Salem Reports Q3 Gain

For the third quarter that ended Sept. 30, Salem Communications reported operating income of $11.2 million for the quarter, compared with operating income of $7.6 million for the comparable period in 2003. Its net broadcasting revenue increased 11% to $47.3 million from $42.6 million for the same period last year.
Station operating income increased 18.8% to $18.3 million for the third quarter of 2004 from $15.4 million in the corresponding period last year. Station operating income margin increased to 38.7% in the third quarter of 2004 from 36.2% in the third quarter of 2003.
Salem President/CEO Edward Atsinger III, said, “This strong performance is fueled by growth at our start-up and developing stations, in particular, our Contemporary Christian Music stations which achieved an increase of 16.5% in net broadcasting revenue and 36.0% in station operating income compared to last year. Additionally, during the quarter we announced a radio station exchange with Univision Communications, Inc. This station exchange presents a unique opportunity for Salem to expand our presence in four attractive major markets – Chicago, Houston, Dallas and Sacramento. This transaction upgrades our station group, offers an opportunity to significantly improve the return from two stations which have been underperforming, and enhances our network business by providing strong anchor affiliates in Chicago and Houston, the third and seventh largest markets in the country, respectively.”
EBITDA increased to $30.2 million for the nine months ended Sept. 30, 2004 from $22.4 million in the corresponding 2003 period. EBITDA for the nine months ended Sept. 30, 2004 includes a loss of $2.9 million on disposal of assets, a loss of $6.6 million from the early retirement of $55.6 million of the company’s 9.0% senior subordinated notes due 2011, and a loss (net of income tax benefit) of $0.1 million from discontinued operations.
EBITDA for the nine months ended September 30, 2003 included a loss of $6.4 million from the early retirement of $100 million of the company’s 9.5% senior subordinated notes due 2007, a loss of $2.2 million for costs associated with a denied tower site and license upgrade, a gain of $0.3 million on disposal of assets, and a loss of $0.7 million write-off from the cancellation of a contemplated debt offering. Excluding these items, Adjusted EBITDA increased 27.5% to $40.1 million for the nine months ended Sept. 30, 2004 from $31.4 million in the corresponding 2003 period.