Salem Media Group, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Data

Segment Data

9 Months Ended

Sep. 30, 2018

NOTE 19. 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.

Our operating segments reflect how our chief operating decision makers, which we define as a collective group of senior executives, assess the performance of each operating segment and determine the appropriate allocations of resources to each segment. We continue to 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, 2018 and 2017:


	Broadcast			Digital Media			Publishing			Unallocated Corporate Expenses			Consolidated
	(Dollars in thousands)
Three Months Ended September 30, 2018
Net revenue	$	48,812		$	10,397		$	6,319		$	—		$	65,528
Operating expenses		37,158			8,021			6,210			3,987			55,376

Net operating income (loss) before depreciation, amortization and net loss on the disposition of assets	$	11,654		$	2,376		$	109		$	(3,987	)	$	10,152

Depreciation		1,923			777			128			204			3,032
Amortization		9			1,370			225			—			1,604
Net loss on the disposition of assets		(759	)		—			—			—			(759	)

Net operating income (loss)	$	10,481		$	229		$	(244	)	$	(4,191	)	$	6,275


Three Months Ended September 30, 2017
Net revenue	$	48,424		$	10,446		$	6,563		$	—		$	65,433
Operating expenses		37,040			8,169			6,686			4,233			56,128

Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairment and net gain on the disposition of assets	$	11,384		$	2,277		$	(123	)	$	(4,233	)	$	9,305

Depreciation		1,920			792			159			211			3,082
Amortization		11			860			264			—			1,135
Change in the estimated fair value of contingent earn-out consideration		—			(12	)		—			—			(12	)
Net gain on the disposition of assets		97			—			—			(2	)		95

Net operating income (loss)	$	9,356		$	637		$	(546	)	$	(4,442	)	$	5,005


	Broadcast			Digital Media			Publishing			Unallocated Corporate Expenses			Consolidated
	(Dollars in thousands)
Nine Months Ended September 30, 2018
Net revenue	$	147,425		$	31,051		$	17,119		$	—		$	195,595
Operating expenses		110,151			24,792			17,319			11,938			164,200

Net operating income (loss) before depreciation, amortization and net loss on the disposition of assets	$	37,274		$	6,259		$	(200	)	$	(11,938	)	$	31,395

Depreciation		5,692			2,346			388			650			9,076
Amortization		29			3,818			710			1			4,558
Change in the estimated fair value of contingent earn-out consideration		—			72			—			—			72
Net loss on the disposition of assets		4,400			—			—			—			4,400

Net operating income (loss)	$	27,153		$	23		$	(1,298	)	$	(12,589	)	$	13,289

Nine Months Ended September 30, 2017
Net revenue	$	145,479		$	31,998		$	19,048		$	—		$	196,525
Operating expenses		108,807			25,241			18,705			13,183			165,936

Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairment and net gain on the disposition of assets	$	36,672			6,757		$	343		$	(13,183	)	$	30,589

Depreciation		5,668			2,389			515			599			9,171
Amortization		46			2,494			879			1			3,420
Change in the estimated fair value of contingent earn-out consideration		—			(54	)		—			—			(54	)
Impairment of indefinite-lived long-term assets other than goodwill		—			—			19			—			19
Net gain on the disposition of assets		(399	)		—			(9	)		(2	)		(410	)

Net operating income (loss)	$	31,357		$	1,928		$	(1,061	)	$	(13,781	)	$	18,443



	Broadcast			Digital Media			Publishing			Unallocated Corporate			Consolidated
	(Dollars in thousands)
As of September 30, 2018
Inventories, net	$	—		$	336		$	555		$	—		$	891
Property and equipment, net		81,552			6,442			1,000			7,718			96,712
Broadcast licenses		379,182			—			—			—			379,182
Goodwill		2,960			21,933			1,888			8			26,789
Other indefinite-lived intangible assets		—			—			313			—			313
Amortizable intangible assets, net		312			10,347			2,237			3			12,899

As of December 31, 2017
Inventories, net	$	—		$	313		$	417		$	—		$	730
Property and equipment, net		83,901			6,173			1,281			8,125			99,480
Broadcast licenses		380,914			—			—			—			380,914
Goodwill		3,581			20,947			1,888			8			26,424
Other indefinite-lived intangible assets		—			—			313			—			313
Amortizable intangible assets, net		351			9,801			2,947			5			13,104