EXHIBIT 99.1
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For Immediate Release
Monday, May 8, 2006
Contacts: Dave Newcomer
Jodi Wright
317.266-0100
CHAIRMAN AND CEO PROPOSES TO ACQUIRE
EMMIS COMMUNICATIONS CORPORATION'S
OUTSTANDING PUBLIC SHARES
$15.25 CASH PER SHARE OFFERED FOR EMMIS COMMUNICATIONS CORPORATION'S
PUBLIC SHARES
EMMIS COMMUNICATIONS CORPORATION ANNOUNCES AGREEMENTS
TO SELL WKCF-TV AND KKFR-FM
HEARST-ARGYLE TO PURCHASE ORLANDO'S WB/CW AFFILIATE FOR $217.5 MILLION;
BONNEVILLE TO PURCHASE PHOENIX RADIO STATION FOR $77.5 MILLION
CHAIRMAN AND CEO PROPOSAL:
Indianapolis, IN, May 8, 2006 - Emmis Communications Corporation
(NASDAQ: EMMS) ("Emmis") today announced that ECC Acquisition, Inc., an
Indiana corporation wholly-owned by Jeffrey H. Smulyan, the Chairman, Chief
Executive Officer and controlling shareholder of Emmis ("Purchaser"), has made
a non-binding proposal to acquire the outstanding publicly held shares of
Emmis for $15.25 per share in cash.
According to the proposal, the offer price represents a 13.6% premium
over the closing price of Emmis' Class A common stock on Friday, May 5, 2006,
the last trading day prior to the proposal. The proposal values the total
common equity of Emmis (including both Class A Common Stock and Class B Common
Stock) at approximately $567 million and implies an enterprise value of
approximately $1.4 billion (based on Emmis' outstanding debt and preferred
stock).
The proposal states that the transaction would be implemented through
a merger of Emmis with the Purchaser. In conjunction with the merger,
Purchaser proposes to refinance certain of Emmis' outstanding debt and
preferred stock. The proposal further states that Purchaser intends to invite
certain other members of Emmis' management to join the Purchaser in the
proposed transaction.
In response to the proposal, the Board of Directors of Emmis
announced that it has formed a special committee of independent directors to
consider the proposal. The Special Committee will select its own independent
financial and legal advisors. Mr. Smulyan and the other directors of Emmis
that are members of management will not participate in the evaluation of the
proposal, which requires the recommendation of the special committee and the
approval of the Board of Directors.
Emmis expects this process to have no impact on day-to-day
operations.
The transaction will be subject to the negotiation and execution of
definitive agreements related to the transaction and will be subject to
receipt of required financing. The proposal states that the transaction is not
subject to any regulatory conditions other than Federal Communications
Commission ("FCC") approvals and, if applicable, compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The proposal also states
that the transaction will be subject to approval by Emmis' shareholders. Under
the terms of Emmis' charter, the transaction will be a "going private"
transaction (as such term is defined in the charter) involving Emmis and a
purchaser affiliated with Mr. Smulyan; therefore, holders of Class B Common
Stock will be entitled to vote on the transaction on an "as converted" to
Class A Common Stock basis so that all shares are entitled to one vote per
share and vote together as a single class. Mr. Smulyan owns shares of Emmis
representing approximately 16.9% of the equity and 16.9% of the votes entitled
to vote on the proposal (calculated in each case to include shares issuable
under all options exercisable currently or within 60 days).
In its proposal, Purchaser advised Emmis' Board that Mr. Smulyan will
not agree to any other transaction involving Emmis or his shares of Emmis.
Under the terms of Emmis' charter, on any such other transaction (other than
the "going private" transaction described above) that requires the approval of
Emmis' shareholders, the Class A Common Stock and Class B Common Stock will
vote together as a single class, with each share of Class A Common Stock
entitled to one vote per share and each share of Class B Common Stock entitled
to ten votes per share. Mr. Smulyan would in such circumstances have
approximately 66.7% of the combined voting power entitled to vote on any such
other transaction (calculated to include shares issuable under all options
exercisable currently or within 60 days), thereby giving him the ability to
prevent Emmis from engaging in any such other transaction.
The proposal stated that The Blackstone Group L.P., Banc of America
Securities LLC and Deutsche Bank Securities Inc. are each serving as
Purchaser's financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison
LLP is providing legal advice to Purchaser.
Emmis does not anticipate making any further announcement concerning
the proposal unless and until a definitive agreement is reached. If and when
the parties reach a definitive agreement with respect to the proposal, Emmis
and Purchaser will file appropriate materials with the Securities and Exchange
Commission and mail such materials to Emmis shareholders. Shareholders and
other interested parties should read Emmis' relevant documents filed with the
SEC when they become available because they will contain important
information. Emmis' shareholders will be able to obtain such documents free of
charge at the SEC's web site (www.sec.gov) or from Emmis at One Emmis Plaza,
40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, Attn: Scott
Enright.
AGREEMENTS TO SELL WKCF-TV AND KKFR-FM; CLOSING ON WRDA-FM
Emmis today also announced that it has signed agreements to sell two
of its broadcast properties: WKCF-TV, its WB/CW affiliate in Orlando, and
KKFR-FM in Phoenix.
Under terms of its agreement, Hearst-Argyle Television, Inc. (NYSE:
HTV) has agreed to pay $217.5 million in cash for the assets of WKCF-TV,
subject to FCC and other regulatory approvals.
Emmis continues to own 50 percent of "The Daily Buzz," a syndicated
weekday news program produced in the WKCF studios, with partner Acme
Communications, and will retain the WKCF building.
Emmis purchased WKCF in October of 1999 from Press Communications,
LLC. In May 2005, Emmis announced its intention to explore strategic
alternatives for its 16-station television division. Since that time and
including today's announcement, 14 Emmis television stations have found
buyers. The television stations remaining in the Emmis portfolio are New
Orleans' WVUE-TV (Fox 8) and Honolulu's KGMB-TV (CBS 9).
In Phoenix, Bonneville International Corporation and Bonneville
Holding Company have agreed to purchase the assets of KKFR-FM (Power 92.3) for
$77.5 million, subject to FCC and other regulatory approvals.
Emmis purchased KKFR-FM from Clear Channel in August 2000. In January
2005, Emmis swapped three Phoenix stations -- KTAR-AM, KMVP-AM and KKLT-FM --
with Bonneville in exchange for WLUP-FM (97.9) in Chicago and $70 million in
cash. After the close of the transaction, Emmis will own 23 domestic radio
stations in seven markets.
The closing of each of these transactions is subject to customary
conditions, including approval from the FCC, and is expected to occur in the
next three to six months.
Emmis also announced that on May 5, 2006, it completed the sale of
the assets of WRDA-FM (104.1 FM, now known as WHHL-FM) to Radio One (NASDAQ:
ROIAK and ROIA) for $20 million. Emmis announced it had signed a definitive
agreement for the sale of the station in September of 2005. In St. Louis,
Emmis continues to own KFTK-FM (97.1), KIHT-FM (96.3), KPNT-FM (105.7) and
legendary KSHE-FM (94.7). Emmis-St. Louis continues to air Red's programming
via the web at WWW.REDONTHEWEB.COM.
OTHER MATTERS:
Through February 28, 2006, Emmis had deferred approximately $1.1
million of third-party acquisition-related costs associated with the
acquisition of the Washington Nationals Major League Baseball franchise. On
April 18, 2006, Emmis reported results for its fourth quarter and full year
ended February 28, 2006, and continued to believe that deferral of these costs
was appropriate. However, on May 3, 2006, Major League Baseball announced that
it had awarded the right to purchase the Washington Nationals to a group other
than the one led by Emmis. As a result of this subsequent event, Emmis has
expensed these costs in its year ended February 28, 2006, as a component of
corporate expenses. Consequently, Emmis' operating income in its Form 10-K for
the year ended February 28, 2006, will be $1.1 million lower than the
operating income reported in its press release on April 18, 2006. Please see
the financial table attached to this press release as Annex A.
EMMIS COMMUNICATIONS - GREAT MEDIA, GREAT PEOPLE, GREAT SERVICE(R)
Emmis Communications is an Indianapolis-based diversified media firm
with radio broadcasting, television broadcasting and magazine publishing
operations. Pro forma for the transactions above, Emmis' 21 FM and 2 AM
domestic radio stations serve the nation's largest markets of New York, Los
Angeles and Chicago as well as St. Louis, Austin, Indianapolis and Terre
Haute, Ind. In addition, Emmis owns a radio network, international radio
interests, two television stations, award-winning regional and specialty
magazines, and ancillary businesses in broadcast sales and publishing.
NOTE: STATEMENTS IN THIS RELEASE REPRESENT THE PARTIES' CURRENT INTENTIONS,
PLANS, EXPECTATIONS AND BELIEFS AND INVOLVE RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM THE EVENTS DESCRIBED IN THIS
RELEASE, INCLUDING RISKS OR UNCERTAINTIES RELATED TO THE SUCCESS OF THE
NEGOTIATIONS WITH THE SPECIAL COMMITTEE AND WHETHER THE MERGER WILL BE
COMPLETED, AS WELL AS CHANGES IN GENERAL ECONOMIC CONDITIONS, STOCK MARKET
TRADING CONDITIONS, TAX LAW REQUIREMENTS OR GOVERNMENT REGULATION, AND CHANGES
IN THE BROADBAND COMMUNICATIONS INDUSTRY OR THE BUSINESS OR PROSPECTS OF
EMMIS. THE READER IS CAUTIONED THAT THESE FACTORS, AS WELL AS OTHER FACTORS
DESCRIBED OR TO BE DESCRIBED IN SEC FILINGS WITH RESPECT TO THE TRANSACTION,
ARE AMONG THE FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER
MATERIALLY FROM THE CURRENT EXPECTATIONS DESCRIBED HEREIN. NO AGREEMENT,
ARRANGEMENT OR UNDERSTANDING WITH RESPECT TO THE ACQUISITION OF THE STOCK OF
EMMIS DESCRIBED ABOVE SHALL BE CREATED (OR DEEMED CREATED FOR ANY PURPOSE)
UNTIL SUCH TIME AS DEFINITIVE DOCUMENTATION PROVIDING FOR ANY SUCH AGREEMENT,
ARRANGEMENT, OR UNDERSTANDING HAS BEEN APPROVED BY THE SPECIAL COMMITTEE AND
THE BOARD OF DIRECTORS OF EMMIS AND THEREAFTER EXECUTED AND DELIVERED BY EMMIS
AND ALL OTHER RELEVANT PERSONS. CERTAIN STATEMENTS INCLUDED IN THIS RELEASE
WHICH ARE NOT STATEMENTS OF HISTORICAL FACT, INCLUDING BUT NOT LIMITED TO
THOSE IDENTIFIED WITH THE WORDS "EXPECT," "WILL" OR "LOOK" ARE INTENDED TO BE,
AND ARE, BY THIS NOTE, IDENTIFIED AS "FORWARD-LOOKING STATEMENTS," AS DEFINED
IN THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF EMMIS TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULT, PERFORMANCE OR ACHIEVEMENT
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE,
AMONG OTHERS:
o GENERAL ECONOMIC AND BUSINESS CONDITIONS;
o FLUCTUATIONS IN THE DEMAND FOR ADVERTISING AND DEMAND FOR DIFFERENT
TYPES OF ADVERTISING MEDIA;
o OUR ABILITY TO SERVICE OUR OUTSTANDING DEBT;
o INCREASED COMPETITION IN OUR MARKETS AND THE BROADCASTING INDUSTRY;
o OUR ABILITY TO ATTRACT AND SECURE PROGRAMMING, ON-AIR TALENT, WRITERS
AND PHOTOGRAPHERS;
o INABILITY TO OBTAIN (OR TO OBTAIN TIMELY) NECESSARY APPROVALS FOR
PURCHASE OR SALE TRANSACTIONS OR TO COMPLETE THE TRANSACTIONS FOR
OTHER REASONS GENERALLY BEYOND OUR CONTROL;
o PURCHASER'S OFFER TO PURCHASE BEING TERMINATED OR MODIFIED MATERIALLY;
o INCREASES IN THE COSTS OF PROGRAMMING, INCLUDING ON-AIR TALENT;
o INABILITY TO GROW THROUGH SUITABLE ACQUISITIONS;
o NEW OR CHANGING REGULATIONS OF THE FEDERAL COMMUNICATIONS COMMISSION
OR OTHER GOVERNMENTAL AGENCIES;
o COMPETITION FROM NEW OR DIFFERENT TECHNOLOGIES;
o WAR, TERRORIST ACTS OR POLITICAL INSTABILITY; AND OTHER FACTORS
MENTIONED IN DOCUMENTS FILED BY EMMIS WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Annex A
EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited, dollars in thousands, except per share data)
THREE MONTHS ENDED FEBRUARY 28, TWELVE MONTHS ENDED
------------------------------- -------------------
2006 2005 2006
---- ---- ----
OPERATING DATA:
Net revenues:
Radio $ 63,045 $ 60,855 $ 300,545
Publishing 21,440 20,021 86,836
Total net revenues 84,485 80,876 387,381
Operating expenses, excluding noncash compensation:
Radio 43,978 38,768 174,321
Publishing 20,976 17,683 78,837
Total station operating expenses, excluding
noncash compensation 64,954 56,451 253,158
Corporate expenses, excluding noncash compensation 13,295 7,438 32,686
Noncash compensation (a) 690 2,318 8,906
Depreciation and amortization 4,867 3,835 17,335
Impairment loss 37,372 -- 37,372
Loss on disposal of assets 9 718 94
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Operating income (loss) (36,702) 10,116 37,830
Interest expense (21,513) (9,568) (70,586)
Interest income 3,040 564 3,532
Gain from unconsolidated affiliates 55 3 8
Loss on debt extinguishment (b) (6,952) -- (6,952)
Other income (expense), net (170) 680 (500)
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Income (loss) before income taxes, minority
interest, discontinued operations and accounting change (62,242) 1,795 (36,668)
Provision (benefit) for income taxes (25,748) 1,544 (15,455)
Minority interest (income) expense, net of tax (485) 539 3,026
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Income (loss) from continuing operations (36,009) (288) (24,239)
Income (loss) from discontinued operations, net of tax 174,951 37,389 382,010
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Income (loss) before accounting change 138,942 37,101 357,771
Cumulative effect of accounting change, net of tax -- (303,000) --
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Net income (loss) 138,942 (265,899) 357,771
Preferred stock dividends 2,246 2,246 8,984
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Net income (loss) available to common shareholders $ 136,696 $ (268,145) $ 348,787
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Basic net income (loss) per common share:
Continuing operations $ (1.03) $ (0.04) $ (0.78)
Discontinued operations, net of tax 4.72 0.66 8.91
Cumulative effect of accounting change, net of tax -- (5.37) --
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Net income (loss) available to common shareholders $ 3.69 $ (4.75) $ 8.13
============ ============ ============
Diluted net income (loss) per common share:
Continuing operations (1.03) $ (0.04) $ (0.78)
Discontinued operations, net of tax 4.72 0.66 8.91
Cumulative effect of accounting change, net of tax -- (5.37) --
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Net income (loss) available to common shareholders $ 3.69 $ (4.75) $ 8.13
============ ============ ============
Weighted average shares outstanding:
Basic 37,056 56,397 42,876
Diluted 37,056 56,397 42,876