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

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Depreciation is computed using the straight-line method over estimated useful lives as follows:


Category		Estimated Life
Buildings		40 years
Office furnishings and equipment		5-10 years
Antennae, towers and transmitting equipment		10-20 years
Studio, production and mobile equipment		5-10 years
Computer software and website development costs		3 years
Record and tape libraries		3 years
Automobiles		5 years
Leasehold improvements		Lesser of the useful life or remaining lease term

These intangibles are amortized using the straight-line method over the following estimated useful lives:


Category		Estimated Life
Customer lists and contracts		Lesser of 5 years or the life of contract
Domain and brand names		5 -7 years
Favorable and assigned leases		Lease Term
Subscriber base and lists		3-7 years
Author relationships		1-7 years
Non-compete agreements		1 to 5 years

The following table presents the changes in our partial self-insurance reserves.

Significant changes in our contract liabilities balances during the period are as follows:


	Short Term			Long-Term
	(Dollars in thousands)
Balance, beginning of period January 1, 2018	$	12,763		$	1,951
Revenue recognized during the period that was included in the beginning balance of contract liabilities		(7,843	)		—
Additional amounts recognized during the period		21,460			830
Revenue recognized during the period that was recorded during the period		(16,245	)		—
Transfers		1,402			(1,402	)

Balance, end of period December 31, 2018	$	11,537		$	1,379

Amount refundable at beginning of period	$	12,450		$	1,677
Amount refundable at end of period	$	11,410		$	1,379

We expect to satisfy these performance obligations as follows:


	Amount
	(Dollars in thousands)
For the Twelve Months Ended December 31,
2019	$	11,537
2020		606
2021		331
2022		179
2023		94
Thereafter		169

	$	12,916

Trade and barter revenues and expenses were as follows:


	Year Ended December 31,
	2017		2018
Net broadcast barter revenue	$	5,858	$	6,702
Net digital media barter revenue		30		124
Net publishing barter revenue		51		11
Net broadcast barter expense	$	5,575	$	6,161
Net digital media barter expense		—		3
Net publishing barter expense		100		20

The following table presents our revenues disaggregated by revenue source for each of our three operating segments:


	Year Ended December 31, 2018
	Broadcast		Digital Media		Publishing		Consolidated
	(Dollars in thousands)
By Source of Revenue:
Block Programming-National	$	49,864	$	—	$	—	$	49,864
Block Programming-Local		33,274		—		—		33,274
Spot Advertising-National		16,333		—		—		16,333
Spot Advertising-Local		55,863		—		—		55,863
Infomercials		1,824		—		—		1,824
Network		19,293		—		—		19,293
Digital Advertising		7,172		22,351		473		29,996
Digital Streaming		752		4,347		—		5,099
Digital Downloads and eBooks		—		5,354		1,481		6,835
Subscriptions		1,056		8,205		907		10,168
Book Sales and e-commerce		483		1,949		11,866		14,298
Self-Publishing fees		—		—		5,609		5,609
Advertising-Print		42		—		574		616
Other Revenues		12,546		389		776		13,711

	$	198,502	$	42,595	$	21,686	$	262,783

Timing of Revenue Recognition
Point in Time	$	196,187	$	42,500	$	21,640	$	260,327
Rental Income(1)		2,315		95		46		2,456

	$	198,502	$	42,595	$	21,686	$	262,783

(1)	Rental income is not applicable to ASC Topic 606, but shown for the purpose of identifying each revenue source presented in total revenue on our Consolidated Financial Statements within this report on Form 10-K.

The following table sets forth the shares used to compute basic and diluted net earnings per share for the periods indicated:


	Year Ended December 31,
	2017		2018
Weighted average shares		26,068,942		26,179,702
Effect of dilutive securities—stock options		366,815		—

Weighted average shares adjusted for dilutive securities		26,435,757		26,179,702