Emmis Privatization Doubles Down On Radio


By Adam R Jacobson, RBR + TVBR

The August 18 announcement that Emmis Communciations Corp. had made a non-binding proposal to purchase its outstanding stock at $4.10 per share comes with a strong endorsement of the radio industry: It’s refocusing its efforts on its core AM and FM radio assets; its NextRadio smartphone app for Android devices enabled for local FM radio reception; and TagStation, the cloud-based data service allowing radio stations to synchronize their broadcasts with images, interactive touch points, and other related data for display in the NextRadio app, HD Radio Artist Experience, and connected car dashboards currently in development.

In an 8-K filing with the SEC made August 17, Emmis revealed that its Board of Directors has authorized Emmis “to explore strategic alternatives” for its publishing division, minus Indianapolis Monthly. The move puts such venerable titles as Los Angeles and Texas Monthly up for sale.

Additionally, Emmis’ Board of Directors gave the OK for the company to spin off Class B Gospel WLIB-AM 1190 in New York, as well as its four radio properties in Terre Haute, Ind.

The $4.10 per share cash proposal falls in line with Emmis’ current stock performance. At 12:41pm ET, EMMS shares were up 11 cents to $4.11.

According to the proposal, the offer price represents premiums of approximately 25% over the 90-day volume weighted average closing price.

Jeff Smulyan

The proposal would likely be implemented through a merger, with Emmis being combined with “E Acquisition Company,” a corporation owned by Chairman/CEO Jeff Smulyan (pictured) and “expected to be owned by certain directors, officers and other outstanding shareholders of the company.”

This action would take Emmis private—something that the company tried to do in 2006 and 2010 but failed to achieve. EMMS shares went public in 1994.

To help bring the privatization to fruition, Emmis’ Board of Directors formed a special committee comprised of two “independent and disinterested directors” to review and evaluate the proposal. The members are Susan Bayh, the wife of Evan Bayh, a Democratic politician from the state of Indiana who has been that state’s governor and a U.S. Senator; and former CBS Inc. Chairman/CEO Peter Lund.

Lund joined Emmis’ Board of Directors in December 2002.

As is the case with such proposals, Emmis notes that “no assurance can be given that an agreement on terms satisfactory to the Special Committee or the Board of Directors will result from the proposal or that any transaction will be completed.”


To help finance the privatization effort being led by Smulyan, E Acquisition Corp. has obtained a committed acquisition facility from an affiliate of Falcon Investment Advisors LLC.

Moelis & Company provided financial advice in connection with securing this financing commitment and related matters.

The sale of Emmis Publishing, minus Indianapolis Monthly; WLIB-AM and Emmis’ Terre Haute, Ind. cluster will be used to help pay down Emmis’ debt, something that comes in conjunction with the proposed merger.

Additionally, Smulyan “intends to invite certain other investors, such as Emmis officers and directors,” to acquire equity interests in E Acquisition Corp., which will drive funding for the privatization plan.

Emmis’ shareholders also play a role in the privatization effort, as any move to make Emmis a non-public company will require shareholder approval.

Holders of Class A Common Stock and Class B Common Stock will vote together as a single class, with each share of Class A Common Stock entitled to one vote per share and each share of Class B Common Stock entitled to ten votes per share. Smulyan would in such circumstances have approximately 52% of the combined voting power entitled to vote on any such other transaction (calculated to include shares issuable under all options exercisable currently or within 60 days), thereby giving him the ability to prevent Emmis from engaging in any such other transaction.

Emmis expects this process to have no impact on day-to-day operations, which includes the Incite – Social Impact Marketing arm and Digonex Technologies, a pricing and pricing analytics provider currently operating in the sports, live entertainment, attraction and retail markets.