Indeed, BIA Advisory Services estimates that overall radio ad revenue in 2019 will increase a mere 2%, reaching $14.5 billion. It’s the same song radio operators have been hearing for years.
“It’s very hard,” Smulyan said. “I think we’ve got some of the best people who’ve ever done radio. But we learned for a lot of reasons that the likelihood of great growth is probably not there.”
Indeed, it has been a bruising stretch for radio, following a consolidation spree around the turn of the century in which station operators—Emmis included—snapped up stations at what proved to be sky-high prices.
A barrage of forces, including the Great Recession, the rise of Pandora and Spotify, and the proliferation of digital advertising alternatives conspired to knock some of Emmis’ rivals into bankruptcy.
The Indianapolis company avoided that fate, but the prices at which it has sold stations expose the industry’s painful new economics. For example, under a deal announced in June, Emmis is set to receive just $39 million for the controlling interest in Austin, Texas, radio stations it acquired in 2003 for $105 million.
Emmis, which Smulyan founded in 1980, once owned more than 20 U.S. stations. After selling stations in Los Angeles, Terre Haute and St. Louis and completing pending deals for stations in Austin and New York City, the company will be down to just six.
Smulyan said he’s committed to holding on to Emmis’ Indianapolis assets, which include the dynamic-pricing firm Digonex and the magazine Indianapolis Monthly, as well as four radio stations.
Its other two stations are in New York. It is trying to sell one, and it leases the second to ESPN for an all-sports station under an agreement extending into 2024.
The selloff will leave Emmis, which once had more than $1.3 billion in debt, with no secured debt beyond the $13 million mortgage on its Monument Circle headquarters. It also will leave Emmis with more than $88 million in cash, a stockpile Smulyan said will allow it to buy businesses with a stronger growth profile. Nothing is imminent, he said, but the company already is reviewing potential targets.
“We feel this is an opportunity to sort of reinvent ourselves.