**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| [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 PRINCIPALEXECUTIVE                OFFICES) |   | **93012**(                ZIP CODE)                                  |

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

|  Yes                [X ]   |    No  [   ] |
|-------------------------------------------|------------------------------------------------------|

|  Large                accelerated filer                [   ]       |  Accelerated                filer  [X ]    |  Non-accelerated                filer  [   ] |
|----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|----------------------------------------------------------------------------|

| Class                A                                 |   | Outstanding                at August 3, 2007 |
|--------------------------------------------------------|--------|----------------------------------------------|
| Common                Stock, $0.01 par value per share |   | 18,296,324                shares             |

| Class                B                                 |   | Outstanding                at August 3, 2007 |
|--------------------------------------------------------|--------|----------------------------------------------|
| Common                Stock, $0.01 par value per share |   | 5,553,696                shares              |

----

**SALEM      COMMUNICATIONS CORPORATION**

**INDEX**

|                                          |                                                                                                                                                                                                                                             |   | PAGE                NO. |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|
|                                          |                                                                                                                                                                                                                                             |   |                    |
| COVER                PAGE                     |                                                                                                                                                                                                                                             |   |
| INDEX                                         |                                                                                                                                                                                                                                             |   |
| PART                I - FINANCIAL INFORMATION |                                                                                                                                                                                                                                             |   |
|                                          | Item 1.   Financial                Statements                                                                                                                                                                                |   | 2                       |
|                                          | Item 2.   Management’s                Discussion and Analysis of Financial Condition               and                Results of Operations |   | 19                      |
|                                          | Item 3.   Quantitative                and Qualitative Disclosures About Market Risk                                                                                                                                          |   | 31                      |
|                                          | Item 4.   Controls                and Procedures                                                                                                                                                                             |   | 32                      |
| PART                II - OTHER INFORMATION    |                                                                                                                                                                                                                                             | 33     |
|                                          | Item 1.    Legal                Proceedings                                                                                                                                                                             |   | 33                      |
|                                          | Item                1A. Risk Factors                                                                                                                                                                                                             |   | 33                      |
|                                          | Item 2.   Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                         |   | 33                      |
|                                          | Item 3.   Defaults                Upon Senior Securities                                                                                                                                                                     |   | 33                      |
|                                          | Item 4.   Submission                of Matters to a Vote of Security Holders                                                                                                                                                 |   | 33                      |
|                                          | Item 5.   Other                Information                                                                                                                                                                                   |   | 33                      |
|                                          | Item 6.   Exhibits                                                                                                                                                                                                           |   | 33                      |
| SIGNATURES                                    |                                                                                                                                                                                                                                             | 48     |
| EXHIBIT                INDEX                  |                                                                                                                                                                                                                                             | 49     |

----

**FORWARD–LOOKING      STATEMENTS**

----

**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 |     | **June                30, 2007** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|----------|----------------------------------|
|                                                                                                                                                |                                                                                                                                                                                                                                                       |   | (Note                1)          |     | **(Unaudited)**                  |
| **ASSETS**                                                                                                                                          |
| Current                assets:                                                                                                                      |                                                                                                                                                                                                                                                       |   |                             |     |                             |   |   |   |
|                                                                                                                                                | Cash                and cash equivalents                                                                                                                                                                                                                   |   | $                                | 710      |                             |   | **$** | **752** |   |
|                                                                                                                                                | Trade                accounts receivable (net of allowance for doubtful accounts of $7,606                in                2006 and $7,454 in 2007)                                                                                                       |   |                             | 31,984   |                             |   |   | **31,335** |   |
|                                                                                                                                                | Other                receivables                                                                                                                                                                                                                           |   |                             | 551      |                             |   |   | **581** |   |
|                                                                                                                                                | Prepaid                expenses                                                                                                                                                                                                                            |   |                             | 2,330    |                             |   |   | **2,416** |   |
|                                                                                                                                                | Income                tax  receivable                                                                                                                                                                                                            |   |                             | —  |                             |   |   | **39** |   |
|                                                                                                                                                | Deferred                income taxes                                                                                                                                                                                                                       |   |                             | 5,020    |                             |   |   | **5,009** |   |
| Total                current assets                                                                                                                 |                                                                                                                                                                                                                                                       |   | 40,595                           |     |                             |   | **40,132** |   |
| Property,                plant and equipment (net of accumulated depreciation of $74,766 in                2006                and $78,493 in 2007) |                                                                                                                                                                                                                                                       |   | 128,713                          |     |                             |   | **130,808** |   |
| Broadcast                licenses                                                                                                                   |                                                                                                                                                                                                                                                       |   | 476,544                          |     |                             |   | **472,463** |   |
| Goodwill                                                                                                                                            |                                                                                                                                                                                                                                                       |   | 20,606                           |     |                             |   | **20,463** |   |
| Other                indefinite-lived intangible assets                                                                                             |                                                                                                                                                                                                                                                       |   | 2,892                            |     |                             |   | **2,892** |   |
| Amortizable                intangible assets (net of accumulated amortization of $10,846 in                2006 and                $12,433 in 2007) |                                                                                                                                                                                                                                                       |   | 8,368                            |     |                             |   | **7,098** |   |
| Bond                issue costs                                                                                                                     |                                                                                                                                                                                                                                                       |   | 593                              |     |                             |   | **518** |   |
| Bank                loan fees                                                                                                                       |                                                                                                                                                                                                                                                       |   | 2,996                            |     |                             |   | **2,488** |   |
| Fair                value of interest rate swap agreements                                                                                          |                                                                                                                                                                                                                                                       |   | 1,290                            |     |                             |   | **2,663** |   |
| Other                assets                                                                                                                         |                                                                                                                                                                                                                                                       |   | 3,667                            |     |                             |   | **4,449** |   |
| Total                assets                                                                                                                         |                                                                                                                                                                                                                                                       | $      | 686,264                          |     |                             | **$** | **683,974** |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                       |
| Current                liabilities:                                                                                                                 |
|                                                                                                                                                | Accounts                payable                                                                                                                                                                                                                            |   | $                                | 3,421    |                             |   | **$** | **1,496** |   |
|                                                                                                                                                | Accrued                expenses                                                                                                                                                                                                                            |   |                             | 6,446    |                             |   |   | **6,264** |   |
|                                                                                                                                                | Accrued                compensation and related expenses                                                                                                                                                                                                   |   |                             | 7,033    |                             |   |   | **7,412** |   |
|                                                                                                                                                | Accrued                interest                                                                                                                                                                                                                            |   |                             | 4,275    |                             |   |   | **2,252** |   |
|                                                                                                                                                | Deferred                revenue                                                                                                                                                                                                                            |   |                             | 4,050    |                             |   |   | **4,565** |   |
|                                                                                                                                                | Current                portion of long-term debt and capital lease obligations                                                                                                                                                                             |   |                             | 2,048    |                             |   |   | **3,683** |   |
|                                                                                                                                                | Income                taxes payable                                                                                                                                                                                                                        |   |                             | 22       |                             |   |   | **—** |   |
| Total                current liabilities                                                                                                            |                                                                                                                                                                                                                                                       |   | 27,295                           |     |                             |   | **25,672** |   |
| Long-term                debt and capital lease obligations, less current portion                                                                   |                                                                                                                                                                                                                                                       |   | 358,978                          |     |                             |   | **344,951** |   |
| Deferred                income taxes                                                                                                                |                                                                                                                                                                                                                                                       |   | 53,935                           |     |                             |   | **60,810** |   |
| Deferred                revenue                                                                                                                     |                                                                                                                                                                                                                                                       |   | 7,063                            |     |                             |   | **7,303** |   |
| Other                liabilities                                                                                                                    |                                                                                                                                                                                                                                                       |   | 1,277                            |     |                             |   | **1,204** |   |
| Total                liabilities                                                                                                                    |                                                                                                                                                                                                                                                       |   | 448,548                          |     |                             |   | **439,940** |   |
| 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 June 30, 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 June 30,                2007                                                      |   |                             | 56       |                             |   |   | **56** |   |
|                                                                                                                                                | Additional                paid-in capital                                                                                                                                                                                                                  |   |                             | 221,466  |                             |   |   | **223,131** |   |
|                                                                                                                                                | Retained                earnings                                                                                                                                                                                                                           |   |                             | 47,433   |                             |   |   | **51,262** |   |
|                                                                                                                                                | Treasury                stock, at cost (2,130,418 shares at December 31, 2006 and June 30,                2007)                                                                                                                                            |   |                             | (32,218) |                             |   |   | **(32,218)** |   |
|                                                                                                                                                | Accumulated                other comprehensive income                                                                                                                                                                                                      |   |                             | 775      |                             |   |   | **1,599** |   |
| Total                stockholders’ equity                                                                                                     |                                                                                                                                                                                                                                                       |   | 237,716                          |     |                             |   | **244,034** |   |
| Total                liabilities and stockholders’ equity                                                                                     |                                                                                                                                                                                                                                                       | $      | 686,264                          |     |                             | **$** | **683,974** |   |
| See                accompanying notes                                                                                                               |

----

**SALEM      COMMUNICATIONS CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

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

**(Unaudited)**

|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Three                      Months Ended** |                                                       | **Six                      Months Ended** |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|------------------------------------------------------------|-------------------------------------------|
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **June                      30,**           |                                                       | **June                      30,**         |
|                                                                        | 2006                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        | **2007**                                                   |                                      | 2006 |   | **2007** |
| Net                      broadcasting revenue                               | $    53,381                                                                                                                                                                                                                                                                                                                                                                                                           |                                        | **$    53,650**                        |                                      | $    102,155 |   | **$    104,090** |
| Non-broadcast                      revenue                                  | 4,684                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **6,388**                                                  |                                      | 7,936 |   | **12,042** |
| Total                      revenue                                          | 58,065                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                        | **60,038**                                                 |                                      | 110,091 |   | **116,132** |
| Operating                      expenses:                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | Broadcasting                      operating expenses, exclusive of depreciation and amortization                      shown below                      (including $337 and $307 for the quarter ended June 30, 2006                      and 2007,                      respectively, and $614 and $617 for the six months ended June                      30, 2006 and                      2007, respectively, paid to related parties) | 33,498                                      |                                                       | **33,629**                                |   | 65,192 |   | **66,112** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | Non-broadcast                      operating expenses, exclusive of depreciation and amortization shown                      below                                                                                                                                                                                                                                                                                                        | 3,827                                       |                                                       | **5,652**                                 |   | 7,259 |   | **10,923** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | Corporate                      expenses, exclusive of depreciation and amortization shown                      below                      (including $52 and $76 for the quarter ended June 30, 2006                      and 2007,                      respectively, and $150 and $145 for the six months ended June                      30, 2006 and                      2007, respectively, paid to related parties)                | 6,256                                       |                                                       | **5,496**                                 |   | 12,696 |   | **11,310** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | Depreciation                      (including $138 and $150 for the quarter ended June 30 2006                      and 2007,                      respectively, and $225 and $289 for the six months ended June                      30, 2006 and                      2007, respectively for non-broadcast businesses)                                                                                                                   | 3,113                                       |                                                       | **2,923**                                 |   | 5,858 |   | **6,014** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | Amortization                      (including $525 and $748 for the quarter ended June 30 2006                      and 2007,                      respectively, and $842 and $1,486 for the six months ended                      June 30, 2006                      and 2007, respectively for non-broadcast businesses)                                                                                                                 | 753                                         |                                                       | **776**                                   |   | 1,303 |   | **1,586** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |   |
|                                                                        | (Gain)                      loss on disposal of assets                                                                                                                                                                                                                                                                                                                                                                                    | (15,510)                                    |                                                       | **634**                                   |   | (19,039) |   | **(2,635)** |
| Total                      operating expenses                               | 31,937                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                        | **49,110**                                                 |                                      | 73,269 |   | **93,310** |
| Operating                      income from continuing operations            | 26,128                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                        | **10,928**                                                 |                                      | 36,822 |   | **22,822** |
| Other                      income (expense):                                |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |
|                                                                        | Interest                      income                                                                                                                                                                                                                                                                                                                                                                                                      | —                                     |                                                       | **48**                                    |   | 46 |   | **108** |
|                                                                        | Interest                      expense                                                                                                                                                                                                                                                                                                                                                                                                     | (6,779)                                     |                                                       | **(6,308)**                               |   | (13,367) |   | **(12,762)** |
|                                                                        | Other                      income (expense), net                                                                                                                                                                                                                                                                                                                                                                                          | (174)                                       |                                                       | **182**                                   |   | (346) |   | **147** |
| Income                      from continuing operations before income taxes  | 19,175                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                        | **4,850**                                                  |                                      | 23,155 |   | **10,315** |
| Provision                      for income taxes                             | 7,584                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **1,926**                                                  |                                      | 9,178 |   | **4,426** |
| Income                      from continuing operations                      | 11,591                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                        | **2,924**                                                  |                                      | 13,977 |   | **5,889** |
| Income                      (loss) from discontinued operations, net of tax | (25)                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        | **—**                                                |                                      | 304 |   | **—** |
| Net                      income                                             | $    11,566                                                                                                                                                                                                                                                                                                                                                                                                           |                                        | **$    2,924**                         |                                      | $    14,281 |   | **$    5,889** |
| Other                      comprehensive income, net of tax                 | 894                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                        | **1,112**                                                  |                                      | 1,930 |   | **824** |
| Comprehensive                      income                                   | $    12,460                                                                                                                                                                                                                                                                                                                                                                                                           |                                        | **    $    4,036** |                                      |    $    16,211 |   | **   $    6,713** |
| Basic                      earnings per share from continuing operations    | $        0.48                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **$        0.12**  |                                      | $        0.57 |   | **$        0.25** |
| Income                      per share from discontinued operations          | —                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                        | **—**                                                |                                      | 0.01 |   | **—** |
| Basic                      earnings per share                               | $        0.48                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **$        0.12**  |                                      | $        0.58 |   | **$        0.25** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |
| Diluted                      earnings per share from continuing operations  | $        0.48                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **$        0.12**  |                                      | $        0.57 |   | **$        0.25** |
| Income                      (loss) per share from discontinued operations   | **—**                                                                                                                                                                                                                                                                                                                                                                                                                               |                                        | **—**                                                |                                      | 0.01 |   | **—** |
| Diluted                      earnings per share                             | $        0.47                                                                                                                                                                                                                                                                                                                                                                                     |                                        | **$        0.12**  |                                      | $        0.58 |   | **$        0.25** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |
| Basic                      weighted average shares outstanding              | 24,347,520                                                                                                                                                                                                                                                                                                                                                                                                                                |                                        | **23,850,020**                                             |                                      | 24,516,432 |   | **23,849,312** |
| Diluted                      weighted average shares outstanding            | 24,356,275                                                                                                                                                                                                                                                                                                                                                                                                                                |                                        | **23,855,967**                                             |                                      | 24,525,718 |   | **23,854,518** |
|                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                        |                                                       |                                      |   |   |   |
| See                      accompanying notes                                 |

----

** SALEM      COMMUNICATIONS CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Dollars      in thousands)**

**(Unaudited)**

|                                                                                                                                                  |                                                               |                                                     |        | **Six                Months Ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|----------------------------------------------------------|-------------|----------------------------------------------|---------|
|                                                                                                                                                  |                                                               |                                                     |        | 2006                                         |    |   | **2007** |   |
| **OPERATING                ACTIVITIES**                                                                                                               |                                                               |                                                     |        |                                         |    |   |   |   |
| Income                from continuing operations                                                                                                      |                                                               | $                                                        | 13,977      |                                         |    | **$** | **5,889** |   |
| Adjustments                to reconcile income from continuing operations to net cash provided                by                operating activities: |                                                               |                                                     |        |                                         |    |   |   |   |
|                                                                                                                                                  | Non-cash                stock-based compensation                   |                                                     |        | 2,620                                        |    |   |   | **1,634** |   |
|                                                                                                                                                  | Depreciation                and amortization                       |                                                     |        | 7,161                                        |    |   |   | **7,600** |   |
|                                                                                                                                                  | Amortization                of bond issue costs and bank loan fees |                                                     |        | 535                                          |    |   |   | **583** |   |
|                                                                                                                                                  | Amortization                and accretion of financing items       |                                                     |        | (252)                                        |    |   |   | **58** |   |
|                                                                                                                                                  | Provision                for bad debts                             |                                                     |        | 1,699                                        |    |   |   | **1,173** |   |
|                                                                                                                                                  | Deferred                income taxes                               |                                                     |        | 9,160                                        |    |   |   | **4,277** |   |
|                                                                                                                                                  | (Gain)                loss on disposal of assets                   |                                                     |        | (19,039)                                     |    |   |   | **(2,635)** |   |
|                                                                                                                                                  | Changes                in operating assets and liabilities:        |
|                                                                                                                                                  |                                                               | Accounts                receivable                       |        |                                         | (1,106) |   |   |   | **(593)** |   |
|                                                                                                                                                  |                                                               | Prepaid                expenses and other current assets |        |                                         | (146)   |   |   |   | **(86)** |   |
|                                                                                                                                                  |                                                               | Accounts                payable and accrued expenses     |        |                                         | 2,565   |   |   |   | **(2,673)** |   |
|                                                                                                                                                  |                                                               | Deferred                revenue                          |        |                                         | 1,078   |   |   |   | **755** |   |
|                                                                                                                                                  |                                                               | Other                liabilities                         |        |                                         | (189)   |   |   |   | **28** |   |
|                                                                                                                                                  |                                                               | Income                taxes payable                      |        |                                         | 157     |   |   |   | **(22)** |   |
| Net                cash provided by continuing operating activities                                                                                   |                                                               |                                                     | 18,220      |                                         |    |   | **15,988** |   |
| **INVESTING                ACTIVITIES**                                                                                                               |
|     Capital                expenditures                                                                                           |                                                               |                                                     | (11,258)    |                                         |    |   | **(8,788)** |   |
|     Purchases                of                broadcast assets                                                                   |                                                               |                                                     | (19,229)    |                                         |    |   | **—** |   |
|     Purchase                of                non-broadcast businesses                                                            |                                                               |                                                     | (10,509)    |                                         |    |   | **(311)** |   |
|     Proceeds                from                sale of property, plant and equipment                                             |                                                               |                                                     | 2,106       |                                         |    |   | **7,963** |   |
|     Other                                                                                                                         |                                                               |                                                     | (206)       |                                         |    |   | **(649)** |   |
|     Net                cash used in investing activities of continuing operations                                                 |                                                               |                                                     | (39,096)    |                                         |    |   | **(1,785)** |   |
| **FINANCING                ACTIVITIES**                                                                                                               |
|     Proceeds                from                borrowings under credit facilities                                                |                                                               |                                                     | 35,000      |                                         |    |   | **2,793** |   |
|     Repurchase                of                Class A common stock                                                              |                                                               |                                                     | (15,149)    |                                         |    |   | **—** |   |
|     Payments                of                long-term debt and notes payable                                                    |                                                               |                                                     | (2,002)     |                                         |    |   | **(15,991)** |   |
|     Proceeds                from                exercise of stock options                                                         |                                                               |                                                     | 24          |                                         |    |   | **30** |   |
|     Tax                benefit related to stock options exercised                                                                 |                                                               |                                                     | 1           |                                         |    |   | **1** |   |
|     Payments                on                capital lease obligations                                                           |                                                               |                                                     | (14)        |                                         |    |   | **(21)** |   |
|     Book                overdraft                                                                                                 |                                                               |                                                     | **—** |                                         |    |   | **(973)** |   |
| Net                cash provided by (used in) financing activities                                                                                    |                                                               |                                                     | 17,860      |                                         |    |   | **(14,161)** |   |
| **CASH                FLOWS OF DISCONTINUED OPERATIONS**                                                                                              |                                                               |                                                     |        |                                         |    |   |   |   |
|   Operating                cash flows                                                                                                       |                                                               |                                                     | (231)       |                                         |    |   | **—** |   |
|   Investing                cash flows                                                                                                       |                                                               |                                                     | (2)         |                                         |    |   | **—** |   |
|           Total                cash outflow from discontinued operations                            |                                                               |                                                     | (233)       |                                         |    |   | **—** |   |
| Net                increase (decrease) in cash and cash equivalents                                                                                   |                                                               |                                                     | (3,249)     |                                         |    |   | **42** |   |
| Cash                and cash equivalents at beginning of year                                                                                         |                                                               |                                                     | 3,979       |                                         |    |   | **710** |   |
| Cash                and cash equivalents at end of period                                                                                             |                                                               | $                                                        | 730         |                                         |    | **$** | **752** |   |
| **Supplemental                disclosures of cash flow information:**                                                                                 |                                                               |                                                     |        |                                         |    |   |   |   |
| Cash                paid during the period for                                                                                                        |                                                               |                                                     |        |                                         |    |
|                                                                                                                                                  |                                                               | Interest                                                 |        | $                                            | 12,459  |   |   | **$** | **10,739** |   |
|                                                                                                                                                  |                                                               | Income                taxes                              |        | $                                            | 76      |   |   | **$** | **215** |   |
| **Non-cash                investing and financing activities:**                                                                                       |                                                               |                                                     |        |                                         |    |   |   |   |
|    Assets** **acquired                through capital lease obligations                                                           |                                                               | $                                                        | **—** |                                         |    | $ | **800** |   |

----

**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     |   |
| Goodwill                                    |   |                                    | 11     |   |
|                                        |   | $                                       | 311    |   |

**Other      Pending Transactions:**

----

**   Discontinued      Operations:**

|                                                                        |   | **Three                Months Ended** |   | **Six                Months Ended** |
|-----------------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|
|                                                                        |   | **June                30, 2006**      |   | **June                30, 2006**    |
| Operating                loss                                               | $      | (18)                                  |   |                                |  $ | (160)  |
| Gain                (loss) on sale or exchange of radio stations            |   | (11)                                  |   |                                |   | 656 |
| Gain                (loss) from discontinued operations before income taxes |   | (29)                                  |   |                                |   | 496 |
| Provision                (benefit) for (from) income taxes                  |   | (4)                                   |   |                                |   | 192 |
| Income                (loss) from discontinued operations, net of tax       | $      | (25)                                  |   |                                | $ | 304 |

----

**    NOTE      4. STOCK-BASED      COMPENSATION**

|                                                                                                                    |   | **Three                Months Ended**   |   |   | **Six                Months Ended** |       |
|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|-------------------------------------|------------|
|                                                                                                                    |   | **June                30,**             |   |   | **June                30,**         |       |
|                                                                                                                    |   | 2006                                    |   |   | **2007**                            |       |   | 2006 |   |   | **2007** |   |
|                                                                                                                    |   | *(Dollars                in thousands)* |   |
| Stock                option compensation expense included in corporate expenses                                         |   | $                                       | 1,101  |   |                                | **$**      | **591** |   |   | $ | 2,174 |   |   | **$** | **1,098** |   |
| Restricted                stock units compensation expense included in corporate                expenses                |   |                                    | 22     |   |                                | ** ** | **16** |   |   |   | 44 |   |   | ** ** | **32** |   |
| Stock                option compensation expense included in broadcast operating                expenses                |   |                                    | 166    |   |                                | ** ** | **230** |   |   |   | 373 |   |   | ** ** | **437** |   |
| Stock                option compensation expense included in non-broadcast  operating                expenses |   |                                    | 23     |   |                                | ** ** | **43** |   |   |   | 29 |   |   | ** ** | **67** |   |
|  Total                stock-based compensation expense                                                             |   | $                                       | 1,312  |   |                                | **$**      | **880** |   |   | $ | 2,620 |   |   | **$** | **1,634** |   |
| Tax                benefit from stock-based compensation expense                                                        |   |                                    | (520   | )      |                                | ** ** | **(378** | **)** |   |   | (1,044 | ) |   | ** ** | **(723** | **)** |
| Total                stock-based compensation expense net of tax benefit                                                |   | $                                       | 792    |   |                                | **$**      | **502** |   |   | $ | 1,576 |   |   | **$** | **911** |   |

----

*    Employee      stock option and restricted stock grants*

|                                    |  **Three                Months Ended** |                        |                                | **Six                Months Ended** |                        |
|-----------------------------------------|---------------------------------------------|-----------------------------|-------------------------------------|-------------------------------------|-----------------------------|
|                                    |                                        | **June                30,** |                                |                                | **June                30,** |   |
|                                    |                                        | 2006                        |                                |                                | **2007**                    |   |   | 2006 |   |   | **2007** |   |
| Expected                volatility      |                                        |                        | 50.65                               | %                              |                        | ** ** | **43.88** | **%** |   |   | 52.1 | % |   | ** ** | **43.65** | **%** |
| Expected                dividends       |                                        |                        | 0.0                                 | %                                   |                        | ** ** | **0.0** | **%** |   |   | 0.0 | % |   | ** ** | **0.0** | **%** |
| Expected                term (in years) |                                        |                        | 6                -                9 |                                |                        | ** ** | **6                - 9** |   |   |   | 6                -                9 |   |   | ** ** | **6                - 9** |   |
| Risk-free                interest rate  |                                        |                        | 5.09                                | %                                   |                        | ** ** | **4.83** | **%** |   |   | 4.97 | % |   | ** ** | **4.70** | **%** |

| Options                                           |   | Shares     |          |   | Weighted                Average Exercise Price |       | Weighted                Average Remaining Contractual Term | Weighted                Average Grant Date Fair Value |                         |   | Aggregate                Intrinsic Value |   |
|---------------------------------------------------|--------|------------|---------------|--------|------------------------------------------------|------------|------------------------------------------------------------|-------------------------------------------------------|------------------------------|--------|------------------------------------------|--------|
| **Outstanding                at January 1, 2007** |   | ** ** | **2,146,564** |   |                                           | **$**      | **22.30**                                                  |                                                  |                         |   |                                     |   | **$** | — |   |
| **Granted**                                       |   | ** ** | **388,900**   |   |                                           | ** ** | **11.82**                                                  |                                                  |                         | **$**  | **6.35**                                 |   |   |   | — |   |
| **Exercised**                                     |   | ** ** | **(2,500**    | **)**  |                                           | ** ** | **11.81**                                                  |                                                  |                         |   |                                     |   |   |   | **4,219** |   |
| **Forfeited                or expired**           |   | ** ** | **(83,965**   | **)**  |                                           | ** ** | **20.98**                                                  |                                                  |                         |   |                                     |   |   |   | — |   |
| **Outstanding                at June 30, 2007**   |   | ** ** | **2,448,999** |   |                                           | **$**      | **20.70**                                                  |                                                  | **4.7                years** |   |                                     |   |   |   | — |   |
| **Exercisable                at June 30, 2007**   |   | ** ** | **1,416,062** |   |                                           | **$**      | **24.35**                                                  |                                                  | **3.0                years** |   |                                     |   |   |   | **18,796** |   |

| Restricted                Stock Units        |   | Shares |    |   | Weighted                AverageExercise                Price |   |
|----------------------------------------------|--------|--------|---------|--------|--------------------------------------------------------------|--------|
| Non-Vested                at January 1, 2007 |   |   | 6,000   |   |                                                         | $      | 11.15 |   |
| Granted                                      |   |   | — |   |                                                         |   | — |   |
| Vested                                       |   |   | — |   |                                                         |   | — |   |
| Forfeited                                    |   |   | — |   |                                                         |   | — |   |
| Non-Vested                at June 30, 2007   |   |   | 6,000   |   |                                                         | $      | 11.15 |   |

**NOTE      5. OTHER COMPREHENSIVE INCOME**

|                                      |   | **Three                Months Ended**   |   |   | **Six                Months Ended** |       |
|-------------------------------------------|--------|-----------------------------------------|--------|--------|-------------------------------------|------------|
|                                      |   | **June                30,**             |   |   | **June                30,**         |       |
|                                      |   | 2006                                    |   |   | **2007**                            |       |   | 2006 |   |   | **2007** |   |
|                                      |   | *(Dollars                in thousands)* |   |
| Mark-to-market                adjustment  |   | $                                       | 1,489  |   |                                | **$**      | **1,853** |   |   | $ | 3,216 |   |   | **$** | **1,373** |   |
| Tax                Provision (benefit)    |   |                                    | 595    |   |                                | ** ** | **741** |   |   |   | 1,286 |   |   | ** ** | **549** |   |
| Other                comprehensive income |   | $                                       | 894    |   |                                | **$**      | **1,112** |   |   | $ | 1,930 |   |   | **$** | **824** |   |
|                                      |   |                                    |   |   |                                |       |   |   |   |   |   |   |   |   |   |   |

**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  | **June                30,****2007**           |    |
|--------|---------------------------------------------------------------|---------------------------------------|-----------------------------------------------|---------|
|   |                                                          |                                  | *(Dollars                in thousands)*  |    |
|   |                                                          |                                  |                                          |    |
|   | Term                loans under credit facility               |                                  | $                                             | 238,125 |   |   | **$** | **236,475** |   |
|   | Revolving                line of credit under credit facility |                                  |                                          | 19,100  |   |   | ** ** | **8,500** |   |
|   | Swingline                credit facility                      |                                  |                                          | 1,241   |   |   | ** ** | **293** |   |
|   | 73⁄4%                Senior Subordinated Notes due 2010    |                                  |                                          | 100,000 |   |   | ** ** | **100,000** |   |
|   | Seller                financed note to acquire Townhall.com   |                                  |                                          | 2,444   |   |   | ** ** | **2,502** |   |
|   | Capital                leases and other loans                 |                                  |                                          | 116     |   |   | ** ** | **864** |   |
|   |                                                          |                                  |                                          | 361,026 |   |   | ** ** | **348,634** |   |
|   | Less                current portion                           |                                  |                                          | 2,048   |   |   | ** ** | **3,683** |   |
|   |                                                          |                                  | $                                             | 358,978 |   |   | **$** | **344,951** |   |

----

**Maturities      of Long-Term      Debt**

| Twelve                Months Ended June 30, | Amount                                  |
|---------------------------------------------|-----------------------------------------|
|                                        | *(Dollars                in thousands)* |
| 2008                                        | **$**                                   | **3,683** |
| 2009                                        | ** **                              | **12,482** |
| 2010                                        | ** **                              | **231,715** |
| 2011                                        | ** **                              | **100,023** |
| 2012                                        | ** **                              | **28** |
| Thereafter                                  | ** **                              | **703** |
|                                        | **$**                                   | **348,634** |

**NOTE      9. AMORTIZABLE INTANGIBLE      ASSETS**

|                                               |   | **As                of June 30, 2007**  |   |
|----------------------------------------------------|--------|-----------------------------------------|--------|
|                                               |   |                                    |   |   | Accumulated |   |   |   |   |
|                                               |   | Cost                                    |   |   | Amortization |   |   | **Net** |   |
|                                               |   | *(Dollars                in thousands)* |   |
|                                               |   |                                    |   |
| Customer                lists and contracts        |   | $                                       | 10,437 |   |   | $ | (6,890 | ) |   | **$** | **3,547** |   |
| Domain                and brand names              |   |                                    | 4,771  |   |   |   | (2,018 | ) |   | ** ** | **2,753** |   |
| Favorable                and assigned leases       |   |                                    | 1,581  |   |   |   | (1,188 | ) |   | ** ** | **393** |   |
| Other                amortizable intangible assets |   |                                    | 2,742  |   |   |   | (2,337 | ) |   | ** ** | **405** |   |
|                                               |   | $                                       | 19,531 |   |   | $ | (12,433 | ) |   | **$** | **7,098** |   |

|                                               |   | **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**                   | **Amortization                Expense** |
|--------------------------------------------------|-----------------------------------------|
|                                             | *(Dollars                in thousands)* |
| 2007                (July 1 – December 31) | $                                       | 1,398 |
| 2008                                             |                                    | 2,533 |
| 2009                                             |                                    | 1,282 |
| 2010                                             |                                    | 832 |
| 2011                                             |                                    | 369 |
| Thereafter                                       |                                    | 684 |
| Total                                            | $                                       | 7,098 |

**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**

|                                                                                                                                                             | **Three                Months Ended**   |   |     | **Six                Months Ended** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|--------|----------|-------------------------------------|--------|
|                                                                                                                                                             | **June                30,**             |   |     | **June                30,**         |   |
|                                                                                                                                                             | 2006                                    |   | **2007** |                                |   | 2006 |   |   | **2007** |   |
|                                                                                                                                                             | *(Dollars                in thousands)* |   |
| Net                revenue                                                                                                                                       |                                    |   |     |                                |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 53,381   |                                |   | **$** | **53,650** |   |   | $ | 102,155 |   |   | **$** | **104,090** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 4,684    |                                |   | ** ** | **6,388** |   |   |   | 7,936 |   |   | ** ** | **12,042** |   |
| Consolidated                net revenue                                                                                                                          |                                    | $      | 58,065   |                                |   | **$** | **60,038** |   |   | $ | 110,091 |   |   | **$** | **116,132** |   |
|                                                                                                                                                             |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses before depreciation, amortization and (gain) loss on disposal                of                assets                          |                                    |   |     |                                |   |   |   |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 33,498   |                                |   | **$** | **33,629** |   |   | $ | 65,192 |   |   | **$** | **66,112** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 3,827    |                                |   | ** ** | **5,652** |   |   |   | 7,259 |   |   | ** ** | **10,923** |   |
| Corporate                                                                                                                                                        |                                    |   | 6,256    |                                |   | ** ** | **5,496** |   |   |   | 12,696 |   |   | ** ** | **11,310** |   |
| Consolidated                operating expenses before depreciation, amortization and (gain) loss                on                disposal of assets             |                                    | $      | 43,581   |                                |   | **$** | **44,777** |   |   | $ | 85,147 |   |   | **$** | **88,345** |   |
|                                                                                                                                                             |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income from continuing operations before depreciation, amortization                and                (gain) loss on disposal of assets |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 19,883   |                                |   | **$** | **20,021** |   |   | $ | 36,963 |   |   | **$** | **37,978** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 857      |                                |   | ** ** | **736** |   |   |   | 677 |   |   | ** ** | **1,119** |   |
| Corporate                                                                                                                                                        |                                    |   | (6,256   | )                                   |   | ** ** | **(5,496** | **)** |   |   | (12,696 | ) |   | ** ** | **(11,310** | **)** |
| Consolidated                operating income from continuing operations before depreciation,                amortization and (gain) loss on disposal of assets   |                                    | $      | 14,484   |                                |   | **$** | **15,261** |   |   | $ | 24,944 |   |   | **$** | **27,787** |   |
|                                                                                                                                                             |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                     |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 2,676    |                                |   | **$** | **2,497** |   |   | $ | 5,050 |   |   | **$** | **5,162** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 138      |                                |   | ** ** | **150** |   |   |   | 225 |   |   | ** ** | **289** |   |
| Corporate                                                                                                                                                        |                                    |   | 299      |                                |   | ** ** | **276** |   |   |   | 583 |   |   | ** ** | **563** |   |
| Consolidated                depreciation expense                                                                                                                 |                                    | $      | 3,113    |                                |   | **$** | **2,923** |   |   | $ | 5,858 |   |   | **$** | **6,014** |   |
|                                                                                                                                                             |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                                                                                                                                                     |                                    |   |     |                                |   |   |   |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 224      |                                |   | **$** | **23** |   |   | $ | 452 |   |   | **$** | **90** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 525      |                                |   | ** ** | **748** |   |   |   | 842 |   |   | ** ** | **1,486** |   |
| Corporate                                                                                                                                                        |                                    |   | 4        |                                |   | ** ** | **5** |   |   |   | 9 |   |   | ** ** | **10** |   |
| Consolidated                amortization expense                                                                                                                 |                                    | $      | 753      |                                |   | **$** | **776** |   |   | $ | 1,303 |   |   | **$** | **1,586** |   |
|                                                                                                                                                             |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income from continuing operations before (gain) loss on disposal                of                assets                                |                                    |   |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Radio                broadcasting                                                                                                                                |                                    | $      | 16,983   |                                |   | **$** | **17,501** |   |   | $ | 31,461 |   |   | **$** | **32,726** |   |
| Non-broadcast                                                                                                                                                    |                                    |   | 194      |                                |   | ** ** | **(162** | **)** |   |   | (390 | ) |   | ** ** | **(656** | **)** |
| Corporate                                                                                                                                                        |                                    |   | (6,559   | )                                   |   | ** ** | **(5,777** | **)** |   |   | (13,288 | ) |   | ** ** | **(11,883** | **)** |
| Consolidated                operating income from continuing operations before (gain) loss on                disposal                of assets                   |                                    | $      | 10,618   |                                |   | **$** | **11,562** |   |   | $ | 17,783 |   |   | **$** | **20,187** |   |

----

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

|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   |                          | December                  31,             |                          | **June                  30,** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|---------------------------------------|--------|-------------------------------|-------------------------------------------|-------------------------------|-------------------------------|
|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   | 2006                          |                                      | **2007**                      |
| Total                  property, plant and equipment, net                                                                                                                                                                                 |                                                                                                                                         |   |                                      |    |                                  |   |                          | *(Dollars                  in thousands)* |
|                                                                                                                                                                                                                                      | Radio                  broadcasting                                                                                                          |   |                                      |    |                                  |   |                          | $                                         | 115,604                       |                          | $ | **116,354** |
|                                                                                                                                                                                                                                      | Non-broadcast                                                                                                                                |   |                                      |    |                                  |   |                          |                                      | 2,830                         |                          |   | **4,316** |
|                                                                                                                                                                                                                                      | Corporate                                                                                                                                    |   |                                      |    |                                  |   |                          |                                      | 10,279                        |                          |   | **10,138** |
| Consolidated                  property, plant and equipment, net                                                                                                                                                                          |                                                                                                                                         |   |                                      |    |                                  |   | $                             | 128,713                                   |                          | $                             | **130,808** |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   |                          |                                      |                          |                          |   |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   | December                  31, |                                      | **June                  30,** |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   | 2006                          |                                      | **2007**                      |
| Goodwill                                                                                                                                                                                                                                  |                                                                                                                                         |   |                                      |    |                                  |   |                          | *(Dollars                  in thousands)* |
|                                                                                                                                                                                                                                      | Radio                  Broadcasting                                                                                                          |   |                                      |    |                                  |   |                          | $                                         | 5,011                         |                          | $ | **4,857** |
|                                                                                                                                                                                                                                      | Non-broadcast                                                                                                                                |   |                                      |    |                                  |   |                          |                                      | 15,587                        |                          |   | **15,598** |
|                                                                                                                                                                                                                                      | Corporate                                                                                                                                    |   |                                      |    |                                  |   |                          |                                      | 8                             |                          |   | **8** |
| Consolidated                  Goodwill                                                                                                                                                                                                    |                                                                                                                                         |   |                                      |    |                                  |   | $                             | 20,606                                    |                          | $                             | **20,463** |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   |                                      |    |                                  |   |                          |                                      |                          |                          |   |   |
| ***Reconciliation                  of operating income before depreciation, amortization,  and                  (gain) loss on disposal of assets to income from continuing operations                  before income taxes:*** |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   | **Three                  Months Ended**   |    | **Six                  Months Ended** |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   | **June                  30,**             |    | **June                  30,**         |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   | 2006                                      |    | **2007**                              |   | 2006                          |                                      | **2007**                      |
|                                                                                                                                                                                                                                      |                                                                                                                                         |   | *(Dollars                  in thousands)* |
|                                                                                                                                                                                                                                      | Operating                  income before depreciation, amortization, and gain (loss) on disposal                  of                  assets |   | $                                         | 14,484  |                                  | **$**  | **15,261**                    |                                      | $                             | 24,944                        |   | **$** | **27,787** |
|                                                                                                                                                                                                                                      | Depreciation                  expense                                                                                                        |   |                                      | (3,113) |                                  |   | **(2,923)**                   |                                      |                          | (5,858)                       |   |   | **(6,014)** |
|                                                                                                                                                                                                                                      | Amortization                  expense                                                                                                        |   |                                      | (753)   |                                  |   | **(776)**                     |                                      |                          | (1,303)                       |   |   | **(1,586)** |
|                                                                                                                                                                                                                                      | Interest                  income                                                                                                             |   |                                      | — |                                  |   | **48**                        |                                      |                          | 46                            |   |   | **108** |
|                                                                                                                                                                                                                                      | Gain                  (loss) on disposal of assets                                                                                           |   |                                      | 15,510  |                                  |   | **(634)**                     |                                      |                          | 19,039                        |   |   | **2,635** |
|                                                                                                                                                                                                                                      | Interest                  expense                                                                                                            |   |                                      | (6,779) |                                  |   | **(6,308)**                   |                                      |                          | (13,367)                      |   |   | **(12,762)** |
|                                                                                                                                                                                                                                      | Other                  income (expense), net                                                                                                 |   |                                      | (174)   |                                  |   | **182**                       |                                      |                          | (346)                         |   |   | **147** |
|                                                                                                                                                                                                                                      | Income                  from continuing operations before income taxes                                                                       |   | $                                         | 19,175  |                                  | **$**  | **4,850**                     |                                      | $                             | 23,155                        |   | **$** | **10,315** |

----

**NOTE        15. CONDENSED        CONSOLIDATING FINANCIAL STATEMENTS**

----

**NOTE      15. CONDENSED      CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)**

**SALEM      COMMUNICATIONS CORPORATION**

**CONDENSED      CONSOLIDATING BALANCE SHEET**

**(Unaudited)**

***(Dollars      in thousands)***

|                                                    |   | As                of June 30, 2007 |
|---------------------------------------------------------|--------|------------------------------------|
|                                                    |   |                               |   |   |   |   |   |   |   |   | Issuer                and |
|                                                    |   |                               |   |   |   |   |   |   |   |   | Guarantor |
|                                                    |   | Guarantors                         |   |   | Subsidiaries |
|                                                    |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   | Parent                             |   |   | AcquisitionCo |   |   | Other                  Media |   |   | Salem                Holding |   |   | Adjustments |   |   | Salem                  Consolidated |
| Current                assets:                          |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents           |   | $                                  | — |   |   | $ | 123 |   |   | $ | 314 |   |   | $ | 315 |   |   | $ | — |   |   | $ | 752 |
| Trade                accounts receivable, net      |   |                               | — |   |   |   | 2,901 |   |   |   | 718 |   |   |   | 27,789 |   |   |   | (73 | ) |   |   | 31,335 |
| Other                receivables                        |   |                               | — |   |   |   | 11 |   |   |   | 3 |   |   |   | 567 |   |   |   | — |   |   |   | 581 |
| Prepaid                expenses                    |   |                               | — |   |   |   | 134 |   |   |   | 245 |   |   |   | 2,037 |   |   |   | — |   |   |   | 2,416 |
| Income                tax receivable                    |   |                               | — |   |   |   | (6 | ) |   |   | (5 | ) |   |   | 50 |   |   |   | — |   |   |   | 39 |
| Deferred                income taxes               |   |                               | — |   |   |   | 305 |   |   |   | 153 |   |   |   | 4,551 |   |   |   | — |   |   |   | 5,009 |
| Total                current assets                |   |                               | — |   |   |   | 3,468 |   |   |   | 1,428 |   |   |   | 35,309 |   |   |   | (73 | ) |   |   | 40,132 |
| Investment                in subsidiaries               |   |                               | 215,654 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (215,654 | ) |   |   | — |
| Property,                plant and equipment, net  |   |                               | — |   |   |   | 7,726 |   |   |   | 415 |   |   |   | 122,667 |   |   |   | — |   |   |   | 130,808 |
| Broadcast                licenses                  |   |                               | — |   |   |   | 94,473 |   |   |   | — |   |   |   | 377,990 |   |   |   | — |   |   |   | 472,463 |
| Goodwill                                           |   |                               | — |   |   |   | 10,256 |   |   |   | 2,565 |   |   |   | 7,642 |   |   |   | — |   |   |   | 20,463 |
| Other                indefinite-lived intangible assets |   |                               | — |   |   |   | — |   |   |   | 2,892 |   |   |   | — |   |   |   | — |   |   |   | 2,892 |
| Amortizable                intangible assets, net  |   |                               | — |   |   |   | 4,625 |   |   |   | 1,002 |   |   |   | 1,471 |   |   |   | — |   |   |   | 7,098 |
| Bond                issue costs                    |   |                               | — |   |   |   | — |   |   |   | — |   |   |   | 518 |   |   |   | — |   |   |   | 518 |
| Bank                loan fees                      |   |                               | — |   |   |   | — |   |   |   | — |   |   |   | 2,488 |   |   |   | — |   |   |   | 2,488 |
| FV                of interest rate swap                 |   |                               | — |   |   |   | — |   |   |   | — |   |   |   | 2,663 |   |   |   | — |   |   |   | 2,663 |
| Intercompany                receivables            |   |                               | 106,818 |   |   |   | 10,477 |   |   |   | — |   |   |   | 184,360 |   |   |   | (301,655 | ) |   |   | — |
| Other                assets                        |   |                               | — |   |   |   | 60 |   |   |   | 26 |   |   |   | 4,363 |   |   |   | — |   |   |   | 4,449 |
| Total                assets                        |   | $                                  | 322,472 |   |   | $ | 131,085 |   |   | $ | 8,328 |   |   | $ | 739,471 |   |   | $ | (517,382 | ) |   | $ | 683,974 |

----

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

**SALEM      COMMUNICATIONS CORPORATION**

**CONDENSED      CONSOLIDATING BALANCE SHEET**

**(Unaudited)**

***(Dollars      in thousands)***

|                                                                    |   | As                  of June 30, 2007 |    |
|-------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                    |   |                                 |    |   |   |   |   |   |   |   | Issuer                  and |   |
|                                                                    |   |                                 |    |   |   |   |   |   |   |   | Guarantor |   |
|                                                                    |   | Guarantors                           |    |   | Subsidiaries |   |
|                                                                    |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | Parent                               |    |   | AcquisitionCo |   |   | Other                  Media |   |   | Salem                  Holding |   |   | Adjustments |   |   | Salem                    Consolidated |   |
| Current                  liabilities:                              |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  payable                                  |   | $                                    | — |   |   | $ | (42 | ) |   | $ | 65 |   |   | $ | 1,473 |   |   | $ | — |   |   | $ | 1,496 |   |
| Accrued                  expenses                                  |   |                                 | — |   |   |   | 593 |   |   |   | 482 |   |   |   | 5,315 |   |   |   | (126 | ) |   |   | 6,264 |   |
| Accrued                  compensation and related expenses         |   |                                 | — |   |   |   | 729 |   |   |   | 125 |   |   |   | 6,558 |   |   |   | — |   |   |   | 7,412 |   |
| Accrued                  interest                                       |   |                                 | — |   |   |   | — |   |   |   | — |   |   |   | 2,252 |   |   |   | — |   |   |   | 2,252 |   |
| Deferred                  revenue                                  |   |                                 | — |   |   |   | — |   |   |   | 4,003 |   |   |   | 562 |   |   |   | — |   |   |   | 4,565 |   |
| Current                  maturities of long-term debt                   |   |                                 | — |   |   |   | 1,242 |   |   |   | — |   |   |   | 2,441 |   |   |   | — |   |   |   | 3,683 |   |
| Total                  current liabilities                         |   |                                 | — |   |   |   | 2,522 |   |   |   | 4,675 |   |   |   | 18,601 |   |   |   | (126 | ) |   |   | 25,672 |   |
| Intercompany                  payables                             |   |                                 | 77,178  |   |   |   | 104,404 |   |   |   | 14,730 |   |   |   | 105,290 |   |   |   | (301,602 | ) |   |   | — |   |
| Long-term                  debt                                         |   |                                 | — |   |   |   | 1,305 |   |   |   | — |   |   |   | 343,646 |   |   |   | — |   |   |   | 344,951 |   |
| Deferred                  income taxes                             |   |                                 | 1,260   |   |   |   | 13,777 |   |   |   | (9,819 | ) |   |   | 55,592 |   |   |   | — |   |   |   | 60,810 |   |
| Deferred                  revenue                                  |   |                                 | — |   |   |   | 598 |   |   |   | (1,576 | ) |   |   | 8,281 |   |   |   | — |   |   |   | 7,303 |   |
| Other                  liabilities                                 |   |                                 | — |   |   |   | — |   |   |   | — |   |   |   | 1,204 |   |   |   | — |   |   |   | 1,204 |   |
| Stockholders’                  equity                        |   |                                 | 244,034 |   |   |   | 8,479 |   |   |   | 318 |   |   |   | 206,857 |   |   |   | (215,654 | ) |   |   | 244,034 |   |
| Total                  liabilities and stockholders’ equity  |   | $                                    | 322,472 |   |   | $ | 131,085 |   |   | $ | 8,328 |   |   | $ | 739,471 |   |   | $ | (517,382 | ) |   | $ | 683,974 |   |

----

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

**SALEM      COMMUNICATIONS CORPORATION**

**CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS**

**(Unaudited)**

***(Dollars      in thousands)***

|                                                                |   | Six                Months Ended June 30, 2007 |    |
|---------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                |   |                                          |    |   |   |   |   |   |   |   | Issuer                and |   |
|                                                                |   |                                          |    |   |   |   |   |   |   |   | Guarantor |   |
|                                                                |   | Guarantors                                    |    |   | Subsidiaries |   |
|                                                                |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Parent                                        |    |   | AcquisitionCo |   |   | Other                Media |   |   | Salem                Holding |   |   | Adjustments |   |   | Salem                Consolidated |   |
| Net                broadcasting revenue                        |   | $                                             | — |   |   | $ | 5,729 |   |   | $ | — |   |   | $ | 99,665 |   |   | $ | (1,304 | ) |   | $ | 104,090 |   |
| Non-broadcast  revenue                               |   |                                          | — |   |   |   | 6,356 |   |   |   | 3,615 |   |   |   | 2,592 |   |   |   | (521 | ) |   |   | 12,042 |   |
| Total                revenue                                   |   |                                          | — |   |   |   | 12,085 |   |   |   | 3,615 |   |   |   | 102,257 |   |   |   | (1,825 | ) |   |   | 116,132 |   |
| Operating                expenses:                             |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Broadcasting                operating expenses                 |   |                                          | — |   |   |   | 3,920 |   |   |   | — |   |   |   | 62,107 |   |   |   | 85 |   |   |   | 66,112 |   |
| Non-broadcast  operating                expenses     |   |                                          | — |   |   |   | 6,101 |   |   |   | 4,251 |   |   |   | 1,987 |   |   |   | (1,416 | ) |   |   | 10,923 |   |
| Corporate                expenses                              |   |                                          | — |   |   |   | 655 |   |   |   | — |   |   |   | 11,149 |   |   |   | (494 | ) |   |   | 11,310 |   |
| Depreciation                                                        |   |                                          | — |   |   |   | 480 |   |   |   | 78 |   |   |   | 5,456 |   |   |   | — |   |   |   | 6,014 |   |
| Amortization                                                        |   |                                          | — |   |   |   | 841 |   |   |   | 229 |   |   |   | 516 |   |   |   | — |   |   |   | 1,586 |   |
| Gain                (loss) on disposal of assets               |   |                                          | — |   |   |   | 1 |   |   |   | — |   |   |   | (2,636 | ) |   |   | — |   |   |   | (2,635 | ) |
| Total                operating expenses                        |   |                                          | — |   |   |   | 11,998 |   |   |   | 4,558 |   |   |   | 78,579 |   |   |   | (1,825 | ) |   |   | 93,310 |   |
| Operating                income (loss)                              |   |                                          | — |   |   |   | 87 |   |   |   | (943 | ) |   |   | 23,678 |   |   | ­— |   |   |   | 22,822 |   |
| Other                income (expense):                         |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                in earnings of consolidated subsidiaries, net |   |                                          | 6,175   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (6,175 | ) |   |   | — |   |
| Interest                income                                 |   |                                          | 3,881   |   |   |   | 5 |   |   |   | — |   |   |   | 6,614 |   |   |   | (10,392 | ) |   |   | 108 |   |
| Interest                expense                                |   |                                          | (4,375  | ) |   |   | (4,921 | ) |   |   | (844 | ) |   |   | (13,014 | ) |   |   | 10,392 |   |   |   | (12,762 | ) |
| Other                income, net                               |   |                                          | — |   |   |   | — |   |   |   | — |   |   |   | 147 |   |   |   | — |   |   |   | 147 |   |
| Income                (loss) before income taxes               |   |                                          | 5,681   |   |   |   | (4,829 | ) |   |   | (1,787 | ) |   |   | 17,425 |   |   |   | (6,175 | ) |   |   | 10,315 |   |
| Provision                (benefit) for income taxes            |   |                                          | (208    | ) |   |   | (1,604 | ) |   |   | (847 | ) |   |   | 7,085 |   |   |   | — |   |   |   | 4,426 |   |
| Net                income (loss)                                    |   | $                                             | 5,889   |   |   | $ | (3,225 | ) |   | $ | (940 | ) |   | $ | 10,340 |   |   | $ | (6,175 | ) |   | $ | 5,889 |   |
| Other                comprehensive income                           |   |                                          | 824     |   |   |   | — |   |   |   | — |   |   |   | 824 |   |   |   | (824 | ) |   |   | 824 |   |
| Comprehensive                income (loss)                          |   | $                                             | 6,713   |   |   | $ | (3,225 | ) |   | $ | (940 | ) |   | $ | 11,164 |   |   | $ | (6,999 | ) |   | $ | 6,713 |   |

----

**NOTE        16. SUBSEQUENT        EVENT**

----

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS**

**GENERAL**

----

*Any information found on our      website is not a part of, or incorporated by reference into, this or any other      report of the Company filed with, or furnished to, the SEC.*

**OVERVIEW**

| ·   | the                sale of block program time, both to national and local program                producers, |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | the                sale of advertising time on our radio stations, both to national                and local                advertisers, and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                sale of advertising time on our national radio                network. |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | audience                share, |
|--------------------|--------------------------------|

| ·   | how                well our stations perform for our                clients, |
|--------------------|------------------------------------------------------------------------------|

| ·   | the                size of the market, |
|--------------------|----------------------------------------|

| ·   | the                general economic conditions in each market,                and |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | supply                and demand on both a local and national                level. |
|--------------------|-------------------------------------------------------------------------------------|

----

----

**SAME      STATION      DEFINITION**

**RESULTS      OF      OPERATIONS**

|                                                                  |   | **Three                Months Ended** |    |   |     |       |       | **Six                Months Ended** |   |   |   |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|---------|--------|----------|------------|------------|-------------------------------------|--------|--------|--------|--------|
|                                                                  |   | **June                30,**           |    |   |     |       |       | **June                30,**         |   |   |   |   |
|                                                                  |   | 2006                                  |    |   | **2007** |       |       | %                Change             |   |   | 2006   |   |   | **2007** |   |   | %                Change |   |
| Net                broadcasting revenue                               |   | $                                     | 53,381  |   |     | **$**      | **53,650** |                                |   |   | 0.5    | %      |   | $ | 102,155 |   |   | **$** | **104,090** |   |   |   | 1.9 | % |
| Non-broadcast                revenue                                  |   |                                  | 4,684   |   |     | ** ** | **6,388**  |                                |   |   | 36.4   | %      |   |   | 7,936 |   |   | ** ** | **12,042** |   |   |   | 51.7 | % |
| Total                revenue                                          |   |                                  | 58,065  |   |     | ** ** | **60,038** |                                |   |   | 3.4    | %      |   |   | 110,091 |   |   | ** ** | **116,132** |   |   |   | 5.5 | % |
| Operating                expenses:                                    |   |                                  |    |   |     |       |       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Broadcasting                operating expenses                        |   |                                  | 33,498  |   |     | ** ** | **33,629** |                                |   |   | 0.4    | %      |   |   | 65,192 |   |   | ** ** | **66,112** |   |   |   | 1.4 | % |
| Non-broadcast                operating expenses                       |   |                                  | 3,827   |   |     | ** ** | **5,652**  |                                |   |   | 47.7   | %      |   |   | 7,259 |   |   | ** ** | **10,923** |   |   |   | 50.5 | % |
| Corporate                expenses                                     |   |                                  | 6,256   |   |     | ** ** | **5,496**  |                                |   |   | (12.1  | %)     |   |   | 12,696 |   |   | ** ** | **11,310** |   |   |   | (10.9 | %) |
| Depreciation                                                          |   |                                  | 3,113   |   |     | ** ** | **2,923**  |                                |   |   | (6.1   | %)     |   |   | 5,858 |   |   | ** ** | **6,014** |   |   |   | 2.7 | % |
| Amortization                                                          |   |                                  | 753     |   |     | ** ** | **776**    |                                |   |   | 3.1    | %      |   |   | 1,303 |   |   | ** ** | **1,586** |   |   |   | 21.7 | % |
| (Gain)                loss on disposal of assets                      |   |                                  | (15,510 | )      |     | ** ** | **634**    |                                |   |   | (104.1 | %)     |   |   | (19,039 | ) |   | ** ** | **(2,635** | **)** |   |   | (86.2 | %) |
| Total                operating expenses                               |   |                                  | 31,937  |   |     | ** ** | **49,110** |                                |   |   | 53.8   | %      |   |   | 73,269 |   |   | ** ** | **93,310** |   |   |   | 27.4 | % |
| Operating                income from continuing operations            |   |                                  | 26,128  |   |     | ** ** | **10,928** |                                |   |   | (58.2  | %)     |   |   | 36,822 |   |   | ** ** | **22,822** |   |   |   | (38.0 | %) |
| Other                income (expense):                                |   |                                  |    |   |     |       |       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                        |   |                                  | — |   |     | ** ** | **48**     |                                |   |   | 100.0  | %      |   |   | 46 |   |   | ** ** | **108** |   |   |   | 134.8 | % |
| Interest                expense                                       |   |                                  | (6,779  | )      |     | ** ** | **(6,308** | **)**                               |   |   | (6.9   | %)     |   |   | (13,367 | ) |   | ** ** | **(12,762** | **)** |   |   | (4.5 | %) |
| Other                income (expense), net                            |   |                                  | (174    | )      |     | ** ** | **182**    |                                |   |   | (204.6 | %)     |   |   | (346 | ) |   | ** ** | **147** |   |   |   | (142.5 | %) |
| Income                from continuing operations before income taxes  |   |                                  | 19,175  |   |     | ** ** | **4,850**  |                                |   |   | (74.7  | %)     |   |   | 23,155 |   |   | ** ** | **10,315** |   |   |   | (55.5 | %) |
| Provision                for income taxes                             |   |                                  | 7,584   |   |     | ** ** | **1,926**  |                                |   |   | (74.6  | %)     |   |   | 9,178 |   |   | ** ** | **4,426** |   |   |   | (51.8 | %) |
| Income                from continuing operations                      |   |                                  | 11,591  |   |     | ** ** | **2,924**  |                                |   |   | (74.8  | %)     |   |   | 13,977 |   |   | ** ** | **5,889** |   |   |   | (57.9 | %) |
| Income                (loss) from discontinued operations, net of tax |   |                                  | (25     | )      |     |       | —    |                                |   |   | (100.0 | %)     |   |   | 304 |   |   | ** ** | **—** |   |   |   | (100.0 | %) |
| Net                income                                             |   | $                                     | 11,566  |   |     | **$**      | **2,924**  |                                |   |   | (74.7  | %)     |   | $ | 14,281 |   |   | **$** | **5,889** |   |   |   | (58.8 | %) |

----

|                                                                 |   | **Three                Months Ended** |        |   | **Six                Months Ended** |       |
|----------------------------------------------------------------------|--------|---------------------------------------|-------------|--------|-------------------------------------|------------|
|                                                                 |   | **June                30,**           |        |   | **June                30,**         |       |
|                                                                 |   | 2006                                  |        |   | **2007**                            |       |   | 2006 |   |   | **2007** |   |
| Net                broadcasting revenue                              |   |                                  | 92          | %      |                                | ** ** | **89** | **%** |   |   | 93 | % |   | ** ** | **90** | **%** |
| Non-broadcast                revenue                                 |   |                                  | 8           | %      |                                | ** ** | **11** | **%** |   |   | 7 | % |   | ** ** | **10** | **%** |
| Total                revenue                                         |   |                                  | 100         | %      |                                | ** ** | **100** | **%** |   |   | 100 | % |   | ** ** | **100** | **%** |
| Operating                expenses:                                   |   |                                  |        |   |                                |       |   |   |   |   |   |   |   |   |   |   |
| Broadcasting                operating expenses                       |   |                                  | 58          | %      |                                | ** ** | **56** | **%** |   |   | 59 | % |   | ** ** | **57** | **%** |
| Non-broadcast                operating expenses                      |   |                                  | 7           | %      |                                | ** ** | **10** | **%** |   |   | 7 | % |   | ** ** | **9** | **%** |
| Corporate                expenses                                    |   |                                  | 11          | %      |                                | ** ** | **9** | **%** |   |   | 12 | % |   | ** ** | **10** | **%** |
| Depreciation                                                         |   |                                  | 5           | %      |                                | ** ** | **5** | **%** |   |   | 5 | % |   | ** ** | **5** | **%** |
| Amortization                                                         |   |                                  | 1           | %      |                                | ** ** | **1** | **%** |   |   | 1 | % |   | ** ** | **1** | **%** |
| (Gain)                loss on disposal of assets                     |   |                                  | (27         | )%     |                                | ** ** | **1** | **%** |   |   | (17 | )% |   | ** ** | **(2** | **)%** |
| Total                operating expenses                              |   |                                  | 55          | %      |                                | ** ** | **82** | **%** |   |   | 67 | % |   | ** ** | **80** | **%** |
| Operating                income from continuing operations           |   |                                  | 45          | %      |                                | ** ** | **18** | **%** |   |   | 33 | % |   | ** ** | **20** | **%** |
| Other                income (expense):                               |   |                                  |        |   |                                |       |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                       |   |                                  | —     | %      |                                | ** ** | **—** | **%** |   | ** ** | **—** | **%** |   | ** ** | **—** | **%** |
| Interest                expense                                      |   |                                  | (12         | )%     |                                | ** ** | **(10** | **)%** |   |   | (12 | )% |   | ** ** | **(11** | **)%** |
| Other                expense, net                                    |   | ** **                            | **—** | **%**  |                                | ** ** | **—** | **%** |   | ** ** | **—** | **%** |   | ** ** | **—** | **%** |
| Income                from continuing operations before income taxes |   |                                  | 33          | %      |                                | ** ** | **8** | **%** |   |   | 21 | % |   | ** ** | **9** | **%** |
| Provision                for income taxes                            |   |                                  | 13          | %      |                                | ** ** | **3** | **%** |   |   | 8 | % |   | ** ** | **4** | **%** |
| Income                from continuing operations                     |   |                                  | 20          | %      |                                | ** ** | **5** | **%** |   |   | 13 | % |   | ** ** | **5** | **%** |
| Discontinued                operations, net of tax                   |   |                                  | —     | %      |                                | ** ** | **—** | **%** |   | ** ** | **—** | **%** |   | ** ** | **—** | **%** |
| Net                income                                            |   |                                  | 20          | %      |                                | ** ** | **5** | **%** |   |   | 13 | % |   | ** ** | **5** | **%** |

*** Three      months ended June 30, 2007 compared to three months ended June 30,      2006***

*      NET      BROADCASTING REVENUE.*

*NON-BROADCAST      REVENUE. *

----

*BROADCASTING      OPERATING EXPENSES. *

*CORPORATE      EXPENSES*

*DEPRECIATION.      *

*AMORTIZATION.      *

* (GAIN)*
*LOSS      ON DISPOSAL OF ASSETS.*

----

*OTHER      INCOME (EXPENSE). *

*PROVISION      FOR INCOME TAXES.*

*      LOSS      FROM DISCONTINUED OPERATIONS, NET OF      TAX.*

*NET      INCOME.       *

***Six      months ended June 30, 2007 compared to six months ended June 30,      2006***

*      NET      BROADCASTING REVENUE.*

----

*NON-BROADCAST      REVENUE. *

*BROADCASTING      OPERATING EXPENSES. *

*NON-BROADCAST      OPERATING EXPENSES. *

*CORPORATE      EXPENSES.*

*DEPRECIATION.      *

*AMORTIZATION.      *

----

*GAIN)      LOSS ON DISPOSAL OF ASSETS.*

*OTHER      INCOME (EXPENSE). *

*PROVISION      FOR INCOME      TAXES.*

*INCOME      FROM DISCONTINUED OPERATIONS, NET OF TAX.*

*NET      INCOME.       *

----

**NON-GAAP      FINANCIAL      MEASURES**

***Three      months ended June 30,      2007 compared to the three months ended June 30,      2006***

*STATION      OPERATING INCOME.*

----

***Six      months ended June 30,      2007 compared to the six months ended June 30,      2006***

*STATION      OPERATING INCOME. *

|                                                      |   | **Three                Months Ended June 30,** |   |   | **Six                Months Ended June 30,** |       |
|-----------------------------------------------------------|--------|------------------------------------------------|--------|--------|----------------------------------------------|------------|
|                                                      |   | 2006                                           |   |   | **2007**                                     |       |   | 2006 |   |   | **2007** |   |
|                                                      |   | *(Dollars                in thousands)*        |   |
| Station                operating income                   |   | $                                              | 19,883 |   |                                         | **$**      | **20,021** |   |   | $ | 36,963 |   |   | **$** | **37,978** |   |
| Plus                non-broadcast revenue            |   |                                           | 4,684  |   |                                         | ** ** | **6,388** |   |   |   | 7,936 |   |   | ** ** | **12,042** |   |
| Less                non-broadcast operating expenses |   |                                           | (3,827 | )      |                                         | ** ** | **(5,652** | **)** |   |   | (7,259 | ) |   | ** ** | **(10,923** | **)** |
| Less                depreciation and amortization         |   |                                           | (3,866 | )      |                                         | ** ** | **(3,699** | **)** |   |   | (7,161 | ) |   | ** ** | **(7,600** | **)** |
| Plus                gain (loss) on disposal of assets     |   |                                           | 15,510 |   |                                         | ** ** | **(634** | **)** |   |   | 19,039 |   |   | ** ** | **2,635** |   |
| Less                corporate expenses                    |   |                                           | (6,256 | )      |                                         | ** ** | **(5,496** | **)** |   |   | (12,696 | ) |   | ** ** | **(11,310** | **)** |
| Operating                income                           |   | $                                              | 26,128 |   |                                         | **$**      | **10,928** |   |   | $ | 36,822 |   |   | **$** | **22,822** |   |

**CRITICAL      ACCOUNTING POLICIES,      JUDGMENTS AND ESTIMATES**

----

***Accounting      for acquisitions      and upgrades of radio station and network      assets***

----

***Allowance      for doubtful      accounts***

***Intangible      assets***

***Valuation      allowance      (deferred taxes)***

----

***Long-term      debt and debt      covenant compliance***

***Derivative      Instruments and Hedging Activities***

***Stock-Based      Compensation***

----

**LIQUIDITY        AND CAPITAL RESOURCES**

**Cash      Flows **

*Cash      Flows from Operating Activities*

*Cash      Flows from Investing Activities*

*Cash      Flows from Financing Activities*

----

**Credit      Facilities**

----

*Swingline      Credit Facility.*

*73⁄4%      Notes.*

----

***Summary      of long-term debt      obligations***

|   |                                                          | December                31, 2006    |   | **June                30, 2007** |   |
|--------|---------------------------------------------------------------|-----------------------------------------------|--------|----------------------------------|--------|
|   |                                                          |  *(Dollars                in thousands)* |   |
|   | Term                loans under credit facility               |                                          | $      | 238,125                          |   |   | **$** | **236,475** |   |
|   | Revolving                line of credit under credit facility |                                          |   | 19,100                           |   |   | ** ** | **8,500** |   |
|   | Swingline                credit facility                      |                                          |   | 1,241                            |   |   | ** ** | **293** |   |
|   | 73⁄4%                senior subordinated notes due 2010    |                                          |   | 100,000                          |   |   | ** ** | **100,000** |   |
|   | Seller                financed note to acquire Townhall.com   |                                          |   | 2,444                            |   |   | ** ** | **2,502** |   |
|   | Capital                leases and other loans                 |                                          |   | 116                              |   |   | ** ** | **864** |   |
|   |                                                          |                                          |   | 361,026                          |   |   | ** ** | **348,634** |   |
|   | Less                current portion                           |                                          |   | (2,048                           | )      |   | ** ** | **(3,683** | **)** |
|   |                                                          |                                          | $      | 358,978                          |   |   | **$** | **344,951** |   |

| ·   | Outstanding                borrowings of $236.5 million on term loans and $8.5 million on our                revolver with interest payments due at LIBOR plus 1.25% to 1.75%                or at                prime rate plus 0.25% to 0.75%, depending on our total leverage                ratio, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $100                million senior subordinated notes with semi-annual interest payments                at 7                3⁄4%. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Commitment                fee of 0.375% on the unused portion of our credit                facilities. |
|--------------------|--------------------------------------------------------------------------------------------------------|

**OFF      BALANCE SHEET ARRANGEMENTS**

----

**ITEM      3. QUANTITATIVE AND      QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**DERIVATIVE      INSTRUMENTS**

----

**Interest      Rate Caps**

----

**MARKET      RISK**

**ITEM      4. CONTROLS AND      PROCEDURES**

----

**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL      PROCEEDINGS**

**ITEM      1A.  RISK FACTORS**

**ITEM      2. UNREGISTERED SALES OF      EQUITY SECURITIES AND USE OF PROCEEDS**

**ITEM      3. DEFAULTS UPON SENIOR      SECURITIES**

----

**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

| 1. | Stuart                  W. Epperson was elected by a vote of     | 72,806,570 | for,                  with | 563,054 | withheld;                      |
|----|------------------------------------------------------------------|------------|----------------------------|---------|--------------------------------|
| 2. | Edward                  G. Atsinger III was elected by a vote of | 72,806,570 | for,                  with | 563,054 | withheld;                      |
| 3. | David                  Davenport was elected by a vote of        | 17,285,737 | for,                  with | 546,927 | withheld;                      |
| 4. | Eric                  H. Halvorson was elected by a vote of      | 72,800,328 | for,                  with | 569,296 | withheld;                      |
| 5. | Roland                  S. Hinz was elected by a vote of         | 72,753,297 | for,                  with | 616,327 | withheld;                      |
| 6. | Judge                  Paul Pressler was elected by a vote of    | 17,285,637 | for,                  with | 547,027 | withheld;                      |
| 7. | Richard                  A. Riddle was elected by a vote of      | 72,806,888 | for,                  with | 562,736 | withheld;                  and |
| 8. | Dennis                  M. Weinberg was elected by a vote of     | 72,737,488 | for,                  with | 632,136 | withheld.                      |

**ITEM      5. OTHER      INFORMATION**

**ITEM      6.      EXHIBITS**

----

**INDEX        TO EXHIBITS**

**Incorporated        by        Reference**

|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                              |
|-----------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
|  **Exhibit                Number**  |   |  **Exhibit                Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **Form**                                     |   | **File                Number**  |   | **Date                of First Filing**  |   | **Exhibit                Number**  |   | ** Filed                Herewith** |
|  3.01                               |   | Amended                and Restated Certificate of Incorporation of Salem Communications                Corporation, a Delaware corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **8-K**                                      |   |  **333-41733-29** | ** ** | ** 04/14/99** | ** ** | **3.1**  |   |   |
|  3.02.01                            |   | Bylaws                of Salem Communications Corporation, a Delaware Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **8-K **                                     | ** ** | ** 333-41733** | ** ** | **4/14/99 ** | ** ** | ** 3.2** |   |   |
|  3.02.02                            |   | Amended                and Restated Bylaws of Salem Communications Corporation, a Delaware                Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  **8-K**                                     | ** ** | **000-26497** | ** ** | **6/26/07** | ** ** | **3.2**  |   |   |
|  3.03                               |   | Certificate                of Incorporation of Salem Communications Holding Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | ** 8-K**                                     | ** ** | **000-26497** | ** ** | ** 09/08/00** | ** ** | **2.01** |   |   |
|  3.04.01                            |   | Bylaws                of Salem Communications Holding Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | ** 8-K**                                     | ** ** | ** 000-26497** | ** ** | ** 09/08/00** | ** ** | ** 2.02** |   |   |
|  3.04.02                            |   | Amended                and Restated Bylaws of Salem Communications Holding Corporation,                a                Delaware Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                              |   |   |   |   |   |   |   | ** X** |
|  3.05                               |   | Certificate                of Incorporation of Salem Communications Acquisition                Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | ** 8-K**                                     | ** ** | ** 000-26497** | ** ** | ** 09/08/00** | ** ** | ** 2.03** |   |   |
|  3.06                               |   |  Bylaws                of Salem Communications Acquisition Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | ** 8-K**                                     | ** ** | ** 000-26497** | ** ** | **09/08/00 ** | ** ** | **2.04**  |   |   |
|  3.07                                    |   | Certificate                  of Incorporation of SCA License Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **8-K**                                           |   | **000-26497** |   | **09/08/00** |   | **2.05** |   |   |
| 3.08                                          |   | Bylaws                  of SCA License Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **8-K**                                           |   | **000-26497** |   | **09/08/00** |   | **2.06** |   |   |
| 4.01                                          |   | Specimen                  of Class A common stock certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |  **S-1/A**                                   |   |  **333-76649**  |   | **Declared                  Effective****06/30/99** |   |  **4.09** |   |   |
| 4.02                                          |   | Fifth                  Amended and Restated Credit Agreement, dated as of September 25,                  2003, by                  and among Salem Communications Corporation, Salem Communications                  Holding                  Corporation, General Electric Capital Corporation, as Syndication                  Agent,                  Suntrust Bank, as Syndication Agent, Fleet National Bank, as Documentation                  Agent, ING (U.S.) Capital, LLC, as Documentation Agent, The Bank                  of New                  York, as Administrative Agent, and the Lenders party                  thereto.                                                |   |       **10-Q**      |   |       **000-26497** |   |       **11/06/03** |   |       **4.09** |   |   |
| 4.03                                          |   | Second                  Amended and Restated Parent Security Agreement dated as of June                  15, 2001,                  by and among Salem Communications Corporation, a Delaware corporation,                  Salem Communications Holding Corporation, a Delaware corporation,                  and The                  Bank of New York, as Administrative Agent.                                                                                                                                                                                                                                                                                                           |   |     **10-Q**                  |   |     **000-26497** |   |     **08/14/01** |   |     **4.24.02** |   |   |
| 4.04                                          |   | Amendment                  #1, dated as of May 19, 2004, to the Fifth Amended and Restated                  Credit                  Agreement, dated as of September 25, 2003, by and among Salem                  Communications Corporation, Salem Communications Holding Corporation,                  General Electric Capital Corporation, as Syndication Agent, Suntrust                  Bank,                  as Syndication Agent, Fleet National Bank, as Documentation Agent,                  ING                  (U.S.) Capital, LLC, as Documentation Agent, The Bank of New York,                  as                  Administrative Agent, and the Lenders party thereto. |   |      **10-Q**            |   |      **000-26497** |   |      **08/06/04** |   |      **4.11** |   |   |
| 4.05                                          |   | Amendment                  #2, dated as of July 7, 2005, to the Fifth Amended and Restated                  Credit                  Agreement, dated as of September 25, 2003, by and among Salem                  Communications Corporation, Salem Communications Holding Corporation, General                  Electric                  Capital Corporation, as Syndication Agent, Suntrust Bank, as Syndication                  Agent, Fleet National Bank, as Documentation Agent, ING (U.S.)                  Capital,                  LLC, as Documentation Agent, The Bank of New York, as Administrative                  Agent, and the Lenders party thereto.             |   |       **8-K**       |   |       **000-26497** |   |       **07/13/05** |   |       **4.12** |   |   |
| 4.06                                          |   | Indenture                  between Salem Communications Holding Corporation, a Delaware corporation,                  certain named guarantors and The Bank of New York, as Trustee,                  dated as of                  June 25, 2001, relating to the 9% Series A and Series B Senior                  Subordinated Notes due 2011.                                                                                                                                                                                                                                                                                                                                              |   |    **10-Q**              |   |    **000-26497** |   |    **08/14/01** |   |    **4.10.03**  |   |   |
| 4.07                                          |   | Form                  of 9% Senior Subordinated Notes (filed as part of exhibit                  4.06).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  **10-Q**                                    |   |  **000-26497** |   |  **08/14/01** |   |   |   |   |
| 4.08                                          |   | Form                  of Note Guarantee (filed as part of exhibit 4.06).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |  **10-Q**                                    |   |  **000-26497** |   |  **08/14/01** |   |   |   |   |
| 4.09                                          |   | Registration                  Rights Agreement dated as of June 25, 2001, by and among Salem                  Communications Holding Corporation, the guarantors and initial                  purchasers                  named therein.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **10-Q**                              |   |   **000-26497** |   |   **08/14/01** |   |   **4.28** |   |   |
| 4.10                                          |   | Indenture,                  dated as of December 23, 2002, relating to the 73⁄4% Senior Subordinated                  Notes due 2010 by and among Salem Holding, the Company and The                  Bank of New                  York, as trustee, with form of Note incorporated                                                                                                                                                                                                                                                                                                                                                                                                       |   |    **8-K**                         |   |    **000-26497** |   |    **12/23/02** |   |    **4.1** |   |   |
| 4.11                                          |   | Form                  of 73⁄4% Senior Subordinated Notes (filed as part of exhibit                  4.10).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  **8-K**                                     |   |  **000-26497** |   |  **12/23/02** |   |   |   |   |
| 4.12                                          |   | Form                  of Note Guarantee (filed as part of exhibit 4.10).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |  **8-K**                                     |   |  **000-26497** |   |  **12/23/02** |   |   |   |   |
| 4.13                                          |   | Supplemental                  Indenture No. 1 to the 73⁄4% Senior Subordinated Notes, dated as of December                  23, 2002, between Salem Communications Corporation and its guarantors,                  and                  Bank of New York.                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   **10-K**                              |   |   **000-26497** |   |   **03/31/03** |   |   **4.22** |   |   |
| 4.14                                          |   | Supplemental                  Indenture No. 1 to the 9% Senior Subordinated Notes, dated as of                  December                  16, 2002, between Salem Communications Corporation and its guarantors,                  and                  Bank of New York.                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **10-K**                              |   |   **000-26497** |   |   **03/31/03** |   |   **4.23** |   |   |
| 4.15                                          |   | Supplemental                  Indenture No. 2 to the 73⁄4% Senior Subordinated Notes, dated as of June 12,                  2003, between Salem Communications Corporation and its guarantors,                  and                  Bank of New York.                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   **10-Q**                              |   |   **000-26497** |   |   **08/06/03** |   |   **4.24** |   |   |
| 4.16                                          |   | Supplemental                  Indenture No. 2 to the 9% Senior Subordinated Notes, dated as of                  June 12,                  2003, between Salem Communications Corporation and its guarantors,                  and                  Bank of New York.                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   **10-Q**                              |   |   **000-26497** |   |   **08/06/03** |   |   **4.25** |   |   |
| 4.17                                          |   | Consent                  No. 2, dated as of July 23, 2003, under the Fourth Amended and                  Restated                  Credit Agreement between Salem Communications Corporation and its                  guarantors, and The Bank of New York.                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   **10-Q**                              |   |   **000-26497** |   |   **08/06/03** |   |   **4.26** |   |   |
| 4.18                                          |   | Amendment                  #3, dated as of June 9, 2006, to the Fifth Amended and Restated                  Credit                  Agreement, dated as of September 25, 2003, by and among Salem                  Communications Corporation, Salem Communications Holding Corporation, General                  Electric                  Capital Corporation, as Syndication Agent, Suntrust Bank, as Syndication                  Agent, Fleet National Bank, as Documentation Agent, ING (U.S.)                  Capital,                  LLC, as Documentation Agent, The Bank of New York, as Administrative                  Agent, and the Lenders party thereto.             |   |        **8-K** |   |        **000-26497** |   |        **06/15/06** |   |        **4.13** |   |   |
| 10.01.01                                      |   | Employment                  Agreement, dated July 1, 2004, between Salem Communications Holding                  Corporation and Edward G. Atsinger III.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **10-Q**                              |   |   **000-26497** |   |   **08/06/04** |   |   **10.01.01** |   |   |
| 10.01.02                                      |   | Employment                  Agreement, dated July 1, 2007, between Salem Communications Holding                  Corporation and Edward G. Atsinger III.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **8-K**                               |   |   **000-26497** |   |   **06/26/07** |   |   **10.2** |   |   |
| 10.02.01                                      |   | Employment                  Agreement, dated July 1, 2004, between Salem Communications Holding                  Corporation and Stuart W. Epperson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  **10-Q**                                    |   |  **000-26497** |   |  **08/06/04** |   |  **10.02.01** |   |   |
| 10.02.02                                      |   | Employment                  Agreement, dated July 1, 2007, between Salem Communications Holding                  Corporation and Stuart W. Epperson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   **8-K**                               |   |   **000-26497** |   |   **06/26/07** |   |   **10.1** |   |   |
| 10.03.01                                      |   | Employment                  Agreement, dated July 1, 2007, between Salem Communications Holding                  Corporation and Eric H. Halvorson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   **8-K**                               |   |   **000-26497** |   |   **06/26/07** |   |   **10.3** |   |   |
| 10.04.01                                      |   | Employment                  Agreement, effective as of September 1, 2005, between Salem Communications                  Holding Corporation and Joe D. Davis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   **8-K/A**                             |   |   **000-26497** |   |   **05/25/05** |   |   **99.1** |   |   |
| 10.04.02                                      |   | Employment                  Agreement, effective as of September 1, 2005, between Salem Communications                  Holding Corporation and Joe D. Davis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   **8-K**                               |   |   **000-26497** |   |   **06/26/07** |   |   **10.4** |   |   |
| 10.05.01                                      |   | Employment                  Agreement, effective as of September 1, 2005, between Salem Communications                  Holding Corporation and David A.R. Evans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   **8-K**                               |   |   **000-26497** |   |   **09/27/05** |   |   **99.1** |   |   |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                              |   |   |   |   |   |   |   |   |
| 10.06.01                                      |   | Antenna/tower/studio                  lease between Common Ground Broadcasting, Inc. (KKMS-AM/Eagan,                  Minnesota)                  and Messrs. Atsinger and Epperson expiring in 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.04** |   |   |
| 10.06.02                                      |   | Antenna/tower                  lease between Common Ground Broadcasting, Inc. (WHK-AM/ Cleveland,                  Ohio)                  and Messrs. Atsinger and Epperson expiring 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.05** |   |   |
| 10.06.03                                      |   | Antenna/tower                  lease (KFAX-FM/Hayward, California) and Salem Broadcasting Company,                  a                  partnership consisting of Messrs. Atsinger and Epperson, expiring                  in                  2013.                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.06** |   |   |
| 10.06.04                                      |   | Antenna/tower                  lease between Inspiration Media, Inc. (KGNW-AM/Seattle, Washington)                  and                  Messrs. Atsinger and Epperson expiring in 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.08** |   |   |
| 10.06.05                                      |   | Antenna/tower                  lease between Inspiration Media, Inc. (KLFE-AM/Seattle, Washington)                  and                  The Atsinger Family Trust and Stuart W. Epperson Revocable Living                  Trust                  expiring in 2014.                                                                                                                                                                                                                                                                                                                                                                                                                         |   |    **S-4**                         |   |    **333-41733-29** |   |    **01/29/98** |   |    **10.05.09** |   |   |
| 10.06.06                                      |   | Antenna/tower/studio                  lease between Pennsylvania Media Associates, Inc.                  (WNTP-AM/WFIL-AM/Philadelphia, Pennsylvania) and The Atsinger Family                  Trust                  and Stuart W. Epperson Revocable Living Trust expiring                  2014.                                                                                                                                                                                                                                                                                                                                                                                          |   |    **S-4**                         |   |    **333-41733-29** |   |    **01/29/98** |   |    **10.05.11.02** |   |   |
| 10.06.07                                      |   | Antenna/tower                  lease between New Inspiration Broadcasting Co., Inc.: as successor                  in                  interest to Radio 1210, Inc. (KPRZ-AM/Olivenhain, California) and                  The                  Atsinger Family Trust expiring in 2028.                                                                                                                                                                                                                                                                                                                                                                                                       |   |   **S-4**                          |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.12** |   |   |
| 10.06.08                                      |   | Antenna/tower                  lease between Salem Media of Texas, Inc. and Atsinger Family                  Trust/Epperson Family Limited Partnership (KSLR-AM/San Antonio,                  Texas).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   **10-K**                              |   |   **000-26497** |   |   **03/30/00** |   |   **10.05.13** |   |   |
| 10.06.09                                      |   | Antenna/tower                  lease between Salem Media of Colorado, Inc. (KNUS-AM/Denver-Boulder,                  Colorado) and Messrs. Atsinger and Epperson expiring 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.15** |   |   |
| 10.06.10                                      |   | Antenna/tower                  lease between Salem Media of Colorado, Inc. and Atsinger Family                  Trust/Epperson Family Limited Partnership (KRKS-AM/KBJD-AM/Denver,                  Colorado) expiring 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   **10-K**                              |   |   **000-26497** |   |   **03/30/00** |   |   **10.05.16** |   |   |
| 10.06.11                                      |   | Antenna/tower                  lease between Salem Media of Oregon, Inc. (KPDQ-AM/FM/Raleigh Hills,                  Oregon), and Messrs. Atsinger and Epperson expiring 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.17.02** |   |   |
| 10.06.12                                      |   | Antenna/tower                  lease between Salem Media of Pennsylvania, Inc.                  (WORD-FM/WPIT-AM/Pittsburgh, Pennsylvania) and The Atsinger Family                  Trust                  and Stuart W. Epperson Revocable Living Trust expiring                  2013.                                                                                                                                                                                                                                                                                                                                                                                                     |   |    **S-4**                         |   |    **333-41733-29** |   |    **01/29/98** |   |    **10.05.18** |   |   |
| 10.06.13                                      |   | Antenna/tower                  lease between Salem Media of Texas, Inc. (KSLR-AM/San Antonio,                  Texas) and                  Epperson-Atsinger 1983 Family Trust expiring 2017.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   **S-4**                               |   |  **333-41733-29** |   |   **01/29/98** |   |   **10.05.19** |   |   |
| 10.06.14                                      |   | Antenna/tower                  lease between South Texas Broadcasting, Inc. (KNTH-AM/Houston-Galveston,                  Texas) and Atsinger Family Trust and Stuart W. Epperson Revocable                  Living                  Trust expiring 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   **S-4**                               |   |   **333-41733-29** |   |   **01/29/98** |   |   **10.05.20** |   |   |
| 10.06.15                                      |   | Antenna/tower                  lease between New Inspiration Broadcasting Co., Inc. successor                  in interest                  to Vista Broadcasting, Inc. (KFIA-AM/Sacramento, California) and                  The                  Atsinger Family Trust and Stuart W. Epperson Revocable Living Trust                  expiring 2016.                                                                                                                                                                                                                                                                                                                                       |   |    **S-4**                         |   |    **333-41733-29** |   |    **10/29/98** |   |    **10.05.21** |   |   |
| 10.06.16                                      |   | Antenna/tower                  lease between South Texas Broadcasting, Inc. (KKHT-FM/Houston-Galveston,                  Texas) and Sonsinger Broadcasting Company of Houston, LP expiring                  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   **10-K                  405**         |   |   **000-26497** |   |   **03/31/99** |   |   **10.05.22** |   |   |
| 10.06.17                                      |   | Antenna/tower                  lease between Inspiration Media of Texas, Inc. (KTEK-AM/Alvin,                  Texas) and                  the Atsinger Family Trust and The Stuart W. Epperson Revocable                  Living                  Trust expiring 2018.                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   **10-K                  405**         |   |   **000-26497** |   |   **03/31/99** |   |   **10.05.23** |   |   |
| 10.06.18                                      |   | Studio                  building lease between Salem Radio Properties, Inc. and Thomas                  H. Moffit                  Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  **10-K**                                    |   |  **000-26497** |   |  **03/31/06** |   |  **10.05.24** |   |   |
| 10.06.19                                      |   | Antenna/tower                  lease between Pennsylvania Media Associates Inc. (WTLN-AM/ Orlando,                  Florida) and Atsinger Family Trust and Stuart W. Epperson, revocable                  living trust expiring 2045.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   **10-K**                         |   |   **000-26497** |   |   **3/16/07** |   |   **10.05.25** |   |   |
| 10.07.01                                      |   | Asset                  Purchase Agreement, dated August 18, 2006, by and between Caron                  Broadcasting, Inc. and Chesapeake-Portsmouth Broadcasting Corporation                  (WJGR-AM, Jacksonville, Florida, and WZNZ-AM, Jacksonville,                  Florida)                                                                                                                                                                                                                                                                                                                                                                                                    |   |  **10Q**                                     |   |  **000-26497** |   |  **11/09/06** |   |  **10.06.02**  |   |   |
| 10.07.02                                      |   | Asset                  Purchase Agreement, dated September 14, 2006, by and between Caron                  Broadcasting, Inc. and Chesapeake-Portsmouth Broadcasting Corporation                  (WZAZ-AM, Jacksonville, Florida)                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  **10Q**                                     |   |  **000-26497** |   |  **11/09/06** |   |  **10.06.03** |   |   |
| 10.07.03                                      |   | Local                  Programming and Marketing Agreement, dated September 14, 2006,                  by and                  between Caron Broadcasting, Inc. and Chesapeake-Portsmouth Broadcasting                  Corporation (WJGR-AM, Jacksonville, Florida,and WZNZ-AM, Jacksonville,                  Florida)                                                                                                                                                                                                                                                                                                                                                                |   |  **10Q**                                     |   |  **000-26497** |   |  **11/09/06** |   |  **10.06.04** |   |   |
| 10.07.04                                      |   | Local                  Programming and Marketing Agreement, dated September 14, 2006,                  by and                  between Caron Broadcasting, Inc. and Chesapeake-Portsmouth Broadcasting                  Corporation (WZAZ-AM, Jacksonville, Florida)                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  **10Q**                                     |   |  **000-26497** |   |  **11/09/06** |   |  **10.06.05** |   |   |
| 10.08.01                                      |   | Amended                  and Restated 1999 Stock Incentive Plan (incorporated by reference                  to                  previously filed Appendix B).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  **DEF                  14A**                |   |  **000-26497** |   |  **04/29/03**  |   |  **Appendix                  B** |   |   |
| 10.08.02                                      |   | Form                  of stock option grant for Amended and Restated 1999 Stock Incentive                  Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  **10-K**                                    |   |  **000-26497** |   |  **03/16/05** |   |  **10.08.02** |   |   |
| 10.08.03                                      |   | Form                  of restricted stock option grant for Amended and Restated 1999                  Stock                  Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |  **10-Q**                                    |   |  **000-26497** |   |  **11/09/05** |   |  **10.01** |   |   |
| 10.08.04                                      |   | Amended                  and Restated 1999 Stock Incentive Plan as amended and restated                  through May                  18, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  **DEF                  14A**                |   |  **000-26497** |   |  **04/18/05** |   |  **Proposal                  No. 2** |   |   |
| 10.09                                         |   | Management                  Services Agreement by and among Salem and Salem Communications                  Holding                  Corporation, dated August 25, 2000 (incorporated by reference to                  previously filed exhibit 10.11). (7)                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  **10-Q**                                    |   |  **000-26497** |   |  **05/15/01** |   |  **10.11** |   |   |
| 31.1                                          |   | Certification                  of Edward G. Atsinger III Pursuant to Rules 13a-14(a) and 15d-14(a)                  under                  the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **-**                                             |   | **-** |   | **-** |   | **-** |   | **X** |
| 31.2                                          |   | Certification                  of Evan D. Masyr Pursuant to Rules 13a-14(a) and 15d-14(a) under                  the                  Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **-**                                             |   | **-** |   | **-** |   | **-** |   | **X** |
| 32.1                                          |   | Certification                  of Edward G. Atsinger III Pursuant to 18 U.S.C. Section                  1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **-**                                             |   | **-** |   | **-** |   | **-** |   | **X** |
| 32.2                                          |   | Certification                  of Evan D. Masyr                  Pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **-**                                             |   | **-** |   | **-** |   | **-** |   | **X** |

----

**SIGNATURES**

|                            |   | SALEM                  COMMUNICATIONS CORPORATION                  |   |
|---------------------------------|--------|--------------------------------------------------------------------|--------|
| August                  9, 2007 |   |                                                               |   |
|                            |   | By:                  /s/ EDWARD G. ATSINGER III                    |   |
|                            |   | Edward                  G. Atsinger III                            |   |
|                            |   | Chief                  Executive Officer                           |   |
|                            |   | (Principal                  Executive Officer)                     |   |
|                            |   |                                                               |   |
|                            |   |                                                               |   |
| August                  9, 2007 |   |                                                               |   |
|                            |   | By:                  /s/ EVAN D. MASYR                             |   |
|                            |   | Evan                  D. Masyr                                     |   |
|                            |   | Senior                  Vice President and Chief Financial Officer |   |
|                            |   | (Principal                  Financial Officer)                     |   |

----

**EXHIBIT        INDEX**

| **Exhibit****Number** |   | **Description                  of Exhibits**                                                                                                                 |
|-----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                         |
|  3.04.01         |   | Amended                and Restated Bylaws of Salem Communications Holding Corporation,                a                Delaware Corporation                 |
|                  |   |                                                                                                                                                         |
| 31.1                  |   | Certification                  of Edward G. Atsinger III Pursuant to Rules 13a-14(a) and 15d-14(a)                  under                  the Exchange Act. |
|                  |   |                                                                                                                                                         |
| 31.2                  |   | Certification                  of Evan D. Masyr Pursuant to Rules 13a-14(a) and 15d-14(a) under                  the                  Exchange Act.          |
|                  |   |                                                                                                                                                         |
| 32.1                  |   | Certification                  of Edward G. Atsinger III Pursuant to 18 U.S.C. Section                  1350.                                                |
|                  |   |                                                                                                                                                         |
| 32.2                  |   | Certification                  of  Evan D. Masyr Pursuant to 18 U.S.C. Section                  1350.                                              |

----

**EXHIBIT          3.04.01**

**AMENDED          AND RESTATED BYLAWS**

**OF**

**SALEM          COMMUNICATIONS HOLDING  CORPORATION**

**(A          DELAWARE CORPORATION)**

**ARTICLE          I**

**CORPORATE          OFFICES**

**ARTICLE          II**

**MEETINGS          OF STOCKHOLDERS**

**ARTICLE          III**

**DIRECTORS**

**ARTICLE          IV**

**COMMITTEES**

**ARTICLE          V**

**OFFICERS**

----

**ARTICLE          VI**

**INDEMNIFICATION          OF DIRECTORS, OFFICERS, EMPLOYEES,**

**AND          OTHER AGENTS**

**ARTICLE          VII**

**RECORDS          AND REPORTS**

**ARTICLE          VIII**

**GENERAL          MATTERS**

**ARTICLE          IX**

**AMENDMENTS**

----

**EXHIBIT        31.1**

| 1.     | I                  have reviewed this quarterly report on Form 10-Q of Salem Communications                  Corporation;                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| 2.     | Based                  on my knowledge, this report does not contain any untrue statement                  of a                  material fact or omit to state a material fact necessary to make                  the                  statements made, in light of the circumstances under which such                  statements                  were made, not misleading with respect to the period covered by                  this                  report; |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| 3.     | Based                  on my knowledge, the financial statements, and other financial                  information                  included in this report, fairly present in all material respects                  the                  financial condition, results of operations and cash flows of the                  registrant as of, and for, the periods presented in this                  report;                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| 4.     | The                  registrant’s other certifying officers and I are responsible for                  establishing and maintaining disclosure controls and procedures                  (as                  defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal                  control over financial reporting (as defined in Exchange Act Rules                  13a-15(f) and 15d-15(f)) for the registrant and have:                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Designed                  such disclosure controls and procedures, or caused such disclosure                  controls and procedures to be designed under our supervision, to                  ensure                  that material information relating to the registrant, including                  its                  consolidated subsidiaries, is made known to us by others within                  those                  entities, particularly during the period in which this report is                  being                  prepared; |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Designed                  such internal control over financial reporting, or caused such                  internal                  control over financial reporting to be designed under our supervision,                  to                  provide reasonable assurance regarding the reliability of financial                  reporting and the preparation of financial statements for external                  purposes in accordance with generally accepted accounting                  principles;                                          |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Evaluated                  the effectiveness of the registrant’s disclosure controls and procedures                  and presented in this report our conclusions about the effectiveness                  of                  the disclosure controls and procedures, as of the end of the period                  covered by this report based on such evaluation; and                                                                                                                                                                           |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Disclosed                  in this report any change in the registrant’s internal control over                  financial reporting that occurred during the registrant’s most recent                  fiscal quarter (the registrant’s fourth fiscal quarter in the case of an                  annual report) that has materially affected, or is reasonably likely                  to                  materially affect, the registrant’s internal control over financial                  reporting; and                   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| 5.     | The                  registrant’s other certifying officers and I have disclosed, based on our                  most recent evaluation of internal control over financial reporting,                  to                  the registrant’s auditors and the audit committee of registrant’s board of                  directors (or persons performing the equivalent                  functions):                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | all                  significant deficiencies and material weaknesses in the design                  or                  operation of internal control over financial reporting which are                  reasonably likely to adversely affect the registrant’s ability to record,                  process, summarize and report financial information; and                                                                                                                                                                                     |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | any                  fraud, whether or not material, that involves management or other                  employees who have a significant role in the registrant’s internal control                  over financial reporting.                                                                                                                                                                                                                                                                                                                      |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Date:                  August 9, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  By:                /s/ EDWARD G. ATSINGER III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  Edward                G. Atsinger III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  Chief                Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |

----

**EXHIBIT          31.2**

| 1.     | I                      have reviewed this quarterly report on Form 10-Q of Salem Communications                      Corporation;                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| 2.     | Based                      on my knowledge, this report does not contain any untrue statement                      of a                      material fact or omit to state a material fact necessary to                      make the                      statements made, in light of the circumstances under which                      such statements                      were made, not misleading with respect to the period covered                      by this                      report;             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| 3.     | Based                      on my knowledge, the financial statements, and other financial                      information                      included in this report, fairly present in all material respects                      the                      financial condition, results of operations and cash flows of                      the                      registrant as of, and for, the periods presented in this                      report;                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| 4.     | The                      registrant’s other certifying officers and I are responsible for                      establishing and maintaining disclosure controls and procedures                      (as                      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and                      internal                      control over financial reporting (as defined in Exchange Act                      Rules                      13a-15(f) and 15d-15(f)) for the registrant and have: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Designed                      such disclosure controls and procedures, or caused such disclosure                      controls and procedures to be designed under our supervision,                      to ensure                      that material information relating to the registrant, including                      its                      consolidated subsidiaries, is made known to us by others within                      those                      entities, particularly during the period in which this report                      is being                      prepared; |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Designed                      such internal control over financial reporting, or caused such                      internal                      control over financial reporting to be designed under our supervision,                      to                      provide reasonable assurance regarding the reliability of financial                      reporting and the preparation of financial statements for external                      purposes in accordance with generally accepted accounting                      principles;                                                  |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Evaluated                      the effectiveness of the registrant’s disclosure controls and procedures                      and presented in this report our conclusions about the effectiveness                      of                      the disclosure controls and procedures, as of the end of the                      period                      covered by this report based on such evaluation; and                                                                                                                                                                          |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Disclosed                      in this report any change in the registrant’s internal control over                      financial reporting that occurred during the registrant’s most recent                      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an                      annual report) that has materially affected, or is reasonably                      likely to                      materially affect, the registrant’s internal control over financial                      reporting; and                               |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| 5.     | The                      registrant’s other certifying officers and I have disclosed, based on                      our                      most recent evaluation of internal control over financial reporting,                      to                      the registrant’s auditors and the audit committee of registrant’s board of                      directors (or persons performing the equivalent                      functions):                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | all                      significant deficiencies and material weaknesses in the design                      or                      operation of internal control over financial reporting which                      are                      reasonably likely to adversely affect the registrant’s ability to record,                      process, summarize and report financial information; and                                                                                                                                                                                    |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | any                      fraud, whether or not material, that involves management or                      other                      employees who have a significant role in the registrant’s internal control                      over financial reporting.                                                                                                                                                                                                                                                                                                                             |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Date:                      August 9, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  By:                    /s/ EVAN D. MASYR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  Evan                    D. Masyr                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Senior                    Vice President and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |

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**EXHIBIT        32.1**

**CERTIFICATION        PURSUANT TO**

**18        U.S.C. SECTION 1350,**

**AS        ADOPTED PURSUANT TO**

**SECTION        906 OF THE SARBANES-OXLEY ACT OF 2002**

| ·   | the                  Quarterly Report of the Company on Form 10-Q for the period ended                  June 30,                  2007 (the “Report”) fully complies with the requirements of Section 13(a)                  or Section 15(d) of the Securities Exchange Act of 1934;                  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                  information contained in the Report fairly presents, in all material                  respects, the financial condition and results of operations of                  the                  Company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Dated:                  August 9, 2007 |                                            |   |
|--------|----------------------------------------|-------------------------------------------------|--------|
|   |                                   | By:                  /s/ EDWARD G. ATSINGER III |   |
|   |                                   | Edward                  G. Atsinger III         |   |
|   |                                   | Chief                  Executive Officer        |   |

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**EXHIBIT        32.2**

**CERTIFICATION        PURSUANT TO**

**18        U.S.C. SECTION 1350,**

**AS        ADOPTED PURSUANT TO**

**SECTION        906 OF THE SARBANES-OXLEY ACT OF 2002**

| ·   | the                  Quarterly Report of the Company on Form 10-Q for the period ended                  June 30,                  2007 (the “Report”) fully complies with the requirements of Section 13(a)                  or Section 15(d) of the Securities Exchange Act of 1934;                  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                  information contained in the Report fairly presents, in all material                  respects, the financial condition and results of operations of                  the                  Company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Dated:                  August 9, 2007 |                                                                                |   |
|--------|----------------------------------------|-------------------------------------------------------------------------------------|--------|
|   |                                   | By:                  /s/  EVAN D. MASYR                                   |   |
|   |                                   | Evan                  D. Masyr                                                      |   |
|   |                                   | Senior                  Vice President and Chief                  Financial Officer |   |
|   |                                   |                                                                                |   |