After a rough end to its fiscal year, which is being followed by a rough fiscal 2016 Q1, Emmis President President/CEO Jeff Smulyan sees sunnier skies ahead – and a mammoth opportunity as more and more cell phones bring radio to American consumers.
Most radio companies have reported rough times in March and April.
For most companies, April will fold into improving Q2 numbers, but for Smulyan, April is the second month of its unique fiscal year, so any improvement experienced in May will add into a negative pool.
The upshot is that pacing down 6% for its fiscal Q1 2016. Pacing is up mid-single digits looking further down the road.
Smulyan said station overhauls have been undertaken, and after a rough first quarter for the entire industry, things are definitely turning around. He noted that even the troubled New York market is showing signs of picking up.
Leverage is not expected to go anywhere near the 6.7x it is allowed, said Smulyan. He estimated it would be closer to 5x, and perhaps in the high 4s, by year’s end.
As far as diversifying the group’s station portfolio to reduce exposure to New York and Los Angeles, Smulyan said that isn’t a strategy. He said that the company knows both markets, they bring in lots of income, and noted it’s rare that both are so problematic at the same time.
Asked about radio’s future, Smulyan predictably launched into a sermon about FM on cell.
He stated that Emmis believe’s NextRadio is a catalyst for the industry. He thinks it will dramatically improve radio listening if it can be activated on all smartphones. In particular, millennials who haven’t discovered radio off-air love it when they discover it on their mobile device.
People love it and use it dramatically more than we ever imagined.
Smulyan said, “This industry is going to be on all the smartphones, and when that happens we will have an opportunity to grow our listening dramatically.” He also noted that it also adds interactive capability, including interactive advertising, and that gives radio a brand new revenue stream. Even more important, NextRadio will change the perception of radio. People will think that radio is cool again.