February 2007

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Amid Salem's growing array of media holdings, Christian teaching and talk stations remain its bread and butter. Salem's chief financial officer, David A. R. Evans, approximates the company's income as follows:

50% Teaching and talk stations
25% Christian contemporary music stations
15% Secular news/talk stations
10% Magazines and websites

Unlike secular radio, in which stations purchase content from program producers, Christian programs have always paid for airtime. While half of Salem's income comes from teaching and talk stations, half of that revenue comes from program producers. So serving these ministries—by maintaining a large and responsive radio audience and by charging rates that markets can support—is in Salem's financial interest.

The company conducted an initial offering of stock (NASDAQ: SALM) in 1999, followed by a secondary offering in 2004. Public financing has allowed Salem to expand quickly, purchasing dozens of stations since 1999 and engaging in purchases or station swaps with some of the country's largest secular chains like Clear Channel Communications and Spanish-speaking Univision.

But radio's industry-wide stock woes, due in part to fluctuating advertising dollars, have troubled Salem as well. National Religious Broadcasters president Frank Wright hopes Wall Street considerations don't pressure Salem into making poor decisions. Evans says the opposite is happening: Radio's struggles are causing Salem to diversify sensibly.

The company continues to invest in a variety of media—mostly magazines and websites—that Evans says both support its radio ministry and bring in new streams of revenue. Such expansion serves Salem's mission and core audience, he believes, and will allow the company ...