SALM

Salem Communications Corporation (SALM)

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Salem Communications Corporation (SALM)

Q2 2008 Earnings Call

August 6, 2008 5:00 pm ET

Executives

Evan D. Masyr – Chief Financial Officer

Edward G. Atsinger III – Chief Executive Officer

Eric H. Halvorson – President, Chief Operating Officer

Analysts

Bishop Sheen - Wachovia

James Goss - Barrington Research

Presentation

Operator

Welcome to the Salem Communications second quarter 2008 earnings conference call. (Operator Instructions) It is now my pleasure to turn the call over to your host, Evan Masyr.

Evan D. Masyr

As usual, I am joined today by our Chief Executive Officer Edward Atsinger and our President and Chief Operating Officer, Eric Halvorson. We will begin in just a moment with our prepared remarks and once we’re done the conference call, the 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. Actual results may differ materially from those anticipated or as a result of certain risks and uncertainties including but not limited to market acceptance of Salem’s radio formats, competition in the radio broadcast, Internet and publishing industries and new technologies, adverse economic conditions and other risks and uncertainties detailed from time to time in Salem’s reports on Forms 10-K, 10-Q, 8-K, and other filings filed with or furnished to the Securities and Exchange Commission.

Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, change circumstances or unanticipated events.

This conference call also contains non-GAAP financial measures within the meaning of Regulation Z specifically substantial operating income, EBITDA, and adjusted EBITDA. When conforming with Regulation Z, information required to accompany the disclosure of non-GAAP financial measures including a reconciliation of such non-GAAP financial measures included in this conference call and most directly comparable financial measures prepared in accordance with GAAP is available on the Investor Relations portion of the company’s website at www.salem.cc as part of the current report on Form 8-K and the earnings release issued by Salem earlier today.

I will now turn the conference call over to Edward Atsinger.

Edward G. Atsinger III

I’m going to turn the call in a moment over to Eric Halvorson and then back to Evan to get into the specifics of the quarter’s performance. I’d like to just review with you some of the material developments that have taken place in recent days that impact our company and I think largely in a positive way.

Some of you may have learned this morning of a format change that took place in New York City. We changed the format of one of the two AM stations that we operate in New York City, WWDJ to our news-talk format that we offer in a number of other cities across the country. We changed the call letters of that station to WMYM. We long recognized a franchise opportunity in New York for news-talk.

Relative to other comparable top markets, New York is always, we felt, been underserved by this format, particularly the brand of news-talk that we employ that focuses specifically on a public policy, political talk and cultural critique. That very specific focus, we really could not take advantage of that opportunity as we perceived it until recently because WWDJ was a 5,000 watt station. The FCC about a year ago branded an application to increase power to 50,000 watts which is the maximum allowable for AM stations and we implemented that about six weeks ago. So we have been operating now for some time with a maximum power 50,000 watt station which significantly increases our reach in the New York metro adding several millions of people to the coverage area but it also intensifies the signal. It makes it much more penetrating which is important in New York given the large urban buildup and the need to have a very strong signal to penetrate in densely populated areas with large construction and edifices.

So we were happy to make that change this morning. We’re quite pleased with the rollout, with the reports that we’ve gotten today as things have developed. This change was facilitated by our acquisition of radio station WAMD-AM in the Maryland area, suburban Baltimore for $2.7 million in July. We weren’t in a position to get too specific at that time as to why we made that acquisition. We did have some questions on our prior calls about it and we answered it in a general way but essentially it was designed to facilitate this upgrade. It adds far more value in our opinion to the 970 frequency in New York City than existed when it was a 5,000 watt station.

So we’re pleased with that change and it also benefits Salem in that, it facilitates our national business in the radio network. As you know or most of you are probably aware, we syndicate 18 hours a day of long-form talk programming. This move insures access for our talent that we syndicate nationally in the nation’s #1 population center and it provides us also with that connection of a very cost-effective way of launching this format since we control all of the product or essentially all of the product, about 70% of the product that we offer over the air.

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