Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.22.2
Segment Data
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Data
NOTE 17. 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.
Broadcast
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 other advertisements can benefit national companies by reaching audiences throughout the United States.
Salem Radio Network
TM
(“SRN
TM
”), 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. SRN
TM
delivers programming via satellite to approximately 3,200 affiliated radio stations throughout the United States, including several of our Salem-owned stations. SRN
TM
operates five divisions, SRN
TM
Talk, SRN
TM
News, SRN
TM
Websites, SRN
TM
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 9 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.
Salem Surround, our national multimedia advertising agency with locations in 29 markets across the United States, 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.
Salem Podcast Network (“SPN”), launched in January 2021, is our platform for conservative, political, news, and family-oriented podcasts. SPN reaches over 11 million downloads per month, with one show already in the top 10 of all podcasts, and another in the top 10 in the News category according to the Apple Podcast Rankings.
Digital Media
Our digital media-based businesses provide Christian, conservative, investing content, audio and video streaming, and other resources digitally through the web. Salem Web Network (“SWN”) websites include Christian content websites; BibleStudyTools.com, Crosswalk.com
®
, Christianity.com, iBelieve.com, GodTube
®
.com, OnePlace
™
.com, GodUpdates.com, CrossCards
™
.com, ChristianHeadlines.com, and LightSource.com, and our conservative opinion websites; collectively known as Townhall Media, include Townhall.com
®
, HotAir
™
.com, Twitchy
®
.com, RedState
®
.com, BearingArms.com, ConservativeRadio.com and pjmedia.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 product websites, including SermonSearch
™
.com, ChurchStaffing.com, WorshipHouseMedia.com, SermonSpice
™
.com, WorshipHouseKids.com, Preaching.com, ChristianJobs.com, ShiftWorship.com, JourneyBoxMedia.com, Playbackmedia.com, and HyperPixelsMedia.com, offer a variety of digital resources including videos, song tracks, sermon archives and job listings to pastors and Church leaders.
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 two businesses: (1) Regnery
®
Publishing and Salem Books, traditional book publishers that have published dozens of bestselling books by leading conservative and Christian authors and personalities and (2) Salem Author Services, a self-publishing service for authors through Xulon Press and Mill City Press.
 
The table below presents financial information for each operating segment as of June 30, 2022 and 2021 based on the composition of our operating segments:
 
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
                                
    
(Dollars in thousands)
  
Three Months Ended June 30, 2022
                                         
Net revenue
   
$
52,452
 
  
$
10,804
 
  
$
5,426
 
  
$
—  
 
  
$
68,682
 
Operating expenses
   
 
42,489
 
  
 
8,273
 
  
 
5,432
 
  
 
4,781
 
  
 
60,975
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before debt modification costs, depreciation, amortization, impairments, and net (gain) loss on the disposition of assets
   
$
9,963
 
  
$
2,531
 
  
$
(6
) 
  
$
(4,781
) 
  
$
7,707
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Debt modification costs
      —         —         —      
 
20
 
  
 
20
 
Depreciation
   
 
1,530
 
  
 
979
 
  
 
89
 
  
 
260
 
  
 
2,858
 
Amortization
   
 
4
 
  
 
328
 
     —         —      
 
332
 
Impairment of indefinite-lived long-term assets other than goodwill
   
 
3,935
 
     —         —         —      
 
3,935
 
Impairment of goodwill
   
 
127
 
     —         —         —      
 
127
 
Net (gain) loss on the disposition of assets
   
 
(6,919
) 
  
 
(1
) 
     —      
 
27
 
  
 
(6,893
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
11,286
 
  
$
1,225
 
  
$
(95
) 
  
$
(5,088
) 
  
$
7,328
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Three Months Ended June 30, 2021
                                         
Net revenue
    $ 46,783     $ 10,339     $ 6,660     $ —       $ 63,782  
Operating expenses
      36,162       8,338       6,426       4,192       55,118  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent
earn-out
consideration, impairments, and net (gain) loss on the disposition of assets
    $ 10,621     $ 2,001     $ 234     $ (4,192 )    $ 8,664  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
      1,603       860       44       234       2,741  
Amortization
      4       397       144       —         545  
Net (gain) loss on the disposition of assets
      —         65       (328 )      —         (263 ) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
    $ 9,014     $ 679     $ 374     $ (4,426 )    $ 5,641  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
    
Broadcast
    
Digital
Media
    
Publishing
    
Unallocated
Corporate
Expenses
    
Consolidated
  
                                
    
(Dollars in thousands)
  
Six Months Ended June 30, 2022
                                         
Net revenue
   
$
100,884
 
  
$
21,104
 
  
$
9,303
 
   $ —      
$
131,291
 
Operating expenses
   
 
80,610
 
  
 
16,746
 
  
 
9,899
 
  
 
9,591
 
  
 
116,846
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before debt modification costs, depreciation, amortization, change in the estimated fair value of contingent
earn-out
consideration, impairments, and net (gain) loss on the disposition of assets
   
$
20,274
 
  
$
4,358
 
  
$
(596
) 
  
$
(9,591
) 
  
$
14,445
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Debt modification costs
      —         —         —      
 
248
 
  
 
248
 
Depreciation
   
 
3,186
 
  
 
1,920
 
  
 
169
 
  
 
525
 
  
 
5,800
 
Amortization
   
 
8
 
  
 
658
 
     —         —      
 
666
 
Change in the estimated fair value of contingent
earn-out
consideration
      —      
 
(5
) 
     —         —      
 
(5
) 
Impairment of indefinite-lived long-term assets other than goodwill
   
 
3,935
 
     —         —         —      
 
3,935
 
Impairment of goodwill
   
 
127
 
     —         —         —      
 
127
 
Net (gain) loss on the disposition of assets
   
 
(8,657
) 
  
 
(1
) 
     —      
 
30
 
  
 
(8,628
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
   
$
21,675
 
  
$
1,786
 
  
$
(765
) 
  
$
(10,394
) 
  
$
12,302
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Six Months Ended June 30, 2021
                                         
Net revenue
    $ 90,831     $ 19,958     $ 12,346     $ —       $ 123,135  
Operating expenses
      69,505       17,011       11,631       8,480       106,627  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent
earn-out
consideration, impairments, and net (gain) loss on the disposition of assets
    $ 21,326     $ 2,947     $ 715     $ (8,480 )    $ 16,508  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Depreciation
      3,128       1,641       91       470       5,330  
Amortization
      8       829       289       —         1,126  
Net (gain) loss on the disposition of assets
      318       65       (328 )      —         55  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net operating income (loss)
    $ 17,872     $ 412     $ 663     $ (8,950 )    $ 9,997  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
    
Broadcast
     
Digital
Media
     
Publishing
     
Unallocated
Corporate
     
Consolidated
  
                                    
    
(Dollars in thousands)
  
As of June 30, 2022
                                             
Inventories, net
    $ —        $ —       
$
1,528
 
   
$
—  
 
   
$
1,528
 
Property and equipment, net
   
 
62,370
 
   
 
8,115
 
   
 
641
 
   
 
8,587
 
   
 
79,713
 
Broadcast licenses
   
 
313,500
 
      —          —          —       
 
313,500
 
Goodwill
   
 
2,622
 
   
 
19,793
 
   
 
1,446
 
      —       
 
23,861
 
Amortizable intangible assets, net
   
 
221
 
   
 
1,578
 
      —          —       
 
1,799
 
As of December 31, 2021
                                             
Inventories, net
    $ —        $ —        $ 960      $ —        $ 960  
Property and equipment, net
      61,694        8,447        746        8,452        79,339  
Broadcast licenses
      320,008        —          —          —          320,008  
Goodwill
      2,750        19,790        1,446        —          23,986  
Amortizable intangible assets, net
      229        2,215        —          —          2,444