Moving to shore up its balance sheet, Salem Media Group has agreed to sell all its remaining contemporary Christian radio stations to a company that knows the format well: Educational Media Foundation. For $80 million, EMF will pick up WFSH-FM Atlanta, WFHM-FM Cleveland, KBIQ-FM Colorado Springs, KLTY-FM Dallas, KFSH-FM Los Angeles, KFIS-FM Portland, and KKFS-FM Sacramento.
Most of the stations are currently branded as “The Fish.”
Salem will also enter into an advertising and marketing agreement with EMF for $10 million.
“We have made a strategic decision to exit the Contemporary Christian Music format in order to pay off all of Salem’s long-term debt,” Salem executive chairman and co-founder Ed Atsinger said in a news release. “We could not be more delighted that the buyer is EMF. EMF has demonstrated over many years a unique ability and dedication to creating and distributing the highest quality Christian music content to its listeners in a positive and encouraging way. I am confident that their impact on listeners and their communities will be incredibly effective.”
The sell-off follows earlier sales of Salem’s contemporary Christian radio stations in Greensboro-Winston-Salem-High Point, NC; Little Rock, AR; Nashville, TN; and Honolulu, HI.
EMF says it will put either its contemporary Christian K-Love or Air1 Worship Now network on the seven signals, based on market needs. The Christian radio colossus plans to begin programming the stations under a local marketing agreement on Feb. 1, 2025.
“As Salem has leaned into its talk and information programming, we are honored to carry the torch and keep Christian music flowing over these frequencies,” said EMF Interim CEO Tom Stultz. “These strong stations expand our coverage area and help us deliver on our mission to reach more people with the Gospel of Jesus Christ. We feel it is an incredible opportunity to continue serving listeners with Christian music in these important markets.”
The deal is expected to close in the first half of 2025, pending regulatory approval.
Salem Buys Debt, Issues New Shares
Proceeds from the deal, along with other financial transactions made by Salem, will allow the Christian and conservative-centric media company to repay all $159.4 million of its long-term debt. On Dec. 23, Salem repurchased all its outstanding 7.125% Senior Secured Notes due 2028 at a $37.1 million discount, including accrued interest. This included Salem making a $104 million cash payment and issuing $24 million in subordinated unsecured promissory notes to the holders of the 2028 notes. The loans were then cancelled and the indenture relating to the 2028 notes was discharged.
Salem also issued a $72 million senior secured promissory note due 2027 — a portion of the proceeds were used for the repurchase of the 2028 notes. The promissory note, which will be terminated once the sale of the seven stations closes, is secured by Salem’s assets.
Also on Dec. 23, Salem extended its revolver line of credit with Siena Lending Group for one year.
When the sale to EMF closes, or by June 22 at the latest, Salem will swap all of the subordinated notes for 24,000 shares of newly issued series A preferred stock, which will have an initial liquidation preference of $1,000 and accrue quarterly dividends, payable in cash or in kind at the option of the company, at a rate of 5% for the first two years after issuance, 7.5% for the following two years, and 10% after the fourth year after issuance. Salem says the debt-for-equity swap contains “certain mandatory redemption obligations, subject to the prior repayment of the Company’s outstanding senior debt.”
One day after buying back all its debt at a discount, Salem issued $40 million of a new Series B convertible preferred stock to The Christian Community Foundation, doing business as WaterStone. The proceeds were used for the repurchase of the 2028 Notes.
WaterStone’s investment in Salem will be overseen by WaterStone COO Rick von Gnechte, who Salem says earlier served as CFO for an unnamed $2 billion NYSE-listed public company.
“Upon the closing of these three transactions, we will have transformed and significantly improved Salem’s balance sheet and capital structure. With the exception of its revolving line of credit, Salem will have no outstanding debt,” Salem CEO David Santrella said in a news release. “Salem will also have the benefit of working with an important new strategic investor that is expected to bring significant new opportunities to the company as well as offer incredible expertise in the area of digital media.” Santrella added, “As a result of these transactions, our ability to service our national ministry partners and listeners with the important content provided by Salem has been greatly enhanced.”