Troubling Radio Industry Finances

[101tm]

The area is densely populated, so they may have met the "population coverage" criteria of EMF.

And the 95.5 signal for the Air1 simulcast was upgraded early last month to where it along with the existing 103.3 signal cover much more population than it previously did, essentially the whole market. It’s almost like that was timed perfectly for this because it increased the value of the cluster. Will be interesting as this is going to be EMF going against a very established CCM outlet in its home market (RTN’s His Radio).

The adult hits format on 95.5/103.3 never made much sense anyway. There were very few advertisers, most seemed to be shared with 94.5. Just wealth management, travel, and flooring commercials 🤣 it was treated like a “refuge” for DJ’s let go from other stations in the market more than anything.

If Salem didn’t need the money, I doubt they would have left the market entirely like this. It was definitely the best signal they had their talk programming on. Salem got 94.5 for a decent price in 2012 as the seller had a clause that it could only be sold to someone who wouldn’t play secular music on the signal - which made it a bit difficult for them to find a buyer.

 

[MarkW]

Wow - I now see WGTK is a monster signal. That's clearly the prize of the trio.

 

[EricStein]

That should give them a little more wiggle room, but their problems still loom large going forward.

It's not going to help that the only properties in some of their markets are marginal-at-best AM signals with no associated FM translators.

 

[Mediafrog+]

Will be interesting as this is going to be EMF going against a very established CCM outlet in its home market (RTN’s His Radio).

EMF is no longer shy about going against established CCM stations. Here in Houston they are preparing to (finally) launch K-Love against long established (40+ years) KSBJ. And they also are possibly close to a deal in DFW, despite the presence of KLTY and several other Christian music variants.

 

[Kelly A]

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.

Chances are that Salem understands they need to balance cashflow and live within their means. It sucks when you have to sell off plum FM stations while being saddled with far less desirable AM stations, but at least they had that card to play.

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.

EMF is really good at knowing what's needed to get quick transfer approval. That's what happens in a cash deal.

 

[101tm]

So with Salem needing the cash ASAP, and being somewhat curious living in the market - would it be possible for an LMA for EMF to begin operating those 3 Salem stations on 9/1? The filing makes it quite clear EMF will be taking these stations over via LMA until the sale closes.

 

[Kelly A]

So with Salem needing the cash ASAP, and being somewhat curious living in the market - would it be possible for an LMA for EMF to begin operating those 3 Salem stations on 9/1? The filing makes it quite clear EMF will be taking these stations over via LMA until the sale closes.

Sure, I suppose it depends on any contractional obligations Salem might need to fulfill before EMF wipes the slate clean.

 

[secondchoice]

Would any religious operator like KLove be interested in loaning money or buying Salem debt? They could help out a fellow Christian minded broadcaster. If Salem fails the folks holding the Salem bonds or notes would have a lot of say in the court hearings. They could be first in line to get the "good" properties. The AMs could be teaching and preaching. KLove claims to be interested in spread the Word of God. They have a lot of cash. This would be a chance to reach folks that don't listen to CCM.

 

[JJSPC]

Would any religious operator like KLove be interested in loaning money or buying Salem debt? They could help out a fellow Christian minded broadcaster. If Salem fails the folks holding the Salem bonds or notes would have a lot of say in the court hearings. They could be first in line to get the "good" properties. The AMs could be teaching and preaching. KLove claims to be interested in spread the Word of God. They have a lot of cash. This would be a chance to reach folks that don't listen to CCM.

Even Christian networks who run a lot of teaching programs such as VCY don't want AM's. No way EMF is going to go there.

 

[Kelly A]

Would any religious operator like KLove be interested in loaning money or buying Salem debt? They could help out a fellow Christian minded broadcaster. If Salem fails the folks holding the Salem bonds or notes would have a lot of say in the court hearings. They could be first in line to get the "good" properties. The AMs could be teaching and preaching. KLove claims to be interested in spread the Word of God. They have a lot of cash. This would be a chance to reach folks that don't listen to CCM.

Whereas religiously based Salem has a completely different motivation and business structure than EMF. Beside that, EMF likely has clearly established guardrails where they can, or can't spend donations.

 

[Mediafrog+]

Would any religious operator like KLove be interested in loaning money or buying Salem debt? They could help out a fellow Christian minded broadcaster. If Salem fails the folks holding the Salem bonds or notes would have a lot of say in the court hearings. They could be first in line to get the "good" properties. The AMs could be teaching and preaching. KLove claims to be interested in spread the Word of God. They have a lot of cash. This would be a chance to reach folks that don't listen to CCM.

Have my doubts about a not-for-profit entity getting involved with buying up debt, unless they are assuming debt load in lieu of paying for a station or stations. In such a scenario EMF could immediately pay down the debt.

As for eventually acquiring stations from Salem, you’d have to do a market by market analysis. EMF may already have good signals in places where Salem is present.

I don’t think EMF is interested in the “preaching and teaching” model. Their philosophy involves soft-selling their message through music.

 

[secondchoice]

Salem does have several "Fish" FM stations which could be KLove or Air 1 operations. I suspect the FM generate lot more cash than the AMs. I am surprised that Salem hasn't sold some land their AMs are using. Duplexing the AM stations or turning in licenses.

 

[101tm]

I wonder if WAVA or KKLA could be on the block? EMF is in both markets but they could be Air 1 outlets. Then again, I know EMF may have money to buy but their money isn’t unlimited.

I could see them unloading those before KLTY or WFSH.

 

[BoboKnight]

I wonder if WAVA or KKLA could be on the block? EMF is in both markets but they could be Air 1 outlets. Then again, I know EMF may have money to buy but their money isn’t unlimited.

I could see them unloading those before KLTY or WFSH.

EMF had $132 million in cash and $109 million in marketable securities at 12/31/22. They generated $108 million in cash flow from operations last year. I imagine financial constraints wouldn’t be a factor for them buying any radio stations Salem puts on the market.

 

[davideduardo]

Would any religious operator like KLove be interested in loaning money or buying Salem debt? They could help out a fellow Christian minded broadcaster. If Salem fails the folks holding the Salem bonds or notes would have a lot of say in the court hearings. They could be first in line to get the "good" properties. The AMs could be teaching and preaching. KLove claims to be interested in spread the Word of God. They have a lot of cash. This would be a chance to reach folks that don't listen to CCM.

Salem is a for-profit public corporation that found a niche that matched the beliefs of its founders. EMF is a non-profit "church without a chapel" that is belief based and which offers the alternative of nonsectarian Christian music formats without preaching.

EMF does not want AMs. When they get one as part of an AM/FM combo they bought, they quickly get rid of the AM.

The only case where there might be some mutual interest would be an outright purchase of one or more stations, but not the whole company.

And, most important, Salem appears to have short term crunch that likely can be resolved.

 

[davideduardo]

Salem does have several "Fish" FM stations which could be KLove or Air 1 operations. I suspect the FM generate lot more cash than the AMs. I am surprised that Salem hasn't sold some land their AMs are using. Duplexing the AM stations or turning in licenses.

Some of the Salem land has no value for anything except a station... AM antennas are not usually the best for cellular or communications sites and most of the Salem AM sites are not in much-liked locations. And putting directional AMs into duplexed towers is very hard as the patterns of each are different, requiring different tower layouts and a different number of towers... and even different heights.

 

[davideduardo]

Have my doubts about a not-for-profit entity getting involved with buying up debt, unless they are assuming debt load in lieu of paying for a station or stations. In such a scenario EMF could immediately pay down the debt.

They might pledge one or more stations to EMF in exchange for a loan guarantee... in case of a default, they complete the buy. But, as you say, they are not going to get involved with the internal finances of Salem.

I don’t think EMF is interested in the “preaching and teaching” model. Their philosophy involves soft-selling their message through music.

Amen! Two different companies, one for-profit and the other for spiritual purposes.

 

[PTBoardOp94]

Interesting that, in the face of the asset sale that will give Salem some breathing room, the stock price fell further to an all-time low of 65 cents. So Wall Street appears unconvinced.

 

[Kelly A]

Interesting that, in the face of the asset sale that will give Salem some breathing room, the stock price fell further to an all-time low of 65 cents. So Wall Street appears unconvinced.

Wall Street can't give a about traditional media. It wouldn't matter if Salem grew a money tree on a transmitter site, the market has long given up on radio or TV.

 

[vchimpanzee]

EMF does not want AMs. When they get one as part of an AM/FM combo they bought, they quickly get rid of the AM.

There was one in my area, though I'm sure EMF was more interested in its translators. Air1 was on there for a while but one day I turned in just to see what that sounded like and it was Southern gospel. So EMF must have stopped using it for the HD-2 signal of the K-Love station.