Another tough quarter for Emmis


"Slovakia is having a wonderful year," said CEO Jeff Smulyan as he reported on fiscal Q1 (March-May) results for Emmis Communications. And it was strength in Slovakia and in Hungary which proved bright points for another disappointing quarter. Wall Street had lowered the bar so much for Emmis, though, that the company actually beat expectations slightly. But that was due to better-than-expected results from its international radio operations. Domestic radio was down 9%, mainly due to continued shortfalls in New York and Los Angeles. Aside from WRKS-FM NYC and KMVN-FM LA, Smulyan insisted that the rest of Emmis' stations outpaced their markets – but those are two big stations in the #1 and #2 markets.

Look for more of the same in the current quarter. Emmis CFO Pat Walsh told analysts to expect domestic radio revenues for fiscal Q2 (June-August) to be down in the mid to high single digits. (See Wall Street section for the nitty gritty numbers from the Emmis quarterly report.)

SmartMedia observation: Of course, the question of going private came up. In reply, Smulyan said the company is continuing to look at the possibility of going private, but that nothing has been decided yet. A couple of Wall Street analysts looked at the numbers yesterday and declared a buyout of public shareholders unlikely. Bank of America analyst Jonathan Jacoby calculated the break-up value of the company at 20-25 bucks per share. That's a huge premium over the current price, which has been around nine bucks. Analyst Victor Miller at Bear Stearns says it is unlikely that investors would be willing to sell out to Smulyan while the company's cash flow is so badly impaired. And that declining cash flow makes it difficult for Smulyan to lever a buyout anyway. As we all know, Smulyan, who has voting control, has no intention of selling Emmis to anyone else – nor of selling off more than a few of the remaining pieces – so it looks like the EMMS ticker will continue to trade on Nasdaq for some time to come.