Emmis Communications Corp. shareholders on Thursday voted to approve a one-for-four reverse stock split that is aimed at avoiding a delisting of the stock by Nasdaq.
The Indianapolis-based media company also announced a higher profit in its latest quarter despite a small decline in overall revenue.
Emmis has long been out of compliance with the Nasdaq exchange’s rule requiring shares trade for at least $1 each. The last time Emmis shares met that threshold was Oct. 22, when the stock closed at $1 per share.
The reverse stock split, which takes effect Friday, will reduce the number of Emmis shares from more than 47 million to fewer than 12 million. At Thursday morning’s price of 79 cents per share, the 4-to-1 split would boost the price to $3.16 each.
Emmis received a letter from Nasdaq in December notifying the company that its stock had closed below the exchange’s minimum $1-per-share requirement for 30 straight business days.
Nasdaq rules gave Emmis 180 days, or until June 6, to get back in compliance. To do so, Emmis stock needed to close higher than $1 per share for 10 straight business days before the end of the 180-day period.
Emmis, however, avoided a decision on the delisting by requesting a hearing with the exchange in June and presenting its plan to perform the reverse stock split. Nasdaq must still decide whether the move is enough to keep Emmis in compliance.
Without its Nasdaq listing, Emmis shares would be relegated to penny-stock status on the over-the-counter bulletin board or on the pink sheets. Once that happens, shares are harder for investors to buy and sell.
The situation isn't a new one for the company. Emmis has averted a delisting three times in the last six years. The company was warned about possible delistings in November 2010 and in October 2009, but its stock rebounded both times.
Meanwhile, Emmis said Thursday that it turned a profit of nearly $2.7 million, or 6 cents per share, in the fiscal first quarter ended May 31. That’s an improvement from $1.5 million, or 4 cents per share, in the same period of the previous year.
Overall revenue dropped from $58.5 million to $56 million, but radio revenue ticked up from $42.6 million to $42.7 million.
Emmis said radio revenue would have risen 5 percent except for the negative performance of its Los Angeles radio station, which has struggled since losing radio personality Kurt “Big Boy”Alexander to a competitor.
That was partially offset by an 11 percent increase in revenue at Emmis’ New York stations.
Emmis owns 19 FM and four AM radio stations in New York, Los Angeles, St. Louis, Indianapolis, Terre Haute and Austin, Texas.
"Compared to last year, Emmis' ratings are up across our portfolio, and we are optimistic this will help drive revenue growth in the second half of the fiscal year,” Emmis CEO Jeff Smulyan said in a written statement.
Publishing revenue fell 16 percent in the quarter, to $13.1 million, Emmis said, “partially due to the timing of certain custom publications that ran in the first quarter of the prior fiscal year, but will run later in the current fiscal year.”
Emmis publishes magazines in Atlanta, Cincinnati, Indianapolis, Los Angeles, the Orange Coast, and Texas.