Emmis Communications Reports 3rd Quarter Results

Emmis Communications Reports 3rd Quarter Results

INDIANAPOLIS, Jan. 9 /PRNewswire-FirstCall/ -- Emmis Communications Corporation (NASDAQ:EMMS) today announced results for its third fiscal quarter ended Nov. 30, 2007.

"Along with everyone in the radio business, we face unprecedented challenges, particularly in our largest radio markets," Emmis Chairman and CEO Jeff Smulyan said. "However, in the third quarter we closed the gap between our performance and that of our markets. Excluding KMVN in Los Angeles, we actually outperformed our markets. Coupled with a continued strong showing in our international stations and publishing operations, I'm hopeful about the new year."

For the third fiscal quarter, net revenue was $91.7 million, compared to $91.2 million for the same quarter of the prior year.

Diluted net loss per common share from continuing operations was ($0.22), compared to ($0.09) for the same quarter of the prior year.

For the third quarter, radio net revenues decreased 3.2%, while pro forma publishing net revenues were up 4.6%. Domestic radio net revenues decreased 7.0% during the quarter, primarily as a result of continuing weakness in the Company's New York and Los Angeles clusters.

On Oct. 1, Emmis terminated its existing national sales representation agreement with Interep National Radio Sales, Inc. and entered into a new agreement with Katz Communications, Inc. extending through March 2018.

For the third quarter, operating income was $2.0 million, compared to $17.6 million for the same quarter of the prior year. The decrease is attributable principally to a one-time contract termination fee associated with the Company's change in national representative firms. The termination fee was paid by our new national representation firm and was a non-cash charge for Emmis. Emmis' station operating income for the third quarter was $26.2 million, compared to $30.2 million for the same quarter of the prior year.

Emmis has included supplemental pro forma net revenues, station operating expenses, and certain other financial data on its website, http://www.emmis.com/ under the "Investors" tab.

International radio net revenues and station operating expenses for the quarter ended Nov. 30, 2007 were $9.0 million and $6.4 million, respectively. International radio net revenues increased 30% in the quarter as net revenues jumped in each of our international markets.

Subsequent to quarter end, Emmis announced its acquisition of Inforadio, a national radio chain broadcasting in 13 Bulgarian cities, for $8.8 million. Inforadio is Emmis' third national radio brand in Bulgaria; the company also operates Radio FM+ and Radio Fresh.

The following table reconciles reported results to pro forma results (dollars in thousands):

3 months ended 9 months ending
Nov. 30, % Nov. 30, %
2007 2006 Change 2007 2006 Change
Radio
Reported net
revenues $64,564 $66,704 -3% $203,980 $214,630 -5%
Plus: Revenues
from assets
acquired - - - -
Pro forma net
revenues $64,564 $66,704 -3% $203,980 $214,630 -5%

Publishing
Reported net
revenues $27,149 $24,501 11% $71,395 $66,271 8%
Plus: Revenues
from assets
acquired - 1,442 2,774 3,982
Pro forma net
revenues $27,149 $25,943 5% $74,169 $70,253 6%

Total Company
Reported net
revenues $91,713 $91,205 1% $275,375 $280,901 -2%
Plus: Revenues
from assets
acquired - 1,442 2,774 3,982
Pro forma net
revenues $91,713 $92,647 -1% $278,149 $284,883 -2%

On a pro forma basis, the Company expects its radio net revenues for its quarter ending Feb. 29, 2008 to be in line with revenues in the prior year, inclusive of domestic and international radio operations and certain national revenue guarantees in the Company's new national sales representation agreement. The Company is not able to reasonably estimate the exact amount, if any, of the national revenue guarantees at this time. On a pro forma basis, the Company expects its radio station operating expenses to increase in the low single digits.

Emmis will host a call regarding this information on Wednesday, Jan. 9 at 9 a.m. Eastern at 1.517.623.4891, with a replay available through Wednesday, Jan. 16 at 1.203.369.3135. Listen online at http://www.emmis.com/.

Emmis generally evaluates the performance of its operating entities based on station operating income. Management believes that station operating income is useful to investors because it provides a meaningful comparison of operating performance between companies in the industry and serves as an indicator of the market value of a group of stations or publishing entities. Station operating income is generally recognized by the broadcast and publishing industries as a measure of performance and is used by analysts who report on the performance of broadcasting and publishing groups. Station operating income does not take into account Emmis' debt service requirements and other commitments, and, accordingly, station operating income is not necessarily indicative of amounts that may be available for dividends, reinvestment in Emmis' business or other discretionary uses.

Station operating income is not a measure of liquidity or of performance, in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to, and not a substitute for, our results of operations presented on the basis of accounting principles generally accepted in the United States. Moreover, station operating income is not a standardized measure and may be calculated in a number of ways. Emmis defines station operating income as revenues net of agency commissions and station operating expenses, excluding non-cash compensation.

Emmis Communications -- Great Media, Great People, Great Service(R)

Emmis is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 21 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago, as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. In May 2005, Emmis announced its intent to seek strategic alternatives for its 16 television stations, and has since sold 15 of them. Emmis also owns a radio network, international radio stations, regional and specialty magazines, an interactive business and ancillary businesses in broadcast sales.

The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission's Regulation FD.

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words "expect," "will" or "look" are intended to be, and are, by this Note, identified as "forward- looking statements," as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

-- general economic and business conditions;
-- fluctuations in the demand for advertising and demand for different
types of advertising media;
-- our ability to service our outstanding debt;
-- increased competition in our markets and the broadcasting industry;
-- our ability to attract and secure programming, on-air talent, writers
and photographers;
-- inability to obtain (or to obtain timely) necessary approvals for
purchase or sale transactions or to complete the transactions for other
reasons generally beyond our control;
-- increases in the costs of programming, including on-air talent;
-- inability to grow through suitable acquisitions;
-- changes in audience measurement systems
-- new or changing regulations of the Federal Communications Commission or
other governmental agencies;
-- competition from new or different technologies;
-- war, terrorist acts or political instability; and
-- other factors mentioned in documents filed by the Company with the
Securities and Exchange Commission.

Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited, dollars in thousands, except per share data)

Three months ended Nine months ended
November 30, November 30,

2007 2006 2007 2006
OPERATING DATA:
Net revenues:
Radio $64,564 $66,704 $203,980 $214,630
Publishing 27,149 24,501 71,395 66,271
Total net revenues 91,713 91,205 275,375 280,901
Operating expenses:
Radio 44,057 41,665 140,417 133,246
Publishing 22,074 20,189 61,567 58,627
Total station operating
expenses 66,131 61,854 201,984 191,873
Noncash contract termination fee 15,252 - 15,252 -
Corporate expenses 4,872 8,339 16,921 23,308
Depreciation and amortization 3,702 3,417 10,801 9,915
(Gain) loss on disposal of
assets (198) 2 (104) 5

Operating income 1,954 17,593 30,521 55,800
Interest expense (8,692) (9,505) (26,678) (33,621)
Loss on debt extinguishment (a) - (10,023) - (13,403)
Other income, net 217 1,885 442 2,670

Income (loss) before income
taxes, minority
interest and discontinued
operations (6,521) (50) 4,285 11,446
Provision (benefit) for income
taxes (2,237) 504 3,126 5,148
Minority interest expense, net
of tax 1,253 654 3,774 3,376

Income (loss) from continuing
operations (5,537) (1,208) (2,615) 2,922
Income from discontinued
operations, net of tax 5,641 4,400 17,086 121,330
Net income 104 3,192 14,471 124,252
Preferred stock dividends 2,246 2,246 6,738 6,738
Net income (loss) available to
common shareholders $(2,142) $946 $7,733 $117,514

Basic net income (loss) per
common share:
Continuing operations $(0.22) $(0.09) $(0.25) $(0.10)
Discontinued operations, net
of tax 0.16 0.12 0.46 3.26
Net income available to
common shareholders $(0.06) $0.03 $0.21 $3.16

Diluted net income (loss) per
common share:
Continuing operations $(0.22) $(0.09) $(0.25) $(0.10)
Discontinued operations, net
of tax 0.16 0.12 0.46 3.26
Net income available to
common shareholders $(0.06) $0.03 $0.21 $3.16

Weighted average shares
outstanding:
Basic 35,558 37,290 36,885 37,214
Diluted 35,558 37,290 36,885 37,214

(a) Reflects costs of our senior floating rate notes and senior discount
notes redemptions and costs associated with permanent paydowns of our
senior credit facility.

OTHER DATA:
Station operating income (See
below) 26,158 30,154 75,720 91,797
Cash paid for taxes 174 5,414 2,508 5,988
Cash paid for interest 8,754 14,566 20,776 39,323
Capital expenditures 977 1,149 3,902 2,306

Noncash compensation by segment:
Radio $385 $600 $1,586 $1,946
Publishing 191 203 743 823
Corporate 1,112 1,150 3,216 3,715
Total $1,688 $1,953 $5,545 $6,484

COMPUTATION OF STATION OPERATING
INCOME:
Operating income (loss) $1,954 $17,593 $30,521 $55,800
Plus: Depreciation and
amortization 3,702 3,417 10,801 9,915
Plus: Corporate expenses 4,872 8,339 16,921 23,308
Plus: Station noncash
compensation 576 803 2,329 2,769
Plus: Noncash contract
termination fee 15,252 - 15,252 -
Plus: (Gain) loss on disposal
of assets (198) 2 (104) 5
Station operating income $26,158 $30,154 $75,720 $91,797

SELECTED BALANCE SHEET November February
INFORMATION: 30, 2007 28, 2007

Total Cash and Cash Equivalents $25,392 $20,747
Senior Debt $448,793 $498,000

First Call Analyst:
FCMN Contact:
Web site:

http://www.emmis.com

Source: Emmis Communications Corporation

CONTACT: Patrick Walsh, CFO, or Kate Snedeker, Media & Investor
Relations, +1-317-266-0100, both of Emmis Communications Corporation

NOTE TO EDITORS: A conference call regarding this earnings release is scheduled for 9 a.m. Eastern, Wednesday, Jan. 9, 2008. Dial in at 1.517.623.4891 or listen online at http://www.emmis.com

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