Emmis-Annual-Shareholder-Meeting-July-2014

Emmis Communications
Annual Meeting of Shareholders
July 10, 2014
11:00 a.m.
• Note: Certain statements in this presentation constitute “forwardlooking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Reference is made to the company’s
Annual Report on Form 10-K and other public documents filed with
the Securities and Exchange Commission for additional information
concerning such risks and uncertainties.
• Additional disclosure related to non-GAAP financial measures can
be found under the Investors tab on our website, www.emmis.com.
2
Emmis Overview
Company overview


Headquartered in Indianapolis, IN, Emmis is a publicly traded
radio broadcasting communications company (NASDAQ:
EMMS). The Company was incorporated in 1979 and went
public in 1994
Emmis operates the 9th largest radio portfolio in the US (based
on number of listeners)
-
Owns 19 FM and 4 AM radio stations in New York, Los
Angeles, St. Louis, Austin (has 50.1% controlling interest)
Indianapolis and Terre Haute, IN




Includes 2 largest hip-hop stations in the world based in
New York City (Hot 97) and Los Angeles (Power 106)
Includes WBLS, the top-rated urban station in the US
One of the FM radio stations in New York is operated
pursuant to a Local Marketing Agreement (“LMA”) with
ESPN / Disney
The radio division of Emmis accounts for approximately 69% of
the revenue and 96% of the Company’s station operating
income
In addition to owning and operating radio stations, the
Company owns leading city / regional publications and has
investments in certain other businesses
Radio market statistics
Stations
Market
rank
Revenue
share
AM
FM
Total
Los Angeles, CA
1
6%
-
1
1
New York, NY
2
10%
1
3
4
St. Louis, MO
20
22%
-
4
4
Austin, TX
33
43%
1
5
6
Indianapolis, IN
38
30%
1
3
4
Terre Haute, IN
227
70%
1
3
4
4
19
23
Market name
Total
Source: Miller Kaplan; Terre Haute revenue share is Company estimate
Note: One of the above stations in New York is operated under LMA with ESPN
Publishing portfolio summary
Monthly Paid &
Verified Circulation
Texas Monthly
Los Angeles
Atlanta
300,945 Orange Coast
141,000 Indianapolis Monthly
68,280 Cincinnati
Total
Monthly Paid &
Verified Circulation
47,060
39,280
33,960
630,525
Source: Publisher’s Statement as of 12/31/2013
3
Emmis consistently delivers superior radio
revenue performance
Emmis versus the market
Year ended 2/28
Emmis revenue growth
Market revenue growth
2014
+4.9%
+2.7%1

Emmis wins!
By 2%
2013
+3.3%
-1.2%

Emmis wins!
By 4%
20121
+4.0%
+0.6%

Emmis wins!
By 3%
20111
+6.7%
+4.5%

Emmis wins!
By 2%
Superior strategy and execution leading to consistently better results
Source: Miller Kaplan
1 Excludes WRKS now operated under LMA with ESPN as WEPN-FM
4
Emmis is winning by focusing on areas where
we can excel
Strategy based on smarts and speed; others focused on scale
Local spot growth rates
Growth categories
CAGR 2011–2013
Category
Focused here
3.7%
Direct result of
emphasis on sales,
hiring, training and
local programming
Digital
7% 25% growth in FY14
Events
10% 14% CAGR 2011–13
Incite
10%¹ 25% growth in FY14
Non-growth category
% of Emmis radio
Category
net revenues
0.6%
National
1
Market
65% of radio
net revenues
Source: Miller Kaplan
1 Comprised of Los Angeles, New York, Indianapolis, St. Louis and Austin radio markets
Not here
Emmis
% of Emmis radio
net revenues
16%  3% market growth
dominated by Clear
Channel and CBS
 Emmis has -1% growth
Network
2%  -24% market growth
 Emmis is -26%
¹ Included in local revenues when reported to Miller Kaplan
5
Strategic merits of the WBLS/WLIB
acquisition
WBLS / WLIB acquisition is a logical enhancement to existing strategy and will help Emmis continue its winning streak
Expands
operating
metrics and
scale

Significant improvement in station operating income and free cash flow allowing for
substantial de-levering by 2017

Increases net revenues by 16.4% and EBITDA by 95.3% on a pro forma basis
Improves
competitive
position

Better positions Emmis to compete in the New York market in targeted demographics

Past experience with two adult urban competitors will likely preclude full-signal
entrant

$3 million in cost synergies already initiated; operations already co-located easing
post-acquisition integration (also avoids losing existing co-location benefits)

No additional corporate overhead required

WBLS’ Steve Harvey Morning Show is a key ratings driver; during 2013 a new 5-year
agreement was executed

All key talent and station leadership (General Manager, Director of Sales,
Programming Director) under contract

Emmis has delivered stronger sales results from concerts, events, sponsorship, and
digital sales on its existing station in the market, WQHT

Significant opportunities exist for Emmis to cross sell between the WQHT/WBLS brands
Clear
operating
efficiencies
Additional
revenue growth
opportunities
6
Pro forma snapshot of Emmis
Pro forma operating statistics
Metric
Emmis
WBLS/WLIB1
Pro Forma
FYE 2014 net
revenues
$194.8 million
$32.0 million
$226.8 million
FYE 2014 Station
operating income
$39.0 million
$15.2 million
$54.2 million2
EBITDA3
$19.0 million
$15.2 million
$37.2 million2
9.8%
47.5%
16.4%
$4.3 million4
$7.2 million5
$21.2 million6
EBITDA %
FYE 2014E Free cash
flow (“FCF”)
Radio BCF
concentration by
market7
NY
15%
MO
13%
MO
Indy 9%
10%
LA
42%
Austin
Indy 16%
14%
NYC
100%
NY
41%
Austin
11%
LA
29%
1 WBLS
/ WLIB results are for the calendar year ended December 31, 2013
$3 million of cost synergies already initiated
3 Net of Austin minority interest of $5.6 million
4 Includes $8 million of mandatory debt amortization under current credit agreement
5 Assumes 5.75% interest on acquisition purchase price of $131 million and $0.5 million of capital expenditures
6 Interest on $185 million at 5.75%, $3.5 million of capital expenditures and 1% mandatory debt amortization
7 Net of Austin minority interest
2 Includes
7
Additional revenue growth opportunities
Improved Power
Ratios
Events and
Sponsorships
 Hot97 historically
operates at a power
ratio of 1.3x
 Summer Jam
generates $2.9 million
in sponsorship sales
 WBLS operated at a
power ratio of 0.8x and
budgeted in 2014 for
0.9x
 Circle of Sisters,
WBLS’ signature
event, reaches a
40,000 person
audience, but only has
limited sponsorships
 Opportunities to
improve inventory
management and
apply Portable People
Meter (“PPM”)
techniques Emmis
developed for ratings
improvement in its
own portfolio
 New Steve Harvey
agreement provides
opportunity for an
additional event
 Possibility to create a
combined winter
concert between
Hot97 and WLBS with
crossover artists
Digital
 Hot97’s digital
revenues of $2.5
million outperform
WBLS’ $0.3 million in
digital revenues
 Emmis believes the
investments it has
made in the digital
category surpass
YMF’s own efforts and
present significant
growth opportunities
at WBLS
Incite
 Hot97 generates $1.3
million in Incite sales
to government
agencies, not-forprofits and
corporations
 Emmis’ Incite
leadership believes
WBLS, with a focus on
African American
mothers, will be the
best positioned station
to implement the
Company’s unique
sales proposition in
this area
Training and
Culture
 A focus on sales hiring
and training has
yielded strong results
across existing
stations and these
efforts will extend to
the acquired stations
 WBLS and WLIB have
historically had limited
investment in training
due to the ownership
profile (distressed
owners followed by
private equity owners)
 40% of WBLS and
WLIB’s employees
have previously
worked for Emmis,
helping limit the
integration risk of
culture and training
Although not currently considered in projections, Emmis believes significant revenue upside exists as a result
of integrating the WBLS and WLIB radio stations
8
Summary of publishing division performance
Publishing division net revenues for fiscal year ended 2/28/2014
($ millions)
+2.5%
-1.8%
+6.6%
+8.5%
$7.1
Atlanta
$24.0
+39.6%
$11.1
$4.6
$5.9
Cincinnati
Indianapolis
+7.8%
$2.9
Los Angeles
Orange Coast
Texas
Emmis achieved publishing division revenue growth of 5.9% in FYE 2014
9
Emmis consistently provides industry
leadership and innovation
Emmis has an innovative culture that is recognized as a thought leader

Controls intellectual property around NextRadio smartphone and digital dash board application as well as
broadcaster delivered traffic applications for navigation systems

NextRadio has the potential to reinvigorate radio industry growth rates
-
Emmis would benefit both as a radio operator and as owner of the intellectual property
10
NextRadio overview
Interactive, mobile platform provides point-of-purchase opportunity for advertisers to connect
with Emmis’ listeners
SMS
Website
Location
Consumers

Free, unlimited audio
entertainment from familiar,
local radio stations

3x longer battery life

Ability to seamlessly interact
with familiar local radio stations
Coupon
Carriers
Broadcasters

Revenue opportunity through
partnership with broadcasters

Expand distribution of FM
beyond the car dashboard

Relieve data congestion


Product differentiation
Reach of mass market FM fully
integrated with one-to-one
smartphone interaction

Enables more meaningful
participation in digital ad pie

Much lower content costs
compared to streaming
11
Digonex overview
• On June 16, 2014, Emmis acquired majority control of Digonex Technologies,
Inc., an Indianapolis-based dynamic pricing company.
• Digonex owns a portfolio of patents and develops customized algorithms for
clients to help them maximize revenues. Digonex currently operates
principally in three silos:
Sports & Entertainment
Target market: sporting, musical
and theatrical events
Principal application: ticket pricing
Retail
Target market: online retailing
Principal application: merchandise
pricing
Cultural Institutions
Target market: museums and
zoos
Principal application: ticket pricing
• In addition to growing these existing lines of business, Emmis believes the
technology is applicable to pricing the inventory for its existing radio and
publishing assets.
12
Stock Price Performance
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
•Roughly 100% stock
price appreciation in
FY14.
•Q1 results released
in June 2013 was a
“clean” comparison of
year-over-year results
and allowed investors
to quickly see Emmis’
much improved
financial condition.
•Future value creation
will largely relate to
our ability to grow
operating free cash
flow.
Source: Capital IQ
13
Compelling free cash flow yield
valuation
The summary below excludes the operations of 98.7FM in New York, which is
operated pursuant to an LMA with Disney/ESPN
FY14 Pro Forma EBITDA (see page 7)
Plus: Preferred litigation expenses
Plus: WBLS/WLIB transaction and severance costs
Less: Capital expenditures
Less: Pro forma interest expense
Less: Mandatory debt amortization
FY14 Pro Forma Free Cash Flow
37,200
1,091
936
(3,500)
(10,638)
(1,850)
23,239
Diluted shares outstanding (5/31/2014)
47,347
Free cash flow/share
$
0.49
Price 7/3/2014
$
2.95
FCF Yield
16.6%
14
Strategic focus for FY15
New Sources of
Core Growth
Continue to
outperform peers in
core businesses
Grow Free Cash
Flow and Pay
Down Debt
Invest in future
growth
NextRadio
Digonex
Integrate WBLS
and WLIB in NY
15
Emmis Communications
Annual Meeting of Shareholders
July 10, 2014
11:00 a.m.