The Hungarian government awards its radio licenses for a seven year term, and after that period is up – as Emmis Communications is painfully aware – there are no guarantees that another seven years will be granted.
Emmis told the Securities and Exchange Commission that the Hungarian National Radio and Television Board (known there as ORTT) has awarded its licenses to a rival bidder. Emmis is challenging – “We believe the award of the license to the other bidder violates, among other things, the ORTT’s own national radio license tender rules, the Hungarian Media Law and European Commission Treaty to which Hungary became a party in 2004, and are vigorously exploring avenues for having the award set aside, including but not limited to litigation in Hungary and in the European Union.”
According to the Budapest Business Journal, the chairman of ORTT – Laszlo Majtenyi — actually resigned over the situation. He said the companies selected over Emmis’s Slager and another incumbent (Slager was one of two ousted incumbents) both had weak business and financial plans. He said that he did not believe the matter was closed and called it a “scandal.”
Whatever the next step is, it’ll have to happen fast – the licenses expire 11/19/09.
Emmis has been making a nice piece of change in Hungary with the group. In the last three fiscal years (2007, 2008 & 2009) it has pulled in net revenues of $18.6M, $20.6M and $23.9M, and its share of net profits has been $3.6M, $3.3M and $5.1M.
Emmis declined to comment on the matter at this time.