DOJ gives Emmis-YMF deal thumbs-up


Emmis CommunicationsWhile still needing the FCC’s blessings, DOJ antitrust attorneys signed off on Emmis Communications deal with YMF Media to purchase its heritage Urban AC WBLS-FM and its sister station, Urban Gospel WLIB-AM, for $131 million in cash. Emmis, which already owns Urban WQHT-FM, HOT 97 in the market, will nearly double the company’s annual station operating income through the deal.

It’s the latest move in NYC for Emmis, which struck a deal 4/26/12 to “merge” its Urban AC WRKS-FM into WBLS and LMA/lease WRKS to ESPN Radio.

The purchase price will be paid in two installments.  The first payment of $55 million will be made right after the initial grant of the FCC’s consent to assignment of the stations’ licenses, expected this Summer.

The second payment of $76 million will occur in February 2015.  Emmis will finance the buy through a new senior credit facility and plans to access the loan market in the coming months.  Emmis expects its senior secured debt-to-EBITDA leverage ratio to remain below 5x following the close.

The acquisition is subject to the expiration or earlier termination of the applicable waiting period under the Hart Scott Rodino.  Emmis and YMF will request early termination of the waiting period, which could allow the company to begin programming the stations under an LMA on or around 3/1.

The monthly LMA fee will be $1.275 million until the first purchase price payment.  Thereafter, the monthly LMA fee will be reduced to $0.74 million and will continue until the second closing.

During calendar 2013, WBLS and WLIB reported approximately $31.9 million of net revenues and approximately $16.5 million of station operating expenses, excluding depreciation and amortization, resulting in $15.4 million of station operating income.

Emmis expects to realize approximately $3 million of annual expense savings by combining these stations with HOT 97 in New York.  Pro forma for these expected cost savings, the purchase price of $131 million represents a buyer’s multiple of 7.1x the stations’ calendar 2013 station operating income.

The WBLS/WLIB operations and studios have been co-located with HOT 97 since 2012, and more than 40% of their employees are Emmis alumni.

Emmus alum Deon Levingston, CEO of YMF Media and General Manager of WBLS/WLIB, will become GM of Emmis’ New York cluster when the LMA commences.