I’ve written before about the pattern of dismal and declining ratings for Salem Radio’s radio stations – Salem operates 3 main types of radio – Christian Contemporary Music, Christian Teaching and Conservative Talk, along with selling subscriptions to Townhall magazine.
Salem is a for-profit corporation traded on NASDAQ (symbol: SALM) – it isn’t a benevolent religious charity – it’s a business that is supposed to make money for its stockholders.
Like most radio owners following 1996, they loaded up on debt to pay inflated prices to buy up radio stations. Salem has a “Market Cap” (# shares x $/share) of about $89 million for the Class A (publicly traded) part of hte company.
NASDAQ’s price charts only go back 10 years – the stock had an IPO price of $25, and went up to $33 and started a slow slide down, hitting $0.65 a share in July 2009 when it looked like they might be crushed by the $300+ million in debt they owed to banks. They didn’t go into bankruptcy, but there was a major restructuring of their debt
A couple months ago, activity in trading the stock has exploded (not sure why) and the stock has gone from about $3 a share to $4.50
Today’s news (per radio-info.com) is that one of the directors – a man named Roland Hinz has loaned Salem $8 million in an unsecured loan, standing in line behind the banks. When a director of a company gets involved in a transaction like this (especially post Sarbaines-Oxley) it requires disclosure – to make stockholders aware of the possibility that directors are doing something that may not be in their interest – by loaning the money, even as an unsecured loan, he is injecting himself in line in front of the stockholders in the event the company filed bankruptcy – however the entire Board did approve the transaction and has disclosed it. The rationale for Salem to do this is he is loaning the money to Salem at a rate better than Salem can get from its banks.
It’s more likely he is motivated by friendships and/or his religious beliefs. He owned several of the radio stations in California that were acquired by Salem and still owns KSDO-AM, a Spanish language religious AM station in San Diego. My suspicion is this is a prelude to him “buying back” the stations he sold to Salem (KLTX-AM and KEZY-AM) but since they are assets used as collateral for the bank loans, Salem can’t sell them back without approval of the banks. Perhaps Salem will LMA (lease) them back so Mr Hinz can run the stations himself without actually owning them. All 3 stations are part of Radio Neuva Vida (New life) a Spanish language religious broadcaster targeting Evangelical (non-Catholic) immigrants in Southern California.
You might guess that Mr Hinz is probably not a big fan of Michael Savage… and keep that in mind about what Salem hosts (Bennett, Gallagher, Prager, Medved, and Hewitt) say or don’t say about the “illegal immigration problem”. Medved in particular is overtly pro-illegal immigration, going so far as to explain how he crashed the US border at San Diego when he was going to be late returning to the studio after visiting relatives in Mexico.