Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - EMMIS COMMUNICATIONS CORP | emmsex991070716.htm |
| 8-K - 8-K - EMMIS COMMUNICATIONS CORP | emms8k07072016.htm |
Emmis Communications
Annual Meeting of Shareholders
July 7, 2016
10:00 a.m.
2
• Note: Certain statements in this presentation constitute “forward-
looking 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.
3
Emmis 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 one of the 10 largest radio portfolios 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 most listened to 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 73% of
revenues and substantially all of the Company’s station operating
income
In addition to owning and operating radio stations, the Company
owns NextRadio®, leading city / regional publications and is
majority owner of a dynamic pricing business (Digonex)
Company overview Radio market statistics
Publishing portfolio summary
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
Source: Publisher’s Statement as of 12/31/2015
Revenue
share AM FM Total
Los Angeles, CA 1 5% - 1 1
New York, NY 2 10% 1 3 4
St. Louis, MO 21 22% - 4 4
Austin, TX 31 41% 1 5 6
Indianapolis, IN 38 33% 1 3 4
Terre Haute, IN 229 41% 1 3 4
Total 4 19 23
Market name
Market
rank
Stations
Monthly Paid &
Verified Circulation
Monthly Paid &
Verified Circulation
Texas Monthly 297,600 Orange Coast 52,800
Los Angeles 138,000 Indianapolis Monthly 40,100
Atlanta 71,000 Cincinnati 36,500
Total 636,000
4
Radio Industry – Unparalleled Reach
Radio has
surpassed
broadcast television
as the #1 reach
medium in the
United States
Source: Nielsen Q1 2016
5
Radio Industry – Consumption is Growing
Source: Nielsen Q1 2016
Average time spent per adult per day with media – all demographics
Adults tune in to radio for an average of 1 hour, 52 minutes per day and
radio consumption is up 1% in the last 12 months; TV’s share is down.
6
Radio Industry’s Value
• Nielsen’s ROI studies highlight
radio’s effectiveness
Average ROI of 6:1 and as high
as 23:1
• Radio has the lowest CPM of all
major media ($13)
Magazines ($17), Cable ($18),
Digital ($20), Newspapers ($27),
TV ($30)
• Perception of streaming providers
doesn’t align with reality
AM/FM’s share of audio listening
is 9x larger than Pandora and
17x larger than Spotify
7
Emmis Radio Market Summary
FY16 Radio Net Revenues
100% = $143.5 million
FY16 Radio Station Operating Income
100% = $38.3 million
Note: Excludes 98.7FM in NY. Reflects 50.1% of Austin radio stations
New York + Los Angeles represent approximately 55% of our radio net
revenues and 64% of our radio SOI
35%
20%
17%
15%
11%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
NY LA Ind STL Austin TH
35%
29%
14% 13%
9%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
NY LA Austin Ind STL TH
8
Streak of outperforming markets derailed by new
competition in Los Angeles; other markets continue
to outperform
Year ended 2/28(29) Emmis revenue growth Market revenue growth
2016
-4.6%
(ex-LA -2.0%)
-1.5%
(ex-LA -2.5%)
2015
+1.6%
-3.7%
2014
+4.9%
+2.7%
2013
+3.3%
-1.2%
20121
+4.0%
+0.6%
20111
+6.7%
+4.5%
Emmis versus the market
Emmis wins!
By 2%
Emmis wins!
By 4%
Emmis wins!
By 3%
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
LA format change causes first
miss in 6 years; ex-LA, Emmis
narrowly beats markets.
Emmis wins!
By 5%
9
New York Update
FY16 NY market revenue summary
National +3%
Local -5%
Network/NTR +6%
Digital -3%
Total revenues -3%
Emmis total NY revenues -5%
New York Market Revenue Summary
Q1 FY17 NY market revenue summary
National +21%
Local +1%
Network/NTR +1%
Digital -1%
Total revenues +4%
Emmis total NY revenues +11%
• Disappointing performance in fiscal 2016 led to management changes in
January 2016. Improving market, coupled with better cluster
performance, bodes well for fiscal 2017.
• Ratings remain strong at Hot97 and WBLS. Poor weather for our largest
outdoor concert, Summer Jam, is a temporary setback for June’s results.
10
Los Angeles Update
FY16 LA market revenue summary
National flat
Local -2%
Network/NTR +9%
Digital +1%
Total revenues flat
Emmis total LA revenues -14%
Los Angeles Market Revenue Summary
Q1 FY17 LA market revenue summary
National -8%
Local +6%
Network/NTR +5%
Digital +14%
Total revenues +3%
Emmis total LA revenues -19%
• The revenue impact from the new format competitor was most pronounced
beginning in August 2015 (KPWR was down 5% in a down 2% market from
March-July 2015 before revenue declines accelerated).
• We expect the revenue declines we are currently experiencing to abate in Q3 of
this fiscal year.
• Our ratings are beginning to rebound and we are beating our competitor in the
key 18-34 demographic; marketing campaign underway to create further
separation in the ratings.
11
Austin, Indianapolis & St. Louis Update
• Grew market share in Indianapolis and St. Louis in fiscal 2016 as well as Q1 of
fiscal 2017
• Maintained 40%+ market share in Austin, but market was weaker in fiscal 2016
as compared to recent years
• Ratings in St. Louis are very strong as KPNT and KSHE hold the #1 ratings
position in every major demographic.
• Market revenues have improved from FY16 to Q1FY17 in all three markets.
12
January 2016 Expense Reductions
In response to difficult market conditions and company-specific challenges in New York and LA, we
implemented a cost reduction plan in January 2016 to yield approximately $7.5 million of savings in
fiscal 2017. We are using a portion of these savings to invest in our businesses and a portion to
improve EBITDA.
Radio
($5.3 million)
Publishing
($1.5 million)
Corporate
($0.7 million)
Increase marketing for WQHT,
WBLS and KPWR to grow ratings.
Increase investment in NextRadio
Stabilize EBITDA
January
2016
Cuts
FY 2017
Uses
13
Summary of publishing division performance
Publishing division revenues mostly flat in FYE 2016
$22.5
$12.3
$8.1
$5.5 $5.0
$3.1
Texas Los Angeles Atlanta Indianapolis Cincinnati Orange Coast
Publishing division net revenues for fiscal year ended 2/29/2016 ($ millions)
+0.4%
+0.2% -0.2%
+4.7%
-1.4%
-3.0%
% Change in net revenue compared to prior year
14
Offers dynamic pricing solutions to
help clients optimize revenues given
supply and demand conditions
Emmis acquired majority control in
June 2014
Targeted sectors primarily include
zoos, aquariums, theme parks, seated
venues, and cultural institutions.
Emerging Technologies: NextRadio and
Digonex
Emmis owns 100% of the NextRadio smartphone application
Started with single Sprint phone in 2013. Now on every major
wireless carrier, including #1 selling phone for 2016 (Samsung
Galaxy S7 and S7 Edge).
NextRadio has the potential to change consumer and advertiser
perceptions and it gives the radio industry a new revenue stream.
- Emmis would benefit both as a radio operator and as owner of
NextRadio
15
NextRadio Product
NextRadio is…
FM Radio on your Smartphone
NOT Internet Streaming
Intuitive Live Guide
Artist/program/commercial visuals
Station feedback
Real-time interactivity
Enabled by TagStation® – cloud-
based content delivery application
software for broadcasters
16
NextRadio Data Attribution
NextRadio is able to pinpoint listeners and provide insights about the behavior
of those listeners for advertisers. This level of measurement has never existed
in broadcast radio until now. The chart below shows the location of some
NextRadio listeners during the Indianapolis 500.
17
NextRadio - Carrier and Handset Update
NextRadio Supported Smartphone Sales in the US
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Sprint/Boost/Virgin AT&T/Cricket T-Mobile Blu Preload US Cellular Verizon Other
130M
120M
110M
100M
90M
80M
70M
60M
50M
40M
30M
20M
10M
0
60 million
enabled
devices
by 2016
year end
121 million
enabled
devices
by 2017
year end
18
NextRadio Product – International
• FM radio broadcasting technology is the same around the world.
• NextRadio is working with broadcasters across North and South America to
bring NextRadio to international markets.
Product is live in Google Playstore for Peru and Canada
Launch in Mexico is planned for August. Great discussions with large
carriers in Mexico
Ongoing discussions in Colombia and other LATAM countries
• NextRadio is also having exploratory discussions with European and
Australian broadcasters.
• NextRadio licenses its technology to these international broadcasters for a fee
and shares in the new revenue streams created by the interactive ecosystem.
19
Financial Overview
• EBITDA in excess of
cash interest by
approximately $20
million
• FY17 Uses: CapEx
($3.5 million), debt
principal amortization
payments ($9.2
million), and
investments to
accelerate growth of
NextRadio ($7
million).
Exclude Exclude Emmis
Emmis NY SPV Digonex Ex-Nonrecourse
($ in millions) 5/31/16 (Nonrecourse) (Nonrecourse) 5/31/16
LTM Adjusted EBITDA (1) $40.9 ($9.4) $2.1 $33.6
Cash 4.7 (1.0) (0.5) 3.2
Debt: Rate
Revolver L + 600 9.0 -- -- 9.0
Senior Term Loans L + 600 176.6 -- -- 176.6
Nonrecourse debt - NY 4.10% 64.1 (64.1) -- --
Nonrecourse debt - Digonex 5.00% 4.9 -- (4.9) --
Total Debt Balance $254.6 ($64.1) ($4.9) $185.6
Cash Interest Expense $16.2 ($2.6) ($0.2) $13.3
Total Interest Expense $16.2 $13.3
Total Net Debt / Adjusted EBITDA 6.1x 5.4x
(1) Based on definition in the Company's Credit Agreement. Excludes NextRadio losses, severance charges,
49.9% of Austin EBITDA, barter activity and other noncash items.
20
Compelling free cash flow yield
valuation
The summary below excludes the operations of 98.7FM in New York, which is operated pursuant to an LMA
with Disney/ESPN, but makes no adjustments for Digonex losses, NextRadio losses, or severance
expenses in the LTM period.
LTM 5/31/2016 EBITDA (See appendix for reconciliation) 24,305 Excludes 98.7FM LMA in NY
Less: Capital expenditures (3,369)
Less: Cash Interest expense (13,297) Excludes 98.7FM LMA in NY
LTM 5/31/2016 Free Cash Flow 7,639
Diluted shares outstanding 47,295
Free cash flow/share 0.16$
Price 7/5/2016 0.75$
FCF Yield 21.5%
Appendix
22
EBITDA Reconciliation
LTM 5/31/2016
Trailing twelve-months operating income from continuing operations 20,660$
Plus: Depreciation and amortization 5,679
Plus: Noncash compensation 3,656
Plus: Impairment loss 9,499
Plus: Loss on disposal of assets 56
Less: 49.9% of Austin radio EBITDA (Minority Interest) (5,816)
EBITDA, including New York SPV EBITDA 33,734$
Less: 98.7FM New York LMA LTM EBITDA (9,429)
EBITDA, excluding New York SPV EBITDA 24,305$
Adjusted EBITDA:
EBITDA, excluding New York SPV EBITDA 24,305$
Plus: Digonex LTM losses 2,086
Plus: NextRadio/TagStation LTM losses 4,977
Plus: Severance and contract termination expenses 2,439
Plus/Less: Other (240)
Adjusted EBITDA (Credit Agreement Definition): 33,567$
Emmis Communications
Annual Meeting of Shareholders
July 7, 2016
10:00 a.m.