			—			(43	)
Net gain on the disposition of assets		(494	)		—			(16	)		—			(510	)
Net operating income (loss)	$	11,867		$	903		$	(127	)	$	(4,024	)	$	8,619

	Broadcast			Digital Media			Publishing			Unallocated Corporate Expenses			Consolidated
	(Dollars in thousands)
Six Months Ended June 30, 2018
Net revenue	$	98,613		$	20,654		$	10,800		$	—		$	130,067
Operating expenses		72,993			16,771			11,109			7,951			108,824
Net operating income (loss) before depreciation, amortization and net loss on the disposition of assets	$	25,620		$	3,883		$	(309	)	$	(7,951	)	$	21,243
Depreciation		3,769			1,569			260			446			6,044
Amortization		20			2,448			485			1			2,954
Change in the estimated fair value of contingent earn-out consideration		—			72			—			—			72
Net loss on the disposition of assets		5,159			—			—			—			5,159
Net operating income (loss)	$	16,672		$	(206	)	$	(1,054	)	$	(8,398	)	$	7,014

Six Months Ended June 30, 2017
Net revenue	$	97,055		$	21,552		$	12,485		$	—		$	131,092
Operating expenses		71,767			17,072			12,019			8,950			109,808
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairment and net gain on the disposition of assets	$	25,288		$	4,480		$	466		$	(8,950	)	$	21,284
Depreciation		3,748			1,597			356			388			6,089
Amortization		35			1,634			615			1			2,285
Change in the estimated fair value of contingent earn-out consideration		—			(42	)		—			—			(42	)
Impairment of indefinite-lived long-term assets other than goodwill		—			—			19			—			19
Net gain on the disposition of assets		(496	)		—			(9	)		—			(505	)
Net operating income (loss)	$	22,001		$	1,291		$	(515	)	$	(9,339	)	$	13,438

	Broadcast		Digital Media		Publishing		Unallocated Corporate		Consolidated
	(Dollars in thousands)
As of June 30, 2018
Inventories, net	$	—	$	473	$	480	$	—	$	953
Property and equipment, net		81,834		5,955		1,075		7,559		96,423
Broadcast licenses		373,962		—		—		—		373,962
Goodwill		2,960		20,947		1,888		8		25,803
Other indefinite-lived intangible assets		—		—		313		—		313
Amortizable intangible assets, net		320		7,393		2,462		5		10,180

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