Salem Media Group 375

Citing “the growing social and economic impact of the COVID-19 pandemic,” Salem Media Group has withdrawn its revenue and operating expense guidance for the first quarter of 2020. Salem isn’t the first publicly traded broadcaster to pull its financial guidance due to the turbulent U.S. economy and likely won’t be the last.

“Based on current indications, Salem expects total first quarter 2020 revenue will be less than previously projected as a result of decreased revenues from advertising, programming, events and book sales,” the Christian/conservative media company said in a statement. “Due to continuing uncertainties regarding the ultimate scope and trajectory of COVID-19’s spread and evolution, the effects of the pandemic on Salem’s audiences, programmers and advertisers, and current and potential future governmental restrictions that may be adopted in the markets in which Salem operates, it is impossible to predict the total impact that the pandemic may have on Salem’s business,” the statement continued.

In a research note to clients, Noble Capital analyst Michael Kupinksi said the move wasn’t a surprise. “Original guidance anticipated that revenues would be flat to a decrease of 2% and expenses would be flat to an increase of 3%, which was in line with our previous estimates,” Kupinski said. “We believe that the quarter started strongly but quickly deteriorated in the last weeks of March when the Coronavirus had a large effect on the economy and advertising.”

Kupinski says he believes Salem has the capacity to weather the storm for several reasons. First, some parts of the company, like its paid block programming business, “will be somewhat of a ballast to its advertising driven businesses.” Block programming makes up 31% of total company revenues. Salem has also seen increased traffic to its faith-based and news oriented mobile apps and websites, Kupinksi says, and “has cost reduction strategies that can be applied to offset some of the advertising decline.”

On Thursday, HeartMedia said it had withdrawn its financial guidance for 2020 “due to heightened uncertainty related to the novel coronavirus pandemic” and that it boosted its cash reserves by drawing $350 million from its revolving credit facility to “maintain maximum financial flexibility.”