Is there untapped value in tower land or has Salem already sold their high value land?
-
Get involved.
We want your input!
Apply for Membership and join the conversations about everything related to broadcasting.
After we receive your registration, a moderator will review it. After your registration is approved, you will be permitted to post.
If you use a disposable or false email address, your registration will be rejected.
After your membership is approved, please take a minute to tell us a little bit about yourself.
https://www.radiodiscussions.com/forums/introduce-yourself.1088/
Thanks in advance and have fun!
RadioDiscussions Administrators
Troubling Radio Industry Finances
- Thread starter ThatVoice22
- Start date
As you can imagine, they've been looking at this for several years. Here's an article from 2020:
Salem May Sell More Stations, But Real Estate Or Towers May Go First.
Salem Media Group has been downsizing its radio station portfolio during the past few years, most recently with a deal to exit the Miami market. While more sales may come
The problem with selling tower land is if you don't negotiate the ability to lease the land and tower back, then you have to spend money to move the tower. That's additional legal and engineering expense.
You would lose that bet. Read the financial statements available on Form 10-Q and 10-K. The ABL facility is their only line of credit.
It is not uncommon for credit agreements and bond indentures to have cross-default provisions. However, because Salem apparently has not yet retained advisors, I suspect the senior unsecured notes might not be cross-defaultable for a violation of this nature. Now, if the forbearance period were to expire and WFC were to accelerate maturity, then in that instance, I suspect there likely would be a cross-default.
Valued by whom at hundreds of millions? The stock market values Salem at less than $25 million. Their current market cap is only $20.41 million. A credit line larger than the their market cap is certainly not small potatoes.
Price per share value or estimated market cap is not the same as total asset value. Here is an explanation on what market capitalization means: Market Capitalization: How Is It Calculated and What Does It Tell Investors?
For example; when a company is trading below cash, it implies that the company's market capitalization is much lower than its book value of equity, which is the total asset value (including cash as well as other current and long-term assets like real estate, tangible assets, etc.) minus the liabilities.
And the trouble with lease-backs, especially for AM sites, is assuming the land isn't swampland, developers are usually interested in the land for housing or industrial building construction. That likely wouldn't allow the AM station to remain on the site after the land sale.
Adjusted EBITDA for 1H has fallen from $18.5 million to $4.1 million year over year.
There is no way this company at that type of run rate can support ongoing servicing of ~$180 million of debt. Interest expense on the 2028 Notes is over $11 million a year. I'm not sure what the effective coupon is on the ABL facility right now (it probably has grid pricing), but if I had to hazard a guess, that is likely another ~$1.5 million in pro forma annualized interest expense.
Annualized capex appears to be about $10 million to $12 million a year.
So, even if annualized Adjusted EBITDA were to grow from the current $8.2 million to, say, $20 million, the Company would still generate negative levered cash flow unless capex can be reduced significantly. They need to get that number to probably $26 million or $27 million per annum to live semi-comfortably at the current debt load.
Perhaps there is hidden equity in things like real estate that can be monetized. Salem might be a case where the sum of the parts is worth more than the whole, so to speak. Tough to say without doing an extensive analysis of leases, owned real estate, etc.
There is no way this company at that type of run rate can support ongoing servicing of ~$180 million of debt. Interest expense on the 2028 Notes is over $11 million a year. I'm not sure what the effective coupon is on the ABL facility right now (it probably has grid pricing), but if I had to hazard a guess, that is likely another ~$1.5 million in pro forma annualized interest expense.
Annualized capex appears to be about $10 million to $12 million a year.
So, even if annualized Adjusted EBITDA were to grow from the current $8.2 million to, say, $20 million, the Company would still generate negative levered cash flow unless capex can be reduced significantly. They need to get that number to probably $26 million or $27 million per annum to live semi-comfortably at the current debt load.
Perhaps there is hidden equity in things like real estate that can be monetized. Salem might be a case where the sum of the parts is worth more than the whole, so to speak. Tough to say without doing an extensive analysis of leases, owned real estate, etc.
Last edited:
Not when this country is home to millions of tinfoil-hat types who believe that any radio signals will give you terminal cancer, by design of the Deep State.
There are things outside of the commercial radio station business, and there appears to be funding that is outside of traditional advertising.
Salem owns a book publishing company, and all of its hosts regularly publish books. There is a podcasting business, and all of its hosts do podcasts. There is also a non-commercial broadcasting operation, and the funding for that appears to be nebulous.
Here's a tidbit from Salem's 10-Q filing, released last week: National spot revenue is down 30% from 2022 levels (pg. 39)
Another tidbit: The gross margins on the publishing business TheBigA mentioned: 0% (pg. 42)
Those are two separate, and apparently serious, problems. They have to fix those, or no amount of negotiating and refinancing will keep the company solvent long-term.
Another tidbit: The gross margins on the publishing business TheBigA mentioned: 0% (pg. 42)
Those are two separate, and apparently serious, problems. They have to fix those, or no amount of negotiating and refinancing will keep the company solvent long-term.
I assume you're talking about the Delmarva Educational Assn. I think it was orginally endowed by Salem co-founder Stuart Epperson, as an individual. I don't know if it is self-sustaining or not.
Yes I think that's it. My point is that this is a company that operates both within a traditional business framework, with loans and stocks and that kind of thing. But also operates outside that framework with a non-profit. Given that many of its on-air staff advocate political theories outside normally accepted approaches. So I wonder if we might see some unconventional approaches to this situation.
Reminds me of a relative who lived a healthy lifestyle, exercised every day, ate the right foods, didn't smoke or drink, and died young.
Jim Fixx, author and dedicated, almost evangelistic runner/jogger who wrote what was considered THE book on the subject. Died of a heart attack, at 52, while jogging.
Diversified is a strong word. Salem earned 75% of their revenue from the radio business last quarter, 16% from digital and 8% from publishing.
By comparison, Audacy was about 70% radio, 22% digital, 4% events, 4% "other" revenue for the same 3 months. Not a huge difference.
The two companies reporting categories may not be strictly the same, so grain of salt.
Looks like Salem just found a solution to its ABL tightness issue.
Disaster averted for now, it would appear.
Cash burn will cause a new round of problems 6 to 12 months from now if not satisfactorily addressed.
We'll see how quickly this sale closes. My guess is WFC will extend the forbearance period to allow runway for closing of this divestiture.
radioinsight.com
Disaster averted for now, it would appear.
Cash burn will cause a new round of problems 6 to 12 months from now if not satisfactorily addressed.
We'll see how quickly this sale closes. My guess is WFC will extend the forbearance period to allow runway for closing of this divestiture.
Salem Sells Greenville/Spartanburg Trio To Educational Media Foundation
Salem Media Group is selling Conservative Talk "94.5 The Answer" WGTK-FM Greenville and Classic Hits simulcast "Earth-FM" 103.3 WRTH Greer/95.5
radioinsight.com
Looks like Salem just found a solution to its ABL tightness issue.
Disaster averted for now, it would appear.
Cash burn will cause a new round of problems 6 to 12 months from now if not satisfactorily addressed.
We'll see how quickly this sale closes. My guess is WFC will extend the forbearance period to allow runway for closing of this divestiture.
Salem Sells Greenville/Spartanburg Trio To Educational Media Foundation
Salem Media Group is selling Conservative Talk "94.5 The Answer" WGTK-FM Greenville and Classic Hits simulcast "Earth-FM" 103.3 WRTH Greer/95.5
That should give them a little more wiggle room, but their problems still loom large going forward.
The area is densely populated, so they may have met the "population coverage" criteria of EMF.
And demographically, Greenville/Spartanburg hits the bull's eye for anything Christian, even if the music EMF programs is not fire-and-brimstone evangelical. I wonder if there were other serious bidders for the stations or whether EMF made the first offer and no one else had the desire or ability to make a higher offer.
- Status