Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.19.2
Segment Data
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment Data
NOTE 21. 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, which also qualify as reportable segments. Our operating segments reflect how our chief operating decision makers, which we define as a collective group of senior executives, assesses the performance of each operating segment and determines the appropriate allocations of resources to each segment. We continually review our operating segment classifications to align with operational changes in our business and may make 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, which are reported as unallocated corporate expenses in our condensed consolidated statements of operations included in this quarterly report on Form
10-Q.
We also exclude costs such as amortization, depreciation, taxes and interest expense.
Segment performance, as defined by Salem, is not necessarily comparable to other similarly titled captions of other companies.
Broadcasting
Our foundational business is radio broadcasting, which includes the ownership and operation of radio stations in large metropolitan markets. Our broadcasting segment includes our national networks and national sales firms. National companies often prefer to advertise across the United States as an efficient and cost effective way to reach their target audiences. Our national platform under which we offer radio airtime, digital campaigns and print advertisements can benefit national companies by reaching audiences throughout the United States.
Salem Radio Network
TM
(“SRN
TM
”), based in Dallas, Texas, develops, produces and syndicates a broad range of programming specifically targeted to Christian and family-themed talk stations, music stations and News Talk stations. SRN
TM
delivers programming via satellite to approximately 3,200 affiliated radio stations throughout the United States, including several of our Salem-owned stations. SRN
TM
operates five divisions, SRN
TM
Talk, SRN
TM
News, SRN
TM
Websites, SRN
TM
Satellite Services and Salem Music Network that includes Today’s Christian Music (“TCM”) and Singing News
®
Radio.
 
Salem Media Representatives (“SMR”) is our national advertising sales firm with offices in 13 U.S. cities. SMR specializes in placing national advertising on Christian and talk formatted radio stations as well as other commercial radio station formats. SMR sells commercial airtime to national advertisers on our radio stations and through our networks, as well as for independent radio station affiliates. SMR also contracts with independent radio stations to create custom advertising campaigns for national advertisers to reach multiple markets.
During 2018, we launched Salem Surround, a national multimedia advertising agency with locations in 35 markets across the United States. Salem Surround offers a comprehensive suite of digital marketing services to develop and execute audience-based marketing strategies for clients on both the national and local level. Salem Surround specializes in digital marketing services for each of our radio stations and websites as well as provides a full-service digital marketing strategy for each of our clients.
Digital Media
Our digital media based businesses provide Christian, conservative, investing and health-themed content,
e-commerce,
audio and video streaming, and other resources digitally through the web. Salem Web Network (“SWN”) websites include Christian content websites; BibleStudyTools.com, Crosswalk.com
®
, GodVine.com, iBelieve.com, GodTube
®
.com, OnePlace
™
.com, Christianity.com, GodUpdates.com, CrossCards
™
.com, ChristianHeadlines.com, LightSource.com, AllCreated.com, ChristianRadio.com, CCMmagazine.com, SingingNews
®
.com and SouthernGospel.com and our conservative opinion websites; collectively known as Townhall Media, include Townhall.com
®
, HotAir
™
.com, Twitchy
®
.com, RedState
®
.com, BearingArms.com, and ConservativeRadio.com. We also publish digital newsletters through Eagle Financial Publications, which provide market analysis and
non-individualized
investment strategies from financial commentators on a subscription basis.
Our church
e-commerce
websites, including SermonSearch
™
.com, ChurchStaffing.com, WorshipHouseMedia.com, SermonSpice
™
.com, WorshipHouseKids.com, Preaching.com, ChristianJobs.com and Youthworker.com, offer a variety of digital resources including videos, song tracks, sermon archives and job listings to pastors and Church leaders.
E-commerce
also included Newport Natural Health, a seller of nutritional supplements through the date of sale on March 21, 2019.
Our web content is accessible through all of our radio station websites that feature content of interest to local audiences throughout the United States
.
Publishing
Our publishing operating segment includes three businesses: (1) Regnery
®
Publishing, a traditional book publisher that has published dozens of bestselling books by leading conservative authors and personalities, including Ann Coulter, Newt Gingrich, David Limbaugh, Ed Klein, Mark Steyn and Dinesh D’Souza; (2) Salem Author Services, a self-publishing service for authors through Xulon Press and Mill City Press; and (3)
 Singing News
®
,
which produces and distributes a print magazine.
The table below presents financial information for each operating segment as of June 30, 2019 and 2018 based on the composition of our operating segments:
 
   
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
(Dollars in thousands)
  
Three Months Ended June 30, 2019
                                        
Net revenue
  
$
49,082
    
$
9,960
    
$
5,638
     $ —      
$
64,680
  
Operating expenses
    
37,707
      
7,648
      
5,773
      
4,332
      
55,460
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization and net (gain) loss on the disposition of assets
  
$
11,375
    
$
2,312
    
$
(135
) 
  
$
(4,332
) 
  
$
9,220
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
    
1,819
      
764
      
93
      
176
      
2,852
  
Amortization
    
9
      
903
      
211
      
1
      
1,124
  
Net (gain) loss on the disposition of assets
    
(371
) 
    
15
      
1
      
(2
) 
    
(357
) 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
  
$
9,918
    
$
630
    
$
(440
) 
  
$
(4,507
) 
  
$
5,601
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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, change in the estimated fair value of contingent
earn-out
consideration and net (gain) 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 (gain) loss on the disposition of assets
     5,154       —         —         —         5,154  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   $ 6,245     $ (199 )    $ (444 )    $ (4,259 )    $ 1,343  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Six Months Ended June 30, 2019
                                        
Net revenue
  
$
95,175
    
$
20,200
    
$
9,774
     $ —      
$
125,149
  
Operating expenses
    
74,156
      
15,706
      
10,595
      
8,203
      
108,660
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization and net (gain) loss on the disposition of assets
  
$
21,019
    
$
4,494
    
$
(821
) 
  
$
(8,203
) 
  
$
16,489
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
    
3,679
      
1,538
      
209
      
359
      
5,785
  
Amortization
    
18
      
1,978
      
423
      
1
      
2,420
  
Net (gain) loss on the disposition of assets
    
3,412
      
254
      
1
       —        
3,667
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
  
$
13,910
    
$
724
    
$
(1,454
) 
  
$
(8,563
) 
  
$
4,617
  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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, change in the estimated fair value of contingent
earn-out
consideration and net (gain) 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 (gain) loss on the disposition of assets
     5,159       —         —         —         5,159  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   $ 16,672     $ (206 )    $ (1,054 )    $ (8,398 )    $ 7,014  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
           
   
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
    
Consolidated
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
(Dollars in thousands)
  
As of June 30, 2019
                                        
Inventories, net
   $ —       $ —      
$
630
     $ —      
$
630
  
Property and equipment, net
    
79,872
      
6,083
      
826
      
7,810
      
94,591
  
Broadcast licenses
    
372,325
       —         —         —        
372,325
  
Goodwill
    
2,957
      
21,592
      
1,888
      
8
      
26,445
  
Other indefinite-lived intangible assets
     —         —        
277
       —        
277
  
Amortizable intangible assets, net
    
286
      
7,175
      
1,598
      
2
      
9,061
  
As of December 31, 2018
                                        
Inventories, net
   $ —       $ 290     $ 387     $ —       $ 677  
Property and equipment, net
     81,269       6,184       933       7,958       96,344  
Broadcast licenses
     376,316       —         —         —         376,316  
Goodwill
     2,960       21,933       1,888       8       26,789  
Other indefinite-lived intangible assets
     —         —         277       —         277  
Amortizable intangible assets, net
     303       8,937       2,021       3       11,264