Net Income Slides For Salem Despite Revenue Growth

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It was a good news, bad news kind of Q4 — and 2016 — for Christian and conservative-focused media company Salem Media Group.


Just after the Closing Bell on Wall Street Thursday, the company reported Q4 net income of $2.97 million (11 cents per diluted share), down from $5.26 million (20 cents) in the year-ago period.

The dip came despite Q4 net broadcast revenue growth to $52.25 million, from $51.58 million in the final three months of 2015. Consolidated revenue increased to $70.7 million in Q4, from $69.15 million.

Why the dip in net income?

Operating expenses in Salem’s broadcast and digital media divisions increased slightly, sending total operating expenses up 12% to $67.24 million, compared to $59.9 million in Q4 ’15.

Operating income shrunk to $3.46 million, from $9.23 million. EBITDA decreased to $9.8 million, from $16.4 million, in the most recent quarter.

For the full-year 2016, total revenue increased to $274.32 million, from $265.79 million. But, operating expenses increased as well, to $246.24 million, from $232.77 million. Operating income dipped year-over-year, to $28.08 million, from $33 million.

This resulted in a net income slide to $8.87 million (34 cents per diluted share), from $11.15 million (43 cents).

Political dollars were not a factor, company executives said on its conference call with analysts to discuss its financial results. In 2016, political dollars came in at $4.6 million. By comparison, political dollars in 2012 were $5.5 million. This is likely due to the unconventional spending for the Trump campaign and the unlikely spending on Salem properties by the Hillary Clinton campaign.

Where does Salem expect its Q1 2017 to be?

The company is projecting total revenue to be between flat and up 2% over Q1 2016 total revenue of $64.6 million.

But, Salem is also projecting operating expenses, excluding gains or losses on the sale or disposal of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation expense and amortization expense, to be between flat and an increase of 3% compared to the first three months of 2016.

CASH DIVIDEND DECLARED

Despite the decreased net income for Salem, the company’s Board of Directors on Thursday declared a cash distribution for Q1 2017 in the amount of $0.0650 per share.

The cash distribution will be paid on March 31 to all Class A and Class B common stockholders of record as of March 20.


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