It has been more than five years since Emmis struck a $3 million deal to buy a 51% interest in Digonex Technologies, a dynamic pricing company with clients including major sports teams, retailers, cultural institutions, and entertainment companies. In a series of convertible debt deals, Emmis later put another $4 million into Diogonex which gave the broadcaster the right to at least a 73% stake in the company. But repaying what it owed to Emmis didn’t go entirely as planned. Three years ago, the software company struck an agreement to repay the millions it owed from December 2017 to December 2020.
As the years ticked by, the original $3.6 million owed to Emmis grew as interest costs accrued. As the maturity date for the loans came up last year, Digonex owed its parent $6.2 million, according to a filing last week with the Securities and Exchange Commission. When the money wasn’t repaid, Emmis told investors that it foreclosed on Digonex as of Jan. 1.
Emmis plans to create a new entity that it will control, telling shareholders it plans to continue to operate Digonex, albeit with a “more rational capital structure.” The filing said the remaining Digonex debt and interest payments owed to Emmis are expected to be “extinguished,” although the filing didn’t indicate if the bankruptcy process will be used to achieve that goal—or whether Emmis will simply forgive the debt and write it off as a loss. The move comes as Emmis pivots away from radio and looks to other businesses to expand into.
Emmis CEO Jeff Smulyan said in a conference call last year that he has been “very encouraged” by Digonex’s growing client base. “We really like that business,” he said on a conference call. “We think it is a business that's forward looking. As time goes by, more and more people realize that dynamic pricing is the answer and we've got a great team. And the thing I like most about it is they get great results for their clients and more clients come in the door every day.”
Digonex uses software to optimize data and allow its users to offer variable pricing, similar to the algorithms that airlines use to determine how much a seat costs on a plane. Among Digonex’s clients are the Indianapolis Zoo and the Indianapolis Symphony Orchestra. By using a variable pricing model, Digonex has said that clients can see a 10-20% increase in revenue.