EMMS

Emmis Communications Corporation (EMMS)

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Emmis Communications Corporation (EMMS)

F2Q09 Earnings Call

October 10, 2008 9:00 am ET

Executives

Kate Snedeker – Investor and Media Relations

Jeffrey H. Smulyan – Chairman, President and Chief Executive Officer

Patrick Walsh – Chief Financial Officer and Treasurer

Richard F. Cummings – President, Emmis Radio

Analysts

Lee Westerfield - BMO Capital

Marci Ryvicker - Wachovia

Jim Boyle - C.L. King and Associates

Mike Kupinski - Noble Finance Group

Presentation

Operator

Welcome to the Emmis second quarter earnings conference call. (Operator Instructions) Now I will turn the meeting over to Kate Snedeker with Emmis Communications.

Kate Snedeker

I want to extend a special welcome to all the Emmis employees joining us and those of you listening from our website.

We'll begin in a just a moment with opening comments from Emmis Chairman and CEO, Jeff Smulyan and Pat Walsh, our CFO. After their opening comments, our conference call moderator will come back on the line to instruct you on how to submit questions. Joining us to help answer your questions this morning is Rick Cummings, President of Emmis Radio.

A playback of this call will be available for the next week at 1-203-369-3289.

This conference call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to Emmis' public filings with the SEC for more information on the various risks and uncertainties. Additional disclosures related to non-GAAP financial measures can be found under the Investors tab of our website, www.Emmis.com.

Jeffrey H. Smulyan

It's difficult to talk much about what we see. Usually that's a question we always get. There's no question, everybody on this call knows that this is an extremely challenged industry in an extremely challenging overall economy. Where it all goes, no one knows.

I can tell you that I think our people have worked harder in tougher times than I've ever seen in my over 30 years in the industry. There are a couple positives that I'd like to point. You know the numbers. Pat will go through all the numbers with you, but not a lot of surprises. Our numbers comport with what you've seen in our industry. But there are some things that Emmis is doing that give me a lot of hope for the future.

Our Interactive Group, led by Deb Esayian  and Rey Mena already signed up well over 100 affiliates in clearly leading the way in our industry in mirroring our audiences and our advertisers in a way that we think serves the industry quite well.

Our International Division Group, led by Paul Fiddick and Barbara Brill, the business is up 50% in Hungary, 40% in Slovakia. Our networks in those two countries reach by far the largest amount of people in both countries, as well as our operations in Bulgaria and Belgium. It's been a very, very big bright spot in an otherwise tough time.

A couple of other things that we're doing. Leading the Broadcaster Traffic Consortium that Paul Brenner has led and Scott Enright; we could not be more pleased with that. And then also the company leading through some of our 360 sales efforts and our involvement with some industry ideas that we really do believe will lead this industry back to a much better place than it's been.

And I just want to take one second. You all know about 20/20. You all know that we at Emmis are taking the lead in getting radio tuners in cell phones. Those things are very encouraging.

I think the most important thing that I want to stress is, as people step back and look at this industry, the consumption of the industry, it's remarkable. Two things are remarkable: that the perception is as weak as it's been - we are addressing that - but that, through all of this, radio listening has held up. And in tough times, when people get confused about various subscriber models and cost of doing this and that, I think it's not lost on major advertisers that this is a business that reaches on a [six]plus basis 260 million people every week. That's a very vibrant business that I think people have lost sight of and I think we're helping lead the way to explore why that can [inaudible], and we're doing that in all sorts of areas.

So we'll take questions on that, and I now want to turn it over to Pat.

Patrick Walsh

We'll try to move through this quickly so we can get to those questions.

Our diluted net income from continuing operations for the quarter ended August 31 was $0.02 per share which compares to $0.04 during the prior fiscal year. The $0.02 per share in diluted net income compares favorably to First Call's breakeven estimate.

Our net revenues for the second fiscal quarter were $94.2 million compared to a First Call estimate of $90.8 million, so we beat that estimate. The $94.2 million figure represents a 1.5% decrease over the prior period.

Pro forma net revenues for the fiscal second quarter decreased 2.9% compared to the prior year.

Our Domestic Radio net revenues underperformed our markets during the fiscal second quarter. Our net revenues decreased 8% compared to a 7% decrease in our markets. The domestic radio net revenues include certain revenue performance guarantees associated with our national sales representation agreement. During the second quarter, excluding any revenue guarantees, our Domestic Radio net revenues were down 11%.

Each of our clusters trailed their market performance during the quarter. Our L.A. cluster finished the quarter down 13% on a market off 11%. KPWR continued to outperform the market, but its share gains were more than offset by continued weakness at KMVN. Our New York stations were down 14% with the New York market off 7%. Hot 97 and KISS performed largely in line with the market, however revenues at our reformatted WRXP in its second quarter of operation are still developing and considerably short of revenues recorded at the former WQCD in last year's second quarter. The Chicago market finished off 2% and our Emmis stations were off 15%.

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