**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

----

**FORM      10-Q/A**

| [X] | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE                ACT                OF 1934 |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| [   ] | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE                ACT                OF 1934 |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

**SALEM      COMMUNICATIONS CORPORATION**

| **DELAWARE**(STATE                  OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)                                               |   | **77-0121400**(I.R.S.                  EMPLOYER IDENTIFICATION NUMBER) |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|                                                                                                                                      |   |                                                                   |
| **4880                  SANTA ROSA ROAD CAMARILLO, CALIFORNIA**(ADDRESS                  OF PRINCIPAL EXECUTIVE                  OFFICES) |   | **93012**(                  ZIP CODE)                                  |

**REGISTRANT’S        TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-0400**

| Class                  A                                 |   | Outstanding                  at May 2, 2007 |
|----------------------------------------------------------|--------|---------------------------------------------|
| Common                  Stock, $0.01 par value per share |   | 18,296,324                  shares          |

| Class                  B                                 |   | Outstanding                  at May 2, 2007 |
|----------------------------------------------------------|--------|---------------------------------------------|
| Common                  Stock, $0.01 par value per share |   | 5,553,696                  shares           |

** Explanatory        Note**

----

**PART        I**
**        - FINANCIAL INFORMATION**

**SALEM        COMMUNICATIONS CORPORATION**

**ITEM        1.      FINANCIAL STATEMENTS        (UNAUDITED)**
** **

----

**SALEM        COMMUNICATIONS CORPORATION**

**CONDENSED        CONSOLIDATED BALANCE SHEETS **

**(Dollars        in thousands, except share data)**

|                                                                                                                                                      |                                                                                                                                                                                                                                                              |   | December                  31, 2006 | **March                  31, 2007** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------------------------------|
|                                                                                                                                                      |                                                                                                                                                                                                                                                              |   | (Note                  1)          | **(Unaudited)**                     |
| **ASSETS**                                                                                                                                                |
| Current                  assets:                                                                                                                          |                                                                                                                                                                                                                                                              |   |                               |                                |   |   |   |
|                                                                                                                                                      | Cash                  and cash equivalents                                                                                                                                                                                                                        |   | $                                  | 710                                 |   | **$** | **598** |   |
|                                                                                                                                                      | Accounts                  receivable (net of allowance for doubtful accounts of $7,606 in                  2006 and                  $7,318 in 2007)                                                                                                              |   |                               | 31,984                              |   |   | **30,214** |   |
|                                                                                                                                                      | Other                  receivables                                                                                                                                                                                                                                |   |                               | 551                                 |   |   | **507** |   |
|                                                                                                                                                      | Prepaid                  expenses                                                                                                                                                                                                                                 |   |                               | 2,330                               |   |   | **2,406** |   |
|                                                                                                                                                      | Income                  tax receivable                                                                                                                                                                                                                            |   |                               | —                             |   |   | **30** |   |
|                                                                                                                                                      | Deferred                  income taxes                                                                                                                                                                                                                            |   |                               | 5,020                               |   |   | **4,943** |   |
| Total                  current assets                                                                                                                     |                                                                                                                                                                                                                                                              |   | 40,595                             |                                |   | **38,698** |   |
| Property,                  plant and equipment (net of accumulated depreciation of $74,766                  in 2006                  and $76,458 in 2007) |                                                                                                                                                                                                                                                              |   | 128,713                            |                                |   | **129,620** |   |
| Broadcast                  licenses                                                                                                                       |                                                                                                                                                                                                                                                              |   | 476,544                            |                                |   | **473,571** |   |
| Goodwill                                                                                                                                                  |                                                                                                                                                                                                                                                              |   | 20,606                             |                                |   | **20,606** |   |
| Other                  indefinite-lived intangible assets                                                                                                 |                                                                                                                                                                                                                                                              |   | 2,892                              |                                |   | **2,892** |   |
| Amortizable                  intangible assets (net of accumulated amortization of $10,846 in                  2006 and                  $11,657 in 2007) |                                                                                                                                                                                                                                                              |   | 8,368                              |                                |   | **7,878** |   |
| Bond                  issue costs                                                                                                                         |                                                                                                                                                                                                                                                              |   | 593                                |                                |   | **556** |   |
| Bank                  loan fees                                                                                                                           |                                                                                                                                                                                                                                                              |   | 2,996                              |                                |   | **2,741** |   |
| Fair                  value of interest rate swap agreements                                                                                              |                                                                                                                                                                                                                                                              |   | 1,290                              |                                |   | **913** |   |
| Other                  assets                                                                                                                             |                                                                                                                                                                                                                                                              |   | 3,667                              |                                |   | **3,770** |   |
| Total                  assets                                                                                                                             |                                                                                                                                                                                                                                                              | $      | 686,264                            |                                | **$** | **681,245** |   |
| **LIABILITIES                  AND STOCKHOLDERS’ EQUITY**                                                                                           |
| Current                  liabilities                                                                                                                      |                                                                                                                                                                                                                                                              |   |                               |                                |   |   |   |
|                                                                                                                                                      | Accounts                  payable                                                                                                                                                                                                                                 |   | $                                  | 3,421                               |   | **$** | **2,504** |   |
|                                                                                                                                                      | Accrued                  expenses                                                                                                                                                                                                                                 |   |                               | 6,446                               |   |   | **5,577** |   |
|                                                                                                                                                      | Accrued                  compensation and related expenses                                                                                                                                                                                                        |   |                               | 7,033                               |   |   | **7,935** |   |
|                                                                                                                                                      | Accrued                  interest                                                                                                                                                                                                                                 |   |                               | 4,275                               |   |   | **5,866** |   |
|                                                                                                                                                      | Deferred                  revenue                                                                                                                                                                                                                                 |   |                               | 4,050                               |   |   | **4,610** |   |
|                                                                                                                                                      | Current                  portion of long-term debt and capital lease obligations                                                                                                                                                                                  |   |                               | 2,048                               |   |   | **2,431** |   |
|                                                                                                                                                      | Income                  tax payable                                                                                                                                                                                                                               |   |                               | 22                                  |   |   | — |   |
| Total                  current liabilities                                                                                                                |                                                                                                                                                                                                                                                              |   | 27,295                             |                                |   | **28,923** |   |
| Long-term                  debt and capital lease obligations, less current portion                                                                       |                                                                                                                                                                                                                                                              |   | 358,978                            |                                |   | **346,821** |   |
| Deferred                  income taxes                                                                                                                    |                                                                                                                                                                                                                                                              |   | 53,935                             |                                |   | **58,114** |   |
| Deferred                  revenue                                                                                                                         |                                                                                                                                                                                                                                                              |   | 7,063                              |                                |   | **7,123** |   |
| Other                  liabilities                                                                                                                        |                                                                                                                                                                                                                                                              |   | 1,277                              |                                |   | **1,146** |   |
| Total                  liabilities                                                                                                                        |                                                                                                                                                                                                                                                              |   | 448,548                            |                                |   | **442,127** |   |
| Commitments                  and contingencies                                                                                                            |                                                                                                                                                                                                                                                              |   |                               |                                |   |   |   |
| Stockholders’                  equity                                                                                                               |                                                                                                                                                                                                                                                              |   |                               |                                |   |   |   |
|                                                                                                                                                      | Class A                  common stock, $0.01 par value; authorized 80,000,000 shares; 20,424,242                  issued and 18,293,824 outstanding at December 31, 2006 and 20,426,742                  issued and 18,296,324 outstanding at March 31, 2007 |   |                               | 204                                 |   |   | **204** |   |
|                                                                                                                                                      | Class B                  common stock, $0.01 par value; authorized 20,000,000 shares; 5,553,696                  issued and outstanding shares at December 31, 2006 and March 31,                  2007                                                      |   |                               | 56                                  |   |   | **56** |   |
|                                                                                                                                                      | Additional                  paid-in capital                                                                                                                                                                                                                       |   |                               | 221,466                             |   |   | **222,251** |   |
|                                                                                                                                                      | Retained                  earnings                                                                                                                                                                                                                                |   |                               | 47,433                              |   |   | **48,338** |   |
|                                                                                                                                                      | Treasury                  stock, at cost (2,130,418 shares at December 31, 2006 and March                  31,                  2007)                                                                                                                             |   |                               | (32,218)                            |   |   | **(32,218)** |   |
|                                                                                                                                                      | Accumulated                  other comprehensive income                                                                                                                                                                                                           |   |                               | 775                                 |   |   | **487** |   |
| Total                  stockholders’ equity                                                                                                         |                                                                                                                                                                                                                                                              |   | 237,716                            |                                |   | **239,118** |   |
| Total                  liabilities and stockholders’ equity                                                                                         |                                                                                                                                                                                                                                                              | $      | 686,264                            |                                | **$** | **681,245** |   |
| See                  accompanying notes                                                                                                                   |

----

**SALEM        COMMUNICATIONS CORPORATION**

**CONDENSED        CONSOLIDATED STATEMENTS OF OPERATIONS **

**(Dollars        in thousands, except share and per share data)**

**(Unaudited)        **

|                                                                   |                                                                                                                                                                                                                                                                                        | **Three                  Months Ended** |
|------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
|                                                                   |                                                                                                                                                                                                                                                                                        | **March                  31,**          |
|                                                                   | 2006                                                                                                                                                                                                                                                                                        |                                    | **2007** |
| Net                  broadcasting revenue                              | $                  48,774                                                                                                                                                                                                                                                                   |                                    | **$                  50,440** |
| Non-broadcast                  revenue                                 | 3,252                                                                                                                                                                                                                                                                                       |                                    | **5,654** |
| Total                  revenue                                         | 52,026                                                                                                                                                                                                                                                                                      |                                    | **56,094** |
| Operating                  expenses:                                   |                                                                                                                                                                                                                                                                                        |                                    |   |
|                                                                   | Broadcasting                  operating expenses, exclusive of depreciation and amortization                  shown below                  (including $277 and $310 for the quarter ended March 31, 2006 and                  2007,                  respectively, paid to related parties) | 31,694                                  |   | **32,483** |
|                                                                   | Non-broadcast                  operating expenses, exclusive of depreciation and amortization                  shown                  below                                                                                                                                                 | 3,432                                   |   | **5,271** |
|                                                                   | Corporate                  expenses, exclusive of depreciation and amortization shown below                  (including $99 and $70 for the quarter ended March 31, 2006 and                  2007,                  respectively, paid to related parties)                                 | 6,440                                   |   | **5,814** |
|                                                                   | Depreciation                  (including $87 and $139 for the quarter ended March 31, 2006 and                  2007,                  respectively, for non-broadcast businesses)                                                                                                          | 2,745                                   |   | **3,091** |
|                                                                   | Amortization                  (including $317 and $738 for the quarter ended March 31, 2006 and                  2007,                  respectively, for non-broadcast businesses)                                                                                                         | 550                                     |   | **810** |
|                                                                   | Gain                  on disposal of assets                                                                                                                                                                                                                                                 | (3,529)                                 |   | **(3,269)** |
| Total                  operating expenses                              | 41,332                                                                                                                                                                                                                                                                                      |                                    | **44,200** |
| Operating                  income from continuing operations           | 10,694                                                                                                                                                                                                                                                                                      |                                    | **11,894** |
| Other                  income (expense):                               |
|                                                                   | Interest                  income                                                                                                                                                                                                                                                            | 46                                      |   | **60** |
|                                                                   | Interest                  expense                                                                                                                                                                                                                                                           | (6,588)                                 |   | **(6,454)** |
|                                                                   | Other                  expense, net                                                                                                                                                                                                                                                         | (172)                                   |   | **(35)** |
| Income                  from continuing operations before income taxes | 3,980                                                                                                                                                                                                                                                                                       |                                    | **5,465** |
| Provision                  for income taxes                            | 1,594                                                                                                                                                                                                                                                                                       |                                    | **2,500** |
| Income                  from continuing operations                     | 2,386                                                                                                                                                                                                                                                                                       |                                    | **2,965** |
| Income                  from discontinued operations, net of tax       | 329                                                                                                                                                                                                                                                                                         |                                    | — |
| Net                  income                                            | $                  2,715                                                                                                                                                                                                                                                                    |                                    | **$                  2,965** |
| Other                  comprehensive income (loss), net of tax         | 1,036                                                                                                                                                                                                                                                                                       |                                    | **(288)** |
| Comprehensive                  income                                  | $                  3,751                                                                                                                                                                                                                                                                    |                                    | **$                  2,677** |
|                                                                   |                                                                                                                                                                                                                                                                                        |                                    |   |
| Basic                  earnings per share data:                        |                                                                                                                                                                                                                                                                                        |                                    |   |
| Earnings                  per share from continuing operations         | $                  0.10                                                                                                                                                                                                                                                                     |                                    | **$                  0.12** |
| Income                  per share from discontinued operations         | 0.01                                                                                                                                                                                                                                                                                        |                                    | **—** |
| Basic                  earnings per share                              | 0.11                                                                                                                                                                                                                                                                                        |                                    | **0.12** |
| Diluted                  earnings per share data:                      |                                                                                                                                                                                                                                                                                        |                                    |   |
| Earnings                  per share from continuing operations         | $                  0.10                                                                                                                                                                                                                                                                     |                                    | **$                  0.12** |
| Income                  per share from discontinued operations         | 0.01                                                                                                                                                                                                                                                                                        |                                    | **—** |
| Diluted                  earnings per share                            | 0.11                                                                                                                                                                                                                                                                                        |                                    | **0.12** |
| Basic                  weighted average shares outstanding             | 24,686,517                                                                                                                                                                                                                                                                                  |                                    | **23,848,603** |
| Diluted                  weighted average shares outstanding           | 24,696,334                                                                                                                                                                                                                                                                                  |                                    | **23,853,068** |
| See                  accompanying notes                                |

----

**SALEM        COMMUNICATIONS CORPORATION**

**CONDENSED        CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Dollars        in thousands)**

**(Unaudited)**

|                                                                                                                                                        |                                                                 |                                                       |     | Three                  Months Ended March 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|------------------------------------------------------------|----------|-----------------------------------------------|--------|
|                                                                                                                                                        |                                                                 |                                                       |     | 2006                                          |   | **2007** |
| **OPERATING                  ACTIVITIES**                                                                                                                   |                                                                 |                                                       |     |
| Income                  from continuing operations                                                                                                          |                                                                 | $                                                          | 2,386    |                                          | **$**  | **2,965** |   |
| Adjustments                  to reconcile income from continuing operations to net cash provided                  by                  operating activities: |                                                                 |                                                       |     |                                          |   |   |   |
|                                                                                                                                                        | Non-cash                  stock-based compensation                   |                                                       |     | 1,309                                         |   |   | **754** |   |
|                                                                                                                                                        | Depreciation                  and amortization                       |                                                       |     | 3,295                                         |   |   | **3,901** |   |
|                                                                                                                                                        | Amortization                  of bond issue costs and bank loan fees |                                                       |     | 386                                           |   |   | **292** |   |
|                                                                                                                                                        | Amortization                  and accretion of financing items       |                                                       |     | (126)                                         |   |   | **31** |   |
|                                                                                                                                                        | Provision                  for bad debts                             |                                                       |     | 662                                           |   |   | **464** |   |
|                                                                                                                                                        | Deferred                  income taxes                               |                                                       |     | 1,743                                         |   |   | **2,388** |   |
|                                                                                                                                                        | Gain                  on disposal of assets                          |                                                       |     | (3,529)                                       |   |   | **(3,269)** |   |
|                                                                                                                                                        | Changes                  in operating assets and liabilities:        |                                                       |     |                                          |   |   |   |   |
|                                                                                                                                                        |                                                                 | Accounts                  receivable                       |     |                                          | 1,506  |   |   | **1,320** |   |
|                                                                                                                                                        |                                                                 | Prepaid                  expenses and other current assets |     |                                          | 60     |   |   | **(76)** |   |
|                                                                                                                                                        |                                                                 | Accounts                  payable and accrued expenses     |     |                                          | 805    |   |   | **816** |   |
|                                                                                                                                                        |                                                                 | Deferred                  revenue                          |     |                                          | 299    |   |   | **620** |   |
|                                                                                                                                                        |                                                                 | Other                  liabilities                         |     |                                          | (124)  |   |   | **(29)** |   |
|                                                                                                                                                        |                                                                 | Income                  tax payable                        |     |                                          | 41     |   |   | **(22)** |   |
| Net                  cash provided by continuing operating activities                                                                                       |                                                                 |                                                       | 8,713    |                                          |   | **10,155** |   |
| **INVESTING                  ACTIVITIES**                                                                                                                   |                                                                 |                                                       |     |                                          |   |   |   |
| Capital                  expenditures                                                                                                                       |                                                                 |                                                       | (5,680)  |                                          |   | **(4,081)** |   |
| Purchases                  of radio station assets                                                                                                          |                                                                 |                                                       | (17,830) |                                          |   | — |   |
| Purchase                  of non-broadcast properties                                                                                                       |                                                                 |                                                       | (6,296)  |                                          |   | **(300)** |   |
| Proceeds                  from disposals of assets                                                                                                          |                                                                 |                                                       | 4        |                                          |   | **7,060** |   |
| Other                                                                                                                                                       |                                                                 |                                                       | 635      |                                          |   | **13** |   |
| Net                  cash provided by (used in) investing activities                                                                                        |                                                                 |                                                       | (29,167) |                                          |   | **2,692** |   |
| **FINANCING                  ACTIVITIES**                                                                                                                   |                                                                 |                                                       |     |                                          |   |   |   |
| Repurchases                  of Class A common stock                                                                                                        |                                                                 |                                                       | (15,149) |                                          |   | — |   |
| Proceeds                  from borrowings under credit facilities                                                                                           |                                                                 |                                                       | 32,578   |                                          |   | **2,500** |   |
| Payments                  of long-term debt                                                                                                                 |                                                                 |                                                       | (1)      |                                          |   | **(15,165)** |   |
| Proceeds                  from exercise of stock options                                                                                                    |                                                                 |                                                       | 24       |                                          |   | **30** |   |
| Tax                  benefit related to stock options exercised                                                                                             |                                                                 |                                                       | 1        |                                          |   | **1** |   |
| Payments                  on loans and capital lease obligations                                                                                            |                                                                 |                                                       | (7)      |                                          |   | **(13)** |   |
| Other                                                                                                                                                       |                                                                 |                                                       | —  |                                          |   | **(312)** |   |
| Net                  cash provided by (used in) by financing activities                                                                                     |                                                                 |                                                       | 17,446   |                                          |   | **(12,959)** |   |
| **CASH                  FLOWS FROM DISCONTINUED OPERATIONS**                                                                                                |                                                                 |                                                       |     |                                          |   |   |   |
| Operating                  cash flows                                                                                                                       |                                                                 |                                                       | (971)    |                                          |   | — |   |
| Investing                  cash flows                                                                                                                       |                                                                 |                                                       | 695      |                                          |   | — |   |
| Total                  cash used in discontinued operations                                                                                                 |                                                                 |                                                       | (276)    |                                          |   | — |   |
| Net                  decrease in cash and cash equivalents                                                                                                  |                                                                 |                                                       | (3,284)  |                                          |   | **(112)** |   |
| Cash                  and cash equivalents at beginning of year                                                                                             |                                                                 |                                                       | 3,979    |                                          |   | **710** |   |
| Cash                  and cash equivalents at end of period                                                                                                 |                                                                 | $                                                          | 695      |                                          | **$**  | **598** |   |
| **Supplemental                  disclosures of cash flow information:**                                                                                     |                                                                 |                                                       |     |                                          |   |   |   |
|                                                                                                                                                        | Cash                  paid during the period for:                    |                                                       |     |                                          |   |
|                                                                                                                                                        |                                                                 | Interest                                                   |     | $                                             | 5,289  |   | **$** | **4,863** |   |
|                                                                                                                                                        |                                                                 | Income                  taxes                              |     | $                                             | 49     |   | **$** | **168** |   |
| **Noncash                  investing and financing activities:**                                                                                            |                                                                 |                                                       |     |                                          |   |   |   |
|                                                                                                                                                        | Assets                  acquired through capital lease obligations   |                                                       | $        | —                                       |   | **$** | **800** |   |
| See                  accompanying notes                                                                                                                     |

----

**SALEM        COMMUNICATIONS CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        1. BASIS OF PRESENTATION**

**NOTE        2. RECLASSIFICATIONS**

----

**NOTE        3. ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS**

|      |                                          | Amount                                    |
|-----------|-----------------------------------------------|-------------------------------------------|
|      |                                          | *(Dollars                  in thousands)* |
| **Asset** |                                          |
|      | Domain                  names                 | $                  268                    |
|      | Customer                  lists and contracts | 32                                        |
|      |                                          | $                  300                    |

**   Other        Pending        Transactions:**

**Discontinued        Operations:**

|   | **Three                  Months Ended**                          |
|--------|------------------------------------------------------------------|
|   | **March                  31, 2006**                              |
|   |                                                             |   |
|   | Operating                  loss                                  |   |   | **$** | **(142)** |
|   | Gain                  on sale or exchange of radio stations      |   |   |   | **667** |
|   | Gain                  from discontinued operations, net of tax   |   |   |   | **525** |
|   | Provision                  for income taxes                      |   |   |   | **196** |
|   | Income                  from discontinued operations, net of tax |   |   | $ | **329** |

----

----

**NOTE        4. STOCK INCENTIVE PLAN**

|                                                                                                             | Three                  Months Ended March 31, |
|------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|
|                                                                                                             | 2006                                          |   | **2007** |
|                                                                                                             |
| Stock                  option compensation expense included in corporate expenses                                | $                  1,073                      |   | **$                  507** |
| Restricted                  stock units compensation expense included in corporate expenses                      | 22                                            |   | **16** |
| Stock                  option compensation expense included in broadcast operating expenses                      | 207                                           |   | **207** |
| Stock                  option compensation expense included in non-broadcast operating                  expenses | 7                                             |   | **24** |
|  Total                  stock-based compensation expense                                                    | $                  1,309                      |   | **$                  754** |
| Tax                  benefit from stock-based compensation expense                                               | (527)                                         |   | **(345)** |
| Total                  stock-based compensation expense net of tax benefit                                       | $                  782                        |   | **$                  409** |

*Employee        stock option and restricted stock grants *

|                                      | Three                  Months Ended March 31, |
|-------------------------------------------|-----------------------------------------------|
|                                      | 2006                                          |   | **2007** |
| Expected                  volatility      | 48.3%                                         |   | **67.0%** |
| Expected                  dividends       | 0.0%                                          |   | **0.0%** |
| Expected                  term (in years) | 5                  -                  8       |   | **5                  - 8** |
| Risk-free                  interest rate  | 4.73%                                         |   | **4.53%** |

----

**NOTE        4. STOCK INCENTIVE PLAN (Continued)**

|   | Options                                             |   | Shares        |   | Weighted                  Average Exercise Price |   | Weighted                  Average Remaining Contractual Term |   | Aggregate                  Intrinsic Value |
|--------|-----------------------------------------------------|--------|---------------|--------|--------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------|
|   | **Outstanding                  at January 1, 2007** |   | **2,146,564** |   | **$                  22.30**                     |   |                                                         |   | **$                  47,873**              |
|   | **Granted**                                         |   | **279,650**   |   | **11.80**                                        |   |                                                         |   | **3,300**                                  |
|   | **Exercised**                                       |   | **(2,500)**   |   | **11.81**                                        |   |                                                         |   | **5**                                      |
|   | **Forfeited                  or expired**           |   | **(28,950)**  |   | **18.39**                                        |   |                                                         |   | **532**                                    |
|   | **Outstanding                  at March 31, 2007**  |   | **2,394,764** |   | **$                  21.13**                     |   | **4.7                  years**                               |   | **$                  50,611**              |
|   | **Exercisable                  at March 31, 2007**  |   | **1,389,425** |   | **$                  24.70**                     |   | **3.0                  years**                               |   | **$                  34,313**              |

|   | Restricted                  Stock Units        |   | Shares  |   | Weighted                  Average Exercise                  Price |
|--------|------------------------------------------------|--------|---------|--------|-------------------------------------------------------------------|
|   | Non-Vested                  at January 1, 2007 |   | 6,000   |   | $                  11.15                                          |
|   | Granted                                        |   | — |   | —                                                           |
|   | Vested                                         |   | — |   | —                                                           |
|   | Forfeited                                      |   | — |   | —                                                           |
|   | Non-Vested                  at March 31, 2007  |   | 6,000   |   | $                  11.15                                          |

**NOTE        5. OTHER COMPREHENSIVE INCOME (LOSS)**

----

**NOTE        6. RECENT ACCOUNTING PRONOUNCEMENTS**

***Statement        of Financial Accounting Standards No. 159***

***Statement        of Financial Accounting Standards No. 157***

**NOTE        7. EQUITY TRANSACTIONS**

----

**NOTE        8. NOTES PAYABLE AND LONG-TERM DEBT**

|                                                            | December                  31, 2006        |    | **March                  31, 2007** |
|-----------------------------------------------------------------|-------------------------------------------|---------|-------------------------------------|
|                                                            | *(Dollars                  in thousands)* |
|                                                            |                                      |    |                                |   |   |
| Term                  loans under credit facility               | $                                         | 238,125 |                                | **$** | **237,300** |
| Revolving                  line of credit under credit facility |                                      | 19,100  |                                |   | **8,500** |
| Swingline                  credit facility                      |                                      | 1,241   |                                |   | - |
| 73⁄4%                  Senior Subordinated Notes due 2010    |                                      | 100,000 |                                |   | **100,000** |
| Fair                  market value of interest swap agreement   |                                      | -       |                                |   | **104** |
| Capital                  leases and other loans                 |                                      | 2,560   |                                |   | **3,348** |
|                                                            |                                      | 361,026 |                                |   | **349,252** |
| Less                  current portion                           |                                      | 2,048   |                                |   | **2,431** |
|                                                            | $                                         | 358,978 |                                | **$** | **346,821** |

----

**Maturities        of Long-Term Debt**

| Twelve                  Months Ended March 31,               |   | Amount                                    |
|--------------------------------------------------------------|--------|-------------------------------------------|
|                                                         |   | *(Dollars                  in thousands)* |
| 2008                                                         | $      | 2,431                                     |
| 2009                                                         |   | 12,238                                    |
| 2010                                                         |   | 74,490                                    |
| 2011                                                         |   | 259,251                                   |
| 2012                                                         |   | 27                                        |
| Thereafter                                                   |   | 711                                       |
|                                                         | $      | 349,148                                   |
| Fair                  value of interest rate swap agreements |   | 104                                       |
|                                                         | $      | 349,252                                   |
|                                                         |   |                                      |

----

**NOTE        9. AMORTIZABLE INTANGIBLE ASSETS**

|                                                 |   | **As                  of March 31, 2007** |
|------------------------------------------------------|--------|-------------------------------------------|
|                                                 |   |                                      |   |   | Accumulated |   |   |   |
|                                                 |   | Cost                                      |   | Amortization |   | **Net** |
|                                                 |   | *(Dollars                  in thousands)* |
|                                                 |   |                                      |
| Customer                  lists and contracts        |   | $                                         | 10,437 |   | $ | (6,485) |   | $ | 3,952 |
| Domain                  and brand names              |   |                                      | 4,775 |   |   | (1,765) |   |   | 3,010 |
| Favorable                  and assigned leases       |   |                                      | 1,581 |   |   | (1,166) |   |   | 415 |
| Other                  amortizable intangible assets |   |                                      | 2,742 |   |   | (2,241) |   |   | 501 |
|                                                 |   | $                                         | 19,535 |   | $ | (11,657) |   | $ | 7,878 |

|                                                 |   | **As                  of December 31, 2006** |
|------------------------------------------------------|--------|----------------------------------------------|
|                                                 |   |                                         |   |   | Accumulated |   |   |   |
|                                                 |   | Cost                                         |   | Amortization |   | **Net** |
|                                                 |   | *(Dollars                  in thousands)*    |
|                                                 |   |                                         |
| Customer                  lists and contracts        |   | $                                            | 10,404 |   | $ | (6,030) |   | $ | 4,374 |
| Domain                  and brand names              |   |                                         | 4,487 |   |   | (1,533) |   |   | 2,954 |
| Favorable                  and assigned leases       |   |                                         | 1,581 |   |   | (1,144) |   |   | 437 |
| Other                  amortizable intangible assets |   |                                         | 2,742 |   |   | (2,139) |   |   | 603 |
|                                                 |   | $                                            | 19,214 |   | $ | (10,846) |   | $ | 8,368 |

| **Year                  Ending December 31,** |   | **Estimated                  future Amortization Expense** |
|-----------------------------------------------|--------|------------------------------------------------------------|
|                                          |   | *(Dollars                  in thousands)*                  |
| 2007                  (April 1 - December 31) | $      | 2,177                                                      |
| 2008                                          |   | 2,535                                                      |
| 2009                                          |   | 1,283                                                      |
| 2010                                          |   | 832                                                        |
| 2011                                          |   | 370                                                        |
| Thereafter                                    |   | 681                                                        |
| Total                                         | $      | 7,878                                                      |

----

**NOTE        10. BASIC AND DILUTED EARNINGS PER SHARE**

**NOTE        11. DERIVATIVE INSTRUMENTS**

~~ ~~

----

**Interest        Rate Caps**

----

**NOTE        12. INCOME TAXES**

**NOTE        13. COMMITMENTS AND CONTINGENCIES**

**NOTE        14. SEGMENT DATA **

----

**NOTE        14. SEGMENT DATA (CONTINUED)**

|                                                                                                                                                            |                                | **Three                  Months Ended**   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|-------------------------------------------|---------|
|                                                                                                                                                            |                                | **March                  31,**            |    |
|                                                                                                                                                            |                                | 2006                                      |    |   | **2007** |   |
|                                                                                                                                                            |                                | *(Dollars                  in thousands)* |    |
| Net                  revenue                                                                                                                                    |                                |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 48,774  |   |   | $ | **50,440** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | 3,252   |   |   |   | **5,654** |   |
| Consolidated                  net revenue                                                                                                                       | $                                   | 52,026                                    |    |   | $ | **56,094** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Operating                  expenses before depreciation, amortization and gain on disposal                  of                  assets                          |                                |                                      |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 31,694  |   |   | $ | **32,483** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | 3,432   |   |   |   | **5,271** |   |
|                                                                                                                                                            | Corporate                           |                                      | 6,440   |   |   |   | **5,814** |   |
| Consolidated                  operating expenses before depreciation, amortization and gain on                  disposal                  of assets             | $                                   | 41,566                                    |    |   | $ | **43,568** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Operating                  income from continuing operations before depreciation, amortization                  and                  gain on disposal of assets |                                |                                      |    |   |   |   |   |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 17,080  |   |   | $ | **17,957** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | (180)   |   |   |   | **383** |   |
|                                                                                                                                                            | Corporate                           |                                      | (6,440) |   |   |   | **(5,814)** |   |
| Consolidated                  operating income from continuing operations before depreciation,                  amortization and gain on disposal of assets     | $                                   | 10,460                                    |    |   | $ | **12,526** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Depreciation                                                                                                                                                    |                                |                                      |    |   |   |   |   |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 2,374   |   |   | $ | **2,665** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | 87      |   |   |   | **139** |   |
|                                                                                                                                                            | Corporate                           |                                      | 284     |   |   |   | **287** |   |
| Consolidated                  depreciation expense                                                                                                              | $                                   | 2,745                                     |    |   | $ | **3,091** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Amortization                                                                                                                                                    |                                |                                      |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 228     |   |   | $ | **67** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | 317     |   |   |   | **738** |   |
|                                                                                                                                                            | Corporate                           |                                      | 5       |   |   |   | **5** |   |
| Consolidated                  amortization expense                                                                                                              | $                                   | 550                                       |    |   | $ | **810** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Operating                  income from continuing operations before gain on disposal of                  assets                                                 |                                |                                      |    |   |   |   |   |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 14,478  |   |   | $ | **15,225** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | (584)   |   |   |   | **(494)** |   |
|                                                                                                                                                            | Corporate                           |                                      | (6,729) |   |   |   | **(6,106)** |   |
| Consolidated                  operating income from continuing operations before gain on disposal                  of                  assets                   | $                                   | 7,165                                     |    |   | $ | **8,625** |   |
|                                                                                                                                                            |                                |                                      |    |   |   |   |   |   |
| Total                  property, plant and equipment, net                                                                                                       |                                |                                      |    |   |   |   |   |
|                                                                                                                                                            | Radio                  broadcasting | $                                         | 115,604 |   |   | $ | **115,616** |   |
|                                                                                                                                                            | Non-broadcast                       |                                      | 2,830   |   |   |   | **3,516** |   |
|                                                                                                                                                            | Corporate                           |                                      | 10,279  |   |   |   | **10,488** |   |
| Consolidated                  property, plant and equipment, net                                                                                                | $                                   | 128,713                                   |    |   | $ | **129,620** |   |

----

**NOTE        14. SEGMENT DATA (CONTINUED)**

|                                                                                                                                                                                                                                             |                                                                                                                                                                   | **Three                  months ended** |                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|-------------------------------------------|
|                                                                                                                                                                                                                                             |                                                                                                                                                                   | **March                  31,**          |                                      |
|                                                                                                                                                                                                                                             |                                                                                                                                                                   | 2006                                    |                                      |   |   | 2007 |   |
| Goodwill                                                                                                                                                                                                                                         |                                                                                                                                                                   |                                    |                                      |   |   |   |   |
|                                                                                                                                                                                                                                             | Radio                  broadcasting                                                                                                                                    | $                                       | 5,011                                     |   |   | $ | **5,011** |   |
|                                                                                                                                                                                                                                             | Non-broadcast                                                                                                                                                          |                                    | 15,587                                    |   |   |   | **15,587** |   |
|                                                                                                                                                                                                                                             | Corporate                                                                                                                                                              |                                    | 8                                         |   |   |   | **8** |   |
| Consolidated                  goodwill                                                                                                                                                                                                           | $                                                                                                                                                                      | 20,606                                  |                                      |   | $ | **20,606** |   |
| ***Reconciliation                  of operating income from continuing operations before depreciation,                  amortization and gain on disposal of assets to income from continuing                  operations before income taxes*** |                                                                                                                                                                   |
|                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                    | **Three                  Months Ended**   |
|                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                    | **March                  31,**            |
|                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                    | 2006                                      |   | **2007** |
|                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                    | *(Dollars                  in thousands)* |
|                                                                                                                                                                                                                                             | Operating                  income from continuing operations before depreciation, amortization                  and                  gain (loss) on disposal of assets | $                                       | 10,460                                    |   | **$** | **12,526** |
|                                                                                                                                                                                                                                             | Depreciation                  expense                                                                                                                                  |                                    | (2,745)                                   |   |   | **(3,091)** |
|                                                                                                                                                                                                                                             | Amortization                  expense                                                                                                                                  |                                    | (550)                                     |   |   | **(810)** |
|                                                                                                                                                                                                                                             | Interest                  income                                                                                                                                       |                                    | 46                                        |   |   | **60** |
|                                                                                                                                                                                                                                             | Gain                  on disposal of assets                                                                                                                            |                                    | 3,529                                     |   |   | **3,269** |
|                                                                                                                                                                                                                                             | Interest                  expense                                                                                                                                      |                                    | (6,588)                                   |   |   | **(6,454)** |
|                                                                                                                                                                                                                                             | Other                  expense, net                                                                                                                                    |                                    | (172)                                     |   |   | **(35)** |
|                                                                                                                                                                                                                                             | Income                  from continuing operations before income taxes                                                                                                 | $                                       | 3,980                                     |   | **$** | **5,465** |

----

**NOTE        15. CONSOLIDATING FINANCIAL INFORMATION **

----

*(Dollars        in thousands)*

|                                                      |                                       |                       | As                  of March 31, 2007 |
|-----------------------------------------------------------|--------------------------------------------|----------------------------|---------------------------------------|
|                                                      |                                       |                       |                                  |   |   |   |   |   | Issuer                  and |
|                                                      |                                       |                       |                                  |   |   |   |   |   | Guarantor |
|                                                      |                                       |                       | Guarantors                            |   | Subsidiaries |
|                                                      |                                       |                       |                                  |   |   |   | Other |   |   |   |   |   | Salem |
|                                                      |                                       |                       | Parent                                |   | AcquisitionCo |   | Media |   | HoldCo |   | Adjustments |   | Consolidated |
| Current                  assets:                          |
|                                                      | Cash                  and cash equivalents |                       | $—                              |   | $                  117 |   | $                  161 |   | $                  320 |   | $— |   | $                  598 |
|                                                      | Accounts                  receivable       |                       | —                               |   | 2,924 |   | 929 |   | 26,445 |   | (84) |   | 30,214 |
|                                                      | Other                  receivables         |                       | —                               |   | 14 |   | 3 |   | 490 |   | — |   | 507 |
|                                                      | Prepaid                  expenses          |                       | —                               |   | 108 |   | 280 |   | 2,018 |   | — |   | 2,406 |
|                                                      | Income                  tax receivable     |                       | —                               |   | (9) |   | (8) |   | 47 |   | — |   | 30 |
|                                                      | Deferred                  income taxes     |                       | —                               |   | 263 |   | 176 |   | 4,504 |   | — |   | 4,943 |
| Total                  current assets                     |                                       | —                    |                                  | 3,417 |   | 1,541 |   | 33,824 |   | (84) |   | 38,698 |
| Investment                  in subsidiaries               |                                       | 211,063                    |                                  | — |   | — |   | — |   | (211,063) |   | — |
| Property,                  plant and equipment, net       |                                       | —                    |                                  | 6,911 |   | 374 |   | 122,335 |   | — |   | 129,620 |
| Broadcast                  licenses                       |                                       | —                    |                                  | 94,473 |   | — |   | 379,098 |   | — |   | 473,571 |
| Goodwill                                                  |                                       | —                    |                                  | 10,256 |   | 2,554 |   | 7,796 |   | — |   | 20,606 |
| Other                  indefinite-lived intangible assets |                                       | —                    |                                  | — |   | 2,892 |   | — |   | — |   | 2,892 |
| Amortizable                  intangible assets, net       |                                       | —                    |                                  | 5,044 |   | 1,131 |   | 1,703 |   | — |   | 7,878 |
| Bond                  issue costs                         |                                       | —                    |                                  | — |   | — |   | 556 |   | — |   | 556 |
| Bank                  loan fees                           |                                       | —                    |                                  | — |   | — |   | 2,741 |   | — |   | 2,741 |
| Fair                  value of interest rate swap         |                                       | —                    |                                  | — |   | — |   | 913 |   | — |   | 913 |
| Intercompany                  receivables                 |                                       | 104,920                    |                                  | 9,918 |   | — |   | 176,980 |   | (291,818) |   | — |
| Other                  assets                             |                                       | —                    |                                  | 60 |   | 27 |   | 3,683 |   | — |   | 3,770 |
| Total                  assets                             |                                       | $                  315,983 |                                  | $                  130,079 |   | $                  8,519 |   | $                  729,629 |   | $                  (502,965) |   | $                  681,245 |

----

**NOTE        15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)**

*(Dollars        in thousands)*

|                                                              |                                                       |                       | As                  of March 31, 2007 |
|-------------------------------------------------------------------|------------------------------------------------------------|----------------------------|---------------------------------------|
|                                                              |                                                       |                       |                                  |   |   |   |   |   | Issuer                  and |
|                                                              |                                                       |                       |                                  |   |   |   |   |   | Guarantor |
|                                                              |                                                       |                       | Guarantors                            |   | Subsidiaries |
|                                                              |                                                       |                       |                                  |   |   |   | Other |   |   |   |   |   | Salem |
|                                                              |                                                       |                       | Parent                                |   | AcquisitionCo |   | Media |   | HoldCo |   | Adjustments |   | Consolidated |
| Current                  liabilities:                             |                                                       |                       |
|                                                              | Accounts                  payable                          |                       | $                  —            |   | $37 |   | $                  123 |   | $                  2,344 |   | $— |   | $                  2,504 |
|                                                              | Accrued                  expenses                          |                       | —                               |   | 484 |   | 330 |   | 4,966 |   | (203) |   | 5,577 |
|                                                              | Accrued                  compensation and related expenses |                       | —                               |   | 656 |   | 161 |   | 7,118 |   | — |   | 7,935 |
|                                                              | Accrued                  interest                          |                       | —                               |   | — |   | — |   | 5,866 |   | — |   | 5,866 |
|                                                              | Deferred                  revenue                          |                       | —                               |   | — |   | 4,057 |   | 553 |   | — |   | 4,610 |
|                                                              | Current                  maturities of long-term debt      |                       | —                               |   | — |   | — |   | 2,431 |   | — |   | 2,431 |
| Total                  current liabilities                        |                                                       | —                    |                                  | 1,177 |   | 4,671 |   | 23,278 |   | (203) |   | 28,923 |
| Intercompany                  payables                            |                                                       | 74,946                     |                                  | 101,222 |   | 13,734 |   | 101,797 |   | (291,699) |   | — |
| Long-term                  debt                                   |                                                       | —                    |                                  | 2,523 |   | — |   | 344,298 |   | — |   | 346,821 |
| Deferred                  income taxes                            |                                                       | 1,919                      |                                  | 14,756 |   | (9,346) |   | 50,785 |   | — |   | 58,114 |
| Deferred                  revenue                                 |                                                       | —                    |                                  | 515 |   | (1,373) |   | 7,981 |   | — |   | 7,123 |
| Other                  liabilities                                |                                                       | —                    |                                  | — |   | — |   | 1,146 |   | — |   | 1,146 |
| Total                  stockholders’ equity                 |                                                       | 239,118                    |                                  | 9,886 |   | 833 |   | 200,344 |   | (211,063) |   | 239,118 |
| Total                  liabilities and stockholders’ equity |                                                       | $                  315,983 |                                  | $                  130,079 |   | $                  8,519 |   | $729,629 |   | $                  (502,965) |   | $                  681,245 |

----

**NOTE        15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)**

*(Dollars        in thousands)*

|                                                  |                                                                  |                       | Three                  Months Ended March 31, 2007 |
|-------------------------------------------------------|-----------------------------------------------------------------------|----------------------------|----------------------------------------------------|
|                                                  |                                                                  |                       |                                               |   |   |   |   |   | Issuer                  and |
|                                                  |                                                                  |                       |                                               |   |   |   |   |   | Guarantor |
|                                                  |                                                                  |                       | Guarantors                                         |   | Subsidiaries |
|                                                  |                                                                  |                       |                                               |   |   |   | Other |   |   |   |   |   | Salem |
|                                                  |                                                                  |                       | Parent                                             |   | AcquisitionCo |   | Media |   | HoldCo |   | Adjustments |   | Consolidated |
| Net                  broadcasting revenue             |                                                                  | $                  — |                                               | $                  2,778 |   | $                  — |   | $                  48,290 |   | $                  (628) |   | $                  50,440 |
| Non-broadcast                  revenue                |                                                                  | —                    |                                               | 3,076 |   | 1,604 |   | 1,134 |   | (160) |   | 5,654 |
| Total                  revenue                        |                                                                  | —                    |                                               | 5,854 |   | 1,604 |   | 49,424 |   | (788) |   | 56,094 |
| Operating                  expenses:                  |                                                                  |                       |                                               |   |   |   |   |   |   |   |   |   |
|                                                  | Broadcasting                  operating expenses                      |                       | —                                            |   | 1,889 |   | — |   | 30,527 |   | 67 |   | 32,483 |
|                                                  | Non-broadcast                  operating expenses                     |                       | —                                            |   | 3,013 |   | 1,957 |   | 916 |   | (615) |   | 5,271 |
|                                                  | Corporate                  expenses                                   |                       | —                                            |   | 336 |   | — |   | 5,718 |   | (240) |   | 5,814 |
|                                                  | Amortization                                                          |                       | —                                            |   | 425 |   | 101 |   | 284 |   | — |   | 810 |
|                                                  | Depreciation                                                          |                       | —                                            |   | 246 |   | 40 |   | 2,805 |   | — |   | 3,091 |
|                                                  | Gain                  on disposal of assets                           |                       | —                                            |   | — |   | — |   | (3,269) |   | — |   | (3,269) |
| Total                  operating expenses             |                                                                  | —                    |                                               | 5,909 |   | 2,098 |   | 36,981 |   | (788) |   | 44,200 |
| Operating                  income (loss)              |                                                                  | —                    |                                               | (55) |   | (494) |   | 12,443 |   | — |   | 11,894 |
| Other                  income (expense):              |
|                                                  | Equity                  in earnings of consolidated subsidiaries, net |                       | 5,111                                              |   | — |   | — |   | — |   | (5,111) |   | — |
|                                                  | Interest                  income                                      |                       | 1,916                                              |   | — |   | — |   | 3,070 |   | (4,926) |   | 60 |
|                                                  | Interest                  expense                                     |                       | (2,143)                                            |   | (2,337) |   | (326) |   | (6,574) |   | 4,926 |   | (6,454) |
|                                                  | Other                  income (expense)                               |                       | —                                            |   | — |   | — |   | (35) |   | — |   | (35) |
| Income                  (loss) before income taxes    |                                                                  | 4,884                      |                                               | (2,392) |   | (820) |   | 8,904 |   | (5,111) |   | 5,465 |
| Provision                  (benefit) for income taxes |                                                                  | 1,919                      |                                               | (580) |   | (395) |   | 1,556 |   | — |   | 2,500 |
| Net                  income (loss)                    |                                                                  | $-                  2,965  |                                               | $                  (1,812) |   | $                  (425) |   | $                  7,348 |   | $                  (5,111) |   | $                  2,965 |
| Other                  comprehensive income (loss)    |                                                                  | (288)                      |                                               | — |   | — |   | (288) |   | 288 |   | (288) |
| Comprehensive                  income (loss)          |                                                                  | $                  2,677   |                                               | $                  (1,812) |   | $                  (425) |   | $                  7,060 |   | $                  (4,823) |   | $                  2,677 |

----