Jodi Wright - IR Jeffrey H. Smulyan - Chairman, CEO Patrick Walsh - CFO Rick Cummings - President, Emmis Radio

Lee Westerfield - Harris Nesbitt Tim Schlock - Wachovia John Kilme Victor Miller - Bear Stearns & Co. Jim Goss - Barrington Research

(Operator Instructions) Now I would like to turn the call over to Jodi Wright. You may begin.

Good morning and thank you for joining us for today's Emmis Communications conference call regarding second quarter earnings. I want to extend a special welcome to all the Emmis employees who are joining us and listening in this morning, and those of you listening from our website, Emmis.com. We will begin in just a moment with opening comments from Emmis Chairman and CEO Jeff Smulyan and Pat Walsh, CFO. After their opening comments, our conference call moderator will come back on the line to instruct you on how to submit questions. Joining us today to help answer your questions is Rick Cummings, President of Emmis Radio. A playback of this call will be available for the next week by dialing 203.369.1644. This conference call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to Emmis public filings with the SEC for more information on the various risks and uncertainties. Additional disclosure related to non-GAAP financial measures can be found under the investors tab on our website, Emmis.com. I would also like to mention that the link to our supplemental pro forma table has been corrected on the site. Jeffrey H. Smulyan: Jodi, thanks. I'm actually very encouraged by the things we've seen this quarter. The company has had very good ratings gains in almost all situations; encouraging. Also, our local sales effort has improved -- I think dramatically -- and that, coupled with the addition of the Katz Radio Group, should give us an opportunity to also see similar improvement in our national sales. We think this points to a pretty significant rebound for the company. I think in the next quarter coming up, we have a good chance to catch our markets, certainly locally if not overall. That, coupled with the initiatives underway at the company, give me a lot of excitement about where we're going in the future. That's not to say that that is not against the backdrop where our industry is still challenged; but coming out of our convention last week in Charlotte, I think more than ever, I've seen a unified industry that has come together. I am proud of this company because in many cases we've taken a leading role in the initiatives -- not only corporate-wide, but also industry-wide -- that I think will finally re-cement the position of radio in the American media landscape. I've said many times that radio consumption has held up remarkably well. I've looked at one of the pieces of data coming home from Los Angeles last night. For the year, L.A. radio is down about 2 points; L.A. TV is flat to down just a little bit and the L.A. newspaper business is down over 26%. Radio's consumption has held very, very well. We have to do a better job of demonstrating that to advertisers and I think some of the things that we're doing as an industry will do that. Whether it's the HD alliance, as you know, HD radio has had a major breakthrough with Ford Motor Company last week, along with major retailers. That, I think, will demonstrate the vibrancy of American, over the air, local radio. The RAB has reenergized itself with a whole new campaign to reach out to the major 25 advertisers. Portable People Meter, while certainly creating some controversy, addresses the single most important need that our industry has faced with our advertisers, which is accountability. I'm excited about the future of PPM and what it means for our industry. Finally, from an industry standpoint, Radio 2020, which will focus on the 100-year anniversary of this medium and how much importance it has in American life. Those are initiatives that I think will finally point the way toward a rebirth of radio, and to get us back to the growth that we've known for most of our 100 years, but that we haven't had for the last few years. That, coupled with the initiatives that we're taking within this company that I'm so proud of, not only some creativity in formats but our interactive group, which is now reaching out to other companies in the industry and has been an absolute trendsetter. Some of the experimentations we're doing with texting and interoperability, the whole Radio 360 approach; innovative things that I realize people who follow the stock on a day-to-day basis, or even quarter to quarter say, “What have you done for us lately?” This company is on the move, this industry is on the move, and I'm pleased. I think we're coming out of what has been a very long malaise in radio, but I do see enough signs and enough energy, both in this company and this industry. I think it's finally going to recapture its place in the American media landscape. With that, I want to turn it over to Pat Walsh.

Thanks, Jeff. Good morning, everyone. I want to walk through some of the financial results. For our second fiscal quarter ended August 31, 2007 our diluted net income from continuing operations was $0.03 per share, a decrease from $0.05 per share in the three months ended August 31, 2006 and generally in line with the $0.02 per share First Call consensus estimate. Net revenues for the fiscal second quarter were $96.4 million, a 3.5% decrease compared to the second fiscal quarter in FY07. As has been the case in recent quarters, weakness in our domestic radio operations, in particular our New York and Los Angeles radio markets, was offset to some degree by ongoing growth in our international radio and publishing operations. Radio revenues for the second quarter were $74.4 million, down 6% compared to the prior year. Domestic radio net revenues were off 9% during the quarter compared to our markets being down just 4%. Our underperformance in our key New York and Los Angeles radio markets was the primary contributor to the shortfall. In fact, excluding the performance of New York station WRKS and Los Angeles station KMVN, our station portfolio performed in line with our markets. During the second quarter, our revenues in New York were off 11% compared to the prior year; the New York market was down 5%. In Los Angeles, the strength of ratings gains at KPWR offset, to some degree, revenue declines at KMVN such that our stations were off 12.5% while the L.A. market was down 3%. In Chicago, Emmis revenues were off 16% during the quarter in a market down 5%. Our St. Louis market was off 5% in a flat market. Indianapolis market saw 14% in a market down 10%. Our strongest performer in this quarter and most recent quarters, Austin was up 6% in a market up 2%. I just wanted to note the exceptional performance of KBPA, Bob FM in Austin, which continues to pace our results in this strong market. On the international front, our radio division continued to demonstrate strong revenue growth in the second quarter, with revenue up 15%. Each of the European markets continued to experience growth in the second quarter. Although challenges in the Hungarian economy have slowed our growth in that market, this has been more than offset by strength in our Slovakian operation, which continues to be an extraordinarily strong performer for Emmis. We are guiding third quarter FY08 radio revenues to decrease compared to the prior year mid single-digits based on continuing difficulties in our domestic radio operations, particularly in New York and at KMVN in Los Angeles. Excluding KMVN in Los Angeles, we are forecasting that in the third quarter, our performance will be in line with market declines. Some additional color on the domestic radio front. Our underperformance was impacted by both national and local performance. Local was off 9% compared to markets off 5%. National at Emmis, we were off 21% compared to markets being off 7%. In terms of categories, automotive continues to be a struggle for us and many others in the industry. It's still our largest category, representing 14% of our second quarter revenues and the category was off 15% in the quarter. Movie, beverages, media, cellular and retail were also top ten categories exhibiting double-digit declines. Entertainment was flat, health care and financial institutions showed increases during the quarter. For the second quarter, sellout was up 3%, average unit rate decreased 11%. Our publishing division also continued to show growth, with revenues increasing 6% during the quarter. The revenue increase was highlighted by gains in our magazines in Los Angeles, Atlanta, the newly acquired Orange Coast in Orange County, California, Tu Ciudad and Country Sampler. Turning to expenses, total operating expenses in the quarter increased 6%. Radio operating expenses increased 6% as well, attributable to three principal factors. (1) Marketing expenditures at KMVN in Los Angeles;(2) Expansion of Emmis Interactive;(3) Increased sales and promotional costs and a weak dollar impacting international radio expenses. Absent the marketing spend at KMVN and our interactive expansion, domestic radio expenses would have been down 3% during the quarter. We expect radio operating expenses in the third fiscal quarter to increase mid to high single-digits compared to the third quarter in the prior year, primarily related to the three items noted already. We expect expense growth to moderate during the fiscal fourth quarter. Publishing expenses were up 7% during the second quarter and corporate expenses down 30% as we have begun to realize the impact of our corporate rightsizing efforts. On the balance sheet at August 31, we had $462 million in debt outstanding under our $600 million credit facility. Our leverage ratio, excluding non-cash comp, was 6 times trailing 12-month operating cash flow as defined in our credit agreement. Our weighted average cost of debt was 7.17% during the quarter. On August 8, our board authorized a $50 million open market share buyback of our Class A common shares. Through October 1 the company has repurchased 2.2 million shares for a cost of $13.8 million, at an average price of $6.22 per share. On the M&A front, two items to note during the quarter. On June 4, as we've previously disclosed, we sold KGMB TV in Honolulu to HITV Operating Company for $40 million. On July 25, Emmis Publishing completed the acquisition of Orange Coast Kommunications, the publisher of Orange Coast Magazine, for $6.8 million, including $200,000 in acquisition costs. We look forward to growing this already successful operation and identifying operating synergy with our other Southern California publishing operations. On the M&A front, we continue to actively market the sale of our remaining local television station, the FOX affiliate WVUE in New Orleans, Louisiana. We continue to report the results of this TV station in discontinued operations and expect to sell the station in the next three to 12 months. Finally on the CapEx side, we continue to guide CapEx for the fiscal year in the $7 million to $8 million range. With that, we'll turn it over for questions and answers.

We're ready for questions, please.

(Operator Instructions) Our first question will come from Lee Westerfield. Lee Westerfield - Harris Nesbitt: Thank you, gentlemen. Good morning. I guess two questions, if I may; the first, and Pat, if you can walk us through a little bit further on your available debt capacity relative to your covenants at this stage; and second, Jeff, Pat, you mentioned that in the fiscal fourth quarter, one might expect the costs to moderate. I wonder if you could, without providing a forecast, I guess, but be a little bit more specific about what moderate refers to, 1%, 2% domestic growth? Your domestic costs were down so I’m trying to understand what moderate may entail.

Why don’t we walk through both of them? For folks that kind of follow our credit facility, our leverage ratio actually steps down at the end of our fiscal third quarter to seven times. Currently, we’ve got capacity to leverage roughly in the $120 million range at the 7.5 times we currently have for a required ratio. In terms of moderating, without providing specific guidance, I think we expect the first two factors that we’ve discussed will not be as pervasive during the fourth quarter. In particular, a lot of the spends that we have made at Emmis Interactive has already taken place. They’ve got the backbone in place to continue to pursue their expansion strategy and we think we are going to have some pretty exciting things to announce over the next several quarters in terms of Emmis Interactive working with other media groups and executing on the plan, the growth plan that we funded. Lee Westerfield - Harris Nesbitt: Jeff, Pat, thank you very much.

Thank you. Our next question will come from Marci Ryvicker. Tim Schlock - Wachovia: This is actually Tim [Schlock] for Marci Ryvicker. I have a couple of quick questions. The first is how much was the contract termination payment to Interep? And have you already made this payment? If you haven’t, when do you plan on making it? Also, how much did the Internet contribute to revenue expenses in the quarter? What type of growth do you anticipate from the Internet and what type of margins are you getting there?

The first question is confidential and is a matter between Katz and Interep. Jeffrey H. Smulyan: That’s a Katz/Interep thing.

So that’s kind of taken care of. Without going into too much detail and specifics, the interactive expansion was a substantial part of expense growth during the second quarter and we expect it to be in the third quarter as well. We’ve told folks that we expect the unit, the interactive unit to contribute roughly $10 million to our revenue performance this year, which is still pretty exceptional 25%, 30% growth which, with our expansion plan, we expect to continue for the foreseeable future. Jeffrey H. Smulyan: And it’s been profitable. We haven’t broken that out but what we’ve chosen to do is reinvest that profitability in what we think is some pretty exciting expansion opportunities.

Okay. Thank you very much.

Your next question comes from James Dix. Sir, are you on a speaker phone? If you please lift your handset, we are unable to hear you. There’s a lot of static on your lines. Jeffrey H. Smulyan: Let’s try somebody else, Rosie.

One moment, please. Our next question comes from John [Kilme].

Good morning. How much of the foreign radio revenue and expense growth is currency related, and can you touch on the advertising trend in your foreign radio business generally? Is the strong underlying revenue growth there a function of relatively immature advertising markets, or is it something else? And then secondly, if you could touch on the margin potential of the publishing business and if you could talk about any discrepancies between radio advertising and magazine advertising in the cities in which you own properties, that would be much appreciated. Thanks. Jeffrey H. Smulyan: I think almost all of our foreign revenue growth is, and the whole strategy is to go into markets that are newly privatized and that are experiencing significant growth. Almost all the growth in international group has come from really creating networks that have been, that have had significant ratings increases and then coupling that with an above average, certainly above domestic American radio revenue growth. We were very encouraged. Especially it’s been true in Slovakia this year. Hungary has been the number one network there for quite some time but we’ve been very encouraged by what we’ve seen. As far as magazines, margins have always been in the mid-teens to low-20s. That’s standard in the business because of the cost structure. The magazine industry has held up better, frankly, than domestic radio has. Growth has been okay. That’s been especially true, probably more so in our group than among our peers, but that’s been -- the magazine business has been more robust in the last several years than the domestic radio business. I think that answers it, doesn’t it?

John, just on the last or the first part of your question on what the FX effect on our operations, the weak dollar has been a major contributor to our performance in each of the first two quarters. Two-thirds of the revenue growth was actually attributable to currency-related matters.

That’s very helpful, thanks. Jeff, if I could just follow up, what do you think is the -- are the nature of the advertisers different in your magazines? Are they higher end? Is that why you think your magazines could be outperforming your radio stations? Jeffrey H. Smulyan: I think that’s exactly right. City magazines -- two things about city and regional magazines -- as long as you have a strong brand, which we happen to have, they reach a very affluent audience and if you look at the character of the American economy, the very high-end has done well, everybody else has struggled a bit. And also because people have an affinity for them. We’ve done a lot of research in this area because it’s a growing category and when people actually are drawn to the content and are subscribing to the content, that creates an affinity and a bond, which we have found a very helpful mix.

Great. Thank you very much.

Your next question comes from Victor Miller. Victor Miller - Bear Stearns & Co.: Good morning. Thanks for taking the questions. Two for you, Jeff, please, and then one for Pat. Jeff, as you know, the PPM comes out in New York October, November, starts encoding Los Angeles January, February, same as Chicago. The initial indications for the urban numbers haven’t been particularly good in the ratings. I imagine you are in the middle of a huge, and I’ve heard that you’ve actually been leading the charge on an education program for the PPM transition in New York and I’d like to have you talk a little bit about that and tell us what you are doing there to prepare the advertising community for that. Also, Jeff, in terms of the transition from Interep to Katz, is there any issue you think in the transition period where you actually might see national hurt a little bit more in the transition? And why did you think you had to make that move? For Pat, there was some speculation that you wouldn’t be using your repurchase. In fact, obviously you have but you’ve got a $50 million program in total. When you selected $50 million as your number, is that something, given what you knew about where you were going with the numbers, that was something that you felt that you could absorb and expect to use entirely? Thanks. Jeffrey H. Smulyan: While I would love to talk about PPM, and since Rick has really led this industry in getting ready for the rollout of PPM, I would rather have Rick answer the first one. Richard F. Cummings: I think part of our goal is to get everybody in the advertising world, as well as frankly the radio industry, to understand that nothing really has changed. The audience isn’t smaller. It’s just as loyal, just as big. In fact, PPM shows that the audience is actually bigger on a cumulative basis but it’s a different measurement system, so 100 points in the diary world equals 70 points in this new system and it’s like going from Francs to Euros or kilometers per hour versus miles per hour, and we’ve got to teach the buyers that first. Then, the second thing we have to teach them is that 100 equals 70 in the general market, but with Spanish language at Irvin stations it is more like 60 and again, there’s no change in the size of that audience. It’s a different measurement system and the stations that over-indexed with 100-plus quarter hour listeners are not going to over-index as much in a PPM world. The truth is PPM is sort of demonstrating that 100-plus quarter hour listeners were kind of a diary myth. So we’ve got our work cut out for us in teaching that, but I think there are so many great stories that come out of this new measurement system that we could never -- we knew they were there in the diary world but we could never prove it. For example, the theory that you can reach the African-American audience with general market stations. It cannot be done and now we can show that. We’ve got a good plan, I think, in place between the committee we put together of major broadcasters back in June strictly to study urban radio and the PPM data. It’s a great story. We’re going to tell it to you and we offer that same thing to anybody else on this call who would like to see it. There is some very, very valuable data there and we’ve begun to roll that out to the advertising world. I think if we are aggressive and we get their -- they are certainly getting their attention now in New York because it’s there, it’s reality. I think we can make a great case for urban radio as well as frankly Spanish language radio. Jeffrey H. Smulyan: I want to add one more thing to what Rick said, and again this was one of the things that we’ve been pushing on in the industry. Our customers, our advertisers have said we don’t -- we have a problem with the methodology of diaries. We think the net result of PPM will be a tremendous benefit because for the first time, we will be able to demonstrate to our customers the accountability of this industry. I can’t stress that enough. I know it seems like every bit of data in this industry, we get the negative spin and I know there’s been a lot of controversy about PPM and I think you said it; why do we always air our dirty laundry in public? But that’s kind of the robust nature of this industry. But the reality is the transition to PPM will give us credibility and if there is anything this industry needs with the major advertisers, it’s credibility. And this will -- this is a major step for it. As far as the switch to Interep, we don’t think we’ll miss a beat. As we’ve said, this is a painful decision. I am a dear, dear friend of David Kennedy. I think he is going to do a wonderful job with Interep. Interep has served this company well for many, many years. We just felt at this time, given the nature of the challenges this company faces, that the best choice for us was Katz, and we think that it will be a superb partnership going forward.

Finally on the buy-back, when we went to the board and had a long discussion and their subsequent authorization, the $50 million program, we spent a lot of time looking at where we are in leverage and that was a number people were comfortable with. We selected the open share buy-backs so that we could monitor our trends and be selective in when we actually purchase shares. So we thought it was the right amount and the right program for us at this stage. As you’ve noted, we’ve been executing the buy-back plan throughout the latter part of the second quarter since we got the authorization in early August. Victor Miller - Bear Stearns & Co.: Thank you very much.

Rosie, we have time for one more question.

Thank you. Mr. Jim Goss, your line is open. Jim Goss - Barrington Research: Thank you. One item I want to go into a little bit more is just following up on what Victor just asked you about PPMs. I understand the point of view you are taking in translating 100 points to 70 points on a new basis, but I am sure the advertising community is going to take the opposite tack and say yes, but we were always paying too much because we weren’t really getting the audience. I’m just wondering how you think that would settle out and is it some point in between or do you think you’d be successful in going all the way that you say? Richard F. Cummings: Well, there’s a reason they are called buyers and we are called sellers. The nature, as you know, the nature of a buyer is to give you all the reasons they want to pay less for and get a good deal, so we are certainly going to encounter that but I’ve been really pleased at some of the comments from what I would call the tastemakers in the buying community, a Cathy Crawford, Janice Nickelgreen, both were at the NAB show in Charlotte and both said look, we get this and there is going to be a rate increase. We understand that. And the most recent data coming out of Philadelphia was a report on I think yesterday or the day before, indicates rates are now up I believe 21% in the major day parts, call that 6:00 A to 7:00 P -- no, I think night time was included too, since PPM rolled out. But you are right, Jim. I mean, that’s why we say we’ve got our work cut out for us. It’s going to be challenging. Buyers are always going to look for things they can use to get the best deal they can find. It’s up to us to show those buyers, and more importantly the media planners and the advertisers, what they are getting and why that rate, that seeming rate increase is worth it to them. I think that will take some time but what I am pleased about is that we made this move because the industry needs it. It needs that accountability and the story is there to justify those rates, so -- Jeffrey H. Smulyan: Jim, let me add one thing; obviously the key is inducing demand. That’s the key to this entire industry and we think that with a credible rating service that we will induce demand. As Rick said, it’s always a negotiation. I’ve never seen a buy who said hey, I want to pay more. I never saw a radio station that said I want to take less but the reality is if we induce demand because of a more credible rating service, this industry will be well-served. Jim Goss - Barrington Research: I’m sure the precision will be a lot better received too. Jeff, a couple of -- Jeffrey H. Smulyan: You know, there are going to be bugs. You are changing a system that’s been in place for 50 years. Jim Goss - Barrington Research: That’s true. Jeff, a couple of opinions from you; they’re always valuable. Do you think Ford buyers will be willing to spend $350 for an HD radio? And secondly, any reflections you have coming out of the NAB? Jeffrey H. Smulyan: Yes, number one, I think every buyer of a Ford car is dying to spend the money. Seriously, Jim, this is an iterate process. HD is going to start. When we all came together, I think seven companies came together to launch HD about a year-and-a-half ago and we said that we needed to continue to gain this turf bit by bit. The first radios that came out I think were $600. In a little over a year, they’ve gone down to about $110. Probably the major tipping point on a price basis will be $40. I think we will probably get there in the next year. We’ve started with the first major auto manufacturer in Ford. My guess is in the next year, we’ll have all of them. We think as people understand what HD can do, we think that when people see some of the creativity in the programming, this will create a buzz, which this industry needs. I think that’s the most important thing. This is an industry that, and I think coming out of Charlotte at the convention last week, the thing I was most encouraged about is that we are moving down a number of fronts to change the perception of this industry. I got a lot of press for my comment about the satellite business, that you can call the merger whatever you want but the satellite business is a dog. I even told somebody that I know why Sirius’ mascot’s a dog. The reality is that they’ve done a great job repositioning us. They haven’t really created a business themselves. This is an industry that needs to reinvent itself but we start from a wonderful place, Jim. We start from a place where we reach 93% of the American public every week. We have to capitalize that and demonstrate that we are relevant to consumers, as we have been, but change the perception of how relevant we are. I think this company is leading the way in that. I think this industry, with radio 20/20 and with the reinvigorated RAB and with PPM and with the HD alliance -- all these things are finally driving home the point that this is not yesterday’s radio and I’m excited about it. Jim Goss - Barrington Research: All right. Well, thanks a lot.

Thank you all for joining us. Before Jeff’s final comments, I want to remind everyone that a replay of this call will be available through next Friday, October 12th, by calling 203.369.1644, and we will also have a replay on our website, emmis.com. Jeff. Jeffrey H. Smulyan: Jodi, thanks. Again, first I want to thank our people. In challenging times, they always come through. I’ve seen more innovation in this company in the last six months than I think I’ve seen the first 27 years and we are reinventing the company. We are leading the way in reinventing the industry and while I understand the skepticism of the public markets, I think that we are on our way to demonstrating that this industry deserves the confidence of the public markets and I think we’ll get there. I thank our people for that as always and I, as we say in the radio business, stay tuned. Thank you.

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