Emmis wins round in court v. preferred shareholders


Emmis CommunicationsAn injunction against Emmis Communications sought by a disgruntled, dividend-seeking shareholder group has been turned down in court, which ruled that Emmis to all appearances Emmis is lawfully pursuing a path to corporate financial health.

Emmis’ Jeff Smulyan told RBR-TVBR, “We are gratified with the judge’s decision to deny the injunction request. Today’s ruling allows us to proceed with our shareholder meeting on Sept. 4 and maintain our focus on continuing improvements in our operating performance and delivering value for our shareholders.”

The plaintiffs, Corre Opportunities Fund LP, Zazove Associates LLC, DJD Group LLLP, First Derivative Traders LP and Kevan A. Fight, threw a legal kitchen sink at Emmis but failed to find relief in the court.

In essence, the court ruled that the plaintiff’s arguments were unlikely to prevail at trial, eliminating the court’s ability to grant the injunction against Emmis that they were seeking.

The opinion of the United States District Court for the Southern District of Indiana was written by Judge Sarah Evans Barker.

The attempt by gain the injunction focused on things like the precise definition of a preferred share, divining the intent of legal phrasing in various documents, all the way to things like failure to disclose negotiation undertaken with ESPN and Grupo Radio Centro for radio stations in New York and Los Angeles. However, at the time certain documents were printed, the deals hadn’t progressed beyond the informal feeler stage.

The court concluded, “For the reasons detailed above, we have found that Plaintiffs have failed to meet any of the threshold requirements for injunctive relief. We therefore need not address the balance of harms or public interest factors. Nonetheless, we note that, had Plaintiffs met the threshold requirements, the balance of harms is, if anything, a toss-up: Defendants have shown a likelihood that, if an injunction were to issue and the vote be enjoined, both Emmis’s stock price as well as its efforts to refinance before the November 2012 deadline could be seriously and adversely affected. As for the public interest, it is served best in our judgment by allowing the decisions made by this Indiana corporation to stand when, given the circumstances presented here, they appear to have acted in compliance with their statutory prerogatives. At this preliminary stage of the litigation, Plaintiffs have failed to show that Defendants’ actions contravened either the IBCL or the relevant federal securities disclosure laws.”

RBR-TVBR observation: It will be really interesting to follow Emmis’ progress throughout the remainder of 2012 and throughout 2013. At the moment, it has pulled off an extraordinary series of steps towards regaining control of its own destiny, and simply has to be called the comeback kid radio group of the year.