NextRadio App Could Derail Smulyan's Bid for Emmis

Jeff Smulyan's offer to take Emmis Communications Corp. private is putting him in an awkward position: downplaying the company's most exciting product.

According to to The Indianapolis Star, shareholders of the Indianapolis-based media company say Smulyan is attempting to buy them out at a lowball price just before Emmis makes a splash with a product that could compete with music apps such as Spotify and Pandora.

Emmis' app, NextRadio, accesses chips in smartphones to let users listen to FM radio for free. Although the app has been available since 2013, investors say Emmis is on the verge of monetizing it after years of piling up heavy losses. Some shareholders want Emmis to remain public so they can reap the benefits.

"NextRadio has enormous potential that will come to fruition in the next few years," John Francis of Santa Monica, Calif.-based Francis Capital Management LLC, wrote in an email. "The board should not consider any buyout transaction that includes NextRadio for at least three years."

That sentiment, echoed by several other shareholders in interviews with IndyStar, threatens to derail Smulyan's third attempt to take Emmis private. Shareholders said Smulyan should offer between $6 and $10 per share — and even then, the deal wouldn't be a no-brainer.

Smulyan, though, countered that investors who oppose his offer are merely negotiating in public for a higher price. The Emmis CEO on Thursday offered $4.10 per share to take Emmis private, a 3.5 percent premium on that day's closing price, which would amount to about $46.5 million. The deal must be approved by a special committee and company shareholders. It's likely to be a monthslong process for Smulyan, who also tried to take Emmis private in 2006 and 2010.

Francis, who declined to say how many shares his firm owns, said he has "spoken with a number of shareholders, and a $4.10 deal is a nonstarter."

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