Emmis Corporation · OTC:EMMS
Emmis — Lehman Brothers 2004 Small Cap Conference
32 slides from Emmis's conference presentation, Nov 18, 2004
Slide 1: Lehman Brothers 2004 Small Cap Conference
Lehman Brothers 2004 Small Cap Conference Thursday, Nov. 18, 2004
Slide 2: Forward-looking statements and Regulation G note
greatmedia. greatpeople. greatservice. ® 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 factor
Slide 3: Investment highlights
Top ten positions in New York, Los Angeles and Chicago Managing inventory to maximize rate Television stations have significantly outperformed the industry for two consecutive years Focus on balance sheet Strong conversion of EBITDA into cash flow and limited capital requirements Strong
Slide 4: Emmis divisions: Radio, Television, Publishing
• Emmis’ Radio Division consists of the leading U.S. Pub markets, including New York 13% City, Los Angeles and Chicago, as well as TV Indianapolis, St. Louis, 40% Actual Revenue Austin and Phoenix. Radio Year End Feb. 2004 47% • Emmis’ Television Division is comprised of 16 network- affiliated stati
Slide 5: Media usage will continue to increase
The New VSS Forecast Says Media Usage Will Continue to Increase • By 2008, the average consumer will spend 78 hours a week with media—and advertiser-supported media will decline to a 54.1% share of that time. • Media usage will continue to be influenced by longer commutes and more time spent with ni
Slide 6: Time spent with media in the last 24 hours
“In the last 24 hours, approximately how much time did you spend…?” (Mean) 3:113:063:06 3:21 2:56 2:45 2:52 2:38 2:31 2:31 2:24 1:55 1:06 1:26 1:10 1:04 0:41 0:49 0:57 0:28 0:310:34 0:28 0:00 Watching Listening To The Reading On The Internet Television Radio Newspaper Adults 18+ Hispanic Ad 25-54 Wo
Slide 7: wie’
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Slide 8: FM radio stations in top three markets
7 FM radio stations serving the nation’s top three markets — New York, Los Angeles and Chicago Additional 16 FM and 2 AM radio stations with strong positions in large markets, including Phoenix, St. Louis, Austin and Indianapolis In FY 2004, Emmis radio revenues were up 4.5%, two percentage po
Slide 9: Building Shareholder Value: Chicago-Phoenix Swap
Building Shareholder Value: Recently announced Chicago- Phoenix Swap Emmis to exchange three of its Phoenix stations for WLUP-FM in Chicago and $70 million in cash Emmis gets heritage classic rock station to complement its existing heritage alternative rock station Significant revenue growth
Slide 10: Emmis Domestic Radio Fiscal 2004 Review
Emmis Domestic Radio Fiscal 2004 Review ($ in millions) Operating and Financial Performance Calendar 2003 vs. Peers Net Revenues Station Operating Income(a) • Emmis met or beat market growth in every quarter CCU (1.0)% (1.7)% • Emmis Markets: +2.7% revenue Infinity (1.1)% (4.7)% (fiscal year) CMLS (
Slide 11: Same-Station Radio Revenue Growth 1999 to Q2 2004
Same-Station Radio Revenue Growth from 1999 to Q2 2004 UBS Universe ROIA ETM EMMS* CMLS CXR BBGI INF CCU 0% 5% 10% 15% 20% *UBS estimate for Q2 2004
Slide 12: Diversified format, demo
Diversified format, demo… Cume by Format Target Demo Soft Adult CHR News/ Hot Adult Sports Rock Country 12-24 25-54 Jazz Hip Hop 18-34 R&B
Slide 13: and advertiser base
…and advertiser base FY 2005 Estimate Category mix for Q2 FY ’05 1. Auto – 14% 2. Beverages – 8% 3. Restaurants – 7% Local 4. Media – 5% 81% 5. Cellular/Pager Services – 5% 6. Banks/Credit Card/Mortgage– 5% National 7. Movies/Video – 5% 19% 8. Dept. Stores/Clothing– 5% 9. Entertainment – 4% 10. Auto
Slide 14: Spot sell out and rate change
FY 2004 Spot Sell Out Change Rate Change over previous year over previous year Q1 -2.7% +10.5% Q2 -6.0% +6.1% Q3 -2.0% +6.2% Q4 -4.1% +4.3% FY 2005 Q1 -1.3% +3.8% Q2 -1.6% +3.6
Slide 15: New York station ratings
Summer Fall Winter Spring Summer 2003 2003 2004 2004 2004 10.3 Hot97 8.8 10.0 9.5 9.4 #1 (18-34) #1 #1 #1 #1 31 straight @ #1 18-34 CD101.9 3.8 3.5 3.5 3.5 3.1 (25-54) #8 (tie) #8 (tie) #10 (tie) #8 (tie) #13 (Tie) 6.1 Kiss 98.7 5.2 5.5 5.7 5.7 #2 (25-54) #2 #3 #3 #3 Highest since Spring 1996
Slide 16: Emmis NY Cluster Performance
Emmis NY Cluster Performance 25 20 15 Yr to Yr % Change 10 5 0 F'00 F'01 F'02 F'03 F'04 Proj. F'05 -5 -10 -15 -20 Yearly Progression NY Market Rev Emmis NY Cluster Rev
Slide 17: Emmis has #1 station in #1 U.S. revenue market
Power 106, has been #1 12+ and 18-34 in the ratings for 10 straight books in the #1 U.S. revenue market Fast growing target demo Hot morning personality Emmis has #1 station in One of the top-billing stations in the U.S. #1 U.S. revenue market
Slide 18: Heritage rock stations and other market positions
Chicago’s Q101 and The Loop are heritage rock stations in the market, with legendary brands and tremendous upside St . Louis has FM “Rock Block” cluster, based on Summer 2004; KSHE Top 3 in 25-54 in 12 of last 13 books; currently #1 (highest since Sum 96); KPNT top 3 in 18-34; #1 in 10 of the la
Slide 19: Emmis TV reaches 7.3 million U.S. Households
Emmis TV reaches 7.3 million U.S. Households
Slide 20: Emmis Television Fiscal 2004 Review
Emmis Television Fiscal 2004 Review ($ in millions) Operating and Financial Performance Calendar 2003 vs. Peers • Local revenue for the division was Net Revenues Station Operating Income(a) up 13.7% HTV (4.8)% (10.8)% • Overcame net loss of $13.6 million in political revenue and LIN (4.7)% (14.5)% $
Slide 21: Emmis TV revenue share growth
Emmis TV grew revenue share at 11 of 13 measured stations in calendar ’03 Limited network compensation - $2 m in FY ’04 Held expense growth to 1.7% TV stations positioned in many political battleground states
Slide 22: Emmis owns and operates 16 TV stations
Emmis owns and operates 16 TV stations in 14 markets Emmis’ TV markets are predominantly middle- sized, with 2 large markets, Orlando & Portland Diversity of network affiliation CBS(5), Fox(5), NBC(3), WB(2), ABC(1) The Television group has attained remarkable revenue growth by applying th
Slide 23: Local, National & Political
Local, National & Political Category mix for Q2 FY ’05 FY 2005 Estimate 1. Auto – 25.2% 2. Restaurants – 9.7% 3. Political – 7.5% 4. Retail – 6.8% 5. Entertainment – 4.9% 6. Medical/Drugs – 4.4% 7. Furniture – 4.4% 8. Food Products – 4.1% 9. Professional Services – 3.8% 10. Paid Programming – 3.5% L
Slide 24: Publishing division
5 million monthly readers Minimal capital requirements High returns on investment Sláger is #1 in Budapest Emmis Mags win National Magazine Award and 24 of 63 national awards at CRMA (5/2004)
Slide 25: Emmis Financials
Emmis Financials
Slide 26: Summary Historical Financials
Summary Historical Financials ($ in millions) Station Operating Income Net Revenues and Adjusted EBITDA (a,b) $700 $250 $223.9 R $219.8 A GR $579.5 $599.6 % CAG 20.1 $600 %C 20.8 $539.8 $200 $185.7 $500 $473.3 $174.2 $150 $400 $125.4 $198.4 $199.8 $325.3 $300 $165.4 $100 $89.5 $156.6 $232.8 $110.0 $
Slide 27: Emmis Net Revenue by Division
Emmis Net Revenue by Division FY 2003 FY 2004 FY 2005 Pub, Pub, Pub, 12.6% TV, 12.7% 12.2% TV, TV, 40.1% 39.2% 40.7% Radio, Radio, Radio, 47.3% 48.1% 47.1% *Note: 2003 and 2004 are pro forma and 2005 is an estimate.
Slide 28: Comparative Statistics
Comparative Statistics Total Interest Cost ($000s) WACD 8.93% $140,000 9.00% $129,100 $125,000 8.00% 7.68% 6.92% $110,000 $103,835 7.00% $95,000 $86,300 6.00% $80,000 5.00% 4.70% $70,332 $65,000 4.00% $50,000 3.00% 2002 2003 2004 2005 2002 2003 2004 2005 FCF / Share* Net Leverage $2.50 10.00x $2.09
Slide 29: Comparative Statistics (continued)
Total Interest Cost ($000s) $145,000 Refi Comparative Statistics $130,000 (continued…) $115,000 $100,000 $85,000 $70,000 $55,000 2002 2003 2004 2005 2006 2007 2008 Net Leverage FCF / Share 10.00x Refi $3.50 9.00x Refi $3.00 8.00x $2.50 7.00x $2.00 6.00x $1.50 5.00x $1.00 4.00x $0.50 3.00x $0.00 2002
Slide 30: Impact of Refinancing Capital Structure – FCF Model
Impact of Refinancing Capital Structure – FCF Model Emmis Post Refinancing Capital Structure MidCap Radio TV Index Current Average FCF Average FCF Multiple Multiple Free Cash Flow Multiple 11.6x 13.0x 14.5x 16.0x 17.5x 19.2x 17.2x Hypothetical Share Price $19.31 $21.67 $24.17 $26.67 $29.17 $31.94 $2
Slide 31: Trailing Free Cash Flow Multiples
Trailing Free Cash Flow Multiples Emmis FY2/04 vs. Comps CY03 Emmis 2/04 Emmis 2/04 PF FCF $67 $92 FCF/Share $1.21 $1.67 24.3x 21.9x 20.8x 19.6x 20.0x 18.2x 17.3x 15.9x 15.3x 15.2x 11.6x EMMS EMMS CMLS ROIAK CDL CXR ETM GTN LIN HTV Newspapers 2/04 2/04PF Radio TV Note: Free Cash Flow = Operating Inc
Slide 32: Lehman Brothers 2004 Small Cap Conference
grea t grea media tp e . Lehman Brothers grea ople tser . 2004 Small Cap Conference vice . Thursday, Nov. 18, 2004 ®