Executive Summary

Q1 2023 revenue increased 1.4% year over year to $63.5 million, but the company posted an operating loss of $4.2 million and a net loss of $5.2 million ($0.19 per share); Adjusted EBITDA fell 79.6% to $1.4 million as expenses rose with digital investments and an impairment on a Miami broadcast license .
Management initiated cost actions late March (44 positions; ~$5 million annualized savings, $0.4 million severance in Q1) and highlighted digital revenue growing 6.4% and now 31% of total revenue, underpinning a shift to higher-growth platforms .
Q2 2023 guidance calls for revenue down 5%–7% versus Q2 2022 and recurring OpEx up 3%–6%, reflecting ongoing advertising softness (especially local spot) and lighter publishing slate; digital remains the strongest area .
Debt refinancing completed in March: $44.7 million of new 7.125% 2028 notes issued to redeem remaining 2024 notes; total debt $177.6 million and leverage ratio 6.19 at quarter end, with revolver work underway .

What Went Well and What Went Wrong

What Went Well

Digital momentum and mix shift: “overall digital revenue increased 6.4% in the first quarter and now represents 31% of our total revenue” and Broadcast digital revenue increased 12%; management continues to invest in Salem Surround, Podcast Network, and Salem News Channel .
Network and national spot strength: Network revenue grew 5.9%; national spot rose 20.7% in Q1, helping offset local weakness .
Publishing outperformed: Publishing revenue increased 19.7% YoY to $4.6 million, driven by backlist titles (Scalia; Letter to the American Church; When China Attacks) and pipeline (Manhood; Life after Capitalism) .

What Went Wrong

Profitability deterioration: Adjusted EBITDA fell to $1.4 million (−79.6% YoY), EBITDA turned negative (−$0.6 million), and SOI declined 46.4% amid expense growth and an impairment charge on the Miami WMYM-AM license .
Local spot weakness and macro headwinds: Local spot declined 8.3%; advertisers are delaying decisions given economic uncertainty and mortgage category softness, pressuring ad-driven revenues .
Broadcast cost inflation: Broadcast expenses increased 12.3% YoY, driven by continued investments in Salem News Channel and digital initiatives, compressing station margins .

Financial Results

Consolidated Summary (Q3 2022 → Q4 2022 → Q1 2023)

Metric	Q3 2022	Q4 2022	Q1 2023
Total Revenue ($USD Millions)	$66.862	$68.813	$63.489
Net Income (Loss) ($USD Millions)	$(11.885)	$(2.207)	$(5.154)
Diluted EPS ($USD)	$(0.44)	$(0.08)	$(0.19)
EBITDA ($USD Millions)	$(5.667)	$4.876	$(0.619)
Adjusted EBITDA ($USD Millions)	$2.300	$7.266	$1.397

Margins (computed from disclosed figures)

Margin	Q3 2022	Q4 2022	Q1 2023
EBITDA Margin %	−8.48% (−$5.667 / $66.862)	7.09% ($4.876 / $68.813)	−0.97% (−$0.619 / $63.489)
Adjusted EBITDA Margin %	3.44% ($2.300 / $66.862)	10.56% ($7.266 / $68.813)	2.20% ($1.397 / $63.489)

Segment Breakdown

Segment Metric	Q3 2022	Q4 2022	Q1 2023
Broadcast Revenue ($USD Millions)	$51.136	$53.295	$48.340
Digital Media Revenue ($USD Millions)	$10.189	$10.368	$10.510
Publishing Revenue ($USD Millions)	$5.537	$5.150	$4.639
Station Operating Income (SOI) ($USD Millions)	$9.958	$10.140	$5.531
Digital Media Operating Income ($USD Millions)	$1.856	$1.697	$1.516
Publishing Operating Income (Loss) ($USD Millions)	$(1.005)	$(0.551)	$(0.737)

Operational KPIs and Balance Sheet Highlights

KPI	Q3 2022	Q4 2022	Q1 2023
Same-Station Broadcast Revenue ($USD Millions)	$51.121	$53.279	$48.138
Same-Station SOI ($USD Millions)	$10.058	$10.328	$6.013
National Spot YoY	—	—	+20.7%
Local Spot YoY	—	—	−8.3%
Network Revenue YoY	—	—	+5.9%
Digital Share of Total Revenue	—	~30% commentary	31%
Total Debt ($USD Millions)	$155.778 (LTD)	$150.367 (LTD)	$177.6 (Total)
Notes Outstanding ($USD Millions)	$114.731 2028	$114.731 2028; $39.035 2024	$159.416 2028
Revolver Outstanding ($USD Millions)	—	$9.0	$18.184
Leverage Ratio	4.38 (as defined)	4.88 (as defined)	6.19 (as defined)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	Q1 2023	Flat to −2% vs $62.6M (Q1’22 base)	Actual: +1.4% YoY to $63.5M	Beat prior guide (raised vs guide outcome)
Recurring Operating Expenses	Q1 2023	+7% to +10% vs $55.8M (Q1’22 base)	Actual: $62.1M (+11.4% YoY)	Higher than guided range
Total Revenue	Q2 2023	N/A	−5% to −7% vs $68.7M (Q2’22 base)	New guide (lower)
Recurring Operating Expenses	Q2 2023	N/A	+3% to +6% vs $60.0M (Q2’22 base)	New guide (higher)

Note: Company did not provide EPS or margin guidance; focus was on revenue and recurring OpEx ranges .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2022)	Previous Mentions (Q4 2022)	Current Period (Q1 2023)	Trend
Digital strategy & investments	Broadcast digital up 4.2%; invest in Salem News Channel, Surround; cookie demise pressuring National Digital	Broadcast digital up 14%; overall digital flat; continued investment	Digital +6.4% overall; 31% of total; Broadcast digital +12%; 2023 is “investment year” in digital infrastructure	Increasing investment; mix shift to digital
Ad market softness	Local spot −3%; national +5.7%; mortgage category weakness; macro headwinds	Local spot −4.3%; political buoyant; headwind persists	Local spot −8.3%; national spot +20.7%; advertisers cautious (Fed, macro), delays	Continued softness; local weaker than national
Political advertising	Q3: $1.5M; pacing above prior cycles	Q4: $2.1M; historical context and expected debates	Expect political in Q3/Q4; debates starting August	Seasonal tailwind expected H2
Publishing	Q3 moved “2,000 Mules” book to Q4; Q3 revenue −3.7%	Q4 revenue −21.3% but titles like Cruz/Metaxas helped relative to guidance	Q1 revenue +19.7% (backlist strength); Q2 lighter schedule	Volatile; slate-dependent
Debt & liquidity	LTM leverage calc context; covenant mechanics; Miami acquisitions planned	Announced delayed-draw 2028 notes to redeem 2024s; deleveraging focus	Issued $44.7M 2028 notes; leverage 6.19; working on new revolver; asset monetization options	Refinanced; monitoring liquidity
Regulatory/Platform dynamics	Facebook algorithm change reduces traffic to conservative opinion sites; cookie demise hurting CPMs	Same impacts continued	Ongoing headwinds in National Digital	Persistent external headwinds

Management Commentary

“Overall digital revenue increased 6.4% in the first quarter and now represents 31% of our total revenue. We continue to invest in digital and see it as the best opportunity for continued growth.” — CEO David Santrella .
“We made the difficult but necessary decision in late March to lay off 44 positions… we expect to save approximately $5 million annually.” — CEO David Santrella .
“For the second quarter of 2023, Salem is projecting total revenue to decline between 5% and 7%… [and] operating expenses… to increase between 3% and 6%.” — CFO Evan Masyr .
“We issued $44.7 million in new 7.125% 2028 notes… We now have $159.4 million in 2028 notes in addition to our revolver, which had $18.2 million drawn as of March 31.” — CEO David Santrella .
“Digital revenue within the Broadcast division increased 12%… Network revenue… growing revenue by 5.9%.” — CEO David Santrella .

Q&A Highlights

Local vs national spot: National spot +20.7% vs local −8.3% in Q1; mortgage category cited as weakest; competitive intensity rising in direct business .
Miami stations outlook: Early revenue growth encouraging; cautious optimism for faster-than-modeled profitability timing .
Expense/investment cadence: 2023 framed as investment year (social media marketing hires; OTT/video positions); cycling of added investments expected by Q1 2024 .
Guidance color: Publishing schedule lighter in Q2 vs prior year; digital strongest segment .
Liquidity/asset monetization: Asset-based line provides liquidity; evaluating real estate and select asset sales/sale-leasebacks to balance value vs free cash flow impact .
Film investment: $1.5 million invested to finance and distribute a motion picture with Dinesh D’Souza, targeting early 2024 release, following prior success .

Estimates Context

S&P Global consensus estimates for Q1 2023 EPS and revenue were unavailable at time of request due to API limits; therefore, comparisons to Wall Street consensus could not be performed (Values retrieved from S&P Global).
Company did not provide EPS guidance; focus remained on revenue and recurring OpEx ranges .
Given actual Q1 revenue modestly exceeded the prior quarter’s guidance range (+1.4% YoY vs guide of flat to −2%), but OpEx ran above guided growth, estimates may tilt toward lower profitability assumptions despite stable topline inputs .

Key Takeaways for Investors

Mix shift to digital is accelerating (31% of revenue), but carries cost of goods sold and investment needs; near-term margin pressure likely until scale benefits and in-house fulfillment expand margins .
Local advertising remains the key swing factor; mortgage and broader macro caution are suppressing demand, while national/network and auto parts categories provide partial offsets .
Q2 guide implies sequential revenue decline from Q1 and continued expense growth; expect street models to reflect lower near-term EBITDA/FCF despite cost cuts ramping evenly over the next four quarters .
Balance sheet: leverage at 6.19 and ABL usage increased to ~$18.2 million; refinancing reduces near-term maturity risk, but liquidity management (including potential real estate monetization) remains a focus .
Publishing contributes positively when slate is strong but remains volatile; Q2 likely softer before potential H2 political tailwinds in broadcast .
Tactical setup: Near-term sentiment hinges on ad market stabilization and evidence of ROI from digital investments; watch Q2 revenue trajectory vs guide and commentary on local spot momentum and cost savings realization .

Appendix: Source Notes

Q1 2023 8-K and Exhibit 99.1 press release provide GAAP and non-GAAP detail, segment data, and guidance .
Q1 2023 earnings call transcript provides divisional color, ad market commentary, cost actions, and strategic updates .
Prior quarters’ earnings materials (Q4 2022 and Q3 2022) used for trend analysis and guidance context .

No additional standalone press releases were found for Q1 2023 beyond the Exhibit 99.1 furnished within the Form 8-K .

SALEM MEDIA GROUP, INC. /DE/ (SALM)·Q1 2023 Earnings Summary