UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ		Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

for the Fiscal Year Ended February 29, 2008

o		Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

for the Transition Period from                      to                     .

EMMIS COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

INDIANA

(State of incorporation or organization)

0-23264
(Commission file number)

35-1542018
(I.R.S. Employer
Identification No.)

ONE EMMIS PLAZA
40 MONUMENT CIRCLE
SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)

(317) 266-0100
(Registrant’s Telephone Number,
Including Area Code)

     SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

     SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Class A common stock, $.01 par value of Emmis Communications Corporation; 6.25% Series A Cumulative Convertible Preferred Stock, $.01 par value of Emmis Communications Corporation.

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No þ

     Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

     The aggregate market value of the voting stock held by non-affiliates of the registrant, as of August 31, 2007, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $193,964,000.

     The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of May 1, 2008, was:

	31,193,693			Class A Common Shares, $.01 par value
	4,956,305			Class B Common Shares, $.01 par value
	0			Class C Common Shares, $.01 par value

DOCUMENTS INCORPORATED BY REFERENCE

Documents		Form 10-K Reference
Proxy Statement for 2008 Annual Meeting expected to be filed within 120 days		Part III

 

 

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

		Page
PART I			4
Item 1. Business			4
Item 1A. Risk Factors			17
Item 1B. Unresolved Staff Comments			23
Item 2. Properties			23
Item 3. Legal Proceedings			23
Item 4. Submission of Matters to a Vote of Security Holders			23
Executive Officers of the Registrant			24
PART II			24
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			24
Item 6. Selected Financial Data			27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation			29
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			52
Item 8. Financial Statements and Supplementary Data			54
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			98
Item 9A. Controls and Procedures			98
Item 9B. Other Information			99
PART III			99
Item 10. Directors and Executive Officers of the Registrant			99
Item 11. Executive Compensation			99
Item 12. Security Ownership of Certain Beneficial Owners, and Management, and Related Stockholder Matters			99
Item 13. Certain Relationships and Related Transactions			99
Item 14. Principal Accountant Fees and Services			100
PART IV			100
Item 15. Exhibits and Financial Statement Schedules			100
Signatures			103
Amended and Restated By-Laws
Ratio of Earnings to Fixed Charges
Subsidiaries
Consent of Independent Registered Public Accounting Firm
Power of Attorney
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
Certification of Principal Executive Officer Pursuant to Section 906
Certification of Principal Financial Officer Pursuant to Section 906

FORWARD-LOOKING STATEMENTS

     This report includes or incorporates forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by our use of words such as “intend,” “plan,” “may,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity” and similar expressions, whether in the negative or affirmative. We cannot guarantee that we will achieve these plans, intentions or expectations. All statements regarding our expected financial position, business and financing plans are forward-looking statements.

     Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important facts in various cautionary statements in this report that we believe could cause our actual results to differ materially from forward-looking statements that we make. These include, but are not limited to, the following:

	•		material adverse changes in economic conditions in the markets of our Company;
	•		the ability of our stations and magazines to attract and retain advertisers;
	•		loss of key personnel;
	•		the ability of our stations to attract quality programming and our magazines to attract good editors, writers and photographers;
	•		uncertainty as to the ability of our stations to increase or sustain audience share for their programs and our magazines to increase or sustain subscriber demand;
	•		competition from other media and the impact of significant competition for advertising revenues from other media;
	•		future regulatory actions and conditions in the operating areas of our Company;
	•		the necessity for additional capital expenditures and whether our programming and other expenses increase at a rate faster than expected;
	•		increasingly hostile reaction of various individuals and groups, including the government, to certain content broadcast on radio and television stations in the United States;
	•		financial community and rating agency perceptions of our business, operations and financial condition and the industry in which we operate;
	•		the effects of terrorist attacks, political instability, war and other significant events;
	•		rapid changes in technology and standards in our industry;
	•		whether pending transactions, if any, are completed on the terms and at the times set forth, if at all;
	•		other risks and uncertainties inherent in the radio and television broadcasting and magazine publishing businesses.

The forward-looking statements do not reflect the potential impact of any future acquisitions, mergers or dispositions. We undertake no obligation to update or revise any forward-looking statements because of new information, future events or otherwise.

PART I

ITEM 1. BUSINESS.

GENERAL

     We are a diversified media company, principally focused on radio broadcasting. We operate the 7^th largest publicly traded radio portfolio in the United States based on total listeners. We own and operate seven FM radio stations serving the nation’s top three markets – New York, Los Angeles and Chicago. Additionally, we own and operate fourteen FM and two AM radio stations with strong positions in St. Louis, Austin (we have a 50.1% controlling interest in our radio stations located there), Indianapolis and Terre Haute, IN.

     In addition to our domestic radio properties, we operate an international radio business, publish several city and regional magazines and operate one television station that is held for sale. Internationally, we own and operate a network of radio stations in the Flanders region of Belgium, own a national radio network in Slovakia, have a 59.5% interest in a national radio station in Hungary and controlling interests in three national radio networks in Bulgaria. Our publishing operations consist of Texas Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati, Orange Coast, Tu Ciudad, and Country Sampler and related magazines. We also own and operate one television station located in New Orleans. The Company has previously announced that it intends to sell this television station in the next three to twelve months, and the operation of this television station has been classified as discontinued operations for all periods presented. We also engage in various businesses ancillary to our broadcasting business, such as website design and development, consulting, broadcast tower leasing and operating a news information radio network in Indiana.

     Our operational focus is on maintaining our leadership position in radio broadcasting by continuing to enhance our operating performance. We have created top performing radio stations that rank, in terms of primary demographic target audience share, among the top ten stations in the New York, Los Angeles and Chicago radio markets according to the Fall 2007 Arbitron Survey. We believe that this strong large-market radio presence and our diversity of station formats make us attractive to a broad base of radio advertisers and reduces our dependence on any one economic sector or specific advertiser.

BUSINESS STRATEGY

     We are committed to maintaining our leadership position in radio broadcasting, enhancing the performance of our radio and publishing properties, and distinguishing ourselves through the quality of our operations. Our strategy is focused on the following operating principles:

Develop Innovative Local Programming. We believe that knowledge of local markets and innovative programming developed to target specific demographic groups are the most important determinants of individual radio station success. We conduct extensive market research to identify underserved segments of our markets and to ensure that we are meeting the needs of our target audience. Utilizing the research results, we concentrate on providing a focused programming format carefully tailored to the demographics of our markets and our audiences’ preferences. As we look to invest in our core properties, we will continue to emphasize the development of innovative local programming. Our sales efforts focus on maximizing our net revenues from local advertising. Historically, local advertising revenues have been a more stable revenue source for the broadcast industry, and we believe local sales will continue to be less susceptible to economic swings than national sales.

Deliver Results to Advertisers. Realizing that the ultimate success of our business depends on our ability to deliver results for our advertisers, we seek to become marketing partners with our advertisers by offering innovative solutions for reaching and connecting with consumers. Radio broadcasting is a highly-targeted advertising medium, and we are able to deliver niche audiences for advertisers in a cost-efficient manner. We believe that offering advertisers multiple points of contact with our audiences maximizes the strength of the advertiser’s message. To that end, we offer integrated marketing solutions to our advertisers that combine traditional on-air commercials with other multimedia consumer touch points including, among others, the Internet, mobile technologies and on-site appearances. We will continue to explore and invest in new, effective means of delivering results for our advertisers.

Pursue Strategic Acquisitions. We have built our portfolio by selectively acquiring underdeveloped media properties in desirable markets at reasonable purchase prices where our experienced management team has been able to enhance value. We have been successful in acquiring these types of media properties and improving their operational performance, revenues and cash flow with our marketing focus and innovative programming expertise. We find underdeveloped properties particularly attractive because they offer greater potential for revenue and cash flow growth than mature properties through the application of our operational experience. We intend to continue to evaluate potential acquisitions of international radio stations and city/regional magazines. We will also continue to explore acquisitions of businesses that have developed innovative new technologies that we believe will enhance our existing operations and other businesses that we believe both hold promise for long-term appreciation in value and leverage our strengths.

Encourage a Performance-Based, Entrepreneurial Management Approach. We believe that broadcasting and city/regional publishing are primarily local businesses and that much of their success is the result of the efforts of regional and local management and staff. We have attracted and retained an experienced team of broadcast and publishing professionals who understand the preferences, demographics and competitive opportunities of their particular markets. Our decentralized approach gives local management oversight of spending, long-range planning and resource allocation at their individual stations and publications, and our approach provides rewards for all employees. In addition, we encourage our managers and employees to own a stake in the Company, and most of our full-time employees have an equity ownership position in Emmis. We believe that our performance-based, entrepreneurial management approach has created a distinctive corporate culture, making Emmis a highly desirable employer in the media industry and significantly enhancing our ability to attract and retain experienced and highly motivated employees and management.

Extend Local Brands to New Digital Distribution Channels. Emmis has taken a leadership position in extending its leading radio and publishing brands to new digital distribution channels such as the Internet and mobile phones. We believe these digital platforms offer excellent opportunities to further enhance the relationships we have with our listeners and readers by expanding products and services offered by our stations and magazines. Emmis Interactive LLC, a wholly-owned subsidiary of Emmis Communications Corporation, has developed industry leading website design, software development, and interactive sales training and consulting capabilities enabling Emmis to lead the radio industry in percentage of revenues from the Internet. We plan to continue to invest in these efforts and offer interactive services to other media companies.

     RADIO STATIONS

     In the following table, “Market Rank by Revenue” is the ranking of the market revenue size of the principal radio market served by the station among all radio markets in the United States. Market revenue rankings are from BIA’s Investing in Radio 2007 (4^th Edition). “Ranking in Primary Demographic Target” is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the Fall 2007 Arbitron Survey. A “t” indicates the station tied with another station for the stated ranking. “Station Audience Share” represents a percentage generally computed by dividing the average number of persons over age 12 listening to a particular station during specified time periods by the average number of such persons for all stations in the market area as determined by Arbitron.

										RANKING IN
		MARKET				PRIMARY				PRIMARY				STATION
STATION AND		RANK BY				DEMOGRAPHIC				DEMOGRAPHIC				AUDIENCE
MARKET		REVENUE		FORMAT		TARGET AGES				TARGET				SHARE
Los Angeles, CA		1
KPWR-FM				Hip-Hop			18-34				3				3.5
KMVN-FM				Rhythmic/Pop Contemporary			25-54				26	t			0.8
New York, NY		2
WRKS-FM				Classic Soul/Today’s R&B			25-54				4				4.3
WQHT-FM				Hip-Hop			18-34				1	t			3.7
WRXP-FM 1				Adult Album Alternative			25-54				15	t			2.7
Chicago, IL		3
WLUP-FM				Classic Rock			25-54				12				2.1
WKQX-FM				Alternative Rock			18-34				9				1.6
St. Louis, MO		21
KPNT-FM				Alternative Rock			18-34				1				3.0
KSHE-FM				Album Oriented Rock			25-54				1				4.7
KIHT-FM				Classic Hits			25-54				6				3.4
KFTK-FM				Talk			25-54				8	t			3.2
Indianapolis, IN		32
WFNI-AM 2				Sports Talk			25-54				5				6.2
WYXB-FM				Soft Adult Contemporary			25-54				4				6.3
WLHK-FM				Country			25-54				11	t			3.4
WIBC-FM 3				News/Talk			35-64				15	t			2.2
Austin, TX		36
KLBJ-AM				News/Talk			25-54				7				5.0
KDHT-FM				Hip-Hop			18-34				7				2.9
KBPA-FM				Adult Hits			25-54				4				4.1
KLBJ-FM				Album Oriented Rock			25-54				9	t			3.0
KGSR-FM				Adult Album Alternative			25-54				14				2.0
KROX-FM				Alternative Rock			18-34				5				2.9
Terre Haute, IN		238
WTHI-FM				Country			25-54				1				22.3
WWVR-FM				Classic Rock			25-54				2				6.4

     In addition to our other domestic radio broadcasting operations, we own and operate Network Indiana, a radio network that provides news and other programming to nearly 70 affiliated radio stations in Indiana. Internationally, we own and operate a network of radio stations in the Flanders region of Belgium, own national radio networks in Slovakia and Bulgaria, have an approximate 60% interest in two other national radio networks in Bulgaria, and have a 59.5% interest in a national radio station in Hungary. We also engage in various businesses ancillary to our broadcasting business, such as consulting and broadcast tower leasing.

     TELEVISION STATION

     On May 10, 2005, Emmis announced that it had engaged advisors to assist in evaluating strategic alternatives for its television assets. As of February 29, 2008, the Company has sold fifteen of its sixteen television stations. The following discussion relates to the remaining television station, WVUE-TV, located in New Orleans, Louisiana which is classified as discontinued operations in the accompanying financial statements. On May 2, 2008, Emmis entered into an agreement to sell WVUE-TV.

     In the following table, “DMA Rank” is estimated by the Nielsen Media Research, Inc. (“Nielsen”) as of January 2008. Rankings are based on the relative size of a station’s market among the 210 generally recognized Designated Market Areas (“DMAs”), as defined by Nielsen. “Number of Stations in Market” represents the number of television stations (“Reportable Stations”) designated by Nielsen as “local” to the DMA, excluding public television stations and stations which do not meet minimum Nielsen reporting standards (i.e., a weekly cumulative audience of less than 2.5%) for reporting in the Sunday through Saturday, 7:00 a.m. to 1:00 a.m. time period. “Station Rank” reflects the station’s rank relative to other Reportable Stations based upon the DMA rating as reported by Nielsen from 9:00 a.m. to midnight, Sunday through Saturday. “Station Audience Share” reflects an estimate of the share of DMA households viewing television received by a local commercial station in comparison to other local commercial stations in the market as measured from 9:00 a.m. to midnight, Sunday through Saturday.

NUMBER OF

STATION

TELEVISION

METROPOLITAN

DMA

AFFILIATION/

STATIONS

STATION

AUDIENCE

AFFILIATION

STATION

AREA SERVED

RANK

CHANNEL

IN MARKET(1)

RANK(1)

SHARE(1)

EXPIRATION

WVUE-TV

New Orleans, LA

53

Fox/8

8

2

11

June 30, 2010

     Our affiliation agreement provides WVUE-TV with the right to rebroadcast all programs transmitted by FOX. In return, FOX has the right to sell a substantial portion of the advertising time during such broadcasts. Emmis does not receive any network compensation payments for WVUE-TV.

PUBLISHING OPERATIONS

     We publish the following magazines through our publishing division:

		Monthly
		Paid & Verified
		Circulation(a)
Regional Magazines:
Texas Monthly			304,000
Los Angeles			150,000
Atlanta			72,000
Orange Coast			56,000
Indianapolis Monthly			46,000
Cincinnati			42,000
Tu Ciudad			33,000
Specialty Magazines (b):
Country Sampler			358,000
Country Business			29,000

INTERNET AND NEW TECHNOLOGIES

     We believe that the growth of the Internet and other new technologies present not only a challenge, but an opportunity for broadcasters and publishers. The primary challenge is increased competition for the time and attention of our listeners and readers. The opportunity is to further enhance the relationships we already have with our listeners and readers by expanding products and services offered by our stations and magazines. For that reason, we have continued to expand our Emmis Interactive group, which provides additional revenue opportunities for our radio and publishing entities through customized website design and development. Emmis Interactive recently began offering its services to third parties in exchange for a monthly royalty fee. The goal of Emmis Interactive is to leverage multiple technology platforms to not only create a two-way dialogue with listeners, but to also address the needs of marketers seeking multimedia touch points with potential consumers.

COMMUNITY INVOLVEMENT

     We believe that to be successful, we must be integrally involved in the communities we serve. We see ourselves as community partners. To that end, each of our stations and magazines participates in many community programs, fundraisers and activities that benefit a wide variety of organizations. Charitable organizations that have been the beneficiaries of our contributions, marathons, walkathons, dance-a-thons, concerts, fairs and festivals include, among others, Big Brothers/Big Sisters, Coalition for the Homeless, Indiana Black Expo, the Children’s Wish Fund, the National Multiple Sclerosis Foundation and Special Olympics. The National Association of Broadcasters Education Foundation honored us with the Hubbard Award, honoring a broadcaster “for extraordinary involvement in serving the community.” Emmis was the second broadcaster to receive this prestigious honor, after the Hubbard family, for which the award is named. In 2006, The Broadcasters’ Foundation honored Chairman and CEO Jeff Smulyan with its Golden Mike Award in recognition of his charitable efforts.

INDUSTRY INVOLVEMENT

     We have an active leadership role in a wide range of industry organizations. Our senior managers have served in various capacities with industry associations, including as directors of the National Association of Broadcasters, the Radio Advertising Bureau, the Radio Futures Committee, the Arbitron Advisory Council, and as founding members of the Radio Operators Caucus. Our chief executive officer has been honored with the National Association of Broadcasters’ “National Radio Award” and as Radio Ink’s “Radio Executive of the Year.” Our Radio Division President served as Chairman of the NAB’s Fall Radio Show in 2006 and reprised that role for the Fall Radio Show in 2007. Our management and on-air personalities have won numerous industry awards.

COMPETITION

     Radio and television broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, cable, magazines, outdoor advertising, transit advertising, the Internet and direct marketing. Competition within the broadcasting industry occurs primarily in individual market areas, so that a station in one market (e.g., New York) does not generally compete with stations in other markets (e.g., Chicago). In each of our markets, our stations face competition from other stations with substantial financial resources, including stations targeting the same demographic groups. In addition to management experience, factors that are material to competitive position include the station’s rank in its market in terms of the number of listeners or viewers, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. We attempt to improve our competitive position with programming and promotional campaigns aimed at the demographic groups targeted by our stations. We also seek to improve our position through sales efforts designed to attract advertisers that have done little or no radio advertising by emphasizing the effectiveness of radio advertising in increasing the advertisers’ revenues. The policies and rules of the Federal Communications Commission (the “FCC”) permit certain joint ownership and joint operation of local stations. All of our radio stations take advantage of these joint arrangements in an effort to lower operating costs and to offer advertisers more attractive rates and services. Although we believe that each of our stations can compete effectively in its market, there can be no assurance that any of our stations will be able to maintain or increase its current audience ratings or advertising revenue market share.

     Although the broadcasting industry is highly competitive, barriers to entry exist. The operation of a broadcasting station in the United States requires a license from the FCC. Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC’s multiple ownership rules regulating the number of stations that may be owned and controlled by a single entity and cross ownership rules which limit the types of media

properties in any given market that can be owned by the same person or company.

     The broadcasting industry historically has grown in terms of total revenues despite the introduction of new technology for the delivery of entertainment and information, such as cable television, the Internet, portable media players, satellite radio, and satellite television. We believe that radio’s portability in particular makes it less vulnerable than other media to competition from new methods of distribution or other technological advances. There can be no assurance, however, that the development or introduction in the future of any new media technology will not have an adverse effect on the radio industry.

ADVERTISING SALES

     Our stations and magazines derive their advertising revenue from local and regional advertising in the marketplaces in which they operate, as well as from the sale of national advertising. Local and most regional sales are made by a station’s or magazine’s sales staff. National sales are made by firms specializing in such sales, which are compensated on a commission-only basis. We believe that the volume of national advertising revenue tends to adjust to shifts in a station’s audience share position more rapidly than does the volume of local and regional advertising revenue. During the year ended February 29, 2008, approximately 21% of our total advertising revenues were derived from national sales and 79% were derived from local and regional sales. For the year ended February 29, 2008, our radio stations derived a higher percentage of their advertising revenues from local and regional sales (84%) than our publishing entities (62%).

EMPLOYEES

     As of February 29, 2008, Emmis had approximately 1,190 full-time employees and approximately 375 part-time employees. Approximately 140 employees are represented by unions at our television station and various radio stations. We consider relations with our employees to be good.

INTERNET ADDRESS AND INTERNET ACCESS TO SEC REPORTS

     Our Internet address is www.emmis.com. Through our Internet website, free of charge, you may obtain copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports will be available the same day we electronically file such material with, or furnish such material to, the SEC. We have been making such reports available on the same day they are filed during the period covered by this report.

FEDERAL REGULATION OF BROADCASTING

     Radio broadcasting in the United States is subject to the jurisdiction of the FCC under the Communications Act of 1934 (the “Communications Act”), as amended in part by the Telecommunications Act of 1996 (the “1996 Act”). Radio broadcasting is prohibited except in accordance with a license issued by the FCC upon a finding that the public interest, convenience and necessity would be served by the grant of such license. The FCC has the power to revoke licenses for, among other things, false statements made in applications or willful or repeated violations of the Communications Act or of FCC rules. In general, the Communications Act provides that the FCC shall allocate broadcast licenses for radio stations in such a manner as will provide a fair, efficient and equitable distribution of service throughout the United States. The FCC determines the operating frequency, location and power of stations; regulates the equipment used by stations; and regulates numerous other areas of radio broadcasting pursuant to rules, regulations and policies adopted under authority of the Communications Act. The Communications Act, among other things, prohibits the assignment of a broadcast license or the transfer of control of an entity holding such a license without the prior approval of the FCC. Under the Communications Act, the FCC also regulates certain aspects of the operation of cable television systems and other electronic media that compete with broadcast stations.

     The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations and policies. Reference should be made to the Communications Act as well as FCC rules, public notices and rulings for further information concerning the nature and extent of federal regulation of radio stations. Other legislation has been introduced from time to time which would amend the Communications Act in various respects, and the FCC from time to time considers new regulations or amendments to its existing regulations. We cannot predict whether any such legislation will be enacted or whether new or amended FCC regulations will be adopted or what their effect would be on Emmis.

     LICENSE RENEWAL. Radio and television stations operate pursuant to broadcast licenses that are ordinarily granted by the FCC for maximum terms of eight years and are subject to renewal upon approval by the FCC. The following table sets forth our FCC license expiration dates in addition to the call letters, license classification, antenna elevation above average terrain (for our FM stations and television station only), power and frequency of all owned stations as of February 29, 2008:

Height

Above

Expiration

Average

Date of

Terrain (in

Power (in

Radio Market

Stations

City of License

Frequency

License 1

FCC Class

feet)

Kilowatts)

Los Angeles, CA

KPWR-FM

Los Angeles, CA

105.9

December 2013

B

3035

25

KMVN-FM

Los Angeles, CA

93.9

December 2013

B

3009

18.5

New York, NY

WRXP-FM

New York, NY

101.9

June 2014

B

1355

6.2

WQHT-FM

New York, NY

97.1

June 2014

B

1339

6.7

WRKS-FM

New York, NY

98.7

June 2014

B

1362

6

Chicago, IL

WKQX-FM

Chicago, IL

101.1

December 2004 2

B

1394

5.7

WLUP-FM

Chicago, IL

97.9

December 2012

B

1394

4

St. Louis, MO

KFTK-FM

Florissant, MO

97.1

February 2013

C1

561

100

KIHT-FM

St. Louis, MO

96.3

February 2013

C1

1027

80

KPNT-FM

St. Genevieve, MO

105.7

February 2005 2

C

1375

100

KSHE-FM

Crestwood, MO

94.7

February 2013

C0

1027

100

Indianapolis, IN

WFNI-AM

Indianapolis, IN

1070

August 2012

B

N/A

50 D / 10 N

WLHK-FM

Shelbyville, IN

97.1

August 2012

B

732

23

WIBC-FM

Indianapolis, IN

93.1

August 2004 2

B

991

13.5

WYXB-FM

Indianapolis, IN

105.7

August 2012

B

492

50

Austin, TX

KBPA-FM

San Marcos, TX

103.5

August 2013

C0

1257

100

KDHT-FM

Cedar Park, TX

93.3

August 2013

C

1926

100

KGSR-FM

Bastrop, TX

107.1

August 2013

C2

499

39

KLBJ-AM

Austin, TX

590

August 2013

B

N/A

5 D / 1 N

KLBJ-FM

Austin, TX

93.7

August 2013

C

1050

97

KROX-FM

Buda, TX

101.5

August 2013

C2

843

12.5

Terre Haute, IN

WTHI-FM

Terre Haute, IN

99.9

August 2012

B

489

50

WWVR-FM

West Terre Haute, IN

105.5

August 2012

A

295

3.3

Height

Above

Expiration

Average

Analog / Digital

Date of

Terrain (in

Power (in

Television Market

Station

City of License

Channel 3

License

feet)

Kilowatts)

New Orleans

WVUE-TV

New Orleans, LA

8/29

June 2013

991

316

     Under the Communications Act, at the time an application is filed for renewal of a station license, parties in interest, as well as members of the public, may apprise the FCC of the service the station has provided during the preceding license term and urge the denial of the application. If such a petition to deny presents information from which the FCC concludes (or if the FCC concludes on its own motion) that there is a “substantial and material” question as to whether grant of the renewal application would be in the public interest under applicable rules and policy, the FCC may conduct a hearing on specified issues to determine whether the renewal application should be granted. The Communications Act provides for the grant of a renewal application upon a finding by the FCC that the licensee:

•		has served the public interest, convenience and necessity;
•		has committed no serious violations of the Communications Act or the FCC rules; and
•		has committed no other violations of the Communications Act or the FCC rules which would constitute a pattern of abuse.

     If the FCC cannot make such a finding, it may deny the renewal application, and only then may the FCC consider competing applications for the same frequency. In a vast majority of cases, the FCC renews a broadcast license even when petitions to deny have been filed against the renewal application.

     Petitions to deny have been filed against the renewal applications for WKQX and KPNT and remain pending. An informal objection was filed against the renewal applications of the Company’s Indiana radio stations and was rejected by the FCC, and the licenses of all the Indiana radio stations except WIBC were renewed. However, a petition has been filed with the FCC seeking reconsideration of grant of those license renewals, and remains pending. See “PROGRAMMING AND OPERATION.”

     REVIEW OF OWNERSHIP RESTRICTIONS. The 1996 Act required the FCC to review all of its broadcast ownership rules every two years and to repeal or modify any of its rules that are no longer “necessary in the public interest.” Pursuant to recent congressional appropriations legislation, these reviews now must be conducted once every four years.

     In June of 2003, the FCC modified several of its regulations governing the ownership of radio stations in local markets. In June of 2004, however, the United States Court of Appeals for the Third Circuit released a decision rejecting much of the Commission’s 2003 decision. While affirming the FCC in certain respects, the Third Circuit found fault with the proposed new limits on media combinations, remanded them to the agency for further proceedings and extended a stay on the implementation of the new rules that it had imposed in September 2003. In December of 2007, the FCC adopted a decision pursuant to the remand ordered by the Court of Appeals. The FCC relaxed its long-standing prohibition on common ownership of a television or radio station and daily newspaper in the same market, allowing such ownership under limited circumstances. The FCC, however, largely left intact its other pre-2003 ownership rules, including those limiting the number of radio stations that may be commonly owned, or owned in combination with a television station, in a given local market. The FCC’s decision has been appealed by a number of broadcasters (not including the Company) and by a number of “public interest” groups. We cannot predict whether such appeals will result in modifications of the ownership rules or the impact (if any) that such modifications would have on our business.

     The discussion below reviews the pertinent ownership rules currently in effect and the changes in the newspaper/broadcast rule adopted in the FCC’s December 2007 decision.

     Local Radio Ownership:

     The local radio ownership rule limits the number of commercial radio stations that may be owned by one entity in a given radio market based on the number of radio stations in that market:

•

if the market has 45 or more radio stations, one entity may own up to eight stations, not more than five of which may be in the same service (AM or FM);

•

if the market has between 30 and 44 radio stations, one entity may own up to seven stations, not more than four of which may be in the same service;

•

if the market has between 15 and 29 radio stations, one entity may own up to six stations, not more than four of which may be in the same service; and

•

if the market has 14 or fewer radio stations, one entity may own up to five stations, not more than three of which may be in the same service, however one entity may not own more than 50% of the stations in the market.

     Each of the markets in which our radio stations are located has at least 15 commercial radio stations.

     For purposes of applying these numerical limits, the FCC has also adopted rules with respect to (i) so-called local marketing agreements, or “LMAs,” by which the licensee of one radio station provides programming for another licensee’s radio station in the same market and sells all of the advertising within that programming and (ii) so-called joint sale agreements, or “JSAs,” by which the licensee of one station sells the advertising time on another station in the market. Under these rules, an entity that owns one or more radio stations in a market and programs more than 15% of the broadcast time, or sells more than 15% of the advertising time, on another radio station in the same market pursuant to an LMA or JSA is generally required to count the station toward its media ownership limits even though it does not own the station. As a result, in a market where we own one or more radio stations, we generally cannot provide programming to another station under an LMA, or sell advertising on another station pursuant to a JSA, if we could not acquire that station under the local radio ownership rule.

     Although the FCC’s June 2003 decision did not change the numerical caps under the local radio rule, the Commission adjusted the rule by deciding that both commercial and noncommercial stations could be counted in determining the number of stations in a radio market. The decision also altered the definition of the relevant local market for purposes of the rule. The FCC “grandfathered” existing station “clusters” not in compliance with the numerical caps as calculated pursuant to the new market definition, but provided that they could be sold intact only to small businesses meeting certain requirements. In December 2007, the FCC expanded this policy to allow an owner to sell a grandfathered station cluster to any buyer, so long as the buyer commits to file, within 12 months, an application with the FCC to transfer the excess station(s) to an eligible small business or to a trust for ultimate sale to such an entity. The change in market definition appears to impact the Austin, Texas, market, such that we exceed the numerical cap for FM stations, so that if we chose to sell our Austin cluster of stations, we would have to either sell the cluster to a buyer meeting the requirements described above or “spin off” one FM station to a separate buyer.

     Cross-Media Ownership:

     The FCC’s radio/television cross-ownership rule generally permits the common ownership of the following combinations in the same market, to the extent permitted under the FCC’s television duopoly rule and local radio rules:

•

up to two commercial television stations and six commercial radio stations or one commercial television station and seven commercial radio stations in a market where at least 20 independent media voices will remain post-merger;

•

up to two commercial television stations and four commercial radio stations in a market where at least 10 independent media voices will remain post-merger; and

•

two commercial television stations and one commercial radio station in a market with less than 10 independent media voices that will remain post-merger.

For purposes of this rule, the FCC counts as “voices” commercial and non-commercial broadcast television and radio stations as well as some daily newspapers and no more than one cable operator. The Commission will consider permanent waivers of its revised radio/television cross-ownership rule only if one of the stations is a “failed station.”

     As noted above, the FCC rules formerly prohibited common ownership of a daily newspaper and a radio or television station in the same local market. In its December 2007 decision, the FCC adopted rules that contain a presumption in favor of allowing ownership of one television or radio station in combination with one daily newspaper in the 20 largest media markets. In smaller markets, there is a presumption against allowing such ownership. In the case of proposed TV/newspaper combinations, the TV station may not be among the top four ranked stations in its market, and there must be at least eight independently owned and operated TV stations in the market post-transaction. It is unclear whether a stay earlier imposed by the Court of Appeals applies to the liberalized newspaper crossownership rule. In addition, there are efforts in Congress to adopt legislation repealing the rule and reinstating the prohibition on newspaper/broadcast crossownership.

     ALIEN OWNERSHIP. Under the Communications Act, no FCC license may be held by a corporation if more than one-fifth of its capital stock is owned or voted by aliens or their representatives, a foreign government or representative thereof, or an entity organized under the laws of a foreign country (collectively, “Non-U.S. Persons”). Furthermore, the Communications Act provides that no FCC license may be granted to an entity directly or indirectly controlled by another entity of which more than one-fourth of its capital stock is owned or voted by Non-U.S. Persons if the FCC finds that the public interest will be served by the denial of such license. The FCC staff has interpreted this provision to require an affirmative public interest finding to permit the grant or holding of a license, and such a finding has been made only in limited circumstances. The foregoing restrictions on alien ownership apply in modified form to other types of business organizations, including partnerships and limited liability companies. Our Second Amended and Restated Articles of Incorporation and Amended and Restated Code of By-Laws authorize the Board of Directors to prohibit such restricted alien ownership, voting or transfer of capital stock as would cause Emmis to violate the Communications Act or FCC regulations.

     ATTRIBUTION OF OWNERSHIP INTERESTS. In applying its ownership rules, the FCC has developed specific criteria in order to determine whether a certain ownership interest or other relationship with a Commission licensee is significant enough to be “attributable” or “cognizable” under its rules. Specifically, among other relationships, certain stockholders, officers and directors of a broadcasting company are deemed to have an attributable interest in the licenses held by that company, such that there would be a violation of the Commission’s rules where the broadcasting company and such a stockholder, officer or director together hold attributable interests in more than the permitted number of stations or a prohibited combination of outlets in the same market. The FCC’s regulations generally deem the following relationships and interests to be attributable for purposes of its ownership restrictions:

•		all officer and director positions in a licensee or its direct/indirect parent(s);
•		voting stock interests of at least 5% (or 20%, if the holder is a passive institutional investor, i.e., a mutual fund, insurance company or bank);
•		any equity interest in a limited partnership or limited liability company where the limited partner or member is “materially involved” in the media-related activities of the LP or LLC and has not been “insulated” from such activities pursuant to specific FCC criteria;
•		equity and/or debt interests which, in the aggregate, exceed 33% of the total asset value of a station or other media entity (the “equity/debt plus policy”), if the interest holder supplies more than 15% of the station’s total weekly programming (usually pursuant to a time brokerage, local marketing or network affiliation agreement) or is a same-market media entity (i.e., broadcast company or newspaper). In December of 2007, the FCC increased these limits under certain circumstances where the equity and/or debt interests are in a small business meeting certain requirements.

     To assess whether a voting stock interest in a direct or indirect parent corporation of a broadcast licensee is attributable, the FCC uses a “multiplier” analysis in which non-controlling voting stock interests are deemed proportionally reduced at each non-controlling link in a multi-corporation ownership chain.

     Under existing FCC policy, in the case of corporations having a “single majority shareholder,” the interests of minority shareholders are generally not deemed attributable. Because Jeffrey H. Smulyan’s voting interest in the Company currently exceeds 50%, this exemption appears to apply to the Company. Elimination of the exemption is, however, under consideration by the FCC. If the exemption is eliminated, or if Mr. Smulyan’s voting interest falls to or below 50%, then the interests of any minority shareholders that meet or exceed the thresholds described above would become attributable and would be combined with the Company’s interests for purposes of determining compliance with FCC ownership rules.

     Ownership-rule conflicts arising as a result of aggregating the media interests of the Company and its attributable shareholders could require divestitures by either the Company or the affected shareholders. Any such conflicts could result in Emmis being unable to obtain FCC consents necessary for future acquisitions. Conversely, Emmis’ media interests could operate to restrict other media investments by shareholders having or acquiring an interest in Emmis.

     ASSIGNMENTS AND TRANSFERS OF CONTROL. The Communications Act prohibits the assignment of a broadcast license or the transfer of control of a broadcast licensee without the prior approval of the FCC. In determining whether to grant such approval, the FCC considers a number of factors, including compliance with the various rules limiting common ownership of media properties, the “character” of the licensee and those persons holding attributable interests therein and compliance with the Communications Act’s limitations on alien ownership as well as other statutory and regulatory requirements. When evaluating an assignment or transfer of control application, the FCC is prohibited from considering whether the public interest might be served by an assignment of the broadcast license or transfer of control of the licensee to a party other than the assignee or transferee specified in the application.

     PROGRAMMING AND OPERATION. The Communications Act requires broadcasters to serve the “public interest.” Since the late 1970s, the FCC gradually has relaxed or eliminated many of the more formalized procedures it had developed to promote the broadcast of certain types of programming responsive to the needs of a station’s community of license. However, licensees continue to be required to present programming that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness.

     Federal law prohibits the broadcast of obscene material at any time and the broadcast of indecent material during specified time periods; these prohibitions are subject to enforcement action by the FCC. The agency has engaged in more aggressive enforcement of its indecency regulations than has generally been the case in the past. In addition to imposing more stringent fines, the Commission has indicated that it may begin license revocation procedures for “serious” violations of the indecency law. Furthermore, in June of 2006, Congress passed legislation that increased the per-violation maximum fine tenfold, from $32,500 to $325,000.

     In August of 2004, Emmis entered into a Consent Decree with the FCC, pursuant to which (i) the Company adopted a compliance plan intended to avoid future indecency violations, (ii) the Company admitted, solely for purposes of the Decree, that certain prior broadcasts were “indecent,” (iii) the Company agreed to make a voluntary payment of $300,000 to the U.S. Treasury, (iv) the FCC rescinded its prior enforcement actions against the Company based on allegedly indecent broadcasts, and agreed not to use against the Company any indecency violations based on complaints within the FCC’s possession as of the date of the Decree or “similar” complaints based on pre-Decree broadcasts, and (v) the FCC found that neither the alleged indecency violations nor the circumstances surrounding a civil suit filed by a WKQX announcer raised any substantial and material questions concerning the Company’s

qualifications to hold FCC licenses. The Consent Decree was subsequently upheld by a federal court of appeals. Petitions have been filed against the license renewal applications of stations WKQX and KPNT, and an informal objection was filed against the license renewals of the Company’s Indiana radio stations, in each case based primarily on the matters covered by the Decree. The petitions against WKQX and KPNT remain pending; the objections against the Indiana license renewals were rejected by the FCC, but a petition for reconsideration of that FCC action is pending. Subsequent to the approval of the Consent Decree, the Company has received letters of inquiry from the FCC alleging additional violations of indecency rules. The broadcasts covered by these letters of inquiry are not covered by the Consent Decree and could result in the imposition of liability.

     In 2006, the FCC commenced an industry-wide inquiry into possible violations of sponsorship identification requirements and “payola” in the radio industry. Its initial inquiries were directed to four radio groups, and in April 2007, those groups entered into Consent Decrees with the FCC to resolve outstanding investigations and allegations. The Company has received similar inquiries from the FCC and has submitted responses; additional responses may be submitted in the future.

     Stations also must pay regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identification, equal employment opportunities, contest and lottery advertisements, and technical operations, including limits on radio frequency radiation.

     Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary fines, the grant of “short-term” (less than the maximum term) license renewals or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license.

     ADDITIONAL DEVELOPMENTS AND PROPOSED CHANGES. The Commission has adopted rules implementing a new low power FM (“LPFM”) service and approximately 800 such stations are in operation. In November of 2007, the FCC adopted rules that, among other things, enhance LPFM’s interference protection from subsequently-authorized full-service stations. The FCC has also proposed to reduce interference protection to FM stations from LPFM stations operating on certain adjacent frequencies. We cannot predict whether any LPFM stations will interfere with the coverage of our radio stations.

     The FCC also has authorized two companies to launch and operate satellite digital audio radio service (“SDARS”) systems. Both companies—Sirius Satellite Radio, Inc. and XM Radio—are now providing nationwide service. In addition, Sirius and XM recently have launched channels providing local traffic and weather information in major cities. Broadcasters have objected to these local services, contending that the provision of local programming conflicts with the FCC’s intent to license satellite radio solely as a national service. XM and Sirius contend, in response, that the services are not in contravention of their FCC authorizations because the channels offering local information are being offered nationwide, not on a local basis. In February of 2007, XM and Sirius announced their intention to merge, and subsequently filed applications for necessary regulatory approvals, which remain pending. We cannot predict the impact of SDARS or of the possible merger of XM and Sirius on our radio stations’ listenership.

     In October 2002, the FCC issued an order selecting a technical standard for terrestrial digital audio broadcasting (“DAB,” also known as high definition radio or “HD Radio”). The in-band, on-channel (“IBOC”) technology chosen by the agency allows AM and FM radio broadcasters to introduce digital operations and permits existing stations to operate on their current frequencies in either full analog mode, full digital mode, or a combination of both (at reduced power). In March of 2005, the FCC announced that pending adoption of final rules, it would allow stations on an interim basis to broadcast multiple digital channels. In March 2007, the FCC adopted service rules for HD Radio. Significantly, the Commission decided to allow FM stations to broadcast digital multicast streams without seeking prior FCC authority, to provide datacasting services, to lease excess digital capacity to third parties, and to offer subscription services pursuant to requests for experimental authority. Under the new rules, FM stations may operate in the “extended hybrid mode,” which provides more flexibility for multicasting and datacasting services; and may use separate analog and digital antennas without seeking prior FCC authority. FM translators, FM boosters and low power FM stations may also broadcast digitally where feasible, and AM stations may now operate digitally during nighttime hours. The new rules mandate that broadcasters offering digital service provide at least one free over-the-air signal comparable in quality to their analog signal and that they simulcast their analog programming on their main digital stream, and prohibit broadcasters from operating exclusively in digital. The FCC declined either to set any mandatory deadline for broadcasters to convert to digital operations or to impose additional public interest obligations (beyond those that already apply to analog broadcasters) on digital broadcasters. The FCC did, however, adopt a Further Notice of Proposed Rulemaking seeking comment on (among other things) whether additional public interest obligations are necessary, including consideration of a requirement that radio stations report their public service programming in detail on a standardized form and post that form and all other contents of their public inspection files on the station’s website. (The FCC subsequently imposed such a requirement on television stations in November 2007.)

     In May 2007, the Copyright Royalty Board (“CRB”) published royalty rates for non-interactive Internet streaming of sound recordings for 2006-2010. The new rates apply to all services that stream sound recordings on the Internet, including radio stations that simulcast their broadcast programming over the Internet. The new rates represent a substantial increase from the previous rates. The rates increase from 0.08 cents per-listener per-song in 2006 to 0.19 cents per-listener per-song in 2010. Further, in order to accurately calculate royalties, beginning in 2008 a webcaster will need to know how many listeners listened to each song it transmitted, information that had often not previously been tracked. Several parties have appealed the CRB decision to the United States Court of Appeals for the D.C. Circuit. In addition, legislation that could provide relief for many webcasters has been proposed in Congress.

     In December of 2007, the FCC initiated a proceeding to consider imposing requirements intended to promote broadcasters’ service to their local communities, including (i) requiring stations to establish a “community advisory board,” (ii) reinstating a requirement that a station’s main studio be in its community of license and (iii) imposing local programming “guidelines” that, if not met, would result in additional scrutiny of a station’s license renewal application.

     Congress and the FCC have under consideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our broadcast stations, result in the loss of audience share and advertising revenues for our broadcast stations and/or affect our ability to acquire additional broadcast stations or finance such acquisitions. Such matters include, but are not limited to:

•

proposals to require broadcasters to pay royalties to performing artists for use of their recordings;

•

proposals to impose spectrum use or other fees on FCC licensees;

•

proposals to repeal or modify some or all of the FCC’s multiple ownership rules and/or policies;

•

proposals to change rules relating to political broadcasting;

•

technical and frequency allocation matters;

•

AM stereo broadcasting;

•

proposals to permit expanded use of FM translator stations, including use by AM stations;

•

proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;

•

proposals to tighten safety guidelines relating to radio frequency radiation exposure;

•

proposals permitting FM stations to accept formerly impermissible interference;

•

proposals to reinstate holding periods for licenses;

•

changes to broadcast technical requirements, including those relative to the implementation of SDARS and DAB;

•

proposals to reallocate spectrum associated with TV channels 5 and 6 for FM radio broadcasting;

•

proposals to limit the tax deductibility of advertising expenses by advertisers; and

•

proposals to regulate violence in broadcasts.

     We cannot predict whether any proposed changes will be adopted, what other matters might be considered in the future, or what impact, if any, the implementation of any of these proposals or changes might have on our business.

     The foregoing is only a brief summary of certain provisions of the Communications Act and of specific FCC regulations. Reference should be made to the Communications Act as well as FCC regulations, public notices and rulings for further information concerning the nature and extent of federal regulation of broadcast stations.

REGULATION OF BROADCASTING IN OTHER COUNTRIES

     Each of our broadcast properties outside the United States also operate pursuant to licenses granted by a government regulator comparable to the FCC. The following table sets forth the regulator, the city or country of license and the license expiration date for each of our international radio properties:

Property		Regulator		Country		Expiration
Slager Radio		Hungarian National Radio and Television Board		Hungary		November 2009
Radio Expres		Council for Broadcasting and Retransmission		Slovakia		February 2013
BeOne		Flemish Regulator for Media		Belgium		December 2012
Radio FM+		The Council for Electronic Media		Bulgaria		February 2013
Radio Fresh		The Council for Electronic Media		Bulgaria		February 2013
Star FM		The Council for Electronic Media		Bulgaria		January 2013

     Broadcast licenses in many foreign countries do not generally confer the same renewal expectancy as U.S. radio stations broadcast licenses. For instance, Hungarian broadcast law is silent as to the treatment of broadcast licenses after the expiration of the first license renewal period. While we believe we have reasonable prospects for securing additional extensions of our Hungarian broadcast licenses after the expiration of our first license renewal period in November 2009, we cannot assure that such extensions will be granted or that the terms and conditions of such extensions will not have a material adverse effect on our Hungarian operations.

     In addition, the broadcast licenses in these countries require our stations to comply with various other regulatory requirements, including broadcast content requirements (e.g., a certain amount of local news), limits on the amounts and types of advertising, and the like.

     GEOGRAPHIC FINANCIAL INFORMATION

     The Company’s segments operate primarily in the United States with one national radio station in Hungary, a network of radio stations in Belgium and national radio networks in Slovakia and Bulgaria. The following tables summarize relevant financial information by geographic area. Net revenues and noncurrent assets related to discontinued operations are excluded for all periods presented.

		Year Ended February 28 (29),
		2006				2007				2008
		(amounts in thousands)
Net Revenues:
Domestic		$	349,941			$	327,166			$	320,048
International			27,495				32,369				41,164
Total		$	377,436			$	359,535			$	361,212

		As of February 28 (29),
		2006				2007				2008
		(amounts in thousands)
Noncurrent Assets:
Domestic		$	1,000,155			$	985,635			$	943,436
International			26,424				27,261				40,879
Total		$	1,026,579			$	1,012,896			$	984,315

ITEM 1A. RISK FACTORS.

     The risk factors listed below, in addition to those set forth elsewhere in this report, could affect the business and future results of the Company. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Risks Related to our Business

Decreased spending by advertising or particular categories of advertisers can adversely affect our advertising revenues.

     We believe that advertising is a discretionary business expense. Spending on advertising tends to decline disproportionately during an economic recession or downturn as compared to other types of business spending. Consequently, a downturn in the United States economy would likely have an adverse effect on our advertising revenue and, therefore, our results of operations. A recession or downturn in the economy of any individual geographic market, particularly a major market such as Los Angeles or New York, in which we own and operate sizeable stations, could have a significant effect on us.

     Even in the absence of a general recession or downturn in the economy, an individual business sector (such as the automotive industry) that tends to spend more on advertising than other sectors might be forced to reduce its advertising expenditures if that sector experiences a downturn. If that sector’s spending represents a significant portion of our advertising revenues, any reduction in its advertising expenditures may affect our revenue.

We may lose audience share and advertising revenue to competing radio stations or other types of media.

     We operate in highly competitive industries. Our radio stations compete for audiences and advertising revenue with other radio stations and station groups, as well as with other media. Shifts in population, demographics, audience tastes, consumer use of technology and forms of media and other factors beyond our control could cause us to lose market share. Any adverse change in a particular market, or adverse change in the relative market positions of the stations located in a particular market, could have a material adverse effect on our revenue or ratings, could require increased promotion or other expenses in that market, and could adversely affect our revenue in other markets. Other radio broadcasting companies may enter the markets in which we operate or may operate in the future. These companies may be larger and have more financial resources than we have. Our radio stations may not be able to maintain or increase their current audience ratings and advertising revenue in the face of such competition.

     We routinely conduct market research to review the competitive position of our stations in their respective markets. If we determine that a station could improve its operating performance by serving a different demographic within its market, we may change the format of that station, as we have recently done in Los Angeles with KMVN and in New York City with WRXP. Our competitors may respond to our actions by more aggressive promotions of their stations or by replacing the format we vacate, limiting our options if we do not achieve expected results with our new format.

     From time to time, other stations may change their format or programming, a new station may adopt a format to compete directly with our stations for audiences and advertisers, or stations might engage in aggressive promotional campaigns. These tactics could result in lower ratings and advertising revenue or increased promotion and other expenses and, consequently, lower earnings and cash flow for us. Any failure by us to respond, or to respond as quickly as our competitors, could also have an adverse effect on our business and financial performance.

     Arbitron Inc., the supplier of ratings data for United States radio markets, has developed technology to passively collect data for its ratings service. The Portable People Meter^TM (PPM^TM) is a small, pager-sized device that does not require any active manipulation by the end user and is capable of automatically measuring radio, television, Internet, satellite radio and satellite television signals that are encoded for the service by the broadcaster. Initial results in some markets have indicated that ratings for certain stations using the PPM versus the traditional diary ratings gathering methodology can be materially different. PPM based ratings are scheduled to be introduced in our three largest markets in September 2008.

     Because of the competitive factors we face and the introduction of the PPM, we cannot assure investors that we will be able to maintain or increase our current audience ratings and advertising revenue.

Our domestic radio operations are heavily concentrated in the New York and Los Angeles markets.

     Our radio operations in New York and Los Angeles account for approximately 50% of our domestic radio revenues. Our results from operations can be materially affected by a downturn in operations in either one of these markets.

We must respond to the rapid changes in technology, services and standards that characterize our industry in order to remain competitive.

     The radio broadcasting industry is subject to rapid technological changes, evolving industry standards and the emergence of competition from new media technologies and services. We cannot assure that we will have the resources to acquire new technologies or to introduce new services that could compete with these new technologies. Various new media technologies and services are being developed or introduced, including:

	-		satellite-delivered digital audio radio service, which has resulted in the introduction of new subscriber-based satellite radio services with numerous niche formats;
	-		audio programming by cable systems, direct-broadcast satellite systems, personal communications systems, Internet content providers and other digital audio broadcast formats;
	-		personal digital audio devices (e.g., audio via Wi-Fi, mobile phones, iPods®, WiMAX, the Internet and MP3 players);
	-		in-band on-channel digital radio (i.e., HD digital radio), which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services; and
	-		low-power FM radio, which could result in additional FM radio broadcast outlets.

     New media has resulted in fragmentation in the advertising market, but we cannot predict the effect, if any, that additional competition arising from new technologies may have on the radio broadcasting industry or on our financial condition and results of operations. We also cannot ensure that our investments in HD digital radio and other technologies will produce the desired returns.

Our business depends on maintaining our licenses with the FCC. We could be prevented from operating a radio station if we fail to maintain its license.

     The radio broadcasting industry is subject to extensive and changing regulation. The Communications Act, and FCC rules and policies require FCC approval for transfers of control and assignments of FCC licenses. The filing of petitions or complaints against FCC licensees could result in the FCC delaying the grant of, or refusing to grant, its consent to the assignment of licenses to or from an FCC licensee or the transfer of control of an FCC licensee. In certain circumstances, the Communications Act, and FCC rules and policies will operate to impose limitations on alien ownership and voting of our common stock. There can be no assurance that there will be no changes in the current regulatory scheme, the imposition of additional regulations or the creation of new regulatory agencies, which changes could restrict or curtail our ability to acquire, operate and dispose of stations or, in general, to compete profitably with other operators of radio and other media properties.

     Each of our radio stations operates pursuant to one or more licenses issued by the FCC. Under FCC rules, radio licenses are granted for a term of eight years. Our licenses expire at various times through June 2014. Although we will apply to renew these licenses, third parties may challenge our renewal applications. While we are not aware of facts or circumstances that would prevent us from having our current licenses renewed, there can be no assurance that the licenses will be renewed or that renewals will not include conditions or qualifications that could adversely affect our business and operations. Failure to obtain the renewal of any of our broadcast licenses may have a material adverse effect on our business and operations. In addition, if we or any of our officers, directors or significant stockholders materially violates the FCC’s rules and regulations or the Communications Act, is convicted of a felony or is found to have engaged in unlawful anticompetitive conduct or fraud upon another government agency, the FCC may, in response to a petition from a third party or on its own initiative, in its discretion, commence a proceeding to impose sanctions upon us which could involve the imposition of monetary fines, the revocation of our broadcast licenses or other sanctions. If the FCC were to issue an order denying a license renewal application or revoking a license, we would be required to cease operating the applicable radio station only after we had exhausted all rights to administrative and judicial review without success.

The FCC has begun more vigorous enforcement of its indecency rules against the broadcast industry, which could have a material adverse effect on our business.

     The FCC’s rules prohibit the broadcast of obscene material at any time and indecent material between the hours of 6 a.m. and 10 p.m. Broadcasters risk violating the prohibition on the broadcast of indecent material because of the FCC’s broad definition of such material, coupled with the spontaneity of live programming.

     Congress has dramatically increased the penalties for broadcasting obscene, indecent or profane programming and broadcasters can potentially face license revocation, renewal or qualification proceedings in the event that they broadcast indecent material. In addition, the FCC’s heightened focus on indecency, against the broadcast industry generally, may encourage third parties to oppose our license renewal applications or applications for consent to acquire broadcast stations. As a result of these developments, we have implemented certain measures that are designed to reduce the risk of broadcasting indecent material in violation of the FCC’s rules. These and other future modifications to our programming in an effort to reduce the risk of indecency violations could have an adverse effect on our competitive position.

Any changes in current FCC ownership regulations may negatively impact our ability to compete or otherwise harm our business operations.

     The FCC is required to review all of its broadcast ownership rules every four years and to repeal or modify any of its rules that are no longer “necessary in the public interest.” We cannot predict the impact of these reviews on our business or their effect on our ability to acquire broadcast stations in the future or to continue to own and freely transfer stations that we have already acquired.

     In 2003, we acquired a controlling interest in five FM stations and one AM station in the Austin, Texas market. Under ownership regulations released after the date of our acquisition, it appears that we would be permitted to own or control only four FM stations in the Austin market (ownership of one AM station would continue to be allowed). The new rules do not require divestiture of existing non-conforming station combinations, but do provide that such clusters may be transferred only to defined small business entities or to buyers that commit to selling any excess stations to such entities within one year. Consequently, if we wish to sell our interest in the Austin stations, we will have to either sell to an entity that meets those FCC requirements or exclude at least one FM station from the transaction.

Changes in current Federal regulations could adversely affect our business operations.

     Congress and the FCC have under consideration, and may in the future consider and adopt, new laws, regulations and policies that could, directly or indirectly, affect the profitability of our broadcast stations. In particular, Congress is considering a revocation of radio’s exemption from paying royalties to performing artists for use of their recordings (radio already pays a royalty to songwriters). A requirement to pay additional royalties could have an adverse effect on our business operations and financial performance.

Our business strategy and our ability to operate profitably depend on the continued services of our key employees, the loss of whom could materially adversely affect our business.

     Our ability to maintain our competitive position depends to a significant extent on the efforts and abilities of our senior management team and certain key employees. Although our executive officers are typically under employment agreements, their managerial, technical and other services would be difficult to replace if we lose the services of one or more of them or other key personnel. Our business could be seriously harmed if one of them decides to join a competitor or otherwise competes directly or indirectly against us.

     Our radio stations employ or independently contract with several on-air personalities and hosts of syndicated radio programs with significant loyal audiences in their respective broadcast areas. These on-air personalities are sometimes significantly responsible for the ranking of a station and, thus, the ability of the station to sell advertising. These individuals may not remain with our radio stations and may not retain their audiences.

Future operation of our business may require significant additional capital.

     The continued development, growth and operation of our businesses may require substantial capital. In particular, additional acquisitions may require large amounts of capital. We intend to fund our growth, including acquisitions, if any, with cash generated from operations, borrowings under our credit facility and proceeds from future issuances of debt and equity, both public and private.

Our ability to raise additional debt or equity financing is subject to market conditions, our financial condition and other factors. If we cannot obtain financing on acceptable terms when needed, our results of operations and financial condition could be adversely impacted.

Our ability to grow through acquisitions may be limited by competition for suitable properties or other factors we cannot control.

     We intend to selectively pursue acquisitions of international radio stations, publishing properties and other businesses we believe hold promise for long-term appreciation in value, when appropriate, in order to grow. To be successful with this strategy, we must be effective at quickly evaluating markets, obtaining financing on satisfactory terms and, in the case of foreign acquisitions, appropriately assessing the risks inherent with operating in a foreign country, as discussed below. We also must accomplish these tasks at reasonable costs. In general, we compete with many other buyers for the properties we pursue. These other buyers may be larger and have more resources. We cannot predict whether we will be successful in buying additional properties, or whether we will be successful with any property we acquire. Our strategy is generally to buy underperforming properties and use our experience to improve their performance. Thus, the benefits resulting from the properties we buy may not manifest themselves immediately, and we may need to pay large initial costs for these improvements.

Our current and future operations are subject to certain risks that are unique to operating in a foreign country.

     We currently have several international operations, including operations in Hungary, Slovakia, Belgium and Bulgaria. Therefore, we are exposed to risks inherent in international business operations. We intend to pursue opportunities to buy additional broadcasting properties in these and other foreign countries. The risks of doing business in foreign countries include the following:

	-		changing regulatory or taxation policies;
	-		currency exchange risks;
	-		changes in diplomatic relations or hostility from local populations;
	-		seizure of our property by the government or restrictions on our ability to transfer our property or earnings out of the foreign country;
	-		potential instability of foreign governments, which might result in losses against which we are not insured; and
	-		difficulty of enforcing agreements and collecting receivables through some foreign legal systems.

     Broadcast licenses in many foreign countries do not generally confer the same renewal expectancy as U.S. radio stations’ broadcast licenses. For instance, Hungarian broadcast law is silent as to the treatment of broadcast licenses after the expiration of the first license renewal period. While we believe we have reasonable prospects for securing additional extensions of our Hungarian broadcast licenses after the expiration of our first license renewal period in November 2009, we cannot assure that such extensions will be granted or that the terms and conditions of such extensions will not have a material adverse effect on our Hungarian operations.

Exchange rates may cause future losses in our international operations.

     Because we own assets in foreign countries and derive revenue from our international operations, we may incur currency translation losses due to changes in the values of foreign currencies and in the value of the United States dollar. We cannot predict the effect of exchange rate fluctuations upon future operating results.

We may not be able to integrate acquired properties successfully, which could affect our financial performance.

     Our ability to operate our Company effectively depends, in part, on our success in integrating acquired properties into our operations. These efforts may impose significant strains on our management and financial resources. The pursuit and integration of acquired properties will require substantial attention from our management and will limit the amount of time they can devote to other important matters. Successful integration of acquired properties will depend primarily on our ability to manage our combined operations. If we fail to successfully integrate acquired properties or manage our growth or if we encounter unexpected difficulties during expansion, it could have a negative impact on the performance of acquired properties as well as on our Company as a whole.

We may not be able to complete the disposition of our remaining television station.

     In May 2005, we announced that we had engaged advisors to assist us in evaluating strategic alternatives for our television assets. As of February 29, 2008, we have sold fifteen of our original sixteen television stations. On May 2, 2008, we entered into an agreement

to sell WVUE-TV in New Orleans. The transaction contains customary representations, warranties and covenants, and is subject to standard closing conditions, including but not limited to approvals by the FCC. We expect to close this transaction in the second half of the calendar year.

An accounting principle that affects the accounting treatment of goodwill and FCC licenses could cause future losses due to asset impairment.

     As of February 29, 2008, our indefinite-lived intangibles (consisting entirely of our FCC licenses) and goodwill comprise 77% of our total assets. We are required by Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” to test our goodwill and indefinite-lived intangible assets for impairment at least annually. These annual reviews have sometimes resulted in impairment charges, and in our most recently completed fiscal year, we recorded a noncash impairment loss of $21.2 million. Our future impairment reviews could result in additional write-downs.

Our failure to comply under the Sarbanes-Oxley Act of 2002 could cause a loss of confidence in the reliability of our financial statements.

     We have undergone a comprehensive effort to comply with Section 404 of the Sarbanes-Oxley Act of 2002. This effort included documenting and testing our internal controls. As of February 29, 2008, we did not identify any material weaknesses in our internal controls as defined by the Public Company Accounting Oversight Board. In future years, there are no assurances that we will not have material weaknesses that would be required to be reported or that we will be able to comply with the reporting deadline requirements of Section 404. A reported material weakness or the failure to meet the reporting deadline requirements of Section 404 could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. This loss of confidence could cause a decline in the market price of our stock.

Our operating results have been and may again be adversely affected by acts of war, terrorism and natural catastrophes.

     Acts of war and terrorism against the United States, and the country’s response to such acts, may negatively affect the U.S. advertising market, which could cause our advertising revenues to decline due to advertising cancellations, delays or defaults in payment for advertising time, and other factors. In addition, these events may have other negative effects on our business, the nature and duration of which we cannot predict.

     For example, after the September 11, 2001 terrorist attacks, we decided that the public interest would be best served by the presentation of continuous commercial-free coverage of the unfolding events on our stations. This temporary policy had a material adverse effect on our advertising revenues and operating results for the month of September 2001. Future events like those of September 11, 2001 may cause us to adopt similar policies, which could have a material adverse effect on our advertising revenues and operating results.

     Additionally, the attacks on the World Trade Center on September 11, 2001 resulted in the destruction of the transmitter facilities that were located there. Although we had no transmitter facilities located at the World Trade Center, broadcasters that had facilities located in the destroyed buildings experienced temporary disruptions in their ability to broadcast. Since we tend to locate transmission facilities for stations serving urban areas on tall buildings or other significant structures, such as the Empire State Building in New York, further terrorist attacks or other disasters could cause similar disruptions in our broadcasts in the areas affected. If these disruptions occur, we may not be able to locate adequate replacement facilities in a cost-effective or timely manner or at all. Failure to remedy disruptions caused by terrorist attacks or other disasters and any resulting degradation in signal coverage could have a material adverse effect on our business and results of operations.

     Similarly, hurricanes, floods, tornadoes, earthquakes, wild fires and other natural disasters can have a material adverse effect on our operations in any given market. While we generally carry property insurance covering such catastrophes, we cannot assure that the proceeds from such insurance will be sufficient to offset the costs of rebuilding or repairing our property or the lost income.

Risks Related to our Indebtedness:

Our substantial indebtedness could adversely affect our financial health.

     We have a significant amount of indebtedness. At February 29, 2008, our total indebtedness was approximately $441.8 million, and our shareholders’ equity was approximately $243.6 million. Our substantial indebtedness could have important consequences to investors. For example, it could:

	-		make it more difficult for us to satisfy our obligations with respect to our indebtedness;
	-		increase our vulnerability to generally adverse economic and industry conditions;
	-		require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
	-		result in higher interest expense in the event of increases in interest rates because some of our debt is at variable rates of interest;
	-		limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;
	-		place us at a competitive disadvantage compared to our competitors that have less debt; and
	-		limit, along with the financial and other restrictive covenants in our credit facility and our other debt instruments, our ability to borrow additional funds. Failing to comply with those covenants could result in an event of default, which if not cured or waived, could have a material adverse effect on our businesses.

The terms of our indebtedness and the indebtedness of our direct and indirect subsidiaries may restrict our current and future operations, particularly our ability to respond to changes in market conditions or to take some actions.

     Our credit facility imposes significant operating and financial restrictions on us. These restrictions significantly limit or prohibit, among other things, our ability and the ability of our subsidiaries to incur additional indebtedness, issue preferred stock, incur liens, pay dividends, enter into asset sale transactions, merge or consolidate with another company, dispose of all or substantially all of our assets or make certain other payments or investments.

     These restrictions currently limit our ability to grow our business through acquisitions and could limit our ability to respond to market conditions or meet extraordinary capital needs. They also could restrict our corporate activities in other ways. These restrictions could adversely affect our ability to finance our future operations or capital needs.

To service our indebtedness and other obligations, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

     Our ability to make payments on and to refinance our indebtedness, to pay dividends and to fund capital expenditures will depend on our ability to generate cash in the future. This ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our businesses might not generate sufficient cash flow from operations. We might not be able to complete future offerings, and future borrowings might not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure investors that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Risks Related to our Common Stock:

One shareholder controls a majority of the voting power of our common stock, and his interest may conflict with those of investors.

     As of May 1, 2008, our Chairman of the Board of Directors, Chief Executive Officer and President, Jeffrey H. Smulyan, beneficially owned shares representing approximately 70% of the outstanding combined voting power of all classes of our common stock, as calculated pursuant to Rule 13d-3 of the Exchange Act. He therefore is in a position to exercise substantial influence over the outcome of most matters submitted to a vote of our shareholders, including the election of directors.

The difficulties associated with any attempt to gain control of our company could adversely affect the price of our Class A common stock.

     Jeffrey H. Smulyan has substantial influence over the decision as to whether a change in control will occur for our Company. There are also provisions contained in our articles of incorporation, by-laws and Indiana law that could make it more difficult for a third party to acquire control of our Company. In addition, FCC approval for transfers of control of FCC licenses and assignments of FCC licenses are required. These restrictions and limitations could adversely affect the trading price of our Class A common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

     The types of properties required to support each of our radio stations include offices, studios and transmitter/antenna sites. We typically lease our studio and office space, although we do own some of our facilities. Most of our studio and office space leases contain lease terms with expiration dates of five to fifteen years. A station’s studios are generally housed with its offices in downtown or business districts. We generally consider our facilities to be suitable and of adequate size for our current and intended purposes. We own many of our main transmitter/antenna sites and lease the remainder of our transmitter/antenna sites that contain lease terms that generally range from five to twenty years. The transmitter/antenna site for each station is generally located so as to provide maximum market coverage, consistent with the station’s FCC license. In general, we do not anticipate difficulties in renewing facility or transmitter/antenna site leases or in leasing additional space or sites if required. We have approximately $47.9 million in aggregate annual minimum rental commitments under real estate leases related to our continuing operations. Many of these leases contain escalation clauses such as defined contractual increases or cost-of-living adjustments.

     Our principal executive offices are located at 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, in approximately 91,500 square feet of owned office space which is shared by our Indianapolis radio stations and our Indianapolis Monthly publication.

     We own substantially all of our other equipment, consisting principally of transmitting antennae, transmitters, studio equipment and general office equipment. The towers, antennae and other transmission equipment used by our stations are generally in good condition, although opportunities to upgrade facilities are periodically reviewed.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company likely to have a material adverse effect on the Company.

     Certain individuals and groups have challenged applications for renewal of the FCC licenses of certain of the Company’s stations. The challenges to the license renewal applications are currently pending before the Commission. Emmis does not expect the challenges to result in the denial of any license renewals.

     In 2006, the FCC began an industry-wide inquiry into possible violations of sponsorship identification requirements and “payola” in the radio industry. Its initial inquiries were directed to four radio groups, and in April 2007, those groups entered into Consent Decrees with the FCC to resolve outstanding investigations and allegations. The Company has received similar inquiries from the FCC and has submitted responses; additional responses may be submitted in the future. The Company has not yet determined what effect the inquiry will have, if any, on its financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of security holders in the fourth quarter ended February 29, 2008.

EXECUTIVE OFFICERS OF THE REGISTRANT

     Listed below is certain information about the executive officers of Emmis or its affiliates who are not directors or nominees to be directors.

				AGE AT		YEAR FIRST
				FEBRUARY 29,		ELECTED
NAME		POSITION		2008		OFFICER
Richard F. Cummings		Radio Division President		58		1984
Michael Levitan		Executive Vice President of Human Resources		50		2002
Gary A. Thoe		Publishing Division President		51		1998
Paul W. Fiddick		International Division President		58		2002
Patrick M. Walsh		Executive Vice President,		40		2006
		Chief Financial Officer and Treasurer

     Set forth below is the principal occupation for the last five years of each executive officer of the Company or its affiliates who is not also a director.

     Richard F. Cummings was the Program Director of our first radio station in Indianapolis from 1981 to March 1984, when he became the National Program Director and a Vice President of Emmis. He became Executive Vice President of Programming in 1988 and became Radio Division President in December 2001.

     Michael Levitan was the Senior Vice President of Human Resources from September 2000 to March 2004 when he became the Executive Vice President of Human Resources. Prior to joining Emmis, Mr. Levitan served as Director of Human Resources for Apple Computer and as Executive Director of Organizational Effectiveness and Assistant to the President of Cummins Engine.

     Gary A. Thoe has been employed as President of Emmis Publishing since February 1998. Prior to February 1998, Mr. Thoe served as President and part owner of Mayhill Publications, Inc.

     Paul W. Fiddick has been employed as President of Emmis International since September 2002. Prior to joining Emmis, Mr. Fiddick served as Assistant Secretary for Administration of the U.S. Department of Agriculture from November 1999 until May 2001.

     Patrick M. Walsh has been employed as Executive Vice President, Chief Financial Officer and Treasurer since September 2006. Prior to joining Emmis, Mr. Walsh served as Senior Vice President and Chief Financial Officer of iBiquity Digital Corporation. His prior experience includes tenures at McKinsey and Company, General Motors and Deloitte LLP. Mr. Walsh is a Certified Public Accountant.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION FOR OUR COMMON STOCK

     Emmis’ Class A common stock is traded in the over-the-counter market and is quoted on the National Association of Securities Dealers Automated Quotation (NASDAQ) Global Select Market under the symbol EMMS. There is no established public trading market for Emmis’ Class B common stock or Class C common stock.

     The following table sets forth the high and low bid prices of the Class A common stock for the periods indicated.

QUARTER ENDED		HIGH				LOW
May 2006			18.51				11.86
August 2006			16.77				10.85
November 2006			13.22				8.33
February 2007			8.92				8.00
May 2007			10.86				7.63
August 2007			10.27				5.28
November 2007			7.02				3.64
February 2008			4.64				2.02

HOLDERS

     At May 1, 2008, there were 6,021 record holders of the Class A common stock, and there was one record holder of the Class B common stock.

DIVIDENDS

     On November 2, 2006, the Company’s Board of Directors declared a special one-time dividend of $4.00 per common share to shareholders of record as of November 12, 2006. The dividend was paid November 22, 2006, which reduced shareholders’ equity by $150.2 million. Emmis currently intends to retain future earnings for use in its business and has no plans to pay any dividends on shares of its common stock in the foreseeable future.

SHARE REPURCHASES

     Emmis made no purchases of its equity securities during the fourth quarter of its fiscal year ended February 29, 2008.

PERFORMANCE GRAPH    

     The following Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this performance graph by reference, and shall not otherwise be deemed filed under such Acts.

          The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Class A common stock with the cumulative total return of the Nasdaq Stock Market Index, the cumulative total return of the Nasdaq Telecommunications Stock Market Index (an index containing performance data of radio, telephone, telegraph, television and cable television companies), and the cumulative total return of an index of certain peer radio broadcasting companies with which the Company competes from February 28, 2003, to the fiscal year ended February 29, 2008. The peer group index is comprised of Cox Radio, Inc., Entercom Communications Corp., and Radio One, Inc. Emmis added the peer group index as the peer group’s operations more closely resemble the radio broadcasting concentration of Emmis than the broader scope of the Nasdaq Telecommunications Stock Market Index. The performance graph assumes that an investment of $100 was made in the Class A common stock and in each index on February 28, 2003 and that all dividends were reinvested.

				Feb 2003					Feb 2004					Feb 2005					Feb 2006					Feb 2007					Feb 2008
	Emmis			$	100				$	127				$	94				$	83				$	62				$	35
	Nasdaq Stock Market (U.S.)			$	100				$	152				$	153				$	171				$	181				$	170
	Nasdaq Telecommunications			$	100				$	163				$	153				$	175				$	201				$	197
	Radio Peer Group			$	100				$	106				$	79				$	62				$	63				$	31

ITEM 6. SELECTED FINANCIAL DATA

Emmis Communications Corporation
FINANCIAL HIGHLIGHTS

		YEAR ENDED FEBRUARY 28 (29)
		(in thousands, except per share data)
		2004				2005				2006				2007				2008
OPERATING DATA:
Net revenues		$	318,946			$	343,961			$	377,436			$	359,535			$	361,212
Station operating expenses excluding depreciation and amortization expense			206,538				222,294				252,034				256,019				269,751
Corporate expenses excluding depreciation and and amortization expense			28,982				34,940				36,389				30,430				23,073
Depreciation and amortization			15,062				15,634				17,099				13,338				14,451
Impairment losses (1)			—				—				35,681				—				21,225
Contract termination fee (2)			—				—				—				—				15,252
(Gain) loss on disposal of fixed assets			78				795				94				4				(104	)
Operating income			68,286				70,298				36,139				59,744				17,564
Interest expense			62,950				39,690				70,586				43,160				34,837
Loss on debt extinguishment (3)			—				97,248				6,952				13,435				—
Other income (loss), net			(795	)			2,196				3,040				(22	)			—
Income (loss) before income taxes, discontinued operations, minority interest and cumulative effect of accounting change			4,541				(64,444	)			(38,359	)			3,127				(17,273	)
Loss from continuing operations			(2,116	)			(66,828	)			(25,237	)			(3,466	)			(19,179	)
Discontinued operations (4)			4,618				65,677				383,292				117,048				17,829
Net income (loss) (5)			2,502				(304,151	)			358,055				113,582				(1,350	)
Net income (loss) available to common shareholders			(6,482	)			(313,135	)			349,071				104,598				(10,334	)
Net income (loss) per share available to common shareholders:
Basic:
Continuing operations		$	(0.20	)		$	(1.35	)		$	(0.80	)		$	(0.33	)		$	(0.77	)
Discontinued operations, net of tax			0.08				1.17				8.94				3.14				0.49
Cumulative effect of accounting change, net of tax			—				(5.40	)			—				—				—
Net income (loss) available to common shareholders		$	(0.12	)		$	(5.58	)		$	8.14			$	2.81			$	(0.28	)
Diluted:
Continuing operations		$	(0.20	)		$	(1.35	)		$	(0.80	)		$	(0.33	)		$	(0.77	)
Discontinued operations, net of tax			0.08				1.17				8.94				3.14				0.49
Cumulative effect of accounting change, net of tax			—				(5.40	)			—				—				—
Net income (loss) available to common shareholders		$	(0.12	)		$	(5.58	)		$	8.14			$	2.81			$	(0.28	)
Cash dividends declared per common share		$	—			$	—			$	—			$	4.00			$	—
Weighted average common shares outstanding:
Basic			54,716				56,129				42,876				37,265				36,551
Diluted			54,716				56,129				42,876				37,265				36,551

		FEBRUARY 28 (29),
		(Dollars in thousands)
		2004				2005				2006				2007				2008
BALANCE SHEET DATA:
Cash (6)		$	19,970			$	16,054			$	140,822			$	20,747			$	19,498
Working capital			11,093				52,101				34,742				60,469				52,773
Net intangible assets (7)			830,779				943,141				916,925				916,518				908,584
Total assets			2,300,569				1,823,035				1,512,701				1,207,904				1,139,740
Long-term credit facility, senior subordinated debt, senior discount notes and liquidation preference of preferred stock until reclassification to mezzanine			1,367,929				1,317,558				808,174				494,587				434,306
Shareholders’ equity			749,294				453,157				272,578				238,045				243,628

		YEAR ENDED FEBRUARY 28 (29),
		(Dollars in thousands)
		2004				2005				2006				2007				2008
OTHER DATA:
Cash flows from (used in):
Operating activities		$	118,165			$	121,907			$	70,508			$	27,882			$	46,670
Investing activities			(146,359	)			54,542				859,843				309,224				33,606
Financing activities			32,085				(181,069	)			(804,677	)			(458,608	)			(83,170	)
Capital expenditures			9,381				10,201				12,132				5,301				6,783
Cash paid for taxes			1,143				286				5,045				6,866				4,010

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

GENERAL

     The following discussion pertains to Emmis Communications Corporation and its subsidiaries (collectively, “Emmis” or the “Company”).

     We own and operate radio and publishing properties located primarily in the United States. We also own and operate a television station in New Orleans. In the quarter ended August 31, 2005, we classified our television assets as held for sale (see Note 1k to the accompanying consolidated financial statements for more discussion). The results of operations of our television division have been classified as discontinued operations in the accompanying consolidated financial statements. Our revenues are mostly affected by the advertising rates our entities charge, as advertising sales represent more than 80% of our consolidated revenues. These rates are in large part based on our entities’ ability to attract audiences/subscribers in demographic groups targeted by their advertisers. Radio stations’ ratings are measured principally four times a year by Arbitron Inc. Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research, advertising and promotion to attract and retain audiences in each station’s chosen demographic target group.

     Our revenues vary throughout the year. As is typical in the broadcasting industry, our revenues and operating income are usually lowest in our fourth fiscal quarter.

     In addition to the sale of advertising time for cash, stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade.

     The following table summarizes the sources of our revenues for each of the past three years. All revenues generated by our international radio properties are included in the “Local” category. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations and magazines conduct in their local markets. The category “Other” includes, among other items, revenues generated by the websites of our entities, political advertising and barter.

		Year ended February 28 (29),
		2006				% of Total				2007				% of Total				2008				% of Total
Net revenues:
Local		$	246,620				65.3	%		$	234,558				65.2	%		$	235,689				65.2	%
National			64,894				17.2	%			64,943				18.1	%			62,083				17.2	%
Publication Sales			17,656				4.7	%			13,776				3.8	%			14,414				4.0	%
Non Traditional			28,718				7.6	%			22,191				6.2	%			21,591				6.0	%
Other			19,548				5.2	%			24,067				6.7	%			27,435				7.6	%
Total net revenues		$	377,436							$	359,535							$	361,212

     A significant portion of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, syndicated programming fees, utilities, office expenses and salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share.

KNOWN TRENDS AND UNCERTAINTIES

     Domestic radio revenue growth has been anemic for several years. Management believes this is principally the result of four factors: (1) the emergence of new media, such as various media content distributed via the Internet and cable interconnects, which are gaining advertising share against radio and other traditional media, (2) the perception of investors and advertisers that satellite radio and portable media players diminish the effectiveness of radio advertising, (3) lack of confidence in the ratings of radio stations due to dated ratings-gathering methods, and (4) a lack of inventory and pricing discipline by radio operators.

     The radio industry has begun several initiatives to address these issues, most notable of which is the rollout of HD Radio^®. HD Radio offers listeners advantages over standard analog broadcasts, including improved sound quality and additional channels. To make the rollout of HD Radio more efficient, a consortium of broadcasters representing a majority of the radio stations in nearly all of our markets have agreed to work together to coordinate the programming on secondary channels in each radio market to ensure a more diverse consumer offering and to accelerate the rollout of HD Radio receivers, particularly in automobiles. In addition to offering secondary channels, the HD Radio spectrum allows broadcasters to transmit other forms of data. We recently announced our participation in a joint venture with seven other member broadcasters to provide the bandwidth that a third party will use to transmit location-based data to hand-held and in-car navigational devices. We currently utilize HD Radio digital technology on most of our FM stations. It is unclear what impact HD Radio will have on the markets in which we operate.

     Arbitron Inc., the supplier of ratings data for United States radio markets, has developed technology to passively collect data for its ratings service. The Portable People Meter^TM (PPM^TM) is a small, pager-sized device that does not require any active manipulation by the end user and is capable of automatically measuring radio, television, Internet, satellite radio and satellite television signals that are encoded for the service by the broadcaster. The PPM offers a number of advantages over the traditional diary ratings collection system including ease of use, more reliable ratings data and shorter time periods between when advertising runs and when audience listening or viewing habits can be reported. This service is scheduled to begin in New York, Los Angeles and Chicago markets in the fall of 2008. It is unclear what impact the introduction of the PPM will have on ratings in the markets in which we operate.

     Our radio cluster in New York trailed the performance of its peers during the year ended February 29, 2008. For the year ended February 29, 2008, our New York radio stations’ revenues were down 10.3%, whereas the independent accounting firm Miller, Kaplan, Arase & Co., LLP (“Miller Kaplan”) reported that net revenues of the New York market in total were down 3.6%. We believe we trailed the performance of our peers in New York principally due to deterioration in ratings early in our fiscal 2008 at WQHT-FM and WRXP-FM (formerly WQCD-FM). Ratings for WQHT-FM improved steadily during fiscal 2008. On February 5, 2008, Emmis announced the launch of WRXP-FM, an adult oriented rock station. Emmis believes it will be able to capitalize on improved ratings at WQHT-FM and also believes that ratings at WRXP-FM will steadily improve.

     Our radio cluster in Los Angeles also trailed the performance of its peers during the year ended February 29, 2008. For the year ended February 29, 2008, our Los Angeles radio stations’ revenues were down 12.2%, whereas Miller Kaplan reported that net revenues of the Los Angeles market in total were down 4.9%. Ratings at KPWR-FM steadily improved during our fiscal 2008, which allowed for KPWR-FM to exceed the performance of its peers during the year. However, KMVN-FM has continued to struggle following its format change in August 2006. We invested additional resources in KMVN-FM during fiscal 2008, yet ratings for the station showed no material improvements during the year. The performance at KMVN-FM has been the principal factor in our Los Angeles cluster financial performance lagging the Los Angeles market.

     In August 2005, Emmis made a strategic decision to divest all its television stations. The decision to sell its television stations stemmed from the Company’s desire to reduce its debt, coupled with the Company’s view that its television stations needed to be aligned with a company with more significant financial resources and a singular focus on resolving American television challenges, including the growth of digital video recorders and the industry’s relationship with cable and satellite providers. As of February 29, 2008, Emmis has sold 15 of its 16 television stations, receiving gross proceeds of approximately $1.2 billion. On May 2, 2008, Emmis entered into an agreement to sell its remaining television station, WVUE-TV. The transaction is expected to close in the second half of calendar 2008.

     As part of our business strategy, we continually evaluate potential acquisitions of radio stations, publishing properties and other businesses that we believe hold promise for long-term appreciation in value and leverage our strengths.

CRITICAL ACCOUNTING POLICIES

     Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially derive materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below.

     Impairment of Goodwill and Indefinite-lived Intangibles

     The annual impairment tests for goodwill and indefinite-lived intangibles under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142), require us to make certain assumptions in determining fair value, including assumptions about the cash flow growth rates of our businesses. Additionally, the fair values are significantly impacted by macro-economic factors, including market multiples at the time the impairment tests are performed. Accordingly, we may incur additional impairment charges in future periods under SFAS No. 142 to the extent we do not achieve our expected cash flow growth rates, or to the extent that market values decrease.

     Allocations for Purchased Assets

     We have made acquisitions in the past for which a significant amount of the purchase price was allocated to broadcasting licenses and goodwill assets.  As of February 29, 2008, including amounts we have reclassified as held-for-sale, we have recorded approximately $902.1 million in FCC licenses and goodwill, which represents 79.2% of our total assets. In assessing the recoverability of these assets, we conduct annual impairment testing required by SFAS No. 142 and charge to operations an impairment expense if the recorded value of these assets is more than their fair value.  In fiscal 2008, we recorded a noncash impairment loss of $21.2 million for radio broadcasting licenses ($18.0 million related to our domestic radio FCC licenses and $3.2 million related to our international broadcast licenses in Belgium). We believe our estimate of the value of our radio broadcasting licenses and goodwill assets is a critical accounting estimate as the value is significant in relation to our total assets, and our estimate of the value uses assumptions that incorporate variables based on past experiences and judgments about future performance of our stations. These variables include but are not limited to: (1) the forecasted growth rate of each radio market, including population, household income, retail sales and other expenditures that would influence advertising expenditures; (2) market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area; and (6) terminal values. Changes in our estimates of the fair value of these assets could result in material future period write-downs in the carrying value of our broadcasting licenses and goodwill assets.

     Deferred Taxes and Effective Tax Rates

     We estimate the effective tax rates and associated liabilities or assets for each legal entity in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109). These estimates are based upon our interpretation of United States and local tax laws as they apply to our legal entities and our overall tax structure. Audits by local tax jurisdictions, including the United States Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded. We utilize experts in the various tax jurisdictions to evaluate our position and to assist in our calculation of our tax expense and related liabilities.

     Insurance Claims and Loss Reserves

     The Company is self-insured for most healthcare claims, subject to stop-loss limits. Claims incurred but not reported are recorded based on historical experience and industry trends, and accruals are adjusted when warranted by changes in facts and circumstances. The Company had $1.4 million accrued for employee healthcare claims as of February 28, 2007 and February 29, 2008. The Company also maintains large deductible programs (ranging from $250 thousand to $500 thousand per occurrence) for workers compensation claims, automotive liability losses and media liability.

     Valuation of Stock Options

     The Company determines the fair value of its employee stock options at the date of grant using a Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the value of exchange-traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different than

these traded options. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility and expected term of the options granted. The Company relies heavily upon historical data for its stock price when determining expected volatility, but each year the Company reassesses whether or not historical data is representative of expected results.

ACQUISITIONS, DISPOSITIONS AND INVESTMENTS

     During the three-year period ended February 29, 2008, we acquired Orange Coast, Inforadio (a Bulgarian national radio network), and controlling interests in Radio FM Plus and Radio Fresh (Bulgarian national radio networks) and D.EXPRES (a Slovakian national radio network) for an aggregate cash purchase price of $32.6 million ($0.3 million of which is deferred – see the Orange Coast discussion below). We also disposed of 15 television stations and two domestic radio stations, collectively receiving gross cash proceeds of $1.3 billion. A recap of the material transactions completed during the three years ended February 29, 2008 is summarized hereafter. These transactions impact the comparability of operating results year over year.

     On December 17, 2007, Emmis completed its acquisition of 100% of the shares of Infopress & Company OOD for $8.8 million in cash. Infopress & Company OOD operates Inforadio, a national radio network broadcasting to 13 Bulgarian cities. Inforadio joins Emmis’ majority owned Bulgarian radio networks Radio FM+ and Radio Fresh. Emmis believes the acquisition of Inforadio further strengthens its footprint in Bulgaria. Consistent with our other foreign subsidiaries, Inforadio reports on a fiscal year ending December 31, which Emmis consolidates into its fiscal year ending February 28 (29). The operating results of Inforadio from December 17, 2007 through December 31, 2007 were immaterial.

     On July 25, 2007, Emmis completed its acquisition of Orange Coast Kommunications, Inc., publisher of Orange Coast, for $6.9 million in cash including acquisition costs of $0.2 million. Approximately $0.3 million of the purchase price was withheld and will be paid to the seller nine months from the date of purchase, subject to certain conditions. This $0.3 million is classified as accounts payable in the accompanying consolidated balance sheets. Orange Coast fits Emmis’ niche of publishing quality city and regional magazines. Orange Coast serves the affluent area of Orange County, CA, and may also provide synergies with our other California-based publications, Los Angeles and Tu Ciudad. The acquisition was financed through borrowings under the senior credit facility. The operating results of Orange Coast from July 25, 2007 are included in the accompanying consolidated statements of operations.

     On June 4, 2007, Emmis closed on its sale of KGMB-TV in Honolulu to HITV Operating Co, Inc. for $40.0 million in cash. Emmis used a portion of the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $10.1 million, net of tax, which is included in discontinued operations in the accompanying consolidated statement of operations.

     On October 31, 2006, Emmis sold land and the associated building formerly occupied by WKCF-TV to Goodlife Broadcasting, Inc. for $3.0 million in cash. In connection with the sale, Emmis recorded a gain on sale of $0.3 million, net of tax, which is included in discontinued operations in the accompanying consolidated statements of operations.

     On August 31, 2006, Emmis closed on its sale of WKCF-TV in Orlando, FL to Hearst-Argyle Television Inc. for $217.5 million in cash. Emmis used a portion of the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $93.4 million, net of tax, which is included in discontinued operations in the accompanying consolidated statements of operations.

     On July 11, 2006, Emmis closed on its sale of KKFR-FM in Phoenix, AZ to Bonneville International Corporation for $77.5 million in cash and also sold certain tangible assets to Riviera Broadcast Group LLC for $0.1 million in cash. Emmis used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $11.3 million, net of tax, which is included in discontinued operations in the accompanying consolidated statements of operations.

     On July 7, 2006, Emmis closed on its sale of WBPG-TV in Mobile, AL / Pensacola, FL to LIN Television Corporation for $3.0 million in cash. LIN Television Corporation had been operating WBPG-TV under a Local Programming and Marketing Agreement since November 30, 2005. Emmis used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $1.1 million, net of tax, which is included in discontinued operations in the accompanying consolidated statements of operations.

     On May 5, 2006, Emmis closed on its sale of WRDA-FM in St. Louis, MO to Radio One, Inc. for $20.0 million in cash. Emmis used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $4.2 million, net of tax, which is included in discontinued operations in the accompanying consolidated statements of operations.

     On January 27, 2006, Emmis sold substantially all of the assets of television stations KOIN in Portland, OR, and KHON in Honolulu, HI (plus satellite stations), and also sold the stock of the corporation that owns KSNW in Wichita, KS (plus satellite stations) and KSNT in Topeka, KS, to SJL Broadcast Group, LLC for $253.0 million in cash and a $6.0 million note receivable. Emmis recorded a gain on sale of $88.2 million, net of tax, which is reflected in discontinued operations in the accompanying consolidated statements of operations. Emmis used the proceeds to repay outstanding debt obligations.

     On December 5, 2005, Emmis sold substantially all of the assets of television stations WFTX in Ft. Myers, FL and KGUN in Tucson, AZ, and the tangible assets and many of the intangible assets (excluding, principally, the FCC license) of KMTV in Omaha, NE to Journal Communications (Journal) for $225.0 million in cash. Emmis recorded a gain on sale of $92.6 million, net of tax, which is reflected in discontinued operations in the accompanying statements of operations. Emmis used the proceeds to repay outstanding debt obligations. Due to Journal’s existing radio station ownership in the Omaha market, we retained the FCC license for KMTV and Journal provided programming for the station under a local marketing agreement. Journal made no monthly payments to Emmis under the LMA, but reimbursed Emmis for substantially all of Emmis’ costs to operate the station. In March 2007, Journal divested two radio stations and the FCC consented to the transfer of the license. Emmis closed on the sale of KMTV on March 27, 2007 for $10.0 million in cash.

     On November 30, 2005, Emmis sold substantially all of the assets of television station WSAZ in Huntington/Charleston, WV to Gray Television for $186.0 million in cash. Also on November 30, 2005, Emmis sold substantially all of the assets of four television stations (plus satellite stations) to LIN Television Corporation (WALA in Mobile, AL/Pensacola, FL, WTHI in Terre Haute, IN, WLUK in Green Bay, WI, and KRQE in Albuquerque, NM) for $248.0 million in cash. In connection with these sales to Gray Television and LIN, Emmis recorded a gain on sale of $186.2 million, net of tax, which is reflected in discontinued operations in the accompanying consolidated statements of operations. Emmis also entered into a LMA with LIN for WBPG in Mobile, AL/Pensacola, FL. Emmis transferred to LIN all of the assets of WBPG except the FCC license, the WB affiliation agreement and a tower lease. LIN paid $9.0 million of the agreed-upon $12.0 million value of WBPG on November 30, 2005. The Company received $0.2 million per year payable in monthly installments related to this LMA. Pursuant to the LMA, LIN began programming the station on November 30, 2005 and recorded all of the revenues and expenses of the station. Emmis closed on the sale of WBPG-TV on July 7, 2006 and received the final $3.0 million in cash. In connection with this sale, Emmis recorded a gain on sale of $1.1 million, net of tax, which is reflected in discontinued operations in the accompanying consolidated statements of operations.

     On November 14, 2005, Emmis acquired a 66.5% (economic and voting) majority ownership in Radio FM Plus AD, a national network of radio stations in Bulgaria for a cash purchase price of $3.3 million. This acquisition allowed Emmis to expand its international radio portfolio within Emmis’ Euro-centric international acquisition strategy. The acquisition was financed with cash on hand. The Company has recorded $0.5 million of goodwill, none of which is deductible for income tax purposes. Consistent with the Company’s other foreign subsidiaries, Radio FM Plus reports on a fiscal year ending December 31, which Emmis consolidates into its fiscal year ending February 28 (29). On December 29, 2006, Emmis acquired control of a second radio network in Bulgaria, Radio Fresh, for $1.1 million in cash. This radio network had previously been accounted for as a 40% equity investment. Substantially all of the purchase price was allocated to the international broadcast license, which is being amortized over six years. The company also recorded $0.2 million of goodwill, none of which is deductible for income tax purposes.

     On March 10, 2005, Emmis completed its acquisition of D.EXPRES, a.s., a Slovakian company that owns and operates Radio Expres, a national radio network in Slovakia, for a cash purchase price of $12.6 million. This acquisition allowed Emmis to expand its international portfolio in Europe and enter one of the world’s fastest growing economies. The acquisition was financed through borrowings under the credit facility. The Company has recorded $1.9 million of goodwill, none of which is deductible for income tax purposes. The operating results from March 10, 2005 are included in the accompanying consolidated financial statements. Consistent with the Company’s other foreign subsidiaries, Radio Expres reports on a fiscal year ending December 31, which Emmis consolidates into its fiscal year ending February 28 (29).

RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2007 COMPARED TO YEAR ENDED FEBRUARY 29, 2008

Net revenue pro forma reconciliation:

     Since March 1, 2006, we have acquired Orange Coast, a national radio network in Bulgaria and a controlling interest in another national radio network in Bulgaria. The results of our television division, radio station sold in Phoenix and radio station sold in St. Louis have been included in discontinued operations and are not included in reported results below. The following table reconciles actual results to pro forma results.

		Year ended February 28 (29),
		2007				2008				$ Change				% Change
		(amounts in thousands)
Reported net revenues
Radio		$	271,929			$	266,120			$	(5,809	)			-2.1	%
Publishing			87,606				95,092				7,486				8.5	%
Total			359,535				361,212				1,677				0.5	%
Plus: Net revenues from stations acquired
Radio			1,806				604
Publishing			5,540				2,774
Total			7,346				3,378
Pro forma net revenues
Radio			273,735				266,724				(7,011	)			-2.6	%
Publishing			93,146				97,866				4,720				5.1	%
Total		$	366,881			$	364,590			$	(2,291	)			-0.6	%

     For further disclosure of segment results, see Note 15 to the accompanying consolidated financial statements. For additional pro forma results, see Note 10 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all material consummated acquisitions and dispositions through February 29, 2008.

Net revenues discussion:

     Radio net revenues decreased principally as a result of declining revenues in our New York and Los Angeles markets. On a pro forma basis (assuming the purchase of the radio network in Bulgaria had occurred on the first day of the pro forma periods presented above), radio net revenues for the year ended February 29, 2008 would have decreased $7.0 million, or 2.6%. We typically monitor the performance of our domestic radio stations against the aggregate performance of the markets in which we operate based on reports for the periods prepared by the independent accounting firm Miller Kaplan. For the year ended February 29, 2008, on a pro forma basis, net revenues of our domestic radio stations were down 6.1%, whereas Miller Kaplan reported that net revenues of our domestic radio markets were down 4.3%. As previously discussed, we underperformed the markets in which we operate principally due to continuing challenges in our Los Angeles and New York markets. We have had significant ratings and revenue declines at our New York and Los Angeles stations, although ratings in recent months for certain stations in those markets have improved. KMVN-FM, the Los Angeles station we reformatted in August 2006, continues to underperform its peers. In February 2008, we reformatted WRXP-FM in New York (formerly WQCD-FM). The Company does not expect the negative revenue impact of the format change in New York to be as long or as pronounced as the negative revenue impact from our Los Angeles format change. Market weakness and our stations’ weakness has led us to discount our rates charged to advertisers. In fiscal 2008, our average unit rate was down 11.8% and our number of units sold was up 4.6%. Our New York and Los Angeles stations account for approximately 50% of our domestic radio revenues. The Company’s national representation firm guaranteed a minimum amount of national sales for the year ended February 29, 2008. Actual national sales, as defined by the representation agreement, were approximately $3.7 million lower than the guaranteed minimum

amount of national sales and Katz has paid the shortfall to Emmis. As such, Emmis recognized $3.7 million of additional net revenues for the year ended February 29, 2008, which partially offsets our weakness in the New York and Los Angeles markets.

     Publishing net revenues increased mostly due to the production of three additional issues of Tu Ciudad in fiscal 2008 as compared to fiscal 2007 and the introduction of two new wedding guides by Atlanta. Also, Los Angeles advertising sales performance contributed to the division’s net revenue growth, with the apparel, home furnishings, real estate and travel categories fueling growth during the year.

     On a consolidated basis, pro forma net revenues for the year ended February 29, 2008 decreased $2.3 million, or 0.6%, due to the effect of the items described above.

Station operating expenses excluding depreciation and amortization expense pro forma reconciliation:

     Since March 1, 2006, we have acquired Orange Coast and a national radio network in Bulgaria and a controlling interest in another national radio network in Bulgaria. The results of our television division, radio station sold in Phoenix and radio station sold in St. Louis have been included in discontinued operations and are not included in reported results below. The following table reconciles actual results to pro forma results.

		Year ended February 28 (29),
		2007				2008				$ Change				% Change
		(amounts in thousands)
Reported station operating expenses excluding depreciation and amortization expense
Radio		$	176,686			$	186,250			$	9,564				5.4	%
Publishing			79,333				83,501				4,168				5.3	%
Total			256,019				269,751				13,732				5.4	%
Plus: Station operating expenses excluding depreciation and amortization expense from stations acquired:
Radio			1,081				567
Publishing			5,467				2,894
Total			6,548				3,461
Pro forma station operating expenses excluding depreciation and amortization expense
Radio			177,767				186,817				9,050				5.1	%
Publishing			84,800				86,395				1,595				1.9	%
Total		$	262,567			$	273,212			$	10,645				4.1	%

     For further disclosure of segment results, see Note 15 to the accompanying consolidated financial statements. For additional pro forma results, see Note 10 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all material consummated acquisitions and dispositions through February 29, 2008.

Station operating expenses excluding depreciation and amortization expense discussion:

     Radio station operating expenses excluding depreciation and amortization expense increased principally due to continued expansion of Emmis Interactive, which consisted mostly of headcount increases, additional promotional expenses related to KMVN-FM, our reformatted Los Angeles station, and additional station operating costs of our growing international radio stations. Emmis Interactive expenses were up approximately $3.5 million, KMVN-FM promotional expenses were up approximately $1.1 million, and international expenses were up approximately $4.8 million on a pro forma basis. A portion of the international operating expense increase relates to currency fluctuations as the US dollar devalued versus the functional currencies of our international operations during the year. The additional operating expenses are partially offset by lower sales-related costs due to the decline in revenues as discussed above.

     Publishing operating expenses increased modestly due to higher sales-related costs associated with the increase in revenues as discussed above.

     On a consolidated basis, pro forma station operating expenses excluding depreciation and amortization expense increased $10.6 million, or 4.1%, due to the effect of the items described above.

Corporate expenses excluding depreciation and amortization expense:

		For the years ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Corporate expenses excluding depreciation and amortization expense		$	30,430			$	23,073			$	(7,357	)			(24.2	)%

     In the year ended February 28, 2007, the Company incurred $2.5 million of costs related to our evaluation of the CEO’s bid to take the Company private and approximately $1.9 million of costs in connection with a special dividend paid on November 22, 2006. During the year ended February 29, 2008, our Chief Executive Officer elected to reduce his salary from $0.9 million to $1 for the fiscal year. The remaining decrease is principally due to our ongoing commitment to improve the efficiency of our corporate services.

Depreciation and amortization:

		For the years ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Depreciation and amortization:
Radio		$	9,988			$	10,947			$	959				9.6	%
Publishing			697				1,033				336				48.2	%
Corporate			2,653				2,471				(182	)			(6.9	)%
Total depreciation and amortization		$	13,338			$	14,451			$	1,113				8.3	%

     The increase in radio depreciation and amortization expense relates mostly to the addition of HD Radio equipment at certain stations during fiscal 2008. The increase in publishing depreciation and amortization mostly relates to our acquisition of Orange Coast in July 2007.

Contract termination fee:

		For the year ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Contract termination fee		$	—			$	15,252			$	15,252				N/A

     On October 1, 2007, Emmis terminated its existing national sales representation agreement with Interep National Radio Sales, Inc. and entered into a new agreement with Katz Communications, Inc. extending through March 2018. Emmis, Interep and Katz entered into a tri-party termination and mutual release agreement under which Interep released Emmis from its future contractual obligations in exchange for a one-time payment of $15.3 million, which was paid by Katz on behalf of Emmis as an inducement for Emmis to enter into the new long-term contract with Katz.

Impairment loss:

		For the year ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Impairment loss		$	—			$	21,225			$	21,225				N/A

     In connection with our fiscal 2008 annual impairment review, we recognized a noncash impairment loss of $21.2 million ($18.0 million related to our FCC licenses in St. Louis and Terre Haute and $3.2 million related to our international broadcasting licenses in Belgium). No impairment was recorded in connection with our fiscal 2007 annual impairment review.

Operating income:

		For the years ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Operating income:
Radio		$	85,251			$	32,550			$	(52,701	)			(61.8	)%
Publishing			7,576				10,558				2,982				39.4	%
Corporate			(33,083	)			(25,544	)			7,539				(22.8	)%
Total operating income		$	59,744			$	17,564			$	(42,180	)			(70.6	)%

     Radio operating income decreased principally due to the $21.2 million noncash impairment charge coupled with the $15.3 million noncash contract termination fee. Excluding the noncash impairment charge and noncash contract termination fee, radio operating income would have decreased by $16.2 million due to lower revenues at our New York and Los Angeles stations and higher radio station operating expenses excluding depreciation and amortization expense as discussed above. As discussed above, the net revenue growth of our domestic stations trailed the revenue growth of the markets in which we operate. Weak demand for radio advertising and competitive pressures in New York and Los Angeles will continue to present challenges for the Company in fiscal 2009.

     Publishing operating income increased mostly due to higher net revenues at our Los Angeles, Tu Ciudad and Atlanta publications as discussed above partially offset by higher sales-related costs.

     On a consolidated basis, excluding the noncash impairment charge and the noncash contract termination fee, operating income decreased $5.7 million, or 9.5%, principally due to the decrease in radio operating income, as discussed above.

Interest expense:

		For the years ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Interest expense		$	43,160			$	34,837			$	(8,323	)			(19.3	)%

     The decrease in interest expense is due to reduced levels of borrowings under the Company’s senior credit facility as a result of the application of proceeds from the sale of assets, coupled with lower interest rates. No interest expense was allocated to discontinued operations in fiscal 2007 or fiscal 2008.

Loss on debt extinguishment:

		For the years ended February 28 (29),
		2007				2008				$ Change				% Change
		(As reported, amounts in thousands)
Loss on debt extinguishment		$	(13,435	)		$	—			$	(13,435	)			(100.0	)%