Emmis reports a little improvement


Emmis Communications reported more negative revenue numbers for its fiscal Q3 (September-November), but the shortfall shrank a bit. CEO Jeff Smulyan says a return to positive numbers is near.

For the quarter, radio net revenues declined 19% to $56.4 million and publishing revenues were off 17.2% to $22.9 million. That brought net revenues for the entire company in at $79.2 million, down 18.5% from a year earlier.

According to analysis of the 10-Q filing with the SEC (Emmis did not hold a conference call or issue a financial press release) by Wells Fargo Securities analyst Marci Ryvicker, domestic radio revenues were down 18%, while foreign fell 22%. Domestic radio EBITDA was down 19% and foreign 34%.

“It sounds like the NYC and LA markets have continued to improve.  In the fiscal first half, the NYC market was -21% and for the nine-month period ended November 31st, the market was -17%.  In the fiscal first half, the LA market was -26% and for the nine-month period ended November 31st, the market was -22%,” Ryvicker noted.

“While average unit rate seems to have improved slightly, the declines are still significant. Average unit rate was -30% in the fiscal first half and -27% for the nine months ended November 31st. Sell-out also improved, at -2% in the fiscal first half vs. -0.4% for the nine months ending November 31,” the analyst said in a note to clients.

In an email to employees, also provided to RBR-TVBR, Emmis CEO Jeff Smulyan was upbeat about the recovering advertising business.

“First of all, we continue to see sequential improvements in Emmis’ domestic radio results and our advances accelerated during the recent holiday season. What’s driving this? Mostly your hard work and the increasing confidence we see in the marketplace. We made a number of important investments during the third quarter including: Austin Radio launching a new Regional Mexican format and enhancing KGSR and KLBJ-AM’s coverage, successful marketing efforts to bolster key radio brands in New York and Los Angeles, and a strategy initiative in our Publishing Division focused on accelerating revenue growth during the upcoming recovery.  These steps should help us in the future as our business rebounds,” Smulyan wrote.

“As in the last quarter, we are behind year-to-year, but we’re seeing improvements. In Q2, we were down 22 percent from the previous year; in Q3 we reduced that lag to 18 percent. We are projecting that our first positive numbers since April 2008 are just a month or two away – and could possibly hit our books this month,” said Smulyan.

As you would expect, the CEO also addressed the company’s legal battle in Hungary.

“On the international front, we’ve seen an interesting development, and also made a change. First of all, as you’ll recall, last month we began folding our international division into our domestic operations. That process continues. On another international matter, as many of you know, we are trying to get back our Hungarian radio license, one of two we believe were taken illegally from non-Hungarian owners. A few days ago, a Hungarian court essentially agreed with our position in a case involving the other contested frequency. It’s not clear what the ruling means in practical terms, but it’s certainly good news for us. Our case is set for hearing January 19. We’ll keep you posted as this continues to develop,” Smulyan told the troops.

To wrap up, here is the overview of Emmis’ quarterly results from Ryvicker at Wells Fargo:

“EMMS results this morning confirm that large market radio continues to improve.  Based on our analysis of EMMS’ results over the past few quarters, FQ3 (Sept, Oct, Nov) is the first time organic demand is driving the sequential improvement rather than easing comps. Clearly ad rates are still an issue but are on the right trajectory. We view today’s data as a positive for CBS, which reports Q4 results Feb 18th.”

RBR-TVBR observation: Another indication that things are moving in the right direction. The quarter reported by Emmis ended with November, but we’ve been seeing indications from Clear Channel in radio and from some TV companies that business really picked up in December. That would be in line with Smulyan’s indication that Emmis is now on the verge of having an up month.