Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.19.1
Segment Data
3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
Segment Data

NOTE 21. 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 NetworkTM (“SRNTM”), 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. SRNTM delivers programming via satellite to approximately 3,200 affiliated radio stations throughout the United States, including several of our Salem-owned stations. SRNTM operates five divisions, SRNTM Talk, SRNTM News, SRNTM Websites, SRNTM 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 13 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.

During 2018, we launched Salem Surround, a national multimedia advertising agency with locations in 35 markets across the United States. Salem Surround 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, and ConservativeRadio.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 and Youthworker.com, offer a variety of digital resources including videos, song tracks, sermon archives and job listings to pastors and Church leaders. E-commerce also included Newport Natural Health, a seller of nutritional supplements through the date of sale on March 21, 2019.

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 March 31, 2019 and 2018 based on the composition of our operating segments:

 

     Broadcast      Digital
Media
    Publishing     Unallocated
Corporate
Expenses
    Consolidated  
     (Dollars in thousands)  

Three Months Ended March 31, 2019

           

Net revenue

   $ 46,093      $ 10,240     $ 4,136     $ —       $ 60,469  

Operating expenses

     36,449        8,058       4,822       3,871       53,200  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss) before depreciation, amortization and net (gain) loss on the disposition of assets

   $ 9,644      $ 2,182     $ (686   $ (3,871   $ 7,269  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation

     1,860        774       116       183       2,933  

Amortization

     9        1,075       212       —         1,296  

Net (gain) loss on the disposition of assets

     3,783        239       —         2       4,024  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss)

   $ 3,992      $ 94     $ (1,014   $ (4,056   $ (984
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Three Months Ended March 31, 2018

           

Net revenue

   $ 48,050      $ 10,394     $ 5,351     $ —       $ 63,795  

Operating expenses

     35,750        8,374       5,587       3,921       53,632  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss) before depreciation, amortization and net (gain) loss on the disposition of assets

   $ 12,300      $ 2,020     $ (236   $ (3,921   $ 10,163  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation

     1,858        802       131       218       3,009  

Amortization

     10        1,225       243       —         1,478  

Net (gain) loss on the disposition of assets

     5        —         —         —         5  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss)

   $ 10,427      $ (7   $ (610   $ (4,139   $ 5,671  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

     Broadcast      Digital
Media
     Publishing      Unallocated
Corporate
     Consolidated  
     (Dollars in thousands)  

As of March 31, 2019

              

Inventories, net

   $ —        $ —        $ 533      $ —        $ 533  

Property and equipment, net

     80,505        6,093        866        8,082        95,546  

Broadcast licenses

     372,025        —          —          —          372,025  

Goodwill

     2,957        21,592        1,888        8        26,445  

Other indefinite-lived intangible assets

     —          —          277        —          277  

Amortizable intangible assets, net

     295        7,533        1,809        2        9,639  

As of December 31, 2018

              

Inventories, net

   $ —        $ 290      $ 387      $ —        $ 677  

Property and equipment, net

     81,269        6,184        933        7,958        96,344  

Broadcast licenses

     376,316        —          —          —          376,316  

Goodwill

     2,960        21,933        1,888        8        26,789  

Other indefinite-lived intangible assets

     —          —          277        —          277  

Amortizable intangible assets, net

     303        8,937        2,021        3        11,264