Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.20.2
Segment Data
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Data
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, 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, assess the performance of each operating segment and determine 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.
Broadcast
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 12 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.
Salem Surround, our national multimedia advertising agency with locations in 34 markets across the United States, 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, 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 June 30, 2020 and 2019 based on the composition of our operating segments:
 
    
Broadcast
    
Digital
Media
     
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
    
(Dollars in thousands)
  
Three Months Ended June 30, 2020
            
Net revenue
   
$
39,470
 
  
$
9,443
 
   
$
3,958
 
   $
—
  		    
$
52,871
 
Operating expenses
   
 
33,094
 
  
 
7,653
 
   
 
5,567
 
  
 
3,850
 
  
 
50,164
 
  
 
 
    
 
 
     
 
 
    
 
 
    
 
 
  
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
   
$
6,376
 
  
$
1,790
 
   
$
(1,609
) 
  
$
(3,850
) 
  
$
2,707
 
  
 
 
    
 
 
     
 
 
    
 
 
    
 
 
  
Depreciation
   
 
1,641
 
  
 
767
 
   
 
73
 
  
 
237
 
  
 
2,718
 
Amortization
   
 
5
 
  
 
623
 
   
 
211
 
  
 
1
 
  
 
840
 
Change in the estimated fair value of contingent
earn-out
consideration
     
—
  		    
 
3
 
     
—
  		      
—
  		    
 
3
 
Net (gain) loss on the disposition of assets
   
 
30
 
    
—
  		       
—
  		    
 
4
 
  
 
34
 
  
 
 
    
 
 
     
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
4,700
 
  
$
397
 
   
$
(1,893
) 
  
$
(4,092
) 
  
$
(888
) 
  
 
 
    
 
 
     
 
 
    
 
 
    
 
 
  
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, change in the estimated fair value of contingent
earn-out
consideration 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  
  
 
 
    
 
 
     
 
 
    
 
 
    
 
 
  
 
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
    
(Dollars in thousands)
  
Six Months Ended June 30, 2020
           
Net revenue
   
$
84,650
 
  
$
18,547
 
  
$
7,924
 
  
$
—  
    
$
111,121
 
Operating expenses
   
 
70,421
 
  
 
15,979
 
  
 
10,629
 
  
 
8,060
 
  
 
105,089
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent
earn-out
consideration, impairments and net (gain) loss on the disposition of assets
   
$
14,229
 
  
$
2,568
 
  
$
(2,705
) 
  
$
(8,060
) 
  
$
6,032
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
   
 
3,286
 
  
 
1,538
 
  
 
142
 
  
 
465
 
  
 
5,431
 
Amortization
   
 
14
 
  
 
1,391
 
  
 
421
 
  
 
1
 
  
 
1,827
 
Change in the estimated fair value of contingent
earn-out
consideration
     
—  
    
 
(2
) 
    
—  
      
—  
    
 
(2
) 
Impairment of indefinite-lived long-term assets other than goodwill
   
 
16,994
 
    
—  
    
 
260
 
    
—  
    
 
17,254
 
Impairment of goodwill
   
 
184
 
  
 
10
 
  
 
105
 
  
 
8
 
  
 
307
 
Net (gain) loss on the disposition of assets
   
 
109
 
    
—  
      
—  
    
 
4
 
  
 
113
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
(6,358
) 
  
$
(369
) 
  
$
(3,633
) 
  
$
(8,538
) 
  
$
(18,898
) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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, change in the estimated fair value of contingent
earn-out
consideration 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  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
    
Consolidated
  
    
(Dollars in thousands)
  
As of June 30, 2020
           
Inventories, net
   
$
—  
 
  
$
—  
 
  
$
707
 
  
$
—  
 
  
$
707
 
Property and equipment, net
   
 
69,754
 
  
 
5,847
 
  
 
789
 
  
 
7,990
 
  
 
84,380
 
Broadcast licenses
   
 
320,864
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
320,864
 
Goodwill
   
 
2,746
 
  
 
19,499
 
  
 
1,446
 
  
 
—  
 
  
 
23,691
 
Other indefinite-lived intangible assets
   
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
Amortizable intangible assets, net
   
 
254
 
  
 
4,262
 
  
 
757
 
  
 
1
 
  
 
5,274
 
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