NEW YORK — Indianapolis-based Emmis Communications is putting its TV station group on the block in a sale expected to raise $900 million-$1 billion.
Frustrated with slow growth in local TV, Emmis retained the Blackstone Group to advise the company on a sale or other strategic alternatives for its 16 stations.
Topper Jeff Smulyan said the purpose of the sale would be to reduce debt at the midsize media conglom and to put the stations in the hands of a company “that is larger and more singularly focused on the challenges of American television.”
Separately, the company announced it would buy back up to 20.25 million of its own shares via a Dutch auction tender at a price between $17.25 and $19.75 a share.
News of the buyback sent Emmis shares skyrocketing, closing up 19.35% at $18.44.
The sale of the Emmis stations would reduce the company to a relatively small owner of 25 radio stations concentrated in major markets and of regional city magazines, including Los Angeles magazine and Texas Monthly.
While Emmis is small compared to Infinity Broadcasting or Clear Channel, its radio stations are clustered in big markets like Los Angeles, New York and Chicago.
Radio accounts for 64% of the company’s cash flow.
Smulyan wouldn’t say if the company plans to expand its radio holdings with the cash it raises, enter new businesses or pay off even more debt.
Selling the stations is “obviously a difficult decision,” he said. “We will figure out what’s in the best interest of this company and all its people and that’s what we’re going to pursue.”
Smulyan said the TV stations group may be sold as a whole or in parts. Stations are clustered in second- and third-tier markets like Tucson, Ariz.; Portland, Ore.; and New Orleans.
Emmis TV prexy Randy Bongarten is trying to assemble investors to lead a management buyout of some or all of the stations.
Emmis reported flat TV revenue for its most recent quarter, while radio revenue was up 9% and publishing revenue up 6%. Net revenue for the quarter was $138 million; total debt as of February was $1.18 billion.