Last week Emmis Communications held its fiscal-Q1 2016 earnings call. In it, CEO Jeff Smulyan expressed confidence and optimism about terrestrial radio, skepticism of streaming as a primary business model, and continued enthusiasm for the NextRadio initiative.
As is often the case in earnings calls, many of the most interesting statements came in response to investor questions. Concerning the viability of streaming as a pillar of the Emmis business model, Smulyan drew a clear line separating streaming from over-the-air. First he cited Nielsen’s Total Audience Report which pegged radio’s reach at 93% of the U.S. population. Concerning Emmis’ streaming operations, Jeff Smulyan said:
“As we’ve said we are going to continue the stream, we streamed for now over 20 years, but we haven’t found a way to make money at it and we’ve never heard of anybody who has. And so, [this is like the] tulip craze — you know, all this money and every streaming idea. We love the terrestrial business. We’re going to stream to supplement that, but we think our bread and butter is a business that distributes directly at no cost to our listeners. And of course that’s why we’re so focused on NextRadio.”
Concerning NextRadio, the mobile which puts an interactive version of FM reception in partnered smartphones, the Emmis exec’s maintains a grand view: “This will be something that we think changes the face of American Radio.”
NextRadio metrics include 3.2-million app activations, and an average 19 minutes of Time Spent Listening. Smulyan compared that TSL figure with an average Nielsen PPM session of nine minutes. “What it means is and it’s a further confirmation that when people experience interactivity of NextRadio they are engaged. They are engaged because they see — they are engaged because they can rate records, they are engaged because they can go back and forth with the radio station and coming soon they will be engaged because they will be able to interact with advertisers in a way that we as an industry haven’t had before.”
Will NextRadio move toward profitability? That’s always the question for investors, and of them asked that question. Jeff Smulyan’s response:
“We don’t have [know] when NextRadio is going to profitable. NextRadio will be built to try to figure out an answer for the challenges of the American radio business. We are very gratified that other people and other countries have come to us. So, we think it can be a profitable business. But right now we just want to make sure that we can roll it out and make the American Radio industry stronger than it’s been.”
Smulyan also commented on Emmis’ digital business generally, and its subscription-based music app, Where Hip Hop Lives. The app is ad-supported for free listening, and offers a non-commercial experience for $3.99 per month.
“[Where Hip Hop Lives] is maybe the first time that the over-the-air radio industry has successfully launched a subscriber-based streaming business. We hope so, because I think it’s tough for streaming without a subscription to make money. And we put some amazing things in Where Hip Hop Lives, the combination of the two largest Hip Hop stations in the world. We’re hopeful.”