Emmis shows modest pro forma growth


Emmis CommunicationsThe results registered by a slimmed-down Emmis Communications may not look like much, but Chairman/CEO Jeff Smulyan says it’s better than the industry as a whole in its markets. He said that even in a challenging economic environment Emmis is performing at the top levels of the industry.

The company stated its results, saying, “While the Company’s reported results are negatively impacted by station divestitures over the past twelve months, on a pro forma basis, net revenue for the second fiscal quarter increased 1 percent, from $54.4 million to $55.0 million. Pro forma radio net revenues increased 2 percent, from $41.4 million to $42.0 million. This growth in radio revenues outpaced market revenue growth in the quarter, which was less than 1 percent.”

“Emmis has continued its strong operating performance, with our revenue growth exceeding the revenue growth of our markets in every month this calendar year,” said Smulyan. “Ratings remain very strong. In the month of September, our two most-listened-to stations, Hot97 in New York and Power 106 in Los Angeles, were #1 in their target 18-34 demographic.”

“We are actively pursuing a refinancing of our entire capital structure that will dramatically reduce our interest expense and increase our free cash flow going forward,” Smulyan concluded.

The company is currently levered at about three and a half times, said Smulyan, putting Emmis as one of the lowest-levered companies in the industry. Looking to strike unique partnerships, and talks are ongoing. Will nevertheless operate conservatively and expects to continually lower debt.

Smulyan also hailed its “resounding victory” in court over a group of disgruntled shareholders who were trying to enforce certain discontinued dividend payments.

Smulyan frequently referred to his ongoing vigorous efforts to establish FM radio on cell phones.
CFO Pat Walsh noted that beverage was the company’s top ad category, and automotive did very well. He added that the Q3 advertising market is volatile, but on the plus side, demand is stronger in October and November, and the company is poised to post good results.

Emmis said it made about $1M in the political category during the quarter, about 3% of its total domestic revenues, and a lot of it was related to primary activity. The category is picking up in October, but the company is not generally in hot political battlegrounds. Smulyan said that it’s been a disappointing year overall for the entire radio business. He said radio and newspaper both seem to be losing cash to local cable, and noted that historically radio has not done particularly well in the category.

Smulyan voiced his misgivings about streaming terrestrial radio – he said the cost of broadcasting was far less than the cost of streaming just for starters, and on top of that streaming brings in high royalty costs. But that said, the company has to go where the listeners are. However, he thinks eventually, broadcast will remain the distribution method of choice for radio and its audience.

The agreements between Clear Channel and a pair of record companies are tied heavily to the streaming environment, said Smulyan. What he likes about it is the fact that they are agreements between private companies, and he said that is the way to move forward, not via a federally-imposed mandate ordered by Congress.

RBR-TVBR observation: Emmis has provided an early confirmation for what analysts have been saying. The results for the quarter have been sluggish and disappointing. That said, at least Emmis didn’t move backwards. Flat may not be something to write home about, but it definitely beats falling into another pothole.