So Bill Bennett and Michael Medved have retired, moving the magnanimous Hugh Hewitt to early mornings. I don’t have the sense that their new talent has exactly caught fire. Salem’s hosts basically are heard only on Salem radio stations. Bill Bennett was probably an exception
Salem stock on the NASDAQ stock exchange is languishing approaching penny stock territory. Their earnings are coming out soon and people suspect there might be bad news. One of the radio rumor mills says that they are in the process is selling off some of their stations. They were the buyer of last resort when Disney had trouble unloading many of their Major market AM radio stations.
Salem lost $3.8 million on their deal to sell WWRC in Washington DC. the problem is if you sell radio stations to raise cash, you wind up with huge paper losses recognizing the difference between what you say the station is worth, and the amount of cash you actually accepted. Sometimes that can obfuscated by doing things as a trade rather than a sale. On a trade, both parties can make up any number they want to say how much they gave each other.
For some time now Salem’s profitability is based more on selling townhall.com subscriptions and books and not brokering advertising and religious time on their stations. Selling blocks of infomercial advertising time on weekends is foolish, as all it does is decreases people’s interest in listening to this station during the week. They would be better off just playing contemporary Christian music.
As of their last 10-Q, it shows they had a whopping $4,000 in cash on hand and $30 million in accounts receivable, with about one-fourth of that estimated to be uncollectible. They have $227 million in long-term debt which is being backed by the value of their broadcast licenses and very little else. Maybe they have land underneath their broadcast towers they could sell as Cumulus was doing.
For the quarter they had about $984,000 in operating loss with about $60 million in revenue. Their interest expense was about $4.4 million giving rise to about a $5 million dollar total loss including interest, but before taxes. With some accounting magic, by losng $5 million they saved $5.3 million dollars in income tax, creating a net profit after taxes of $322,000. Isn’t America wonderful?