Salem Communications (SALM)
Q4 2012 Earnings Call
February 25, 2013 5:00 pm ET
Evan D. Masyr - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Corporate Controller
Edward G. Atsinger - Founder, Chief Executive Officer, Director and Director of Salem Communications Holding Corporation
Barry L. Lucas - Gabelli & Company, Inc.
Michael A. Kupinski - Noble Financial Group, Inc., Research Division
Previous Statements by SALM
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Evan D. Masyr
Great. Thank you, and thank you for joining us today for Salem Communications' fourth quarter 2012 earnings call. As a reminder, if you get disconnected at any time, you can dial into (719) 325-4804 or listen from our website at www.salem.cc.
I'm joined today by Edward Atsinger, our Chief Executive Officer; David Santrella, President of Radio; and David Evans, President of Interactive and Publishing. We will begin in just a moment with our prepared remarks and once we are done, the conference call operator will come back on the line to instruct you on how to submit questions.
Please be advised that statements made on this call that relate to future plans, events, financial results, prospects or performance are forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available information. Actual results may differ materially from those anticipated and reported results should not be considered an indication of future performance. We do not intend or undertake no obligation to update our forward-looking statements, including forecasts of future performance, the potential for growth of existing markets, the opening of new markets or the potential growth from future acquisitions. More information on risks and uncertainties that may affect our business and financial results are included in our annual report on Form 10-K for the year-ended December 31, 2012 and other public filings we have made with the Securities and Exchange Commission.
This conference call also contains non-GAAP financial measures within the meaning of Regulation G, specifically station operating income, EBITDA and adjusted EBITDA. In conformity with Regulation G, information required to accompany the disclosure of any non-GAAP financial measures is available on the Investor Relations portion of the company's website at salem.cc.
I would now like to turn the call over to Edward Atsinger.
Edward G. Atsinger
Thanks, Evan, and thanks to all of you for joining us for our fourth quarter 2012 earnings conference call. Let me begin with a review of our financial performance for the quarter and discuss some of our strategic initiatives. Also, about an hour ago, we issued a press release announcing a plan to refinance our capital structure. I'll discuss that in a little more detail before I turn the call back over to Evan, who can review then with you in more detail the fourth quarter and discuss guidance for the first quarter.
Let's begin with a brief review of the fourth quarter. Total revenue was up 6%, this growth was a result of a 25% increase in Internet revenue, a 9% increase in publishing revenue and 3% increase in broadcast revenue. Currently, as we continue to diversify our revenue streams, 23% of our income comes from Internet and -- revenue comes from Internet and publishing, and we continue to see that diversification.
Our results during the quarter were aided by strong political revenue. We recorded $2.4 million in political for the quarter compared to $700,000 in the fourth quarter of 2011. This represents the biggest political year in Salem's history, with political revenue in 2012 totaling $5.5 million. Our previous high watermark for political was $3.7 million in 2010. I think that this trend, this positive trend in political, is being driven in part by a stronger group of assets that target political opinion. And while we're pleased with the fact that these -- those in the political arena recognize the value of our listeners and our focused audience, it will pose a particularly tough comp for us in 2013. So while we're projecting top line growth in our Q1 2013 guidance, which Evan will discuss in a minute, the impact of the Republican primaries in Q1 2012 will be noticed in the first year-over-year comparison.
If we turn our attention to our Internet division, revenue increased by 25%, as I mentioned a minute ago, in the fourth quarter, compared to Q4 in the prior year. This was a result of both the impact of acquisitions and organic growth. The recent acquisitions of SermonSpice and Godvine are progressing right at, or a bit better than we projected. If we exclude the impact of these 2 acquisitions, however, the organic growth produced a 13% increase on its own. Our national Conservative News Talk website saw the biggest growth, posting a 23% increase in revenue. Clearly, political played a role here. The election cycle also produced a significant increase in monthly page views to these sites. While we have seen some falling off of traffic since the election, visits are still up nicely compared to preelection levels.
I mentioned earlier our publishing revenue was up 9% for the quarter, that we achieved a significant growth in revenue of 21% from our digital on-demand book publisher Xulon Press. We've learned over time that Xulon Press is a business that can grow cost effectively with increased marketing. Accordingly, beginning in late 2011 and continuing into 2012, and through 2012 we increased our marketing budget. We're now starting to see, in our fourth quarter numbers, the positive impact of this increased marketing.