Salem Media Group, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Broadcast Licenses (Tables)

Broadcast Licenses (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Changes in Broadcasting Licenses

The following table presents the changes in broadcasting licenses that include acquisitions and divestitures of radio stations and FM translators as discussed in Note 3—Acquisitions and Recent Transactions.


	Year Ended December 31,
	2017			2018
	(Dollars in thousands)
Balance, beginning of period before cumulative loss on impairment	$	494,058		$	486,455
Accumulated loss on impairment		(105,541	)		(105,541	)

Balance, beginning of period after cumulative loss on impairment		388,517			380,914

Acquisitions of radio stations		191			6,270
Acquisitions of FM translators and construction permits		198			19
Capital projects to improve broadcast signal and strength		5			—
Abandoned capital projects		—			(40	)
Disposition of radio stations		(7,997	)		(8,013	)
Impairments based on the estimated fair value of broadcast licenses		—			(2,834	)

Balance, end of period before cumulative loss on impairment	$	486,455		$	484,691
Accumulated loss on impairment		(105,541	)		(108,375	)

Balance, end of period after cumulative loss on impairment	$	380,914		$	376,316

Schedule of Impairment Testing Under the Income Approach

The table below presents the results of our impairment testing under the income approach for the 2018 annual testing period.


Market Cluster	Excess Fair Value 2018 Estimate
Atlanta, GA		21.2	%
Cleveland, OH		(3.8	%)
Columbus, OH		25.4	%
Dallas, TX		45.9	%
Denver, CO		951.3	%
Detroit, MI		47.6	%
Greenville, SC		46.5	%
Honolulu, HI		131.1	%
Houston, TX		1070.4	%
Little Rock		21.0	%
Los Angeles, CA		102.6	%
Louisville, KY		(11.2	%)
Nashville, TN		675.1	%
New York, NY		35.4	%
Philadelphia, PA		9.7	%
Phoenix, AZ		51.0	%
Pittsburgh, PA		292.7	%
Portland, OR		(3.9	%)
Sacramento, CA		3.1	%
San Antonio, TX		63.1	%
San Diego, CA		47.2	%
San Francisco, CA		2.6	%
Seattle, WA		597.4	%
St Louis		329.5	%
Tampa, FL		12.5	%
Washington, D.C.		164.9	%

Broadcast Licenses [Member]

Schedule of Estimates and Assumptions Used in the Start - Up Income Valuation for Broadcast Licenses

The assumptions used reflect those of a hypothetical market participant and not necessarily the actual or projected results of Salem. The key estimates and assumptions used in the start-up income valuation for our broadcast licenses were as follows:


Broadcast Licenses	December 31, 2017	December 31, 2018
Risk-adjusted discount rate	9.0%	9.0%
Operating profit margin ranges	(13.9%) - 30.8%	4.4% - 34.5%
Long-term revenue growth rates	1.9%	0.5% - 1.2%