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Tuning in profits

By   /   Monday, September 14th, 2009  /   Comments Off on Tuning in profits

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The raucous public debate over health care reform has given shares of Camarillo-based Salem Communications a healthy 375  percent boost.

Salem owns a nationwide network of Christian and conservative talk radio stations. Opponents of health care reform have spent millions to get their message out to just such an audience, and investors seem to think Salem is in a good position to catch that money: Between early July and early September, shares rose from the 65 cent range to about $3.10.

Meanwhile, Salem has dived headfirst into opposing a public health insurance option. As the Business Times was going to press, President Obama was set to deliver a major speech on health care reform Sept. 9. Salem Radio Network, the syndicated content arm of Salem, has plans to deliver to Congress 1 million signatures it’s gathered to oppose a public option just hours before the president speaks.

Officials at Salem headquarters and Salem Radio Network refused to comment for this story. But they have publicly acknowledged that the advertising dollars the health care debate has thrown off meshes nicely with the company’s core audience.

“The more our audience learned about the health care landscape, the more disenchanted our audience became with President Obama’s desire for a so-called ‘public option,’ and with his rush to get health care reform completed by the end of the summer,” Salem Radio Network President Greg Anderson said in a release announcing the firm’s petition against reform efforts. “Talk radio is at the epicenter of public opinion, and citizens from all across the country are making their concerns known loud and clear.”

It seems there’s good money for media outlets that have the audience health care opponents want. In July alone, opponents of the Democrats’ push for health care reform spent $12.1 million on television commercials, compared to $9.1 million for reform supports, Evan Tracey, president of the Campaign Media Analysis Group in Arlington, Va., told the Associated Press. The group didn’t have figures available for radio advertising.

Herb Gooch, a political scientist at California Lutheran University in Thousand Oaks, said that Salem’s audience tends to be exactly the kind of people political advertisers want: Active listeners who seek out politically oriented content on their own.

And even though Obama made headlines with his new media campaigns on Facebook, an old-media drive against health care reform has proved quite effective. It’s still possible that it will derail health care reform efforts altogether.

“[Salem] has a personal conduit to people who are willing to get out there and march,” Gooch said. “It’s one thing to have a big e-mail list, but e-mail is very passive. People have to get on and listen to the radio. [Salem] seems to be able to touch the hot button very well.”

Salem is not saying whether its revenues have gotten a boost from the debate. But its most recently released financial data show that the firm needs a jolt. In the second quarter, total revenue was down nearly 13 percent year over year to $50 million. The company had a net loss of $5 million, or 21 cents per share.

The boost in Salem’s stock price is good news for the personal fortunes of Edward G. Atsinger III, Salem’s chief executive officer, and Stuart W. Epperson, chairman of the board. They each own about 20 percent of the company’s common stock, according to the company’s most recent proxy statement.

Even as Salem’s stock and revenue have withered, Atsinger’s pay has risen. Atsinger’s total compensation went from $1.58 million in 2007 to $1.61 million in 2008, according the firm’s proxy statement.

Atsinger is no stranger to politics. Between joint fundraising efforts, soft money and direct contributions, he’s given more than $130,000 to Republican candidates and causes.

It’s no secret that conservative talk radio and media flourish when Democrats hold power. In this case, Salem’s politics and its business might just align.

“If you look at [Salem’s] involvement with the tea bag thing from a few months ago, you’ll find their fingerprints all over the place,” Gooch said. “I don’t think one has to be so cynical as to say they’re building listenership, but it doesn’t hurt.”

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