Emmis Communications on Thursday reported financial results for the three months ending Nov. 30, 2019. Net revenues for the fiscal quarter were essentially flat, coming in at $10.74 million, compared to $10.80 million in the same period one year earlier. Local ad sales declined 2.9% compared to a year earlier to $4.2 million while national soared 50% to $828,000. Digital revenue more than doubled, increasing 104% compared to a year ago to $675,000.
“Home and home-related products was the largest category for our radio division,” Emmis said in its quarterly 10-Q filing with the Securities and Exchange Commission, noting those categories accounted for 12% of its revenue in the nine months ending Nov. 30, 2019. The company also banked $159,000 in political revenue during the most recently completed quarter.
Station operating expenses fell to $8.20 million from $10.81 million in the prior year period as the company has downsized operations. But it also noted some new expenses were recorded associated with the launch of its branded podcast company, Sound That Brands.
As the company is remaking itself, it was the first quarter Emmis didn't issue a press release or hold a conference call with analysts. Instead the new numbers were released in its 10-Q filing. The company has been systematically shedding almost all its radio assets during the past three years and that activity continued in its most recent fiscal quarter. Before the Thanksgiving holiday the company closed a $91.5 million deal that gave a majority 76% stake in urban AC WBLS (107.5) and rhythmic CHR “Hot 97” WQHT New York to a new holding company with Standard General, a New York investment firm headed by Soohyung Kim. Emmis also closed on the $39.3 million sale of its 50.1% controlling interest in its six-station Austin radio cluster to Sinclair Telecable during the reporting period. “Each is a strategic shift that will have a significant impact on the company’s operations and financial results,” Emmis said in the regulatory filing. The company classified both the New York and Austin assets as discontinued operations for both the current and the comparable year-ago reporting periods.
In addition to its sole remaining station in New York, gospel WLIB (1190), Emmis still owns four stations in the Indianapolis market where the company is headquartered. Combined it says those stations are valued at $68.5 million, a $4 million reduction from its Feb. 2019 assessment. The company told investors in the SEC filing that “continued declines” in the Indianapolis market required it to lower the value of its remaining station portfolio. With the sale of most of its other stations, Emmis says the Indianapolis market now accounts for 60% of its radio revenue. Miller Kaplan Arase said the Indy market saw a 3.4% drop in revenue during the nine months that ended Nov. 30 compared to a year earlier. Emmis however said during that same timeframe its cluster saw revenue inch up 0.4%.
Emmis reported a significantly wider loss from continuing operations of $6.32 million in the reporting period, compared to $1.71 million one year earlier. This was expected. After announcing the New York stations sale, Emmis told shareholders in July 2019 that it would be operating at a net loss due to the corporate overhead expenses it will continue to carry to manage its future purchases.
One place Emmis is banking money is through local marketing agreement fees. They totaled $2.6 million during the quarter—or nearly a quarter of the revenue booked by the company. Most of that comes from ESPN’s long-term agreement to lease “ESPN 98.7” WEPN-FM New York through Aug. 31, 2024.
In addition to what’s left of its radio holdings, Emmis also owns Indianapolis Monthly magazine and Digonex, a dynamic pricing company. But CEO Jeff Smulyan has made it clear that he intends to chart a new course that takes Emmis beyond the radio industry. “With the closing of the sale of our Austin Partnership and WQHT-FM and WBLS-FM, we have begun actively exploring additional businesses to acquire, with the goal of investing the proceeds from these sales into businesses with better growth profiles than we have experienced in recent years in our radio and magazine businesses,” the company said in the quarterly report.