Posted by chicagomedia.org on July 11, 2008 at 09:29:05:
Emmis Cuts Q1 Losses As N.Y., L.A. Improve
Emmis Communications said Thursday (July 10) that it reduced its fiscal first quarter loss to $1.1 million, or 3 cents a share, a reduction from the $1.9 million hit, or a nickel a share, it reported for the three-month period ending May 31, 2007. But revenue was off slightly, by .04% to $86.8 million. Analysts had expected a loss of 4 cents on revenue of $86.8 million, but a sharper internal cost monitoring campaign inside the Indianapolis-based multimedia company held down costs.
In fact, just after the quarter ended, Emmis folded its three-year magazine venture, Tu Ciudad Los Angeles, noting that the magazine's financial performance did not meet the company's expectations. Emmis expects to take a second-quarter charge of $1.1 million for severance and other costs related to the closing.
But in a morning conference call for Wall Street analysts and shareholders where company employees were encouraged to listen in via the company Web site or by using a toll-free number, Emmis co-founder, chairman and CEO Jeff Smulyan was optimistic that recent company innovations had started a trend that would trickle down positive changes within the radio industry.
"This has been a very interesting quarter. It's actually a very good quarter for us. Very good station opperating income and growth as a result of better-than-expected revenues as well as significant cost controls,� Smulyan said enthusiastically. �We have now caught, and by most metrics, beat our markets. We are very encouraged about that because it is the result of some significant initiatives, especially in our three largest radio stations. Kiss in New York, Hot 97 in New York and Power 106 in Los Angeles had an exceptional quarter, all significantly beating their markets. I think that is probably the most important thing.�
Overall, Smulyan reported that Emmis was experiencing �good trends� in New York and Los Angeles, in its Austin cluster, in St. Louis, and �very encouraging with turn-around signs in Indianapolis.� He added, �We're seeing the innovation of this company starting to take off.� He pointed to �the innovations throughout Emmis -- Emmis Interactive,� adding that his company's interactive development is the �hallmark of how our industry approaches the interactive experience.� He also used the forum to congratulate Emmis staffers and bolster industry-wide participation in the newly formed Broadcasters Traffic Consortium which he characterized as �the most significant new development in monetizing our new, digital spectrum.�
He added, "Throughout the company, I am encouraged by our sense on innovation.� He also said he was "most encouraged" by the progress that had been made to include radio receivers in cellphones.
"I believe that radio, with its ability to reach now 260 million Americans each week, has the ability to reinvent itself. And I believe as that occurs, the people at Emmis will lead the way. It's a challenging time, not only in media, but obviously in the entire economy. But when times are tough, great people work hard....�
But then there are always some ugly numbers that seem to hit investors in the face with a dose of reality. Emmis CFO Patrick Walsh agreed with Smulyan that two of the operation's Big Apple stations -- Hot 97 and Kiss -- "helped off-set, to some degree� the losses from WRXP, the longtime smooth jazz outlet reformatted in February as �101.9, the Rock Experience� that is currently draining revenues. Overall, New York market revenues were down 2%, acknowledged Walsh, but despite great revenue gains at two stations, together, all three Emmis Gotham stations were down 8%. But he said there was better news on the opposite side of the nation where "our Los Angles cluster fueled our performance as our two stations posted revenue down 3% compared to the L.A. market being off 6%.�
Both Smulyan and Walsh are optimistic about the company's stations gaining stronger ratings in the latter part of the spring book which they hope will fuel stronger sales later in the year.
CL King & Associates senior analyst Jim Boyle asked Smulyan, �In an era of potential long-term lower multiples, would Emmis consider seriously selling an individual asset at a lower than historical multiple, but a good multiple in these much lowered times?�
Responded Smulyan, �I don't think anybody who sits in this chair is going to preclude any option. I don't know how I can say it anymore strongly than that. I think you look at all of your options and in a world that is changing so much, clearly, clearly we would.�
The reaction by shareholders to Emmis' fiscal results has been grim so far. Shares of EMMS were down 13.5% in lunchtime trading, off by 27 cents to $1.73, moving closer to the 52-week low of $1.655 a share and a long way from the 52-week high of $9.49 a share. By 1 p.m. EDT, some 270,434 shares of Emmis had traded, just under the 30-day average of 288,000 shares traded.
(R&R)