Three years after it began the market-by-market selloff of its radio portfolio with the spin of stations in Terre Haute, IN, Emmis has all but exited the largest metro. Before the Thanksgiving holiday the company closed a deal that gave a majority stake in urban AC WBLS (107.5) and rhythmic CHR “Hot 97” WQHT to a new holding company with Standard General, a New York investment firm headed by Soohyung Kim. It is paying $91.5 million to Emmis for a 76% equity position in the venture they’ve named Mediaco Holdings in which Emmis will retain 23.7% stake. Emmis will receive an additional $5 million under a five-year promissory note.

“We're already talking to them about projects where we will be involved in the oversight and the management,” Emmis CEO Jeff Smulyan said on a recent conference call. Smulyan said he’s known Kim for years and the two had discussed doing some form of partnership for years. “We thought this was a natural thing. This solves some issues for him. It solves some issues for us,” he said. “It allows our management team, led by Charlie Morgan and our people in New York, to keep running the stations, which they have done a pretty remarkable job. And so we'll keep our people in place, we'll keep our oversight in place.”

Smulyan will serve as CEO of Mediaco—in addition to continuing as head of Emmis—while Standard General gets to appoint a majority of Mediaco’s board. Kim has been named Chairman of the new entity.

The complex deal has several other components. Under a $1.25 million per year management agreement that runs until Dec. 31, 2020, Emmis will continue to operate the two FMs and employees remain employees of Emmis, although they will technically be leased to Mediaco. Emmis continues to own gospel WLIB (1190) and under a local marketing agreement it will continue to have the right to simulcast its signal on the HD2 channel of WQHT for free through Dec. 31, 2022. The deal also calls for Emmis to pay Mediaco for any expenses that it incurs related to the WLIB operations or the long-term lease of sports WEPN (98.7) to ESPN Radio.

The deal is the latest in a series of radio sell-offs by Emmis. In June, Emmis agreed to sell its controlling 50.1% interest in its Austin, TX cluster in a deal valued at $39.3 million. It also exited the Los Angeles market in 2017 with an $82.75 million deal that saw rhythmic CHR “Power 106” KPWR sold to Meruelo Media. And last year it spun-off its stations in St. Louis to Entercom and Hubbard Radio for a combined $60 million. Emmis also sold most of its city-based magazines. Smulyan said that they would still like to secure a buyer for WLIB, telling analysts during the recent call that the process has had “ups and downs” during the past several years but that he believes a deal is now closer than ever.

With a New York market sale, Emmis will still own radio stations in its home Indianapolis market in addition to Indianapolis Monthly magazine and Digonex, a dynamic pricing company. The company also owns its Indy headquarters and a tower site in nearby Whitestown, IN.

“This is the transformation of Emmis that we've been working on,” said Smulyan. “Make no mistake, we love the radio business. We love the business we've been in, but we also would like to tackle businesses that we think may have a higher growth profile. And that's what we're looking for.” He told analysts that after taxes and fees the Standard General deal will give Emmis about $88 million in cash to invest in new businesses. “We would like to find businesses of a certain scale and that have a history of growth, where we believe with the skill sets we bring to the table, we can help enhance that growth,” said Smulyan.