Emmis playing ball for big blue

TV, radio operator makes bid for Dodgers

NEW YORK — Plucky TV and radio station owner Emmis Communications officially joined those interested in purchasing the News Corp.-owned Los Angeles Dodgers on Friday, part of a strategy whose ultimate aim is to land certain midsize-market Fox TV stations.

The Indianapolis-based company said it was exploring a possible deal with an investor group that will offer to buy the baseball team, along with several unnamed Fox TV assets. Emmis, which would own a minority interest in the investment group, is trying to spin off its TV business in combination with a round of acquisitions.

While Emmis CEO Jeff Smulyan is no stranger to sports teams, having owned the Seattle Mariners, his company’s late innings pitch is considered a long shot. Company is pint-sized compared to many of its broadcast station group peers, with a market cap of around $950 million and annual sales of $200 million.

Kit Spring, a broadcast analyst with Stifel, Nicolaus & Co., suspects Emmis is eyeing Fox TV properties in Austin, Texas; Birmingham, Ala.; and Salt Lake City.

News Corp. wary

News Corp., however, dismissed Emmis’ unexpected overture. “They approached us with an unsolicited bid to buy several TV stations that we have no interest in selling,” said spokesman Andrew Butcher, who added that there is no imminent bid deadline for the Dodgers.

But Spring isn’t so sure Emmis’ offer is completely out of the question. “Fox is currently above the ownership cap of 35% of the U.S. market. They’ve been lobbying to get the cap lifted, but if they’re unsuccessful, those would be markets Fox could logically part with.”

Investors weren’t particularly pleased by Emmis’ bid to play with the big boys at a time when they were expecting the company to pay down debt instead, sending the station group’s shares down 8.3% Friday.

Emmis investors have been frustrated by management’s appetite for deals while its debt load becomes more cumbersome by the day. Management last month postponed plans to spin off its TV assets this summer, citing difficult capital markets and war-induced economic woes.

Other offers

With pressure mounting on News Corp. to raise cash to support its bid for DirecTV parent Hughes, the list of interested bidders for the Dodger properties seems to be reaching a head, despite News Corp.’s claims to the contrary. The team is expected to fetch some $350 million. Other expected bidders include Tampa Bay Buccaneers owner Malcolm Glazer and sports exec Dave Checketts.

The Dodgers have been at the plate for over a year with no deal yet. At least one buyer’s insistence on gaining control of broadcast rights and the regional FSN channel that carries them as part of any deal has slowed down negotiations.

Emmis, the country’s ninth-largest radio group, owns 18 FM and 3 AM stations in key urban markets such as New York, L.A. and Chicago. It also owns 16 TV stations (primarily Fox and CBS affiliated) and a handful of regional and specialty magazines. The company is awaiting FCC approval on its recent acquisition of six Austin radio stations.

Most of its TV stations are located in 14 mid-tier TV markets including Portland, Ore., and Orlando. Its preliminary offer for the team and station assets is reportedly in the vicinity of $850 million.

Emmis CEO Smulyan has a reputation as an innovator and intrepid dealmaker, often to the chagrin of his investors. Emmis introduced the country’s first 24-hour all-sports radio format in the 1980s and the first adult classic soul station.

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