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Smulyan delays Emmis buyout vote for 7th time

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For the seventh time, Emmis Communications CEO Jeff Smulyan delayed a vote on his plan to take the company private, this time by postponing a shareholders meeting scheduled for Thursday evening.

Instead, shareholders of the Indianapolis-based radio company will gather Friday morning at 8:30 to decide the fate of Smulyan’s $90 million buyout bid.

For weeks, Smulyan has failed to strike an deal with a group of preferred shareholders that also appeals to the liking of his financier, New York-based Alden Global Capital.

Smulyan announced Monday morning that Alden had backed out of an “agreement in principle” to sweeten the terms for the preferred shareholders. That move rendered the entire deal “unlikely” to happen, according to Smulyan’s own press release.

Emmis’ stock swooned on the news, falling by nearly 27 percent at one point Tuesday. The shares bounced back a bit Thursday to close at $1.59 apiece—which is still well shy of Smulyan’s offering price of $2.40 per share.

“Investors are betting against the deal being revived,” wrote Tom Taylor, news editor of the industry publication Radio-Info.com, on Tuesday. He noted that talks are ongoing but added, “It may be too late to save the deal.”

Smulyan and Alden agreed in April to take Emmis private. But in July, nine dissident investors emerged to block the deal. They collectively hold 38 percent of the preferred shares—more than enough to prevent Smulyan from securing the necessary two-thirds vote required to approve his plan.

The dissidents balked at Smulyan’s initial offer to convert their shares into bonds worth only 60 percent of the value of the shares, but paying an interest rate nearly double the 6.25 percent the shareholders currently enjoy.

Smulyan’s proposal also requires approval from the holders of a majority of Emmis shares, a threshold he already has the votes to meet.

Founded by Smulyan in 1981, Indianapolis-based Emmis owns 23 radio stations in the United States and publishes regional magazines in seven cities, including Indianapolis Monthly. It also operates radio stations in Slovakia and Bulgaria.

The company’s audience base has been trimmed by competition from satellite radio and iPods at the same time advertisers have funneled more dollars to websites and cable television channels.

Over the past four years, Emmis’ annual revenue has swooned by 33 percent, to $243 million. Over those four years, its continuing operations have wracked up losses of more than $430 million.

This is not the first time Smulyan—the company's controlling shareholder—has tried to take Emmis private.

Smulyan made an offer in May 2006 to acquire all the shares of Emmis for $15.25 per share in a deal that valued the company’s stock at $567 million. He called off the deal a few months later after he couldn’t reach terms with the board. The company later declared a special $4-per-share dividend.
 

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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