Annual report pursuant to Section 13 and 15(d)

Segment Data

v3.20.1
Segment Data
 12 Months Ended
Dec. 31, 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 consolidated statements of operations included in this annual report on Form
10-K.
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 3,100 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 3
4
 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. 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, ConservativeRadio.com and pjmedia.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,
 
Youthworker.com, JourneyBoxMedia.com and Playblackmedia.com, offer a variety of digital resources including videos, song tracks, sermon archives and job listings to pastors and Church leaders.
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 December 31, 2019 and 2018 based on the composition of our operating segments:
 
    
Broadcast
     
Digital
Media
    
Publishing
    
Unallocated

Corporate
    
Consolidated
  
    
(Dollars in thousands)
  
Year Ended December 31, 2019
 
         
Net revenue
   
$
193,339
 
   
$
39,165
 
  
$
21,394
 
  
$
—
 
  
$
253,898
 
Operating expenses
   
 
149,439
 
   
 
30,801
 
  
 
22,348
 
  
 
15,940
 
  
 
218,528
 
  
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization, impairments, change in estimated fair value of contingent
earn-out
consideration and net (gain) loss on the disposition of assets
   
$
43,900
 
   
$
8,364
 
  
$
(954
) 
  
$
(15,940
) 
  
$
35,370
 
  
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
   
 
7,128
 
   
 
3,082
 
  
 
354
 
  
 
733
 
  
 
11,297
 
Amortization
   
 
35
 
   
 
3,757
 
  
 
844
 
  
 
1
 
  
 
4,637
 
Impairment of indefinite-lived long-term assets other than goodwill
   
 
2,908
 
   
 
—
 
  
 
17
 
  
 
—
 
  
 
2,925
 
Impairment of goodwill
   
 
—
 
   
 
2,089
 
  
 
338
 
  
 
—
 
  
 
2,427
 
Change in estimated fair value of contingent
earn-out
consideration
   
 
—
 
   
 
(41
) 
  
 
—
 
  
 
—
 
  
 
(41
) 
Net (gain) loss on the disposition of assets
   
 
22,056
 
   
 
260
 
  
 
10
 
  
 
—
 
  
 
22,326
 
  
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Operating income (loss)
   
$
11,773
 
   
$
(783
) 
  
$
(2,517
) 
  
$
(16,674
) 
  
$
(8,201
) 
  
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
 
    
Broadcast
     
Digital
Media
    
Publishing
    
Unallocated

Corporate
    
Consolidated
  
    
(Dollars in thousands)
  
Year Ended December 31, 2018
 
          
Net revenue
    $ 198,502      $ 42,595      $ 21,686     $ —       $ 262,783  
Operating expenses
      148,614        33,296        22,396       15,686       219,992  
Net operating income (loss) before depreciation, amortization, impairments, change in estimated fair value of contingent
earn-out
consideration and net (gain) loss on the disposition of assets
    $ 49,888      $ 9,299      $ (710 )    $ (15,686 )    $ 42,791  
Depreciation
      7,520        3,169        510       835       12,034  
Amortization
      38        5,227        926       1       6,192  
Impairment of indefinite-lived long-term assets other than goodwill
      2,834        —          36       —         2,870  
Change in estimated fair value of contingent
earn-out
consideration
      —          76        —         —         76  
Net (gain) loss on the disposition of assets
      4,653        —          —         —         4,653  
Operating income (loss)
    $ 34,843      $ 827      $ (2,182 )    $ (16,522 )    $ 16,966  
 
    
Broadcast
     
Digital
Media
     
Publishing
     
Unallocated

Corporate
     
Consolidated
  
    
(Dollars
 in
 thousands)
  
As of December 31, 2019
 
         
Inventories, net
   
$
—
 
   
$
—
 
   
$
717
 
   
$
—
 
   
$
717
 
Property and equipment, net
   
 
72,816
 
   
 
6,127
 
   
 
801
 
   
 
7,929
 
   
 
87,673
 
Broadcast licenses
   
 
337,858
 
   
 
—
 
   
 
—
 
   
 
—
 
   
 
337,858
 
Goodwill
   
 
2,930
 
   
 
19,509
 
   
 
1,551
 
   
 
8
 
   
 
23,998
 
Other indefinite-lived intangible assets
   
 
—
 
   
 
—
 
   
 
260
 
   
 
—
 
   
 
260
 
Amortizable intangible assets, net
   
 
268
 
   
 
5,653
 
   
 
1,178
 
   
 
1
 
   
 
7,100
 
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