It’s a tough time to be in the radio business.

That’s what Salem Communications, the Camarillo-based owner of nearly 100 Christian and conservative-talk radio stations, has found over the last year.

The company, which has owned Oxnard’s KDAR-FM since 1974 and has stations in all of the top 10 U.S. radio markets, watched its balance sheet turn from a net income of $8.2 million in 2007 to a net loss of $30 million in its 2008 annual report released this month. Its shares have plummeted from trading above $4 to the 50-cent range.

But Salem has taken big steps to control costs – including laying off about 13 percent of its workforce and cutting pay from the executive suite all the way down.

“We didn’t grow revenue, but we grew cash flow,” Evan Masyr, Salem’s chief financial officer, told the Business Times.

The devil is in the accounting details. Salem took a $73 million impairment this year because of a rule that requires it to re-evaluate its Federal Communications Commission licenses each year and value them based on the radio business as a whole. The result: The licenses that make up 65 percent of the company’s assets were worth $465 million in 2007 but only $398 million last year and drove the firm’s large impairment.

But accounting details aside, the radio industry is hurting. Nationwide, broadcast revenue was down about 10 percent in 2008, according to the Radio Advertising Bureau, which tracks data from 6,000 stations.

Salem has actually fared somewhat better than the industry. Its broadcast revenue dropped only about 6 percent, to $192 million.

That’s partially because about one-third of Salem’s broadcast revenue comes not from selling advertisements, but rather from selling 26-minute airtime blocks to ministries and other faith organizations.

“When advertising is growing tremendously, [airtime block sales] kind of just plod along at 4 percent or 5 percent growth,” Masyr said. “When advertising is down in an environment like this, [airtime blocks] hold their own and are down only a few percent. It tends to be little bit more of a predictable stream of revenue than advertising, especially these days.”

But many of the ministries buying air time are funded by donations. Though other Christian broadcast groups say revenue from them is down only slightly so far, they things could dip further if economic conditions continue to sour.

“People tend to reach out more to God and to Christian media during these times,” said Tom Scott, president of Florida-based Sky Angel, which owns more than 70 Christian-oriented television and radio channels and carries some of Salem’s content. “But economically, they just don’t have their pocket book behind it. Not because they don’t want to, but because it’s just not feasible.”

For its part, Salem has put into place some painful cost-saving measures. It is laying off about 13 percent of its workforce, which has more than 1,000 full-time employees. It also ended its 401(k) matching payments in July 2008 and implemented a companywide pay cut of 5 percent, with 10 percent cuts for some of the firm’s top officers.

Salem takes a “cluster” approach with its stations, owning, for example, five call signs in the Atlanta area and seven in Honolulu.

“If it were not for the clustering approach, it would be more difficult to reduce our headcount,” Masyr said. “If you’re able to have three stations [in a market], you’re able to have one manager, one studio, one receptionist. You definitely gain economy of scale.”

Masyr said that factoring out last year’s large one-time expenses and factoring in some cost-saving measures, the firm’s adjusted earnings before interest, taxes, depreciation and amortization grew 16 percent. But non-GAAP accounting aside, the firm also has non-radio revenue that’s growing slightly and radio plays that hold promise.

Last summer, the Salem dipped its toe in Christian-oriented Spanish language radio in Denver. And since 2004, it’s also been in the conservative talk radio business.

Since then, Congress and the presidency have changed from Republican hands to Democrat hands – which might bolster conservative talk radio as the out-of-power party regroups.

“It’s a little bit early to say whether it’s going to move the needle in terms of listeners or revenue,” Masyr said. “This is the first real change. But I can tell you that Rush Limbaugh has been quoted saying he does better when there’s a Democrat in office. We are doing events around the country in response to the change in administration.”

But there’s no getting around the fact that it’s a tough economy for advertising-intensive businesses like radio. Masyr said the company’s primary focus right now is de-leveraging itself.

“It’s a challenging time for broadcasters,” Masyr said. “We’re doing everything we can to confront the challenges of radio and our capital structure.”

Are you a subscriber? If not, sign up today for a four-week FREE trial or subscribe and receive the 2009 Book of Lists with your purchase.