New York-based Arnhold and S. Bleichroeder Advisers LLC made the request to directors Peter Lund and Susan Bayh, the wife of U.S. Sen. Evan Bayh, and issued the letter as a news release.
Arnhold and S. Bleichroeder said directors of the media company would not be in a conflict of interest if they allowed Chairman Jeff Smulyan to make an offer and then allow the matter to be decided by shareholders without the shareholders receiving a board recommendation. Smulyan could fund a buyout through an asset sale so long as investors received a "substantial premium" to the current stock price of approximately $5 a share, the investor said.
Such a scenario presumes that shareholders could not receive greater value by liquidating the assets or selling Emmis to a third party, Arnhold and S. Bleichroeder said.
Last year, a board committee rebuffed a Smulyan offer of as much as $16.80 a share to buy the company because it was deemed too low. Considering a $4-per-share cash dividend the company issued in November, the offer would be equivalent to $12.80 today.
In a conference call with analysts this May, Smulyan said he would reconsider taking the company private "from time to time," but he stopped short of discussing rumors that he might soon take another stab at it.
Arnhold and S. Bleichroeder isn't the first investor to call for drastic action. Elkhart-based Martin Capital Management has been pressing Emmis to spin off assets and to cut Smulyan's influence over the company. A special class of stock gives Smulyan 60 percent of the company's voting power.
Emmis shares, now trading just above $5, were worth $23 in 2005-the result, Emmis has said, of a difficult radio market.
The company, headquartered on Monument Circle, owns 28 radio stations and eight magazines. It has sold all but one of its televisions stations.