Tough quarter for Emmis


Domestic radio revenues fell 20.8% for Emmis Communications in the final quarter of its fiscal year, which ended February 28th. As if that’s not bad enough, the company says pacings for the current quarter are worse.

Emmis discontinued quarterly earnings conference calls, but has filed preliminary results for the quarter (December-February) and fiscal year with the SEC. The company said it expects to file its Form 10-K on or about May 14th.

Fiscal Q4 net revenues dropped 19.8% to $68.5 million. Domestic radio revenues were down 20.8% to $38.7 million. International radio revenues declined 6.5% to $12.5 million. And publishing revenues dropped 25.5% to $17.4 million.

Emmis noted that its contract with its national rep, Katz, provided a guarantee of minimum national sales. Emmis accrued $4 million in Q4 under that guarantee, up from $3.7 million a year earlier. The guarantee ended February 28th, so Emmis will not accrue any payments under the Katz guarantee in the current quarter.

Broadcast cash flow (BCF), as calculated by RBR/TVBR (net revenues minus operating expenses excluding depreciation and amortization), fell 61.3% for Emmis in fiscal Q4 to $7.1 million. Domestic radio BCF plunged 56.6% to $5.6 million and international radio BCF was down 33.1% to $3.5 million. For the publishing division, expenses exceeded revenues, so BCF was a negative $981,000, compared to a positive $2.5 million a year earlier.

Emmis had this to say about the current fiscal Q1: “The advertising environment remains incredibly challenging, particularly for traditional media like radio broadcasting and publishing. Our domestic radio revenues in March finished down 26% as compared to same period of the prior year. As of April 10, 2009, our domestic radio revenues for April were pacing down 32% and for May were pacing down 37%. Pacing information for the month of March strengthened throughout the month as advertising is generally being purchased by our clients much later in the current year than it was purchased in the prior year. Our publishing business is seeing trends similar to our domestic radio business. Our international radio division is expecting first quarter revenues on a percentage basis to be down high-teens in local currency, but the strengthening of the US dollar will adversely impact results.”

Emmis disclosed in the SEC filing that it has retained Blackstone Advisory Services LP to provide financial advisory services as the company explores a possible amendment to its credit facility or a possible restructuring of certain of its liabilities.

Another interesting note: Emmis signed a deal in February to sell its corporate aircraft for $9.1 million. That sale is expected to close this week.

Emmis reported that it borrowed $71.2 million under its revolving credit facility on April 10th. With that, the company had tapped the entire $75 million available from the revolver under an amended and restated agreement with its banks dated March 3rd.

RBR/TVBR observation: Other radio companies not so heavily concentrated in the very largest markets may not be quite so hard hit, but calendar year 2009 has started out pretty dismally by all reports. What’s yet to be seen is what it will take to hold on until a recovery begins – and just when that will be.