INVESTOR PRESENTATION. NASDAQ: SALM June 2017

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Transcription:

INVESTOR PRESENTATION NASDAQ: SALM June 2017

Safe Harbor Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed in Salem Media Group s reports filed with the Securities and Exchange Commission, which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Please refer to Salem Media Group s most recent Forms 10-K, 10-Q and 8-K for additional information on the risks, uncertainties and other factors related to our business. Except as required by law, Salem Media Group does not undertake any obligation to update or revise any forward-looking statements included in this presentation. Non-GAAP Financial Measures This presentation also contains non-gaap financial measures within the meaning of Regulation G, including EBITDA, Adjusted EBITDA, credit agreement adjusted EBITDA, adjusted free cash flow, same station net broadcast revenue, station operating income, digital media operating income and publishing operating income. In conformity with Regulation G, information reconciling the non-gaap financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles is available on the investor relations portion of the company's website at www.salemmedia.com, as part of the earnings releases issued by Salem Media Group and related filings with the Securities and Exchange Commission. 1

Who We Are Salem Media Group is a multi-media company targeting conservative and Christian audiences. 118 Radio Stations We reach millions of consumers across the nation through digital media, radio and publishing. Salem Media has one of the largest content libraries with more than 100 highly-trafficked website properties and 118 radio stations featuring multiple celebrity talk show hosts. Strong financial model characterized by recurring revenue, adjusted free cash flow (currently 15% yield) and quarterly dividends (currently 4% yield) 1. Daily Bible Bible Study Tools 1) As of June 2, 2017 2

We Address a Large & Evolving Marketplace Salem s Christian and conservative content has massive reach across two of the largest and fastest growing media channels: Radio + Online. Account for 2% of total US ad spend. Expected to increase 0% to $112B by 2020. 71% of Americans identify with a Christian religion, while 42% lean toward the Republican party². US Advertising Media Market Sizes¹ In US$ billions traditional media figures include online equivalents 2016 2020 $94 $82 $7 $68 Radio reaches over 9% of adult consumers on a weekly basis². Over 268 million people listen every week, with news/talk as the second largest format (following country music). Christian radio remains the fastest growing format. 1) Source: PwC Global Entertainment and Media Outlook 2) Source: Gallup, Nielsen Audio Internet Advertising TV Advertising $18 $18 $17 $17 $19 $15 Radio Advertising Consumer Magazine Advertising Newspaper Advertising

Key Market Drivers Current state of political and religious climate command strong premiums from advertisers. Mobile is our fastest growing segment share in US online ad spend is expected to grow from 41% to 49% in 2020. Hollywood is increasingly recognizing the size and buying power of our audience through continued distribution of religious films affirms the market for faith-based content. Mobile Share of US Online Ad Spend¹ 41% 49% 2016 2020 1) Source: emarketer 4

Our Integrated Multi-Media Approach Publishing $27 Digital Media $47 Revenue LTM March 1, 2017 $275M Radio Broadcasting #1 in commercial Christian radio broadcasting. 118 stations across 40 markets, with 2,900 affiliates. Digital Media More than 145 million monthly page views across hundreds of website properties. Salem s fastest growing segment. Radio Broadcasting $201 Publishing Publish more than 2 million Christian books annually. Several high profile authors under contract. Dollars in millions 5

Our Integrated Multi-Media Approach Radio Broadcasting Digital Publishing We are the Third Largest Radio Broadcaster in the Top 25 U.S. Markets Ownership of Radio Stations Serving the Top 25 Markets 1 154 Number of stations in the top 25 markets Number of top 25 markets represented 120 Approximately half of the adults in the U.S. live in the top 25 markets, where stations have stronger revenue, margins and asset values 7 24 2 2 9 6 2 29 22 19 10 10 6 9 5 5 9 5 9 iheartmedia Entercom/CBS Radio 2 Salem Cumulus Univision Beasley Radio One Cox Alpha Media Spanish Broadcasting System 1) Source: BIA/Kelsey and company filings. Market ranking excludes Puerto Rico. 2) Pro forma for Entercom/CBS Radio merger and related regulatory divestures of 10 stations in five top 25 markets. ) Includes announced acquisitions, divestitures, and exchanges for Salem. Emmis 6

Our Integrated Multi-Media Approach Radio Broadcasting Five Strategic Radio Formats Christian Teaching and Talk 48% of radio revenue Christian Music The FISH 2% of radio revenue Digital News Talk 20% of radio revenue 40 Stations + Sirius XM 1 Stations 2 Stations Spanish Christian Teaching and Talk % of radio revenue Business % of radio revenue 8 Stations 1 Stations Publishing Salem LTM March 2017 Radio Revenue Programming Advertising Other 42% 10% $180M 48% Block Programming Programming time sold to national non-profit ministries and local churches. Higher margins than traditional spot advertising. High renewal rates exceeding 95% annually + 2.5-5.0% rate increases. Our top 10 programmers have averaged 0+ years on the air. Programming revenue comprises 1% of total revenue. 7

Our Integrated Multi-Media Approach Radio Broadcasting Digital Publishing Salem Radio Network Over 2,900 Affiliates The Hugh Hewitt Show The Mike Gallagher Show The Dennis Prager Show The Michael Medved Show The Larry Elder Show The Joe Walsh Show The Eric Metaxas Show Number of Affiliates: 60 62 49 5 62 19 1,29 Affiliates 89 Affiliates $ in millions Salem Radio Network Revenue 472 Affiliates 54 Affiliates $15.5 $15.6 $17.8 LTM /15 LTM /16 LTM /17 8

Our Integrated Multi-Media Approach Radio Digital Publishing National Christian Websites Salem Digital Media Growth Revenue CAGR: 12.8% Operating Income CAGR: 15.0% National Conservative Websites $28.7 $6.8 $45.2 $45. $46.5 Church E-Commerce Websites $6.0 $9.1 $9.6 $9.7 $10.5 New Mobile Apps Bible Study Tools King James Bible Daily Bible One Place Daily Devotion LTM /1 LTM /14 LTM /15 LTM /16 LTM /17 Revenues Operating Income $ in millions 9

Our Integrated Multi-Channel Approach Radio We continue to invest in mobile and tablet platforms given ongoing shift in consumer demand, including mobile apps. Digital Publishing Transitioned From Desktop to Mobile 1% 8% 22% 2009 29% 2016 Desktop now accounts for only 22% of page views vs. 99% in 2009. Diversified our traffic sources to avoid reliance from any one provider. Majority of traffic now comes from mobile. 1% 29% 7% 99% Desktop Mobile Apps Mobile Web Tablet 2009 Diversified Mix of Traffic Sources 18% 45% % 11% 18% 12% 41% 2016 15% Mobile Apps Search Engine Direct Traffic Facebook Email Website Referrals 41% 10

Our Integrated Multi-Media Approach Radio Digital Publishing Publishing Revenue More than 75 books on the NY Times Best Seller List Salem Traditional Book Publishing $27.0 $24.1 $27.2 Salem Self-Publishing Services LTM /15 LTM /16 LTM /17 11

Geographically Diversified Portfolio Seattle, WA (1) 4 AM Denver, CO (17) 4AM, 1 FM Omaha, NE (72) 2 AM, 1 FM Minneapolis, MN (15) 4 AM Chicago, IL () 2 AM Columbus, OH (6) 1 AM, 1 FM Detroit, MI (12) 2 AM Cleveland, OH (2) 2 AM, 1 FM Youngstown, OH (129) 1 AM Pittsburgh, PA (26) 2AM, 1 FM Portland, OR (22) 2 AM, AM Sacramento, CA (27) 2 AM, 2 FM San Francisco, CA (4.5) AM Colorado Springs, CO (89) 1 AM, 2 FM Oxnard, CA (119) 1 FM Los Angeles, CA (2) 1 AM, 2 FM San Bernardino, CA (24) 1 AM Honolulu, HI (62) AM, 4 FM San Diego, CA (16) 2 AM 7 4 5 4 1 1 2 5 5 4 2 2 2 1 2 6 1 4 5 1 4 2 2 4 Boston, MA (10) 4 AM New York, NY (1,19) 2 AM Philadelphia, PA (9) 2 AM Washington, DC (7) 2 AM, 1 FM Warrenton, VA 1 AM Nashville, TN (42) FM Greenville, SC (58) FM Atlanta, GA (8) 5 AM, 1 FM Orlando, FL (1) 4 AM Phoenix, AZ (14) AM Dallas, TX (5) AM, 2 FM San Antonio, TX (25) AM Houston, TX (6) 2 AM, 1 FM Little Rock, AR (85) FM St. Louis, MO (21) 2 AM Tampa, FL (18) 5 AM Sarasota, FL (7) 1 AM Miami, FL (11) 4 AM Top 25 Markets Markets 26-50 Other Markets Source: Radio Market Survey Population, Rankings & Information Spring 2017, published by The Nielsen Company. Market Ranking excludes Puerto Rico. 12

Why We re Different Radio hosts drive listeners to websites. Radio stations hold book signing events to grow book sales. Pastor events promote digital resources. Websites promote radio programs & books. Cross-selling between radio & digital with larger advertisers. Unique Ability to Promote Across All Platforms 1

Where We re Going Grow Digital Media Strong diversification of traffic sources positions us for sustainable growth. Utilizing strong cash generation from radio business to acquire more traffic and complementary website properties. Our infrastructure enables us to cut nearly all costs from acquired companies, while maintaining or increasing revenues. Increasing traffic to current sites through new mobile apps and cross promotion from our other media platforms. Added 41 apps 2015 2017. $ in thousands Mobile App Revenues $,742 $1,189 $48 $89 201 2014 2015 2016 14

Where We re Going Drive Further Monetization of Large Radio Audience Centralizing costs to mitigate overhead. Capitalize on prior radio station acquisitions, which take 18-24 months to turn profitable. ~18 months Acquired 14 radio stations and 28 FM translators since Jan 2015¹. 1) Includes two stations operated under a local marketing agreement. 15

Where We re Going Publishing Launching Regnery Faith in 2017 Will Continue to Attract Highly Sought After Authors Currently, Dinesh D Souza, Edward Klein and David Limbaugh under contract all New York Times Bestsellers 16

FINANCIAL OVERVIEW 17

Revenue Profile 1 Radio Broadcast 1 Radio $189.2 $189.9 $194.1 $197.2 $202.0 2012 201 2014 2015 2016 2 Digital $26.6 $.8 $45.7 $44.8 $46.8 2012 201 2014 2015 2016 Publishing $1.4 $1.2 $26.8 $2.8 $25.5 2012 201 2014 2015 2016 18

Key Operating Metrics Total Revenue Adjusted EBITDA Adjusted Free Cash Flow $274M $267M $266M $5M $50M $50M $51M $25M $26M $27M $28M $27M 201 2014 2015 2016 201 2014 2015 2016 201 2014 2015 2016 19

Balance Sheet & Dividends Strong Dividend History Currently 4% dividend yield¹ Cash & cash equivalents intentionally held down to minimize cash interest $0M revolving line of credit at LIBOR + 175 $151M Federal NOLs at March 1, 2017 Select Balance Sheet Terms $ Millions Mar 1, 2017 Dec 1, 2016 Cash & cash equivalents 0.1 0.1 Receivables 4.9 8.0 FCC Licenses 88.7 88.5 Total Assets 578.5 590. Debt 257.8 262.2 Total Liabilities 6.9 76.4 Total Stockholders equity 214.7 21.8 1) As of June 2, 2017 20

(Debt in thousands) Leverage Ratio Continued Reduction of Debt & Leverage Debt & Leverage 20,000 10,000 $07k 00,000 290,000 280,000 270,000 5.64x 5.8 5.6 5.4 5.2 260,000 250,000 240,000 20,000 $260k Q1 1 Q2 1 Q 1 Q4 1 Q1 14 Q2 14 Q 14 Q4 14 Q1 15 Q2 15 Q 15 Q4 15 Q1 16 Q2 16 Q 16 Q4 16 Q1 17 5.0 4.98x 4.8 4.6 Debt Balance Leverage Ratio 21

Key Takeaways 1 We are the market leader in Christian and conservative media. 2 We have built a robust multi-media infrastructure that enables us to cross-promote hundreds of owned media properties. Capitalizing on the advertising market s transition from PRINT DIGITAL MOBILE. 4 Utilizing a strong cash generating radio business to invest in our fastest growing initiatives, pay down debt and return capital to shareholders. 22

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