Leaner Emmis Reflects On ‘A Disappointing Quarter’


Emmis Communications saw its total net revenue dip in its fiscal Q3 2018, as the radio broadcasting company and parent of NextRadio creator TagStation swung to a net loss of $279,000 (2 cents per diluted share), from net income of $17.7 million ($1.43).

But, it’s tough to compare Emmis today to the company it was in fiscal Q3 2017, when it had more radio stations in its stable and a host of magazines it no longer owns.

That’s because Emmis in mid-October 2016 made good on its promise to sell its Terre Haute, Ind., stations — regardless of an unsuccessful privatization effort led by Chairman/CEO Jeff Smulyan — to two different buyers for a cumulative price of $5.2 million.

Then, in May 2017, Emmis made the difficult decision to part ways with its longtime standalone FM in Los Angeles—Rhythmic Top 40 KPWR-FM 105.9 “Power 106” — by selling it to an affiliate of The Meruelo Group for $82.75 million.

With fewer radio stations, Emmis’ radio revenue dipped to $34 million, from $42.5 million. This contributed, in part, to a total net revenue slide to $35.4 million, from $56.3 million.

Station Operating Income (SOI) moved to $7.5 million, from $11.1 million.

Another key contributor to the net loss was Emmis’ greatly reduced publishing division. In a quiet move conducted in February 2017, Indianapolis-based Emmis closed on the sale of its monthly magazines serving Atlanta, Cincinnati, Los Angeles and Orange County, Calif. to Hour Media Group LLC.

The sale price: $6.5 million, according to a SEC filing associated with the transaction.

The divestment of the four publications, which had seen significant decreases in value in recent years, followed the October 2016 sale of venerable glossy publication Texas Monthly to Genesis Park LP, an affiliate of a private equity firm led by Paul Hobby, for $25 million.

Emmis has now divested all its publishing assets except for its hometown Indianapolis Monthly, which it intends to continue to operate. This explains the significant decrease in the company’s publishing revenue in fiscal Q3, to $1.13 million from $13.63 million in the year-ago quarter.

Neither same-station comps nor Indianapolis Monthly year-over-year financial information were provided by Emmis ahead of its quarterly conference call scheduled for 9am Eastern on Wednesday (1/11). However, a 10Q SEC filing reveals the details: On a same-asset basis Emmis’ net revenue and net income were also down (more details in our expanded coverage, available later Wednesday).

Emmis did note in its pre-Opening Bell earnings release to the public that its pro forma radio revenues per Miller Kaplan (which excludes barter and syndication revenues) were down 4% in markets that were down 2%. Excluding political advertising, Emmis pro forma radio revenues in the third quarter would have been down 3%.

“Overall it was a disappointing quarter, but I am encouraged going forward by the ratings trends at our radio stations,” said Smulyan, in prepared remarks. “This fiscal year, our radio stations have been growing their ratings vis-à-vis our competitors, which should manifest itself in better revenue performance in Q4 and into the next fiscal year.”

The bright spot for Emmis is in its Emerging Technologies division. Here, revenue increased to $236,000, from $204,000.

Additionally, while Emmis’ total cash and cash equivalents as of Nov. 30, 2017 sits at $3.9 million, compared to $11.4 million as of Feb. 28, 2017, it has sliced away a big portion of its credit agreement debt. At the end of its fiscal Q3, Emmis had $78.5 million in credit agreement debt. By comparison, this stood at $152.2 million on Feb. 28, 2017.