Salem(US:SALM)2022-11-03 21:40Business Segments - Salem Media Group, Inc. operates three segments: Broadcast, Digital Media, and Publishing, which are assessed based on operating income and expenses excluding corporate costs[180]. Revenue Influences - Broadcast revenue is influenced by advertising rates, airtime sold, and audience engagement, with significant reliance on Los Angeles and Dallas markets contributing 12.8% and 19.2% of total net broadcast advertising revenue respectively for the nine months ended September 30, 2022[202]. - Digital media revenue is affected by advertising rates, impressions delivered, and product sales, with seasonal fluctuations noted, particularly during election years and around holidays like Easter[195]. - Publishing revenue is driven by the number and retail price of books sold, with increased demand during election cycles for conservative publications[197]. Financial Performance - 99% of broadcast revenue was sold for cash during the nine months ended September 30, 2022, indicating a strong cash flow position[192]. - Same Station Operating Income is a key non-GAAP financial measure that excludes the impact of new stations and those no longer owned, providing a meaningful comparison of core broadcast operations[204]. - Same Station net broadcast revenue is defined as revenue from radio stations and networks owned or operated in the same format on the first and last day of each quarter, compared to the same quarter of the prior year[205]. - Same Station broadcast operating expenses are calculated similarly, focusing on stations owned or operated in the same format at the beginning and end of each quarter[205]. - The company emphasizes that its non-GAAP financial measures should not be considered superior to GAAP measures, but are useful for evaluating financial results and performance[208]. Challenges and Strategic Focus - The company faces challenges in broadcast revenue growth due to competition from digital content and changing consumer habits, leading to a strategic focus on enhancing digital assets[201]. - Digital revenue is impacted by a shift from desktop to mobile views, which generally yield lower advertisement rates and fewer ads per page, potentially affecting overall revenue[203]. - The company continues to explore cross-promotion opportunities to mitigate revenue impacts from digital shifts and to strategically manage costs[203]. - Known uncertainties include global supply chain disruptions, inflation, and rising interest rates, which may adversely affect advertising spending and revenue growth[199]. Internal Controls - Management has evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of the end of the reporting period[352]. - There were no changes in internal control over financial reporting that materially affected the company's financial reporting during the quarter ended September 30, 2022[353].