Salem Revenues Rise Despite Ad Losses
By Stephanie Hoops, Ventura County Star, Calif.
Jun. 5–Like a ship struck by two unavoidable waves, Salem Communications Corp. is fighting to weather a storm from the loss and diversion of advertising dollars.
“There’s no question it’s a challenge for us and all of business,” Chief Executive Officer Edward G. Atsinger III said Wednesday after the company’s annual shareholders meeting in Westlake Village.
He noted that the biggest challenge facing the Camarillo-based Christian radio broadcast company is the same one facing other media companies: Advertising dollars are moving to the Internet, and that finite pie is fragmented.
On top of that, Atsinger said, the company has been hurt by the economy, as other American companies have. It has lost advertising customers from the financial services and home improvement industries.
Radio broadcast industry revenue declined 2.3 percent in 2007, and the situation is expected to be worse in 2008, according to Salem, which projects an additional 3 percent decrease.
Still, Salem states that it was able to increase its overall revenue last year 2.7 percent as a result of strong Internet and magazine publishing.
While its broadcasting revenue increased a slight 0.1 percent, its Internet and publishing operating income grew 70.2 percent, contributing more than $25 million in revenue.
Total fiscal 2007 revenue equals $231.7 million, up from $225.7 million, while net income decreased to $8.2 million, or 34 cents per diluted share, from $19 million, or 78 cents per diluted share, the previous year.
After the meeting, Atsinger told The Star that Salem’s strategy for getting through this down cycle is to focus on its nontraditional revenue sources, including Web sites, block programming and events.
For example, Atsinger said, the company saw the strength of speaking events after 900 tickets were sold and sponsors bought booths for a recent roast of Salem radio personality Dennis Prager at the Richard Nixon Presidential Library & Museum in Yorba Linda.
Such events are a good source of revenue to help the company weather the storm, he said.
Salem’s experts, headquartered in Richmond, Va., “reworked all of our Web sites,” Atsinger said.
Page views are up 10 to 15 percent, said David A.R. Evans, president of Salem’s new business development, interactive and publishing.
The block programming may be another buoy. It’s not dependent on advertising dollars, Atsinger said; rather, customers buy half an hour of radio airtime, for example.
Block programming provided the company a consistent flow of cash last year, with that revenue stream increasing 5 percent.
In the coming year, Salem also plans to make use of the radio stations to drive those listeners to its Internet sites, and vice versa.
Salem’s shares rose 9 cents to $2.40 Wednesday, down from a 52-week high of $12.18 nearly a year ago.
A letter to shareholders signed by Atsinger and Chairman of the Board Stuart W. Epperson says, “This is the third consecutive year that we are stating in our letter to shareholders that terrestrial radio faces challenges. … We recognize the challenges, but we continue to believe in this industry and in our business model.”
On the Net:
http://www.salem.cc
—–
To see more of the Ventura County Star, or to subscribe to the newspaper, go to http://www.venturacountystar.com.
Copyright (c) 2008, Ventura County Star, Calif.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
NASDAQ-NMS:SALM,