Published on Wednesday, 30 March 2011 09:10
There is good news for Emmis Communications, the Indianapolis-based media corporation that owns Chicago's WKQX-FM and WLUP-FM. The company issued a statement today stating that it has amended the credit agreement with lender Canyon Capital Advisors, LLC. The terms of the new deal push a due date for a major amount of debt off from late this year to late 2014. It also temporarily lifts and rearranges many financial requirements on the company.
$183 million worth of debt was due to be paid back before the end of this year. Those inside and outside of Emmis Communications did not see that as a realistic possibility. To achieve enough money to pay off the debts, Emmis placed both of its Chicago radio stations on the market for $100 million ($50 million a piece) and one of its three New York stations on the market for another $100 million.
While the purchase of the New York station, WRXP-FM, is supposedly being considered by Disney/ESPN, the high asking price has brought no serious contenders for the two under-performing Chicago rock radio stations.
By re-shuffling the $183 million of debt and extending the debt's maturity date back to November, 2014, Emmis has taken a great deal of pressure off to sell the stations by the end of this summer. It can now afford to hold on to the stations longer and wait for the right deal to come their way. The fear of defaulting on their debts this November has subsided.
The company still has financial worries, however. Emmis Communications has been earning approximately $240 million a year in revenue. Last year, it earned a profit of approximately $24 million after expenses. All of its radio markets made money last year, with the exception of its one station in Los Angeles -- which it has leased out to another company -- and the Chicago market, thanks mostly to ongoing losses and lower than average revenue from by WLUP-FM. The company still needs to generate higher revenues to help it stay afloat. Emmis Communications has almost $350 million in senior debt to deal with in the next few years, a difficult feat if it only earns $24 million in money after expenses.
That means it still needs to sell weaker stations to keep the rest of the company strong. For now, Chicago's WLUP-FM & WKQX-FM remain on the market, looking for a new owner (or owners) to save the two radio stations and help save Emmis Communications.