EMMIS COMMUNICATIONS REPORTS RECORD 1ST QUARTER RESULTS

NET REVENUES UP 14% TO $161.0 MILLION

Indianapolis – Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its first fiscal quarter ending May 31, 2004.

“In a highly competitive environment, it was another strong quarter for Emmis,” Jeff Smulyan, Chairman and CEO of Emmis, said. “In radio, New York continues to lead the way as investments we made last year in product and management are paying off. Our television group had nine stations in eleven measured markets exceed their market revenue growth, with a strong political season ahead. These results reflect our focus on strong revenue growth and quality cash flow. And with the debt refinancing we completed this quarter, we are on track for a record year.”

For the first fiscal quarter, reported net revenue was $161.0 million, compared to $141.5 million for the same quarter of the prior year, an increase of 14%. On a pro forma basis, net revenue for the quarter was $161.0 million, compared to $146.8 million for the same quarter of the prior year, an increase of 10%. Diluted Earnings Per Share (EPS) for the quarter were ($1.36) compared to diluted EPS of $0.01 for the same quarter of the prior year. Included in the current quarter is a loss on debt extinguishment of $97.0 million, or a loss of $1.48 per share, net of tax.

For the first quarter, reported radio net revenues increased 17%, while pro forma radio net revenues increased 6%. Reported television net revenues increased 13%, while pro forma television net revenues increased 16%. Publishing net revenues increased 2%.

For the first quarter, operating income was $36.9 million, compared to $28.6 million for the same quarter of the prior year. Emmis’ station operating income for the first quarter was $63.1 million, compared to $52.6 million for the same quarter of the prior year, an increase of 20%.

These results exceed the company’s previous guidance, as well as Wall Street consensus estimates for revenues and station operating income.

Emmis has included supplemental pro forma net revenues, station operating expenses excluding non-cash compensation and certain other financial data, on its website, www.emmis.com. This information, which includes all consummated station acquisitions and dispositions, can be found under the “Investors” tab.

As mentioned above, during its first quarter the company’s principal subsidiary, Emmis Operating Company, completed a successful debt refinancing that will significantly lower the cost of capital and improve pro forma free cash flow by approximately $25 million. In the transactions, Emmis Operating Company issued $375 million of 6 7/8% senior subordinated notes due 2012 and entered into a new senior credit facility in an aggregate amount of $1.025 billion. The new credit facility consists of a senior secured term loan facility of $675 million and a senior secured revolving credit facility of $350 million. Emmis used the net proceeds from the offering of senior subordinated notes and borrowings under the new senior credit facility to repay all indebtedness under Emmis Operating Company’s prior credit facility, to repurchase or redeem all of Emmis Operating Company’s outstanding 8 1/8% senior subordinated notes, and to repurchase substantially all of Emmis Communications Corporation’s 12 1/2% senior discount notes.

Under the terms of Emmis Operating Company’s new credit facility, Emmis Communications Corporation total consolidated debt-to-EBITDA leverage (including senior discount notes) was 6.9x as of May 31, 2004.

International radio net revenues and station operating expenses for the quarter ended May 31, 2004, were $2.9 million and $2.4 million, respectively.

Pro forma calculations assume the following events all had occurred on March 1, 2003: (a) the acquisition of a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area in July 2003 and (b) the disposition of Mira Mobile, a mobile television production company, in June 2003.

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

3 months ended May 31, %
  2004 2003 Change
Radio
Reported net revenues $74,703 $63,784 17%
Plus: Revenues from assets acquired 6,404  
Less: net revenues
   from assets disposed
 
Pro forma net revenues $74,703 $70,188 6%
Television
Reported net revenues $68,434 $60,298 13%
Plus: Revenues from assets acquired  
Less: net revenues
   from assets disposed
(1,134)  
Pro forma net revenues $68,434 $59,164 16%
Publishing
Reported net revenues $17,895 $17,466 2%
Plus: Revenues from assets acquired  
Less: net revenues
   from assets disposed
 
Pro forma net revenues $17,895 $17,466 2%
Total Company
Reported net revenues $161,032 $141,548 14%
Plus: Revenues from assets acquired 6,404  
Less: net revenues
   from assets disposed
(1,134)  
Pro forma net revenues $161,032 $146,818 10%
Guidance Table
(Dollars in millions)
2nd Quarter Guidance
  Quarter ended 8/31/04
Net Revenues:
Domestic Radio $81.4
International Radio 4.5
   Total Radio 85.9
Television 61.9
Publishing 19.5
   Total net revenues $167.3

 
Station Operating Expenses, excluding non-cash compensation:  
Domestic Radio $43.7
Foreign Radio 3.3
   Total Radio 47.0
Television 38.8
Publishing 17.0
   Total station operating expenses,
   excluding non-cash comp
$102.8 (A)
Corporate Expenses $8.4 (B)

(A) The above guidance reflects the previously announced reduction in the company’s stock compensation program, which will increase cash compensation costs by an estimated $1.5 million in the quarter ending Aug. 31, 2004. An analysis of the impact this reduction is expected to have on reported results by division is available under the “Investors” tab on the company’s website, www.emmis.com.

(B) Included in forecasted corporate expenses for the quarter ended Aug. 31, 2004 is approximately $1.8 million of expenses associated with the Broadcasters Initiative.

Emmis will host a conference call regarding this information on Wednesday, June 30, 2004 at 9 a.m. Eastern at 1.630.395.0024, with a replay available until Wednesday, July 7, 2004 by calling 1.203.369.0632, or listen on-line by logging on to www.emmis.com.