Take Emmis private? Been there, done that (audio)


Now that Emmis has completed some major financial moves, selling three stations and buying back a lot of its preferred stock, the balance sheet is looking a lot better but the stock is still well under a buck. So, as the company reported its quarterly results, it was hardly surprising that one investor wanted to know if CEO Jeff Smulyan will try yet again to take the company private.

Smulyan agreed that the stock is undervalued, and he said Emmis management is working to boost the price on Wall Street. But even with the stock looking like a bargain, Smulyan doesn’t have the stomach to try yet again to execute a going private transaction.

Jeff Smulyan:

As you may recall, Smulyan’s second attempt to buy out the public shareholders of Emmis ended dramatically in August 2010 when Smulyan’s financial partner, Alden Global Capital, walked away from the deal to buy out public shareholders at $2.40 per share. That led to lots of litigation from all sides, which was finally resolved just recently.

If you go back even further, Smulyan tried to take Emmis private in 2006 at $15.25 per share – a price that seems incredibly high today with the stock trading lately below 80 cents. But that price met resistance from shareholders and the buyout was abandoned when Smulyan failed to win enough support even after talks to sweeten the deal.

After two failed attempts at going private, Smulyan was understandably reluctant to go down that road for yet a third time.

Of more immediate concern, Emmis faces a deadline next month from Nasdaq to get its stock price back above a dollar or face potential delisting. Back when the notice was issued at the end of August, Smulyan noted that it came just a day before the sale of three stations to Merlin Media improved the Emmis balance sheet, so he was confident that the stock price would get back above a buck before the February 27 deadline. That has not happened, though, and the deadline is now rapidly approaching. If Emmis doesn’t succeed in having its stock price close above a dollar for 10 consecutive sessions by the deadline it can appeal any delisting determination by the Nasdaq staff to a Listing Qualifications Panel.

RBR-TVBR observation: A third attempt at going private? It would be easier and less costly for Jeff to just buy a baseball bat and hit himself in the head. Come to think of it, it might even be less painful!