Mail Stop 3561
December 20, 2005
VIA U.S. MAIL AND FAX
Mr. Walter C. Berger
Executive Vice President and Chief Financial Officer
Emmis Communications Corporation
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204
Re: Emmis Communications Corporation
Form 10-K for Fiscal Year Ended February 28, 2005
Filed May 16, 2005
Form 10-Q for the Quarter Ended August 31, 2005
Filed October 11, 2005
File No. 0-23264
Dear Mr. Berger:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Where indicated, we think you should
revise your documents in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended February 28, 2005
Critical Accounting Policies
Insurance Claims and Loss Reserves, page 27
1. Tell us, and disclose, amounts accrued for self-insurance and
similar risk assessments included in the balance sheets. Refer to
paragraph 27 of SOP 97-3. In this regard, we note that you
attributed operating cost increases, in part, to "higher insurance
and health care costs" in your MD&A.
Summary Disclosures about Contractual Cash Obligations, page 42
2. We note that you are required to maintain fixed interest rates
on
a minimum of 30% of your outstanding debt. Accordingly, please
disclose your fixed interest payments in your contractual cash
obligations table.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
e. Television Programming, page 69.
3. We note that you record certain program contracts at the
estimated
fair value of the advertising air time given in exchange for the
program rights when the programs are aired. Tell us why certain
program contracts are recorded based on the fair value of the
advertising air time given, instead of the estimated fair value of
the programming received. Refer to paragraph 8 of SFAS 63.
Form 10-Q for the quarter ended August 31, 2005
Note 2. Intangible Assets and Goodwill
Indefinite-lived Intangibles, page 13
4. We note that you "use an enterprise valuation approach to
assess
possible impairment of FCC licenses, whereby an estimated market
multiple is applied to the station operating income generated by
each
reporting unit." Please describe this impairment test in detail.
Tell us why you apply the "reporting unit" concept per paragraph
30
of SFAS 142 rather than the "unit of accounting" concept as
detailed
by EITF 02-7.
Goodwill, page 14
5. Further, we note your statement that "consistent with the
Company`s approach to assessing possible impairment of its FCC
licenses, the enterprise valuation approach was used to determine
the
fair value of...reporting units." Describe this impairment test
in
detail, and tell us how your test complies with paragraphs 19-35
of
SFAS 142. Tell us why you believe the impairment testing for
goodwill and FCC licenses should be "consistent."
Note 3. Significant Events, page 14
6. Please clarify and disclose the conversion terms for your
preferred stock and the nature of the anti-dilution formula that
would apply to all future tender and exchange offers. In this
regard, we note your disclosure on page 76 of your Form 10-K that
each preferred share was convertible at the option of the holder
into
1.28 shares of Class A common stock. However, in this section,
you
indicated that the conversion price was originally $39.06 but was
reduced to $30.10 per share of Class A common stock as a result of
the Tender Offer.
7. We note that subsequent to the Dutch auction, you revised the
anti-dilution adjustment provisions of your outstanding
convertible
preferred stock. Please:
* Tell us whether the conversion feature in your convertible
preferred stock meets the definition of an embedded derivative
under
paragraph 12 of SFAS 133.
* If you conclude that the conversion feature is a derivative,
tell
us your consideration of the anti-dilution provisions, as well as
any
other features, before and after the revision when determining
whether the host contract is a conventional convertible instrument
pursuant to paragraph 4 of EITF 00-19.
* If the host is not a conventional convertible instrument,
provide
us with your analysis of paragraphs 12-32 of EITF 00-19 when
determining whether the embedded conversion feature should be
classified as equity or as a liability.
8. Tell us how you considered ASR 268 and EITF Topic D-98 with
respect to the classification and measurement of your convertible
preferred stock.
9. If applicable, tell us how you evaluated EITF 98-5, as amended
by
EITF 00-27, with respect to any beneficial conversion feature.
* * * *
As appropriate, please amend your Form 10-K and respond to
these comments within 10 business days via EDGAR or tell us when
you
will provide us with a response. You may wish to provide us with
marked copies of the amendment to expedite our review. Please
furnish a cover letter with your amendment that keys your
responses
to our comments and provides any requested information. Detailed
cover letters greatly facilitate our review. Please understand
that
we may have additional comments after reviewing your amendment and
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Kathryn Jacobson, Staff Accountant, at (202)
551-3365 or Kyle Moffatt, Accountant Branch Chief at (202) 551-
3836
if you have questions regarding comments on the financial
statements
and related matters. Please contact me at (202) 551-3810 with any
other questions.
Sincerely,
Larry Spirgel
Assistant Director