Emmis Corporation · OTC:EMMS
Emmis — Emmis Communications — 13th Annual Deutsche Bank Media/Telecom Conference 2005
36 slides from Emmis's conference presentation, Jun 7, 2005
Slide 1: 13th Annual Deutsche Bank Media/Telecom Conference
13th Annual Deutsche Bank Media/Telecom Conference Tuesday, June 7, 2005 ® ®
Slide 2: Forward-looking statements note
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 involved known and unknown risks, uncertainties and other factors which may cause the actual results, per
Slide 3: Emmis Investment Highlights
Emmis Investment Highlights ¾ Unparalleled large market broadcasting assets ¾ Consistent outperformance of peer group and industry ¾ Strong Free Cash Flow generation & significant balance sheet improvement ¾ Disciplined acquisition strategy ¾ Performance driven organization ®
Slide 4: Emmis Radio
Emmis Radio Fort nace KSHE95 Wide \Al greatmedia.greatpeople.greatservice.
Slide 5: Emmis Television
Emmis Television KSNT-TOPEKA greatmedia.greatpeople.greatservice.
Slide 6: Overview of Tender Offer
Overview of Tender Offer Total Transaction Size $350-$450 m Mechanism Dutch Auction Expiration Date June 13, 2005 Max. # of Class A shares Sought (mm) 20.25 $$ Range Per Share offered $17.25 - $19.75 (a) % Premium per share 11.7% - 27.8% (b) % of Outstanding Stock Class A & B 36% (b) % of Outstandin
Slide 7: Strategic Alternatives: TV Division
Strategic Alternatives: TV Division ¾ Allows management to delever the Company and have a more flexible capital structure ¾ Creates pure play radio company, allowing management to focus on its core business - radio ¾ Realize full value of TV assets by capitalizing on the disconnect between public an
Slide 8: Inside Emmis
Inside Emmis greatmedia.greatpeople.greatservice.
Slide 9: Emmis Net Revenue by Division
Emmis Net Revenue by Division (In Thousands) Pub, Pub, Pub, 13.6% 13.5% 12.6% TV, TV, TV, 43.7% 41.7% 42.8% Radio, Radio, Radio, 42.7% 44.8% 44.6% FY 2003 FY 2004 FY 2005 Radio 228,678 253,108 275,920 Television $234,752 $235,938 $264,865 Publishing 72,793 76,108 77,675 $536,223 $565,154 $618,460 ®
Slide 10: Emmis SOI by Division
Emmis SOI by Division (In Thousands) Pub, Pub, Pub, 4.9% 4.9% 4.2% TV, TV, TV, Radio, 42.8% 40.8% Radio, 45.5% Radio, 52.2% 54.3% 51.5% FY 2003 FY 2004 FY 2005 Radio 105,866 113,670 120,417 Television $86,711 $85,453 $103,716 Publishing 9,968 10,299 9,805 $202,545 $209,422 $233,938 Stock Comp $18,26
Slide 11: Competitive Landscape
Competitive Landscape greatmedia.greatpeople.greatservice.
Slide 12: Compelling Upside in Radio
Compelling Upside in Radio ¾ Radio has 32.5% of consumer media usage but only 8% of advertising ¾ Time spent with radio projected to increase as commutes grow longer ¾ Fragmentation means consumers are hard to reach ¾ Trend toward more targeted advertising continues ®
Slide 13: NYC – Rating Dominance
NYC – Rating Dominance Spring Summer Fall Winter 2004 2004 2004 2005 10.2 10.2 9.4 10.3 #1 #1 #1 #1 32nd Straight @ 33rd Straight @ 18-34 #1 18-34 #1 18-34 5.2 6.3 5.7 6.1 #3 #3 #3 #2 25-54 Highest since 25-54 Spring 1996 3.5 3.1 4.1 2.4 #8 (tie) #13 (Tie) #6 (25-54) #16 25-54 ®
Slide 14: LA – Continued Ratings Dominance
LA – Continued Ratings Dominance ¾ Power 106, has been #1 12+ and 18-34 in the ratings for 12 straight books in the #1 U.S. revenue market ¾ Fast growing target demo ¾ Hot morning personality ¾ One of the top-billing stations in the U.S. ®
Slide 15: Chicago – Strategic Fit
Chicago – Strategic Fit ¾ Three Emmis Phoenix stations for WLUP-FM in Chicago and nearly $75m cash ¾ Cash received used to repay senior debt – deleveraging transaction ¾ Heritage classic rock station complements existing alternative rock station ¾ Significant revenue growth in next 2-3 years ¾ Cost
Slide 16: Radio Ratings Leader
Radio Ratings Leader Average Emmis Average Market Emmis % Market Rating Rating above market New York 4.1 2.5 63.9% Los Angeles 3.5 1.8 90.7% Chicago 2.0 2.3 -14% St. Louis 3.6 3.6 0.6% Phoenix 4.9 3.1 57.5% Indianapolis 4.6 4.5 1.5% Austin 4.5 2,2 106.9% Terre Haute 8.1 2.3 250% ®
Slide 17: Emmis Radio Outperformance
Emmis Radio Outperformance ¾ Emmis met or beat market growth in each of last 8 quarters Emmis vs. Markets FY 2004 FY 2005* 5.0% 4.5% 5.0% 4.0% 4.0% 2.7% 2.6% 3.0% 3.0% 2.0% 2.0% 0.5% 1.0% 1.0% 0.0% 0.0% Emmis Markets Emmis Emmis Markets Emmis ® *Excludes results from WLUP-FM, which was acquired 1/15
Slide 18: Inventory Management
Inventory Management Radio Rate Increases ¾ Maximize revenues 12% by managing 10% Avg: 5.5% inventory to maximize 8% rate 6% ¾ Consistent history of 4% rate increases 2% ¾ Expect to benefit from 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 competitors’ “less is more” FY 2004 FY 2005 ®
Slide 19: TV: Diversified location, affiliation
TV: Diversified location, affiliation ¾ Emmis owns and operates 16 TV stations in 14 markets ¾ Emmis’ TV markets are predominantly middle- sized, with 2 large markets, Orlando & Portland ¾ Diversity of network affiliation ¾CBS(5), Fox(5), NBC(3), WB(2), ABC(1) ®
Slide 20: Emmis TV Outperformance
Emmis TV Outperformance ¾ Increased margins from 29% to 40% since acquisition ¾ Emmis TV grew revenue share at 11 of 13 measured stations in calendar ’03 and 8 of 13 in calendar ‘04 ¾ Limited network compensation - $2 m in FY ’04 and FY ‘05 FY ‘05 vs. Peers Net Revenues 14% Station Operating Income
Slide 21: Publishing highlights
5 million ¾ Minimal capital monthly requirements readers ¾ High returns on investment ®
Slide 22: Emmis Financials
Emmis Financials greatmedia.greatpeople.greatservice.
Slide 23: Summary Historical Financials
Summary Historical Financials Net Revenues $700 R $618.5 CAG $565.2 $600 % 17.7 $510.3 $536.2 $500 $453.7 $400 $325.3 $300 $232.8 $200 $100 $0 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 ®
Slide 24: Summary Historical Financials
Summary Historical Financials Station Operating Income and Adjusted EBITDA (a,b,c) $250 $233.9 R $209.4 CAG $202.5 4 % 17. $200 $179.7 $170.9 $203.1 Station Operating $181.2 $185.3 Incom e $150 Adjusted $125.4 $153.2 $159.4 EBITDA $100 $89.5 $110.0 $77.6 $50 $0 FY1999 FY2000 FY2001 FY2002 FY2003 FY2
Slide 25: Substantial Operating Leverage
Substantial Operating Leverage ¾ Continue to use Adjusted $203 EBITDA* FCF to deleverage Interest $67 Expense ¾ Refinancing CapEx $25 dramatically Preferred Stock $9 Div reduced borrowing Minority Interest $3 costs and increased FCF Cash Taxes $0 PF FCF $99 ¾ Free Cash Flow per share of $1.77 ® Mana
Slide 26: Pro Forma Debt Capitalization for Divestiture of TV
Pro Forma Debt Capitalization for Divestiture of TV (assumes $1.0 billion of sale proceeds) ($ in Millions) Pre Post As of February 28, 2006 TV Sale TV Sale Existing EBITDA (a) Pro Forma PF EBITDA (b) Capitalization Multiple Capitalization Multiple Cash & Equivalents $16.1 $16.1 Revolver ($350) $234
Slide 27: Significant Debt Reduction
Significant Debt Reduction $160,000 Total Interest Cost ($000s) $129,100 $120,000 $103,835 $86,300 Floating $80,000 $66,657 Fixed $40,000 $0 FY2002 ® FY2003 FY2004 FY2005* *Fixed interest includes amortization of debt fees * estimate
Slide 28: Refinancing Dramatically Reduces Cost of Capital
Refinancing Dramatically Reduces Cost of Capital 8.93% WACD 10.0% 7.68% 6.92% 8.0% 5.20% 6.0% 4.0% 2.0% 0.0% FY 2002 FY 2003 FY 2004 FY 2005 ®
Slide 29: Significant Debt Reduction
Significant Debt Reduction 10 9.3x Net Leverage 8 6.5x 6.7x 5.9x 6 4 FY 2002 FY 2003 FY 2004 FY 2005 ®
Slide 30: Significant Debt Reduction Fuels FCF Growth
Significant Debt Reduction Fuels FCF Growth $2.40 FCF / Share* $1.77 $1.90 $1.32 $1.40 $0.89 $0.90 $0.40 ($0.09) ($0.10) FY 2002 FY 2003 FY 2004 FY 2005 ® *NOTE: FCF per Share defined as Adjusted EBITDA – cash taxes – all interest expense – capital expenditures – preferred dividends. (1) The reconci
Slide 31: Compelling FCF Valuation
Compelling FCF Valuation 17.8x 17.5x 15.7x 14.7x 13.6x 12.5x 12.8x 10.2x EMMS CMLS ROIAK ETM CCU CXR TV Newspapers ® Source: Lehman Brothers for all companies
Slide 32: Reg G Reconciliations
Reg G Reconciliations Computation of Company Total Leverage Ratios Dollars in Thousands Computation of Emmis Total Leverage Ratio Under the Senior Discount Notes: 2/28/05 2/29/04 2/28/03 2/28/02 Numerator: Senior credit facility debt outstanding $ 804,313 $ 739,832 $ 706,898 $ 952,000 Plus: Letters
Slide 33: Reg G Reconciliations
Reg G Reconciliations Emmis Communications Corporation Reconciliation of Operating Income to Station Operating Income For the years ended February 2003 - 2005 Actual Actual Actual FY 2003 FY 2004 FY 2005 Operating Income $ 116,972 $ 104,494 $ 140,375 Plus: Depreciation and amortization 42,334 45,701
Slide 34: Reg G Reconciliations
Reg G Reconciliations Emmis Communications Corporation Reconciliation of EBITDA, Adjusted EBITDA and FCF to Income (loss) f Dollars in Thousands FY 2005 Income (loss) from continuing operations $ (43,703) Plus: Depreciation and amortization 46,201 Plus: Income taxes 15,941 Plus: Interest expense 66,
Slide 35: Reg G Reconciliations
Reg G Reconciliations Emmis Communications Corporation Reconciliation of EBITDA, Adjusted EBITDA and FCF to Income (loss) f Dollars in Thousands FY 2005 Income (loss) from continuing operations $ (43,703) Plus: Depreciation and amortization 46,201 Plus: Noncash compensation 16,570 Plus: Income Tax p
Slide 36: 13th Annual Deutsche Bank Media/Telecom Conference
13th Annual Deutsche Bank Media/Telecom Conference Tuesday, June 7, 2005 ® ®
Emmis Communications — 13th Annual Deutsche Bank Media/Telecom Conference 2005 on 6ix