Emmis Shares Sink As Revenue for Quarter Sags
By Erika D. Smith, The Indianapolis Star
May 12–Revenue declines in Los Angeles and New York left Emmis Communications Corp. with another “challenging” quarter as the company continued to lose money on day-to-day operations.
Its stock fell as much as 8 percent Friday, before closing at $9.83 per share, down 4.1 percent, or 42 cents.
Jeff Smulyan, chief executive of the Indianapolis-based radio operator, said he’s confident innovation and investment in new initiatives, such as Emmis Interactive and Google AdSense for Audio, will lead to “better days.”
For the time being, though, Emmis will continue to struggle in the two radio markets that comprise the largest portion of its revenue.
“The proof is in the pudding,” Smulyan said. “The pudding doesn’t look very good this year.”
In the fourth quarter, the company lost $10.5 million. In New York alone, ad sales were down 20 percent.
Losses after paying preferred dividends totaled $12.7 million, or 34 cents a share. A year ago, when the company had gains from selling its TV stations, profit was $136.7 million, or $3.69 a share.
Losses from continuing operations — which exclude such one-time gains — improved to $6.2 million, or 23 cents a share, from $35.3 million, or $1.01 a share, in the previous year. On that basis, Emmis missed analysts’ average estimate for a loss of 15 cents.
However, the company said operating income for its radio stations fell to $15 million from $19 million a year ago.
Revenue for the quarter fell 4.6 percent to $78.6 million compared with $82.4 million for the year-ago quarter.
In Los Angeles, revenue declined 16 percent, Chief Financial Officer Patrick Walsh said. The company recently changed the format of one its two stations in the city from country to rhythmic pop. Whether it will work remains to be seen.
“Making formats work in this day and age . . . is much harder than it was 20 years ago,” Smulyan said.
During a conference call Friday, analysts probed executives about the company’s growing partnership with the Internet search giant Google and plans to expand its interactive division.
Smulyan called Emmis Interactive the company’s “best potential for growth.” The division runs everything from online ad campaigns and mobile-texting contests to integration with Apple’s iTunes.
In Chicago, the division represents 15 percent of the revenue growth. Last quarter, Emmis also invested in Vancouver-based Exponentia, which makes games and applications for cell phones and the Web.
But analysts were more interested in talking about Emmis’ dealings with Google, which is brokering radio advertising for its customers.
Emmis is using Google in Chicago, St. Louis and Los Angeles. Stations in Indianapolis and New York will join soon. Currently, ads from Google represent less than half of 1 percent of the company’s radio revenue.
“It’s interesting,” Smulyan said to their questions. “It’s an experiment. I think a lot more has been made of it than we know of it.”
With Google’s AdSense each station gets final say over the ads and gets paid for each ad that airs. Google gets a cut of every sale.
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