Emmis pacing down double-digits


Emmis Communications stock fell again yesterday after the company reported that June domestic radio revenues were down 11% and that the rest of its fiscal Q2 is looking much the same. CEO Jeff Smulyan had proudly proclaimed that Q1 (March-May) revenues were better than expected, with Emmis’ US stations down only 3%, and with cost controls converting that to a companywide gain of 5% in operating income.

Calling radio a “challenged industry in a challenged time,” Smulyan said Emmis will continue to lead the industry through innovation, pointing to the Broadcasters Traffic Consortium, which Emmis spearheaded, as an example. He called ad support for the HD Radio spectrum-based traffic data service the “killer app,” since motorists don’t have to pay for the service.

Fiscal Q1 radio revenues were down 1% on a pro forma basis to 64.2 million. That included $9.3 million in revenues from Emmis’ international radio stations, whose revenues were up 14%, while the domestic US stations saw the 3% decline to $54.9 million.

Publishing revenues were up 2% to $22.7 million, but on a pro forma basis publishing revenues declined 5%. Smulyan announced that Emmis had suspended publication of Tu Ciudad, its Spanish language city magazine in Los Angeles, because its financial performance had not met the company’s expectations.

In the conference call with analysts, CL King analyst Jim Boyle noted that in the past radio had shown an ability to rebound in a recession as marketers sought to maintain market share with radio’s cost-efficient advertising. Has there been any evidence of that? “Not yet,” said Emmis Radio President Rick Cummings. And Smulyan chimed in that all bets are off this time.

Would Emmis look at selling an asset to raise cash? Smulyan answered that as CEO he would not preclude any option.

Smulyan insisted that Arbitron’s Portable People Meter will be a positive for the radio industry because of its detailed data and quick delivery. But he and Cummings admitted to some trepidation about how ad buyers will react to the change-over. Cummings said he did not expect to see a decline in buying in New York as steep as what was seen when PPM became ratings currency in Philadelphia because most of the people buying New York radio have already been buying Philadelphia. He has some concerns about Los Angeles, though, since PPM will be brand new for West Coast buyers.
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