EXHIBIT 99.1

SALEM COMMUNICATIONS HOLDING CORPORATION
SUPPLEMENTAL REPORT
TO FORM 10-Q FILED BY
SALEM COMMUNICATIONS CORPORATION

This supplemental report (the Supplemental Report) is prepared by Salem
Communications Holding Corporation (the Subsidiary including
references to the Subsidiary by we, us and our), a wholly-owned subsidiary
of Salem Communications Corporation (Salem), and is presented as an exhibit
to Salems report filed with the Securities and Exchange Commission (the
Commission) and will be provided to the holders of the Subsidiarys senior
subordinated notes due 2007 in accordance with the terms of that certain
Indenture dated as of September 25, 1997, by and among Salem, the guarantors
named therein and The Bank of New York, as Trustee, as such Indenture has been
supplemented from time to time (the Indenture). The information contained in
this Supplemental Report is intended to be read in conjunction with the
Quarterly Report on Form 10-Q filed with the Commission by Salem, in which
quarterly report this Supplemental Report is included as an exhibit.
References in this Supplemental Report to the Report are references to such
Quarterly Report on Form 10-Q filed by Salem.

INDEX

|                               |                                                                                               |  |          |   | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  | -------- | - | 
|                               |                                                                                               |  | PAGE NO.
|                               |                                                                                               |  |         
|INDEX                          |                                                                                               |  | 2        |  
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|PART I  FINANCIAL INFORMATION |                                                                                               |  | 4        |  
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|                              
|                              
|                              
|                               | Item 1. Financial Statements (Unaudited)                                                      |  |          | 4 | 
|                              
|                              
|                              
|                              
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  |          | 6 | 
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|                              
|                              
|                              
|SIGNATURES                     |                                                                                               |  | 10       |  



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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

From time to time, in both written reports (such as this report) and oral
statements, the Subsidiary makes forward-looking statements within the meaning of
Federal and state securities laws. Disclosures that use words such as the
company believes, anticipates, expects, may or plans and similar
expressions are intended to identify forward-looking statements, as defined
under the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Subsidiarys current expectations and are
based upon data available to the Subsidiary at the time of the statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from expectations including, but
not limited to, the Subsidiary's ability to close and integrate
announced transactions, competition in the radio broadcast,
publishing and Internet industries and from new technologies, market
acceptance of recently launched music formats and adverse economic
conditions. These risks as well as
other risks and uncertainties are detailed from time to time in Salems periodic reports on Forms
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
Forward-looking statements made in this report speak as of the date hereof.
The Subsidiary undertakes no obligation to update or revise any forward-looking
statements made in this report. Any such forward-looking statements, whether
made in this report or elsewhere, should be considered in context with the
various disclosures made by Salem about its business. These projections or
forward-looking statements fall under the safe harbors of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended (the Securities Exchange Act).

2



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PART I  FINANCIAL INFORMATION

SALEM COMMUNICATIONS HOLDING CORPORATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

SALEM COMMUNICATIONS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

|                                           |                                       |                                                                                                 |         |         |              |   |           |         |             |  | 
|------------------------------------------ | ------------------------------------- | ----------------------------------------------------------------------------------------------- | ------- | ------- | ------------ | - | --------- | ------- | ----------- |  | 
|                                           |                                       |                                                                                                 |         |         | December 31, |   | March 31,
|                                           |                                       |                                                                                                 |         |         | 2000         |   | 2001     
|                                           |                                       |                                                                                                 |         |         |              |   |          
|                                           |                                       |                                                                                                 |         |         |              |   |           |         | (Unaudited)
|                                           |                                       |                                                                                                 | ASSETS 
|                                          
|                                          
|                                          
|                                          
|Current assets:                           
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents             |                                                                                                 | $       | 3,612   |              |   | $         | 2,674   |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                       | Accounts receivable (less allowance
for doubtful accounts of $3,123 in
2000 and $3,091 in 2001) |         |         | 23,804       |   |           |         | 21,505      | 
|                                          
|                                          
|                                          
|                                          
|                                           | Other receivables                     |                                                                                                 |         | 1,204   |              |   |           | 1,032   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses                      |                                                                                                 |         | 1,519   |              |   |           | 1,989   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Due from stockholders of Parent       |                                                                                                 |         | 450     |              |   |           | 450     |            
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes                 |                                                                                                 |         | 490     |              |   |           | 170     |            
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|Total current assets                       |                                       |                                                                                                 | 31,079  |         |              |   | 27,820    |        
|                                          
|                                          
|                                          
|                                          
|Property, plant and equipment, net         |                                       |                                                                                                 | 68,192  |         |              |   | 74,142    |        
|                                          
|                                          
|                                          
|                                          
|Intangible assets, net                     |                                       |                                                                                                 | 262,209 |         |              |   | 255,810   |        
|                                          
|                                          
|                                          
|                                          
|Bond issue costs                           |                                       |                                                                                                 | 2,396   |         |              |   | 2,307     |        
|                                          
|                                          
|                                          
|                                          
|Due from related parties                   |                                       |                                                                                                 | 50,888  |         |              |   | 54,927    |        
|                                          
|                                          
|                                          
|                                          
|Deferred income taxes                      |                                       |                                                                                                 | 5,564   |         |              |   | 7,912     |        
|                                          
|                                          
|                                          
|                                          
|Other assets                               |                                       |                                                                                                 | 6,243   |         |              |   | 5,542     |        
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|Total assets                               |                                       | $                                                                                               | 426,571 |         |              | $ | 428,460   |        
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|                                           | LIABILITIES AND STOCKHOLDERS EQUITY 
|                                          
|                                          
|                                          
|                                          
|Current liabilities:                      
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable and accrued expenses |                                                                                                 | $       | 5,970   |              |   | $         | 5,908   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued compensation and related      |                                                                                                 |         | 3,353   |              |   |           | 3,565   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued interest                      |                                                                                                 |         | 3,299   |              |   |           | 7,847   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred subscription revenue         |                                                                                                 |         | 1,509   |              |   |           | 1,529   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Income taxes                          |                                                                                                 |         | 100     |              |   |           | 74      |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                       | Capital lease obligations                                                                       |         |         | 93           |   |           |         | 74          | 
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|Total current liabilities                  |                                       |                                                                                                 | 14,324  |         |              |   | 18,997    |        
|                                          
|                                          
|                                          
|                                          
|Long-term debt                             |                                       |                                                                                                 | 286,050 |         |              |   | 287,050   |        
|                                          
|                                          
|                                          
|                                          
|Deferred income taxes                      |                                       |                                                                                                 |        |         |              |   | --        |        
|                                          
|                                          
|                                          
|                                          
|Other liabilities                          |                                       |                                                                                                 | 1,497   |         |              |   | 1,361     |        
|                                          
|                                          
|                                          
|                                          
|Stockholders equity:                     
|                                          
|                                          
|                                          
|                                          
|                                           |                                       | Common stock, $0.01; authorized,
issued and outstanding 1,000 shares                            |         |         |             |   |           |         | --          | 
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital            |                                                                                                 |         | 115,815 |              |   |           | 115,815 |            
|                                          
|                                          
|                                          
|                                          
|                                           | Retained earnings                     |                                                                                                 |         | 8,885   |              |   |           | 5,237   |            
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|Total stockholders equity                 |                                       |                                                                                                 | 124,700 |         |              |   | 121,052   |        
|                                           |                                       |                                                                                                 |         |         |              |   |           |        
|Total liabilities and stockholders equity |                                       | $                                                                                               | 426,571 |         |              | $ | 428,460   |        
|                                           |                                       |                                                                                                 |         |         |              |   |           |        

See accompanying notes

3



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SALEM COMMUNICATIONS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

|                            |                                                                                                    |   |                    |        |      |   |        |        |  
|--------------------------- | -------------------------------------------------------------------------------------------------- | - | ------------------ | ------ | ---- | - | ------ | ------ | -
|                            |                                                                                                    |   | Three Months Ended
|                            |                                                                                                    |   | March 31,         
|                            |                                                                                                    |   |                   
|                            |                                                                                                    |   | 2000               |        | 2001
|                            |                                                                                                    |   |                    |        |     
|Gross broadcasting revenue  |                                                                                                    | $ | 24,662             |        |      | $ | 32,510 |       
|                           
|                           
|                           
|                           
|Less agency commissions     |                                                                                                    |   | 2,053              |        |      |   | 2,786  |       
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Net broadcasting revenue    |                                                                                                    |   | 22,609             |        |      |   | 29,724 |       
|                           
|                           
|                           
|                           
|Other media revenue         |                                                                                                    |   | 1,791              |        |      |   | 1,965  |       
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Total revenue               |                                                                                                    |   | 24,400             |        |      |   | 31,689 |       
|                           
|                           
|                           
|                           
|Operating expenses:        
|                           
|                           
|                           
|                           
|                            | Broadcasting operating expenses                                                                    |   |                    | 12,705 |      |   |        | 19,556 |  
|                           
|                           
|                           
|                           
|                            | Other media operating expenses                                                                     |   |                    | 4,144  |      |   |        | 2,536  |  
|                           
|                           
|                           
|                           
|                            | Corporate expenses                                                                                 |   |                    | 2,454  |      |   |        | 3,847  |  
|                           
|                           
|                           
|                           
|                            | Depreciation and amortization (including
$494 in 2000 and $572 in 2001 for
other media businesses) |   |                    | 4,939  |      |   |        | 6,964  |  
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Total operating expenses    |                                                                                                    |   | 24,242             |        |      |   | 32,903 |       
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Net operating income (loss) |                                                                                                    |   | 158                |        |      |   | (1,214 | )     
|                           
|                           
|                           
|                           
|Other income (expense):    
|                           
|                           
|                           
|                           
|                            | Interest income                                                                                    |   |                    | 288    |      |   |        | 85     |  
|                           
|                           
|                           
|                           
|                            | Interest income from related parties                                                               |   |                    |       |      |   |        | 1,986  |  
|                           
|                           
|                           
|                           
|                            | Interest expense                                                                                   |   |                    | (2,520 | )    |   |        | (6,467 | )
|                           
|                           
|                           
|                           
|                            | Gain (loss) on sale of assets                                                                      |   |                    |       |      |   |        | (8     | )
|                           
|                           
|                           
|                           
|                            | Other expense                                                                                      |   |                    | (287   | )    |   |        | (42    | )
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Loss before income taxes    |                                                                                                    |   | (2,361             | )      |      |   | (5,660 | )     
|                           
|                           
|                           
|                           
|Benefit for income taxes    |                                                                                                    |   | (704               | )      |      |   | (2,012 | )     
|                            |                                                                                                    |   |                    |        |      |   |        |       
|Net loss                    |                                                                                                    | $ | (1,657             | )      |      | $ | (3,648 | )     
|                            |                                                                                                    |   |                    |        |      |   |        |       

See accompanying notes

4



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SALEM COMMUNICATIONS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |        |       |   |  |  |  | 
|------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ------- | ------------------ | ------ | - |  |  |  | ---- | ------ | ------ | ----- | - |  |  |  | 
|                                                                                |                                                     |                                           |         | Three Months Ended
|                                                                                |                                                     |                                           |         | March 31,         
|                                                                                |                                                     |                                           |         |                   
|                                                                                |                                                     |                                           |         | 2000               |        |   |  |  |  | 2001
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |     
|OPERATING ACTIVITIES                                                           
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Net loss                                                                        |                                                     | $                                         | (1,657  | )                  |        |   |  |  |  | $    | (3,648 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Adjustments to reconcile net loss to net cash provided by
operating activities:
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                       |                                           |         | 4,939              |        |   |  |  |  |      |        | 6,964  |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Amortization of bond issue costs and bank loan fees |                                           |         | 121                |        |   |  |  |  |      |        | 183    |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Deferred income taxes                               |                                           |         | (158               | )      |   |  |  |  |      |        | (2,028 | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loss on sale of assets                              |                                           |         |                   |        |   |  |  |  |      |        | 8      |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Changes in operating assets and liabilities:       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Accounts receivable                       |         |                    | 1,198  |   |  |  |  |      |        |        | 2,471 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Prepaid expenses and other current assets |         |                    | 45     |   |  |  |  |      |        |        | (470  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Accounts payable and accrued expenses     |         |                    | (2,748 | ) |  |  |  |      |        |        | 4,698 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Deferred subscription revenue             |         |                    | 128    |   |  |  |  |      |        |        | 20    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Other liabilities                         |         |                    | 5      |   |  |  |  |      |        |        | 141   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Income taxes                              |         |                    | 157    |   |  |  |  |      |        |        | (26   | )
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Net cash provided by operating activities                                       |                                                     |                                           | 2,030   |                    |        |   |  |  |  |      | 8,313  |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|INVESTING ACTIVITIES                                                           
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Capital expenditures                                                            |                                                     |                                           | (3,527  | )                  |        |   |  |  |  |      | (7,547 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Deposits on radio station acquisitions                                          |                                                     |                                           | (445    | )                  |        |   |  |  |  |      | --     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Purchases of radio stations                                                     |                                                     |                                           | (26,465 | )                  |        |   |  |  |  |      | --     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Proceeds from sale of PP&E and intangibles                                      |                                                     |                                           |        |                    |        |   |  |  |  |      | 8      |        |       |   |  | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Other assets                                                                    |                                                     |                                           | 264     |                    |        |   |  |  |  |      | 735    |       
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Net cash used in investing activities                                           |                                                     |                                           | (30,173 | )                  |        |   |  |  |  |      | (6,804 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|FINANCING ACTIVITIES                                                           
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Proceeds from issuance of long-term debt and notes payable
to stockholders      |                                                     |                                           | 1,000   |                    |        |   |  |  |  |      | 1,000  |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Payments of long-term debt and notes payable to stockholders                    |                                                     |                                           | (2,811  | )                  |        |   |  |  |  |      | --     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Payments on capital lease obligations                                           |                                                     |                                           | (61     | )                  |        |   |  |  |  |      | (19    | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Payment of costs related to debt refinancing                                    |                                                     |                                           |        |                    |        |   |  |  |  |      | (316   | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Increase in notes and interest receivable from related party                    |                                                     |                                           |        |                    |        |   |  |  |  |      | (3,112 | )     
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Net cash used in financing activities                                           |                                                     |                                           | (1,872  | )                  |        |   |  |  |  |      | (2,447 | )     
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Net decrease in cash and cash equivalents                                       |                                                     |                                           | (30,015 | )                  |        |   |  |  |  |      | (938   | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Cash and cash equivalents at beginning of period                                |                                                     |                                           | 34,124  |                    |        |   |  |  |  |      | 3,612  |       
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Cash and cash equivalents at end of period                                      |                                                     | $                                         | 4,109   |                    |        |   |  |  |  | $    | 2,674  |       
|                                                                                |                                                     |                                           |         |                    |        |   |  |  |  |      |        |       
|Supplemental disclosures of cash flow information:                             
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cash paid during the period for:                   
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Interest                                  |         | $                  | 4,970  |   |  |  |  |      |        | $      | 1,746 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                     | Income taxes                              |         |                    | 37     |   |  |  |  |      |        |        | 42    |  

See accompanying notes

5



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SALEM COMMUNICATIONS HOLDING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

Information with respect to the three months ended March 31, 2001 and 2000
is unaudited. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
the unaudited interim financial statements contain all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of the
financial position, results of operations and cash flows of Salem
Communications Holding Corporation and Subsidiaries (the
Subsidiary), for the periods presented. The results of operations for the
interim periods are not necessarily indicative of the results of operations for
the full year. For further information, refer to the consolidated financial
statements and footnotes thereto included in our Supplemental Report included
as an exhibit to the annual report on Form 10-K of Salem Communications
Corporation for the year ended December 31, 2000.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards requiring that all
derivatives be recorded in the balance sheet as either an asset or liability
measured at fair value and that changes in fair value be recognized currently
in earnings, unless specific hedge accounting criteria are met. Certain
provisions of SFAS No. 133, including its required implementation date, were
subsequently amended. We adopted SFAS No. 133, as amended, in the first quarter
of 2001 and its adoption did not have a material effect on our results of
operations or our financial position.

NOTE 3. CONTINGENCIES

The Subsidiary
and its subsidiaries, incident to our business activities, are
parties to a number of legal proceedings, lawsuits, arbitration and other
claims, including the Gospel Communications International, Inc. (GCI) matter
described in more detail below. Such matters are subject to many uncertainties
and outcomes are not predictable with assurance. Also, we maintain insurance
which may provide coverage for such matters. Consequently, we are unable to
ascertain the ultimate aggregate amount of monetary liability or the financial
impact with respect to these matters as of March 31, 2001. However, we
believe, at this time, that the final resolution of these matters, individually
and in the aggregate, will not have a material adverse effect upon the our
financial position, results of operations or cash flows.

On December 6, 2000, GCI made a demand
for arbitration upon Salem Communications Corporation
(Salem). The
demand, pending before an arbitration panel of the American Arbitration
Association, alleges Salem and our subsidiary OnePlace failed to provide
certain e-commerce software to GCI pursuant to a written contract between GCI
and OnePlace, for which GCI seeks $5.0 million in damages. Salem has filed an
answer to the demand, denying the factual basis for certain elements of GCIs
claims and has asserted counterclaims against GCI for breach of contract.
Although there can be no assurance that the GCI matter will be resolved in
favor of Salem or OnePlace, each will vigorously defend the action
and pursue the
counterclaims against GCI.

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

GENERAL

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with Salems
Report to which this Supplemental Report is attached as an exhibit,
as well as our condensed
consolidated financial statements and related notes included elsewhere in this
Supplemental Report. Our condensed consolidated financial statements are not directly
comparable from period to period because of our acquisition and disposition of
radio stations and our acquisition of other media businesses.

6



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The Subsidiary has substantially the same business operations as is
reported for Salem in the Report, however, Salems unrestricted subsidiaries
Salem Communications Acquisition Corporation (AcquisitionCo) and
AcquisitionCos subsidiary SCA License Corporation (SCA) own and operate
several radio stations, the results of which are excluded from the results of
operations of the Subsidiary. The results of operations of radio stations
WYLL-AM, WWTC-AM, WYLO-AM, WFIA-AM and WHKW-AM are included in the results of
operations of Salem for the period they were owned or operated by AcquisitionCo
or SCA and are presented in the information included in the Report, but are
excluded from the results of operations of the Subsidiary and are excluded from
the information included in this Supplemental Report.

The sections Results of Operations and Liquidity and Capital
Resources are restated in this Supplemental Report to replace those sections
contained in the Report.

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RESULTS OF OPERATIONS

NET BROADCASTING REVENUE.Net broadcasting revenue increased $7.1 million
or 31.4% to $29.7 million for the quarter ended March 31, 2001 from $22.6
million for the same quarter of the prior year. The growth is attributable to
the increase in same station revenue and the acquisitions of radio stations and
a network during 2000, partially offset by the sales of radio stations during
2000. On a same station basis, net broadcasting revenue improved $1.9 million or 12.2% to
$17.5 million for the quarter ended March 31, 2001 from $15.6 million for the
same quarter of the prior year. The improvement was primarily due to an
increase in network revenue due to increased network affiliations and quality
programming, an increase in net revenue at radio stations we acquired in 1998
and 1999 that previously operated with formats other than their current format,
an increase in program rates and increases in advertising time and improved
selling efforts at both the national and local level. Revenue from advertising
as a percentage of our gross broadcasting revenue increased to 40.8% for the
quarter ended March 31, 2001 from 35.2% for the same quarter of the prior year.
Revenue from block program time as a percentage of our gross broadcasting
revenue decreased to 43.3% for the quarter ended March 31, 2001 from 51.8% for
the same quarter of the prior year. This change in our revenue mix is
primarily due to our continued efforts to develop more advertising revenue in
all of our markets as well as the launch of our contemporary Christian music
format in several markets.

OTHER MEDIA REVENUE.Other media revenue increased $0.2 million or 11.1%
to $2.0 million for the quarter ended March 31, 2001 from $1.8 million for the
same quarter in the prior year. The increase is due primarily to our increased
revenue from banner advertising and streaming services, offset by the loss of
revenues from the sale of certain assets which generated revenue from the sale
of advertising in print and online catalogs.

BROADCASTING OPERATING EXPENSES.Broadcasting operating expenses
increased $6.9 million or 54.3% to $19.6 million for the quarter ended March
31, 2001 from $12.7 million for the same quarter of the prior year. The
increase is attributable to operating expenses associated with the acquisitions
of radio stations and a network during 2000 and 2001, promotional expenses
associated with the launch of the contemporary Christian music format in
several markets, and an increase in music license fees, partially offset by the
operating expenses associated with three radio stations sold during 2000. On a
same station basis, broadcasting operating expenses increased $1.1 million or
12.8% to $9.7 million for the quarter ended March 31, 2001 from $8.6 million
for the same quarter of the prior year. The increase is primarily due to
incremental selling and production expenses incurred to produce the increased
revenue in the period.

OTHER MEDIA OPERATING EXPENSES.Other media operating expenses decreased
$1.6 million or 39.0% to $2.5 million for the quarter ended March 31, 2001 from
$4.1 million for the same quarter in the prior year. The decrease is
attributable primarily to the reduction of operating expenses incurred due to
the sale of certain software products, assets and contracts. .

BROADCAST CASH FLOW.Broadcast cash flow increased $0.3 million or 3.0%
to $10.2 million for the quarter ended March 31, 2001 from $9.9 million for the
same quarter of the prior year. As a percentage of net broadcasting revenue,
broadcast cash flow decreased to 34.3% for the quarter ended March 31, 2001
from 43.8% for the same quarter of the prior year. The decrease is primarily
attributable to the effect of stations acquired during 2000 that previously
operated with formats other than their current format and the effect of the
launch of the contemporary Christian music format in several markets. Acquired
and reformatted radio stations typically produce low margins during the first
few years following conversion. Broadcast cash flow margins improve as we
implement scheduled program rate increases and increase advertising revenue on
our stations. On a same station basis, broadcast cash flow improved $0.8
million or 11.4% to $7.8 million for the quarter ended March 31, 2001 from
$7.0 million for the same quarter of the prior year.

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CORPORATE EXPENSES.Corporate expenses increased $1.3 million or 52.0% to
$3.8 million in the quarter ended March 31, 2001 from $2.5 million in the same
quarter of the prior year, primarily due to additional overhead costs
associated with the acquisitions of radio stations and a network during 2000
and 2001.

EBITDA.EBITDA increased $0.7 million or 13.7% to $5.8 million for the
quarter ended March 31, 2001 from $5.1 million for the same quarter of the
prior year. As a percentage of total revenue, EBITDA decreased to 18.3% for
the quarter ended March 31, 2001 from 20.9% for the same quarter of the prior
year. EBITDA was negatively impacted by the results of operations of our other
media businesses acquired in 1999, which generated a net loss before
depreciation and amortization of $0.6 million for the quarter ended March 31,
2001 as compared to $2.4 million for the same quarter of the prior year.
Broadcast EBITDA excluding the other media businesses decreased $1.1 million or
14.7% to $6.4 million for the quarter ended March 31, 2001 from $7.5 million
for the same quarter in the prior year. As a percentage of net broadcasting
revenue, broadcast EBITDA excluding the other media business decreased to 21.5%
for the quarter ended March 31, 2001 from 33.2% for the same quarter of the
prior year. The decrease is primarily attributable to the effect of stations
acquired during 2000 that previously operated with formats other than their
current format, the effect of the launch of the Contemporary Christian music
format in several markets and increased corporate expenses.

DEPRECIATION AND AMORTIZATION.Depreciation and amortization expense
increased $2.1 million or 42.9% to $7.0 million for the quarter ended March 31,
2001 from $4.9 million for the same quarter of the prior year. The increase is
primarily due to the acquisitions of radio stations and a network in 2000.

OTHER INCOME (EXPENSE).Interest income increased $1.8 million to $2.1
million for the quarter ended March 31, 2001 from $0.3 million for the same
quarter of the prior year, primarily due to interest earned on a promissory
note due from Salem. Interest expense increased $4.0 million or 160.0% to $6.5
million for the quarter ended March 31, 2001 from $2.5 million for the same
quarter of the prior year. The increase is due to interest expense associated
with borrowings on our credit facility to fund acquisitions in 2000. Other
expense, net decreased $0.3 million from $0.3 million for the quarter ended
March 31, 2000 primarily due to decreased bank commitment fees.

BENEFIT FOR INCOME TAXES.Benefit for income taxes as a percentage of
loss before income taxes and extraordinary item (that is, the effective tax
rate) was 35.5% for the quarter ended March 31, 2001 and 29.8% for the same
quarter of the prior year. For the quarter ended March 31, 2001 and 2000 the
effective tax rate differs from the federal statutory income rate of 34.0%
primarily due to the effect of state income taxes and certain expenses that are
not deductible for tax purposes.

NET LOSS.We recognized a net loss of $3.7 million for the quarter ended
March 31, 2001 as compared to a net loss of $1.7 million for the same quarter
of the prior year. The increase in net loss is primarily attributable to an
increase in interest expense, partially offset by an increase in broadcast cash
flow.

AFTER-TAX CASH FLOW.After-tax cash flow remained unchanged at $3.3
million for the quarter ended March 31, 2001 as compared to the same quarter of
the prior year. After-tax cash flow was negatively impacted by the after-tax
cash flow of our other media businesses. After-tax cash flow excluding our
other media losses (net of income tax) decreased $1.0 million or 21.3% to $3.7
million for the quarter ended March 31, 2001 from $4.7 million for the same
quarter of the prior year. The decrease is primarily due to an increase in
interest expense and corporate expenses, offset by interest income.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents was $2.7 million and working capital was $8.8
million at March 31, 2001. Cash and cash equivalents was $3.6 million at
December 31, 2000. The decrease in cash and cash equivalents is due to cash
used for capital expenditures and provided to related parties, offset by cash
provided by operating activities.

Net cash provided by operating activities increased to $8.3 million for
the quarter ended March 31, 2001 compared to $2.0 million in the same period of
the prior year. The increase is primarily due to a decrease in accounts
receivable and an increase in accounts payable.

Net cash used in investing activities was $6.8 million for the quarter
ended March 31, 2001 compared to $30.2 million for the same period of the prior
year. The decrease in cash used is due to cash used for acquisitions in 2000
($26.5 million to purchase ten radio stations and a network for the quarter ended March 31, 2000), partially offset by an increase in capital expenditures.

Net cash used in financing activities was $2.4 million for the quarter
ended March 31, 2001 compared to $1.9 million for the same period of the prior
year due to a cash provided to related parties during 2001, partially offset by
payment of long-term debt associated with the purchase of the KRLA-AM
transmitter site in February 2000.

We have historically funded, and will continue to fund, acquisitions of
radio stations through borrowings, including borrowings under bank credit
facilities and, to a lesser extent, from operating cash flow and selected asset
dispositions. We have historically funded, and will continue to fund,
expenditures for operations, administrative expenses, capital expenditures and
debt service required by our credit facility and senior subordinated notes from
operating cash flow. We believe that cash on hand, cash flow from operations,
borrowings under our credit facility and proceeds from the sale of some of our
existing radio stations will be sufficient to permit us to meet our financial
obligations, fund our pending acquisitions and fund operations for at least the
next twelve months.

At March 31, 2001 we have $100.0 million principal amount of 9 1/2% senior
subordinated notes due 2007. In August 2000, we assumed the obligations of Salem as successor issuer
under the indenture for the senior subordinated notes, in connection with the assignment
of substantially all of the assets and liabilities of Salem to the Subsidiary. The
indenture for the senior subordinated notes contains restrictive covenants
that, among others, limit the incurrence of debt by us and our subsidiaries,
the payment of dividends, the use of proceeds of specified asset sales and
transactions with affiliates. The senior subordinated notes are guaranteed by
all of our subsidiaries.

At March 31, 2001, we had $187.1 million outstanding under our credit
facility. Since August 2000, we amended our credit facility to increase our
borrowing capacity from $150 million to $225 million, lower the borrowing rates
and modify current financial ratio tests to provide us with additional
borrowing flexibility. The credit facility matures on June 30, 2007. Aggregate
commitments under the credit facility begin to decrease commencing March 31,
2002.

Amounts outstanding under our credit facility bear interest at a base
rate, at our option, of the banks prime rate or LIBOR, plus a spread. For
purposes of determining the interest rate under our credit facility, the prime
rate spread ranges from 0% to 1.5%, and the LIBOR spread ranges from 0.875% to
2.75%.

The maximum amount that we may borrow under our credit facility is limited
by a ratio of our existing adjusted debt to pro forma twelve-month cash flow
(the Adjusted Debt to Cash Flow Ratio). Our credit facility will allow us to
adjust our total debt as used in such calculation by the lesser of 50% of the
aggregate purchase price of acquisitions of newly acquired non-religious
formatted radio stations that we reformat to a religious talk, conservative
talk or religious music format or $30.0 million and the cash flow from such
stations will not be considered in the calculation of the ratio. The maximum
Adjusted Debt to Cash Flow Ratio allowed under our credit facility is 6.50 to 1
through December 30, 2001. Thereafter, the maximum ratio will decline
periodically until December 31, 2005, at which point it will remain at 4.00 to
1 through June 2007. The Adjusted Debt to Cash Flow Ratio at March 31, 2001 was
4.74 to 1, resulting in a borrowing availability of approximately $12.4
million.

Our credit facility contains additional restrictive covenants customary
for credit facilities of the size, type and purpose contemplated which, with
specified exceptions, limits our ability to enter into affiliate transactions,
pay dividends, consolidate, merge or effect certain asset sales, make specified
investments, acquisitions and loans and change the nature of our business. The
credit facility also requires us to satisfy specified financial covenants,
which covenants require the maintenance of specified financial ratios and
compliance with certain financial tests, including ratios for maximum leverage
as described, minimum interest coverage, minimum debt service and minimum fixed
charge coverage. The credit facility is guaranteed by all of Salems
subsidiaries, except the Subsidiary which is the borrower under the credit facility, and is secured by
pledges of all of the capital stock of Salems subsidiaries.

9



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SIGNATURES

Pursuant to the
terms of the Indenture, as supplemented, the Subsidiary has duly
caused this Supplement Report to be signed on
its behalf by the undersigned, thereunto duly authorized.



| |              | SALEM COMMUNICATIONS HOLDING CORPORATION                  | 
| | ------------ | --------------------------------------------------------- | 
|
| | May 15, 2001 | By: /s/ EDWARD G.
ATSINGER III                            | 
| |              | Edward G. Atsinger III                                    | 
| |              | President and Chief Executive
        Officer             | 
|
| | May 15, 2001 | By: /s/ DAVID A. R. EVANS                                 | 
| |              | David A. R. Evans                                         | 
| |              | Senior Vice President and Chief
        Financial Officer | 
| |              | (Principal Financial Officer)                             | 
|
| | May 15, 2001 | By: /s/ JONATHAN L. BLOCK                                 | 
| |              | Jonathan L. Block                                         | 
| |              | Director                                                  | 
|
| | May 15, 2001 | By: /s/ EILEEN E. HILL                                    | 
| |              | Eileen E. Hill                                            | 
| |              | Vice President, Finance and Accounting                    | 
| |              | (Principal Accounting Officer)                            | 

10