cschultz test: Challenges remain for Emmis despite NASDAQ save

Emmis Communications Corp. shares closed about $1 for the 10th consecutive day on Monday, saving the firm’s listing on the NASDAQ exchange, but big challenges remain for the locally based owner of radio stations and magazines.

Investors bid up the company’s shares to $1.53 on Monday, a more than 600 percent gain from a low of 25 cents in July. The move i thanks in large part to a sense that the worst is over for the radio business; shares of every publicly traded radio owner have rallied in recent months.

Last month NASDAQ warned Emmis it would be delisted from the exchange if the company’s stock didn’t rise about the $1 minimum for 10 days in a row; March 15 was the deadline.

Weather or not the company keeps its listing is irrelevant, said Frank K. Martin, senior partner at Elkhart-based Martin Capital Management LLP and an owner of Emmis shares.

"Worst case, it’s purgatory," he said. "But it’s purgatory on to the extent it can be reversed."

The rebound began on Oct. 13, when shares closed at $1.14, up 24 cents from the day before. Prior to that, the stock hadn’t closed above $1 in more than a year.

Emmis and many other broadcasters have been weighed down by heavy debt, falling advertising revenue and the perception that radio is a bygone medium.

But several radio posted double-digit percentage gains in their stock prices through the first two quarters of the year. And broadcasters are hoping to get an additional boost from the installation of FM receivers in Apple ipod.

"Survival was in doubt just a few months ago, and while it’s still in doubt people are in a rosier disposition and less likely to think about doomsday outcomes." Martin said. "The facts haven’t changed but perceptions have."

Emmis’ quarterly revenue of $68 million in the second quarter was down 27 percent, from $93.7 million in the same period a year ago.

Wells Fargo analyst Marci Ryvicker, who follows Emmis, wrote in a report this month that September revenue, which will be reported in the company’s fiscal third-quarter results, was better than August’s. And October was looking heathier than September, she said, which is having a positive impact on Emmis stock.

"Comments from Emmis management confirm what we have been hearing from other large and small market groups-trends continue to improve month to month," Ryvicker wrote.

Emmis operates local radio stations WIBC-FM 93.1, WLHK-FM 97.1. WYXB-FM 105.7 and WFNI-AM 1070.

NASDQA suspended its minimum-stock-price requirement rule last fall after financial markets tanked, but reinstated the rule Aug. 3.

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