Question-and-Answer Session
Operator
Thank you. At this time I remind you if you would like to ask a question, press *, and then 1, on your telephone.
Thank you. Our first question is coming from Victor Miller from Bear Stearns
Victor Miller - Bear Stearns
Good afternoon. I penciled in, you obviously said you were down 1.6% in advertising revenue. If you let's say block programming, kept a similar pace, maybe up 7.5% in the second quarter?suggests that the core advertising's probably down about 5%. If you could talk about what you're seeing in terms of what's driving the advertising change there?
Secondly, obviously the expense growth is about 8.5% penciled in for second quarter versus 7.5% for first quarter, yet obviously the revenue's going to be almost 600 basis points lower. Maybe if you can just talk about the dynamic that's driving that with more granularity?
Thanks very much.
Evan Masyr
In service of the advertising revenue side vector they are on a same station basis, local advertising revenue was flat Q1 '07 compared to Q1 '07. National advertising grew 1%. So I'm a little unclear where you get the number minus five. Same station basis local advertising was flat
Victor Miller - Bear Stearns
That's my guess for second quarter. In other words if you only have 1.6% for total revenue growth and block programming grows at a similar rate and that implies that the core growth is down—
Evan Masyr
OK, yeah. Second quarter?two dynamics in advertising revenue. The first dynamic is, as I mentioned, we've got a number of vacancies in our local sales departments in some important markets that we're working hard to fill. Although that gave us favorable expense position in Q1, having those positions vacant is handicapping in our Q2 advertising revenue performance on the local sides.
So that is the Salem specific factor. Overlying that or underlying that is just the overall softness in radio advertising that you're hearing from our various radio broadcasting peers as they report. So I think those are the two factors that the standing out and then the third element is, as Evan mentioned, we sold our sports station in Cleveland during the first quarter so Q2 '06 has got revenues in there for that station?Q2 '07 obviously not in that.
Obviously those are the three
Victor Miller - Bear Stearns
Q2 '06?
Evan Masyr
Q2 '06 I would think that station's revenues were about $7-800,000. So those are the three primary factors.
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