Tough quarter for Emmis despite big profits


Due to major changes to its balance sheet, including the sale of three big FMs to Merlin Media, Emmis Communications reported record earnings of $2.90 per share for its fiscal Q3 (September-November). However, pro forma revenues for its US radio stations fell 4% and were flat overall for the company, so it was a disappointing quarter operationally.

Pro forma domestic radio revenues declined to $36.5 million from $37.7 million for the same period a year earlier. Foreign radio revenues rose to $3.3 million from $3.1 million. So, total radio revenues were $39.8 million, down from $40.8 million.

RBR-TVBR calculates that pro forma domestic radio station operating income declined 19% to $10.4 million from $12.8 million a year earlier.

Publishing revenues declined to $18.5 million from $19.5 million. For all of Emmis, pro forma revenues were basically flat at $59.3 million, managing a slight gain from a year earlier.

That $110 million of net earnings, or $2.90 per share, was largely due to the Merlin transaction and a series of transactions whereby Emmis bought back about 65% of its preferred stock at prices well below the face value.

As for why Emmis trailed its markets in US radio revenues, CEO Jeff Smulyan said there was “a dearth of young-end business,” which impacted its big young-skewing stations in New York and Los Angeles. Emmis execs told analysts and investors that September business was up 4%, but then October dropped 9% and November 1%. December was also weak, but they noted a return to growth in January and February.