Net Revenues Dip, But A Lower Net Loss For Emmis

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It was a good news/bad news fiscal Q4 for Emmis Communications, which wrapped up its 2017 business year on Feb. 28.


Total net revenue declined to $43.5 million, from $50.9 million.

For its core radio division, Emmis’ fiscal Q4 net revenues fell 6.6%, to $34 million.

But, the company’s consolidated net loss was narrower in fiscal Q4, moving to $7.6 million (62 cents per share) from $9.5 million (85 cents per share).

Fiscal 2017 was also mixed, and in his company’s conference call with investors to discuss the results, Emmis Chairman/CEO Jeff Smulyan focused on the future—and that’s all about NextRadio, the sale of WLIB, saluting the St. Louis cluster for a great fiscal Q4, and overcoming what’s looking to be a poor fiscal Q1 2018 for the company.


For the full fiscal year, however, net income soared to $13.1 million ($1.07 per diluted share), from $2 million (17 cents).

Still, fiscal 2017 net revenue was down compared to 2016, slipping to $214.6 million from $231.4 million.

AN ‘ARCH-FUL’ FINAL QUARTER FOR RADIO 

Per Miller Kaplan reporting, which excludes barter revenues and syndication revenues, and excluding results from Los Angeles, Emmis’ Q4 radio revenues were down 4.8% in markets that were down 0.2%.

Austin and St. Louis outperformed their markets, however, and St. Louis was up 10% while the market was up 1%—an incredible achievement for Emmis.

Jeff Smulyan
Jeff Smulyan

Speaking to the financial investment community on his company’s Thursday-morning conference call, Smulyan started off the conversation by talking about Los Angeles—and the sale of KPWR-FM 105.9 “Power 106” to Meruelo Media for $82.75 million, announced earlier this week.

Noting that the sale, along with the ongoing search for a buyer of its WLIB-AM 1190 in New York, are designed to “significantly alter the capital structure of the company.”

In short, the sale of KPWR and eventual sale of WLIB “will reduce well over 60% of our outstanding debt … and to change the capital structure of this company is critical.”

Smulyan also opened the call by touting the latest advancements with NextRadio, and its “game-changing” way it can measure radio’s exposure to consumers via a smartphone. A business relationship between NextRadio and Sprint has been extended for an additional three years.

Ryan Hornaday, Emmis’ EVP/CFO, added during the Q4 and fiscal 2017 earnings call that automotive, which comprises 12% of Emmis’ advertising revenue, was down 7% in Q4.

The weakest ad categories for Emmis? Healthcare, financial, and cellular/wireless.

Hornaday confirmed that the sale of Power 106 — which Smulyan called “a painful decision, but the right decision,” is expected to close later this year, and that the proceeds will be used to repay more than 50% of the company’s credit facility debt outstanding.

This gives investors a hint as to what WLIB will likely attract, dollar-wise—and all signs point to a much smaller dollar amount for the AM that’s been on the market for several months.

Asked for progression on the deal, and for comment on whether additional Emmis assets are for sale, Smulyan debunked any discussion that further Emmis stations are on the market.

As for WLIB, there are three potential buyers, Smulyan says.

Hornaday adds that there is $700,000 trailing cash range for WLIB.

How does the first fiscal quarter of 2018 look for Emmis?

Not great. Q1 pacings are down 10%, with April down 14% and May pacings down 9%.

Why? Weakness at Power 106, along with tough political comps, are the key culprits.

But, excluding these items, Emmis says pacings are poised for a mid single-digit decline.

In a somewhat subdued tone, Smulyan concluded the call by noting, “It’s been a very eventful time for our company. We’ve made some tough decisions … yet we find a buyer in the Meruelo Group that has the ability to do the things we couldn’t do with our leverage as a public company. I’m pleased with it. I think it is the right decision.”

RBR + TVBR