families for 2017 amounted to approximately $1.5 million. Rental expense paid by Salem to Mr. Atsinger or trusts created for the benefit of his family for 2017 amounted to approximately
$191,000.
Purchase of KTRB(AM) from a Related Party
On September 11, 2018, we acquired radio station
KTRB-AM
in San Francisco for $5.1 million in cash from a
related party, East Bay Broadcasting, LLC, a company owned Edward G. Atsinger III, Chief Executive Officer, and Stuart W. Epperson, Chairman of the Board. The acquisition was accounted for as an asset purchase with transaction costs of
$0.2 million capitalized. We had been operating the radio station under an LMA with East Bay Broadcasting, LLC, since June 24, 2016. The accompanying Consolidated Statements of Operations reflect the operating results of this station as of
the LMA date within the broadcast operating segment. Our Nominating and Corporate Governance Committee reviewed the transaction, including an appraisal of the station performed by a licensed broker and reports related to the financial performance of
the station during the LMA period, and determined that the terms of the transaction were no less favorable to Salem than those that would be available in a comparable transaction in arms length dealings with an unrelated third-party.
Purchase of WSPZ(AM) from a Related Party
On November 22, 2017, we closed on the acquisition of radio station
WSPZ-AM
(now
WWRC-AM)
in Bethesda, Maryland for $0.6 million in cash from a related party, AM 570, LLC, a company owned by Edward G. Atsinger III, Chief Executive Officer and Stuart W. Epperson, Chairman of the Board.
We began programming the station within our Washington DC market as of September 15, 2017 under a LMA with AM 570 LLC. We assumed the lease agreement for the land, tower and broadcasting equipment of
WSPZ-AM
(now
WWRC-AM)
as of the closing date.
Payments to Delmarva Educational Association Corporation
During the year ended December 31, 2017, we paid approximately $21,000 to Delmarva Educational Association Corporation, a related party entity for which
Nancy A. Epperson, the wife of the Chairman of the Board, and Stuart W. Epperson Jr., the son of the Chairman of the Board, serve as directors. The payments represented commissions due to Delmarva under a revenue sharing promotion.
Radio Stations Owned by the Eppersons
Nancy A. Epperson, the wife of the Chairman of the Board, Stuart W. Epperson and mother of Board member, Stuart W. Epperson Jr., currently serves as officer,
director and stockholder of six radio stations in Virginia, five radio stations in North Carolina, and five radio stations in Florida. Chesapeake-Portsmouth Broadcasting Corporation (Chesapeake-Portsmouth) is a company controlled by
Nancy Epperson, wife of Salems Chairman of the Board Stuart W. Epperson, mother of Board member Stuart W. Epperson Jr., sister of CEO Edward G. Atsinger III and nephew of Board member Ted Atsinger. Chesapeake-Portsmouth owns and operates radio
stations
WJGR-AM,
Jacksonville, Florida,
WZNZ-AM,
Jacksonville, Florida and
WZAZ-AM,
Jacksonville, Florida. Mr. Epperson Jr.
serves as a director of Chesapeake-Portsmouth.
The markets where these radio stations are located are not currently served by stations owned and operated
by the company. Under his employment agreement, Mr. Epperson is required to offer the company a right of first refusal of opportunities related to the companys business.
Radio Stations Owned by Mr. Roland S. Hinz
Mr. Hinz, a former Director, through companies or entities controlled by him, operates three radio stations in Southern California. These radio stations
are formatted in Christian Teaching and Talk programming in the Spanish language. Mr. Hinz notified us on December 12, 2018, of his immediate desire to retire from the Board of Directors and not seek
re-election
at the upcoming 2019 Annual Meeting.
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