-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C5JKiSB5PLuHmLSfKMRFp5fxeyAKInPyyojU+R7gCuaNZLSLOpWirXj+Dz9Y2leZ 4sV+2eDDDxkUTuptHWvKRQ== 0000902664-07-003356.txt : 20071115 0000902664-07-003356.hdr.sgml : 20071115 20071115105158 ACCESSION NUMBER: 0000902664-07-003356 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20071115 DATE AS OF CHANGE: 20071115 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EMMIS COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000783005 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 351542018 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-43521 FILM NUMBER: 071248204 BUSINESS ADDRESS: STREET 1: ONE EMMIS PLAZA STREET 2: 40 MONUMENT CIRCLE SUITE 700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3172660100 MAIL ADDRESS: STREET 1: ONE EMMIS PLAZA STREET 2: 40 MONUMENT CIRCLE #700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 FORMER COMPANY: FORMER CONFORMED NAME: EMMIS BROADCASTING CORPORATION DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Arnhold & S. Bleichroeder Advisers, LLC CENTRAL INDEX KEY: 0001325447 IRS NUMBER: 571156902 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 212-698-3241 MAIL ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 SC 13D 1 sc13d.txt EMMIS COMMUNICATIONS CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (Amendment No. )* Emmis Communications Corporation - ------------------------------------------------------------------------------- (Name of Issuer) Class A Common Stock, Par Value $0.01 per share - ------------------------------------------------------------------------------- (Title of Class of Securities) 291525103 - ------------------------------------------------------------------------------- (CUSIP Number) Mark Goldstein Arnhold and S. Bleichroeder Advisers, LLC 1345 Avenue of the Americas New York, New York 10105 (212) 698-3101 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 5, 2007 - ------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 7 Pages) - -------------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------- -------------------- CUSIP NO. 291525103 SCHEDULE 13D PAGE 2 OF 7 PAGES - ------------------------- -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Arnhold and S. Bleichroeder Advisers, LLC - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER 2,110,000 --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 2,110,000 --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 2,110,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------- -------------------- CUSIP NO. 291525103 SCHEDULE 13D PAGE 3 OF 7 PAGES - ------------------------- -------------------- ITEM 1. SECURITY AND ISSUER. This statement on Schedule 13D relates to the Class A common stock, $0.01 Par Value per share (the "Shares"), of Emmis Communications Corporation (the "Issuer"). The principal executive office of the Issuer is located at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204. ITEM 2. IDENTITY AND BACKGROUND. (a) This statement is filed by Arnhold and S. Bleichroeder Advisers, LLC, a Delaware limited liability company and an investment adviser registered under the Investment Advisers Act of 1940 (the "Reporting Person"). The Shares reported herein are held by various clients in accounts under the Reporting Person's management and control. Messrs. Jason Dahl and Jonathan Spitzer (together, the "Portfolio Managers") are co-portfolio managers for these client accounts and, as such, have the authority to make decisions regarding the voting and disposition of the Shares. Mr. John P. Arnhold (the "Principal") is the Chairman and Chief Executive Officer of the Reporting Person. (b) The principal business address of the Reporting Person, the Principal and the Portfolio Managers is 1345 Avenue of the Americas, New York, New York 10105. (c) The principal business of the Reporting Person, the Principal and the Portfolio Managers is investing for client accounts under their management. (d) None of the Reporting Person, the Principal or either of the Portfolio Managers has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Person, the Principal or either of the Portfolio Managers has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) The Principal and the Portfolio Managers are citizens of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The Shares reported herein were acquired at an aggregate purchase price of approximately $16.0 million. Such Shares were acquired with investment funds in client accounts under the Reporting Person's management and, in certain cases, were purchased on margin. ITEM 4 PURPOSE OF TRANSACTION. The Reporting Person originally acquired Shares for investment purposes in the ordinary course of business, subsequent to the announcement on May 8, 2006 of the "going private" transaction proposed by the Issuer's Chairman and CEO Jeffrey Smulyan. Subsequent to the withdrawal of that proposal on August 4, 2006, the Reporting Person continued to acquire Shares, based in part on the belief that Mr. Smulyan may in the future deliver another similar proposal. - ------------------------- -------------------- CUSIP NO. 291525103 SCHEDULE 13D PAGE 4 OF 7 PAGES - ------------------------- -------------------- After reviewing disclosures made by Mr. Smulyan in an amended 13D filing on September 18, 2006, the Reporting Person wrote a letter to the Board of Directors on September 27, 2006, which was included in a press release that was issued on the same date, in which it urged the Board to reconsider negotiating a transaction with Mr. Smulyan at a price per share in the range that he indicated in his filing he was prepared to offer, which at the time would have represented as much as a 40% premium to the trading price of the Shares. In this letter, the Reporting Person communicated its belief that a transaction at such a price level would be in the best interests of the shareholders, even if additional value could theoretically be achieved through a liquidation or the sale of the company to a third party, scenarios that Mr. Smulyan, the company's controlling shareholder, stated he would not support. The Reporting Person wrote another letter to the independent directors on the Board of the Issuer on October 25, 2007, which was also included in a press release on that date, urging the independent directors to take proactive steps to facilitate a transaction with Mr. Smuylan at a large premium to the current trading price of the Shares. In this letter, the Reporting Person communicated its interpretation of the Indiana Business Corporation Law, which the Reporting Person believes permits the Board to enter into a transaction with Mr. Smulyan, subject to approval by shareholders, without obligating the Board to recommend in favor of the transaction. The press releases containing the September 27, 2006 and October 25, 2007 letters are attached hereto as Exhibit A and Exhibit B, respectively, and are incorporated herein by reference. Except as set forth herein, or as would occur upon completion of any of the actions discussed herein, the Reporting Person has no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. The Reporting Person remains of the view that a transaction with Mr. Smulyan is the optimal course of action for the Board to pursue to create value for shareholders. Accordingly, the Reporting Person is considering a variety of potential actions that it believes may increase the likelihood of such a transaction taking place. The Reporting Person intends to review its investment in the Issuer on a continuing basis and may engage in discussions with management, including Mr. Smulyan, the Board of Directors, other shareholders of the Issuer and other relevant parties concerning a potential "going private" transaction, and potentially concerning other matters with respect to the Reporting Person's investment in the Shares, including, without limitation, the business, operations, governance, management, strategy and future plans of the Issuer. Depending on various factors, including, without limitation, the terms of any transaction that may be proposed, the Issuer's financial position and strategic direction, the outcome of any discussions referenced above, actions taken by the Board of Directors, price levels of the Shares, other investment opportunities available to the Reporting Person, conditions in the securities market and general economic and industry conditions, the Reporting Person may in the future take such actions with respect to its investment in the Issuer as it deems appropriate, including, without limitation, purchasing additional Shares or selling some or all of its Shares, engaging in short selling of or any hedging or similar transactions with respect to the Shares and/or otherwise changing its intention with respect to any and all matters referred to in Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE COMPANY. (a) As of the close of business on November 14, 2007, the Reporting Person is deemed to be the beneficial owner of 2,110,000 Shares, constituting approximately 6.1% of the Shares outstanding. The aggregate percentage of Shares reported herein is based upon 30,539,745 Shares outstanding, which is the total number of Shares outstanding as of October 4, 2007 as reported in the Issuer's Quarterly Report on Form 10-Q filed on October 9, 2007 for the period ended August 31, 2007. - ------------------------- -------------------- CUSIP NO. 291525103 SCHEDULE 13D PAGE 5 OF 7 PAGES - ------------------------- -------------------- (b) By virtue of investment management agreements with its clients, the Reporting Person has sole voting and dispositive powers over the 2,110,000 Shares reported herein, which powers are exercised by the Principal and the Portfolio Managers. (c) Information concerning transactions in the Shares effected by the Reporting Person during the past sixty days is set forth in Schedule A hereto and is incorporated herein by reference. All of the transactions in Shares listed on Schedule A hereto were effected in the open market. (d) Clients of the Reporting Person have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of the sale of, the Shares reported herein. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE COMPANY. Except as otherwise set forth herein, the Reporting Persons do not have any contract, arrangement, understanding or relationship with any person with respect to the securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit A - Press release containing the Reporting Person's letter to the Issuer dated September 27, 2006. Exhibit B - Press release containing the Reporting Person's letter to the Issuer dated October 25, 2007. - ------------------------- -------------------- CUSIP NO. 291525103 SCHEDULE 13D PAGE 6 OF 7 PAGES - ------------------------- -------------------- SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 15, 2007 ARNHOLD AND S. BLEICHROEDER ADVISERS, LLC By: /s/ Mark Goldstein ---------------------- Name: Mark Goldstein Title: Senior Vice President - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 7 OF 7 PAGES - ------------------------- -------------------- SCHEDULE A TRANSACTIONS IN THE SHARES BY THE REPORTING PERSON DURING THE PAST 60 DAYS Date of Transaction Shares Purchased (Sold) Price Per Share ($) - ------------------- ----------------------- ------------------- 10/01/07 15,000 4.99 10/02/07 12,000 5.24 11/05/07 268,200 5.06 11/05/07 337,296 4.95 11/06/07 29,800 4.81 11/07/07 60,000 4.32 EX-99 2 exhibita.txt EXHIBIT A - PRESS RELEASE OF LETTER TO THE ISSUER DATED SEPTEMBER 27, 2006 EMMIS COMMUNICATIONS BOARD OF DIRECTORS URGED TO RECONSIDER SALE OF COMPANY FOR POTENTIAL 40% PREMIUM BY ARNHOLD AND S. BLEICHROEDER ADVISERS, LLC NEW YORK, Sept. 27, 2006 - Arnhold and S. Bleichroeder Advisers, LLC today announced that it that it has sent the following letter to the Board of Directors of Emmis Communications Corporation (Nasdaq: EMMS): September 27, 2006 The Board of Directors Emmis Communications Corporation One Emmis Plaza 40 Monument Circle-Suite 700 Indianapolis, IN 46204 Members of the Board: Our firm and funds that we advise are holders of 650,000 shares of Emmis Communications Class A common stock, which represents approximately 1.7% of all common shares outstanding. In an amended 13D filing issued on September 18, 2006, Emmis Chairman and CEO Jeffrey Smulyan disclosed that after withdrawing his $15.25 buy-out offer for Emmis on August 4, 2006, he engaged in exploratory discussions with the Special Committee regarding the "potential reinstitution of a proposal at a price of $16.80 per share in cash." The filing indicates that although these discussions ended on or around August 31, 2006, Mr. Smulyan may in the future seek to engage in discussions with the Board of Emmis regarding "a potential offer with different terms" and may "determine to make a similar proposal on different terms," signaling his ongoing interest in taking Emmis private. We note that $16.80 represents a premium of 40% to the average closing price of Emmis shares on the five trading days prior to the date of this 13D filing. We are writing to express our firmly held view that the Board's apparent decision not to pursue a transaction at a premium of this magnitude was simply not in the best interests of shareholders. We urge the Board to take whatever actions necessary to revive discussions with Mr. Smulyan and proceed expeditiously toward a definitive agreement with him and a shareholder vote on the matter. When Mr. Smulyan originally withdrew his $15.25 proposal in early August, it was unclear exactly what went wrong. In the press release issued by Mr. Smulyan, he alluded to a "downturn in the financing markets" as well as a decline in broadcasting valuations. We believe many investors at the time assumed Mr. Smulyan could not obtain the financing required to consummate the transaction. Subsequent press reports, however, including an August 8 article in THE INDIANAPOLIS STAR, indicated that Mr. Smulyan's proposal was withdrawn because the Special Committee demanded too high a price, even though he had offered to increase the take-out price. Mr. Smulyan's SEC filing from September 18 further clarifies the situation, noting that he expected to receive "executed commitment letters" from his financial backers once an agreement was finalized. At this point, we can only conclude that responsibility for a deal not being reached with Mr. Smulyan lies squarely on the shoulders of the members of the Special Committee, who have apparently decided that a buy-out at or above $15.25 per share, and perhaps even as high as $16.80 per share, is inadequate. Why would the Special Committee of the Board of Directors of a struggling public company in a struggling industry spurn repeated efforts to take the company private at a substantial premium? We believe the answer lies in an extreme over-reaction to perceived conflicts of interest arising out of Mr. Smulyan's personal and professional ties to Board members, including the fact that only two of the nine Board members (and only one Special Committee member) were elected by Class A shareholders voting as a single class. As noted in the company's proxy statement from June, 2006, through his 100% ownership of all outstanding Class B shares, Mr. Smulyan controls approximately 48.9% of the voting power of all Emmis common shares and therefore effectively determines seven of the nine Board members who are elected by a majority vote of all outstanding common shares. In addition, these Class B shares provide Mr. Smulyan supermajority voting rights that now empower him to prevent the sale of the company to any other party. We suspect that, to avoid the appearance of impropriety, the Special Committee has refused to support a proposal from Mr. Smulyan that does not achieve, or come very close to, the full private market value of the company's assets. As a number of sell-side analysts have recently demonstrated, and the valuation work of the Special Committee's own advisers may have confirmed, the liquidation of Emmis's radio stations and other assets could possibly generate more than $20 per share in value on an after-tax basis. At the current share price of approximately $12 per share, Emmis trades at approximately 10 times estimates of 2007 total company EBITDA and approximately 8.5 times segment EBITDA (excluding corporate overhead). In 2006, benchmark radio asset transactions have taken place at 12 to 13 times forward estimates of broadcast cash flow, including Entercom's acquisition this August of 15 stations from CBS. By our analysis, the opportunity to capture a higher multiple for radio cash flows in the private market, combined with the potential to eliminate corporate overhead (which depresses total company EBITDA by 20-25%), results in a liquidation value for Emmis at or above $20 per share. We believe members of the Special Committee and the Board might have felt vulnerable to criticism if they recommended a transaction at a price that represented a discount to their advisers' estimates of the full private market value of the company's assets, even if it involved a 40% premium to the trading price of the shares. There is a fatal flaw with this reasoning, however, in that liquidation value is only relevant if it can be realized. The unfortunate reality is that Mr. Smulyan is the controlling shareholder of this company, and he has chosen to oppose any alternative transaction. A proper valuation must apply a substantial minority discount to the Class A shares. Nonetheless, it should not be the primary motivation of a director of a public company to inoculate himself or herself from any possible criticism. The primary concern should be to act in the best interests of shareholders for whom board members act as fiduciaries. As a general matter, we find it difficult to defend the proposition that to deny shareholders a potential 40% premium on their shares is to act in their best interests. In the case of Emmis, we find this proposition impossible to defend, for several reasons: (1) THE BOARD HAS NOT OUTLINED ANY ALTERNATIVE PATH TO ACHIEVE FULL PRIVATE MARKET VALUE. If the Special Committee truly believes shareholders are entitled to $20 per share or more in value, they should put forth a plan to get us there. Other than the sale of the company to a third party, the only conceivable way is to pursue a liquidation strategy, selling the company's core radio assets in the private market and using the proceeds to pay down debt, buyback shares or return cash to shareholders directly. The $4 special cash dividend announced on September 18, 2006 is a token gesture at best, as it merely distributes cash from a previously announced non-core asset sale that we believe was otherwise intended to pay down debt. If the Board won't support a transaction at anything less than liquidation value, why has the Board not initiated the process of putting the company's assets into a liquidating trust? (2) MR. SMULYAN REFUSES TO SUPPORT A TRANSACTION WITH A THIRD PARTY. While the sale of the company to a third party would obviously offer the potential to obtain maximum value, it simply will not happen without Mr. Smulyan's support. Class A shareholders, who have some 80% of the economic ownership of Emmis Communications, are not only deprived of voting control over the company, now the Board denies them the opportunity to vote on the sale of the company under the one set of circumstances in which they can actually determine the outcome. (3) EMMIS IS NOT VIABLE AS A PUBLIC COMPANY THAT CAN CREATE LONG-TERM VALUE FOR SHAREHOLDERS. As we believe the announcement of a $4 special cash dividend suggests, Emmis faces a problem buying back shares at this point because of the already limited public float. With inconsistent and declining broadcasting cash flows, operating in an industry facing significant competitive challenges, Emmis clearly belongs in private hands, a point that was obviously not lost on the founder of this company. Corporate overhead costs, which consume as much as a quarter of the total company's operating income, are completely mismatched relative to the current scope of the company's broadcasting operations, especially as Emmis has continued to divest non-core assets. Moreover, Mr. Smulyan continues on as Chairman and CEO, while stating in SEC filings that he may seek to acquire the company or otherwise increase his ownership of Emmis again in the future. This raises the question: in which direction--up or down--does Mr. Smulyan have the personal financial incentive to see the stock price move? (4) TIME IS NOT ON OUR SIDE. If the Special Committee is holding out for the day Mr. Smulyan capitulates and agrees to auction the company or its assets, the Board should ask itself, does the extra potential consideration justify the delay and additional risk? There is no evidence that Emmis's core radio assets will experience a turnaround anytime soon, there is no guarantee that the gap between public and private market multiples for radio cash flows will be sustained, and there is no assurance that the credit markets will remain accommodative. Logically, Mr. Smulyan will only put the company up for sale once he's convinced that the future of the business and the industry is truly bleak--at which point, potential third party bidders may share the same view. (5) EVERYONE COULD BENEFIT. Typically, it's management that seeks to remain entrenched, while shareholders push for a transaction. In this case, all Emmis "stakeholders" stand to benefit from a deal with Mr. Smulyan. Management would keep control of the company. Emmis's corporate office would likely remain intact. Emmis employees would not only keep their jobs, they would have the opportunity to join Mr. Smulyan in his effort to pursue a growth strategy at Emmis as a private company unencumbered by the demands of the public market. As for the company's shareholders, we are highly confident that a transaction in the neighborhood of $16.80 per share would be quite well received. While we realize there was some initial resistance from shareholders when the $15.25 proposal was first announced (at a time when broadcasting valuations were much healthier), we suggest that had more to do with expectations that the Board, given its history and Mr. Smulyan's influence over its composition, would not go out of its way to extract a better price from him. Perhaps this message was heard all too well. We encourage Board members of Emmis to consult with the investors who actually own Emmis shares and find out how they would regard the opportunity to realize an immediate 40% increase in the value of those shares. We believe the Board of Directors should pursue the following course of action: Reconstitute the Special Committee and invite Mr. Smulyan back to the negotiating table. Put together a transaction at a price in the range of what was indicated in his 13D filing. If the Board is not comfortable recommending the transaction because the price is less than some theoretical maximum value contained in a banker's fairness opinion, then why not hold a vote without any Board recommendation at all? We note that Indiana Business Corporation Law (specifically, Title 23, Article 1, Chapter 40, Section 3) permits a Board of Directors to submit a plan of merger without a recommendation under certain circumstances. Ask Mr. Smulyan to exclude himself from voting on the transaction, such that the affirmative vote of a majority of minority shareholders is required. If a deal is struck in the vicinity of $16.80, we would be quite surprised if the transaction did not receive overwhelming shareholder support. Please feel free to contact us at any time to discuss these matters further. Thank you for considering our views on what we believe is realistically the best possible outcome for our investment in Emmis Class A shares. Yours truly, Robert J. Hordon Jason B. Dahl Jonathan R. Spitzer Arnhold and S. Bleichroeder Advisers, LLC FOR IMMEDIATE RELEASE: Contact: Robert Hordon Company: Arnhold and S. Bleichroeder Advisers, LLC Phone: (212) 698-3124 EX-99 3 exhibitb.txt EXHIBIT B - PRESS RELEASE OF LETTER TO THE ISSUER DATED OCTOBER 25, 2007 EMMIS COMMUNICATIONS INDEPENDENT DIRECTORS URGED TO FORM SPECIAL COMMITTEE TO WORK WITH CONTROLLING SHAREHOLDER ON VALUE-CREATING TRANSACTION NEW YORK, Oct. 25, 2007 - Arnhold and S. Bleichroeder Advisers, LLC today announced that it has sent the following letter to the Independent Directors on the Board of Emmis Communications Corporation (Nasdaq: EMMS): October 25, 2007 Ms. Susan Bayh, Director Mr. Peter Lund, Director Emmis Communications Corporation One Emmis Plaza 40 Monument Circle-Suite 700 Indianapolis, IN 46204 Dear Ms. Bayh and Mr. Lund: Our firm and funds that we advise are now holders of 1,414,704 shares of the Class A common stock of Emmis Communications Corporation ("Emmis"), or approximately 4.6% of the Class A shares outstanding. In addition, we have economic exposure to the equivalent of an additional 337,296 shares through derivative contracts, giving us economic exposure to the equivalent of an aggregate of approximately 5.7% of the Class A shares outstanding. First, we wish to state our agreement with the view that we believe has been expressed in public filings by other Emmis shareholders that aggressive action must be taken by the Emmis Board of Directors (the "Board") for the benefit of all minority shareholders to realize the value inherent in the company's portfolio of underperforming radio assets. Given the facts and realities of how Emmis is structurally impaired from a corporate governance perspective, we are convinced that the optimal, and probably the only practicable, approach to achieving this goal is to pursue a "going private" transaction with the company's controlling shareholder, Jeffrey Smulyan. We strongly support the idea of a buy-out, funded in part by asset sales, that delivers a substantial premium to the current trading price of approximately $5 per share. Second, we appreciate the difficult position the Board is in given the circumstances surrounding Mr. Smulyan's unsuccessful effort to acquire the company last year. As a possible remedy to those concerns, we understand that Indiana law would permit the Board to enter into a transaction with a controlling shareholder such as Mr. Smulyan and put it to a shareholder vote for approval, without providing an explicit recommendation to the shareholders in favor of the transaction. The pertinent provision of the Indiana Business Corporation Law (IBCL 23-1-40-3(b)(1)) specifically exempts a board from recommending a plan of merger if "the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the plan." We believe both conditions, "conflict of interest" and "other special circumstances," would likely be satisfied if a proposal were received from Mr. Smulyan. With respect to conflict of interest, Mr. Smulyan has voting control over a majority of board members who would ultimately be recommending, or refusing to recommend, a transaction. Further, Mr. Smulyan's ability to block alternative transactions, coupled with his publicly stated refusal to approve such transactions, results in the "going private" transaction as the only practicable alternative for the Emmis shareholders. In our view, this fact pattern clearly represents "special circumstances," which would permit the Board to pass such a transaction to the Emmis shareholders for approval without expressly recommending the transaction. If the Board were to receive a "going private" proposal from Mr. Smulyan at a large premium to the current share price, we would urge the Board to defer to the shareholders, to the extent it was unprepared to recommend a transaction that might not deliver as much value as a liquidation or the sale of Emmis to a third party (scenarios that we regard as merely theoretical, considering Mr. Smulyan's control position and his publicly stated refusal to agree to such other transactions). Given the sharp decline in the value of Emmis shares since last summer, when the Board chose not to provide shareholders an opportunity to evaluate Mr. Smulyan's first proposal, we hope members of the Board would now agree that the balance of their fiduciary obligations tips in favor of giving Emmis shareholders that opportunity if a new offer is made. As our representatives on the Board, the only Board members elected by Class A shareholders voting as a single class, you have a critical role to play here, and we are counting on your leadership. We encourage you to form a special committee to evaluate the strategic options available to minority shareholders and to work collaboratively with the controlling shareholder to help generate a positive result for minority shareholders relative to current trading levels. Yours truly, Robert J. Hordon Jason B. Dahl Jonathan R. Spitzer Contact: Arnhold and S. Bleichroeder Advisers, LLC Robert Hordon, 212-698-3124 -----END PRIVACY-ENHANCED MESSAGE-----