Emmis Communications Reports 4th Quarter and Full-Year Results

Indianapolis…Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its fourth fiscal quarter and full year ended February 28, 2009.

“Across our properties, we see signs that the operating environment is slowly improving,” Emmis Chairman and CEO Jeff Smulyan said. “These improvements coupled with recent actions to LMA KMVN-FM in Los Angeles and repurchase and retire $78.5 million of our bank debt for $44.7 million position Emmis well for the inevitable rebound in our radio and publishing operations.”

For the fourth fiscal quarter, net revenue was $68.5 million, compared to $85.4 million for the same quarter of the prior year.

Diluted net income (loss) per common share from continuing operations was ($4.29), compared to ($0.52) for the same quarter of the prior year. The loss in the fourth quarter of the fiscal year ended February 28, 2009 is principally due to a non-cash impairment charge of $163.2 million, a valuation allowance for deferred tax assets of $29.4 million and lower net revenues.

For the fourth quarter, pro forma radio net revenues decreased 18 percent and publishing net revenues decreased 26 percent. Domestic radio net revenues for the fourth quarter decreased 21 percent compared to the same period of the prior year.

For the fourth quarter, our operating loss was $166.7 million, principally due to the impairment loss. Emmis’ station operating income was $7.5 million, compared to $18.8 million for the same quarter of the prior year.

Emmis has included supplemental pro forma net revenues, station operating expenses, and certain other financial data on its website, www.emmis.com under the “Investors” tab.

International radio net revenues and station operating expenses, excluding depreciation and amortization, for the quarter ended February 28, 2009, were $12.5 million and $9.0 million, respectively, representing a pro forma decrease of 8 percent and an increase of 8 percent, respectively, over the same period of the prior year.

During the quarter, Emmis exercised its early purchase option on its leased corporate jet. Emmis paid $10.2 million in cash, net a refundable deposit of $4.2 million, to AVN Air, LLC, the lessor of the aircraft. Emmis sold the corporate jet on April 14, 2009 for $9.1 million in cash.

Also during the quarter, Patrick Walsh, EVP/Chief Financial Officer, added the responsibility of Chief Operating Officer to his role and will now oversee all domestic radio. Rick Cummings, president of the radio division since 2002, remains with Emmis as President of Programming for Emmis Radio.

Subsequent to the quarter end, Emmis entered into a long-term Local Marketing Agreement and a Put and Call Agreement for KMVN-FM in Los Angeles with a subsidiary of Grupo Radio Centro (GRC), one of Mexico’s leading broadcasting companies. The LMA for KMVN-FM started April 15, 2009 and will continue for up to 7 years, for $7 million a year plus reimbursement of certain expenses. At any time during the LMA, GRC has the right to purchase the station for $110 million. At the end of the term, Emmis has the right to require GRC to purchase the station for the same amount. Under the LMA, Emmis continues to own and operate the station, with GRC providing Emmis broadcast programming.

On March 3, 2009, Emmis amended its bank credit agreement. The amendment allowed Emmis to repurchase some of its bank debt at current market prices and to exclude up to $10 million of severance and contract termination expenses from consolidated operating cash flow (as defined in the credit agreement). The amendment also reduced the amount of the revolving line of credit available to Emmis from $145 million to $75 million and restricted Emmis’ ability to perform certain activities, including further funding of the TV Proceeds Quarterly Bonus Program, which is being discontinued effective June 1, 2009.

Between April 14 and May 1, Emmis closed a series of Dutch auction tenders, repurchasing $78.5 million in face amount of its bank debt for $44.7 million in cash. The repurchased bank debt was simultaneously cancelled and forgiven.

In response to a deteriorating economic environment and sharp decline in advertising revenues, on March 5, 2009, the Company announced a broad payroll reduction plan targeting $10 million of annual operating savings. In connection with the plan, approximately 100 employees were terminated, the salary of all remaining non-contract employees was reduced by 5%, and all employees under contract were asked to voluntarily reduce their salary by 5%. All executive officers voluntarily reduced their salaries by 5%.

Total severance paid to terminated employees was approximately $7.6 million. Approximately $4.2 million of this total was paid pursuant to our standard severance policy and was recorded in the fourth quarter. Approximately $3.4 million represents enhanced severance that is a one-time termination benefit and will be recorded in the first quarter of fiscal 2010. While Emmis may incur additional severance and contract termination costs in the remainder of fiscal 2010, we do not believe the total of these costs will exceed the $10 million severance and contract termination basket in our credit agreement.

The following table reconciles reported results to pro forma results (dollars in thousands):

Emmis generally evaluates the performance of its operating entities based on station operating income. Management believes that station operating income is useful to investors because it provides a meaningful comparison of operating performance between companies in the industry and serves as an indicator of the market value of a group of stations or publishing entities. Station operating income is generally recognized by the broadcast and publishing industries as a measure of performance and is used by analysts who report on the performance of broadcasting and publishing groups. Station operating income does not take into account Emmis’ debt service requirements and other commitments, and, accordingly, station operating income is not necessarily indicative of amounts that may be available for dividends, reinvestment in Emmis’ business or other discretionary uses.

Station operating income is not a measure 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. Moreover, station operating income is not a standardized measure and may be calculated in a number of ways. Emmis defines station operating income as revenues net of agency commissions and station operating expenses, excluding depreciation, amortization and non-cash compensation.

Emmis Communications – Great Media, Great People, Great Service®Emmis is an Indianapolis-based diversified media firm with radio broadcasting and magazine publishing operations. Emmis owns 20 FM and 2 AM domestic radio stations serving the nation’s largest markets of New York, Los Angeles and Chicago, as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. Emmis also owns a radio network, international radio stations, regional and specialty magazines, and an interactive business.

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

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words “expect,””believe,” “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 the Company 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 and demand for different types of advertising media;
• our ability to service our outstanding debt;
• increased competition in our markets and the broadcasting industry;
• our ability to attract and secure programming, on-air talent, writers and photographers;
• 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;
• increases in the costs of programming, including on-air talent;
• inability to grow through suitable acquisitions;
• changes in audience measurement systems• new or changing regulations of the Federal Communications Commission or other governmental agencies;
• competition from new or different technologies;
• war, terrorist acts or political instability; and
• other factors mentioned in documents filed by the Company with the Securities and Exchange Commission.

Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.