Emmis smacked with quarterly loss of $135M

Emmis Communications Corp. suffered a whopping loss of $135.6 million in its most recent fiscal quarter, the Indianapolis-based media company reported Friday morning.

Much of the loss was attributed to a $160.9 million impairment charge the company took related to the declining value of its Federal Communications Commission radio licenses.

The overall loss for the quarter ended Aug. 31 translated to $3.67 per share. The company had a gain of $1.2 million, or 3 cents per share, in the same quarter a year earlier.

Quarterly revenue of $68 million was down 27 percent from $93.7 million in the same period last year.

Radio revenue fell 26.5 percent to $53.4 million, and publishing revenue fell 30.6 percent to $20.9 million.

Financial woes are nothing new to Emmis as the media industry struggles amid a poor advertising environment. In the latest fiscal year ended Feb. 28, Emmis lost $283.9 million, or $7.81 per share.

The company did manage to report a profit in its first fiscal quarter in July, but only after buying back a big chunk of its own debt on the cheap. Revenue, however, dropped from $85.3 million to $62.4 million.

Emmis stock closed yesterday at 97 cents per share, below the $1-per-share threshold it needs to meet in order to avoid delisting on the NASDAQ exchange.

NASDAQ notified Emmis in late September that it is in danger of being delisted if the company’s stock doesn’t rise above the minimum bid price for 10 consecutive business days before March 15.

In addition to filing its quarterly results Friday, Emmis amended its most recent annual report for the fiscal year 2009, which ended Feb. 28, and its first quarter 2010 report for the period ended May 31. The company said it did so because it overstated the benefit for income taxes and understated deferred tax liabilities for those periods.

The revision changed Emmis’ 2009 annual loss from $283.9 million, or $7.81 per share, to $309.2 million, or $8.50 per share. The amended first-quarter report raised profit from $7.5 million to $12 million.

Emmis Chairman Jeff Smulyan said in a memo released to employees today that the company will survive the current economic challenges. He expects Emmis to avoid delisting by NASDAQ.

“I understand that merely being put on notice is unsettling, but I am confident that we have the time and means to avoid delisting,” Smulyan said in the memo. “Because the trigger for delisting is months away, we believe improvements in our business could drive our stock price up in time to prevent delisting.”

Emmis shares were down 5 cents in late afternoon trading, to 92 cents each.

Smulyan added that he sees “nothing to worry about” concerning the restatement of earnings.

“Certainly, restating our earnings sounds ominous, but our restatement solely relates to a non-cash technical tax issue that has no impact on our operations,” Smulyan said in the memo.

Smulyan cited “sequential improvements in [Emmis’] domestic radio performance,” as a bright spot during the most recently ended quarter.

“In Q1, we were down 27 percent from the previous year; in Q2, we were down 22 percent,” Smulyan said. “Still negative, but an improvement. And we see continued improvements ahead. In fact, we think that, within a few months, we could see our first positive numbers since April of 2008.”

Smulyan credited gains in Chicago, St, Louis, Indianapolis and Austin, where Emmis stations outperformed the market, as a reason for optimism. He singled out Indianapolis station WIBC-FM 93.1 as a strong performer.

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