Buyer wants refund from Emmis


Emmis revealed in its quarterly report that SJL Acquisition is demanding a 10 million bucks refund from its purchase of KHON-TV Honolulu, claiming that Emmis violated the terms of its Fox affiliation. Emmis denies that any such thing occurred.

SJL, better known by its corporate parent name Montecito Broadcast Group, bought KHON from Emmis in 2005 as part of a four station (plus five satellites) package for 259 million. Montecito, backed by the Blackstone private equity group, already has a profit locked in, having recently filed to re-sell the package to New Vision for 330 million (8/7/07 TVBR #153). Exactly how Emmis allegedly violated its Fox affiliation agreement is not spelled out in the SEC filing. Emmis says it will “defend itself vigorously in the matter,” but at this point no lawsuit has been filed – just a letter from SJL demanding the 10 million.

Walter Berger’s exit from Emmis Communications to join CBS Radio (then known as Infinity) as CFO was not entirely amicable. We note from the Emmis SEC filing that it has a lawsuit pending against CBS Radio, seeking damages for snatching Berger away. The lawsuit claims that CBS Radio knew that Berger had a “valid and enforceable” contract with Emmis when it recruited him and that, despite objections from Emmis, “CBS Radio encouraged Berger to breach his contract by leaving Emmis in January 2006, more than three years before the contract was set to expire.” In addition to suing CBS Radio, Emmis has filed an arbitration action against Berger, seeking damages for breach of contract and repayment of some of the payments made to him under his Emmis contract. 

CBS has a different recollection of the events. In its response to the lawsuit, it said that when Berger informed his employer of the CBS Radio offer “Emmis advised Berger that it would not stand in the way of Berger’s opportunities.” In any case, it looks like the dispute has been resolved. The court documents state that a settlement conference last month produced an agreement and that all that remains now is “the execution of the documents and/or delivery of funds, if so required, in accordance with their agreement.”