IBJNews

Emmis surges as industry anticipates radio sale

Back to TopCommentsE-mailPrintBookmark and Share

The rocket ride taken by shares of Emmis Communications Corp.’s stock on Wednesday and Thursday has industry insiders buzzing that the company may be close to selling off some of its radio stations.

Emmis’ share price soared 42 percent on Wednesday, a day after the company reported improving revenue and reiterated that it is “actively pursuing” sales of its assets. The stock closed the day at $1.22 per share. It gained another 13 percent on Thursday, closing at $1.38.

But for many months Emmis has been saying it is shopping its radio stations.

“We are in discussions,” Emmis CEO Jeff Smulyan wrote in an e-mail Thursday morning, “but it is impossible to say that anything is imminent.”

Still, investors parsing the legalese in Emmis’ quarterly filing with the Securities and Exchange Commission this week may have perceived a bit more urgency from the company.

The company said it has enough cash to get through the end of February, but made no promises for after that. It also disclosed that on Sept. 1, Emmis' debt obligations will be more restrictive, further pinching company finances.

“Absent asset sales, which the company is actively pursuing, the company believes it is unlikely it will be able to maintain compliance with the financial covenants after Sept. 1, 2011,” Emmis attorneys wrote in the regulatory filing. Failure to comply would put Emmis in default on its $345 million of senior bank debt, causing it to come due more rapidly.

Emmis’ debt levels are staggering for a company pulling in roughly $240 million a year in revenue. Through the first nine months of its current fiscal year, which ends Feb. 28, Emmis earned a profit from its operations of $24 million. After a 27-percent decline in radio revenue the previous year, Emmis has enjoyed a 4-percent rise so far this fiscal year.

Emmis has identified three radio stations that are for sale. It reportedly asked for $100 million for rock station WRXP-FM in New York and the same amount for a pair of stations in Chicago: WLUP-FM and WKQX-FM.

A sale “would really help them, because it’s bleeding the company,” said Art Vuolo, a radio industry veteran who now runs Michigan-based Vuolo Video. “The stations, they cost so much, the talent costs so much. It costs a lot of money to operate one of these radio stations in these really big markets.”

Tom Taylor, who writes a daily radio industry newsletter called Taylor on Radio-Info, speculated that The Walt Disney Co. is one of the potential buyers for the New York station.

“We know that Disney would give a Mouse ear to have an FM signal in New York to put ESPN Radio on,” Taylor wrote, referring to Disney-owned ESPN’s current New York presence on an AM station with a weaker signal. “We know it’s talked with Jeff Smulyan. This TRI Newsletter told you late year that Jeff wanted $100 million for his underperforming New York FM ... Now we hear that Smulyan and Disney got closer together on price. It could be that the September 1 deadline for 'more restrictive' covenants is driving Jeff to bargain even harder.”

But Taylor also took the stock run-up—which includes trading volume 12 times as high as normal—with a grain of salt.

“Or on the other hand, maybe this is all wishful thinking by the market,” he wrote.

Emmis would have had no problems selling these stations—if the credit markets hadn’t blown up two years ago and remained tight, said Robert Unmacht, a partner at iN3 Partners, a Tennessee-based investment banking consultancy focused on radio.

“If credit were easy, there would be plenty of buyers,” he said of Emmis’ New York and Chicago stations, adding, “They definitely would be of interest to others because they’re in markets where everybody wants to be.”

Last year, Emmis negotiated a lease-to-buy deal for one of its Los Angeles stations to Mexico's Grupo Radio Centro for $110 million.

It still has one station in Los Angeles. And it would keep two stations in New York, even if it sold WXRP. Emmis also owns radio stations in Indianapolis, St. Louis and Austin, Texas. And it runs a publishing division, which prints such magazines as Indianapolis Monthly, Texas Monthly and Country Sampler.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Here are a few candidates for this new group, "ripped from the headlines." First up, that bizzaro State Senator Brent Waltz; secondly, the unethical Todd Huston, and his contractual arrangements scheme; Finally, but not least of all, the dishonorable Eric Turner. What sayeth you Greg Zoeller?

  2. Good day. I can't hide this great testimony that take place in my life I will love everyone to know it and be partaker that is why I always place it on answer, I am Mrs,Natalie Cuttaia by name, I live in Texas, United State Of America, I want to thank (Mr.Bruce Brandon) for his kindness upon my family life. I never knew that there is still nice lender like this on internet and earth here. Just some Months Back, I was in search for a loan of $100,000,00 as I was running out of money for feeding and rent. I was scammed $6,800 Dollars and I decided not to involve my self in such business again but a Friend of my introduced me to a loan firm due to my appearance and doings. And I told him that I am not interested of any loan deal anymore but he told me that there is still a nice lender who he will recommend me to, and I made a trial and I am most grateful lucky am I today, I was given a loan amount of $100,000.00usd, by this great Company (Bruce Brandon Loan Company) managed by (Mr.Bruce Brandon) If you are in need of a genuine or legit loan or financial assistance and you can be reliable and trusted of capable of paying back at the due time of the funds I will advice you to, contact him via: ( bruce.brandon071@gmail.com ) And you will be free from scams in the internet. All thanks to Mr.Bruce Brandon You are the one who remove me and my family out of poverty. The reason why i am doing this is that, i promise Mr.Bruce Brandon that if i truly got my loan, i will advertize his company and bring customers to his company. Contact him via ( bruce.brandon071@gmail.com )for the Loan you have been looking for..

  3. Hello, We are firm Organization formed to help people in needs of helps,such as financial help. So if you are going through financial difficulty or you are in any financial mess,and you need funds to start up your own business,or you need loan to settle your debt or pay off your bills,start a nice business, or you are finding it hard to obtain capital loan from local banks,contact us today via email mrsroseberrywilkinsfunds.usa@gmail.com So do not let these opportunity pass you by because Jesus is the same yesterday, today and forever more. Please these is for serious minded and God fearing People. Your Name: Loan Amount: Loan Duration: Valid Cell Phone Number: Thanks for your understanding to your contact as we Await Regards Management Email:mrsroseberrywilkinsfunds.usa@gmail.com

  4. The question is, where could they build a new stadium? It seems in the past year, all the prime spots have been spoken for with potential projects. Maybe in the industrial wasteland area a block past Lucas Oil? I think it needs to be close to the core, if a new stadium is built.

  5. Aldi is generally a great shopping experience. Still, I'm sure YOU wouldn't want to shop there, which I consider a positive.

ADVERTISEMENT