In a recent SEC 10K filing, Emmis Communications stated that it was competitively-challenged in its major radio markets due to lack of scale and fewer capital resources, and would be open to selling one of its New York radio stations, and both of its stations in Chicago.
The New York stations are Classic Soul/Today’s R&B WRKS-FM, Hip Hop WQHT-FM and the most likely sale candidate, Adult Album Alternative WRXP-FM. The Chicago stations arte Classic Rock WLUP-FM and Alternative Rock WKQX-FM.
After noting that the company regularly reviews possible acquisitions that hold promise of long-term appreciation, Emmis stated, “We also regularly review our portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so. In particular, we have one radio station in New York City and two radio stations in Chicago where we believe the sale value could exceed the prospects for cash flow generation as part of our portfolio. Although we remain optimistic about the growth potential of these stations, as the market for buying and selling radio stations improves, we may from time to time explore sales of one or more of these stations.”
Emmis also addressed its KXOS-FM (the former KMVN-FM) in Los Angeles, which is being LMA’d to Grupo Radio Central and which may eventually be sold to GRC for $110M.
Emmis said it is trailing the market in terms of ad performance in both New York and Los Angeles. One reason is lack of scale – “Some of our competitors operate larger station clusters in New York and Los Angeles than we do, enabling them to use their market share to extract a greater percentage of available advertising revenue through discounting unit rates.” – and the other is the introduction of Arbitron’s PPM technology, which Emmis believes does not effectively measure the audiences that happen to be in its target categories.