Wall Street continues to reward radio ownership, boosting the stock price of Emmis Communications Corp. by more than 10.8% at one point last Thursday after the company said it had dropped plans to buy another TV station and picked up a second FM in Los Angeles instead.
The moves are related to the settlement of a lawsuit filed in January by Sinclair Broadcast Group Inc. Under the settlement, Emmis agreed to give up its option to acquire Sinclair's KDNL-TV but go ahead and buy Sinclair's six radio stations there for $220 million.
Emmis plans to swap three of those stations, plus its already owned WKKX(FM) St. Louis, to Bonneville International Corp., Emmis Chairman Jeffrey H. Smulyan said last Thursday. In return, Bonneville will give its only radio station in Los Angeles, KZLA-FM, to Emmis, which already owns KPWR(FM) there.
Sinclair officials said they are happy with the agreement because they wanted to hold onto the St. Louis TV station. Also, in divesting the last of its 51 radio properties, Sinclair raised more than $1 billion.
Emmis and Sinclair had been at loggerheads in St. Louis since last June, when Emmis bought the option to acquire the TV and radio stations there from former Sinclair CEO-designate Barry Baker. Under his contract with Sinclair-from which he departed-Baker had the option to the properties, but Sinclair filed suit in January, saying the intent was not to pass the stations along to a third party. Baker now has no rights to the stations, Emmis and Sinclair officials said.
Emmis stock rose 8.3% for the day last Thursday, closing at $48. It had grown 13.8% after announcing it would buy radio stations in Denver and Phoenix.