Emmis tees up today


The bar has been set pretty low by Wall Street as Emmis reports this morning on its fiscal Q2 (June-August) results. Analysts expect revenues to be down. The Thomson/First Call consensus is that revenues will be down 4% to 96 million, with estimates ranging from 94 to 98 million, versus 100 million a year ago.

At Bank of American, analyst Jonathan Jacoby says his checks with markets across the country indicate continued weakness in radio, with no sign of a pickup in the current quarter. "We are projecting Emmis’ domestic radio revenues to decline 9% pro forma to 63.6 million. Emmis’ three largest markets were down approximately 4% in the June-August timeframe, and we believe the company continues to underperform its markets," Jacoby told clients. While he expects domestic radio revenues to be down 9% when Emmis reports today, he is looking for international radio to be up 15% to 10.7 million, producing a total radio decline of 6.2% to 74.2 million. Add in a 2% gain in publishing revenues to 21.2 million and Jacoby expects total revenues at Emmis to be down 4.5% to 95.4 million and EBITDA down 25.6% to 18.8 million.

RBR observation: Despite having to deal with an angry major shareholder, Martin Capital, which is pressing for a break-up or for CEO Jeff Smulyan to take the company private, the immediate challenge is for Smulyan and Radio Division President Rick Cummings to fix problems at several of the company’s largest stations and get Emmis back on track. At the same time, they have to deal with the impact of PPM as Arbitron rolls it out in Emmis’ largest markets. What’s in the future? We go back to Jacoby: "Break-up, get bigger in large markets, buyback stock, status quo? Which way will Jeff Smulyan go? Although we estimate Emmis’ breakup value at 20-25, Mr. Smulyan’s control of the company makes it unlikely for current investors to realize most of the spread between the current share price and our break-up valuation."