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, 2020

Indefinite-lived Intangible Assets [Line Items]

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 described in Note 3 – Recent Transactions.


	Year Ended December 31,
	2019			2020
	(Dollars in thousands)
Balance, beginning of period before cumulative loss on impairment	$	484,691		$	441,143
Accumulated loss on impairment		(108,375	)		(103,285	)

Balance, beginning of period after cumulative loss on impairment		376,316			337,858

Acquisitions of radio stations		617			—
Acquisitions of FM translators and construction permits		35			—
Capital Projects		300			—
Disposition of radio stations and FM translators		(36,502	)		(1,091	)
Impairments based on the estimated fair value of broadcast licenses		(2,908	)		(16,994	)

Balance, end of period after cumulative loss on impairment	$	337,858		$	319,773

Balance, end of period before cumulative loss on impairment	$	441,143		$	440,052
Accumulated loss on impairment		(103,285	)		(120,279	)

Balance, end of period after cumulative loss on impairment	$	337,858		$	319,773

Schedule Of Carrying Value and Fair Value of Broadcast Licenses

The table below presents the percentage within a range by which our prior year

start-up

income estimated fair value exceeds the current year carrying value of our broadcasting licenses:


	Geographic Market Clusters as of December 31, 2020
	Percentage Range By Which 2019 Estimated Fair Value Exceeds 2020 Carrying Value
	£ 25%		>26%-50%		>51% to 75%		> +than 76%
Number of accounting units		4		8		2		1
Broadcast license carrying value (in thousands)	$	92,983	$	44,670	$	27,465	$	6,092


	Geographic Market Clusters as December 31, 2020
	Percentage Range By Which March 2020 Estimated Fair Value Exceeds 2020 Carrying Value
	£ 25 %		> 26 % -50 %		> 51 % to 75 %		> +than 76 %
Number of accounting units		11		—		—		—
Broadcast license carrying value (in thousands)	$	188,858	$	—	$	—	$	—

The table below shows the percentage within a range by which our estimated fair value exceeded the carrying value of our broadcasting licenses for these 13 market clusters:


	Geographic Market Clusters as of December 31, 2020
	Tested due to SOI Multiple and length of time from prior valuation – Percentage Range by Which Prior Valuation Exceeded 2020 Carrying Value
	£ 25%		>26%-50%		>51% to 75%		> +than 76%
Number of accounting units		—		3		2		8
Broadcast license carrying value (in thousands)	$	—		13,373		8,150		63,869

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 the broadcast licenses tested in each period were as follows:


Broadcast Licenses	December 31, 2019	March 31, 2020	September 30, 2020	December 31 , 2020
Risk-adjusted discount rate	9.0%	9.5%	8.5%	8.5%
Operating profit margin ranges	4.0% - 33.8%	4.6% - 33.8%	4.3% - 33.3%	4.2% - 31.0%
Long-term revenue growth rates	0.7% - 1.1%	0.8% - 1.1%	0.2% - 1.1%	0.4% - 0.9%

Schedule of Interim Impairment Testing Under Start-Up Income Approach

The results of our interim impairment reviews were as follows:


Market Cluster	Excess Fair Value March 31, 2020 Estimate			Excess Fair Value September 30, 2020 Estimate
Boston, MA		4.8	%		5.6	%
Chicago, IL		(9.0	%)		8.5	%
Cleveland, OH		(18.4	%)		6.5	%
Dallas, TX		8.5	%		11.8	%
Louisville, KY		(21.8	%)		13.8	%
New York, NY		7.3	%		15.9	%
Philadelphia, PA		(13.1	%)		5.1	%
Portland, OR		(14.8	%)		10.1	%
Sacramento, CA		(9.6	%)		4.6	%
San Francisco, CA		1.2	%		7.0	%
Tampa, FL		(28.0	%)		20.5	%