Kate Snedeker - IR Jeff Smulyan - Chairman and CEO Ryan Hornaday - EVP, CFO and Treasurer

Welcome and thank you for standing by. At this time, all participants are on listen-only-mode. This call is being recorded. If you have any objections, you may disconnect at this point. Now, I’ll turn the meeting over to your host, Kate from Emmis. You may begin.

Thanks, Johnny. Good morning, everyone. Thank you for joining us for today’s Emmis Communications conference call regarding second quarter earnings. I want to extend special welcome to all the Emmis employees joining us and listening in. We’ll begin in just a moment with opening comments from Emmis’ Chairman and CEO, Jeff Smulyan; and Ryan Hornaday, EVP, CFO and Treasurer. After opening comments from Jeff and Ryan, we will respond to questions submitted via email to ir@emmis.com. A playback of the call will be available for the next week by dialing 203-369-1448. 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 on our website, emmis.com. Jeff, we are ready to start.

Kate, thanks. It’s been an interesting quarter, good quarter. Our revenues for this quarter were up 2%. Our markets were up 3%, which is very encouraging. In our markets, New York, Austin and St. Louis all outperformed. One of the things that helped our quarter a lot were our ticket sales for Hot 97’s Summer Jam and also the ratings at Hot 97. We’ve been the number one 18 to 34 radio station in the New York City now for the entire quarter. So, generally, our ratings are very, very encouraging across our portfolio. And then in this quarter, we closed the sale of the Power 106, our station in Los Angeles. We’ve talked about that and what it meant to the Company and how much the people and the station meant to the Company. But the effect is that we’ve retired over half of our debt and it leaves us with a balance sheet which allows us to proceed in the future without some of the constraints that our industry is seeing. So, we think it was very, very important. We’re going to be working on various refinancing; we have a lot of flexibility now. And we’re also doing couple of other things we’ve talked about, possibly selling land and a couple of other things, also the sale of WLIB. So, we feel very, very good about our capital structure and excited about what’s next. And speaking about what’s next, NextRadio, this quarter we released the streaming version for Android and Apple devices. So, we now have NextRadio available on every single smartphone. And we think that’s important and the usage has certainly grown very, very nicely, up very sharply since that introduction. We also introduced the Dial Report version 2, which provides unique data insights which we think is the key to really the future of ad sales for our medium, very excited about that. We understand there is a very steep learning curve for people in the industry to understand what this means but as people understand it, they get very excited. To help us with our data sales, we brought in Lisa Pike as Senior Vice President. We’re very excited Lisa has joined us. She has been an accomplished executive who really brings us extensive experience in strategy, data analytics after a long career at a number of places, including most especially IBM where she spent many, many years. We also announced in August that we have an agreement with LG for FM-enablement across all North and South America. They joined Alcatel, which is a major supplier, especially in Latin America. And stay tuned for some other major announcements on agreements with manufacturers. In addition, our collaboration with Nielsen is progressing nicely. Both parties continue to target the incorporation of NextRadio usage data into Nielsen ratings sometime next year. Again, this is something that we think is a really landmark for our industry, really improving Nielsen measurement and aiding the radio industry. In addition, we’ve had renewed cause for implementation of the FM chip. Chairman, Pai asked Apple, which is the last holdout, to do so, so did Senator Nelson. We know of a number of other members of congress who are ready to do that. There have been a number of editorials. We are optimistic that when Apple understands the critical nature of turning the FM chip on for safety that they will join really every other manufacturer and all of the carriers in bringing the benefits of turning on FM radio in smartphones to every American and really people around the world. So, it’s been an interesting quarter. I also want to say that we are starting to see some nice green shoots from our Digonex dynamic pricing business. New business is coming on, and couldn’t be more encouraged by the effort of Greg Loewen and his team down there. So with that, I want to turn over to Ryan Hornaday and he will give you more financial detail.

Thanks, Jeff, and good morning, everyone. This morning we released earnings for our second fiscal quarter ended August 31, 2017. During the prior fiscal year, we sold all of our magazines except Indianapolis Monthly as well as our radio stations in Terre Haute, Indiana. In addition during our second fiscal quarter, we closed on the sale of Power 106 in Los Angeles. These sales caused our current period reported results to not be comparable with prior year results. We encourage those on the call to refer to the supplemental financial information we have posted under the Investors tab of our website, emmis.com. Pro forma for all asset divestitures, our radio revenues were up 2% in Q2. Our New York, St. Louis and Austin clusters gained share during the quarter. Revenues at our New York cluster were up 7.6% in Q2, aided by record ticket sales for our Hot 97 Summer Jam concert in June. According to Miller Kaplan, our radio markets collectively were up a healthy 3% in the quarter. Looking at the individual months and excluding our stations in Los Angeles and Terre Haute, June was up 5%, July was up -- I am sorry July was down 4% and August was down 2%. Automotive remains our largest category representing 10% of radio revenues in Q2 and automotive advertising spend declined in the quarter. The media, financial and home categories were strong in the quarter. Healthcare and entertainment joined automotive as the weakest of our top 10 categories. Pro forma for asset divestitures, radio station operating expenses excluding depreciation and amortization were up 2.5% in Q2, resulting in modest radio station operating income growth in the quarter. Expenses for our emerging technologies were up $0.5 million in Q2, principally related to ongoing investment in NextRadio and TagStation including product developments and enhancements to our data reporting capabilities. On August 1, 2017, we closed on the sale of Power 106 in Los Angeles. In connection with this sale, we repaid $73.6 million of term loans under our credit facility, leaving $74.4 million of term loans outstanding. Our total leverage ratio as computed under our credit facility is 4.3 times and our weighted average borrowing cost is 8.2%. We are evaluating a number of alternatives to refinance our remaining secured indebtedness. Looking ahead to Q3, September finished up 3%. Performance in September was helped by an event, Circle of Sisters in New York, which occurred one month later in October in the prior year. Consequently, October of this year will be down due to the timing of this event coupled with the loss of political revenues in the prior year. We currently expect Q3 pro forma radio revenues to be down low single digits. Finally, we invested $441,000 in capital expenditures in Q2 and we expect to invest approximately $2 million for all of fiscal 2018. With that Jeff, we have some questions that investors submitted in advance of the call.

Okay. A - Ryan Hornaday: Going back to the Apple discussion earlier, can you summarize the efforts of the NAB and Emmis to convince Apple of the necessity of turning on the FM chip in the smartphones?

Well, I think it’s been -- and Apple obviously is a pretty independent enterprise since they have almost $300 billion in excess cash. But, there has been a widespread feeling that the time’s come. Chairman Pai said that, Senator Nelson said and we have a number of other members of congress that I alluded to that have said it. Congressman Greg Walden has indicated very strongly this is important. Obviously, Senator Smith the NAB, this is an important mission. And we’re seeing calls from a lot of state broadcaster association. So, it’s a great consensus. Our point is look, to Apple, it doesn’t cost anything. There has been a debate whether chips are in there or not. Apple says they’re not; the NAB has done a teardown study which says they are. Whether they are or they’ve taken them out, it’s very simple for upcoming addition to slip basically the wire or allow the wire to stay in the chip that’s manufactured all over the world. So, it’s very simple, there is no cost to Apple to do this. And we think we’ve demonstrated over and over again. I saw another story about the only lifeline that people in Santa Rosa had was radio. Obviously, there is a great story in Time Magazine about how radio was the only way that people in Puerto Rico could be informed and all up Texas and Alabama and Florida. Whenever an emergency strikes and the power grid goes out, we’re really the answer. And so, we hopefully can press that upon people, it’s important, safe lives.

You’ve touched on this in your opening remarks, but there are a couple of questions around remaining noncore asset sales, particularly WLIB in New York and the tower site in Northwest, Indianapolis. Any update on timing and proceeds.

There has been renewed interest in WLIB, but until you have something, you don’t have anything and certainly it’s taken longer than we thought, but we’ll find the right match and be done. And the tower site is a little bit longer process. The interesting thing is that is an area which has become the hottest area really in the state of Indiana. And so, we’re taking our time, we’re bringing our real estate people onboard to devise a plan. And it’s a nice benefit for the Company which will help us obviously delever our balance sheet.

As automakers continue to innovate the infotainment experience in the connected car, what role, if any do you see NextRadio playing?

Well, again, and we’re certainly working in conjunction with our friends at Xperi. There is really two issues to the automobile in the future. Number one, want to make sure everybody understands, radio tuners not coming out of cars, I feel very comfortable saying that. Xperi will provide the HD solution for automobiles. But beyond that, there is an interface that most people are going to get, which will be either the Google car play system, the Apple CarPlay system or individually manufactured, that maybe the first screen people see. As an industry, we must be on that first screen. So, what we’d like to do is work with auto makers and Apple and Google and Xperi to make sure that whatever they see first, there is a button that says radio. And then, it can go into the embedded tuner in the car. And NextRadio will provide all of that software, which goes into the interactive tuner of the future.

When do you expect the emerging technologies NextRadio and Digonex to begin to generate more meaningful revenues?

Well, I think you’ll start seeing it ramp up. We’ve now -- it’s taken us a while to get all of the data worked. It’s tremendously time-consuming, expensive. But now with Dial Report version 2 out just in the last couple of weeks, we’re seeing renewed interest and we think that you’ll start to see ramp up and it will take a while. We’ve always said this is a very long process, but a process which ultimately is the heart of the future of the American radio business.

And the last question was an update on NextRadio downloads and usage. And Jeff, I just looked up those numbers. Our downloads have exceeded 15.5 million and we’re at approximately a 1 million monthly active users today.

Yes, it’s grown. There is a lot of question about you’ve got 1 billion downloads, 800 -- but the question is how many people use it. And I think the good news is, we’re seeing slow steady usage that got -- remember, we’ve got to get them to download it and then they’ve got to use it as part of their experience. And we’re excited, we’re really also excited about what we see outside the United States. But we think this is an idea whose time has come and we’re very pleased.

That’s all we have in terms of questions. Any closing remarks, Jeff?

No, just -- I think listen, we’re coming upon the critical quarter which for the industry is tough. We know the industry has not had the revenues that we’d like. But yet the quarter like this gives us good hope and we see some good things for the following quarter, fourth quarter, which are encouraging. And we think there is some trends in the industry which will be helpful, the CBS Entercom merger will be very helpful, we thing to all of us. And we’re pleased. We now have a balance sheet, which allows us flexibility to do some things. And we’re looking at the future and because of I think the bond we have with our people, we’ve survived an awful lot of crazy things and I am very excited about what’s next.

Thanks, Jeff. Thanks Ryan. A playback of the call will be available for the next week by dialing 203-369-1448. Thanks so much.

That concludes today’s conference. Thank you all for participating. You may now disconnect.