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

Broadcast Licenses (Tables)

3 Months Ended

Mar. 31, 2020

The following table presents the changes in broadcasting licenses that include acquisitions and divestitures of radio stations and FM translators.


Broadcast Licenses	Twelve Months Ended December 31, 2019			Three Months Ended March 31, 2020
Broadcast Licenses	(Dollars in thousands)
Balance before cumulative loss on impairment, beginning of period	$	484,691		$	441,143
Accumulated loss on impairment, beginning of period		(108,375	)		(103,285	)

Balance after cumulative loss on impairment, beginning of period		376,316			337,858

Acquisitions of radio stations		617			—
Acquisitions of FM translators and construction permits		35			—
Capital projects		300			—
Dispositions of radio stations		(36,502	)		—
Impairments based on the estimated fair value of broadcast licenses		(2,908	)		(16,994	)

Balance, end of period after cumulative loss on impairment	$	337,858		$	320,864

Balance, end of period before cumulative loss on impairment	$	441,143		$	441,143
Accumulated loss on impairment, end of period		(103,285	)		(120,279	)

Balance, end of period after cumulative loss on impairment	$	337,858		$	320,864

The table below presents the results of our interim impairment testing under the

start-up

income approach at March 31, 2020:


Market Cluster	Excess Fair Value March 31, Estimate
Boston, MA		4.8	%
Chicago, IL		(9.0	%)
Cleveland, OH		(18.4	%)
Dallas, TX		8.5	%
Louisville, KY		(21.8	%)
New York, NY		7.3	%
Philadelphia, PA		(13.1	%)
Portland, OR		(14.8	%)
Sacramento, CA		(9.6	%)
San Francisco, CA		1.2	%
Tampa, FL		(28.0	%)

The key estimates and assumptions used in the

start-up

income valuation for the broadcast licenses subject to testing were as follows:


Broadcast Licenses	December 31, 2019	March 31, 2020
Risk-adjusted discount rate	9.0%	9.5%
Operating profit margin ranges	4.0% - 33.8%	4.6% - 33.8%
Long-term revenue growth rates	0.7% - 1.1%	0.8% - 1.1%