Edward Atsinger – Chief Executive Officer Evan Masyr – Chief Financial Officer and Senior Vice President Eric Halvorson – President and Chief Operating Officer

Michael McGaffery – (inaudible) Capital Bishop Sheen - Wachovia Victor Miller - Bear Stearns

At this time I would like to welcome everyone to the Salem Communications first quarter 2008 earnings call. (Operator Instructions) It is now my great pleasure to turn the floor over to your host, Mr. Evan Masyr.

Thank you for joining us today for our first quarter 2008 earnings call. As a reminder, if you get disconnected at any time, you can dial in to 973-582-2717 or listen from our website, www.salem.cc. I am joined today by our Chief Executive Officer, Edward Atsinger and our President and Chief Operating Officer, Eric Halvorson. We will begin in just a moment with opening comments from Ed and Eric. I will then provide a brief financial overview. After our prepared remarks, our conference call operator will come back on the line to instruct you on how to submit questions. Please be advised that statements made on this call that relate to future plans, events, financial results, prospects, or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including, but not limited to: Market acceptance of Salem’s radio formats; Competition in the radio broadcast, Internet and publishing industries; New technologies; Adverse economic conditions; And other risks and uncertainties detailed from time to time in Salem’s reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events. This conference call also contains non-GAAP financial measures within the meaning of Regulation G, specifically station operating income, EBITDA and adjusted EBITDA. In conformity with Regulation G, information required to accompany the disclosure of non-GAAP financial measures, including a reconciliation of such non-GAAP financial measures included in this conference call to the most directly comparable financial measures prepared in accordance with GAAP, is available on the Investor Relations portion of the Company’s website at www.salem.cc as part of the current report on Form 8-K and earnings release issued by Salem earlier today. I will now turn the call over to Edward Atsinger.

Thank you, Evan and thank all of you for joining us for our first quarter 2008 earnings call. Before Eric and Evan update you on our specific results for the quarter, I’d like to make a few preliminary comments. Since our last call, we’ve entered into an agreement to sell KKMO-AM in Seattle, Washington for approximately $3.7 million with the cash flow the station generated in 2007, the sales price represents a multiple of about 9 times cash flow. We are still pursuing opportunities to sell additional properties, particularly those that are non-strategic and/or non-performing or underperforming. Last October we launched in Denver a fourth strategic format, Spanish language Christian Teaching and Talk. We now have this format in 4 markets: Denver, Atlanta, Boston and Sacramento and we will be adding a fifth station to this format in Seattle in the near future. The early results have been encouraging as we have been facing more than 10% ahead of our internal budget. We are evaluating the other stations in our portfolio to see if there might be some additional opportunities for this format. The most significant issue in radio continues to be inability to grow revenues in the current environment. This situation is being driven by the overall slowing of the economy; a loss of liquidity in the financial services industry and a related slump in the housing market. As we’ve said before, but it needs to be mentioned again, the mortgage business in home improvement categories have been particularly hard hit and they have historically been important advertisers for sale. I noted that some of our other radio peers have also had similar challenges. We don’t expect much improvement in these areas for at least a couple of quarters; consequently we are devoting a lot of our time and attention to analyzing and paring back our budgets on the expense side. Furthermore, with the slowdown in the economy we are reducing much of our discretionary spending, particularly as it relates to marketing and promotional cost and capital expenditures. So with those preliminary comments, let me turn the call over to Eric Halvorson for a discussion of our first quarter operating results.

Thanks Ed. For the first quarter total revenue decreased by 1%; this was comprised of a 3% decrease in net broadcasting revenue and a 16% increase in non-broadcast revenue. We have 43 stations that are programmed in our foundational Christian Teaching and Talk format. These stations contributed 46% of our total revenue. Our block programming revenue, which accounted for 64% on the revenue on these stations, decreased approximately one half of 1% due to certain program cancellations that have yet to be replaced. Overall net broadcasting revenue for these stations was down by 6% compared to the prior year, directly attributable to a 17% decline in advertising revenue. This decline is primarily due to weakness in national spot advertising and continued softness in local spot advertising in a few key markets, notably New York, Los Angles and Washington DC. Additionally as Ed highlighted in his opening remarks, the loss of revenue from the financial services and related categories has continued to contribute to this decline. Our 12 contemporary Christian music stations decreased in revenue by 8% for the quarter; they contributed 18% of our total revenue. Again, the weakness in national spot business which declined 29% contributed to this decline. Local spot advertising in KLTY in Dallas, which is our flagship CCM station, were up 11%; however, national spot was down more than 30%. This quarter we had a decrease in revenue of 3% on our 26 news talk stations. These stations contributed 13% of our total revenue. On a same station basis these stations grew revenue by 3%. We’ve been providing specific information on the last few calls about our performance at KRLA in Los Angeles, and as you might recall the revenue declines have been shrinking over the past few quarters. In second quarter of 2007, KRLA had an 18% revenue decline followed by a 13% decline in the third quarter and a 6% decline in the fourth quarter of last year. We do continue to see some improvement with a 5% decline in revenue this quarter. However, we also continue to see a weak radio advertising environment in the Los Angeles market. Our non-broadcast business, comprised of our publishing and Internet operations, continues to deliver strong growth. For the quarter, non-broadcast revenue increased 16% to $6.1 million or 11% of our total revenue. Our non-broadcast business generated a loss of $100,000 for the quarter, compared to operating income of $300,000 in the prior year. But as we did mention in our last call we have made investments in our non-broadcast business in the form of increased advertising and the launch of our new magazine Townhall Magazine. Revenue from the publishing division of our non-broadcast business increased 13% to $2.6 million. Our Internet business increased revenue 19% to $3.5 million. I’ll now turn the call over to Evan for additional discussion of first quarter results and our guidance for the second quarter of 2008.

Thank you, Eric. Our results for the first quarter of 2008 were issued in a press release earlier today and are available on the investor relations portion of our website. I’ll now briefly comment on these results. Total revenue for the first quarter decreased 1% to $54.5 million and adjusted EBITDA decreased 12% to $11.5 million. Net broadcasting revenue decreased 3% to $48.4 million and station operating income decreased 9% to $16.2 million. Non-broadcast revenue increased to 16% to $6.1 million and our non-broadcast operating business generated a loss of $0.1 million for the quarter as compared to income of $0.3 million in the prior year. On a same station basis, net broadcasting revenue decreased 4% and station operating income decreased 8%. Let me provide some additional detail by revenue type comparing these results from the first quarter of 2008 to the first quarter of 2007. Same station block programming revenue grew 1% to $18.3 million. Same station local advertising revenue was down 8% to $18.5 million. Same station national advertising revenue including spot and network revenue was down 9% to $6.6 million; other revenue, which includes our infomercials, increased by 8% on a same station basis to $3.2 million. Our same station results include broadcasting revenue from 83 of our radio stations in our network and this represents 96% of our net broadcasting revenue. Let me now comment on our balance sheet. As of March 31 we had net debt outstanding of $338.4 million. We were in compliance with the covenants of our credit facilities and our bond indenture. Our credit facility leverage ratio was 5.89 versus a compliance covenant of 6.25. In October we amended our bank credit facility to increase our leverage ratio covenant to 6.75. This amendment was completed without paying an amendment fee or re-pricing and was done to accommodate acquisition of WMCU-AM in Miami, Florida. The change in covenant became effective upon the closing of that transaction, which occurred on April 11. Our bond leverage ratio was 4.92 versus a compliance covenant of 7. For the second quarter of 2008, we’re projecting total revenue to decrease in the low-single digit range over second quarter 2007 total revenue of $59.2 million. We’re also projecting operating expenses before gain or loss on disposal of assets to increase in the low-single digit range over second quarter of 2007 operating expenses of $47.7 million. This increase is impacted by our continued investment in our non-broadcast business. Broadcasting operating expenses are projected to be flat as compared to the second quarter of 2007 broadcast operating expenses of $33.2 million. This concludes our prepared remarks and we would now like to open the call for questions.

(Operator Instructions) The first question comes from Victor Miller - Bear Stearns. Victor Miller - Bear Stearns: Good afternoon and thank you. First of all, maybe you can help with the amount of acquisition and dispositions you’ve mentioned on page 3 of your press release, just go through what you think the pro forma leverage is going to be in the company once you put in the remaining acquisitions and dispositions? Secondly, a little bit more detail on the national business, what you are seeing in terms of the categories and maybe whether you’re seeing it more focused in your maybe top three or four sized markets; where you are seeing disproportionate amount of downturn in those markets? And lastly, just on the infomercial side, is that a conscious choice to run that type of programming in lieu of some block programming or is it just another opportunity just given the softness of the market to try to build in a revenue base while you just wait for a better economy to emerge? Thanks.

Let me address your third question first, then I’ll let Evan or Eric talk about the national business and the dispositions and acquisitions. With regard to the infomercials, yes. Every year when we have rate adjustments at the end of the year, we will have some cancellations; we normally get about a 90% renewal and last year was fairly typical; that is, this year as a result of the changes we made in December of last year is pretty typical. We’ve had probably a few more that we haven’t replaced yet and part of the reason is there are a couple of new programs coming online that we’re very interested in and excited about, but they won’t be ready until maybe third quarter before they are ready to launch and in some cases we prefer to wait for those. Rather than just simply leave the time fallow we basically put some in infomercials in that so that was probably what you’re seeing.

Victor, with respect to your question on the national business, I think the biggest factor that we would point to as you look at 2008 versus 2007 in the quarter is the movie business. We generated a very large amount of national revenue from movies in Q1 of 2007. We certainly had budgeted a healthy amount for Q1 of 2008, but it is very difficult to know at the time that you budget whether that will hit. It depends on when releases come out; it depends on the nature of the release and whether it’s one that would fit within the type of formats that we have. So I would say that from a category standpoint that’s the big reason for the drop in the national side. Victor Miller - Bear Stearns: Can you pick up from the Caspian movie that’s going to be launched soon?

Yes, the Caspian movie I think is premiering next week and we have some money from the Caspian movie. Victor Miller - Bear Stearns: Thank you. On pro forma leverage how would you look at that?

We’ve got 2 acquisitions that are pending; we have 3 sales that are pending. The net cash flow there is in the flow of almost $5 million for us. The cash flow that we will be giving up on those stations is not very significant so I think it will actually be a net de-leveraging event not substantial, but it will be a de-leverage. Victor Miller - Bear Stearns: So the other $20 million of acquisitions you have will add $5 million of cash flow?

I was looking at the pending acquisitions, Victor. Victor Miller - Bear Stearns: Right, which is the $12.3 million, the $4.5 million and the $3 million?

The WMCU is closed; I was thinking on a prospective basis from today. Victor Miller - Bear Stearns: You have a net debt number that’s March 31 and...

Correct. Victor Miller - Bear Stearns: You closed on April 11 so it’s not in that number, right?

Correct. So if you factor in Miami, you’re talking a net outflow of $7.4 million Victor Miller - Bear Stearns: Okay.

And probably on leverage it’s pretty modest increase, if you recall, we get on our credit facility. Because we reformatted WMCU; we only count half of that debt as part of the leverage ratio, so it’s pretty neutral to leverage. It would probably be slight uptick but not significant. Victor Miller - Bear Stearns: Thank you very much.

Your next question is coming from Bishop Sheen - Wachovia. Bishop Sheen - Wachovia: I know it’s a little early to talk about covenants, but your covenant I believe just stepped up to 6.75 times because of the Miami transaction, is that correct?

That is correct. Bishop Sheen - Wachovia: Okay and the next really inflection point to think about I guess is a year from now; 5.75 times, but as you have noted and you don’t have to reach for that, look these are tough times out there, the ad economy is tough and you are doing everything you can to prepare ahead for that. So what kind of levers can you pull to insure that you clear that covenant step down a year from now? If you could just go through the different kinds of things you think about doing?

We, first of all, have quite of bit of ability to contract expenses. We budgeted pretty heavily because we were still in a building mode on some of these news talk formats and some of the CCM formats. We had a lot of marketing and promotional money plugged into the budgets. We’ve spent a lot of time in recent months figuring out how we pare down the expense side to keep our adjusted EBITDA where we need it to be and we’ve got a lot of flexibility there and the ability to make up an awful lot of ground if the revenue side continues to be sluggish. We have never ceased actively marketing some of the properties and we just aren’t in a position to make some announcements at this point Bishop, but I am confident that by the time we have our next earnings call, we will have some further comments to make about sales of assets that are non-performing and/or non-strategic. We think that on the revenue side that there will be some uptick. I cited the softness in the economy, the turmoil in the credit markets and the fall out in the housing market, but − and I don’t like going into a lot of detail − part of the problem unique to us has been some management challenges in some of these markets that have disproportionately declined in the last several quarters and we’ve made some what we think are very constructive changes in a few markets that we’re confident will certainly produce some better results. So a combination of sales, a disposal of assets, a tightening up on the expense side, which we have an awful lot of room that we can contract and some improvement in the revenue side, all of which we think we’re very confident that we will be able to manage the covenants and move into an environment where we will ultimately redo our facilities at the appropriate time and be in reasonably good shape. Bishop Sheen - Wachovia: Right, and as you wait, certainly the call price keeps dropping each year, so it may pay off.

Yes. Bishop Sheen - Wachovia: All right, one other follow-up, did you mention and if you did I missed it, I apologize, political and what’s your anticipations for the back half of this year for political ad revenue at Salem?

It’s always dangerous to predict that; we’re always are hopeful that there’ll be some there, certainly it’s going to be a very interesting contest. We expect both sides to spend a good bit of money and we hope we get a portion of it, but it’s very difficult to say with great certainty that we will. We always have in the past, particularly in presidential years when the contest is more intense, we certainly did in 20’04. We are hopeful we get some; don’t know how much and it’s difficult to predict ahead of the game. Bishop Sheen - Wachovia: And I know in 2004, your platform was certainly lot smaller but can you quantify how much you did get in 2004, can you remind us and if you don’t have that handy I can leave that.

I am going to be with some degree of confidence to say it was somewhere between $1 million and $1.5 million of additional revenue. Bishop Sheen - Wachovia: Okay, thank you, Ed. That is helpful.

Your next question is coming from Michael McGaffery – (inaudible) Capital Michael McGaffery – (inaudible) Capital: Thanks for taking the question. You had mentioned the Seattle disposition in your earlier remarks, but there was no comment made regarding the Baltimore acquisition. I was just wondering if you could give some color around what the rationale for that acquisition, what that brings to the table. And then as it relates to the M&A it seems for the past quarter or two you’ve had a couple asset sales, but they have been married with, albeit couple of smaller acquisitions. I know asset sales are one of the components you are talk about moving forward but should we continue to see, again albeit small, but acquisitions being laid on top of that as well as we look out at the rest of the year?

Let me start with the Baltimore, it’s actually outside Baltimore, WAMD; that acquisition was designed entirely to facilitate a power increase in New York City. We own WWDG there, which is licensed with 5,000 watts. Because of this deal we made with First Broadcasting we got a construction permit to increase power in New York City from 5 to 50,000 watts. We have completed that construction and we expect to implement that within the next 30 days. So the increased reach and impact of the New York station is really what that acquisition is all about. It is a very minor station, but it was entirely to facilitate that and we likely will spin off WAMD once the process is complete. With regard to our other activity, we really don’t have any acquisitions on the drawing board that we’re planning to make, and there is always more to the story than is evident at the time that we make some of these deals and we can discuss them when they ripen a little bit more. As I mentioned a minute ago, I’ve never ceased working on spinning off additional underperforming or non-strategic assets and we’re down the road on some those and we expect that we will be able to announce them perhaps by our next earnings call. In summary, we have no acquisitions on the drawing boards. We are still focusing on spinning off some non-strategic and underperforming assets and hopefully we will be able to give you more specifics on that in the near future, perhaps by our next earnings call. Michael McGaffery – (inaudible) Capital: And then Evan, is there any update regarding your views on redoing the revolver ahead of the expiration in March of next year?

Nothing really new on at this point; we’re evaluating our capital structure kind of all the time, talking to our banks and looking at what makes the more sense so we are not at the point we’re ready to make a decision and do anything at this point. Michael McGaffery – (inaudible) Capital: Okay, great, thank you.

There appear to be no further questions at this time. I would like to turn the floor back to Ed Atsinger for any closing comments.

Thank you, operator, and thank all of you again for joining us and we will look forward to meeting with you again in 3 months for the next earnings report on second quarter.

This concludes today’s Salem Communications first quarter 2008 earnings conference call. You may now disconnect your lines at this time and have a wonderful evening.