SALEM MEDIA GROUP, INC.
DELAWARE
State of Incorporation
4880 SANTA ROSA ROAD, CAMARILLO CA 93012
Company Address
Telephone: (805) 987-0400
Corporate Website: www.salemmedia.com
Company Email: ir@salemmedia.com
SIC Code:4832
Annual Report
For the period ending December 31, 2024
(the “Reporting Period”)
The number of shares outstanding of our Class A Common Stock is 21,663,091and Class B
Common Stock is 5,553,696 as of December 31, 2024
The number of shares outstanding of our Common Stock was 21,663,091and Class B Common
Stock was 5,553,696 as of September 30, 2024 (end of previous reporting period)
Indicate by check mark whether the company is a shell company (as defined in Rule 405 of the
Securities Act of
1933 and Rule 12b-2 of the Exchange Act of 1934):
Yes: ☐ No: ☒
Indicate by check mark whether the company’s shell status has changed since the previous reporting
period:
Yes: ☐ No: ☒
Indicate by check mark whether a Change in Control of the company has occurred over this reporting
period:
Yes: ☐ No: ☒
2
INDEX TO FINANCIAL STATEMENTS
PAGE
Disclosure Statement
3
Report of Independent Auditors
12
Consolidated Balance Sheets as of December 31, 2023 and 2024
14
Consolidated Statements of Operations for the years ended December 31, 2023 and 2024
15
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2024
16
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2024
17
Notes to Consolidated Financial Statements
19
Management’s Discussion and Analysis of Financial Condition and Results of Operations
57
3
Part A General Company Information
Item 1 The exact name of the issuer and its predecessor (if any).
Salem Media Group, Inc.
Item 2 The address of the issuer’s principal executive offices and address(es) of the issuer’s principal place of
business:
4880 Santa Rosa Road, Camarillo, CA 93012
(805) 987-0400 – telephone of issuer’s principal executive offices
www.salemmedia.com – company website
ir@salemmedia.com – investor relations e-mail address
Check box if principal executive office and principal place of business are the same address: ☒
Item 3 The jurisdiction(s) and date of the issuer’s incorporation or organization.
State of incorporation: Delaware, active.
Incorporated in Delaware on September 20, 1993.
Part B Share Structure
Item 4 The exact title and class of securities outstanding.
Salem Media Group, Inc. Class A Common Stock (794093104 CUSIP)
o
SALM – Trading symbol
Salem Media Group, Inc. Class B Common Stock (794093203 CUSIP)
o
Not publicly traded
Item 5 Par or stated value and description of the security.
$0.01 par value – Salem Media Group, Inc. Redeemable Series A Preferred Stock
$0.01 par value – Salem Media Group, Inc. Redeemable Series B Convertible Perpetual Preferred Stock
$0.01 par value – Salem Media Group, Inc. Class A Common Stock
$0.01 par value – Salem Media Group, Inc. Class B Common Stock
Item 6 The number of shares or total amount of the securities outstanding for each class of securities authorized.
December 31, 2024
o
Class A Preferred Stock
24,000 shares authorized
0 shares outstanding
o
Class B Convertible Perpetual Preferred Stock
40,000 shares authorized
40,000 shares outstanding
1 shareholder of record
o
Class A Common Stock
80,000,000 shares authorized
21,663,091 shares outstanding
13,690,886 shares public float
51 shareholders of record
o
Class B Common Stock
20,000,000 shares authorized
5,553,696 shares outstanding
0 shares public float
2 shareholders of record
December 31, 2023
o
Class A Common Stock
80,000,000 shares authorized
21,663,091 shares outstanding
13,690,886 shares public float
4
77 shareholders of record
o
Class B Common Stock
20,000,000 shares authorized
5,553,696 shares outstanding
0 shares public float
2 shareholders of record
December 31, 2022
o
Class A Common Stock
80,000,000 shares authorized
21,663,091 shares outstanding
13,690,883 shares public float
51 shareholders of record
o
Class B Common Stock
20,000,000 shares authorized
5,553,696 shares outstanding
0 shares public float
2 shareholders of record
Item 7 The name and address of the transfer agent*.
Broadridge Corporate Issuer Solutions, LLC
o
Transfer agent is registered under the Exchange Act
(631) 274-2525
Part C Business Information
Item 8 The nature of the issuer’s business.
See pages 57 to 59 of the Company’s Annual Report
Item 9 The nature of products or services offered.
See pages 57 to 59 of the Company’s Annual Report
Item 10 The nature and extent of the issuer’s facilities.
The Company both owns and leases office buildings and transmitter sites throughout the country.
o
See Note 6 of the financial statements
Part D Management Structure and Financial Information
Item 11 Company Insiders (Officers, Directors, and Control Persons).
A. Officers and Directors
Edward G. Atsinger III (Executive Chairman of the Board)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Co-founder of Salem Media Group, Inc.
o
2024 salary – $955,691 (which includes salary and medical, dental, vision and disability premiums)
o
Shares beneficially owned – 4,141,118 shares of Class A Common Stock and 2,776,848 shares of class B
common stock
o
Mr. Atsinger is currently our Executive Chairman of the Board and a director of each of our subsidiaries
since their inception. He was previously our Chief Executive Officer and a Director. He was President of
Salem from its inception through June 2007. He has been engaged in the ownership and operation of radio
stations since 1969 and currently serves as a Partner of Salem Broadcasting Company, Sonsinger Properties,
and Sonsinger Broadcasting Company of Houston, L.P.; as the manager/member of Atsinger Aviation, LLC,
Sun Air Jets, LLC, Allyson Aviation, LLC, and Greenbelt Property Management, EGA Investments I, and
EGA Investments II; and as President of Sonsinger Management, Inc. Mr. Atsinger has been a member of
the board of directors of the National Religious Broadcasters for a number of years and was re-elected to a
three (3) year term on that board in February 2019. He was also a member of the National Association of
Broadcasters Radio board of directors from 2008 through 2014. In October 2018, Mr. Atsinger was elected
Chairman of the Radio Music License Committee. Mr. Atsinger has been a member of the board of directors
of Oaks Christian School in Westlake Village, California since 1999. Mr. Atsinger is the brother-in-law of
5
Stuart W. Epperson (former Director). Additionally, Mr. Atsinger is the father of Edward C. Atsinger
(current Director) and uncle of Stuart W. Epperson Jr. (current Director). As one of our co-founders, Mr.
Atsinger provides the Board with extensive and valuable radio and senior executive leadership experience,
business development experience and insight into our background and vision. His longstanding association
with and service on many broadcasting-related boards of directors over the years also provides valuable
radio and new media experience as well as an understanding of the broader needs and challenges facing our
industry.
David P. Santrella (Chief Executive Officer)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Employed by Salem Media Group, Inc. since 2001
o
2024 salary – $643,739 (which includes salary, bonus and supplemental life insurance premiums)
o
Shares beneficially owned – 42,535 shares of Class A Common Stock
David A.R. Evans (Chief Operating Officer)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Employed by Salem Media Group, Inc. since 2000
o
2024 salary – $638,664 (which includes salary, bonus, restricted stock awards, and supplemental life
insurance premiums)
o
Shares beneficially owned – 8,170 shares of Class A Common Stock
Christopher J. Henderson (EVP, Legal and Human Resources, General Counsel & Secretary)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Employed by Salem Media Group, Inc. since 2001
o
2024 salary – $384,513 (which includes salary and supplemental life insurance premiums)
o
Shares beneficially owned – zero shares of Class A Common Stock
Evan D. Masyr (EVP and Chief Financial Officer)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Employed by Salem Media Group, Inc. since 2000
o
2024 salary – $459,830 (which includes salary and supplemental life insurance premiums)
o
Shares beneficially owned – 12,224 shares of Class A Common Stock
Allen E. Power (President of Broadcast Media)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Employed by Salem Media Group, Inc. since 2000
o
2024 salary – $404,851 (which includes salary, personal use of company vehicle, and supplemental life
insurance premiums)
o
Shares beneficially owned – 0 shares of Class A Common Stock
Richard A. Riddle (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 1997
o
2024 board fees – $63,500
o
Shares beneficially owned – 101,891 shares of Class A Common Stock
o
Mr. Riddle is an independent businessman specializing in providing financial assistance and consulting to
individuals and manufacturing companies. He was President and majority stockholder of I.L. Walker
Company from 1988 to 1997 when that company was sold. He also was Chief Operating Officer and a
major stockholder of Richter Manufacturing Corp. from 1970 to 1987. In 2010, Mr. Riddle joined the Board
of Directors of Know the Truth, a non-profit organization that is also a customer of the Company. Having an
extensive career in financial matters, Mr. Riddle brings to the Board significant financial experience enabling
him to assess and provide oversight concerning business and financial matters addressed by us.
Eric H. Halvorson (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 2015
o
2024 board fees – $73,000
o
Shares beneficially owned – 9,800 shares of Class A Common Stock
o
Mr. Halvorson was the Dean of Trinity Law School, Santa Ana, California, from 2016-2019 and has served
as Interim Dean since 2022. Additionally, Mr. Halvorson has been an Attorney at the Law Office of Eric H.
Halvorson since 2010 and focuses his practice on business law and estate planning. Mr. Halvorson was an
Adjunct Professor at the Pepperdine University School of Law for the 2006-2007, 2009-2010, 2010-2011,
and 2013-2014 academic years. He was an Executive in Residence at Pepperdine University Seaver College
of Letters, Arts and Sciences from 2000-2003 and from 2005-2007. Mr. Halvorson was our President and
Chief Operating Officer from 2007-2008, our Chief Operating Officer from 1996-2000 and our Executive
Vice President from 1991-2000. From 1991-1999 and 1985-1988, Mr. Halvorson also served as our General
6
Counsel. Mr. Halvorson was the managing partner of the law firm of Godfrey & Kahn, S.C.-Green Bay from
1988 until 1991. From 1985 to 1988, he was our Vice President and General Counsel. From 1976 until 1985,
he was an associate and then a partner of Godfrey & Kahn, S.C.-Milwaukee. Mr. Halvorson was a Certified
Public Accountant with Arthur Andersen & Co. from 1971 to 1973. Mr. Halvorson was previously a
member of the board of directors of Intuitive Surgical, Inc., from 2003 to 2016 and Pharmacyclics, Inc.,
from 2011 to 2015. Mr. Halvorson was previously our Director from 1988 to 2008. Mr. Halvorson brings
valuable legal and financial expertise and extensive historical knowledge of the Company to the Board. He
has also served as a board member for several for-profit companies which enables him to bring relevant
cross-board experience to us.
Heather W. Grizzle (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 2019
o
2024 board fees – $64,500
o
Shares beneficially owned – zero shares of Class A Common Stock
o
Ms. Grizzle is the Managing Partner of Causeway Strategies, a boutique consulting firm that helps
individuals, organizations and corporations to communicate, connect and advance their objectives more
effectively. Her background includes work in the White House and the U.S. House of Representatives, as
well as corporate communications in New York and charity sector communications in London. She
graduated cum laude with high honors in Economics from Harvard University, where she was Co-President
of the Institute of Politics. Ms. Grizzle is Chairman of the Board of Trustees of Stewardship America, and a
member of the Boards of Innovations for Poverty Action, Alpha USA, KidsMatter, and Charityvest. Having
worked in the White House and House of Representatives, Ms. Grizzle brings a unique insider’s perspective
relevant to our Conservative News Talk formats. Additionally, having served on several non-profit boards,
Ms. Grizzle has experience related to many of our programmers and audiences.
Stuart W. Epperson, Jr. (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 2022
o
2024 board fees – $50,000
o
Shares beneficially owned – 113,428 shares of Class A Common Stock
o
Stuart W. Epperson Jr. has been the Founder, President and CEO of Truth Broadcasting Corporation since
its inception in 1998. Truth Broadcasting Corporation operates 35 signals in 8 markets including Raleigh,
Greensboro, Charlotte, Richmond, Salt Lake City, Dayton, Toledo, and Myrtle Beach/Coastal Carolina in
the following formats: Christian Talk (primary), Urban Gospel, Southern Gospel and Christian Spanish. Mr.
Epperson Jr. also hosts Truth Talk Live, his own nationally syndicated show. From 1995 to 1998, Mr.
Epperson Jr. was a Senior Account Executive at Clear Channel Communications and from 1993 to 1995 was
an Account Executive at Multimedia Radio, Inc. Mr. Epperson Jr. earned his B.A. in Communications from
The Master’s College in 1992 and Master of Science, Broadcast Management from Bob Jones University in
1994. Mr. Epperson Jr. is the author of “Last Words of Jesus” published by Worthy Press Publ. in 2015 and
“First Words of Jesus” published by the same publisher in 2016. Additionally, Mr. Epperson Jr. currently
sits on the board of directors for the National Religious Broadcasters, Persecution Project Foundation,
Chesapeake-Portsmouth Broadcasting Corporation and Delmarva Educational Association. Mr. Epperson Jr.
is the son of Stuart W. Epperson (former Director), the nephew of Mr. Edward G. Atsinger III and the cousin
of Edward C. Atsinger. Mr. Epperson Jr. was previously a Director of the Company from 2016 to 2019. Mr.
Epperson Jr. brings valuable radio and senior executive leadership experience to us. In addition, Mr.
Epperson Jr.’s operation of radio stations in similar formats to ours enables him to bring relevant experience
related to our audiences and programmers.
Edward C. Atsinger (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 2022
o
2024 board fees – $50,000
o
Shares beneficially owned – 1,090,078 shares of Class A Common Stock
o
Mr. Atsigner is co-founder and Chief Production Officer of Greytek, LLC, a counterintelligence and security
services company focusing on the Defense and Industrial Security sectors, since 2014. A veteran of multiple
combat deployments, Mr. Atsinger dedicated himself to serving the interests of national security after the
terrorist attacks of September 11, 2001, serving with distinction as a professional Counterintelligence
Officer assigned to and supporting the United States Intelligence and Special Operations communities. Prior
to his national security career, Mr. Atsinger worked as a Senior Producer in Salem’s National News and
Public Affairs Department. Mr. Atsinger holds a BA/MA (Oxon) in Philosophy and Theology from Oxford
University, England. He has been a member of the Board of Directors of Rockbridge Academy, a classical
7
Christian school in Millersville, Maryland since 2010. He also currently serves as the Chairman of the Board
of Trustees for the Ballet Theatre of Maryland, Maryland’s premier professional ballet company, where he
has been a member of the board since 2017. Mr. Atsinger is the son of Edward G. Atsinger III. Additionally,
he is the cousin of Stuart W. Epperson Jr. Mr. Atsinger was previously a Director of the Company from
2016 to 2019. Mr. Atsinger brings valuable senior executive leadership experience and business
development experience to the Company.
Jacki L. Pick (Director)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Director for Salem Media Group, Inc. since 2022
o
2024 board fees – $62,000
o
Shares beneficially owned – zero shares of Class A Common Stock
o
Ms. Pick is the host of The Jacki Daily Show, an educational media offering created in 2014 and airing on
BlazeMedia network, on the dial in Texas, and podcast across most major outlets. She appears frequently on
policy and educational panels as a speaker and moderator, and on various shows and podcasts to promote
education on energy and environmental issues (various cities). From 2017 to 2021, Ms. Pick also served as a
Senior Fellow in energy and environment policy at the Texas Public Policy Foundation, the nation’s largest
state-based public policy organization. She served many years as legal counsel on Capitol Hill to the
Chairman of the Subcommittee on the Constitution of the U.S. House Judiciary Committee and the former
Ranking Member of the Commercial and Administrative Law Subcommittee, advising on the oversight of
federal agencies and on First Amendment issues including speech and media regulation (Washington, DC).
Prior to her career in Washington, she worked as a litigator defending various corporations in tort and as
professional liability actions (Nashville, TN). Ms. Pick studied Economics, Spanish, and World History at
Marshall University (U.S. Society of Yeager Scholars), Oxford University in England, and the University of
Zaragoza in Spain. She is an alumna of the Vanderbilt University Law School, where she served as the
President of the law school’s Federalist Society chapter and earned a Juris Doctor degree in 2003. Ms. Pick
brings a valuable insider’s perspective to the Company.
B. Other Control Persons
Nancy A. Epperson (Executive Chairman of the Board)
o
4880 Santa Rosa Road, Camarillo, CA 93012
o
Shares beneficially owned – 3,831,090 shares of Class A Common Stock and 2,776,848 shares of class B
common stock
C. Legal/Disciplinary History.
None noted
D. Disclosure of Family Relationships.
Edward C. Atsinger (Director) is the son of Edward G. Atsinger III (Executive Chairman of the Board)
Stuart W. Epperson, Jr. (Director) is the son of Nancy A. Epperson (Executive Chairman of the Board)
E. Disclosure of Related Party Transactions.
See Note 16 “Related Party Transactions” attached at the end of the Annual Update
Item 12 Financial information for the issuer’s most recent fiscal period.
The annual financial statements are incorporated by reference within this Disclosure Statement.
Page
Report of Independent Auditors
12
Consolidated Balance Sheets as of December 31, 2023 and 2024
14
Consolidated Statements of Operations for the years ended December 31, 2023 and 2024
15
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2024
16
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2024
17
Notes to Consolidated Financial Statements
19
8
Item 13 Similar financial information for such part of the two preceding fiscal years as the issuer or its
predecessor has been in existence.
The annual financial statements are incorporated by reference within this Disclosure Statement. The company’s
Annual Report for the fiscal year ended December 31, 2022 on Form 10-K was filed with the Securities and
Exchange Commission on March 13, 2023.
Page
Report of Independent Registered Public Accounting Firm
50
Consolidated Balance Sheets as of December 31, 2021 and 2022
52
Consolidated Statements of Operations for the years ended December 31, 2021 and 2022
53
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021 and 2022
54
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2022
55
Notes to Consolidated Financial Statements
57
Item 14 The name, address, telephone number, and email address of each of the following outside providers that
advise the issuer on matters relating to operations, business development and disclosure:
Investment Banker
o
Not applicable
Promoter
o
Not applicable
Securities Counsel
o
Rutan & Tucker, LLP
o
18575 Jamboree Road, 9th Floor
o
Irvine, CA 92612
o
(714) 641-5100
o
gamber@rutan.com
Accountant or Auditor
o
Moss Adams LLP
o
21700 Oxnard Street, Suite 300
o
Woodland Hills, CA 91367
o
310-295-3795
o
Jason.Lawson@mossadams.com
o
Services provided
Audit and review services for quarterly and annual financial statements for Salem Media Group,
Inc.
Annual audit services Salem Media Group, Inc.
Management is responsible for closing the books and preparing the financial statements. The
Auditors are responsible for independent audit and review services.
o
Licensing and qualifications
Moss Adams LLP is registered with the Public Company Accounting Oversight Board. PCAOB
ID: 659
Public Relations Consultant
o
Not applicable
Investor Relations Consultant
o
Not applicable
Any other advisor(s)
o
Not applicable
Item 15 Management’s Discussion and Analysis or Plan of Operation.
The company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations are
incorporated by reference within this Disclosure Statement starting on page 57.
Off-Balance Sheet Arrangements
o
There are no off-balance sheet arrangements
9
Part E Issuance History
Item 16 List of securities offerings and shares issued for services in the past two years.
The only increase to the shares of Class A Common Stock during the two years ended December 31, 2024 was from
the grant of stock options.
o
During the year ended December 31, 2023, there were 1,249,500 options granted for Class A Common
Stock and no options exercised.
o
During the year ended December 31, 2024, there were 40,000 shares for Class B Convertible Perpetual
Preferred Stock issued.
o
During the year ended December 31, 2024, there were no options for Class A Common Stock granted and
exercised.
Part F Exhibits
The following exhibits must be either described in or attached to the disclosure statement:
Item 17 Material Contracts.
None noted
Item 18 Articles of Incorporation and Bylaws.
The Amended and Restated Certificate of Incorporation was filed on Form 8-K with the Securities and Exchange
Commission on April 14, 1999. A Certificate of Amendment of Certificate of Incorporation related to the Company’s
name change was filed on Form 8-K with the Securities and Exchange Commission on February 23, 2015.
The Third Amended and Restated Bylaws were filed on Form 8-K with the Securities and Exchange Commission on
September 17, 2019.
Item 19 Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
None noted
10
Item 20 Issuer’s Certifications.
I, David P. Santrella, certify that:
1. I have reviewed this Annual disclosure statement of Salem Media Group, Inc.;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
March 14, 2025
Chief Executive Officer
I, Evan D. Masyr, certify that:
1. I have reviewed this Annual disclosure statement of Salem Media Group, Inc.;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
March 14, 2025
Executive Vice President and Chief Financial Officer
11
CERTAIN DEFINITIONS
Unless the context requires otherwise, all references in this annual report to “Salem” or the “company,” including references to
Salem by “we” “us” “our” and “its” refer to Salem Media Group, Inc. and our subsidiaries.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Salem makes “forward-looking statements” from time to time in both written reports (including this annual report) and oral
statements, within the meaning of federal and state securities laws. Disclosures that use words such as the company “believes,”
“anticipates,” “estimates,” “expects,” “intends,” “will,” “may,” “intends,” “could,” “would,” “should,” “seeks,” “predicts,” or
“plans” and similar expressions are intended to identify forward-looking statements, as defined under the Private Securities
Litigation Reform Act of 1995 and includes this statement for purposes of such safe harbor provisions.
You should not place undue reliance on these forward-looking statements, which reflect our expectations based upon data
available to the company as of the date of this annual report. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from expectations. Except as required by law, the company undertakes no
obligation to update or revise any forward-looking statements made in this annual report. Any such forward-looking
statements, whether made in this annual report or elsewhere, should be considered in context with the various disclosures
made by Salem about its business. These projections and other forward-looking statements fall under the safe harbors of
Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (“Exchange Act’).
12
Report of Independent Auditors
To the Stockholders and the Board of Directors
Salem Media Group, Inc.
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of Salem Media Group, Inc. (the Company), which comprise the
consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of operations,
stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial
position the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then
ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are required to be independent of the Company and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in
the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the
date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is
a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the consolidated financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control. Accordingly, no such opinion is expressed.
13
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made
by management, as well as evaluate the overall presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
/s/ Moss Adams LLP
Los Angeles, California
March 14, 2025
14
SALEM MEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
December 31,
2023
2024
ASSETS
Current assets:
Cash and cash equivalents and restricted cash
$
284
$
—
Accounts receivable (net of allowance for expected credit losses of $8,442 in 2023 and
$8,071 in 2024)
32,016
28,347
Unbilled revenue
1,175
2,097
Income tax receivable
293
—
Other receivables (net of allowances for expected credit losses of $640 in 2023 and 2024)
2,665
2,153
Prepaid expenses
5,641
5,970
Assets held for sale
4,732
68,105
Total current assets
46,806
106,672
Notes receivable (net of allowance for expected credit losses $454 in 2023 and $210 in 2024)
963
5
Property and equipment, net of accumulated depreciation
75,054
62,699
Operating lease right-of-use assets
44,149
41,962
Financing lease right-of-use assets
67
57
Broadcast licenses
257,172
181,864
Goodwill
22,577
22,116
Amortizable intangible assets, net of accumulated amortization
3,591
2,018
Deferred financing costs
1,168
743
Other assets
3,994
4,976
Total assets
$
455,541
$
423,112
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
32,532
$
23,820
Accrued interest
980
104
Contract liabilities
12,636
13,358
Deferred rent income
102
108
Income taxes payable
—
112
Current portion of operating lease liabilities
8,659
9,688
Current portion of financing lease liabilities
33
30
Secured promissory note
—
72,000
Current portion of long-term debt
16,831
24,617
Total current liabilities
71,773
143,837
Long-term debt, less current portion
152,960
5,250
Operating lease liabilities, less current portion
41,998
38,687
Financing lease liabilities, less current portion
36
29
Deferred income taxes
49,348
41,001
Contract liabilities, less current portion
3,291
1,786
Deferred rent income, less current portion
3,567
3,475
Other long-term liabilities
60
62
Total liabilities
323,033
234,127
Commitments and contingencies (Note 13)
Redeemable Series A preferred stock, $0.01 par value; authorized 0 and 24,000 shares at
December 31, 2023 and 2024; 0 shares issued and outstanding at December 31, 2023 and
2024
—
—
Redeemable Series B convertible perpetual preferred stock, $0.01 par value and $1,000
liquidation value; authorized 0 and 40,000 shares, 0 and 40,000 issued and outstanding at
December 31, 2023 and 2024
—
—
Class A common stock, $0.01 par value; authorized 80,000,000 shares; 23,980,741
issued and 21,663,091 outstanding at December 31, 2023 and 2024
240
240
Class B common stock, $0.01 par value; authorized 20,000,000 shares; 5,553,696 issued
and outstanding at December 31, 2023 and 2024
56
56
Additional paid-in capital
249,275
289,573
Accumulated deficit
(83,057)
(66,878)
Treasury stock, at cost (2,317,650 shares at December 31, 2023 and 2024)
(34,006)
(34,006)
Total stockholders’ equity
132,508
188,985
Total liabilities and stockholders’ equity
$
455,541
$
423,112
The accompanying notes are an integral part of these consolidated financial statements.
15
SALEM MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
Year Ended December 31,
2023
2024
Net broadcast revenue
$
197,676
$
185,903
Net digital media revenue
41,973
45,004
Net publishing revenue
19,004
6,653
Total net revenue
258,653
237,560
Operating expenses:
Broadcast operating expenses (including $2,165 and $2,375 for the years ended
December 31, 2023 and 2024, respectively, paid to related parties)
171,498
169,289
Digital media operating expenses
34,936
37,120
Publishing operating expenses
22,317
7,012
Unallocated corporate expenses (including $18 and $32 for the years ended
December 31, 2023 and 2024, respectively, paid to related parties)
18,876
18,278
Depreciation
11,400
10,371
Amortization
2,235
1,594
Change in the estimated fair value of contingent earn-out consideration
698
(27)
Impairment of indefinite-lived long-term assets other than goodwill
41,717
4,428
Impairment of goodwill
2,580
—
Net (gain) loss on the disposition of assets
(1,295)
(5,048)
Total operating expenses
304,962
243,017
Operating loss
(46,309)
(5,457)
Other income (expense):
Interest income
60
35
Interest expense
(14,283)
(14,902)
Loss on early retirement of long-term debt
(194)
—
Gain on troubled debt restructuring
—
28,656
Earnings from equity method investment
4
2
Net miscellaneous income and (expenses)
26
19
Net income (loss) before income taxes
(60,696)
8,353
Benefit from income taxes
(17,384)
(7,826)
Net income (loss)
$
(43,312)
$
16,179
Basic income (loss) per share data:
Basic income (loss) per share Class A and Class B common stock
$
(1.59)
$
0.59
Diluted income (loss) per share data:
Diluted income (loss) per share Class A and Class B common stock
$
(1.59)
$
0.58
Basic weighted average Class A and Class B shares outstanding
27,216,787
27,216,787
Diluted weighted average Redeemable Series B Convertible Perpetual Preferred shares,
Class A and Class B shares outstanding
27,216,787
27,859,807
The accompanying notes are an integral part of these consolidated financial statements.
16
SALEM MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share data)
Redeemable Series B
Class A
Class B
Convertible Perpetual
Preferred
Common Stock
Common Stock
Additional
Paid-In
Accumulated
Treasury
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Stock
Total
Stockholders’
equity, December
31, 2022
—
—
23,980,741
$240
5,553,696
$56
$248,812
($39,745)
($34,006)
$175,357
Stock-based
compensation
—
—
—
—
—
—
463
—
—
463
Options exercised
—
—
—
—
—
—
—
—
—
—
Net loss
—
—
—
—
—
—
—
(43,312)
—
(43,312)
Stockholders’
equity, December
31, 2023
—
—
23,980,741
$240
5,553,696
$56
$249,275
($83,057)
($34,006)
$132,508
Stock-based
compensation
—
—
—
—
—
—
398
—
—
398
Issuance of
Redeemable
Series B
convertible
perpetual
preferred stock,
net of issuance
costs
40,000
—
—
—
—
—
39,900
—
—
39,900
Net income
—
—
—
—
—
—
—
16,179
—
16,179
Stockholders’
equity,
December 31,
2024
40,000
—
23,980,741
$240
5,553,696
$56
$289,573
($66,878)
($34,006)
$188,985
The accompanying notes are an integral part of these consolidated financial statements.
17
SALEM MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31,
2023
2024
OPERATING ACTIVITIES
Net income (loss)
$
(43,312)
$
16,179
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation
463
398
Depreciation and amortization
13,635
11,965
Amortization of deferred financing costs
1,726
2,306
Non-cash lease expense
9,162
9,111
Accretion of acquisition-related deferred payments and contingent earn-out consideration
14
—
Provision for expected credit losses
(2,161)
(846)
Deferred income taxes
(17,384)
(8,347)
Change in the estimated fair value of contingent earn-out consideration
698
(27)
Impairment of indefinite-lived long-term assets other than goodwill
41,717
4,428
Impairment of goodwill
2,580
—
Loss on early retirement of debt
194
—
Gain on troubled debt restructuring
—
(28,656)
Net (gain) loss on the disposition of assets
(1,295)
(5,048)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue
2,885
3,134
Income taxes receivable
(98)
293
Inventories
298
—
Prepaid expenses and other current assets
(1,322)
650
Accounts payable and accrued expenses
731
(6,171)
Operating lease liabilities
(9,613)
(9,204)
Contract liabilities
(2,880)
(783)
Deferred rent income
(55)
9
Other liabilities
(6)
4
Income tax payable
—
112
Net cash used for operating activities
(4,023)
(10,493)
INVESTING ACTIVITIES
Cash paid for capital expenditures net of tenant improvement allowances
(9,001)
(5,072)
Capital expenditures reimbursable under tenant improvement allowances
(93)
(886)
Purchases of broadcast assets and radio stations
(5,535)
(3,500)
Purchases of digital media businesses and assets
(25)
—
Equity investment in limited liability corporations
(1,500)
—
Proceeds from sale of long-lived assets
15,507
23,747
Proceeds from secured promissory note
—
72,000
Other
316
89
Net cash provided by (used in) investing activities
(331)
86,378
FINANCING ACTIVITIES
Proceeds from issuance of Redeemable Series B convertible perpetual preferred stock
—
40,000
Proceeds from issuance of 2028 Notes
44,685
—
Payments to repurchase 2028 Notes
—
(104,000)
Payments to repurchase 2024 Notes
(38,966)
—
Proceeds from borrowings under ABL Facility
235,242
212,155
Payments on ABL Facility
(227,369)
(223,737)
Payments of debt issuance costs
(5,465)
(705)
Payments of acquisition-related contingent earn-out consideration
(354)
(883)
Payments on financing lease liabilities
(54)
(44)
Book overdraft
(3,081)
1,045
Net cash provided by (used in) financing activities
4,638
(76,169)
Net increase (decrease) in cash and cash equivalents
284
(284)
Cash and cash equivalents and restricted cash at beginning of year
—
284
Cash and cash equivalents and restricted cash at end of year
$
284
$
—
The accompanying notes are an integral part of these consolidated financial statements.
18
SALEM MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in thousands)
Year Ended December 31,
2023
2024
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Cash paid for interest
$
12,402
$
7,292
Cash paid for interest on finance lease liabilities
$
5
$
4
Cash paid for income taxes, net of refunds
$
99
$
116
Other supplemental disclosures of cash flow information:
Barter revenue
$
3,332
$
3,465
Barter expense
$
2,964
$
3,665
Non-cash investing and financing activities:
Capital expenditures reimbursable under tenant improvement allowances
$
93
$
886
Right-of-use assets acquired through operating leases
$
11,052
$
6,986
Right-of-use assets acquired through financing leases
$
46
$
32
Net assets and liabilities assumed in a non-cash acquisition
$
5,020
$
—
Estimated present value of contingent-earn out consideration
$
910
$
—
The accompanying notes are an integral part of these consolidated financial statements.
19
SALEM MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
Description of Business
Salem Media Group, Inc. (“Salem” “we,” “us,” “our” or the “company”) is a domestic multimedia company specializing in
Christian and conservative content. Our media properties include radio broadcasting, digital media, and publishing entities.
We have three operating segments: (1) Broadcast, (2) Digital Media, and (3) Publishing, which are discussed in Note 18.
Segment Data.
The accompanying Consolidated Financial Statements of Salem include the company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with General Accepted Accounting Principles (“GAAP”) requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and
other factors, including the current economic environment, which management believes to be reasonable under the
circumstances. Management adjusts such estimates and assumptions as facts and circumstances dictate. Actual results could
differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior year consolidated financial statements to conform to the presentation in
the current year, which had no impact on the previously reported consolidated financial statements. Certain amounts in the
prior year income taxes footnote have been reclassified to conform to the current year’s presentation. Specifically, the 163(j)
deferred tax asset is now separately disclosed due to its materiality.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
We consider all highly liquid debt instruments, purchased with an initial maturity of three months or less, to be cash
equivalents. The carrying value of our cash and cash equivalents approximated fair value at each balance sheet date.
Restricted Cash
Restricted cash includes amounts that were contractually restricted in connection with a credit agreement between the
company and Wells Fargo Bank, National Association.
Accounts Receivable and Unbilled Revenue
Accounts receivable, net of allowance for expected credit losses: Accounts receivable includes amounts billed and due from
our customers stated at their net estimated realizable value. Accounts receivable for our self-publishing services represent
contractual amounts due under individual payment plans that are adjusted quarterly to exclude unearned or cancelable
contracts.
Unbilled revenue: Unbilled revenue represents revenue recognized in excess of the amounts billed to our customer. Unbilled
revenue results from differences in the Broadcast Calendar and the end of the reporting period. The Broadcast Calendar is a
uniform billing period adopted by broadcasters, agencies and advertisers for billing and planning functions. The Broadcast
Calendar uses a standard broadcast week that starts on Monday and ends on Sunday with the month end on the last Sunday of
the calendar month. We recognize revenue based on the calendar month end and adjust for unbilled revenue when the
Broadcast Calendar billings are at an earlier date as applicable. We bill our customers at the end-of-flight, end of the Broadcast
Calendar or at calendar month end, as applicable, with standard payments terms of thirty days.
Valuation of Accounts Receivable
We review accounts receivable to determine which accounts are doubtful of collection. In making the determination of the
appropriate allowance for expected credit losses, we consider our history of write-offs, relationships with our customers, age
of the invoices and the overall creditworthiness of our customers. We also consider-specific information, current market
conditions, and reasonable and supportable forecasts of future economic conditions. For each of the years ended December
31, 2023 and 2024, the provision for credit losses was $8.4 million and $8.1 million, respectively.
20
Allowance for Expected Credit Losses
We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected.
The allowance is based on our historical collection experience, the age of the receivables, specific customer information and
current economic conditions. Past due balances are generally not written off until all collection efforts have been exhausted,
including use of a collection agency. A considerable amount of judgment is required in assessing the likelihood of ultimate
realization of these receivables, including the current creditworthiness of each customer. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be
required. We have not modified our estimate methodology and we have not historically recognized significant losses from
changes in our estimates. We believe that our estimates and assumptions are reasonable and that our reserves are accurately
reflected. We do not include extended payment terms in our contracts with customers.
Property and Equipment
We account for property and equipment in accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 360-10, Property, Plant and Equipment. Property and equipment are recorded at cost
less accumulated depreciation. Cost represents the historical cost of acquiring the asset, including the costs necessarily
incurred to bring it to the condition and location necessary for its intended use. For assets constructed for our own use, such as
towers and buildings that are discrete projects for which costs are separately accumulated and for which construction takes
considerable time, we record capitalized interest. The amount of interest capitalized is the cost that could have been avoided
had the asset not been constructed and is based on the average accumulated expenditures incurred over the capitalization
period at the weighted average interest rate applicable to our outstanding variable rate debt. We capitalized interest of $0.5
million in 2023 and $0.3 million in 2024 based on the balance outstanding of our variable rate debt. Repair and maintenance
costs are charged to expense as incurred. Improvements are capitalized if they extend the life of the asset or enhance the
quality or ability of the asset to benefit operations.
Depreciation is computed using the straight-line method over estimated useful lives as follows:
Category
Estimated Life
Buildings
40 years
Office furnishings and equipment
5 -10 years
Antennae, towers and transmitting equipment
10 – 20 years
Studio, production, and mobile equipment
5 – 7 years
Computer software and website development costs
3 years
Automobiles
5 years
Leasehold improvements
Lesser of the useful life or remaining lease term
The carrying value of property and equipment is evaluated periodically in relation to the operating performance and
anticipated future cash flows of the underlying radio stations and business units for indicators of impairment. When indicators
of impairment are present, and the cash flow estimated to be generated from these assets is less than the carrying value, an
adjustment to reduce the carrying value to the fair market value of the assets is recorded. See Note 5, Property and Equipment.
Internally Developed Software and Website Development Costs
We capitalize costs incurred during the application development stage related to the development of internal-use software as
specified in the FASB ASC Topic 350-40 Internal-Use Software. Capitalized costs are generally depreciated over the
estimated useful life of three years. Costs incurred related to the conceptual design, and maintenance of internal-use software
are expensed as incurred. Website development activities include planning, design and development of graphics and content
for new websites and operation of existing sites. Costs incurred that involve providing additional functions and features to the
website are capitalized. Costs associated with website planning, maintenance, content development and training are expensed
as incurred. We capitalized $2.5 million during the years ended December 31, 2023, and 2024, related to internally developed
software and website development costs. Depreciation expense of the amounts capitalized was $2.7 million, for each of the
years ending December 31, 2023, and 2024.
Indefinite-Lived Intangible Assets
We account for broadcast licenses and goodwill in accordance with FASB ASC Topic 350 Intangibles—Goodwill and Other.
We do not amortize broadcast licenses or goodwill, but rather test for impairment annually or more frequently if events or
circumstances indicate that the value may be impaired.
Impairment testing requires an estimate of the fair value of our indefinite-lived intangible assets. We believe that these
estimates of fair value are critical accounting estimates as the value is significant in relation to our total assets and the
estimates incorporate variables and assumptions based on our experiences and judgment about our future operating
performance. Fair value measurements use significant unobservable inputs that reflect our own assumptions about the
estimates that market participants would use in measuring fair value, including assumptions about risk. If actual future results
21
are less favorable than the assumptions and estimates used in our estimates, we are subject to future Impairment charges, the
amount of which may be material.
We perform our annual impairment testing during the fourth quarter of each year as discussed in Note 7, Broadcast Licenses
and in Note 8, Goodwill.
Amortizable Intangible Assets
Intangible assets are recorded at cost less accumulated amortization. Typically, intangible assets are acquired in conjunction
with the acquisition of broadcast entities, digital media entities and publishing entities. These intangibles are amortized using
the straight-line method over the following estimated useful lives:
Category
Estimated Life
Customer lists and contracts
Lesser of 5 years or the life of contract
Domain and brand names
5 -7 years
Favorable and assigned leases
Lease Term
Subscriber base and lists
3 – 7 years
Author relationships
1 – 7 years
Non-compete agreements
Life of the contract
The carrying value of our amortizable intangible assets are evaluated periodically in relation to the operating performance and
anticipated future cash flows of the underlying radio stations and businesses for indicators of impairment. In accordance with
FASB ASC Topic 360 Property, Plant and Equipment, when indicators of impairment are present and the undiscounted cash
flows estimated to be generated from these assets are less than the carrying amounts of these assets, an adjustment to reduce
the carrying value to the fair market value of these assets is recorded, if necessary. No adjustments to the carrying amounts of
our amortizable intangible assets were necessary during the years ended December 31, 2023 and 2024.
Disposition of Nonfinancial Assets
Gains or losses on sales of long-lived and indefinite-lived assets are recognized pursuant to the provisions included in ASC
610-20, Other Income. Under ASC 610-20, we must first determine whether the transaction is a sale to a customer or non-
customer. We typically sell long-lived and indefinite-lived assets on a selective basis and not within the ordinary course of our
operating business and therefore expect that our sale transactions will not be contracts with customers. We next determine
whether we have a controlling financial interest in the assets after the sale, consistent with the consolidation model in ASC
810, Consolidation. If we determine that we do not have a controlling financial interest in the assets, we evaluate whether a
contract exists under ASC 606 and whether the buyer has obtained control of the asset that was sold. We recognize a full gain
or loss on sale, which is presented in (gain) loss on disposition of assets within the consolidated statements of operations,
when the derecognition criteria under ASC 610-20 have been met.
Deferred Financing Costs
Deferred financing costs incurred in conjunction with debt obligations are amortized to non-cash interest expense over the
term of the agreement using the effective interest method. Deferred financing costs related to the 7.125% Senior Secured
Notes due 2028 (“2028 Notes”) recorded as a reduction of “Long-term debt – less current portion” in the Consolidated
Balance Sheets. Deferred financing costs related to the Asset Based Loan Facility (“ABL Facility”) are reflected in long term
assets net of accumulated amortization. On December 23, 2024, we repurchased $159.4 million of the 2028 Notes for $104.0
million, recognizing a gain of $28.7 million. See Note 11, Debt.
Income Tax Valuation Allowances (Deferred Taxes)
We account for income taxes in accordance with FASB ASC Topic 740 Income Taxes. In preparing our consolidated financial
statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual
current tax exposure and assessing temporary differences resulting from differing treatment of items for tax and financial
statement purposes. We calculate our current and deferred tax provisions based on estimates and assumptions that could differ
from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are
generally recorded in the period when the tax returns are filed, and the tax implications are known. Tax law and rate changes
are reflected in the income tax provision in the period in which such changes are enacted.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We
consider all available evidence, both positive and negative, including historical levels of income, expectations and risks
associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the
need for a valuation allowance. In the event we were to determine that we would not be able to realize all or part of our net
deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period in which
we make such a determination. Likewise, if we later determine that it is more likely than not that the net deferred tax assets
would be realized, we would reverse the applicable portion of the previously provided valuation allowance.
22
During the year, we released a portion of the valuation allowance due to the use of net operating loss carryforwards in the
current year as well as for changes in the expected utilization of the net operating loss carryforwards due to income anticipated
in future years for the sale of assets that management has determined is more likely than not to be realized.
For financial reporting purposes, we recorded a valuation allowance of $21.1 million as of December 31, 2024, to offset $23.3
million of the deferred tax assets related to federal and state net operating loss carryforwards of $9.9 million and $13.4 million
respectively, along with $3.1 million of other financial statement accruals. This balance represents a decrease of $18.4 million
during the year, from $39.5 million valuation allowance as of December 31, 2023.
We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
Income Taxes and Uncertain Tax Positions
We are subject to audit and review by various taxing jurisdictions. We may recognize liabilities on our financial statements for
positions taken on uncertain tax positions. When tax returns are filed, it is highly certain that some positions taken would be
sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the
position taken or the amount of the position that would be ultimately sustained. Such positions are deemed to be unrecognized
tax benefits and a corresponding liability is established on the balance sheet. It is inherently difficult and subjective to estimate
such amounts, as this requires us to make estimates based on the various possible outcomes. The benefit of a tax position is
recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely
than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.
We review and reevaluate uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of
a tax benefit or an additional charge to the tax provision. During the year ended December 31, 2024, we recognized liabilities
associated with uncertain tax positions related to our subsidiary Salem Communications Holding Company’s Pennsylvania tax
filing. The position taken on the tax returns follows Pennsylvania Notice 2016-01 which provides guidance for reversal of
intercompany interest income and associated expense yielding a net loss for Pennsylvania. The current liability recognized for
the tax position is $0.2 million including interest and penalty related to the 2020 tax return.
Effective Tax Rate
Our provision for income tax as a percentage of operating income before taxes, or our effective tax rate, may be impacted by:
(1) changes in the level of income in any of our taxing jurisdictions;
(2) changes in statutes and rules applicable to taxable income in the jurisdictions in which we operate;
(3) changes in the expected outcome of income tax audits;
(4) changes in the estimate of expenses that are not deductible for tax purposes;
(5) income taxes in certain states where the states’ current taxable income is dependent on factors other than
consolidated net income;
(6) the addition of operations in states that on average have different income tax rates from states in which we
currently operate; and
(7) the effect of previously reported temporary differences between the tax bases and financial reporting bases of
assets and liabilities.
Our annual effective tax rate may also be materially impacted by tax expense associated with non-amortizable assets such as
broadcast licenses and goodwill as well as changes in the deferred tax valuation allowance.
Business Acquisitions
We account for business acquisitions in accordance with the acquisition method of accounting as specified in FASB ASC
Topic 805 Business Combinations. The total acquisition consideration is allocated to assets acquired and liabilities assumed
based on their estimated fair values as of the date of the transaction. The total acquisition consideration is equal to the sum of
all cash payments, the fair value of any deferred payments and promissory notes, and the present value of any estimated
contingent earn-out consideration. Estimates of the fair value include discounted estimated cash flows to be generated by the
acquired assets over their expected useful lives based on historical experience, market trends, and any synergies believed to be
achieved from the acquisition.
Acquisitions may include contingent consideration, the fair value of which is estimated as of the acquisition date as the present
value of the contingent payments expected to be made using a weighted probability of possible payments. The unobservable
inputs used in the determination of the fair value of the contingent earn-out consideration include our own assumptions about
the likelihood of payment based on the established benchmarks and discount rates based on our internal rate of return analysis.
We may retain a third-party appraiser to estimate the fair value of the acquired net assets as of the acquisition date. As part of
the valuation and appraisal process, the third-party appraiser prepares a report assigning estimated fair values to the various
assets acquired. These fair value estimates are subjective in nature and require careful consideration and judgment.
23
Management reviews the third-party reports for reasonableness of the assigned values. We believe that these valuations and
analysis provide appropriate estimates of the fair value for the net assets acquired as of the acquisition date.
The initial valuations for business acquisitions are subject to refinement during the measurement period, which may be up to
one year from the acquisition date. During this measurement period, we may retroactively record adjustments to the net assets
acquired based on additional information obtained for items that existed as of the acquisition date. Upon the conclusion of the
measurement period, any adjustments are reflected in our Consolidated Statements of Operations. To date, we have not
recorded adjustments to the estimated fair values used in our business acquisition consideration during or after the
measurement period. Costs associated with business acquisitions, such as consulting and legal fees, are expensed as incurred.
We incurred acquisition related costs of $0.1 million and $36,000 in each of the years ended December 31, 2023, and 2024,
respectively.
Property and equipment are recorded at the estimated fair value and depreciated on a straight-line basis over their estimated
useful lives. Finite-lived intangible assets are recorded at their estimated fair value and amortized on a straight-line basis over
their estimated useful lives. Goodwill, which represents the organizational systems and procedures in place to ensure the
effective operation of the entity, may also be recorded and tested for impairment.
Transactions that do not meet the definition of a business are recorded as asset purchases. Asset purchases are recognized
based on their cost to acquire, including transaction costs. The cost to acquire an asset group is allocated to the individual
assets acquired based on their relative fair value with no goodwill recognized. A majority of our radio station acquisitions have
consisted primarily of the FCC licenses to broadcast in a particular market with a substantial portion of the purchase price
allocated to the broadcast license. We often do not acquire the existing format, or we change the format upon acquisition. As a
result, we account for the majority of our radio station acquisitions as asset purchases.
Partial Self-Insurance on Employee Health Plan
We provide health insurance benefits to eligible employees under a self-insured plan whereby we pay actual medical claims
subject to certain stop loss limits. We record self-insurance liabilities based on actual claims filed and an estimate of those
claims incurred but not reported. Our estimates are based on historical data and probabilities. Any projection of losses
concerning our liability is subject to a high degree of variability. Among the causes of this variability are unpredictable
external factors such as future inflation rates, changes in severity, benefit level changes, medical costs, and claim settlement
patterns. Should the actual amount of claims increase or decrease beyond what was anticipated, we may adjust our future
reserves. We have not modified our estimate methodology and we have not historically recognized significant losses from
changes in our estimates.
The following table presents the changes in our partial self-insurance reserves:
Year Ended December 31,
2023
2024
(Dollars in thousands)
Balance, beginning of period
$
617
$
639
Self-funded costs
8,349
10,003
Claims paid
(8,327)
(10,005)
Ending period balance
$
639
$
637
Fair Value Measurements and Disclosures
As of December 31, 2023 and 2024, the carrying value of cash and cash equivalents, accounts receivables, accounts payable,
accrued expenses and accrued interest approximates fair value due to the short-term nature of such instruments. The carrying
value of the ABL Facility approximates fair value as the related interest rates approximate rates currently available to the
company. The carrying value of the $24.0 million unsecured debt approximates the fair value at December 31, 2024.
Troubled Debt Restructuring Accounting
The evaluation for troubled debt restructuring includes assessing whether we are experiencing significant financial difficulties
and whether the creditor granted a concession. To determine this, we calculate the post-restructuring effective interest rate by
projecting cash flows on the new terms plus the fair value of any sweeteners issues and calculating a discount rate equal to the
carrying amount of pre-restructuring debt and comparing this calculation to the terms of prior amendments. Sweeteners
include warrants, options or conversion features, and are deemed to be issued at the restructuring date regardless of when they
are exercisable. If the post restructuring effective interest rate is less than the prior terms effective interest rate, we assess this
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as having been granted a concession. We then apply troubled debt restructuring accounting to any debt in which the creditor
granted a concession.
Contingency Reserves
In the ordinary course of business, we are involved in various legal proceedings, lawsuits, arbitrations, and other claims which
are complex in nature and have outcomes that are difficult to predict. Consequently, we are unable to ascertain the ultimate
aggregate amount of monetary liability or the financial impact with respect to these matters.
We record contingency reserves to the extent we conclude that it is probable that a liability has been incurred and the amount
of the related loss can be reasonably estimated. The establishment of the reserve is based on a review of all relevant factors,
the advice of legal counsel, and the subjective judgment of management. The reserves we have recorded to date have not been
material to our consolidated financial position, results of operations, or cash flows. We believe that our estimates and
assumptions are reasonable and that our reserves are accurately reflected.
While we believe that the final resolution of any known matters, individually and in the aggregate, will not have a material
adverse effect upon our consolidated financial position, results of operations, or cash flows, it is possible that we could incur
additional losses. We maintain insurance that may provide coverage for such matters. Future claims against us, whether
meritorious or not, could have a material adverse effect upon our consolidated financial position, results of operations or cash
flows, including losses due to costly litigation and losses due to matters that require significant amounts of management time
that can result in the diversion of significant operational resources. See Note 13, Commitments and Contingencies.
Revenue Recognition
We recognize revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers. FASB ASC Topic
606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods
or services are transferred to our customers at an amount that reflects the consideration that we expect to receive.
Significant management judgments and estimates must be made in connection with determining the amount of revenue to be
recognized in any accounting period. We must assess the promises within each sales contract to determine if they are distinct
performance obligations. Once the performance obligation(s) are determined, the transaction price is allocated to the
performance obligation(s) based on a relative standalone selling price basis. If a sales contract contains a single performance
obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple
performance obligations require an allocation of the transaction price to each performance obligation based on a relative
standalone selling price. If the stand-alone selling price is not determinable, an estimate is used. We make significant estimates
related to variable consideration at the point of sale, including estimates for refunds and product returns.
Stock-Based Compensation
We account for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock
Compensation. We record equity awards with stock-based compensation measured at the fair value of the award as of the
grant date. We determine the fair value of our options using the Black-Scholes option-pricing model that requires the input of
highly subjective assumptions, including the expected stock price volatility and expected term of the options granted. The
exercise price for options is equal to the closing market price of Salem Media Group common stock as of the date of the grant.
We use the straight-line attribution method to recognize share-based compensation costs over the expected service period of
the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted
stock awards, deferred tax assets for options and restricted stock awards with multiple vesting dates are eliminated for each
vesting period on a first-in, first-out basis as if each vesting period was a separate award. See Note 14, Stock Incentive Plan.
Advertising and Promotional Cost
Costs of media advertising and associated production costs are expensed as incurred and amounted to approximately $11.6
million and $12.5 million for years ended December 31, 2023, and 2024, respectively.
Leases
We account for leases under the provisions of FASB ASC Topic 842, Leases. FASB ASC Topic 842 requires that lessees
recognize ROU assets and lease liabilities calculated based on the present value of lease payments for all lease agreements
with terms that are greater than twelve months. FASB ASC Topic 842 distinguishes leases as either a finance lease or an
operating lease that affects how the leases are measured and presented in the consolidated statement of operations and
statement of cash flows.
25
Accounting Policy Elections under FASB ASC Topic 842 Leases
Lease Term
The lease term can materially impact the value of the Right-of-Use (“ROU”) assets and lease liabilities recorded on our
balance sheet as required under FASB ASC Topic 842. We calculate the term for each lease agreement to include the
noncancellable period specified in the agreement together with (1) the periods covered by options to extend the lease if we are
reasonably certain to exercise that option, (2) periods covered by an option to terminate if we are reasonably certain not to
exercise that option and (3) period covered by an option to extend (or not terminate) if controlled by the lessor. The
assessment of whether we are reasonably certain to exercise an option to extend a lease requires significant judgement
surrounding contract-based factors, asset-based factors, entity-based factors, and market-based factors. We have not modified
our estimate methodology since adopting FASB ASC Topic 842 on January 1, 2019.
Lease Payments
Lease payments consist of the following payments (as applicable) related to the use of the underlying asset during the lease
term:
Fixed payments, including in substance fixed payments, less any lease incentives paid or payable to the lessee.
Variable lease payments that depend on an index or a rate, such as the Consumer Price Index or a market interest rate.
The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that
option.
Payments for penalties for terminating the lease if the lease term reflects the lessee exercising an option to terminate
the lease.
Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction.
For a lessee only, amounts probable of being owed by the lessee under residual value guarantees.
Short-Term Lease Exemption
We exclude short-term leases, or leases with a term of twelve months or less that do not contain a purchase option that we are
reasonably certain to exercise, from our ROU asset and lease liability calculations.
We consider the applicability of the short-term exception on month-to-month leases with perpetual or rolling renewals as we
are “reasonably certain” to continue the lease. For example, we lease various storage facilities under agreements with month-
to-month terms that have continued over several years. The standard terms and conditions for a majority of these agreements
allow either party to terminate within a notice period ranging from 10 to 30 days. There are no cancellation penalties other
than the potential loss of a one-month rent or a security deposit if the termination terms are not adhered to.
We believe that these month-to-month leases qualify for the short-term exception to FASB ASC Topic 842 because either
party can terminate the agreement without permission from the other party with no more than an insignificant penalty,
therefore, the arrangements do not create enforceable rights and obligations. Additionally, the cost to move to a new location
or find comparable facilities is low as there are no unique features of the storage facilities that impact our business or
operations. We consider termination clauses, costs associated with moving, and costs associated with finding alternative
facilities to exclude month-to-month leases that have perpetually renewed.
Service Agreements with an Embedded Lease Component
We exclude certain service agreements that contain embedded leases for equipment based on the immaterial impact of these
agreements. Our analysis includes cable and satellite television service agreements for which our monthly payment may
include equipment rentals, coffee and water service at certain facilities that may include equipment rentals (we often meet
minimum requirements and just pay for product used), security services that include a monthly fee for cameras or equipment,
and other similar arrangements. Based on the insignificant amount of the monthly lease costs, we exclude these agreements
from our ROU asset and liability calculations due to the immaterial impact to our consolidated financial statements.
Incremental Borrowing Rate
The ROU asset and related lease liabilities recorded under FASB ASC Topic 842 are calculated based on the present value of
the lease payments using (1) the rate implicit in the lease or (2) the lessee’s IBR, defined as the rate of interest that a lessee
would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar
economic environment. As most leases do not provide an implicit rate, we estimate the IBR applicable to Salem using
significant judgement and estimates, including the estimated value of the underlying leased asset, and the (a) credit history of
Salem Media Group, (b) the credit worthiness of Salem Media Group, (c) the class of the underlying asset and the remaining
term of the arrangement, and (d) the debt incurred under the lease liability as compared to amounts that would be borrowed.
We developed a matrix to estimate the IBR for each lease class. We review the IBR estimates on a quarterly basis and update
as necessary. Our analysis requires the use of significant judgement and estimates, including the estimated value of the
26
underlying leased asset. We have not modified our estimate methodology and we have not recognized significant changes in
our estimates.
Portfolio Approach
We apply a portfolio approach by applying a single IBR to leases with reasonably similar characteristics, including the
remaining lease term, the underlying assets, and the economic environment. We believe that applying the portfolio approach is
acceptable because the results do not materially differ from the application of the leases model to the individual leases in that
portfolio.
Sales Taxes and Other Similar Taxes
We do not evaluate whether sales taxes or other similar taxes imposed by a governmental authority on a specific lease
revenue-producing transaction that are collected by the lessor from the lessee are the primary obligation of the lessor as owner
of the underlying leased asset. A lessor that makes this election will exclude these taxes from the measurement of lease
revenue and the associated expense. Taxes assessed on a lessor’s total gross receipts or on the lessor as owner of the
underlying asset (e.g., property taxes) are excluded from the scope of the policy election. A lessor must apply the election to
all taxes in the scope of the policy election and would provide certain disclosures.
Separating Consideration between Lease and Non-Lease Components
We include the lease and non-lease components (or the fixed and variable consideration) as a single component accounted for
as a lease. This practical expedient is elected by class of underlying assets as an accounting policy election and applies to all
arrangements in that class of underlying assets that qualify for the expedient. FASB ASC Topic 842 provides this expedient to
alleviate concerns that the costs and administrative burden of allocating consideration to the separate lease and non-lease
components may not justify the benefit of more precisely reflecting the ROU asset and the lease liability.
Contracts that include lease and non-lease components that are accounted for under the election not to separate require that all
components that qualify for the practical expedient be combined. The components that do not qualify, such as those for which
the timing and pattern of transfer of the lease and associated non-lease components are not the same, are accounted for
separately.
Accounting for a lease component of a contract and its associated non-lease components as a single lease component results in
an allocation of the total contract consideration to the lease component. Therefore, the initial and subsequent measurement of
the lease liability and ROU asset is greater than if the policy election was not applied. The greater ROU asset value is
considered in our impairment analysis.
Leasehold Improvements
We may construct or otherwise invest in leasehold improvements to properties. The costs of these leasehold improvements are
capitalized and depreciated over the shorter of the estimated useful life of the improvement or the lease term including
anticipated renewal periods.
(Gain) Loss on the Disposition of Assets
We record gains or losses on the disposition of assets equal to the proceeds, if any, as compared to the net book value.
Exchange transactions are accounted for in accordance with FASB ASC Topic 845 Non-Monetary Transactions.
Basic and Diluted Net Earnings Per Share
Basic net earnings per share have been computed using the weighted average number of Class B Convertible Perpetual
Preferred, Class A and Class B shares of common stock outstanding during the period. Diluted net earnings per share is
computed using the weighted average number of shares of Class B Convertible Perpetual Preferred, Class A and Class B
common stock outstanding during the period plus the dilutive effects of stock options.
The following table sets forth the shares used to compute basic and diluted net earnings per share for the periods indicated:
Year Ended December 31,
2023
2024
Numerator
Net income (loss) attributable to Salem Media Group,
Inc.
(43,312)
16,179
Less: Earnings allocated to participating securities
—
—
Net income (loss) for basic and diluted EPS
(43,312)
16,179
Denominator
Basic weighted-average common shares outstanding
27,216,787
27,216,787
27
Add: stock options
—
—
Add: Redeemable Series B Convertible Perpetual
Preferred Stock
—
643,020
Diluted weighted-average common shares
27,216,787
27,859,807
Basic net income (loss) per share
(1.59)
0.59
Diluted net income (loss) per share
(1.59)
0.58
The Company's Redeemable Series B Convertible Perpetual Preferred Stock is considered to be a participating security.
Computation of EPS under the two-class method excludes any undistributed earnings considered to be attributable to
participating securities. The related participating securities are similarly excluded from the denominator. There was no amount
allocated to the participating securities during the year ended December 31, 2023 as there were no shares of Redeemable
Series B Convertible Perpetual Preferred Stock issued and outstanding.
Options to purchase 2,777,843 and 2,516,690 shares of Class A common stock were outstanding at December 31, 2023, and
2024, respectively. Diluted weighted average shares outstanding exclude outstanding stock options whose exercise price is in
excess of the average price of the company’s stock price. These options are excluded from the respective computations of
diluted net income or loss per share because their effect would be anti-dilutive.
Segments
We have three reportable segments: (1) Broadcast, (2) Digital Media, and (3) Publishing.
Broadcast, which includes our radio stations, networks, Podcast network and News Channel businesses;
Digital media, which includes our digital businesses, and provides Christian, conservative, investing content, audio
and video streaming, and other resources digitally through the web; and
Publishing, which consists of Salem Author Services, a self-publishing service for authors through Xulon Press and
Mill City Press.
These reporting 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 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.
Our Station Operating Income (“SOI”) for broadcast business unit and Operating Income (“OI”) from digital and publishing
business units is the segment profitability metric reported to our Chief Operating Decision Maker (“CODM”) for purposes of
decisions about allocations of resources to, and assessing performance of, each reporting segment. 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 consolidated statements of operations included in this annual report. We also exclude
costs such as amortization, depreciation, taxes, and interest expense. Our CODM is a collective group of senior executives.
The CODM uses SOI and OI to evaluate the operating performance of each reportable segment, and to allocate resources.
This measure is the primary measure used by management for the planning and forecasting of future periods, as well as for
measuring performance for compensation of executives and segment management.
Variable Interest Entities
We may enter into agreements or investments with other entities that could qualify as Variable Interest Entities (“VIEs”) in
accordance with FASB ASC Topic 810 Consolidation. A VIE is consolidated in the financial statements if we are deemed to
be the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the VIE,
either explicitly or implicitly. A VIE is an entity for which the primary beneficiary’s interest in the entity can change with
variations in factors other than the amount of investment in the entity. We perform our evaluation for VIE’s upon entry into
the agreement or investment. We re-evaluate the VIE when or if events occur that could change the status of the VIE.
We may enter into lease arrangements with entities controlled by our principal stockholders or other related parties. We
believe that the requirements of FASB ASC Topic 810 do not apply to these entities because the lease arrangements do not
contain explicit guarantees of the residual value of the real estate, do not contain purchase options or similar provisions and the
leases are at terms that do not vary materially from leases that would have been available with unaffiliated parties.
Additionally, we do not have an equity interest in the entities controlled by our principal stockholders or other related parties,
and we do not guarantee debt of the entities controlled by our principal stockholders or other related parties.
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We also enter into Local Marketing Agreements (“LMAs”) or Time Brokerage Agreements (“TBAs”) contemporaneously
with entering into an Asset Purchase Agreement (“APA”) to acquire or sell a radio station. Typically, both LMAs and TBAs
are contractual agreements under which the station owner/licensee makes airtime available to a programmer/licensee in
exchange for a fee and reimbursement of certain expenses. LMAs and TBAs are subject to compliance with the antitrust laws
and the communications laws, including the requirement that the licensee must maintain independent control over the station
and, in particular, its personnel, programming, and finances. The FCC has held that such agreements do not violate the
communications laws as long as the licensee of the station receiving programming from another station maintains ultimate
responsibility for, and control over, station operations and otherwise ensures compliance with the communications laws.
The requirements of FASB ASC Topic 810 may apply to entities under LMAs or TBAs, depending on the facts and
circumstances related to each transaction. As of December 31, 2024, we did not have implicit or explicit arrangements that
required consolidation under the guidance in FASB ASC Topic 810.
Concentrations of Business Risks
We derive a substantial part of our total revenue from the sale of advertising. For the years ended December 31, 2023, and
2024, 25.8% and 24.2%, respectively, of our total broadcast revenue was generated from the sale of broadcast advertising. We
are particularly dependent on revenue from stations in the Los Angeles and Dallas markets, which generated 13.5% and 18.8%
of the total broadcast advertising revenue for the year ended December 31, 2023, and 13.2% and 19.4% of the total broadcast
advertising revenue for the year ended December 31, 2024. Because substantial portions of our revenue were derived from
local advertisers in these key markets, our ability to generate revenue in those markets could be adversely affected by local or
regional economic downturns.
Concentrations of Credit Risks
Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents; accounts
receivable and derivative instruments. We place our cash and cash equivalents with high quality financial institutions. Such
balances may be in excess of the Federal Deposit Insurance Corporation insured limits. To manage the related credit exposure,
we continually monitor the credit worthiness of the financial institutions where we have deposits. Concentrations of credit risk
with respect to accounts receivable are limited due to the wide variety of customers and markets in which we provide services,
as well as the dispersion of our operations across many geographic areas. We perform ongoing credit evaluations of our
customers, but generally do not require collateral to support customer receivables. We establish an allowance for expected
credit losses based on various factors including the credit risk of specific customers, age of receivables outstanding, historical
trends, economic conditions, and other information. Historically, our bad debt expense has been within management’s
expectations.
These estimates require the use of judgment as future events, and the effect of these events cannot be predicted with certainty.
The estimates will change as new events occur, as more experience is acquired and as more information is obtained. We
evaluate and update our assumptions and estimates on an ongoing basis and we may consult outside experts to assist as
considered necessary.
Recent Accounting Pronouncements
Changes to accounting principles are established by the FASB in the form of Accounting Standards Update (“ASUs”) to the
FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations,
cash flows, or presentation thereof. Described below are ASUs that may be applicable to our financial position, results of
operations, cash flows, or presentation thereof. ASUs not listed below were assessed and determined to not be applicable to
our financial position, results of operations, cash flows, or presentation thereof.
Accounting Standards Adopted in 2024
In December 2023, the FASB issued Update 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures, which requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”), an
explanation of how the CODM uses the reported measure of segment profit or loss in assessing segment performance and
deciding how to allocate resources, and disclosure of expenses provided to the CODM that are included within the reported
measure of segment profit or loss. The amendments of ASU 2023-07 are effective for fiscal years beginning after December
15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and should
be applied retrospectively to all periods presented. We retrospectively adopted this guidance during the fourth quarter of 2024.
In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842) – Common Control Arrangements. The ASU amends the
accounting for leasehold improvements in common control arrangements by requiring a lessee in a common control lease
arrangement to amortize leasehold improvements that it owns over the improvements’ useful life to the common control
group, regardless of the lease term, if the lessee continues to control the use of the underlying asset through a lease. Further, a
lessee that no longer controls the use of the underlying asset will derecognize the remaining carrying amount of the
improvements through an adjustment to equity, reflecting the transfer of the asset to the lessor under common control. This
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ASU was effective for fiscal years beginning after December 15, 2023 (fiscal 2024). The adoption of ASU No. 2023-01 did
not have a material impact on our consolidated financial position, results of operations, cash flows, or presentation thereof.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) Fair Value Measurement of Equity
Securities Subject to Contractual Sales Restrictions. This amended guidance clarifies that a contractual restriction on the sale
of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in
measuring fair value. The ASU was effective January 1, 2024. The adoption of ASU No. 2022-03 did not have a material
impact on our consolidated financial position, results of operations, cash flows, or presentation thereof.
Recent Accounting Standards or Update Not Yet Effective
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense
Disaggregation Disclosures (Subtopic 220-40). The standard requires further disaggregation of relevant expense captions in a
separate note to the financial statements. The standard is effective for annual reporting periods beginning after December 15,
2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the
impact of this standard on our annual disclosures, including timing of adoption.
In December 2023, the FASB issued Update 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures,
which enhances the disclosure requirements for income tax rate reconciliation, domestic and foreign income taxes, and
unrecognized tax benefits. The amendments of ASU 2023-09 are effective for annual periods beginning after December 15,
2024. Early adoption is permitted and should be applied prospectively. We are currently evaluating the impact of this standard
on our annual disclosures, including timing of adoption.
NOTE 3. RECENT TRANSACTIONS
During the years ended December 31, 2023 and 2024, we completed the following transactions:
Related Party Transaction
On May 25, 2023, we sold to a related party the economic interests in the leases at our Greenville, South Carolina radio
transmitter site for $3.5 million resulting in a pre-tax gain of $3.3 million. On February 26, 2024, we repurchased the
economic interests in the leases for $3.5 million and sold the transmitter site for $3.0 million, resulting in a combined pre-tax
loss of $1.0 million.
Debt Transactions
On December 30, 2024, the buyer of our remaining seven Contemporary Christian Music (“CCM”) radio stations, loaned the
company $72.0 million via a promissory note at the time of signing. The interest on the note is 0% through June 30, 2025, at
which point the interest rate will be SOFR +1%.
On December 30, 2024, we issued subordinated debt of $24.0 million with the holder of the 2028 Notes. The unsecured debt
will automatically convert to Series A Perpetual Preferred Stock at the earlier of the consummation of the asset sales noted
above or on June 22, 2025. The interest rate on the debt is 5%, which can be paid in cash or paid in kind.
On December 23, 2024, we repurchased $159.4 million of the 2028 Notes for $104.0 million in cash and issuance of
Unsecured Debt, recognizing a gain of $28.7 million. Refer to Note 11 of our Consolidated Financial Statements under this
annual report for details of these transactions.
On December 26, 2023, we entered into an agreement with Siena Lending Group, Inc. (“Siena”) to provide us a $26.0 million
asset based loan (“ABL Facility”) revolving facility. The proceeds from this ABL Facility were used to pay off the previous
ABL Facility from Wells Fargo Bank, National Association. Refer to Note 11 of our Consolidated Financial Statements under
this annual report for details of these transactions.
On March 20, 2023, we issued $44.7 million 2028 Notes at a discount for $41.9 million resulting in an effective yield of
8.625%. We used a portion of the proceeds of this borrowing to redeem the remaining $36.5 million of 6.75% Senior Secured
Notes due 2024 (“2024 Notes”). The redemption of the 2024 Notes closed on March 27, 2023.
On January 19, 2023, we repurchased $2.5 million of the 2024 Notes at 97.25% of face value recognizing a gain of $39,000
after adjusting for debt issuance costs.
Acquisitions
We invested in a limited liability company that will own, distribute, and market a motion picture. The investment of $1.5
million at December 31, 2024 is reflected at cost in other assets.
On March 24, 2023, we closed on the acquisition of Digital Felt Productions and the digital content library through its
www.digitalfelt.com domain and website for $25,000 in cash.
30
On February 1, 2023, we closed on the acquisition of the George Gilder Report and other digital newsletters and related
website assets. We assumed the deferred subscription liabilities paying no cash at the time of closing. We will pay the seller
25% of net revenue generated from sales of most Eagle Financial products during the next year to subscribers who are on
George Gilder subscriber lists that are not already on Eagle Financial lists. We recorded goodwill of approximately $1.2
million associated with the expected synergies to be realized upon combining the operations into our digital media platform
within Eagle Financial Publications. The accompanying Consolidated Statement of Operations reflects the operating results of
this entity as of the closing date within our digital media segment.
On January 10, 2023, we closed on the acquisition of radio stations WWFE-AM, WRHC-AM, two FM translators and six
office condominiums in Miami, Florida for $3.0 million in cash.
On January 6, 2023, we closed on the acquisition of radio station WMYM-AM and an FM translator in Miami, Florida for
$3.2 million in cash.
The total purchase price consideration for our business acquisitions and asset purchases during the year ended December 31,
2023, is as follows:
Description
Total Consideration
(Dollars in thousands)
Cash payments made upon closing
$
5,568
Escrow deposits paid in prior years
750
Fair value of contingent earn-out consideration
263
Total purchase price consideration
$
6,581
The allocations presented in the table below were based upon estimates of the fair values using valuation techniques including
income, cost and market approaches. The following purchase price allocations were based upon the valuation of assets and
these estimates and assumptions are subject to change as we obtained additional information during the measurement period,
which was up to one year from the acquisition date.
Net Broadcast
Net Digital
Total
Assets Acquired
Assets Acquired
Net Assets
Assets
Property and equipment
$
2,671
$ 39
$ 2,710
Broadcast licenses
3,542
—
3,542
Goodwill
80
1,181
1,261
Domain and brand names
—
718
718
Subscriber base and lists
—
1,769
1,769
Non-Compete agreement
—
1,601
1,601
Liabilities
Contract liabilities
—
(5,020)
(5,020)
$
6,293
$ 288
$ 6,581
Divestitures
On November 21, 2024, we sold radio station KKSP-FM in Little Rock, Arkansas for $1.6 million, resulting in a pre-tax gain
of $0.4 million. The radio station had been programmed under a LMA since September 1, 2024.
On October 9, 2024 we closed on the sale of an easement and our economic interest in a lease in our Pittsburgh, Pennsylvania
market for $0.9 million, resulting in a pre-tax gain of $0.8 million.
On September 18, 2024, we sold a building in Honolulu, Hawaii for $3.5 million, resulting in pre-tax loss of $1.8 million.
On June 26, 2024, we sold three radio stations in Nashville, Tennessee and one radio station in Honolulu, Hawaii for $7.0
million, resulting in pre-tax gain of $3.8 million. We incurred additional costs during the third quarter, reducing the pre-tax
gain by $0.2 million in the quarter.
On June 3, 2024, we sold land in Apopka, Florida for $0.6 million, resulting in a pre-tax loss of $0.3 million.
On June 1, 2024, we sold an FM translator in our Greenville, South Carolina site for $0.4 million, resulting in a pre-tax gain of
$0.2 million.
On May 3, 2024, we closed a leaseback agreement for our corporate headquarters building for $5.5 million, resulting in a pre-
tax gain of $0.4 million. The $4.7 million carrying value of the assets were reclassed as held for sale as of December 31,
2023. The related lease is for five years at $0.4 million in annual lease payments.
31
On February 23, 2024, we sold the transmitter site in Greenville, South Carolina for $3.0 million. We repurchased the
economic interests in the leases at our Greenville, South Carolina radio transmitter site for $3.5 million from a related party,
resulting in a combined pre-tax loss of $1.0 million.
On February 20, 2024, we received $1.2 million from the sale of our shares of Broadcast Music, Inc.
On December 31, 2023, we sold Regnery® Publishing for $3.0 million, resulting in a pre-tax loss of $1.0 million. We received
$2.5 million upon closing, with the remaining $0.5 million to be held in an escrow account for potential expenditures such as
liabilities for returns or unpaid royalties, reserves that were taken against royalty payments or co-op incurred for books sold
prior to the closing date or other expenses attributable to the operation of the business prior to the closing date.
On December 21, 2023 we sold six condominiums in Miami, Florida for $0.6 million resulting in a pre-tax loss of $0.2
million.
On December 19, 2023 we sold radio station KSAC-FM in Sacramento, California for $1.0 million. Radio station KSAC-FM
had been programmed under a TBA since August 1, 2023. Based on our plan to sell the station, we recorded an estimated pre-
tax loss on the sale of assets of $3.3 million at June 30, 2023, reflecting the sales price as compared to the carrying value of the
assets and we recorded an additional pre-tax loss of $0.1 million at closing.
On December 14, 2023 we sold radio station WTWD-AM and a translator in Tampa, Florida for $0.7 million resulting in a
pre-tax gain of $0.6 million.
On November 6, 2023 we sold radio stations WGTK-FM, WRTH-FM and WLTE-FM in Greenville, South Carolina for $6.8
million resulting in a pre-tax gain of $1.7 million. We received $6.4 million upon closing, with the remaining $0.4 million to
be held in an escrow account for potential expenses attributable to the operation of the business prior to the closing date.
On July 21, 2023 we sold radio station KNTS-AM in Seattle, Washington for $0.2 million resulting in a pre-tax gain of $0.2
million.
On July 13, 2023 we sold radio station KLFE-AM in Seattle, Washington for $0.5 million resulting in a pre-tax gain of $0.2
million. Radio station KLFE-AM had been programmed under a TBA since August 1, 2022.
Pending Transactions
On December 23, 2024 we entered into an APA to sell our remaining seven CCM stations for $80.0 million. The $68.1
million carrying value of the assets was reclassified as held for sale as of December 31, 2024. We entered into a separate
marketing agreement with the same counterparty for $10.0 million whereby the buyer will be able to promote its stations and
events on our platforms for five years. We also entered into an affiliation agreement with the buyer to provide transition rights
to the CCM stations prior to the close for $300,000 per month, commencing on February 1, 2025. The total transaction cost
was allocated between the APA, marketing agreement and affiliation agreement based on their relative standalone selling
prices, which was equal to their contractual prices. The buyer loaned the company $72.0 million via a Secured Promissory
Note at the time of signing. The transaction will be recorded as a sale of nonfinancial assets in accordance with ASC 610-20,
Other Income. The Secured Promissory Note is required to be offset against the purchase price at closing. The proceeds from
the Secured Promissory Note have been recorded as investing activity in the Consolidated Statement of Cash Flows. The
interest on the note is 0% through June 30, 2025, at which point the interest rate will be SOFR +1%. We expect to close the
sale before June 30, 2025.
On August 14, 2024, we entered into an APA to sell radio station KZTS-AM and two FM translators in Little Rock, Arkansas
for $0.7 million. We also entered into an LMA which began on September 22, 2024. The transaction closed on January 6,
2025.
On October 17, 2023, we entered into an agreement to sell land in Sarasota, Florida for $8.5 million. The closing is
conditional upon getting the property rezoned, and we expect to close the sale in the fourth quarter of 2025.
NOTE 4. REVENUE RECOGNITION
We recognize revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers. FASB Topic ASC
606 requires revenue to be recognized when control of the promised goods or services transfers to our customers at an amount
that reflects the consideration that we expect to receive. The application of FASB ASC Topic 606 requires us to use significant
judgment and estimates when applying a five-step model applicable to all revenue streams.
32
The following table presents our revenues disaggregated by revenue source for each of our operating segments:
Year Ended December 31, 2023
Broadcast
Digital Media
Publishing
Consolidated
(Dollars in thousands)
By Source of Revenue:
Block Programming – National
$
53,801
$
—
$
—
$
53,801
Block Programming – Local
24,664
—
—
24,664
Broadcast Programming Revenue
78,465
—
—
78,465
Spot Advertising – National
12,095
—
—
12,095
Spot Advertising – Local
38,922
—
—
38,922
Network Advertising
20,334
—
—
20,334
Broadcast Advertising Revenue
71,351
—
—
71,351
Infomercials
625
—
—
625
Other Revenue
8,583
—
—
8,583
Other Broadcast Revenue
9,208
—
—
9,208
Digital Advertising
30,567
15,846
—
46,413
Digital Streaming
5,486
3,320
—
8,806
Digital Downloads
261
7,023
—
7,284
Digital Subscriptions
855
15,652
—
16,507
Other Digital Revenue
1,483
132
—
1,615
Digital Revenue
38,652
41,973
—
80,625
Book Sales
—
—
11,925
11,925
Estimated Sales Returns & Allowances
—
—
(918)
(918)
Net Book Sales
—
—
11,007
11,007
E-Book Sales
—
—
1,032
1,032
Self-Publishing Fees
—
—
6,316
6,316
Other Publishing Revenue
—
—
649
649
Publishing Revenue
—
—
19,004
19,004
Total Revenue
$
197,676
$
41,973
$
19,004
$
258,653
Timing of Revenue Recognition
Point in Time
$
195,916
$
41,973
$
19,004
$
256,893
Rental Income (1)
1,760
—
—
1,760
Total Revenue
$
197,676
$
41,973
$
19,004
$
258,653
Year Ended December 31, 2024
Broadcast
Digital Media
Publishing
Consolidated
(Dollars in thousands)
By Source of Revenue:
Block Programming – National
$
53,052
$
—
$
—
$
53,052
Block Programming – Local
22,275
—
—
22,275
Broadcast Programming Revenue
75,327
—
—
75,327
Spot Advertising – National
11,852
—
—
11,852
Spot Advertising – Local
33,173
—
—
33,173
Network Advertising
18,602
—
—
18,602
Broadcast Advertising Revenue
63,627
—
—
63,627
Infomercials
499
—
—
499
Other Revenue
7,665
—
—
7,665
Other Broadcast Revenue
8,164
—
—
8,164
Digital Advertising
31,523
15,569
—
47,092
Digital Streaming
5,272
3,204
—
8,476
Digital Downloads
146
7,210
—
7,356
Digital Subscriptions
1,165
18,844
—
20,009
Other Digital Revenue
679
177
—
856
Digital Revenue
38,785
45,004
—
83,789
Book Sales
—
—
1,279
1,279
Estimated Sales Returns & Allowances
—
—
(16)
(16)
Net Book Sales
—
—
1,263
1,263
E-Book Sales
—
—
(52)
(52)
Self-Publishing Fees
—
—
5,532
5,532
Other Publishing Revenue
—
—
(90)
(90)
Publishing Revenue
—
—
6,653
6,653
33
Total Revenue
$
185,903
$
45,004
$
6,653
$
237,560
Timing of Revenue Recognition
Point in Time
$
184,119
$
45,004
$
6,653
$
235,776
Rental Income (1)
1,784
—
—
1,784
Total Revenue
$
185,903
$
45,004
$
6,653
$
237,560
(1) Rental income is not applicable to FASB ASC Topic 606, but shown for the purpose of identifying each revenue
source presented in total revenue on our Consolidated Financial Statements within this annual report.
A summary of each of our revenue streams is as follows:
Block Programming. We recognize revenue from the sale of airtime to program producers in blocks that typically range from
121/2, 25 or 50-minutes of time. We separate block programming revenue into three categories, National, Local, and
Infomercial revenue. Our stations are classified by format, including Christian Teaching and Talk, News Talk, and
Contemporary Christian Music. National and local programming content is complementary to our station format while
infomercials are closely associated with long-form advertisements. Block Programming revenue may include variable
consideration for charities and programmers that purchase blocks of airtime to generate donations and contributions from our
audience. Block programming revenue is recognized at the time of broadcast, which represents the point in time that control is
transferred to the customer thereby completing our performance obligation. Programming revenue is recorded on a gross basis
unless an agency represents the programmer, in which case, revenue is reported net of the commission retained by the agency.
Spot Advertising. We recognize revenue from the sale of airtime to local and national advertisers who purchase spot
commercials of varying lengths. Spot Advertising may include variable consideration for charities and programmers that
purchase spots to generate donations and contributions from our audience. Advertising revenue is recognized at the time of
broadcast, which represents the point in time that control is transferred to the customer thereby completing our performance
obligation. Advertising revenue is recorded on a gross basis unless an agency represents the advertiser, in which case, revenue
is reported net of the commission retained by the agency.
Network Revenue. Network revenue includes the sale of advertising time on our national network and fees earned from the
syndication of programming on our national network. Network revenue is recognized at the time of broadcast, which
represents the point in time that control is transferred to the customer thereby completing our performance obligation. Network
revenue is recorded on a gross basis unless an agency represents the customer, in which case, revenue is reported net of the
commission retained by the agency.
Digital Advertising. We recognize revenue from the sale of banner advertising on our owned and operated websites and on our
owned and operated mobile applications. Each of our radio stations, our digital media entities and certain of our publishing
entities have custom websites and mobile applications that generate digital advertising revenue. Digital advertising revenue is
recognized at the time that the banner display is delivered, or the number of impressions delivered meets the previously
agreed-upon performance criteria, which represents the point in time that control is transferred to the customer thereby
completing our performance obligation. Digital advertising revenue is reported on a gross basis unless an agency represents
the customer, in which case, revenue is reported net of the commission retained by the agency.
Broadcast digital advertising revenue consists of local digital advertising, such as the sale of banner advertisements on our
owned and operated websites, the sale of advertisements on our owned and operated mobile applications, and advertisements
in digital newsletters that we produce, as well as national digital advertising, or the sale of custom digital advertising solutions,
such as web pages and social media campaigns that we offer to our customers. Advertising revenue is recorded on a gross
basis unless an agency represents the advertiser, in which case, revenue is reported net of the commission retained by the
agency.
Salem Surround, our national multimedia advertising agency, 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 and provides a full-service multimedia
marketing strategy for each of our clients. In our role as a multimedia advertising agency, our sales team provides our
customers with integrated digital advertising solutions that optimize the performance of their campaign, which we view as one
performance obligation. We provide custom digital product offerings, including tools for metasearch, retargeting, website
design, reputation management, online listing services, and social media marketing. Digital advertising solutions may include
third-party websites, such as Google or Facebook, which can be included in a digital advertising social media campaign. We
manage all aspects of the digital campaign, including social media placements, review and approval of target audiences, and
the monitoring of actual results to make modifications as needed. We may contract directly with a third-party, however, we are
responsible for delivering the campaign results to our customer with or without a third-party. We are responsible for any
payments due to the third-party regardless of the campaign results and without regard to the status of our payment from our
customer. We have discretion in setting the price to our customer without input or approval from the third-party. Accordingly,
34
revenue is reported gross, as principal, as the performance obligation is delivered, which represents the point in time that
control is transferred to the customer thereby completing our performance obligation.
Digital Streaming. We recognize revenue from the sale of advertisements and from the placement of ministry content that is
streamed on our owned and operated websites and on our owned and operated mobile applications. Each of our radio stations,
our digital media entities and certain publishing entities have custom websites and mobile applications that generate streaming
revenue. Digital streaming revenue is recognized at the time that the content is delivered, or when the number of impressions
delivered meets the previously agreed-upon performance criteria. Delivery of the content represents the point in time that
control is transferred to the customer thereby completing our performance obligation. Streaming revenue is reported on a gross
basis unless an agency represents the customer, in which case, revenue is reported net of the commission retained by the
agency.
Digital Downloads and e-books. We recognize revenue from the sale of downloaded materials, including videos, song tracks,
sermons, content archives, and e-books. Payments for downloaded materials are due in advance of the download, however, the
download is often instant upon confirmation of payment. Digital download revenue is recognized at the time of download,
which represents the point in time that control is transferred to the customer thereby completing our performance obligation.
Revenue is recorded at the gross amount due from the customer. All sales are final with no allowances made for returns.
Subscriptions. We recognize revenue from the sale of subscriptions for financial publication digital newsletters, conservative
news and commentary through Townhall VIP and Salem Web Plus, podcast subscriptions for on-air content, and video
subscriptions through SalemNOW. Subscription terms typically range from one month to two years. Refunds are considered
on a pro-rata basis based on the number of publications issued and delivered or length of time. Payments are due in advance of
delivery and can be made in full upon subscribing or in quarterly installments. Cash received in advance of the subscription
term, including amounts that are refundable, is recorded in contract labilities. Revenue is recognized ratably over the
subscription term. Revenue is reported net of estimated cancellations, which are based on our experience and historical
cancellation rates during the cancellable period.
Book Sales. We recognize revenue from the sale of books upon shipment, which represents the point in time that control is
transferred to the customer thereby completing the performance obligation. Revenue is recorded at the gross amount due from
the customer, net of estimated sales returns and allowances based on our historical experience. Major new title releases
represent a significant portion of the revenue in the current period. Print-based consumer books are sold on a fully returnable
basis. We do not record assets or inventory for the value of returned books as they are considered used regardless of the
condition returned. Our experience with unsold or returned books is that their resale value is insignificant, and they are often
destroyed or disposed of.
Self-Publishing Fees. We recognize revenue from self-publishing services through Salem Author Services (“SAS”), including
book publishing and support services to independent authors. Services include book cover design, interior layout, printing,
distribution, marketing services and editing for print books and eBooks. As each book and related support services are unique
to each author, authors must make payments in advance of the performance. Payments are typically made in installments over
the expected production timeline for each publication. We record contract liabilities equal to the amount of payments received,
including those amounts that are fully or partially refundable. Contract liabilities were historically recorded under the caption
“deferred revenue” and are reported as current liabilities or long-term liabilities on our consolidated financial statements based
on the time to fulfill the performance obligations under terms of the contract. Refunds are limited based on the percentage
completion of each publishing project.
Revenue is recognized upon completion of each performance obligation, which represents the point in time that control of the
product is transferred to the author, thereby completing our performance obligation. Revenue is recorded at the net amount due
from the author, including discounts based on the service package.
Other Revenue. Other revenue includes various sources, such as event revenue, listener purchase programs, talent fees for on-
air hosts, rental income for studios and towers, production services, and shipping and handling fees. We recognize event
revenue, including fees earned for ticket sales and sponsorships, when the event occurs, which represents the point in time that
control is transferred to the customer thereby completing our performance obligation. Revenue for all other products and
services is recorded as the products or services are delivered or performed, which represents the point in time that control is
transferred to the customer thereby completing our performance obligation. Other revenue is reported on a gross basis unless
an agency represents the customer, in which case, revenue is reported net of the commission retained by the agency.
Principal versus Agent Considerations
When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance
in FASB ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified
goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the
goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as
agent.
35
Contract Assets
Contract Assets – Costs to Obtain a Contract: We capitalize commissions paid to sales personnel in our self-publishing
business when customer contracts are signed and advance payment is received. These capitalized costs are recorded as prepaid
commission expense in the Consolidated Balance Sheets. The amount capitalized is incremental to the contract and would not
have been incurred absent the execution of the customer contract. Commissions paid upon the initial acquisition of a contract
are expensed at the point in time that related revenue is recognized. Prepaid commission expenses are periodically reviewed
for impairment. At December 31, 2023 and 2024, our prepaid commission expense was $0.6 million.
Contract Liabilities
Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive
payments from our customers in advance of completing our performance obligations. Additionally, new customers, existing
customers without approved credit terms and authors purchasing specific self-publishing services, are required to make
payments in advance of the delivery of the products or performance of the services. We record contract liabilities equal to the
amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels
the contract according to the contract terms. Contract liabilities were historically recorded under the caption “deferred
revenue” and are reported as current liabilities on our consolidated financial statements when the time to fulfill the
performance obligations under terms of our contracts is less than one year. Long-term contract liabilities represent the amount
of payments received in excess of revenue earned, including those that are refundable, when the time to fulfill the performance
obligation is greater than one year. Our long-term liabilities consist of subscriptions with a term of two years for which some
customers have purchased and paid for multiple years.
Significant changes in our contract liabilities balances during the period are as follows:
Short Term
Long-Term
(Dollars in thousands)
Balance, beginning of period January 1, 2024
$
12,636
$
3,291
Revenue recognized during the period that was included in the beginning balance
of contract liabilities
(10,921)
—
Additional amounts recognized during the period
28,577
1,245
Revenue recognized during the period that was recorded during the period
(19,684)
—
Transfers
2,750
(2,750)
Balance, end of period December 31, 2024
$
13,358
$
1,786
Amount refundable at beginning of period
$
12,636
$
3,291
Amount refundable at end of period
$
13,358
$
1,786
We expect to satisfy these performance obligations as follows:
Amount
For the Year Ended December 31,
(Dollars in thousands)
2025
$
13,358
2026
867
2027
397
2028
136
2029
74
Thereafter
312
$
15,144
Significant Financing Component
The length of our typical sales agreement is less than 12 months; however, we may sell subscriptions with a two-year term.
The balance of our long-term contract liabilities represents the unsatisfied performance obligations for subscriptions with a
remaining term in excess of one year. We review long-term contract liabilities that are expected to be completed in excess of
one year to assess whether the contract contains a significant financing component. The balance includes subscriptions that
will be satisfied at various dates between January 1, 2025, and December 31, 2029. The difference between the promised
consideration and the cash selling price of the publications is not significant. Therefore, we have concluded that subscriptions
do not contain a significant financing component under FASB ASC Topic 606.
Our self-publishing contracts may exceed a one-year term due to the length of time for an author to submit and approve a
manuscript for publication. The author may pay for publishing services in installments over the production timeline with
payments due in advance of performance. The timing of the transfer of goods and services under self-publishing arrangements
are at the discretion of the author and based on future events that are not substantially within our control. We require advance
payments to provide us with protection from incurring costs for products that are unique and only sellable to the author. Based
36
on these considerations, we have concluded that our self-publishing contracts do not contain a significant financing component
under FASB ASC Topic 606.
Variable Consideration
We make significant estimates related to variable consideration at the point of sale, including estimates for refunds and
product returns. Under FASB ASC Topic 606, estimates of variable consideration are to be recognized before contingencies
are resolved in certain circumstances, including when it is probable that a significant reversal in the amount of any estimated
cumulative revenue will not occur.
We enter into agreements under which the amount of revenue we earn is contingent upon the amount of money raised by our
customer over the contract term. Our customer is typically a charity or programmer that purchases blocks of programming
time or spots to generate revenue from our audience members. Contract terms can range from a few weeks to a few months,
depending on the charity or programmer. If the campaign does not generate a pre-determined level of donations or revenue to
our customer, the consideration that we expect to be entitled to may vary above a minimum base level per the contract.
Historically, under FASB ASC Topic 605, we reported variable consideration as revenue when the amount was fixed and
determinable. Under FASB ASC Topic 606, variable consideration is to be estimated using the expected value or the most
likely amount to the extent it is probable that a significant reversal will not occur when the uncertainty associated with the
variable consideration is subsequently resolved.
Based on the constraints for using estimates of variable consideration within FASB ASC Topic 606, and our historical
experience with these campaigns, we will continue to recognize revenue at the base amount of the campaign with variable
consideration recognized when the uncertainty of each campaign is resolved. These constraints include: (1) the amount of
consideration received is highly susceptible to factors outside of our influence, specifically the extent to which our audience
donates or contributes to our customer or programmer, (2) the length of time in which the uncertainty about the amount of
consideration expected is to be resolved, and (3) our experience has shown these contracts have a large number and broad
range of possible outcomes.
Trade and Barter Transactions
In broadcasting, trade or barter agreements are commonly used to reduce cash expenses by exchanging advertising time for
goods or services. We may enter barter agreements to advertising for goods or services that can be used in our business or that
can be sold to our audience under Listener Purchase Programs. The terms of these barter agreements permit us to preempt the
barter advertising campaign in favor of customers who purchase the advertising campaign for cash. The value of these non-
cash exchanges are included in revenue at an amount equal to the fair value of the goods or services we receive. Each
transaction must be reviewed to determine that the products, supplies, and/or services we receive have economic substance, or
value to us. We record barter operating expenses upon receipt and usage of the products, supplies and services, as applicable.
We record barter revenue as advertising campaigns are delivered, which represents the point in time that control is transferred
to the customer thereby completing our performance obligation. Barter revenue is recorded on a gross basis unless an agency
represents the programmer, in which case, revenue is reported net of the commission retained by the agency.
Trade and barter revenue and expenses are as follows:
Year Ended
December 31,
2023
2024
Net broadcast barter revenue
$
3,332
$
3,465
Net broadcast barter expense
$
2,964
$
3,665
NOTE 5. PROPERTY AND EQUIPMENT
We account for property and equipment in accordance with FASB ASC Topic 360-10, Property, Plant and Equipment.
The following is a summary of the categories of our property and equipment:
As of December 31,
2023
2024
(Dollars in thousands)
Buildings
$
21,970
$
14,774
Office furnishings and equipment
35,177
32,650
Antennae, towers and transmitting equipment
79,212
74,339
Studio, production, and mobile equipment
31,822
32,050
Computer software and website development costs
33,169
35,841
Automobiles
1,646
1,632
Leasehold improvements
19,549
20,493
37
$
222,545
$
211,779
Less accumulated depreciation
(180,646)
(177,998)
41,899
$
33,781
Land
$
25,337
23,186
Construction-in-progress
7,818
5,732
$
75,054
$
62,699
Depreciation expense was approximately $11.4 million and $10.4 million for the years ended December 31, 2023, and 2024,
respectively. We periodically review long-lived assets for impairment when events or changes in circumstances indicate that
the carrying amount of the assets may not be fully recoverable. This review requires us to estimate the fair value of the assets
using significant unobservable inputs that reflect our own assumptions about the estimates that market participants would use
in measuring fair value, including assumptions about risk. If actual future results are less favorable than the assumptions and
estimates we used, we are subject to future impairment charges, the amount of which may be material. There were no
indications of impairment during the years ended December 31, 2023 and 2024.
NOTE 6. OPERATING AND FINANCE LEASE RIGHT-OF-USE ASSETS
Leasing Transactions
Our leased assets include offices and studios, transmitter locations, antenna sites, towers, tower sites, and land. Our lease
portfolio has remaining terms ranging from less than one-year up to twenty-six years. Many of these leases contain options to
extend the term from five to twenty years, the exercise of which is at our sole discretion. Renewal options are excluded from
our calculation of lease liabilities unless we are reasonably assured to exercise the renewal option. Our lease agreements do
not contain residual value guarantees or material restrictive covenants. We lease certain properties from our principal
stockholders or from trusts and partnerships created for the benefit of our principal stockholders and their families. These
leases are designated as Related Party leases in the details provided. We are obligated to pay taxes, insurance, and common
area maintenance charges under a majority of our lease agreements.
Operating leases are reflected on our balance sheet within operating lease ROU assets and the related current and non-current
operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities
represent the obligation to make lease payments arising from lease agreement. Operating lease ROU assets and liabilities are
recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based
upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line
basis over the lease term, subject to any changes in the lease or expectation regarding the lease terms. Variable lease costs,
such as common area maintenance, property taxes and insurance, are expensed as incurred. There were no indications of
impairment during the year ended December 31, 2024.
The various discount rates are based on our incremental borrowing rate due to the rate implicit in the leases not being readily
determinable. The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis
over a similar term, an amount equal to the lease payments in a similar economic environment. We used publicly available
information about low-grade debt, adjusted for the effect of collateralization, to determine the various rates it would pay to
finance transactions over similar time periods.
Balance Sheet
Supplemental balance sheet information related to leases is as follows:
December 31, 2024
(Dollars in thousands)
Operating Leases
Related Party
Other
Total
Operating leases ROU assets
$ 7,128
$ 34,834
$ 41,962
Operating lease liabilities (current)
$ 1,436
$ 8,252
$ 9,688
Operating lease liabilities (non-current)
5,937
32,750
38,687
Total operating lease liabilities
$ 7,373
$ 41,002
$ 48,375
Weighted Average Remaining Lease Term
Operating leases
6.8 years
Finance leases
2.6 years
Weighted Average Discount Rate
Operating leases
8.95%
Finance leases
8.77%
38
Lease Expense
The components of lease expense are as follows:
Twelve Months Ended
December 31, 2024
(Dollars in thousands)
Amortization of finance lease ROU Assets
$ 41
Interest on finance lease liabilities
5
Finance lease expense
46
Operating lease expense
13,738
Variable lease expense
1,190
Short-term lease expense
474
Total lease expense
$ 15,448
Supplemental Cash Flow
Supplemental cash flow information related to leases is as follows:
Twelve Months Ended
December 31, 2024
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
14,043
Operating cash flows from finance leases
3
Financing cash flows from finance leases
44
Leased assets obtained in exchange for new operating lease liabilities
$
6,986
Leased assets obtained in exchange for new finance lease liabilities
32
Maturities
Future minimum lease payments under leases that had initial or remaining non-cancelable lease terms in excess of one year as
of December 31, 2024, are as follows:
Operating
Related Party
Other
Total
Finance
Total
(Dollars in thousands)
2025
$
2,106
$
12,201
$
14,307
$
34
$
14,341
2026
2,019
10,412
12,431
18
12,449
2027
1,640
7,615
9,255
7
9,262
2028
995
6,740
7,735
5
7,740
2029
728
5,510
6,238
1
6,239
Thereafter
3,364
20,009
23,373
—
23,373
Undiscounted Cash Flows
$
10,852
$
62,487
$
73,339
$
65
$
73,404
Less: imputed interest
(3,479)
(21,485)
(24,964)
(6)
(24,970)
Total
$
7,373
$
41,002
$
48,375
$
59
$
48,434
Reconciliation to lease
Lease liabilities – current
$
1,436
$
8,252
$
9,688
$
30
$
9,718
Lease liabilities – long-term
5,937
32,750
38,687
29
38,716
Total Lease Liabilities
$
7,373
$
41,002
$
48,375
$
59
$
48,434
NOTE 7. BROADCAST LICENSES
We account for broadcast licenses in accordance with FASB ASC Topic 350 Intangibles—Goodwill and Other. We do not
amortize broadcast licenses, but rather test for impairment annually or more frequently if events or circumstances indicate that
the value may be impaired. In the case of our broadcast radio stations, we would not be able to operate the properties without
the related broadcast license for each property. Broadcast licenses are renewed with the FCC every eight years for a nominal
fee that is expensed as incurred. We continually monitor our stations’ compliance with the various regulatory requirements
that are necessary for the FCC renewal and all of our broadcast licenses have been renewed. We expect all of our broadcast
licenses to be renewed in the future and therefore, we consider our broadcast licenses to be indefinite-lived intangible assets.
We are not aware of any legal, competitive, economic, or other factors that materially limit the useful life of our broadcast
licenses. The weighted-average period before the next renewal of our broadcasting licenses is 5.3 years.
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 and impairments as described below.
39
Year Ended December 31,
2023
2024
(Dollars in thousands)
Balance, beginning of period before cumulative loss on impairment
$
429,890
$
419,845
Accumulated loss on impairment
(126,116)
(162,673)
Balance, beginning of period after cumulative loss on impairment
303,774
257,172
Acquisitions of radio station and FM translators
3,542
—
Capital projects to improve broadcast signal and strength
200
—
Disposition of radio stations and FM translators
(8,627)
(3,799)
Assets held for sale
—
(67,081)
Loss on impairment
(41,717)
(4,428)
Balance, end of period after cumulative loss on impairment
$
257,172
$
181,864
Balance, end of period before cumulative loss on impairment
$
419,845
$
272,250
Accumulated loss on impairment
(162,673)
(90,386)
Balance, end of period after cumulative loss on impairment
$
257,172
$
181,864
Broadcast Licenses Impairment Test
We perform our annual impairment testing during the fourth quarter of each year, which coincides with our budget and
planning process for the upcoming year. The unit of accounting we use to test broadcast licenses is the cluster level, which we
define as a group of radio stations operating in the same geographic market, sharing the same building and equipment, and
managed by a single general manager. The cluster level is the lowest level for which discrete financial information and cash
flows are available and the level reviewed by management to analyze operating results.
Our annual testing was completed in the fourth quarter of 2024 with updates to our interim assumptions based on the latest
forecasts of economic and market conditions.
The first step of our impairment testing is to perform a qualitative assessment as to whether it is more likely than not that a
broadcast license is impaired. This qualitative assessment requires significant judgment when considering the events and
circumstances that may affect the estimated fair value of our broadcast licenses. We review the significant assumptions and
key estimates applicable to our latest estimated fair value calculations to assess if events and circumstances have occurred that
could affect these assumptions and key estimates. We also review internal benchmarks and the economic performance for each
market cluster to assess if it is more likely than not that impairment exists.
As part of our qualitative assessment, we calculate the excess fair value, or the amount by which our latest estimated fair value
exceeds the current period carrying value. Based on our analysis and review, including the financial performance of each
market, we believe that a 50% excess fair value margin based on testing that was done no more than 12 months ago is a
reasonable benchmark for our qualitative analysis. Markets with an excess fair value of 50% or more, which have had no
significant changes in the prior valuation assumptions and key estimates, and were tested no more than 12 months ago, are not
likely to be impaired, and therefore, are not subject to further testing. Markets with an excess fair value that is less than 50% or
have not been tested within the last 12 months are subject to further testing.
The table below presents the markets that are subject to further testing as noted above:
Geographic Market Clusters as of December 31, 2024
Percentage Range by Which Latest Estimated Fair Value Exceeds 2024 Carrying Value
≤ 50%
> + 50%
Number of accounting units
22
-
Broadcast license carrying value (in thousands)
$ 233,745
$ -
We engaged Bond & Pecaro, an independent third-party appraisal and valuation firm, to assist us with determining the
enterprise value of 22 of our market clusters. The estimated fair value of each market cluster was determined using the
Greenfield Method, a form of the income approach. The premise of the Greenfield Method is that the value of a broadcast
license is equivalent to a hypothetical start-up in which the only asset owned by the station as of the valuation date is the
broadcast license. This approach eliminates factors that are unique to our operation of the station, including its format and
historical financial performance. The method then assumes the entity has to purchase, build, or rent all of the other assets
needed to operate a comparable station to the one in which the broadcast license is being utilized as of the valuation date. Cash
flows are estimated and netted against all start-up costs, expenses, and investments necessary to achieve a normalized and
mature state of operations, thus reflecting only the cash flows directly attributable to the broadcast license. A multi-year
discounted cash flow approach is then used to determine the net present value of these cash flows to derive an indication of
fair value. For cash flows beyond the projection period, a terminal value is calculated using the Gordon constant growth model
and long-term industry growth rate assumptions based on long-term industry growth projections and Gross Domestic Product
(“GDP”) inflation rates.
40
The primary assumptions used in the Greenfield Method are:
1. gross operating revenue in the station’s designated market area,
2. normalized market share,
3. normalized profit margin,
4. duration of the “ramp-up” period to reach normalized operations, (which was assumed to be three years),
5. estimated start-up costs (based on market size),
6. ongoing replacement costs of fixed assets and working capital,
7. the calculations of yearly net free cash flows to invested capital; and
8. amortization of the intangible asset, or the broadcast license.
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 are as follows:
Broadcast Licenses
December 31, 2023
December 31, 2024
Risk-adjusted discount rate
10.0%
9.0%
Operating profit margin ranges
3.1% - 30.7%
3.1% - 29.1%
Long-term revenue growth rates
0.0%
(0.5)%
The risk-adjusted discount rate reflects the Weighted Average Cost of Capital (“WACC”) developed based on data from same
or similar industry participants and publicly available market data as of the measurement date.
Based on our review and analysis, we recorded impairment charges of $4.4 million during the year ended December 31, 2024.
During our annual testing in the fourth quarter of 2024, we recorded an aggregate impairment charge of $4.4 million to the
value of broadcast licenses in Cleveland, Dallas and Hawaii at December 31, 2024. The impairment charge was driven by
declines in market revenue projections in excess of those used in our prior valuations.
The table below presents the results of our annual impairment testing under the start-up income approach:
Market Cluster
Estimated Excess Fair Value December 31, 2024
Atlanta, GA
19.3%
Boston, MA
1.9%
Chicago, IL
9.6%
Cleveland, OH
(10.6)%
Colorado Springs, CO
14.1%
Columbus, OH
7.7%
Dallas, TX
(2.3)%
Detroit, MI
0.5%
Honolulu, HI
(29.1)%
Little Rock, AK
2.3%
Los Angeles, CA
11.2%
Miami, FL
14.2%
Minneapolis, MN
14.2%
New York, NY
51.2%
Orlando FL
23.3%
Philadelphia, PA
6.9%
Phoenix, AZ
16.6%
Portland, OR
0.6%
Sacramento, CA
5.8%
San Diego, CA
52.3%
San Francisco, CA
6.9%
Tampa, FL
3.4%
NOTE 8. GOODWILL
We account for goodwill in accordance with FASB ASC Topic 350 Intangibles—Goodwill and Other. We do not amortize
goodwill, but rather test for impairment annually or more frequently if events or circumstances indicate that an asset may be
impaired. We perform our annual impairment testing during the fourth quarter of each year, which coincides with our budget
and planning process for the upcoming year.
41
The following table presents the changes in goodwill including business acquisitions as described in Note 3 - Recent
Transactions and impairments as described below.
Year Ended December 31,
2023
2024
(Dollars in thousands)
Balance, beginning of period before cumulative loss on impairment,
$
28,975
$
30,047
Accumulated loss on impairment
(4,890)
(7,470)
Balance, beginning of period after cumulative loss on impairment
24,085
22,577
Acquisitions of radio stations
80
—
Acquisitions of digital media entities
1,181
—
Disposition of publishing entities
(189)
—
Assets held for sale
—
(461)
Loss on impairment
(2,580)
—
Ending period balance
$
22,577
$
22,116
Balance, end of period before cumulative loss on impairment
30,047
29,586
Accumulated loss on impairment
(7,470)
(7,470)
Ending period balance
$
22,577
$
22,116
Goodwill Impairment Testing
When performing our annual impairment testing for goodwill, the fair value of each applicable accounting unit is estimated
using a discounted cash flow analysis, which is a form of the income approach. The discounted cash flow analysis utilizes a
five to ten-year projection period to derive operating cash flow projections from a market participant view. We make certain
assumptions regarding future revenue growth based on industry market data, historical performance, and our expectations of
future performance. We also make assumptions regarding working capital requirements and ongoing capital expenditures for
fixed assets. Future net free cash flows are calculated on a debt free basis and discounted to present value using a risk-adjusted
discount rate. The terminal year value is calculated using the Gordon constant growth method and long-term growth rate
assumptions based on long-term industry growth projections and GDP inflation rates. The resulting fair value estimates, net of
any interest-bearing debt, are then compared to the carrying value of each reporting unit’s net assets.
Our annual testing in the fourth quarter of 2024 reflected updates to our interim assumptions based on current economic and
market conditions.
The first step of our impairment testing is to perform a qualitative assessment to determine if events and circumstances have
occurred that indicate it is more likely than not that the fair value of the assets, including goodwill, are less than their carrying
values. We review the significant inputs used in our prior year fair value estimates to determine if any changes to those inputs
should be made. We estimate the fair value using a market approach and compare the estimated fair value of each entity to its
carrying value, including goodwill. Under the market approach, we apply a multiple of four to each entity’s operating income
to estimate the fair value. We believe that a multiple of four is a reasonable indicator of fair value as described in Note 7,
Broadcast Licenses.
If the results of our qualitative assessment indicate that the fair value of a reporting unit may be less than its carrying value, we
perform a second quantitative test of the reporting unit. We engage an independent third-party appraisal and valuation firm to
assist us with determining the enterprise value as part of this quantitative test.
Goodwill - Broadcast Markets
The unit of accounting we use to test goodwill associated with our radio stations is the cluster level, which we define as a
group of radio stations operating in the same geographic market, sharing the same building and equipment, and managed by a
single general manager. The cluster level is the lowest level for which discrete financial information and cash flows are
available and the level reviewed by management to analyze operating results. Five of our 31 market clusters have goodwill
associated with them as of our annual testing period ended December 31, 2024.
We tested one broadcast market at December 31, 2024 based on the length of time elapsed from the last valuation. We
engaged Bond & Pecaro, an independent appraisal and valuation firm, to assist us in estimating the enterprise value of our
market clusters to test goodwill for impairment. The enterprise valuation assumes that the subject assets are installed as part of
an operating business rather than as a hypothetical start-up. The analysis includes both an income and cost approach to
valuation. The income approach uses a discounted cash flow projection while the cost approach, or “stick” uses the value of
the underlying assets.
The key estimates and assumptions used for our enterprise valuations are as follows:
Broadcast Markets Enterprise Valuations
December 31, 2024
Risk-adjusted discount rate
9.0%
42
Operating profit margin ranges
30.0% - 33.9%
Long-term revenue growth rates
(0.5)%
The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and
publicly available market data as of the measurement date.
Based on our review and analysis, we determined that no impairment charges were necessary to the carrying value of our
broadcast market goodwill as of the annual testing period ended December 31, 2024.
The table below presents the percentage within a range by which the estimated fair value exceeded the carrying value of the
digital media entities, including goodwill.
Broadcast Entity as of December 31, 2024
Percentage Range by Which Estimated Fair Value Exceeds Carrying
Value Including Goodwill
< 10%
>10% to 20%
>21% to 50%
> than 51%
Number of accounting units
—
—
1
—
Carrying value including goodwill (in thousands)
—
—
$ 38,447
—
Goodwill – Digital Media
The unit of accounting we use to test goodwill in our digital media segment is the entity level, which includes SWN,
Townhall.com®, and Eagle Financial Publications. The financial statements for SWN include the operating results and cash
flows for our Christian content websites and our church product websites. The financial statements for Townhall.com® reflect
the operating results for each of our conservative opinion websites. Eagle Financial Publications include our investing
websites and related digital publications. The entity level is the level reviewed by management and the lowest level for which
discrete financial information is available.
We tested one entity at December 31, 2024 based on the length of time elapsed from the last valuation. We engaged Bond &
Pecaro, an independent appraisal and valuation firm, to assist us in estimating the enterprise value of the entity. The enterprise
valuation assumes that the subject assets are installed as part of an operating business rather than as a hypothetical start-up.
The key estimates and assumptions used for our enterprise valuations are as follows:
Digital Media Enterprise Valuations
December 31, 2023
December 31, 2024
Risk adjusted discount rate
11.0%
10.0%
Operating profit margin ranges
21.9% - 22.3%
22.5% - 27.7%
Long-term revenue growth rates
0.5%
0.5%
The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and
publicly available market data as of the measurement date.
Based on our review and analysis, we determined that no impairment charges were necessary to the carrying value of goodwill
associated with our digital media entities as of the annual testing period ended December 31, 2024.
The table below presents the percentage within a range by which the estimated fair value exceeded the carrying value of the
digital media entities, including goodwill.
Digital Media Entity as of December 31, 2024
Percentage Range by Which Estimated Fair Value Exceeds Carrying
Value Including Goodwill
< 10%
>10% to 20%
>21% to 50%
> than 51%
Number of accounting units
—
—
—
1
Carrying value including goodwill (in thousands)
—
—
—
$ 22,689
Goodwill - Publishing
The unit of accounting we use to test goodwill in our publishing segment is the entity level for Salem Author Services. Salem
Author Services operates a self-publishing business from a stand-alone facility in Orlando, Florida under one general manager
who is responsible for the operating results and cash flow. The entity level is the level reviewed by management and the
lowest level for which discrete financial information is available.
The publishing entity has goodwill associated with it as of our annual testing period ended December 31, 2024. We tested
Salem Author Services based on the amount by which the latest estimated fair value exceeded the carrying value and based on
the length of time elapsed from the last valuation. We engaged Bond & Pecaro, an independent appraisal and valuation firm, to
assist us in estimating the enterprise value of the publishing entity to test goodwill for impairment. The enterprise valuation
assumes that the subject assets are installed as part of an operating business rather than as a hypothetical start-up.
43
The key estimates and assumptions used for our enterprise valuations are as follows:
Publishing Enterprise Valuations
December 31, 2023
December 31, 2024
Risk adjusted discount rate
11.0%
10.0%
Operating margin ranges
2.6% - 3.1%
(1.4)% - 2.0%
Long-term revenue growth rates
0.5%
0.5%
The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and
publicly available market data as of the measurement date.
Based on our review and analysis, we determined that no impairment charges were necessary to the carrying value of goodwill
associated with our publishing entities as of the annual testing period ended December 31, 2024.
The table below presents the percentage within a range by which the estimated fair value exceeded the carrying value of our
remaining accounting units, including goodwill.
Publishing Entity as of December 31, 2024
Percentage Range by Which Estimated Fair Value Exceeds Carrying Value
Including Goodwill
< 10%
>11% to 20%
>21% to 50%
> than 51%
Number of accounting units
—
1
—
—
Carrying value including goodwill (in thousands)
—
$ 1,225
—
—
NOTE 9. AMORTIZABLE INTANGIBLE ASSETS
The following tables provide a summary of our significant classes of amortizable intangible assets:
As of December 31, 2023
Accumulated
Cost
Amortization
Net
(Dollars in thousands)
Customer lists and contracts
$
23,677
$
(23,171)
$
506
Domain and brand names
19,854
(19,142)
712
Favorable and assigned leases
1,479
(1,479)
—
Subscriber base and lists
10,416
(9,156)
1,260
Author relationships
1,089
(1,089)
—
Non-compete agreements
3,586
(2,473)
1,113
Other amortizable intangible assets
1,411
(1,411)
—
$
61,512
$
(57,921)
$
3,591
As of December 31, 2024
Accumulated
Cost
Amortization
Net
(Dollars in thousands)
Customer lists and contracts
$
23,677
$
(23,411)
$
266
Domain and brand names
19,851
(19,327)
524
Favorable and assigned leases
1,479
(1,479)
—
Subscriber base and lists
10,416
(9,776)
640
Author relationships
1,106
(1,096)
10
Non-compete agreements
1,612
(1,034)
578
Other amortizable intangible assets
1,396
(1,396)
—
$
59,537
$
(57,519)
$
2,018
Amortization expense was approximately $2.2 million and $1.6 million for the years ended December 31, 2023, and 2024,
respectively. Based on the amortizable intangible assets as of December 31, 2024, we estimate amortization expense for future
years to be as follows:
44
Year ended December 31,
Amortization Expense
(Dollars in thousands)
2025
$
1,409
2026
364
2027
232
2028
13
Total
$
2,018
NOTE 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following:
As of December 31,
2023
2024
(Dollars in thousands)
Accounts payable
$
5,412
$
5,684
Accrued expenses
17,021
7,396
Accrued compensation and related expenses
10,099
10,740
$
32,532
$
23,820
NOTE 11. DEBT
Salem Media Group, Inc. has no independent assets or operations, the subsidiary guarantees relating to certain debt are full
and unconditional and joint and several, and any subsidiaries of Salem Media Group, Inc. other than the subsidiary guarantors
are minor.
Debt consists of the following:
December 31, 2023
December 31, 2024
(Dollars in thousands)
2028 Notes
$
159,416
$
—
Less unamortized discount and debt issuance costs based on imputed interest rate of 7.64%
(6,456)
—
2028 Notes net carrying value
152,960
—
Unsecured debt
—
24,617
Asset-Based Revolving Credit Facility principal outstanding (1)
16,831
5,250
Long-term debt less unamortized discount and debt issuance costs
$
169,791
$
29,867
Less current portion
16,831
24,617
Long-term debt less unamortized discount and debt issuance costs, net of current portion
$
152,960
$
5,250
Secured promissory note, current
$
—
$
72,000
(1) As of December 31, 2024, the Asset-Based Revolving Credit Facility (“ABL”), had a borrowing base of $23.6
million, $5.3 million in outstanding borrowings, $2.3 million in letters of credit, a $4.5 million availability block,
resulting in a $11.6 million borrowing base availability.
Our weighted average interest rate was 7.38% and 1.76% at December 31, 2023, and December 31, 2024, respectively.
In addition to the outstanding amounts listed above, we also have interest obligations related to our long-term debt as follows
as of December 31, 2024:
$72.0 million outstanding secured promissory note, with interest 0% through June 30, 2025, at which point the
interest rate will be SOFR +1%;
$24.0 million outstanding unsecured debt, with interest of 5%;
$5.3 million outstanding borrowings under the ABL facility, with interest payments due at Secured Overnight
Financing Rate (“SOFR”) plus 4.5% per annum with a SOFR floor of 4.3%;
$2.3 million in standby letters of credit with interest payment at an annual rate of 4.5%; and
Commitment fee of 0.35% per annum on the unused portion of the ABL Facility.
Secured Promissory Note
On December 30, 2024, the company issued a $72.0 million Secured Promissory Note. The proceeds were used to repurchase
the 2028 Notes. The Secured Promissory Note is due in full at maturity on March 31, 2028. Settlement is accelerated upon the
closing of the sale of the CCM stations and offset against the purchase price. The Secured Promissory Note is repayable upon
demand if closing does not occur by December 31, 2025. Purely from an accounting perspective, we consider the Secured
Promissory Note to be an advanced payment for the sale of CCM stations and the balance is a contract liability in accordance
with ASC 610-20, Other Income.
45
The interest on the Secured Promissory Note is 0% through June 30, 2025, at which point the interest rate will be SOFR +1%.
The debt is collateralized by all of the Company’s assets except for the assets (accounts receivables and the studio/office
building in Irving, Texas) that are first lien collateral for the ABL Revolver with Siena.
Unsecured Debt
On December 30, 2024, we issued unsecured debt of $24.0 million with the holder of the 2028 Notes. The unsecured debt will
automatically convert to Series A Preferred Stock at the earlier of the consummation of the asset sales described in Note 3 or
on June 22, 2025. The interest rate on the debt is 5%, which can be paid in cash or paid in kind.
2028 Notes
On March 20, 2023, we issued $44.7 million in new 7.125% Senior Secured Notes due in 2028 at a discount of $41.9 million
resulting in an effective yield of 8.625%. We used a portion of the proceeds of this borrowing to redeem the remaining $36.5
million of 6.75% Senior Secured Notes due. The redemption of the 2024 Notes closed on March 27, 2023.
The 2028 Notes were originally due to mature on June 1, 2028. Interest accrued on the 2028 Notes was payable semi-annually,
in cash in arrears, on June 1 and December 1 of each year. Upon issuance, we recorded debt issuance costs of $9.5 million.
During the years ended December 31, 2023 and 2024, $1.5 million of debt issuance costs, discount and delayed draw
associated with the 2208 Notes was amortized to interest expense.
On December 23, 2024, we repurchased $159.4 million of the 2028 Notes for $104.0 million in cash and issuance of $24.0
million Unsecured Debt. In accordance with the provisions of ASC 470-60, Troubled Debt Restructuring, we applied troubled
debt restructuring accounting, resulting in a gain of $28.7 million. The carrying value of the 2028 Notes was reduced to the
aggregate undiscounted cash flows due under the Unsecured Debt. Since the Unsecured Debt automatically converts to Series
A Preferred Stock on or prior to June 23, 2025, we utilized the maximum interest payments due through June 23, 2024 for the
undiscounted cash flows computation.
Year ended
December 31, 2024
(Dollars in thousands)
Principal amount of 2028 Notes at December 23, 2024
$
159,416
Plus: accrued interest at December 23, 2024
6,373
Carrying value of 2028 Notes plus interest
165,789
Less: cash consideration
(104,000)
Less: unamortized debt discounts and issuance costs
(5,280)
Carrying value of 2028 Notes at December 23, 2024
$
56,509
Principal amount of Unsecured debt
$
24,000
Plus: interest payments
617
Total cash flows of Unsecured debt (undiscounted)
$
24,617
Difference between carrying value of 2028 Notes and total cash flows
of Unsecured debt
$
31,892
Less: transaction costs
(3,236)
Gain on early retirement of debt
$
28,656
2024 Notes
On May 19, 2017, we issued 2024 Notes in a private placement. The 2024 Notes were guaranteed on a senior secured basis by
our existing subsidiaries (“Subsidiary Guarantors”). The 2024 Notes accrued interest at a rate of 6.75% per year and were
maturing on June 1, 2024, unless they were earlier redeemed or repurchased. Interest was payable semi-annually, in cash in
arrears, on June 1 and December 1 of each year.
The 2024 Notes are secured by a first-priority lien on substantially all assets of ours and the Subsidiary Guarantors other than
the ABL Facility Priority Collateral as described below. There is no direct lien on our FCC licenses to the extent prohibited by
law or regulation other than the economic value and proceeds thereof.
We recorded debt issuance costs of $6.3 million as a reduction of the debt proceeds being amortized to non-cash interest
expense over the life of the Notes using the effective interest method. During the twelve-month period ended December 31,
2023, $20,000 of debt issuance costs associated with the Notes was amortized to interest expense.
During the term of the 2024 Notes, we made various repurchases of the 2024 Notes at prices ranging from 84.58% to 101.69%
of face value. In aggregate, we repurchased $105.6 million of 2024 Notes at an average price of 97.41% of face value.
46
On March 27, 2023, we redeemed the remaining $36.5 million of 2024 Notes and paid $0.8 million in accrued but unpaid
interest through the redemption date.
Asset-Based Revolving Credit Facility
Agreement with Siena Lending Group, Inc.
On December 26, 2023, we entered into an agreement with Siena Lending Group, Inc. (“Siena”) to provide us a $26.0 million
asset based loan (“ABL Facility”) revolving facility. The proceeds from this ABL Facility were used to pay off the previous
ABL Facility from Wells Fargo Bank, National Association and to provide additional working capital for the company. First
priority perfected security interests and liens on all present and future accounts receivable, inventory, deposits and security
accounts and certain owned real property and other equity interests of the company and each of our direct and indirect
subsidiaries and second priority perfected security interests and liens on all other present and future assets of the company.
The ABL Facility is a $26.0 million credit facility due December 26, 2026, which includes a $3.0 million sub-facility for
standby letters of credit.
Availability under the ABL Facility is subject to a borrowing base consisting of (a) 90% of the eligible accounts receivable
plus (b) 90% of the eligible unbilled receivable not to exceed $5.0 million and (c) a calculated amount based on the value of
certain real property. An Availability Block not to exceed $2 million will be required should certain trailing three-month
EBITDA targets not be met. The targets will be mutually agreed between Siena and the company on an annual basis
following the closing date. The Availability Block will remain in effect until such time as the company resumes meeting the
EBITDA targets.
As of December 31, 2024, the amount available under the ABL Facility was $23.6 million of which $5.3 million was
outstanding and $2.3 million is drawn on a letter of credit. All borrowings under the ABL Facility accrue interest at a rate
equivalent to 30 Day Term SOFR Rate plus 4.5% per annum with a SOFR floor of 4.3%. There is an unused line fee of
0.35% per annum. A prepayment fee of 2% of the total ABL Facility amount is due if the ABL Facility is retired in the first
12 months following the closing date; 1% during the subsequent 13-30 month period following the closing date and 0%
thereafter until maturity of the ABL Facility. Additionally, a letter of credit fee of 4.5% per annum would be charged on the
face amount of all letter of credits issued, payable monthly in arrears calculated on the basis of actual days elapsed in a year of
360 days. Other standard fees with respect to letters of credit would also apply.
We recorded debt issue costs of $1.6 million as an asset being amortized to non-cash interest expense over the term of the
ABL Facility using the effective interest method. During the twelve-month period ended December 31, 2023 and 2024,
$13,000 and $0.9 million, respectively, of debt issuance costs associated with the ABL Facility was amortized to interest
expense. At December 31, 2024, the blended interest rate on amounts outstanding under the ABL Facility was 9.84%.
We report outstanding balances on the ABL Facility as long-term regardless of the maturity date based on use of the ABL
Facility to fund ordinary and customary operating cash needs with frequent repayments. We believe that our borrowing
capacity under the ABL Facility allows us to meet our ongoing operating requirements, fund capital expenditures and satisfy
our debt service requirements for at least the next twelve months. As of December 31, 2024, accrued and unpaid interest on
the ABL Facility was $0.1 million.
Previous Credit Agreement with Wells Fargo Bank, National Association.
On May 19, 2017, we entered into the ABL Facility pursuant to a Credit Agreement (“Credit Agreement”) by and among us
and our subsidiaries, parties thereto as borrowers, Wells Fargo Bank, National Association (“Prior ABL Facility’), as
administrative agent and lead arranger, and the lenders that are parties thereto.
The Prior ABL Facility was a $30.0 million revolving credit facility due March 1, 2024, which included a $5.0 million sub-
facility for standby letters of credit and a $7.5 million sub-facility for swingline loans. All borrowings under the ABL Facility
accrued interest at a rate equal to a base rate or LIBOR plus a spread. The spread, which was based on an availability-based
measure, ranged from 0.50% to 1.00% for base rate borrowings and 1.50% to 2.00% for LIBOR borrowings. If an event of
default occurred, the interest rate would increase by 2.00% per annum. Amounts outstanding under the ABL Facility could be
paid and then reborrowed at our discretion without penalty or premium. Additionally, we paid a commitment fee on the
unused balance from 0.25% to 0.375% per year based on the level of borrowings. The April 7, 2020 amendment also allowed
for an alternative benchmark rate that may include SOFR due to LIBOR being scheduled to be discontinued.
Availability under the ABL Facility was subject to a borrowing base consisting of (a) 90% of the eligible accounts receivable
plus (b) a calculated amount based on the value of certain real property. The ABL Facility had a first-priority lien on our and
the Subsidiary Guarantors’ accounts receivable, inventory, deposit and securities accounts, certain real estate and related
assets, and by a second-priority lien on the notes priority collateral. There was no direct lien on our FCC licenses to the extent
prohibited by law or regulation other than the economic value and proceeds thereof.
47
The Credit Agreement included a springing fixed charge coverage ratio of 1.0 to 1.0, which was tested during the period
commencing on the last day of the fiscal month most recently ended prior to the date on which Availability (as defined in the
Credit Agreement) is less than the greater of 15% of the Maximum Revolver Amount (as defined in the Credit Agreement)
and $4.5 million and continuing for a period of 60 consecutive days after the first day on which Availability exceeds such
threshold amount. The Credit Agreement also included other negative covenants that are customary for credit facilities of this
type, including covenants that, subject to exceptions described in the Credit Agreement, restrict or limit our ability and the
ability of our subsidiaries to (i) incur additional indebtedness; (ii) make investments; (iii) make distributions, loans or transfers
of assets; (iv) enter into, create, incur, assume or suffer to exist any liens, (v) sell assets; (vi) enter into transactions with
affiliates; (vii) merge or consolidate with, or dispose of all assets to a third party, except as permitted thereby; (viii) prepay
indebtedness (which does not include bond repurchases); and (ix) pay dividends.
Because the availability of our previous ABL Facility was less than $4.5 million starting in the second quarter of 2023, we
were required to test against the fixed charge coverage ratio covenant. The fixed charge coverage ratio was below the required
1.0 to 1.0 level and therefore, we were not in compliance with that covenant. During the remainder of the year, we signed
multiple forbearance agreements, whereby the bank agreed not to exercise remedies on the default. Additionally, the notional
amount of the revolver was reduced from $30.0 million to $25.0 million with a minimum availability of $7.5 million. Finally,
the interest rate on the ABL Facility was increased to SOFR plus 4% or base rate plus 3.0% effective July 1, 2023.
We recorded debt issue costs of $1.1 million as an asset being amortized to non-cash interest expense over the term of the
Prior ABL Facility using the effective interest method. During the twelve-month period ended December 31, 2023, $0.2
million of debt issuance costs associated with the Prior ABL Facility was amortized to interest expense.
Maturities of Long-Term Debt and Capital Lease Obligations
Principal repayment requirements under all long-term debt agreements outstanding at December 31, 2024 for each of the next
five years and thereafter are as follows:
Amount
For the Year Ended December 31,
(Dollars in thousands)
2025
$
96,617
2026
—
2027
5,250
2028
—
2029
—
Thereafter
—
$
101,867
NOTE 12. INCOME TAXES
We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our
consolidated financial statement carrying amount of assets and liabilities and their respective tax bases. We measure these
deferred tax assets and liabilities using enacted tax rates expected to apply in the years in which these temporary differences
are expected to reverse. We recognize the effect on deferred tax assets and liabilities resulting from a change in tax rates in
income in the period that includes the date of the change.
The consolidated provision for income taxes is as follows:
Year Ended December 31,
2023
2024
(Dollars in thousands)
Current:
Federal
$ —
$ —
State
—
521
—
521
Deferred:
Federal
(11,468)
(7,639)
State
(5,916)
(708)
(17,384)
(8,347)
Benefit from income taxes
$ (17,384)
(7,826)
Consolidated deferred tax assets and liabilities consist of the following:
As of December 31,
48
2023
2024
(Dollars in thousands)
Deferred tax assets:
Financial statement accruals not currently deductible
$ 2,099
1,102
Allowance for bad debt reserve
2,125
2,021
Net operating loss, AMT credit and other carryforwards
35,608
23,281
State taxes
40
105
Operating lease liabilities
12,724
12,114
163j Adjustment
7,775
9,657
Other
738
1,649
Total deferred tax assets
61,109
49,929
Valuation allowance for deferred tax assets
(39,494)
(21,119)
Net deferred tax assets
$ 21,615
28,810
Deferred tax liabilities:
Excess of net book value of property and equipment and software for financial reporting
purposes over tax basis
$ 268
797
Excess of net book value of intangible assets for financial reporting purposes over tax basis
59,609
58,506
Operating lease right-of-use assets
11,086
10,508
Total deferred tax liabilities
70,963
69,811
Net deferred tax liabilities
$ (49,348)
(41,001)
A reconciliation of the statutory federal income tax rate to the benefit from income tax is as follows:
Year Ended December 31,
2023
2024
(Dollars in thousands)
Statutory federal income tax (statutory tax rate)
$
(12,746)
$
1,754
Effect of state taxes, net of federal
(4,674)
1,218
Permanent items
268
323
State rate change
276
—
Valuation allowance
(562)
(11,121)
Stock based compensation cancellation
9
—
Other, net
45
—
Benefit from income taxes
$
(17,384)
$
(7,826)
The amortization of our indefinite-lived intangible assets for tax purposes, but not for book purposes, creates deferred tax
liabilities. A reversal of deferred tax liabilities may occur when indefinite-lived intangibles: (1) become impaired; or (2) are
sold, which would typically only occur in connection with the sale of the assets of a station or groups of stations or the entire
company in a taxable transaction. Due to the amortization for tax purposes and not for book purposes of our indefinite-lived
intangible assets, we expect to continue to generate deferred tax liabilities in future periods exclusive of any impairment losses
in future periods. These deferred tax liabilities and net operating loss carryforwards result in differences between our provision
for income tax and cash paid for taxes.
At December 31, 2024, we had net operating loss carryforwards for federal income tax purposes of approximately $47.2
million that expire in years 2025 through 2037 and for state income tax purposes of approximately $330.8 million that expire
in years 2025 through 2044. For financial reporting purposes at December 31, 2024, we had a valuation allowance of $21.1
million, net of federal benefit, to offset the pre-2018 federal net operating losses and state net operating losses.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We
consider all available evidence, both positive and negative, including historical levels of income, expectations and risks
associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the
need for a valuation allowance. In the event we were to determine that we would not be able to realize all or part of our net
deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period in which
we make such a determination. Likewise, if we later determine that it is more likely than not that the net deferred tax assets
would be realized, we would reverse the applicable portion of the previously provided valuation allowance.
During the year, we released a portion of the valuation allowance due to the use of net operating loss carryforwards in the
current year as well as for changes in the expected utilization of the net operating loss carryforwards due to income anticipated
in future years for the sale of assets that management has determined is more likely than not to be realized.
For financial reporting purposes, we recorded a valuation allowance of $21.1 million as of December 31, 2024, to offset $23.3
million of the deferred tax assets related to federal and state net operating loss carryforwards of $9.9 million and $13.4 million
49
respectively, along with $3.1 million of other financial statement accruals. This balance represents a decrease of $18.4 million
during the year, from $39.5 million valuation allowance as of December 31, 2023.
Utilization of net operating loss carryforwards may be subject to limitations in the event of a change in ownership as defined
under U.S. Internal Revenue Code (“IRC”) §382, and similar state provisions. An “ownership change” is generally defined as
a cumulative change in the ownership interest of significant stockholders over a three-year period of more than 50%. The
Company may have experienced a change in ownership, as defined by U.S. IRC §382, as a result of stock issued in
2024. Accordingly, some of the net operating loss carryforwards may expire prior to being utilized and have been removed
from the inventory of deferred tax assets. As a valuation allowance was placed on the federal net operating loss carryovers,
there is no income statement impact related to this change. Prior to the expiration of these net operating loss carryforwards,
the Company intends to undertake a formal analysis to determine whether there are alternative tax planning solutions that
would allow for the use of these carryforwards.
NOTE 13. COMMITMENTS AND CONTINGENCIES
We enter into various agreements in the normal course of business that contain minimum guarantees. Minimum guarantees are
typically tied to future events, such as future revenue earned in excess of the contractual level. Accordingly, the fair value of
these arrangements is zero.
We may record contingent earn-out consideration representing the estimated fair value of future liabilities associated with
acquisitions that may have additional payments due upon the achievement of certain performance targets. The fair value of the
contingent earn-out consideration is estimated as of the acquisition date as the present value of the expected contingent
payments as determined using weighted probabilities of the expected payment amounts. We review the probabilities of
possible future payments to estimate the fair value of any contingent earn-out consideration on a quarterly basis over the earn-
out period. Actual results are compared to the estimates and probabilities of achievement used in our forecasts. Should actual
results of the acquired business increase or decrease as compared to our estimates and assumptions, the estimated fair value of
the contingent earn-out consideration liability will increase or decrease, up to the contracted limit, as applicable. Changes in
the estimated fair value of the contingent earn-out consideration are reflected in the results of operations in the period in which
they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact and
cause volatility in our operating results.
We and our subsidiaries, incident to our business activities, are parties to a number of legal proceedings, lawsuits, arbitration
and other claims. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance. We
evaluate claims based on what we believe to be both probable and reasonably estimable. We maintain insurance that may
provide coverage for such matters. Consequently, we are unable to ascertain the ultimate aggregate amount of monetary
liability or the financial impact with respect to these matters. We believe, at this time, that the final resolution of these matters,
individually and in the aggregate, will not have a material adverse effect upon our consolidated financial position, results of
operations or cash flows.
Our dividend policy is based upon our Board of Directors’ current assessment of our business and the environment in which
we operate. On May 6, 2020, our Board of Directors voted to discontinue equity distributions until further notice due to our
financial position, results of operations, and cash flows. The declaration of any future distributions and the establishment of
the per share amount, record dates, and payment dates are subject to final determination by our Board of Directors and
dependent upon future earnings, cash flows, financial and legal requirements, and other factors.
NOTE 14. STOCK INCENTIVE PLAN
Our Amended and Restated 1999 Stock Incentive Plan (“Plan”) provides for grants of equity-based awards to employees, non-
employee directors and officers, and advisors (“Eligible Persons”). Insiders may participate in plans established pursuant to
Rule 10b5-1 under the Exchange Act that allow them to exercise awards subject to pre-established criteria.
At a special meeting of the company held on September 27, 2024, the company’s stockholders approved a revision to the Plan
increasing the number of shares authorized by 6,000,000. As a result, a maximum of 14,000,000 shares are authorized under
the Plan of which 7,729,961 were available for issuance at December 31, 2024. All awards have restriction periods tied
primarily to employment and/or service. The Plan allows for accelerated or continued vesting in certain circumstances as
defined in the Plan including death, disability, a change in control, and termination or retirement. The Board of Directors, or a
committee appointed by the Board, has discretion subject to limits defined in the Plan, to modify the terms of any outstanding
award.
We recognize non-cash stock-based compensation expense based on the estimated fair value of awards in accordance with
FASB ASC Topic 718 Compensation—Stock Compensation. Stock-based compensation expense fluctuates over time as a
result of the vesting periods for outstanding awards and the number of awards that actually vest.
50
The following table reflects the components of stock-based compensation expense recognized in the Consolidated Statements
of Operations for the years ended December 31, 2023, and 2024:
Year Ended December 31,
2023
2024
(Dollars in thousands)
Stock option compensation expense included in unallocated corporate expenses
$
280
$
281
Stock option compensation expense included in broadcast operating expenses
126
78
Stock option compensation expense included in digital media operating expenses
53
36
Stock option compensation expense included in publishing operating expenses
4
3
Total stock-based compensation expense, pre-tax
$
463
$
398
Tax expense from stock-based compensation expense
(120)
(103)
Total stock-based compensation expense, net of tax
$
343
$
295
Stock Option and Restricted Stock Grants
Eligible employees may receive stock option awards annually with the number of shares and type of instrument generally
determined by the employee’s salary grade and performance level. Incentive and non-qualified stock option awards allow the
recipient to purchase shares of our common stock at a set price, not to be less than the closing market price on the date of
award, for no consideration payable by the recipient. The related number of shares underlying the stock option is fixed at the
time of the grant. Options generally vest over a four-year period with a maximum term of five years from the vesting date. In
addition, certain management and professional level employees may receive stock option awards upon the commencement of
employment.
The Plan also allows for awards of restricted stock that contain transfer restrictions under which they cannot be sold, pledged,
transferred, or assigned until the period specified in the award, generally from one to five years. Restricted stock awards are
independent of option grants and are granted at no cost to the recipient other than applicable taxes owed by the recipient. The
awards are considered issued and outstanding from the date of grant.
The fair value of each award is estimated as of the date of the grant using the Black-Scholes valuation model. The expected
volatility reflects the consideration of the historical volatility of our common stock as determined by the closing price over a
six to ten-year term commensurate with the expected term of the award. Expected dividends reflect the amount of quarterly
distributions authorized and declared on our Class A and Class B common stock as of the grant date. The expected term of the
awards is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rates for
periods within the expected term of the award are based on the U.S. Treasury yield curve in effect during the period the
options were granted. We have used historical data to estimate future forfeiture rates to apply against the gross amount of
compensation expense determined using the valuation model. These estimates have approximated our actual forfeiture rates.
The weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes valuation
model are as follows for the year ended December 31, 2023. There was no stock option grants during the year ended
December 31, 2024.
Year Ended
December 31, 2023
Expected volatility
87.94%
Expected dividends
—%
Expected term (in years)
8.4
Risk-free interest rate
3.69%
Activity with respect to the company’s option awards during the two years ended December 31, 2024, is as follows (Dollars in
thousands, except weighted average exercise price and weighted average grant date fair value):
Options
Shares
Weighted Average
Exercise Price
Weighted Average
Grant Date Fair Value
Weighted Average
Remaining Contractual Term
Aggregate
Intrinsic Value
Outstanding at January 1, 2023
1,706,340
$ 2.68
$ 1.23
4.2 years
$ —
Granted
1,249,500
1.06
0.87
—
Exercised
—
—
—
—
Forfeited or expired
(177,997)
4.90
1.42
—
Outstanding at December 31, 2023
2,777,843
1.90
1.07
5.3 years
$ —
Exercisable at December 31, 2023
1,108,343
2.74
1.20
2.5 years
—
Expected to Vest
1,585,190
1.91
1.08
5.2 years
$ —
Outstanding at January 1, 2024
2,777,843
$ 1.90
$ 1.07
5.3 years
$ —
Granted
—
—
—
—
51
Exercised
—
—
—
—
Forfeited or expired
(261,153)
3.96
1.47
—
Outstanding at December 31, 2024
2,516,690
1.70
1.06
4.7 years
$ —
Exercisable at December 31, 2024
1,234,940
2.09
1.11
2.6 years
—
Expected to Vest
2,405,932
1.72
1.06
4.6 years
$ —
Activity with respect to the company’s restricted stock awards during the year ended December 31, 2023, is as follows:
Restricted Stock Awards
Shares
Weighted Average
Grant Date Fair
Value
Weighted Average
Remaining Contractual Term
Aggregate Intrinsic
Value
Non-Vested at January 1, 2023
14,854
$ 3.66
1.20 years
$ 16
Granted
—
—
—
—
Lapse of restrictions
—
—
—
—
Forfeited or expired
—
—
—
—
Outstanding at December 31, 2023
14,854
$ 3.66
0.2 years
$ 6
Non-Vested at January 1, 2024
14,854
$ 3.66
0.20 years
$ 6
Granted
—
—
—
—
Lapsed
(14,854)
3.66
—
5
Forfeited or expired
—
—
—
—
Outstanding at December 31, 2024
—
$ —
—
$ —
Additional information regarding options outstanding as of December 31, 2024, is as follows:
Weighted Average
Contractual Life
Weighted
Weighted
Range of
Remaining
Average
Exercisable
Average
Exercise Prices
Options
(Years)
Exercise Price
Options
Exercise Price
$1.06 - $1.63
1,882,375
5.4
$ 1.17
762,125
$ 1.30
$2.37 - $3.56
526,375
3.2
3.05
364,875
3.07
$3.65 - $5.48
107,940
1.0
4.37
107,940
4.37
2,516,690
4.7
$ 1.70
1,234,940
$ 2.09
The aggregate intrinsic value represents the difference between the company’s closing stock price on December 31, 2024 of
$0.63 and the option exercise price of the shares for stock options that were in the money, multiplied by the number of shares
underlying such options. The total fair value of options vested during the years ended December 31, 2023, and 2024 was $0.2
million and $0.3 million, respectively.
As of December 31, 2024, there was $0.5 million of total unrecognized compensation cost related to non-vested stock option
awards. This cost is expected to be recognized over a weighted-average period of 2.2 years.
NOTE 15. STOCKHOLDERS’ EQUITY
Redeemable Series A Preferred Stock
On December 23, 2024, the company entered into a Note Repurchase Agreement with the noteholders of the 2028 Notes and
issued $24.0 million in aggregate principal amount of Unsecured Debt to the noteholders. Upon the earlier to occur of (i) the
close of the sale of the CCM radio stations or (ii) six months from the closing of the repurchase, the Unsecured Debt will
automatically convert into 24,000 shares of newly authorized Series A Preferred Stock. The company has 24,000 authorized
shares of Series A Preferred Stock, with $0.01 par value per share.
The holders of Series A Preferred Stock are entitled to receive cumulative dividends, out of any assets legally available, prior
and in preference to any declaration or payment of any dividend on the common stock, at the applicable dividend rate of 5.0%
per annum until the second anniversary of issuance, 7.5% until the fourth anniversary and 10.0% after the fourth anniversary.
Dividends accrue whether or not declared by the board of directors. Dividends are payable only when and if declared by the
board of directors.
Unless waived by at least 67% of the holders, at any time after the repayment of the ABL Facility and Secured Promissory
Note, the Series A Preferred Stock is mandatorily redeemable upon the occurrence of a qualifying asset sale with aggregate net
proceeds in excess of $2.5 million or the company’s fiscal year end excess cash flow is greater than $2.5 million. The Series A
Preferred Stock is redeemable at the company’s option at any time. The redemption price per share for a mandatory or optional
redemption is equal to its liquation preference.
The Series A Preferred Stock is not convertible and has no voting rights.
52
Redeemable Series B Convertible Perpetual Preferred Stock
On December 23, 2024, the company issued 40,000 shares of Series B Convertible Perpetual Preferred Stock, $0.01 par value
per share. Each of the outstanding shares of Series B Convertible Perpetual Preferred Stock is convertible, at the option of the
Series B Convertible Perpetual Preferred Stock holders at any time after July 1, 2025, into a number of shares of Class A
common stock and/or Class B common stock. The conversion price per share will be the volume weighted average closing
price or last sale price of the Class A common stock over the 90 consecutive trading days immediately prior to conversion.
The amount of shares of Class A common stock and/or Class B common stock that shall convert into shall be at the discretion
of the Series B Convertible Perpetual Preferred Stock holders provided that (a) the aggregate number of shares of common
stock issued upon full conversion of the Series B Convertible Perpetual Preferred Stock shall not exceed, together, with any
other shares of common stock then beneficially owned by the Series B Convertible Perpetual Preferred Stock holders, (i) forty-
nine percent (49%) of the total number of issued and outstanding shares of capital stock of the company and (ii) forty-six
percent (46%) of the voting rights attributable to the total issued and outstanding shares of capital stock entitled to vote upon
and (b) in no event shall the aggregate number of shares of Class B common stock issued upon full conversion of the Series B
Convertible Perpetual Preferred Stock holders exceed 4,250,000 shares.
The holders of Series B Convertible Perpetual Preferred Stock are entitled to receive dividends pari passu with Class A and
Class B common stockholders on an as-converted basis. Series B Convertible Perpetual Preferred Stock is not redeemable
except for upon a deemed liquidation transaction, defined as a change of control, merger/consolidation or sale of substantially
all of the company’s assets.
Class A and Class B Common Stock
The rights of the Class A common stockholders and Class B common stockholders are identical except with respect to their
voting rights and conversion provision. The Class A common stock is entitled to one vote per share and the Class B common
stock is entitled to ten votes per share.
Liquidation Preference
In the event of any deemed liquidation transaction, liquidation, dissolution, or winding up of the company, either voluntary or
involuntary, the holders of the then outstanding shares of Series A Preferred Stock are first entitled to receive the amount
of $1,000 per share plus all declared but unpaid dividends, prior and in preference to any distribution of any assets of the
Company to the holders of the Series B Convertible Perpetual Preferred Stock and Class A and Class B common stock. If,
upon the occurrence of such event, the proceeds distributed among the holders of the Series A Preferred Stock are insufficient
to permit the full payment of the aforesaid preferential amounts to each holder the preferred stock, then the entire proceeds
legally available for distribution to the preferred stock shall be distributed ratably among the holders of the Series A Preferred
Stock in proportion to the full preferential amount that each such holder of preferred stock is otherwise entitled to receive.
Upon completion of the distributions required for Series A Preferred Stock liquidation preferences, the holders of the then
outstanding shares of Series B Convertible Perpetual Preferred Stock are entitled to receive the amount of $1,000 per share
plus all declared but unpaid dividends, prior and in preference to any distribution of any assets of the Company to the holders
of the Class A and Class B common stock. If, upon the occurrence of such event, the proceeds distributed among the holders
of the Series B Convertible Perpetual Preferred Stock are insufficient to permit the full payment of the aforesaid preferential
amounts to each holder the preferred stock, then the entire proceeds legally available for distribution to the preferred stock
shall be distributed ratably among the holders of the Series B Convertible Perpetual Preferred Stock in proportion to the full
preferential amount that each such holder of preferred stock is otherwise entitled to receive.
Upon completion of the distributions required by the above-mentioned liquidation preferences, any remaining proceeds shall
be distributed among the holders of Class A and Class B common stockholders pro rata based on the number of shares of
common stock held by each.
53
NOTE 16. RELATED PARTY TRANSACTIONS
Our Board has adopted a written policy for review, approval and monitoring of transactions between Salem and its related
parties. The policy applies to any transaction or series of transactions in which Salem is a participant, the amount involved
exceeds $120,000 and a Related Party has a direct or indirect material interest, excluding, among other things, compensation
arrangements with respect to employment and Board membership. Related Parties includes our directors, executive officers,
nominees to become a director, any person beneficially owning more than 5% of any class of our stock, immediate family
members of any of the foregoing, and any entity in which any of the foregoing persons is employed or is a general partner or
principal or in which the person has a 10% or greater beneficial ownership interest.
Under the Policy, related party transactions must be reported to our general counsel and be reviewed and approved or ratified
by the Board in accordance with the terms of the Policy, prior to the effectiveness or consummation of the transaction,
whenever practicable. The Board will review all relevant information available about the potential related party transaction
and may, in its sole discretion, impose such conditions as it deems appropriate on Salem or the Related Party in connection
with the approval of the related party transaction. We also poll our directors and executive officers on an annual basis with
respect to related party transactions and their service as an officer or director of other entities. Any director involved in a
related party transaction that is being reviewed or approved must recuse himself or herself from participation in any related
deliberation or decision.
Other than compensation arrangements for our directors and executive officers, the following is a summary of transactions for
the years ended December 31, 2023 and December 31, 2024 to which we have been a party in which the amount involved
exceeds $120,000 annually and in which any of our then directors, executive officers or holders of more than 5% of any class
of our stock at the time of such transaction, or any members of their immediate family, or is a general partner or principal or in
which the person has a 10% or greater beneficial ownership interest, had or will have a direct or indirect material interest.
Leases with Principal Stockholders
A trust controlled by the Executive Chairman of the company, Edward G. Atsinger III, owns real estate on which assets of one
radio station are located. Salem has entered into a lease agreement with this trust. Rental expense related to this lease included
in operating expense for each of the year’s ending December 31, 2023, and 2024 amounted to $0.2 million. Mr. Ted Atsinger,
son of the Executive Chairman is the beneficiary and/or successor trustee.
Land and buildings occupied by various Salem radio stations are leased from entities owned by the company’s Executive
Chairman and its Chairman Emeritus. Rental expense under these leases included in operating expense for each of the years
ending December 31, 2023, and 2024 was $1.9 million and $2.1 million, respectively.
Know the Truth – Mr. Riddle
Know the Truth is a non-profit organization that is a customer of Salem Media Group, Inc. During 2023 and 2024 the
company billed Know the Truth approximately $0.5 million for airtime on its stations. The company had receivable balances
of $0.2 million at December 31, 2023, and 2024. Mr. Riddle, a director of the company, joined the Know the Truth board in
2010 and remains a member of this board.
Transportation Services Supplied by Sun Air Jets
From time to time, the company rents aircraft from a company owned by Edward G. Atsinger III, Executive Chairman of
Salem. As approved by the independent members of the company’s board of directors, the company rents these aircraft on an
hourly basis for general corporate needs. Total rental expenses for these aircraft for the years ended December 31, 2023, and
2024 was approximately $18,000 and $32,000, respectively.
NOTE 17. DEFINED CONTRIBUTION PLAN
We maintain a 401(k) defined contribution plan (“401(k) Plan”), which covers eligible employees as defined in the 401(k)
Plan. Participants are allowed to make non-forfeitable contributions of up to 60% of their annual salary but may not exceed the
annual maximum contribution limitations established by the Internal Revenue Service. The company match was 50% on the
first 5% of the amounts contributed by each participant. The company match was suspended in March 2020 to reduce costs
and conserve cash as a result of the economic impact of the COVID-19 pandemic but was reinstated in January 2022 then it
was suspended again July 2023. The company contributed and expensed $1.1 million and $0, respectively, into the 401(k)
Plan during the years ended December 31, 2023 and 2024.
NOTE 18. SEGMENT DATA
We have three operating segments: (1) Broadcast, (2) Digital Media and (3) Publishing. Revenue and expenses earned and
charged between these segments are eliminated in the consolidation.
SOI for broadcast business unit and OI from digital and publishing business units is the segment profitability metric reported
to our CODM for purposes of decisions about allocations of resources to, and assessing performance of, each reporting
54
segment. 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 consolidated statements of operations included in this
annual report. We also exclude costs such as amortization, depreciation, taxes, and interest expense. Our CODM is a
collective group of senior executives.
The CODM uses SOI and OI to evaluate the operating performance of each reportable segment, and to allocate resources.
This measure is the primary measure used by management for the planning and forecasting of future periods, as well as for
measuring performance for compensation of executives and segment management.
Segment performance, as we define it, 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 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 2,900 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 15 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 34 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 providing a full-service multimedia marketing strategy for each of our clients.
Salem Podcast Network (“SPN”), is a highly specialized platform for conservative, political, news, and family-oriented
podcasts. SPN reaches over 11 million downloads per month, with one show in the top 10 of all podcasts, and another in the
top 10 in the News category according to the Apple Podcast Rankings.
SalemNOW is our online destination to a watch variety of on-demand streaming. SalemNOW is dedicated exclusive
conservative and faith-based films consisting of box office hits, acclaimed documentaries, music festivals, interviews with top
Christian artists, events with our conservative talk show hosts and may other videos. SalemNOW can be found on mobile
apps, and streaming services such as Roku, Apple TV, Amazon Fire Stick and select smart TVs.
Salem News Channel (“SNC”) is a conservative news, opinion and commentary television network hosted by a number of
engaging, compelling and respected conservative media personalities. SNC’s mission is to serve the media needs of audiences
interested in political news and opinion content with a Judeo, Christian world vision and seeks to become the leading provider
of conservative news and option content for the rapidly growing over-the-top television and multi-screen digital audience.
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, CrossCards™.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, Childrens-Ministry-
Deals, LiftCurriculum.com and Playbackmedia.com, offer a variety of digital resources including videos, song tracks, sermon
archives and job listings to pastors and Church leaders.
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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 consists of Salem Author Services, a self-publishing service for authors through Xulon
Press and Mill City Press. In addition, we previously owned Regnery® Publishing and Salem Books, traditional book
publishers that have published dozens of bestselling books by leading conservative and Christian authors and personalities. We
sold Regnery® Publishing and Salem Books in December 2023.
The table below presents financial information for each operating segment as of December 31, 2023, and 2024 based on the
composition of our operating segments:
Broadcast
Digital
Media
Publishing
Unallocated
Corporate
Expenses
Consolidated
(Dollars in thousands)
Year Ended December 31, 2023
Net revenue
$
197,676
$
41,973
$
19,004
$
—
$
258,653
Operating expenses (1)
171,498
34,936
22,317
18,876
247,627
SOI (Loss) (2)
$
26,178
$
7,037
$
(3,313)
$
(18,876)
$
11,026
Depreciation
11,400
Amortization
2,235
Change in the estimated fair value of
contingent earn-out consideration
698
Impairment of indefinite-lived long-term
assets other than goodwill
41,717
Impairment of goodwill
2,580
Net (gain) loss on the disposition of assets
(1,295)
Operating income (loss)
$
(46,309)
Broadcast
Digital
Media
Publishing
Unallocated
Corporate
Expenses
Consolidated
(Dollars in thousands)
Year Ended December 31, 2024
Net revenue
$
185,903
$
45,004
$
6,653
$
—
$
237,560
Operating expenses (1)
169,289
37,120
7,012
18,278
231,699
SOI (Loss) (2)
$
16,614
$
7,884
$
(359)
$
(18,278)
$
5,861
Depreciation
10,371
Amortization
1,594
Change in the estimated fair value of
contingent earn-out consideration
(27)
Impairment of indefinite-lived long-term assets
other than goodwill
4,428
Net (gain) loss on the disposition of assets
(5,048)
Operating income (loss)
$
(5,457)
Broadcast
Digital
Media
Publishing
Corporate
Consolidated
(Dollars in thousands)
As of December 31, 2023
Property and equipment, net
$
64,881
$
6,807
$
364
$
3,002
$
75,054
Broadcast licenses
257,172
—
—
—
257,172
Goodwill
2,702
18,928
947
—
22,577
Amortizable intangible assets, net
—
3,591
—
—
3,591
Capital expenditures
4,378
3,023
95
1,505
9,001
Broadcast
Digital
Media
Publishing
Corporate
Consolidated
(Dollars in thousands)
As of December 31, 2024
Property and equipment, net
$
54,510
$
6,785
$
289
$
1,115
$
62,699
56
Broadcast licenses
181,864
—
—
—
181,864
Goodwill
2,241
18,928
947
—
22,116
Amortizable intangible assets, net
3
2,005
10
—
2,018
Capital expenditures
1,462
3,205
116
289
5,072
(1) Includes direct operating expenses such as content, programming, and production costs as well as employee compensation, talent fees, event costs,
music license fees, and other expenses. It also includes selling, general and administrative expenses such as administrative employee
compensation, sales commissions, ratings fees, trade and barter expenses, and other expenses. Unallocated corporate expenses include shared
services, such as accounting and finance, human resources, legal, tax, and treasury, which are not directly attributable to any one of our operating
segments.
(2) The performance of an operating segment is customarily measured by the ability of its entities to generate SOI. We define SOI as net revenue less
operating expenses. Accordingly, changes in net revenue and operating expenses, as explained above, have a direct impact on changes in SOI. SOI
is not a measure of performance calculated in accordance with GAAP as further discussed in Management’s Discussion and Analysis of Financial
Condition and Results of Operations of this Annual Report.
NOTE 19. SUBSEQUENT EVENTS
On February 21, 2025, we closed on the sale of our office building in Greenville, South Carolina for $1.0 million in cash.
On January 14, 2025, we closed on the sale of an easement and our economic interest in a tower lease in our Nashville,
Tennessee market for $1.0 million.
On January 6, 2025, we closed on the sale of radio station KZTS-AM and two FM translators in Little Rock, Arkansas for $0.7
million. We entered into a LMA which began on September 22, 2024.
Subsequent events reflect all applicable transactions through the date of the filing.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
General
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
the Consolidated Financial Statements and related notes under this annual report. Our Consolidated Financial Statements are
not directly comparable from period to period due to acquisitions and dispositions. Refer to Note 3 of our Consolidated
Financial Statements under this annual report for details of each of these transactions.
Historical operating results are not necessarily indicative of future operating results. Actual future results may differ from
those contained in or implied by any forward-looking statements as a result of various factors. These factors include, but are
not limited to:
risks and uncertainties relating to the need for additional funds to service our debt;
risks and uncertainties relating to the need for additional funds to execute our business strategy;
our ability to access borrowings under our ABL Facility;
reductions in revenue forecasts;
our ability to renew our broadcast licenses;
changes in interest rates;
the timing of our ability to complete any acquisitions or dispositions;
costs and synergies resulting from the integration of any completed acquisitions;
our ability to drive and manage revenue growth;
our ability to effectively manage costs;
the popularity of radio as a broadcasting and advertising medium;
changes in consumer demand;
the impact of general economic conditions in the United States or in specific markets in which we do business;
the impact of inflation increasing operating costs and changing consumer habits;
industry conditions, including existing competition and future competitive technologies;
disruptions or postponements of advertising schedules and programming in response to national or world events;
our ability to generate revenue from new sources, including local commerce and technology-based initiatives; and
the impact of regulatory rules or proceedings that may affect our business from time to time, and the future write-off
of any material portion of the fair value of our FCC broadcast licenses and goodwill.
Because these factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on any of these forward-looking statements. In
addition, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to
update any forward-looking statement or statements to reflect events or circumstances after the date on which the statement is
made, to reflect the occurrence of unanticipated events or otherwise, except as required by law.
Overview
Salem is a domestic multimedia company specializing in Christian and conservative content, with media properties comprising
radio broadcasting, digital media, and publishing. Our content is intended for audiences interested in Christian and family-
themed programming and conservative news talk. We maintain a website at www.salemmedia.com.
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, assess the performance of each operating segment and determine 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 exclude costs related
to corporate functions, such as accounting and finance, human resources, legal, tax and treasury. We also exclude costs such as
amortization, depreciation, taxes, and interest expense when evaluating the performance of our operating segments.
Our principal sources of broadcast revenue include:
the sale of block program time to national and local program producers;
the sale of advertising time on our radio stations to national and local advertisers;
the sale of banner advertisements on our station websites or on our mobile applications;
the sale of digital streaming advertisements on our station websites or on our mobile applications;
the sale of advertisements included in digital newsletters;
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fees earned for the creation of custom digital media campaigns for our customers through Salem Surround;
the sale of advertising time on our national network;
the syndication of programming on our national network;
the sale of advertising time through podcasts and video-on-demand services;
product sales and royalties for on-air host materials, podcasts, programs and media content including documentary
motion pictures, films; and
other revenue such as events, including ticket sales and sponsorships, listener purchase programs, where revenue is
generated from special discounts and incentives offered to our listeners from our advertisers; talent fees for voice-
overs or custom endorsements from our on-air personalities and production services, and rental income for studios,
towers or office space.
Our principal sources of digital media revenue include:
the sale of digital streaming advertisements and banner advertisements on our websites and mobile applications;
the support and promotion to stream third-party content on our websites;
the sale of advertisements included in digital newsletters;
the digital delivery of newsletters to subscribers; and
the number of video and graphic downloads.
Our principal sources of publishing revenue include:
the sale of books; and
publishing fees from authors.
In each of our operating segments, the rates we can charge for airtime, advertising and other products and services are
dependent upon several factors, including:
audience share;
how well our programs and advertisements perform for our clients;
the size of the market and audience reached;
the number of impressions delivered;
the number of advertisements and programs streamed;
the number of page views achieved;
the number of downloads completed;
the number of events held, the number of event sponsorships sold and the attendance at each event;
demand for books and publications;
general economic conditions; and
supply and demand for airtime on a local and national level.
Broadcasting
Our foundational business is radio broadcasting, which includes the ownership and operation of radio stations in large
metropolitan markets, our national networks and our national sales firms, including Salem Surround.
Revenue generated from our radio stations, networks, and sales firms is reported as broadcast revenue in our Consolidated
Financial Statements included in this annual report. Advertising revenue is recorded on a gross basis unless an agency
represents the advertiser, in which case revenue is reported net of the commission retained by the agency.
Broadcast revenue is impacted by the rates radio stations can charge for programming and advertising time, the level of
airtime sold to programmers and advertisers, the number of impressions delivered, or downloads made, and the number of
events held, including the size of the event and the number of attendees. Block programming rates are based upon our stations’
ability to attract audiences that will support the program producers through contributions and purchases of their products.
Advertising rates are based upon the demand for advertising time, which in turn is based on our stations’ and networks’ ability
to produce results for their advertisers. We market ourselves to advertisers based on the responsiveness of our audiences. We
do not subscribe to traditional audience measuring services for most of our radio stations. In five markets, we subscribe to
Nielsen Audio, which develops monthly reports measuring a radio station’s audience share in the demographic groups targeted
by advertisers. Each of our radio stations and our networks has a pre-determined level of time available for block
programming and/or advertising, which may vary at different times of the day.
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Our results are subject to seasonal fluctuations. As is typical in the broadcasting industry, our second and fourth quarter
advertising revenue typically exceeds our first and third quarter advertising revenue. Seasonal fluctuations in advertising
revenue correspond with quarterly fluctuations in the retail industry. Additionally, we experience increased demand for
political advertising during election even numbered years, over non-election odd numbered years. Political advertising revenue
varies based on the number and type of candidates as well as the number and type of debated issues.
Our cash flows from broadcasting may be affected by transitional periods experienced by radio stations when, based on the
nature of the radio station, our plans for the market, or other circumstances, we find it beneficial to change the station format.
During this transitional period, when we develop a radio station’s listener and customer base, the station may generate
negative or insignificant cash flow.
In broadcasting, trade or barter agreements are commonly used to reduce cash expenses by exchanging advertising time for
goods or services. We may enter barter agreements to exchange airtime or digital advertising for goods or services that can be
used in our business or that can be sold to our audience under Listener Purchase Programs. The terms of these barter
agreements permit us to preempt the barter airtime or digital campaign in favor of customers who purchase the airtime or
digital campaign for cash. The value of these non-cash exchanges is included in revenue in an amount equal to the fair value of
the goods or services we receive. Each transaction must be reviewed to determine that the products, supplies and/or services
we receive have economic substance, or value to us. We record barter operating expenses upon receipt and usage of the
products, supplies and services, as applicable. We record barter revenue as advertising spots or digital campaigns are
delivered, which represents the point in time that control is transferred to the customer thereby completing our performance
obligation. Barter revenue is recorded on a gross basis unless an agency represents the programmer, in which case revenue is
reported net of the commission retained by the agency. During each of the twelve-month periods ended December 31, 2023,
and 2024, 98% of our broadcast revenue was sold for cash.
Broadcast operating expenses include: (i) employee salaries, commissions and related employee benefits and taxes, (ii) facility
expenses such as lease expense and utilities, (iii) marketing and promotional expenses, (iv) production and programming
expenses, and (v) music license fees. In addition to these expenses, our network incurs programming costs and lease expenses
for satellite communication facilities.
Digital Media
Our digital media segment provides Christian, conservative, investing, retirement, e-commerce, audio and video streaming,
and other resources digitally through the web.
Revenue generated from this segment is reported as digital media revenue in our Consolidated Statements of Operations under
this annual report. Digital media revenue is impacted by the rates our sites can charge for advertising time, the level of
advertisements sold, the number of impressions delivered, or the number of products sold, and the number of digital
subscriptions sold. Like our broadcasting segment, our second and fourth quarter advertising revenue from our digital media
segment generally exceeds the segment’s first and third quarter advertising revenue. This seasonal fluctuation in advertising
revenue corresponds with quarterly fluctuations in the retail advertising industry. We also experience fluctuations in quarter-
over-quarter comparisons based on the date on which Easter is observed, as this holiday generates a higher volume of product
downloads from our church product websites. Additionally, we experience increased demand for advertising time and
placement during election years for political advertisements.
The primary operating expenses incurred by our digital media businesses include: (i) employee salaries, commissions and
related employee benefits and taxes, (ii) facility expenses such as lease expense and utilities, (iii) marketing and promotional
expenses, (iv) royalties, (v) streaming costs, and (vi) cost of goods sold associated with e-commerce sites.
Publishing
Our publishing operations include book publishing through Regnery® Publishing and self-publishing services through Salem
Author Services. On December 31, 2023, we sold Regnery® Publishing and Salem Books.
Revenue generated from this segment is reported as publishing revenue in our Consolidated Statements of Operations included
in this annual report. Publishing revenue is impacted by the number and rate at which self-published books are published and
the sale of services such as editing and marketing.
The primary operating expenses incurred by our publishing businesses include: (i) employee salaries, commissions and related
employee benefits and taxes, (ii) facility expenses such as lease expense and utilities, (iii) marketing and promotional
expenses; and (iv) cost of goods sold that includes book printing and production costs.
Known Trends and Uncertainties
Ongoing global supply chain disruptions from the pandemic, military conflict in Ukraine and Israel, increases in consumer
prices, persistent inflation, and the Federal Reserve’s raising of the federal funds interest rate may have a material adverse
impact on our business. To the extent that any of these factors interfere with our customers’ advertising and promotional
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spending, we could experience reductions in revenue growth rates and increasing pressure to contain costs. Reductions in
revenue could adversely affect our operating results, financial condition, and results of operations. These uncertainties could
materially impact significant accounting estimates related to, but not limited to, allowances for doubtful accounts,
impairments, and right-of-use assets. As a result, many of our estimates and assumptions require increased judgment and carry
a higher degree of variability and volatility.
We have experienced increases in lease expense associated with escalations tied to changes in the Consumer Price Index
(“CPI”) and higher variable costs associated with Common Area Maintenance (“CAM”) charges. CPI increased 2.9% for the
twelve months ending December 31, 2024, following a 3.1% increase for the twelve months ending December 31, 2023.
Higher energy costs and the impact of inflation resulted in higher CAM charges.
Revenue growth from the sale of broadcast airtime is negatively impacted by audiences spending less time commuting, certain
automobile manufacturers removing AM radio signals, increases in other forms of content distribution, and decreases in the
length of time spent listening to broadcast radio as compared to audio streaming services, podcasts, and satellite radio. These
factors may lead advertisers to conclude that the effectiveness of radio has diminished. We continue to enhance our digital
assets to complement our broadcast content. The increased use of smart speakers and other voice activated platforms that
provide audiences with the ability to access AM and FM radio stations offers potential sources for radio broadcasters to reach
audiences.
Our broadcast spot advertising revenue is particularly dependent on advertising from our Los Angeles and Dallas markets,
which generated 13.5% and 18.8%, respectively, of our total net broadcast spot advertising revenue during the year ended
December 31, 2023, compared to 13.2% and 19.4%, respectively, of our total net broadcast spot advertising revenue during
the year ended December 31, 2024.
Digital revenue is impacted by the nature and delivery of page views and the number of advertisements appearing on each
page view. While page views continue to show growth, the number of page views from desktop devices continue to decline in
favor of page views from mobile devices. Page views from mobile devices carry a lower number of advertisements per page
and are generally sold at lower rates. The shift from desktop page views to mobile device views negatively impacts revenue as
mobile devices carry lower rates and less advertisement per page. We also experience declines in page views from changes in
algorithms, including algorithms that limit political content and from browsers that block third-party cookies limiting
advertising delivery.
Key Financial Performance Indicators – Same-Station Definition
In the discussion of our results of operations below, we compare our broadcast operating results between periods on an as-
reported basis, which includes the operating results of all radio stations and networks owned or operated at any time during
either period and on a Same Station basis. “Same Station” is a Non-GAAP financial measure used both in presenting our
results to stockholders and the investment community as well as in our internal evaluations and management of the business.
We believe that Same Station Operating Income provides a meaningful comparison of period over period performance of our
core broadcast operations as this measure excludes the impact of new stations, the impact of stations we no longer own or
operate, and the impact of stations operating under a new programming format. Our presentation of Same Station Operating
Income is not intended to be considered in isolation or as a substitute for the most directly comparable financial measures
reported in accordance with GAAP. Refer to “Non-GAAP Financial Measures” below for definitions and a reconciliation of
these non-GAAP performance measures to the most comparable GAAP measures.
Non-GAAP Financial Measures
Management uses certain non-GAAP financial measures defined below in communications with investors, analysts, rating
agencies, banks, and others to assist such parties in understanding the impact of various items on our financial statements. We
use these non-GAAP financial measures to evaluate financial results, develop budgets, manage expenditures and as a measure
of performance under compensation programs.
Our presentation of these non-GAAP financial measures should not be considered as a substitute for or superior to the most
directly comparable financial measures as reported in accordance with GAAP.
Item 10(e) of Regulation S-K defines and prescribes the conditions under which certain non-GAAP financial information may
be presented in this annual report. We closely monitor EBITDA, Adjusted EBITDA, Station Operating Income (“SOI”), Same
Station net broadcast revenue, Same Station broadcast operating expenses, Same Station Operating Income, Digital Media
Operating Income, and Publishing Operating Income, all of which are non-GAAP financial measures. We believe that these
non-GAAP financial measures provide useful information about our core operating results, and thus, are appropriate to
enhance the overall understanding of our financial performance. These non-GAAP financial measures are intended to provide
management and investors with a more complete understanding of our underlying operational results, trends, and performance.
The performance of a radio broadcasting company is customarily measured by the ability of its stations to generate SOI. We
define SOI as net broadcast revenue less broadcast operating expenses. Accordingly, changes in net broadcast revenue and
61
broadcast operating expenses, as explained above, have a direct impact on changes in SOI. SOI is not a measure of
performance calculated in accordance with GAAP. SOI should be viewed as a supplement to and not a substitute for our
results of operations presented on the basis of GAAP. We believe that SOI is a useful non-GAAP financial measure to
investors when considered in conjunction with operating income (the most directly comparable GAAP financial measures to
SOI), because it is generally recognized by the radio broadcasting industry as a tool in measuring performance and in applying
valuation methodologies for companies in the media, entertainment, and communications industries. SOI is commonly used by
investors and analysts who report on the industry to provide comparisons between broadcasting groups. We use SOI as one of
the key measures of operating efficiency and profitability, including our internal reviews for potential impairment of
indefinite-lived intangible assets and our internal reviews to approve capital expenditures. SOI does not purport to represent
cash provided by operating activities. Our statement of cash flows presents our cash activity in accordance with GAAP and
our income statement presents our financial performance prepared in accordance with GAAP. Our definition of SOI is not
necessarily comparable to similarly titled measures reported by other companies.
We define Same Station net broadcast revenue as net broadcast revenue from our radio stations and networks that we own or
operate in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. We
define Same Station broadcast operating expenses as broadcast operating expenses from our radio stations and networks that
we own or operate in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior
year. Same Station Operating Income includes those stations we own or operate in the same format on the first and last day of
each quarter, as well as the corresponding quarter of the prior year. Same Station Operating Income for a full calendar year is
calculated as the sum of the Same Station results for each of the four quarters of that year. We use Same Station Operating
Income, a non-GAAP financial measure, both in presenting our results to stockholders and the investment community, and in
our internal evaluations and management of the business. We believe that Same Station Operating Income provides a
meaningful comparison of period-over-period performance of our core broadcast operations as this measure excludes the
impact of new stations, the impact of stations we no longer own or operate, and the impact of stations operating under a new
programming format. Our presentation of Same Station Operating Income is not intended to be considered in isolation or as a
substitute for the most directly comparable financial measures reported in accordance with GAAP. Our definition of Same
Station net broadcast revenue, Same Station broadcast operating expenses and Same Station Operating Income is not
necessarily comparable to similarly titled measures reported by other companies.
We apply a similar methodology to our digital media and publishing group. Digital Media Operating Income is defined as net
digital media revenue less digital media operating expenses. Publishing Operating Loss is defined as net publishing revenue
less publishing operating expenses. Digital Media Operating Income and Publishing Operating Income are not measures of
performance in accordance with GAAP. Our presentations of these non-GAAP financial performance measures are not to be
considered a substitute for, or superior to, our operating results reported in accordance with GAAP. We believe that Digital
Media Operating Income and Publishing Operating Income are useful non-GAAP financial measures to investors, when
considered in conjunction with operating income (the most directly comparable GAAP financial measure), because they are
comparable to those used to measure performance of our broadcasting entities. We use this analysis as one of the key measures
of operating efficiency, profitability and in our internal reviews for impairment of indefinite-lived intangible assets and our
internal reviews to approve capital expenditures. This measurement does not purport to represent cash provided by operating
activities. Our statement of cash flows presents our cash activity in accordance with GAAP and our income statement presents
our financial performance in accordance with GAAP. Our definitions of Digital Media Operating Income and Publishing
Operating Loss are not necessarily comparable to similarly titled measures reported by other companies.
We define EBITDA as net income before interest, taxes, depreciation, and amortization. We define Adjusted EBITDA as
EBITDA before gains or losses on the disposition of assets, before changes in the estimated fair value of contingent earn-out
consideration, before gains on bargain purchases, before the change in fair value of interest rate swaps, before impairments,
before debt modification costs, before net miscellaneous income and expenses, before loss on early retirement of debt, before
(gain) loss from discontinued operations and before non-cash compensation expense. EBITDA and Adjusted EBITDA are
commonly used by the broadcast and media industry as important measures of performance and are used by investors and
analysts who report on the industry to provide meaningful comparisons between broadcasters. EBITDA and Adjusted
EBITDA are not measures of liquidity or of performance in accordance with GAAP and should be viewed as a supplement to
and not a substitute for or superior to our results of operations and financial condition presented in accordance with GAAP.
Our definitions of EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by
other companies.
For all non-GAAP financial measures, investors should consider the limitations associated with these metrics, including the
potential lack of comparability of these measures from one company to another.
Reconciliation of Non-GAAP Financial Measures:
In the tables below, we present a reconciliation of net broadcast revenue, the most comparable GAAP measure, to Same
Station net broadcast revenue, and broadcast operating expenses, the most comparable GAAP measure to Same Station
62
broadcast operating expense. We show our calculation of SOI and Same Station Operating Income, which is reconciled from
net income, the most comparable GAAP measure, in the table following our calculation of Digital Media Operating Income
and Publishing Operating Loss. Our presentation of these non-GAAP measures are not to be considered a substitute for or
superior to the most directly comparable measures reported in accordance with GAAP.
Year Ended December 31,
2023
2024
(Dollars in thousands)
Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue
Net broadcast revenue
$
197,676
$
185,903
Net broadcast revenue – acquisitions
—
—
Net broadcast revenue – dispositions
(4,565)
(720)
Net broadcast revenue – format change
—
—
Same Station net broadcast revenue
$
193,111
$
185,183
Reconciliation of Broadcast Operating Expenses to Same Station Broadcast Operating Expenses
Broadcast operating expenses
$
171,498
$
169,289
Broadcast operating expenses – acquisitions
—
—
Broadcast operating expenses – dispositions
(5,462)
(830)
Broadcast operating expenses – format change
—
—
Same Station broadcast operating expenses
$
166,036
$
168,459
Reconciliation of Operating Income (Loss) to Same Station Operating Income
Station Operating Income
$
26,178
$
16,614
Station operating loss –acquisitions
—
—
Station operating loss – dispositions
897
110
Station operating loss – format change
—
—
Same Station – Station Operating Income
$
27,075
$
16,724
In the table below, we present our calculations of Station Operating Income, Digital Media Operating Income, and Publishing
Operating Income. Our presentation of these non-GAAP performance indicators are not to be considered a substitute for or
superior to the directly comparable measures reported in accordance with GAAP.
Year Ended December 31,
2023
2024
(Dollars in thousands)
Net broadcast revenue
$ 197,676
$ 185,903
Less broadcast operating expenses
(171,498)
(169,289)
Station Operating Income
$ 26,178
$ 16,614
Net digital media revenue
$ 41,973
$ 45,004
Less digital media operating expenses
(34,936)
(37,120)
Digital Media Operating Income
$ 7,037
$ 7,884
Net publishing revenue
$ 19,004
$ 6,653
Less publishing operating expenses
(22,317)
(7,012)
Publishing Operating Loss
$ (3,313)
$ (359)
In the table below, we present a reconciliation of net income (loss), the most directly comparable GAAP measure to Station
Operating Income, Digital Media Operating Income, and Publishing Operating Loss. Our presentation of these non-GAAP
performance indicators are not to be considered a substitute for or superior to the most directly comparable measures reported
in accordance with GAAP.
Year Ended December 31,
2023
2024
(Dollars in thousands)
Net income (loss)
$ (43,312)
$ 16,179
Plus benefit from income taxes
(17,384)
(7,826)
Plus net miscellaneous (income) and expenses
(26)
(19)
Plus loss on early retirement of long-term debt
194
—
Plus (gain) on troubled debt restructuring
—
(28,656)
Plus earnings from equity method investment
(4)
(2)
Plus interest expense, net of capitalized interest
14,283
14,902
Less interest income
(60)
(35)
63
Net operating income (loss)
$ (46,309)
$ (5,457)
Plus net (gain) loss on the disposition of assets
(1,295)
(5,048)
Plus change in the estimated fair value of contingent earn-out
consideration
698
(27)
Plus impairment of indefinite-lived long-term assets other than
goodwill
41,717
4,428
Plus impairment of goodwill
2,580
—
Plus depreciation and amortization
13,635
11,965
Plus unallocated corporate expenses
18,876
18,278
Combined Station Operating Income, Digital Media Operating Income
and Publishing Operating Loss
$ 29,902
$ 24,139
Station Operating Income
$ 26,178
$ 16,614
Digital Media Operating Income
7,037
7,884
Publishing Operating Loss
(3,313)
(359)
Combined Station Operating Income, Digital Media Operating Income
and Publishing Operating Loss
$ 29,902
$ 24,139
In the table below, we present a reconciliation of Adjusted EBITDA to EBITDA to Net Income (Loss), the most directly
comparable GAAP measure. EBITDA and Adjusted EBITDA are non-GAAP financial performance measures that are not to
be considered a substitute for or superior to the most directly comparable measures reported in accordance with GAAP.
Year Ended December 31,
2023
2024
(Dollars in thousands)
Net income (loss)
$ (43,312)
$ 16,179
Plus interest expense, net of capitalized interest
14,283
14,902
Plus benefit from income taxes
(17,384)
(7,826)
Plus depreciation and amortization
13,635
11,965
Less interest income
(60)
(35)
EBITDA
$ (32,838)
$ 35,185
Plus net (gain) loss on the disposition of assets
(1,295)
(5,048)
Plus change in the estimated fair value of contingent earn-out
consideration
698
(27)
Plus impairment of indefinite-lived long-term assets other than
goodwill
41,717
4,428
Plus impairment of goodwill
2,580
—
Plus net miscellaneous (income) and expenses
(26)
(19)
Plus loss on early retirement of long-term debt
194
—
Plus (gain) on troubled debt restructuring
—
(28,656)
Plus non-cash stock-based compensation
463
398
Adjusted EBITDA
$ 11,493
$ 6,261
We define Adjusted Free Cash Flow (1) as Adjusted EBITDA (1) less cash paid for capital expenditures, less cash paid for
income taxes, and less cash paid for interest. We consider Adjusted Free Cash Flow to be a liquidity measure that provides
useful information to management and investors about the amount of cash generated by our operations after cash paid for
capital expenditures, cash paid for income taxes and cash paid for interest. A limitation of Adjusted Free Cash Flow as a
measure of liquidity is that it does not represent the total increase or decrease in its cash balance for the period. We use
Adjusted Free Cash Flow, a non-GAAP liquidity measure, both in presenting our results to stockholders and the investment
community, and in its internal evaluation and management of the business. Our presentation of Adjusted Free Cash Flow is
not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance
with GAAP. Our definition of Adjusted Free Cash Flow is not necessarily comparable to similarly titled measures reported by
other companies.
The table below presents a reconciliation of Adjusted Free Cash Flow to net cash provided by operating activities, the most
directly comparable GAAP measure. Adjusted Free Cash Flow is a non-GAAP liquidity measure that is not to be considered a
substitute for or superior to the directly comparable measures reported in accordance with GAAP.
64
Year Ended December 31,
2023
2024
(Unaudited)
Net cash used by operating activities
$
(4,023)
$
(10,493)
Non-cash stock-based compensation
(463)
(398)
Depreciation and amortization
(13,635)
(11,965)
Amortization of deferred financing costs
(1,726)
(2,306)
Non-cash lease expense
(9,162)
(9,111)
Accretion of acquisition-related deferred payments and contingent earn-out consideration
(14)
—
Provision for bad debts
2,161
846
Deferred income taxes
17,384
8,347
Change in the estimated fair value of contingent earn- out consideration
(698)
27
Impairment of indefinite-lived long-term assets other than goodwill
(41,717)
(4,428)
Impairment of goodwill
(2,580)
—
Net (gain) loss on the disposition of assets
1,295
5,048
Loss on early retirement of long-term debt
(194)
—
Gain on troubled debt restructuring
—
28,656
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue
(2,885)
(3,134)
Income tax receivable
98
(293)
Inventories
(298)
—
Prepaid expenses and other current assets
1,322
(650)
Accounts payable and accrued expenses
(731)
6,171
Operating lease liabilities
9,613
9,204
Contract liabilities
2,880
783
Deferred rent income
55
(9)
Other liabilities
6
(4)
Income tax payable
—
(112)
Net income (loss)
$
(43,312)
$
16,179
Plus interest expense, net of capitalized interest
14,283
14,902
Plus benefit from income taxes
(17,384)
(2,582)
Plus depreciation and amortization
13,635
11,965
Less interest income
(60)
(35)
EBITDA
$
(32,838)
$
35,185
Plus net (gain) loss on the disposition of assets
(1,295)
(5,048)
Plus change in the estimated fair value of contingent earn-out consideration
698
(27)
Plus impairment of indefinite-lived long-term assets other than goodwill
41,717
4,428
Plus impairment of goodwill
2,580
—
Plus (gain) loss on early retirement of long-term debt
194
(28,656)
Plus net miscellaneous income and expenses
(26)
(19)
Plus non-cash stock-based compensation
463
398
Adjusted EBITDA
$
11,493
$
6,261
Less net cash paid for capital expenditures (1)
(9,001)
(5,072)
Plus paid for taxes
(99)
(116)
Less cash paid for interest, net of capitalized interest
(12,402)
(7,292)
Adjusted Free Cash Flow
$
(10,009)
$
(6,219)
(1) Net cash paid for capital expenditures reflects actual cash payments net of cash reimbursements under tenant improvement allowances and net of property and
equipment acquired in trade transactions.
65
RESULTS OF OPERATIONS
Year Ended December 31, 2024 compared to the year ended December 31, 2023
Net Broadcast Revenue
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Net Broadcast Revenue
$
197,676
$
185,903
$
(11,773)
(6.0)
%
76.4
%
78.3
%
Same Station Net Broadcast Revenue
$
193,111
$
185,183
$
(7,928)
(4.1)
%
Net broadcast revenue decreased 6.0%, or $11.8 million, of which $3.8 million which reflects the impact of station
dispositions. On a Same Station basis, net broadcast revenue decreased 4.1%, or $7.9 million. The $7.9 million decrease
reflects a $5.0 million decline in local spot advertising revenue, excluding political revenue. Spot advertising revenue has
been declining in the industry due to reduced time spent listening, particularly on AM radio stations. Network revenue from
our nationally syndicated programs decreased $1.7 million, excluding political revenue, and national and local block
programming revenue decreased $2.7 million primarily in our News Talk format radio stations. This decrease was partially
offset by a $0.5 million increase in broadcast digital revenue and a $1.7 million increase in political revenue, or 75.1%, to $4.0
million from $2.3 million.
Net Digital Media Revenue
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Net Digital Media Revenue
$
41,973
$
45,004
$
3,031
7.2
%
16.2
%
18.9
%
Net digital media revenue increased 7.2%, or $3.0 million, due primarily to a $2.7 million increase in digital subscription
revenue from Eagle Financial Publications, including new subscriptions generated from DayTradeSPY and Gilder Technology
Report and a $0.3 million increase in digital subscriptions through Townhall. This increase was partially offset by a $0.3
million decrease in digital advertising revenue due to Facebook algorithms that limit political content, the growing use of
browsers that block third-party cookies limiting advertising, and the overall state of the economy that has weakened demand
for advertising resulting in a lower number of advertisements and a reduction in rates. In addition, our representation
agreement with Bible Gateway was not renewed effective June 30, 2023.
Net Publishing Revenue
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Net Publishing Revenue
$
19,004
$
6,653
$
(12,351)
(65.0)
%
7.3
%
2.8
%
Net publishing revenue decreased 65.0%, or $12.4 million, due to the sale of Regnery® Publishing in December 2023 and
softness in the overall economy which has caused some declines in our self-publishing business, Salem Author Services, to
decrease by $1.3 million.
Broadcast Operating Expenses
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Broadcast Operating Expenses
$
171,498
$
169,289
$
(2,209)
(1.3)
%
66.3 %
71.3
%
Same Station Broadcast Operating
Expenses
$
166,036
$
168,459
$
2,423
1.5
%
Broadcast operating expenses decreased 1.3%, or $2.2 million, which includes a $4.6 million expense reduction from the
impact of station dispositions. On a Same-Station basis, broadcast operating expenses increased 1.5%, or $2.4 million. The
$2.4 million increase includes a $2.0 million increase in third-party marketing expenses, a $1.1 million increase in health
insurance expenses due to increased medical claims, a $0.9 million increase in facility-related expenses, a $0.8 million
increase in production and programming, a $0.4 million increase in professional services expenses and a $0.3 million increase
in advertising and promotion expense, that was partially offset by a $1.3 million decrease in bad debt expense, a $0.7 million
decrease in events and concerts expenses, a $0.6 million decrease in credit card processing fees, a $0.2 million decrease in
employee-related expenses due to reductions in work force, including severance expense and the suspension of the employer
401(k) match in July 2023, and a $0.3 million decrease in travel and entertainment expense.
66
Digital Media Operating Expenses
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Digital Media Operating Expenses
$
34,936
$
37,120
$
2,184
6.3
%
13.5
%
15.6
%
Digital media operating expenses increased 6.3%, or $2.2 million, including a $2.3 million increase in advertising and
promotional expenses due to increased e-mail marketing efforts to increase subscriptions, a $1.0 million increase in cost of
sales, a $0.3 million increase in professional services and a $0.1 million increase in facility-related expenses, that was partially
offset by a $1.6 million decrease in employee-related expenses due to reductions in work force, which includes severance
expense, and a decrease in employee-related benefits as the 401(k) employer match was suspended in July 2023.
Publishing Operating Expenses
Year Ended December 31,
2023
2024
Change $
Change
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Publishing Operating Expenses
$
22,317
$
7,012
$
(15,305)
(68.6)
%
8.6
%
3.0
%
Publishing operating expenses decreased 68.6%, or $15.3 million, which includes the sale of Regnery® Publishing in
December 2023. Salem Author Services expenses decreased $1.3 million, which includes a $0.6 million decrease in
employee-related expenses, a $0.5 million reduction in cost of sales, a $0.2 million decrease in advertising expenses, and a
$0.1 million decrease in lease expense. The gross profit margin for Salem Author Services increased to 80% from 77% due to
lower paper costs.
Unallocated Corporate Expenses
Year Ended December 31,
2023
2024
Change $
Change
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Unallocated Corporate Expenses
$
18,876
$
18,278
$
(598)
(3.2)
%
7.3
%
7.7
%
Unallocated corporate expenses include shared services, such as accounting and finance, human resources, legal, tax, and
treasury, which are not directly attributable to any one of our operating segments. The decrease of 3.2%, or $0.6 million,
includes a $0.7 million decrease in professional services, a $0.3 million decrease in employee-related expenses due to
reductions in workforce, which includes severance expense, and a decrease in employee-related benefits as the 401(k)
employer match was suspended in July 2023, and a $0.3 million decrease in costs associated with station acquisitions, that was
partially offset by a $0.6 million increase in facility-related expenses, and a $0.1 million increase in franchise tax.
Depreciation Expense
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Depreciation Expense
$
11,400
$
10,371
$
(1,029)
(9.0)
%
4.4
%
4.4
%
Depreciation expense reflects the impact of prior year capital expenditures for data processing equipment and computer
software that had shorter estimated useful lives as compared to towers or other assets and were fully depreciated during the
current year. There were no changes in our depreciation methods or in the estimated useful lives of our asset groups.
Amortization Expense
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Amortization Expense
$
2,235
$
1,594
$
(641)
(28.7)
%
0.9
%
0.7
%
Amortization expense reflects the impact of prior year acquisitions that were fully amortized as of the current year, partially
offset by the acquisition of the George Gilder Report in February 2023 associated with subscriber base lists, domain names
and non-compete agreements that have estimated useful lives of three to five years. There were no changes in our amortization
methods or the estimated useful lives of our intangible asset groups.
Impairment of Indefinite-Lived Long-Term Assets Other Than Goodwill
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Impairment of Indefinite-Lived Long-
Term Assets Other Than Goodwill
$
41,717
$
4,428
$
(37,289)
(89.4)
%
16.1
%
1.9
%
We completed our annual review for impairment in the fourth quarter of 2024. Based on our review and analysis, we recorded
an impairment of $4.4 million during the year ended December 31, 2024. During our annual testing in the fourth quarter, we
67
recorded an impairment charge of $4.4 million to the value of the broadcast licenses in Cleveland, Dallas and Hawaii. The
impairment charge was driven by declines in market revenue projections in excess of those used in our prior valuations.
We completed our annual review for impairment in the fourth quarter of 2023. Based on our review and analysis, we recorded
an impairment of $41.7 million during the year ended December 31, 2023. During our annual testing in the fourth quarter, we
recorded an impairment charge of $3.3 million to the value of the broadcast licenses in Boston, Chicago, Cleveland,
Columbus, Detroit, Little Rock, Miami, Orlando, Philadelphia, Phoenix, Portland, San Diego, San Francisco and Tampa. The
impairment charge was driven by declines in market revenue projections in excess of those used in our prior valuations.
We recorded an impairment charge of $35.1 million to the value of broadcast licenses in Boston, Chicago, Cleveland,
Colorado Springs, Columbus, Dallas, Detroit, Greenville, Little Rock, Miami, New York, Orlando, Philadelphia, Phoenix,
Portland, Sacramento, San Diego, San Francisco, and Tampa at September 30, 2023. The impairment charge was driven by a
decline in projected revenues for the broadcast industry impacting the remainder of 2023, continued softening in radio market
advertising revenue, a reduction in the future industry growth rates based on current economic indicators and rising interest
rates that increase the WACC.
We recorded an impairment charge of $1.1 million to the value of broadcast licenses in Portland and San Francisco at June 30,
2023. The impairment charge was driven by a decline in projected revenues for the broadcast industry impacting the remainder
of 2023 and a reduction in the future industry growth rates based on current economic indicators.
We engaged Bond & Pecaro, an independent third-party appraisal and valuation firm, to assist us in determining the asset
values associated with the acquisition of radio station WMYM-AM in Miami, Florida, which was determined to be less than
the purchase price. Based on our review and analysis, we recorded an impairment charge of $2.1 million at March 31, 2023.
Impairment of Goodwill
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Impairment of Goodwill
$
2,580
$
—
$
(2,580)
(100.0)
%
1.0
%
—
%
We completed our annual review for impairment in the fourth quarter of 2024 with no further impairment charges recognized.
As a result of changes in macroeconomic conditions and revenue reforecasts, we performed an interim review of goodwill for
impairment at September 30, 2023. Based on our review and analysis, we recorded an impairment charge of $0.7 million to
goodwill in Townhall.com® and Salem Author Services at September 30, 2023.
We also performed an interim review of goodwill for impairment at June 30, 2023. Based on our review and analysis, we
recorded an impairment charge of $1.8 million to goodwill in Townhall.com® at June 30, 2023.
Net (Gain) Loss on the Disposition of Assets
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Net (Gain) Loss on the Disposition
of Assets
$
(1,295)
$
(5,048)
$
(3,753)
289.8
%
(0.5) %
(2.1) %
The net gain on the disposition of assets of $5.0 million for the year ended December 31, 2024, reflects a $3.6 million pre-tax
gain on the sale of three radio stations in Nashville, Tennessee and one radio station in Honolulu, Hawaii, a $1.7 million pre-
tax gain related to sale of Regnery® Publishing, a $1.2 million pre-tax gain on the sale of our shares of Broadcast Music, Inc.,
a $0.8 million pre-tax gain on the sale of an easement and our economic interest in a lease in our Pittsburgh, Pennsylvania
market, a $0.4 million pre-tax gain on the sale of radio station KKSP-FM in Little Rock, Arkansas, a $0.4 million pre-tax gain
on the sale-leaseback of our corporate headquarters building, and a $0.2 million pre-tax gain on the sale of an FM translator in
our Greenville, South Carolina site, that was partially offset by a $1.8 million pre-tax loss on the sale of a building in
Honolulu, Hawaii, a $1.0 million pre-tax loss on the sale of the translator site in Greenville, South Carolina, a pre-tax loss of
$0.3 million for the sale of land in Apopka, Florida and $0.2 million in net losses from various fixed asset disposals.
The net gain on the disposition of assets of $1.3 million for the year ended December 31, 2023, reflects a $3.3 million pre-tax
gain on the sale of the economic interests in the leases at our Greenville, South Carolina to a related party, a $1.7 million pre-
tax gain on the sale of WGTK-FM, WRTH-FM and WLTE-FM in Greenville, South Carolina, a $0.6 million pre-tax gain on
the sale of WTWD-AM, Tampa, Florida and a $0.4 million pre-tax gain on the sale of radio station KNTS-AM and KLFE-FM
in Seattle, Washington that was offset by a $3.4 million pre-tax loss on the sale of radio station KSAC-FM in Sacramento,
California, a $1.0 million pre-tax loss on the sale of Regnery® Publishing, a pre-tax loss of $0.2 million on the sale of six
condominiums in Miami, Florida and $0.1 million of net losses from various fixed asset disposals.
68
Other Income (Expense)
Year Ended December 31,
2023
2024
Change
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Interest Income
$
60
$
35
$
(25)
(41.7)
%
—
%
— %
Interest Expense
(14,283)
(14,902)
(619)
4.3
%
(5.5)
%
(6.3) %
Loss on Early Retirement of Long-Term
Debt
(194)
—
194
(100.0)
%
(0.1)
%
— %
Gain on Troubled Debt Restructuring
—
28,656
28,656
—
%
—
%
12.1 %
Earnings from equity method investment
4
2
(2)
(50.0)
%
—
— %
Net Miscellaneous Income and
(Expenses)
26
19
(7)
(26.9)
%
—
%
— %
Interest income represents earnings on excess cash and interest due under promissory notes.
Interest expense includes interest on outstanding debt balances, and non-cash accretion associated with deferred installments
and contingent earn-out consideration from certain acquisitions. The increase reflects the higher interest rate under the ABL
Facility and finance lease obligations outstanding during the twelve-months ended December 31, 2024.
The loss on the early retirement of long-term debt in 2023 reflects $43.3 million of repurchases of the 2024 Notes for $44.0
million in cash, recognizing a net loss of $0.2 million after adjusting for bond issuance costs.
The gain on troubled debt restructuring in 2024 reflects the $159.4 million repurchase of the 2028 Notes for $104.0 million in
cash, recognizing a net gain of $28.7 million after adjusting for bond issuance costs and discounts.
We recorded earnings from our equity investment in OPA, an entity formed for the purpose of developing, producing, and
distributing a documentary motion picture. The motion picture, 2000 Mules, was released in May 2022.
Net miscellaneous income and expenses includes non-operating receipts such as usage fees and other miscellaneous expenses.
Benefit from Income Taxes
Year Ended December 31,
2023
2024
Change $
Change
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Benefit from Income Taxes
$
(17,384)
$
(7,826)
$
9,558
(55.0)
%
(6.7)
%
(3.3)
%
Tax benefit decreased $9.6 million to $7.8 million for the year ended December 31, 2024, compared to $17.4 million for the
same period of the prior year. The benefit from income taxes as a percentage of income before income taxes, or the effective
tax rate, was (93.7)% for the year ended December 31, 2024, compared to 28.6% for the same period of the prior year. The
effective tax rate for each period differs from the federal statutory income rate of 21.0% due to the effect of the state income
taxes, certain expenses that are not deductible for tax purposes, and changes in the valuation allowance. The effective tax rate
of (93.7)% is driven by release of the valuation allowance due to the use of net operating loss carryforwards in the current year
as well as for changes in the expected utilization of the valuation allowance due to income anticipated in future years related to
sale of assets that management has determined is more likely than not to be realized. In addition, the effect tax rate is
impacted by a true up related to the change in blended state rate, along with certain expenses that are nondeductible for income
tax purposes relative to pre-tax book income, and tax expense attributable to deductible amortization on indefinite lived assets
for fully valued state jurisdictions for state jurisdictions in which a full valuation allowance has been recording against net
operating loss carryforward.
At December 31, 2024, we had net operating loss carryforwards for federal income tax purposes of approximately $47.2
million that expire in years 2025 through 2037 and for state income tax purposes of approximately $330.8 million that expire
in years 2025 through 2044. For financial reporting purposes at December 31, 2024, we had a valuation allowance of $21.1
million, net of federal benefit, to offset the pre-2018 federal net operating losses and state net operating losses.
Net Income (Loss)
Year Ended December 31,
2023
2024
Change $
Change %
2023
2024
(Dollars in thousands)
% of Total Net Revenue
Net income (loss)
$
(43,312)
$
16,179
$
59,491
(137.4)
%
(16.7)
%
6.8
%
We had net income of $16.2 million compared to a new loss of $43.3 million during the same period of the prior year due to
the factors described above.
69
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of funds are operating cash flows, borrowings under credit facilities and proceeds from the sale of
selected assets or businesses. Historically, we have funded, and will continue to fund, expenditures for operations,
administrative expenses, and capital expenditures from these sources. We have historically financed acquisitions through
borrowings, including borrowings under credit facilities and, to a lesser extent, from operating cash flow and from proceeds on
selected asset and business sales. We expect to fund future acquisitions from cash on hand, borrowings under our credit
facilities, operating cash flow and possibly through the sale of income-producing assets or proceeds.
Operating Cash Flows
Our largest source of operating cash inflows are receipts from customers in exchange for advertising and programming. Other
sources of operating cash inflows include receipts from customers for digital downloads and streaming, book sales,
subscriptions, self-publishing fees, ticket sales, sponsorships, and vendor promotions. A majority of our operating cash
outflows consist of payments to employees, such as salaries and benefits, vendor payments under facility and tower leases,
talent agreements, inventory purchases and recurring services such as utilities and music license fees. Our operating cash flows
are subject to factors such as fluctuations in preferred advertising media and changes in demand caused by shifts in population,
station listenership, demographics, and audience tastes. In addition, our operating cash flows may be affected if our customers
are unable to pay, delay payment of amounts owed to us, or if we experience reductions in revenue or increases in costs and
expenses.
Net cash used in operating activities increased by $6.5 million during the year ended December 31, 2024, to $10.5 million
compared to $4.0 million during the prior year. The increase in cash used in operating activities includes the impact of the
following items:
Total revenue decreased by $21.1 million;
Operating expenses exclusive of depreciation, amortization, changes in the estimated fair value of contingent
earn-out consideration, impairments, and net gain (loss) on the disposition of assets, decreased by $15.9
million;
Accounts receivables, net of expected credit losses, decreased by $3.7 million compared to an increase of $1.3
million for the prior year;
Unbilled revenue increased $0.9 million;
Our Day’s Sales Outstanding, or the average number of days to collect cash from the date of sale, decreased to
55 days at December 31, 2024, from 56 days in the same period of the prior year; and
Net accounts payable and accrued expenses decreased $8.7 million to $23.8 million from $32.5 million as of
the prior year.
Investing Cash Flows
Our primary source of investing cash inflows is proceeds from the sale of assets or businesses. Investing cash outflows include
cash payments made to acquire businesses, to acquire property, equipment, and intangible assets, and to make investments that
we believe are beneficial to our business.
We undertake projects from time to time to upgrade our radio station technical facilities and/or FCC broadcast licenses,
expand our digital and web-based offerings, improve our facilities, and upgrade our computer infrastructures. The nature and
timing of these upgrades and expenditures can be delayed or scaled back at the discretion of management. Based on our
current plans, we expect to incur capital expenditures of approximately $5.7 million during 2025.
We invested in a limited liability company that will own, distribute, and market a motion. The investment of $1.5 million at
December 31, 2024 is reflected at cost in other assets.
While our focus continues to be on deleveraging, we remain committed to the exploration and pursuit of strategic acquisitions
and investments. We plan to fund any future investing outflows from cash on hand, borrowings under our credit facilities,
operating cash flow and possibly through the sale of income-producing assets or proceeds from debt and equity offerings.
Net cash provided by investing activities was $86.4 million during the year ended December 31, 2024, compared to $0.3
million net cash used in investing activities during the prior year. The $86.7 million increase in cash provided by investing
activities was the result of:
Cash paid for capital expenditures decreased $3.9 million to $5.1 million from $9.0 million during the prior year;
Cash paid for acquisitions decreased $2.1 million to $3.5 million compared to $5.6 million during the prior year;
An issuance of $72.0 million secured promissory note;
Cash paid for investments of $1.5 million during the prior year; and
Cash received from the sale of assets increased $8.2 million to $23.7 million from $15.5 million.
70
Financing Cash Flows
Financing cash inflows include issuance of new debt and equity instruments, borrowings under our credit facilities and any
proceeds from the exercise of stock options issued under our stock incentive plan. Financing cash outflows include repayments
of our credit facilities, the payment of equity distributions and payments of amounts due under deferred installments, and
contingency earn-out consideration associated with acquisition activity.
During the year ended December 31, 2024, the principal balances outstanding under the Notes and ABL Facility ranged from
$128.4 million to $176.5 million. These outstanding balances were ordinary and customary based on our operating and
investing cash needs during this time.
Net used in financing activities during the year ended December 31, 2024, increased $80.3 million to $75.9 million compared
to cash provided by financing activities of $4.4 million during the prior year. The increase in cash used in financing activities
includes:
A $4.1 million increase in the book overdraft;
$104.0 million of cash used to redeem the remaining $159.4 million of 2028 Notes due, compared to $39.0
million of cash used to redeem the remaining $36.5 million of 2024 Notes due in the prior year;
$40.0 million issuance of Redeemable Series B convertible perpetual preferred stock;
An issuance of $24.0 million of unsecured debt; and
Net payments on our ABL Facility were $11.6 million during the year ended December 31, 2023, compared to
$7.9 million net borrowings during the same period of the prior year.