Salem Communications Announces First Quarter 2010 Total Revenue of $48.3 Million

CAMARILLO, CA -- (MARKET WIRE) -- 05/06/10 -- Salem Communications Corporation (NASDAQ: SALM), a leading U.S. radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and family-themed content and conservative values, released its results for the three months ended March 31, 2010.

First Quarter 2010 Results

For the quarter ended March 31, 2010 compared to the quarter ended March 31, 2009:

Consolidated
--  Total revenue decreased 0.7% to $48.3 million from $48.7 million;
--  Operating expenses increased 1.2% to $40.2 million from $39.7 million;
--  Operating income from continued operations decreased 9.2% to $8.1
    million from $8.9 million;
--  Net income decreased to $0.2 million, or $0.01 net income per diluted
    share, from $2.9 million, or $0.12 net income per diluted share in the
    prior year;
--  EBITDA decreased 9.6% to $11.6 million from $12.9 million; and
--  Adjusted EBITDA decreased 7.7% to $12.0 million from $13.0 million.

Broadcast
--  Net broadcast revenue decreased 2.3% to $41.4 million from $42.4
    million;
--  Station operating income ("SOI") decreased 2.3% to $15.4 million from
    $15.8 million;
--  Same station net broadcast revenue decreased 2.5% to $41.3 million from
    $42.3 million;
--  Same station SOI decreased 2.5% to $15.4 million from $15.8 million;
    and
--  Same station SOI margin remained consistent at 37.4%.

Non-broadcast
--  Non-broadcast revenue increased 10.4% to $6.9 million from $6.3
    million; and
--  Non-broadcast operating income remained consistent at $0.5 million.

Included in the results for the quarter ended March 31, 2010 are:
--  A $0.3 million non-cash compensation charge ($0.2 million, net of tax)
    related to the expensing of stock options.

Included in the results for the quarter ended March 31, 2009 are:
--  A $0.1 million benefit related to the change in fair value of our
    interest rate swaps; and
--  A $0.1 million non-cash compensation charge related to the expensing of
    stock options.

These results reflect the reclassification of the operations of our Milwaukee, Wisconsin radio stations to discontinued operations for three months ended March 31, 2009.

Per share numbers are calculated based on 24,441,944 diluted weighted average shares for the quarter ended March 31, 2010, and 23,673,788 diluted weighted average shares for the quarter ended March 31, 2009.

Balance Sheet

As of March 31, 2010, the company had net debt of $293.9 million and was in compliance with the covenants of its credit facility and bond indenture. The company's bank leverage ratio was 5.70 versus a compliance covenant of 7.0.

Acquisitions and Divestitures

--  On April 9, 2010, we entered into an agreement to purchase radio
    station WWRC-AM, Washington, D.C., for $3.1 million.  We will begin
    operating this station on May 15, 2010 under terms of a Local Marketing
    Agreement; and

--  On March 5, 2010, we entered into an agreement to re-acquire KTEK-AM,
    Houston, Texas for $3.7 million.  We began programming the station
    pursuant to a Time Brokerage Agreement with the seller on March 8,
    2010.

Conference Call Information

Salem will host a teleconference to discuss its results on May 6, 2010 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (719) 325-2234, passcode 6265845 or listen via the investor relations portion of the company's website, located at www.salem.cc. A replay of the teleconference will be available through May 20, 2010 and can be heard by dialing (719) 457-0820, passcode 6265845 or on the investor relations portion on the company's website, located at www.salem.cc.

Second Quarter 2010 Outlook

For the second quarter of 2010, Salem is projecting total revenue to increase 3% to 5% over second quarter 2009 total revenue of $50.5 million. Salem is also projecting operating expenses before gain or loss on disposal of assets, terminated transaction costs and abandoned license upgrades and impairments to increase 3% to 6% as compared to the second quarter of 2009 operating expenses of $40.6 million.

Salem Communications Corporation is the largest commercial U.S. radio broadcasting company that provides programming targeted at audiences interested in Christian and family-themed radio content, as measured by the number of stations and audience coverage. Upon completion of all announced transactions, the company will own a national portfolio of 96 radio stations in 37 markets, including 58 stations in 22 of the top 25 markets. We also program the Family Talk™ Christian-themed talk format on XM Radio, channel 170.

Salem also owns Salem Radio Network, a national radio network that syndicates talk, news and music programming to approximately 2,000 affiliated radio stations and Salem Media Representatives, a national media advertising sales firm with offices across the country.

In addition to its radio broadcast business, Salem owns a non-broadcast media division. Salem Web Network is a provider of online Christian and conservative-themed content and streaming and includes websites such as Christian faith focused Christianity.com, Christian living focused Crosswalk.com®, Online Bible Study at BibleStudyTools.com, and Christian radio ministries online at OnePlace.com. Additionally Salem owns conservative news leader Townhall.com® and conservative political blog, HotAir.com providing conservative commentary, news and blogging. Salem Publishing™ circulates Christian and conservative magazines such as Homecoming® The Magazine, YouthWorker Journal™, The Singing News, FaithTalk Magazine, Preaching and Townhall Magazine™. Xulon Press™ is a provider of self publishing services targeting the Christian audience.

Forward-Looking Statements

Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem's radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem's reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

Regulation G

Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). Station operating income is defined as net broadcast revenues minus broadcast operating expenses. Non-broadcast operating income is defined as non-broadcast revenue minus non-broadcast operating expenses. EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before discontinued operations (net of tax), gain or loss on the disposal of assets and non-cash compensation expense. In addition, Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company's operating performance.

Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are generally recognized by the broadcast industry as important measures of performance and are used by investors as well as analysts who report on the industry to provide meaningful comparisons between broadcast. Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company's results of operations presented on a GAAP basis such as operating income and net income. In addition, Salem's definitions of station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.

Salem Communications Corporation
Condensed Consolidated Statements of Operations
(in thousands, except share, per share and margin data)

                                                      Three Months Ended
                                                          March 31,
                                                       2009        2010
                                                    ----------  ----------
                                                          (Unaudited)

Net broadcast revenue                               $   42,395  $   41,408
Non-broadcast revenue                                    6,264       6,916
                                                    ----------  ----------
Total revenue                                           48,659      48,324
Operating expenses:
  Broadcast operating expenses                          26,615      25,997
  Non-broadcast operating expenses                       5,798       6,391
  Corporate expenses                                     3,343       4,269
  Depreciation and amortization                          3,981       3,556
  Gain on disposal of assets                                 1          13
                                                    ----------  ----------
Total operating expenses                                39,738      40,226
                                                    ----------  ----------
Operating income                                         8,921       8,098
Other income (expense):
  Interest income                                           74          48
  Interest expense                                      (4,359)     (7,692)
  Change in fair value of interest rate swaps               80           -
  Other expense, net                                       (21)        (31)
                                                    ----------  ----------
Income from continuing operations before income
 taxes                                                   4,695         423
Provision for income taxes                               1,783         219
                                                    ----------  ----------
Income from continuing operations                        2,912         204
Loss from discontinued operations, net of tax              (23)          -
                                                    ----------  ----------
Net income                                          $    2,889  $      204
                                                    ==========  ==========

Basic income per share before discontinued
 operations                                         $     0.12  $     0.01
Income from discontinued operations, net of tax              -           -
Basic income per share after discontinued
 operations                                         $     0.12  $     0.01

Diluted income per share before discontinued
 operations                                         $     0.12  $     0.01
Income from discontinued operations, net of tax              -           -
Diluted income per share after discontinued
 operations                                         $     0.12  $     0.01

Basic weighted average shares outstanding           23,673,788  23,724,192
                                                    ==========  ==========
Diluted weighted average shares outstanding         23,673,788  24,441,944
                                                    ==========  ==========

Other Data:
Station operating income                            $   15,780  $   15,411
Station operating margin                                  37.2%       37.2%




Salem Communications Corporation
Condensed Consolidated Balance Sheets
(in thousands)
                                                  December 31,  March 31,
                                                      2009         2010
                                                  ------------ ------------
                                                               (Unaudited)

Assets
Cash                                              $      8,945 $      7,196
Restricted cash                                            100          100
Trade accounts receivable, net                          27,289       24,359
Deferred income taxes                                    4,700        4,764
Other current assets                                     3,459        4,231
Property, plant and equipment, net                     121,174      119,445
Intangible assets, net                                 397,801      399,459
Bond issue costs                                         7,078        6,956
Bank loan fees                                           1,515        1,431
Other assets                                             6,984        6,535
                                                  ------------ ------------
Total assets                                      $    579,045 $    574,476
                                                  ============ ============

Liabilities and Stockholders' equity
Current liabilities                                     20,373       28,074
Long-term debt and capital lease obligations           313,969      300,998
Deferred income taxes                                   38,973       38,954
Other liabilities                                        8,531        8,609
Stockholders' equity                                   197,199      197,841
                                                  ------------ ------------
Total liabilities and stockholders' equity        $    579,045 $    574,476
                                                  ============ ============




Salem Communications Corporation
Supplemental Information
(in thousands)
                                                        Three Months Ended
                                                            March 31,
                                                          2009      2010
                                                        --------  --------
                                                            (Unaudited)
Capital expenditures
Acquisition related / income producing                  $    187  $     29
Maintenance                                                  435     1,355
                                                        --------  --------
Total capital expenditures                              $    622  $  1,384
                                                        ========  ========

Tax information
Cash tax expense                                        $      8  $    (18)
Deferred tax expense                                       1,775       237
                                                        --------  --------
Provision for income taxes                              $  1,783  $    219
                                                        ========  ========

Tax benefit of non-book amortization                    $  2,844  $  2,632
                                                        ========  ========

Reconciliation of Same Station Net Broadcast Revenue
 to Total Net Broadcast Revenue
Net broadcast revenue - same station                    $ 42,322  $ 41,283
Net broadcast revenue - acquisitions                           -        14
Net broadcast revenue - dispositions                           2         -
Net broadcast revenue - format changes                        71       111
                                                        --------  --------
Total net broadcast revenue                             $ 42,395  $ 41,408
                                                        ========  ========

Reconciliation of Same Station Broadcast Operating
 Expenses to Total Broadcast Operating Expenses
Broadcast operating expenses - same station             $ 26,503  $ 25,856
Broadcast operating expenses - acquisitions                    1        32
Broadcast operating expenses - dispositions                   20         -
Broadcast operating expenses - format changes                 91       109
                                                        --------  --------
Total broadcast operating expenses                      $ 26,615  $ 25,997
                                                        ========  ========

Reconciliation of Same Station Operating Income to
  Total Station Operating Income
Station operating income - same station                 $ 15,819  $ 15,427
Station operating income - acquisitions                       (1)      (18)
Station operating income - dispositions                      (18)        -
Station operating income - format changes                    (20)        2
                                                        --------  --------
Total station operating income                          $ 15,780  $ 15,411
                                                        ========  ========




Salem Communications Corporation
Supplemental Information
(in thousands)
                                                       Three Months Ended
                                                            March 31,
                                                        2009       2010
                                                      ---------  ---------
                                                          (Unaudited)
Reconciliation of Station Operating Income and
 Non-Broadcast Operating Income to Operating Income
Station operating income                              $  15,780  $  15,411
Non-broadcast operating income                              466        525
Less:
  Corporate expenses                                     (3,343)    (4,269)
  Depreciation and amortization                          (3,981)    (3,556)
  Gain on disposal of assets                                 (1)       (13)
                                                      ---------  ---------
Operating income                                      $   8,921  $   8,098
                                                      =========  =========

Reconciliation of Adjusted EBITDA to EBITDA  to Net
 Income
Adjusted EBITDA                                       $  12,966  $  11,968
Less:
  Stock-based compensation                                  (84)      (332)
  Discontinued operations, net of tax                       (23)         -
  Gain on disposal of assets                                 (1)       (13)
                                                      ---------  ---------

EBITDA                                                   12,858     11,623
Plus:
  Interest income                                            74         48
Less:
  Depreciation and amortization                          (3,981)    (3,556)
  Interest expense                                       (4,359)    (7,692)
  Change in fair value of interest rate swaps                80          -
  Provision for income taxes                             (1,783)      (219)
                                                      ---------  ---------
Net income                                            $   2,889  $     204
                                                      =========  =========

                                                     Outstanding
                                                         at     Applicable
                                                      March 31,  Interest
                                                         2010      Rate
                                                      ---------  ---------
Selected Debt and Swap Data
  9 5/8% senior subordinated notes                    $ 300,000       9.63%
  Revolving credit facility (1)                           2,000       3.73%

(1)  Subject to rolling LIBOR plus a spread of 3.5% and incorporated into
     the rate set forth above.


Company Contact:
Evan D. Masyr
Salem Communications
(805) 987-0400 ext. 1053
Email Contact