Ryan Hornaday - SVP/Finance & Treasurer Jeff Smulyan - Chairman and CEO Pat Walsh - CFO and COO

Welcome and thank you for standing-by. At this time, all participants will be on a listen-only mode until the QA session of today’s conference. This call is being recorded, if you have any objections please disconnect at this time. I would like to turn the call over to your host, Mr. Ryan Hornaday. Sir, you may begin.

Thanks Kristen. Good morning and thank you for joining us for Emmis’ First Quarter Earnings Call. We extend a special welcome to Emmis employees joining us this morning. We will start in a moment with opening comments from Emmis’ Chairman and CEO Jeff Smulyan and CFO, COO Pat Walsh. At the end of their comments, Jeff and Pat will respond to questions that have been submitted via email to ir@emmis.com. A playback of this call will be available until Thursday, July 23rd by dialing 1203-369-0276. 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 has been posted under the Investors tab of our website, www.emmis.com. Jeff?

Ryan thanks. This has been a challenging quarter as most people know and it’s been predicted. But I think the good news is as the quarter ended we are seeing some very very positive signs. In the quarter we were down 5.3% on a Miller Kaplan basis down 6%, against the markets were down 4.9% and that’s the first time we haven’t beaten our markets in several years. As many of you know we’ve actually beaten our markets on an annual basis five years in a row. We think we have a pretty good chance to do and that again for the sixth year but clearly this is a challenging year for us and yet we are starting to see some uptick. Just on a market basis, our concentration of shortfall was New York, Indianapolis and St. Louis beat the markets, New York, LA and Austin did not beat our markets. To give you month-by-month March, Emmis was down 7.6% our markets were down 6.8%. In April Emmis was down 8% and our markets were down 4.7% and that was sort of the trough and in May we were down 3% and markets were down 3.4%, so we are back to beating our markets in May and we feel pretty strongly that we’ll beat them in June. Our Summer Jam concert was record breaking in New York and that really started a very nice turnaround in June and what we believe will be a very nice turn around in Q2. June finished up a little over 6% and our second quarter is pacing up and while we’re just starting obviously July and these months come in later than we’ve seen we feel pretty confident certainly that the second quarter will be an up quarter in significant contrast to the first quarter. Our biggest challenge market is New York. The market was down 8.3% in Q1, but Q2 looked stronger for us and we hope for our brethren in the market, obviously having New York lag American radio has been a big challenge for this company and also for the American radio industry. In Los Angeles, we’ve really performed in line with expectations. We absorbed the ratings [ph] in LA that we knew we would and that all of you knew we would and now we are bouncing back. We’re seeing almost parity with our competitors and now that we have some time under our belt we feel very very confident in the long term situation in Los Angeles and it’s a tribute to a pretty remarkable team that we have out there. Publishing revenues were up 5.8% in Q1 led by a renaissance really a Texas monthly, but also Los Angeles and Atlanta magazines performed very nicely. And of course last well in the quarter on July 2nd the Seventh Circuit Court of Appeals unanimously affirmed the lower court’s ruling at our preferred stock case we feel again as we’ve said we feel vindicated, we felt that we did the right things and we’ve now had the federal court in Indianapolis issue a very strong opinion and an unanimous opinion of the Appellate Court of Seventh Circuit issue a very strong opinion so we believe that that’s probably behind this but you never know, and we are very confident in obviously the outcome and very pleased in the outcome. NextRadio, we think that this is a quarter that really led the significant changes and significant improvement. We are upto over 3.2 million activations, we are adding 400,000 a month and that’s trending upward. Our time spent listening is now over 19 minutes that is double traditional radio. So the average Nielsen PPM session is about a little over 9 minutes, we’re at 19. What it means is and it’s a further confirmation that when people experience interactivity of NextRadio they are engaged. They are engaged because they see -- they are engaged because they can rate records, they are engaged because they can go back and forth with the radio station and coming soon they will be engaged because they will be able to interact with advertizers in a way that we as an industry haven’t had before. We are incredibly gratified that Amazon has picked this up. We are incredibly gratified by some of the negotiations that we are seeing that we hope to be able to discuss in much greater detail soon. We are very gratified by the leadership of the NAV, which really helped launch an industry campaign to lead the consumer awareness and I think people as they look back on this time will realize that once we made our listeners aware of what we could do with NextRadio and where that there is a free FM radio in their smartphone that they paid for that really was a game changer, and I think you will see that as we discuss this further on. So we know that we somewhere see this and experience it, but they love it based on all the metrics that we’ve seen and we think as we’ve said this is an idea that the time has come and nothing makes me prouder that this has been developed through the leadership of the NAV but really by the people of Emmis or by Paul Brenner and his team and this will be something that we think changes the face of American Radio. So with that turn it over to Pat.

Great. Thank you, Jeff. Good morning everyone. As everyone knows we released earnings this morning for our first fiscal quarter ended May 31, 2015. As we do on each of these calls, we encourage those on the call to refer to our additional financial information which we disclosed at our website emmis.com to assist with better understanding our pro forma operating results. Our results for the first quarter reflect the challenging radio advertising environment Jeff referred to for both Emmis and our peers. Even in the face of these challenges we were able to increase station operating income 2% compared to the prior year. During the first quarter of fiscal 2016 we saw our five year streak of outperforming our markets nearly come to an end. Radio net revenues reported to Miller Kaplan during our first quarter which excludes certain barter and syndication revenues were down 6.0% compared to our markets which were down 4.9%. Our narrow miss compared to our markets was achieved with double digit growth in our Indianapolis market and market share gaining’s in St. Louis. For the quarter our shortfall to our markets was related to weakness in the spot business. National spot was down 9% and markets down 6% and while our local spot business outperformed we were still down 5% and markets down 6%. While NTR and digital performed very very well this quarter, with NTR at Emmis up 9% and exceedingly strong up 17% markets and MS digital was up a very strong 14% and markets up only 2%. Taking a quick look at our monthly trends as Jeff mentioned, we were up, yeah we were down 9% in both March and April and fell short of our markets in both of those months we were down only 3% in May beating a strengthening market. During the second quarter our numbers of minutes sold decreased 3% compared to the prior year and our average minute rate was also down 3%. Auto was once again our largest category representing 13% of our revenues and the automotive category saw a 12% decline in revenue compared to the prior year. Our growing categories this quarter were entertainment quick service restaurants, financial grocery and retail; however we saw double digit decreases in both wireless and media which hurt performance. Healthcare also saw a modest decline after seeing big increases in the prior two years related to the affordable care act spending. Revenues in our publishing division were up 6% in the quarter driven by growth at our largest titles Texas Monthly, Los Angeles and Atlanta magazine. Looking forward to our second fiscal quarter was currently pacing up low single digits and improved conditions in national, local and event sponsorship for both Emmis and our markets. Our publishing division is also pacing up low to mid-single digits in the second quarter. In terms of station operating expenses excluding depreciation and amortization, our Q1 expenses were up 6% and the expense increase related to a couple of factors increased spending associated with scaling our emerging technology segments which encompasses both NextRadio and Digonex. Increased expenses associated with the new five year agreement with Nielsen which we signed in the second quarter of the last fiscal year, these expense increases will anniversary and not reccur beginning next quarter. Certain severance cost associated with work force reductions enacted in Q1 along with legal and marketing expenses associated with our new format competitor in Los Angeles. Publishing expenses were up 2% during the quarter, and corporate expenses were down 22% as a result of certain performance bonuses being paid in the prior year but not the current quarter. At May 31, excluding debt that is non recourse to Emmis the company had a $195.5 million outstanding under our senior credit facility where the weighted average cost of borrowing of 6.99% and leverage at 5.56 times EBITDA as defined in our credit agreement. Finally we invested a little over $400,000 in CapEx during the quarter and expect to spend in the range of $3.5 million for the year. With that we kept it reasonably short since we’ve got about half a dozen questions from the investors. Q - Pat Walsh: So Jeff the first one up does relate to the preferred ruling and investor ask with the recent appellate court decision in the preferred stock litigation what’s the impact of the company on the decision?

Well obviously it releases a major overhang on the company. You know as many of you know the fall of this and a few years ago whenever the preferred came to us and said we’d like you to buy us out we raised a lot of money and we brought the great majority of them out. And then the preferred walk up came and said they wanted significantly more and we said we don’t think have pay in, basically make a long story short, we don’t pay them I guess. So I think you know they are, they will now be preferred share holders and thus we have some emerging rights which we you know debating what we do here but at the end we can’t speak for them but now that the Seventh Circuit has spoken unanimously you know I can’t decide what they do but we feel very comfortable this is pretty much at the end.

Okay. The next question from investor relates to the competitive situation in LA and New York that took on a new competitor in Los Angeles this quarter can you provide an update on performance in LA as well as discuss your efforts to improve performance in New York?

Let me start with New York. We redoubled our efforts and we felt that the integration of the BLS the LA combination was slower than we wanted. And also against the backdrop where New York probably has had the worst year in many many years, so that was sort of a combination. We’ve redoubled our efforts, Pat led by you and our team that have focussed on New York and we’re seeing significant benefits and June is the best month we’ve had in New York in a long long time and the trends look pretty good. So we feel good that we had a handle on New York that is the integration settles in if we can get a little bit of a break on the New York overall market and think we can have a pretty nice year there. Los Angeles, as I’ve said many times I think our team in Los Angeles is the best not only in this company but in American Radio and if you ever want a team to weather a storm it would be that one and I think they have done a very nice job. We knew you know where you’re up the competitor taking major morning show like Big Boy and spending several million dollars promoting and running commercial free for several months we’re going to take a hit. But we’ve seen that we are bouncing back and the metrics was good and we’ve said you know this is not going to be a three month or six month battle, it’s going to be a while but I like our odds and I’m very gratified that it’s come back as quickly as it has.

So a couple of investors ask the question related to radio’s challenges during the first half of the year it was markets have been down for the calendar first half, Jeff what are you seeing for the balance of the year?

You know it’s hard to be [Indiscernible] about American Radio. Based on performance on the other hand I think we’re starting to see now something that has been gratifying between the ROI studies which show radio outperforms other media. Between a number of articles that have been written that said, wait a minute why is radio still in love? The Nielsen study which astounded me which shows that more people consume radio every week at the United States than watch television. All of those things we simply mean that this massive capital flow and advertising flow sort of away from radio maybe starting to reverse itself as you see so many of the digital ideas you know that are really not bearing fruit and people look at radio and radio survived for almost a hundred years because it works. And you know you have a massive infusion of capital and every streaming idea around and as we’ve said we are going to continue the stream, we streamed for now over 20 years, but we haven’t found a way to make money at it and we’ve never heard of anybody who has. And so, somebody call tulip craze, you know all this money and every streaming idea. We love the terrestrial business. We’re going to stream to supplement that, but we think our bread and butter is a business that distributes directly at no cost to our listeners. So – and of course that’s why we’re so focused on NextRadio.

Speaking on NextRadio, nice segway Jeff, an investor asked about the recent announcement from Amazon and when additional carriers are coming online? And another investor ask when is NextRadio going to move in the cash generation phase?

Well, you know at the end, a friend of mine once says it’s never soup until it‘s soup, I’m not sure, I like that phrase, but since he is sitting next to me I’ll use it. We feel very comfortable with negotiations with other carriers, very, very productive conversations and we have an announcement. We think that’s people will be pleased. So we’ll say that. We don’t have thought of when NextRadio is going to profitable. NextRadio will be build to try to figure out an answer for the challenges of the American Radio business. We are very gratified that other people and other countries have come to us. So, we think it can be a profitable business. But right now we just want to make sure that we can roll it out and make the American Radio industry stronger than it’s been.

The question Jeff around our digital segment which grew 12% during the quarter, we recently launch the Where Hip Hop Lives app with the subscription component.

Right.

Do you expect Emmis Digital become a major part of the profitability in growth in the coming years?

Well, we hope so. We hope so. We again, Digitals led by Angie May Cook and her team and again Andy is one of the most talented executives we have. We are doing a lot of innovative things. I love when people in the space say you guys are the best innovators there. We hear that about this company over and over again, Where Hip Hop Lives is an interesting challenge. We think that it has maybe the first time that the over the radio industry has successfully launched subscriber-based streaming business. We hope so, because we think it’s – I think it’s tough for streaming without a subscription based to make money. And we put some amazing things in the Where Hip Hop Lives, the combination of the two largest Hip Hop stations in the world and HOT [ph] in New York and Power in Los Angeles and we’re hopeful.

Investor is concerned with coming interest rate hikes and advertising, video advertising growth being challenge that Emmis has too much leverage and he wants to know if you have any plans to sell assets to reduce leverage.

Well, as I’ve said you never say never, we have more leverage than we like, but as you notice our leverage in the low fives. It’s at the bottom of the larger of companies. It’s less than half of some of our competitors. So yes, we want to delever. We’re going to delever through operations, but we are always looking at everything we do.

The last question is today is Emmis’s Annual Meeting of shareholders. Emmis’s share price along with others in the industry have seen a pretty rapid decline over the past years, what are your plans to create shareholder value to investors in the coming year?

Again, I think we’ve tried to give the things that make sense. Nobody is more frustrated than I am and our management team. Sometimes we’re not quite sure, but clearly radio is an unloved sector there. They aren’t very many investors, very few institutions. We’ve always said radio has to have a change of perception and that’s why we’re so big on NextRadio. We think if people understand that the medium that reaches more Americans than any other medium will now be in the one device, the 300 million people have and they look at 137 times today, that will help change of perception, because clearly we have a perception problem. We don’t really have – we don’t have a consumption problem, we have a perception problem. And the perception problem has hurt us now in Wall Street, but on Madison Avenue. Advertisers have not focused on this space, relative to its consumption and we’re as hopeful as anybody. All we can do is do our job. I think you will find that there’s been more innovation in this company than just about anywhere else in this space and hopefully we’ll find the answers to unlock the holy grail of violations.

Jeff, that’s all we had from investors this time around. Perhaps you have a few closing remarks.

Well, again, I always want to thank our people. We’ve survived to over 35 years because I think we have attracted and kept the best people in media. We really believe that these are challenging times for all traditional media, but we think we’re finding answers and we’re finding answers because we have a very innovative, creative, hardworking group of people. And I want to thank them and thank the investors that we have and stay with us.

Once again I’m playing back and this call will be available until Thursday July 23 by dialing 1203-369-0276. Thanks.