Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.21.2
Segment Data
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Segment Data
NOTE 17. 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 3,100 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”).
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 multimedia advertising agency with locations in 33 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 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, Playblackmedia.com, and HyperPixelsMedia.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 and Salem Books, traditional book publishers that have published dozens of bestselling books by leading conservative and Christian authors and personalities and (2) Salem Author Services, a self-publishing service for authors through Xulon Press and Mill City Press.
The table below presents financial information for each operating segment as of September 30, 2021 and 2020 based on the composition of our operating segments:
 
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
                                
    
(Dollars in thousands)
  
Three Months Ended September 30, 2021
                                         
Net revenue
   
$
49,591
 
  
$
10,645
 
  
$
5,747
 
  
$
—  
 
  
$
65,983
 
Operating expenses
   
 
37,463
 
  
 
8,269
 
  
 
5,213
 
  
 
4,284
 
  
 
55,229
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization, and net (gain) loss
on the disposition of assets
   
$
12,128
 
  
$
2,376
 
  
$
534
 
  
$
(4,284
) 
  
$
10,754
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Debt modification costs
   
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
2,347
 
  
 
2,347
 
Depreciation
   
 
1,539
 
  
 
965
 
  
 
43
 
  
 
241
 
  
 
2,788
 
Amortization
   
 
4
 
  
 
375
 
  
 
48
 
  
 
—  
 
  
 
427
 
Net (gain) loss on the disposition of assets
   
 
(10,505
) 
  
 
(148
) 
  
 
22
 
  
 
24
 
  
 
(10,607
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
21,090
 
  
$
1,184
 
  
$
421
 
  
$
(6,896
) 
  
$
15,799
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Three Months Ended September 30, 2020
                                         
Net revenue
    $ 45,391     $ 9,808     $ 5,442     $ —       $ 60,641  
Operating expenses
      34,283       7,144       5,814       3,849       51,090  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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
    $ 11,108     $ 2,664     $ (372 )    $ (3,849 )    $ 9,551  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
      1,626       746       70       235       2,677  
Amortization
      4       537       210       —         751  
Change in the estimated fair value of contingent
earn-out
consideration
      —         (10 )      —         —         (10 ) 
Net (gain) loss on the disposition of assets
      1,380       —         1       —         1,381  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
    $ 8,098     $ 1,391     $ (653 )    $ (4,084 )    $ 4,752  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
                                
    
(Dollars in thousands)
  
Nine Months Ended September 30, 2021
                                         
Net revenue
   
$
140,422
 
  
$
30,603
 
  
$
18,093
 
  
$
—  
 
  
$
189,118
 
Operating expenses
   
 
106,968
 
  
 
25,280
 
  
 
16,844
 
  
 
12,764
 
  
 
161,856
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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
   
$
33,454
 
  
$
5,323
 
  
$
1,249
 
  
$
(12,764
) 
  
$
27,262
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Debt modification costs
   
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
2,347
 
  
 
2,347
 
Depreciation
   
 
4,667
 
  
 
2,606
 
  
 
134
 
  
 
711
 
  
 
8,118
 
Amortization
   
 
12
 
  
 
1,204
 
  
 
337
 
  
 
—  
 
  
 
1,553
 
Net (gain) loss on the disposition of assets
   
 
(10,187
) 
  
 
(83
) 
  
 
(306
) 
  
 
24
 
  
 
(10,552
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
38,962
 
  
$
1,596
 
  
$
1,084
 
  
$
(15,846
) 
  
$
25,796
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Nine Months Ended September 30, 2020
                                         
Net revenue
    $ 130,041     $ 28,355     $ 13,366     $ —       $ 171,762  
Operating expenses
      104,704       23,123       16,443       11,909       156,179  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
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
    $ 25,337     $ 5,232     $ (3,077 )    $ (11,909 )    $ 15,583  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
      4,912       2,284       212       700       8,108  
Amortization
      18       1,928       631       1       2,578  
Change in the estimated fair value of contingent
earn-out
consideration
      —         (12 )      —         —         (12 ) 
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
      1,489       —         1       4       1,494  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
    $ 1,740     $ 1,022     $ (4,286 )    $ (12,622 )    $ (14,146 ) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
    
Broadcast
     
Digital
Media
     
Publishing
     
Unallocated
Corporate
     
Consolidated
  
                                    
    
(Dollars in thousands)
  
As of September 30, 2021
                                             
Inventories, net
   
$
—  
 
   
$
—  
 
   
$
907
 
   
$
—  
 
   
$
907
 
Property and equipment, net
   
 
60,502
 
   
 
8,619
 
   
 
723
 
   
 
8,581
 
   
 
78,425
 
Broadcast licenses
   
 
320,008
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
320,008
 
Goodwill
   
 
2,750
 
   
 
19,790
 
   
 
1,446
 
   
 
—  
 
   
 
23,986
 
Amortizable intangible assets, net
   
 
233
 
   
 
2,552
 
   
 
—  
 
   
 
—  
 
   
 
2,785
 
As of December 31, 2020
                                             
Inventories, net
    $ —        $ —        $ 495      $ —        $ 495  
Property and equipment, net
      64,231        6,221        741        7,929        79,122  
Broadcast licenses
      319,773        —          —          —          319,773  
Goodwill
      2,746        19,565        1,446        —          23,757  
Amortizable intangible assets, net
      246        3,434        337        —          4,017