Executive Summary

Q3 2023 revenue was $63.5M, down 5.0% YoY and 3.5% sequentially; diluted EPS was a loss of $1.15 driven by $35.1M broadcast license impairments, while adjusted EBITDA rose modestly to $2.5M YoY but fell slightly QoQ .
Broadcast revenue declined 4.2% on softer spot advertising and lower political ($0.7M vs. $1.5M prior year); block programming remained resilient and is now 40% of broadcast revenue and 31% of total revenue .
Balance sheet stress and liquidity actions featured prominently: SALM disclosed ABL default and multiple forbearance amendments, asset sales (Greenville stations; pending Salem Church Products and Sarasota land), and intent to use proceeds to pay down the revolver; leverage ratio was “clearly too high” at 11.0% .
Q4 2023 outlook guides total revenue down 6–8% YoY (2–4% ex political and pending sale) and recurring OpEx flat to down 3% YoY; management expects digital revenue growth to re-accelerate in Q4 .
Near-term stock reaction catalysts: closing the Salem Church Products sale, securing a new ABL revolver, and confirmation of Q4 digital growth against an ad recession backdrop .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA improved 9.3% YoY to $2.5M due to lapping last year’s $3.8M legal settlement accrual; costs remained broadly contained (recurring OpEx +0.2% YoY) .
Block programming revenue proved resilient (flat YoY in Q3) and remains a differentiator—“Block programming makes up 40% of our broadcast revenue and 31% of our total revenue” (CEO) .
Strategic deleveraging underway: closed sale of three Greenville FM stations for $6.8M; pending $30M sale of Salem Church Products and $9.5M Sarasota land sale; proceeds targeted to pay down the revolver .

What Went Wrong

Advertising recession pressured spot and network revenue: national spot down 17.9%, local spot down 6.6%, network down 10.1%; digital revenue growth stalled (down 4.5% within Broadcast division) .
Large non-cash impairments (broadcast licenses $35.1M; goodwill $0.7M) drove operating loss to $36.3M and net loss to $31.3M in Q3 .
ABL covenant issues and higher revolver rates: SALM remained in default, entered multiple forbearance agreements, reduced revolver size ($30M→$25M), and faces earlier maturity (Feb 1, 2024) and higher interest cost .

Financial Results

Consolidated P&L and Profitability (oldest → newest)

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Total Revenue ($USD Millions)	$66.862	$63.489	$65.774	$63.497
Operating Income (Loss) ($USD Millions)	$(8.784)	$(4.180)	$(4.101)	$(36.290)
Net Income (Loss) ($USD Millions)	$(11.885)	$(5.154)	$(7.094)	$(31.297)
Diluted EPS ($USD)	$(0.44)	$(0.19)	$(0.26)	$(1.15)
EBITDA ($USD Millions)	$(5.667)	$(0.619)	$(0.608)	$(33.090)
Adjusted EBITDA ($USD Millions)	$2.300	$1.397	$2.666	$2.513
Net Income Margin %	-17.8% (calc from revenue/net)	-8.1% (calc)	-10.8% (calc)	-49.3% (calc)
Adjusted EBITDA Margin %	3.4% (calc)	2.2% (calc)	4.0% (calc)	4.0% (calc)

Notes: Margins are calculated using reported revenue and profit metrics from cited documents.

Segment Breakdown (oldest → newest)

Segment Metric ($USD Millions)	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Net Broadcast Revenue	$51.136	$48.340	$49.680	$48.966
Station Operating Income (SOI)	$9.958	$5.531	$6.162	$6.795
Net Digital Media Revenue	$10.189	$10.510	$10.860	$9.965
Digital Media Operating Income	$1.856	$1.516	$1.834	$1.469
Net Publishing Revenue	$5.426	$4.639	$5.234	$4.566
Publishing Operating Income (Loss)	$(1.005)	$(0.737)	$(0.792)	$(1.373)

KPIs and Operating Details (oldest → newest)

KPI	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Same-Station Net Broadcast Revenue ($M)	$51.048	$48.138	$49.360	$48.556
Same-Station SOI ($M)	$10.123	$6.013	$6.787	$7.269
Digital Share of Total Revenue (%)	—	—	31.6% (CEO)	29.5% (CEO)
Political Revenue ($M)	$1.5 (prior year reference)	—	$0.3 (YTD reference)	$0.7
Total Debt Outstanding ($M)	—	$152.0 ABL; $159.4 notes	$22.6 ABL; $159.4 notes	$20.5 ABL; $159.4 notes

Versus Estimates

S&P Global consensus estimates for Q3 2023 EPS and revenue were unavailable at time of retrieval; comparative “vs. Street” analysis cannot be shown and should be treated as not available (S&P Global request limit exceeded).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue YoY change	Q4 2023	—	Down 6–8% vs. Q4 2022 revenue $68.8M	Initiated
Total Revenue YoY ex political and pending sale	Q4 2023	—	Down 2–4%	Initiated
Recurring Operating Expenses vs. prior year	Q4 2023	—	Flat to -3% vs. Q4 2022 Recurring OpEx $61.6M	Initiated
Recurring OpEx ex pending sale impact	Q4 2023	—	+1% to -2%	Initiated

Definition: Recurring OpEx excludes stock-based comp, debt modification, gains/losses on asset sales, legal settlement, fair value changes to earn-out, impairments, D&A .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2023)	Trend
Advertising recession & macro/interest rates	Q2: “headwinds from a tough economy and high-interest rates”; ad pullback slowed revenue growth	CEO: “S&P has said…persistent ad recession”; spot down; network down	Deteriorating
Political revenue trajectory	Q2: $0.3M YTD; expected pick-up late Q3/Q4; 2022 political was $6.6M	Q3: $0.7M; comps a headwind; expecting Q4 benefit	Improving into Q4/2024
Digital algorithm pressures & product	Q2: Facebook algorithm change; third-party cookie decline	Q3: nonrenewal of Bible Gateway representation; expect double-digit digital growth in Q4	Transitioning, rebound expected
ABL covenant/default & forbearance	Q2: Forbearance signed; revolver reduced; rate increased	Q3: 4 forbearance agreements; new ABL targeted by year-end; leverage 11.0%	In process; deleveraging focus
Asset sales/deleveraging plan	Q2: Sold two Seattle stations; KSAC-FM pending; Greenville rental income assignment	Q3: Closed Greenville FM sale ($6.8M); pending Salem Church Products ($30M) & Sarasota land ($9.5M)	Accelerating
Block programming resilience	—	“Block…40% of broadcast revenue and 31% of total revenue”	Stable/Supportive

Management Commentary

“S&P has said that we are in a persistent ad recession, and we're feeling it as well.” (CEO Santrella) .
“Block programming makes up 40% of our broadcast revenue and 31% of our total revenue.” (CEO Santrella) .
“We'll use the proceeds from these asset sales to fully pay off the revolver.” (CEO Santrella) .
“The leverage ratio at September 30 was 11.0%, clearly too high… we'll be aggressively paying down debt.” (CFO Masyr) .
“We expect a return to double-digit growth in all digital… in Q4.” (CEO Santrella) .

Q&A Highlights

Asset sale impact: management estimated $2–3M of EBITDA will be removed from the portfolio post sales (analyst Marsh; CFO Masyr) .
Sarasota land rezoning: buyer owns adjacent parcel; county pre-approval in place; closing anticipated December 2024 (CFO Masyr; GC Henderson) .
ABL forbearance: temporary waivers continue; next forbearance through Nov 27; aim to refinance with new lender by year-end; equity trading not directly impacted per discussion (CFO Masyr) .
Miami property review: portfolio-wide evaluation of land monetization opportunities underway (CFO Masyr) .

Estimates Context

S&P Global consensus for Q3 2023 EPS and revenue could not be retrieved; therefore, “vs. Street” comparisons are unavailable and should be treated as not available at this time (attempted S&P Global retrieval failed due to daily request limit).
Given the magnitude of non-cash impairments in Q3, focus for estimates should be on revenue trajectory and adjusted EBITDA; consensus may need to rebase near-term EBITDA and OpEx assumptions to reflect asset sales and digital reacceleration plans .

Key Takeaways for Investors

Core revenue pressure persists amid an ad recession and lower political comps; watch for Q4 digital reacceleration and political tailwinds into 2024 .
Non-cash impairments materially impacted GAAP results; adjusted EBITDA remains positive and relatively stable QoQ (down ~6%), highlighting the importance of non-GAAP tracking in this cycle .
Balance sheet repair is the near-term priority: closing asset sales (Salem Church Products, Sarasota land, KSAC-FM) and securing a new ABL revolver are key catalysts for de-risking .
Block programming stability (40% of broadcast revenue) provides a defensive revenue base even as spot and network remain weak .
Expense discipline is visible (recurring OpEx flat YoY in Q3; Q4 guide flat to -3% YoY), aiding cash preservation; monitor execution versus guidance ranges .
Political revenue should build in late Q4 and into 2024; management cites 2022 at $6.6M, implying a favorable setup next year .
Trading implications: shares may be sensitive to financing headlines (new ABL), asset sale closings, and Q4 digital growth confirmation; downside risk tied to ad trends and any delay in liquidity actions .

SALEM MEDIA GROUP, INC. /DE/ (SALM)·Q3 2023 Earnings Summary