Emmis Communications

by Jake Kalmenson

Emmis Communications

40 Monument Circle, Suite 700

Indianapolis, IN 46204

 http://www.emmis.com

About 

Emmis Communications is a media conglomerate based in Indianapolis that specializes in broadcast radio and publishing. The company holds 24 radio stations in six different markets, as well as six magazine publications in five different markets. The company was established in 1979 when Jeff Smulyan purchased WSVL, a radio station in Shelbyville, Indiana. After a few years of struggling to get the operation going, WENS was finally launched, penetrating the market as an adult contemporary format—the station was nearly an automatic hit.  One significant member of the newly launched radio station was David Letterman who was just entering broadcast as a career. His fast appeal as a personality contributed mightily to the overall success of the radio station.  With the success of the companies first acquisition, Smulyan used his profits and reinvested them into the company, eventually turning Emmis Communications into a multi-media company that today ranks among the top 10 in the radio industry in the United States. 2

Jeff Smulyan serves as the founder and Chairman of the Board of Emmis Communications. In 1989, Smulyan and a group of investors purchased the Seattle Mariners. Only three years later they decided to sell it. Evidently, Jeff isn’t solely a radio guy, he has immersed Emmis into the magazine publication industry as well as the digital marketplace. He graduated from the University of Southern California with a B.A. in history and Telecommunications, as well as earned a Juris Doctor degree from the USC Law School. 4

Rick Cummings joined the media company as its first program director for WENS-FM. He later went on to become the national program director for Emmis Communications in 1984. Later on in 2002, he became the President of Programming.6

RADIO: Emmis has a variety of stations in a multitude of markets, however a few in particular help bring in the majority of its revenues. These include its two flagship stations: Power 106 and Hot 97

Power 106

Power 106, Emmis’ Los Angeles-based hip-hop station, is a huge brand and has been the number one urban-hit station in LA for years. The station serves as a portal to debut hits as well as break new artists as millions of people tune in each day. For years KPWR (Power 106) had “Big Boy” host the morning show. However, last year the huge radio company Clear Channel (IHeart Radio) entered the market as a clear competitor with the launch of 92.3. The largest radio conglomerate used its leverage to strip Power 106 of its long-time morning show host by offering him a bigger contract. Since Big Boy left KPWR, the station has seen a serious dip in its ratings: the company moved from #5 in the market to #16 by the end of the year. 8

Hot 97

WQHT or “Hot 97” became the first all hip-hop station in 1992 when the format changed from dance to hip-hop and R&B. This change was in response to the station experiencing an all-time-low in ratings. Ever since, the station has been a powerhouse, trendsetting and defining hip-hop culture in the number one radio market, New York City. Hot 97’s principal demographic is 18-34 year olds. The station has facilitated the breaking of big time artists including: Jay Z, Nas, Chris Brown, Ne-Yo and 50 Cent.11

Concerts

Every year Emmis Communication takes advantage of its powerful position in the music industry by hosting multiple music festivals. In Los Angeles, Power 106 puts on the concert ‘PowerHouse,’ which features many of the top hip-hop artists in the world. Additionally, the company’s New York hip-hop radio station ‘Hot 97’ hosts the music festival “Summer Jam” which takes place at MetLife stadium in New York City. In recent news, Emmis Communications has expanded its ‘Summer Jam’ to Tokyo.

Financial

In the financial report released November 30th, 2015, Emmis Communications released its net revenues per sector of the company. Evidently, radio revenues were the highest at $132,789,000 nine months into the year. As compared to last year, the company is down almost $5 million in revenue. Revenues from publishing remained steady: only dropping in the $10,000 range. What stands out most is that the company generated a significantly higher amount in the field of ‘Emerging Technologies,’ which refers to online radio and digital advertising. In 2014, the company saw $318,000 in revenue, whereas in 2015 the company saw almost $1 million in revenue: $985,000.13

Emmis Communications or (EMMS) currently sells for 58 cents per share. Over the last month (since March 28th) the company’s stock price has fluctuated within a range of 10 cents. It has hit a high of .65 cents per share, meanwhile hitting a low of 55 cents per share.

As shown below, the price has significantly wavered since 2012: it hit a high of over $3 per share, meanwhile also hitting a low of its current state, .58 cents per share. The company’s owner has attributed its fallen stock price to the recent struggles the company has faced in Los Angeles as well as the general consensus that radio is a declining industry.

Recent News

Due to the difficulties the company has seen with its flagship station KPWR, it has taken action to cut costs by laying off employees, cutting executive salaries and lowering its budget. After experiencing a weak fiscal quarter, the company laid off 32 employees, cutting about 3% of its workforce. In addition to the layoffs, the company is also shaving the salaries of all its senior executives. In an article published by The Indy Star, the company is looking to cut “$7.5 million from its budget, as well as $5.3 million from its radio properties.” Additionally, Smulyan decided not to renew the contract of Mike Corbin–someone who had worked for the company for nearly 10 years, as well as Deon Levingston, the company’s New York general manager. 17

What’s to Come

While the situation in Los Angeles as well as the decline of its stock price might suggest a variable future for the company, many believe that the low valuation is a result of an overreaction to a declining radio industry. While studies show that more and more people are using streaming services to consume music, there continues to remain strong evidence showing that radio is still the most dominant medium for music consumption. According to the Nielsen Total Audience Report, AM/FM radio still reaches over 90% of all Americans and 223 million people each week.18

Sources:

1. “Emmis Communications.” Emmis Communications Home Comments. N.p., n.d. Web. 25 Apr. 2016.
2. “History of Emmis Communications.” History of Emmis Communications. N.p., n.d. Web.
3. “Jeff Smulyan – Chairman, CEO, and Founder.” Emmis Communications. N.p., n.d. Web. 25 Apr. 2016.
4. Ibid.
5. “Rick Cummings – Emmis Communications.” Emmis Communications. N.p., n.d. Web. 25 Apr. 2016.
6. Ibid.
7. “Power 106 | Where Hip Hop Lives.” Power 106 | Where Hip Hop Lives. Emmis Communications, n.d. Web. 25 Apr. 2016.
8. “Emmis Radio: Power 106 KPWR – Los Angeles.” Emmis Communications. N.p., n.d. Web. 25 Apr. 2016.
9. “Kanye West – Awesome – [LEAKED MUSIC].” Power 106. N.p., n.d. Web. 25 Apr. 2016.
10. “HOT 97 | Where Hip Hop Lives.” HOT 97 | Where Hip Hop Lives. N.p., n.d. Web. 25 Apr. 2016.
11. “RADIO: New York – HOT 97 WQHT – Emmis Communications.” Emmis Communications. N.p., n.d. Web. 25 Apr. 2016.
12. “Hot 97’s Summer Jam Takes Its Talents To Tokyo.” Vibe. N.p., 30 Mar. 2016. Web. 25 Apr. 2016.
13. Newton, R. Emmis. “801.” The Mathematical Gazette 12.178 (1925): 475. Summary of Financial Results. Web.
14. Ibid.
15. “Emmis Communications Corporation.” : NASDAQ:EMMS Quotes & News. Google Finance, n.d. Web. 25 Apr. 2016.
16. Ibid.
17. Briggs, James. “Emmis Communications Confirms Layoffs.” Indystar. Indystar, n.d. Web.
18. “STATE OF THE MEDIA: AUDIO TODAY 2014.” Nielsen. N.p., n.d. Web.
19. Contents, Table Of. EMMIS COMMUNICATIONS CORPORATION (n.d.): n. pag. Emmis Communications 10-K. Emmis Communications. Web.
20. “Emmis Announces International Expansion of HOT 97 Summer Jam.” PR Newswire. PR Newswire, n.d. Web.
21. “Emmis Communications Income-statement 2016-Q3.” Emmis Communications Quarterly Income Statement 2016 Q3, 2016 Q2. Amigo Bulls, n.d. Web. 25 Apr. 2016.
22. “HOT 97 | Where Hip Hop Lives.” HOT 97 | Where Hip Hop Lives. Emmis Communications, n.d. Web. 25 Apr. 2016.
23. Owen, Laura. “Left on the Dial: With Young People Trading AM/FM for Streaming, Will Radio Find a Home in Your next Car?” Neiman Lab. Neiman Lab, n.d. Web.
24. “RADIO: New York – HOT 97 WQHT – Emmis Communications.” Emmis Communications. N.p., n.d. Web. 25 Apr. 2016.
25. “RADIO REACHES 223M LISTENERS EACH WEEK.” Inside Radio. Inside Radio, n.d. Web.
26. “Top Audio Companies.” : Media Ownership Database. State of the News Media, n.d. Web. 25 Apr. 2016.