Emmis Communications Reports 3rd Q Results

Emmis BCF Up 36%; Net Revenue Up 12%

Indianapolis…Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its third fiscal quarter ending Nov. 30, 2002.

For its third fiscal quarter, Emmis’ broadcast cash flow (BCF) was $67.8 million, compared to $49.7 million for the same quarter of the prior year, an increase of 36%. Net revenue for the quarter was $155.5 million compared to $138.3 million for the same quarter of the prior year, an increase of 12%.

“This really was a remarkable period for our company,” Emmis Chairman and CEO Jeff Smulyan said. “We have continued to dramatically de-lever our balance sheet, and our New York radio performance has seen a tremendous rebound. Our television group has performed spectacularly by all measurable standards — in addition to great ratings, they outperformed in 13 of the 14 Emmis Television markets.”

These results significantly exceed the company’s previous guidance as well as Wall Street estimates for revenues and broadcast cash flow. Earnings Per Share (EPS) was $0.16 compared to ($0.29) for the same quarter of the prior year.

On a pro forma basis, net revenue for the quarter increased 15% and domestic radio net revenue increased 7%. Further, for the 3rd Quarter, Free Cash Flow (FCF) was $26.6 million compared to $3.6 million in the same quarter of the prior year.

Emmis’ after-tax cash flow (ATCF) was $35.6 million, an increase of 86% from the same quarter of the prior year. ATCF per share in the third quarter was $0.67, up from $0.40 in the same quarter of the prior year.

Fall 2002 ratings information for the New York market was released by Arbitron earlier this week, and Emmis had stellar results. WQHT ranked a solid #1 in its target demographic (18-34) with a 9.4 share, 2.6 share points in front of its direct format competitor. WRKS’ best ratings performance since Fall 1999 moved it to #3 25-54 with a 5.0 share, up from 12th place just last year. WQCD ranked #7 25-54 with a 4.0 share. As a cluster on a 12+ basis, Fall 2002 marked the highest aggregate Fall cluster share since 1997.

Emmis’ total debt-to-EBIDTA leverage (including senior discount notes) is now under 7x, compared with Emmis’ February 28, 2002 leverage of 9.3x. Based on the guidance for its fiscal fourth quarter (listed below), Emmis’ total debt-to-EBITDA leverage should be approximately 6.5x at February 28, 2003, with the company’s senior bank leverage expected to be under 4x and Emmis Operating Company’s total debt-to-EBITDA leverage expected to be under 5.5x.

During the company’s 3rd Quarter, Emmis signed a definitive agreement with Pegasus Communications Corporation to purchase WBPG-TV, the WB affiliate in Mobile/Pensacola, which will give Emmis a second television station in the nation’s #63 market. The transaction is expected to close by the end of March 2003.

Barry Mayo, a radio industry and New York City market veteran, was named as Senior Vice President/Market Manager of Emmis-New York in December. Mayo is a co-founder of Broadcasting Partners Incorporated and has served as a media consultant since 1995.

Paul Fiddick, the co-founder of Heritage Media Corporation and former President of Multimedia, was named as President of Emmis International during Emmis’ 3rd quarter. In December, an agreement was reached with the Hungarian broadcasting authority that resolved pending issues and extended Emmis’ national license in Hungary through 2009.

Also after the quarter end, Peter Lund, the former President and Chief Executive Officer of CBS Inc. and CBS Television and Cable, joined the Emmis Board of Directors.

Emmis employees were informed Sept. 6, 2002, of the continuation of a 10% wage cut which is being supplemented with a corresponding 10% Emmis stock award. The extension of the plan, which is completing its first year, is expected to yield cash savings of approximately $14 million over the next twelve months.

4th Quarter Guidance

Quarter ended 2/28/03 Quarter ended 2/28/02 (A) % Change

Net Revenues:

Domestic Radio $50,400 48,000 5.0

Foreign Radio 3,200 4,814 -33.5

Total Radio 53,600 52,814 1.5

Television 51,000 47,112 8.3

Publishing 16,300 16,312 -0.1

Total net revenues 120,900 116,238 4.0

BCF/PCF:

Domestic Radio 19,500 16,310 19.6

Foreign Radio 700 768 -8.9

Total Radio 20,200 17,078 18.3

Television 13,500 12,621 7.0

Publishing 1,500 584 156.8

Total BCF/PCF 35,200 30,283 16.2

Corporate Expenses 5,500 5,404 1.8

EBITDA $29,700 $24,879 19.4

(before certain charges)

(A)Pro forma for the sale of Denver radio stations in May 2002. Revenues and expenses have been adjusted by approximately $1.8 million to reflect the reclassification of expenses related to non-traditional revenue.

Emmis will host a conference call regarding this information on Wednesday, Jan. 8, 2003 at 9 a.m. Eastern at 1.630.395.0024, with a replay available until Wednesday, Jan. 15, 2003 at 1.402.220.3019, or listen on-line by logging on to www.emmis.com.

The Company evaluates performance of its operating entities based on broadcast cash flow (BCF) and publishing cash flow (PCF). Management believes that BCF and PCF are useful because they provide a meaningful comparison of operating performance between companies in the industry and serve as an indicator of the market value of a group of stations or publishing entities. BCF and PCF are generally recognized by the broadcast and publishing industries as a measure of performance and are used by analysts who report on the performance of broadcasting and publishing groups.

BCF and PCF are not measures of liquidity or of performance in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to, and not a substitute for, our results of operations presented on the basis of accounting principles generally accepted in the United States. Specifically, BCF and PCF do not take into account Emmis’ debt service requirements and other commitments and, accordingly, BCF and PCF are not necessarily indicative of amounts that may be available for dividends, reinvestment in Emmis’ business or other discretionary uses. Moreover, BCF and PCF are not standardized measures and may be calculated in a number of ways. Thus, our calculation of these non-GAAP measures may not be comparable to such non-GAAP measures calculated by other companies. Emmis defines BCF and PCF as revenues net of agency commissions and station operating expenses, excluding non-cash compensation.

After Tax Cash Flow is defined by the company as net income plus depreciation and amortization, plus non-cash compensation, plus non-cash taxes, less preferred dividends, and plus non-cash and non-recurring items.

The company defines Free Cash Flow (FCF) as net revenues less segment operating expenses (other than non-cash compensation), corporate expenses (other than non-cash compensation), interest expense (including interest associated with its 12½ % Senior Discount Notes), cash taxes, capital expenditures, and preferred dividends.

Emmis Communications…Great Media, Great People, Great Service sm

Emmis Communications is an Indianapolis based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis’ 18 FM and 3 AM domestic radio stations serve the nation’s largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, 15 television stations, award winning regional and specialty magazines, and ancillary businesses in broadcast sales and publishing.

The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission?s Regulation FD.

Certain statements included above which are not statements of historical fact, including financial data for quarters or other periods that are not yet completed and statements identified with the words ?continues,? “expect,” “will,” or ?would? are intended to be, and are, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended, and 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, general economic and business conditions; fluctuations in the demand for advertising; increased competition in the broadcasting industry including the implementation of competing formats in large markets; changes in the costs of programming; changes in interest rates; inability to grow through suitable acquisitions, including the desired radio; future terrorist attacks or other large-scale disasters; and other factors mentioned in documents filed by Emmis with the Securities and Exchange Commission, including the current report on Form 8-K/A, July 15, 2002. Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

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