UPDATE: Emmis postpones buyout decision

Emmis Communications Corp. on Tuesday postponed a decision on CEO Jeff Smulyan's bid to take the company private, saying
it did not receive enough votes from shareholders—either in person or by proxy—to reach a quorum.

The Indianapolis-based radio and magazine company will convene another shareholders' meeting at 6:30 p.m. Friday.

Securities and Exchange Commission rules prohibit executives from saying how many more votes are needed, but only five shareholders
were present at the meeting Tuesday evening at Emmis' Monument Circle headquarters.

Smulyan did not attend the meeting. Emmis executives declined to say why he was not present but said a forthcoming press
release would explain his absence.

Details were not immediately available, but Indianapolis attorney Jim Strain said the $2.40-per-share offer Smulyan announced
in April could be revised by Wednesday morning. The tender offer for common shares expired Tuesday at 5 p.m.

“We’re not in a position to tell what the status of the offer is,” said Strain, who represents Emmis. “An
announcement has to be made before the market opens tomorrow. We don’t know what that offer will be.”

Strain said Emmis executives are limited in what they can divulge because of SEC rules. He declined to speculate on whether
the deal is in trouble.

Smulyan, through his JS Acquisition Inc. and New York private equity firm Alden Global Capital, had offered $2.40 per share,
a bid that valued the company at about $90 million. Emmis stock closed Tuesday at $1.60.

Observers said the recent stock slide sent a signal that investors were skeptical the deal would go through.

“Somebody’s concerned that the deal’s not going to happen,” said Mark Foster, chief investment officer
at Kirr Marbach & Co. in Columbus, Ind., which does not own any Emmis shares.

Smulyan’s buyout bid has been threatened by shareholder lawsuits since just days after he announced his plans in April.
But the biggest cloud came last month when eight firms that hold Emmis’ preferred stock banded together to block the
deal. Collectively they hold 34 percent of Emmis’ preferred shares.

That’s enough to prevent Smulyan from winning two-thirds approval from preferred shareholders to convert their shares
into bonds—at 60 cents on the dollar—in exchange for the attractive interest rate of 12 percent. That conversion,
in addition to approval by a majority of Emmis' common shareholders, is necessary to allow the buyout to go through.

Jeffrey Meltzer, a local shareholder who said his Emmis stock is valued in the “six figures,” was one of the
few shareholders to attend the meeting.

He said he hasn’t tendered his common shares yet because the sale hinges on the actions of preferred shareholders.

“I was just curious to see how it panned out,” he said of his decision to attend the meeting. “I suspected
it wasn’t going to be a simple process.”

Meltzer said he thought the tender offer could have been higher but is not “disappointed” in the bid.

Founded by Smulyan in 1981, 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 the increasing number of websites and cable television channels.

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

That performance has caused Emmis’ share price to plunge since the last time Smulyan tried to take the company private
in May 2006. At that time, Smulyan’s buyout group offered $15.25 per common share, but could not come to terms with
the company’s board of directors.

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