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Salem Media Group, Inc. Message Board

  • longtimefollower longtimefollower May 6, 2010 7:35 PM Flag

    What will SALM make this year.

    $8 million operating in come in Q1. Looks like Q2 will be fairly flat with a year ago. Figure $10 M in op. income, tops, for Q2, $10 M for Q3, and $12M for Q4. That totals $40 M for the year. Back out $7.75 M a quarter for interest expense, and you are down to pre-tax of $9 M. Apply a 40% tax rate, and you are down to $5.4 M in net income. Divide by 24 M shares outstanding, and you get somewhere around 25 in EPS for this year, I'm guessing.

    The stock is worth $3-4, at this time, and no more...unless someone tries to buy out the company, or they are able to refinance the debt at much lower rates.

    Anyone care to agree or disagree with anything here, especially the projections of operating income, and interest expense, for this year. Seems a "tragedy" to me that a company that is going to have somewhere in the ballpark of $40 M in operating income this year, is going to have at least 3/4 of that eaten up by interest expense. But, admittedly, it's a hell of a lot better than the Ch. 11 that seemed a risk a year ago.

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    • Slightly off topic, but related......How are they allocating the revenue of the block programming to the local stations.

      I have to conclude that corporate sells the national programs and allocates that program income to the local stations.

      But how is that allocation determined? By market size? By some sort of rating/market size method? By what stations they plan to spin? Dart board?

    • Your analysis is ok. The debt level is undesirably high. The business appears stable and they appear to be upgrading their portfolio of properties. This is a longer term opportunity. Solid business.

    • I think you are missing 2 important items the large NOL almost $87 million so SALM will not pay taxes for awhile and the FCF (the real cash the business generates) will be much larger than net income due to the large non-cash amortization and depreciation (because they have little cap ex). In addition, they plan on buying back $30 m of notes per year using the revolver.


    • Got CMLS at 8.5x EV/EBITDA based on my estimates for this year. While SALM is only at 7.5x, I expect little actual growth, in EBITDA, in the way CMLS is expected to grow. And the Street likes to go for GROWTH. Part of that is because of SALM's business model (they weren't hurt as bad when things went down)...but part of it is that it looks like expenses are going to be coming back AT THE SAME RATE as revenues go up, at SALM. And they are also "stuck" with dramatically higher interest expense....more so than CMLS's higher interest expense.

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