Quarterly report pursuant to Section 13 or 15(d)

SEGMENT DATA

v3.5.0.2
SEGMENT DATA
 9 Months Ended
Sep. 30, 2016
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.
 
During the third quarter of 2016 we reclassed Salem Consumer Products, our e-commerce business that sells books, DVD’s and editorial content developed by our on-air personalities, from our Digital Media segment to our Broadcast segment. With this reclassification, all revenue and expenses generated by on-air hosts, including broadcast programs and e-commerce product sales are consolidated to assess the financial performance of each network program.
 
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. Our operating segments now meet the quantitative thresholds to qualify as reportable segments. We continually review our operating segment classifications to align with operational changes in our business and may make future 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; nor do they include costs such as amortization, depreciation, taxes or interest expense. Changes to our operating segments did not impact the reporting units used to test non-amortizable assets for impairment. All prior periods presented are updated to reflect the new composition of our operating segments. Segment performance, as defined by Salem, is not necessarily comparable to other similarly titled captions of other companies.
 
The table below presents financial information for each operating segment as of September 30, 2016 and 2015 based on the new composition of our operating segments:
 
 
 
Broadcast
 
Digital
Media
 
Publishing
 
Unallocated
Corporate
 
Consolidated
 
 
 
(Dollars in thousands)
 
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
51,052
 
$
11,999
 
$
8,221
 
$
—
 
$
71,272
 
Operating expenses
 
 
37,434
 
 
9,172
 
 
8,020
 
 
4,147
 
 
58,773
 
Operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration and the (gain) loss on the sale or disposal of assets
 
$
13,618
 
$
2,827
 
$
201
 
$
(4,147)
 
$
12,499
 
Depreciation
 
 
1,753
 
 
840
 
 
174
 
 
209
 
 
2,976
 
Amortization
 
 
22
 
 
1,091
 
 
228
 
 
—
 
 
1,341
 
Change in the estimated fair value of contingent earn-out consideration
 
 
—
 
 
(13)
 
 
(183)
 
 
—
 
 
(196)
 
(Gain) loss on the sale or disposal of assets
 
 
(633)
 
 
176
 
 
—
 
 
—
 
 
(457)
 
Operating income (loss)
 
$
12,476
 
$
733
 
$
(18)
 
$
(4,356)
 
$
8,835
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
49,451
 
$
11,128
 
$
6,912
 
$
—
 
$
67,491
 
Operating expenses
 
 
35,538
 
 
8,630
 
 
6,966
 
 
3,697
 
 
54,831
 
Operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration and loss on disposal of assets
 
$
13,913
 
$
2,498
 
$
(54)
 
$
(3,697)
 
$
12,660
 
Depreciation
 
 
1,947
 
 
820
 
 
153
 
 
216
 
 
3,136
 
Amortization
 
 
23
 
 
1,171
 
 
136
 
 
—
 
 
1,330
 
Change in the estimated fair value of contingent earn-out consideration
 
 
—
 
 
(105)
 
 
(498)
 
 
—
 
 
(603)
 
Loss on disposal of assets
 
 
35
 
 
11
 
 
(57)
 
 
8
 
 
(3)
 
Operating income (loss)
 
$
11,908
 
$
601
 
$
212
 
$
(3,921)
 
$
8,800
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
149,768
 
$
34,056
 
$
19,802
 
$
—
 
$
203,626
 
Operating expenses
 
 
109,455
 
 
26,815
 
 
19,951
 
 
11,928
 
 
168,149
 
Operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairment of long-lived assets and (gain) loss on the sale or disposal of assets
 
$
40,313
 
$
7,241
 
$
(149)
 
$
(11,928)
 
$
35,477
 
Depreciation
 
 
5,431
 
 
2,392
 
 
489
 
 
638
 
 
8,950
 
Amortization
 
 
67
 
 
3,233
 
 
372
 
 
1
 
 
3,673
 
Change in the estimated fair value of contingent earn-out consideration
 
 
—
 
 
(119)
 
 
(339)
 
 
—
 
 
(458)
 
Impairment of long-lived assets
 
 
700
 
 
—
 
 
—
 
 
—
 
 
700
 
(Gain) loss on the sale or disposal of assets
 
 
(2,175)
 
 
182
 
 
(21)
 
 
6
 
 
(2,008)
 
Operating income (loss)
 
$
36,290
 
$
1,553
 
$
(650)
 
$
(12,573)
 
$
24,620
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
145,609
 
$
32,859
 
$
18,172
 
$
—
 
$
196,640
 
Operating expenses
 
 
104,958
 
 
26,081
 
 
17,932
 
 
11,206
 
 
160,177
 
Operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration and (gain) loss on the sale or disposal of assets
 
$
40,651
 
$
6,778
 
$
240
 
$
(11,206)
 
$
36,463
 
Depreciation
 
 
5,821
 
 
2,344
 
 
488
 
 
715
 
 
9,368
 
Amortization
 
 
73
 
 
3,493
 
 
407
 
 
1
 
 
3,974
 
Change in the estimated fair value of contingent earn-out consideration
 
 
—
 
 
(316)
 
 
(476)
 
 
—
 
 
(792)
 
(Gain) loss on the sale or disposal of assets
 
 
194
 
 
11
 
 
(58)
 
 
9
 
 
156
 
Operating income (loss)
 
$
34,563
 
$
1,246
 
$
(121)
 
$
(11,931)
 
$
23,757
 
 
 
 
Broadcast
 
Digital
Media
 
Publishing
 
Unallocated
Corporate
 
Consolidated
 
 
 
(Dollars in thousands)
 
As of September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inventories, net
 
$
—
 
$
324
 
$
422
 
$
—
 
$
746
 
Property and equipment, net
 
 
87,369
 
 
6,680
 
 
1,757
 
 
7,516
 
 
103,322
 
Broadcast licenses
 
 
394,043
 
 
—
 
 
—
 
 
—
 
 
394,043
 
Goodwill
 
 
3,581
 
 
20,167
 
 
1,968
 
 
8
 
 
25,724
 
Other indefinite-lived intangible assets
 
 
—
 
 
—
 
 
833
 
 
—
 
 
833
 
Amortizable intangible assets, net
 
 
425
 
 
10,883
 
 
4,376
 
 
6
 
 
15,690
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inventories, net
 
$
—
 
$
505
 
$
388
 
$
—
 
$
893
 
Property and equipment, net
 
 
88,894
 
 
6,927
 
 
1,742
 
 
7,920
 
 
105,483
 
Broadcast licenses
 
 
393,031
 
 
—
 
 
—
 
 
—
 
 
393,031
 
Goodwill
 
 
3,581
 
 
19,930
 
 
1,044
 
 
8
 
 
24,563
 
Other indefinite-lived intangible assets
 
 
—
 
 
—
 
 
833
 
 
—
 
 
833
 
Amortizable intangible assets, net
 
 
492
 
 
9,599
 
 
1,385
 
 
5
 
 
11,481