10-K

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 28, 2005

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 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 whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Act). Yes þ No o.

     The aggregate market value of the voting stock held by non-affiliates of the registrant, as of August 31, 2004, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $970,450,000.

     The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of April 30, 2005, was:

51,938,185	Class A Common Shares, $.01 par value
4,879,784	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 2005 Annual Meeting	Part III

     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 the 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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

	Page
PART I		4
Item 1. Business		4
Item 2. Properties		20
Item 3. Legal Proceedings		22
Item 4. Submission of Matters to a Vote of Security Holders		23
Executive Officers of the Registrant		23
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		25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation		27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.		57
Item 8. Financial Statements and Supplementary Data		58
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		104
Item 9A. Controls and Procedures		104
Item 9B. Other Information		104
PART III		104
Item 10. Directors and Executive Officers of the Registrant		104
Item 11. Executive Compensation		104
Item 12. Security Ownership of Certain Beneficial Owners, and Management, and Related Stockholder Matters		105
Item 13. Certain Relationships and Related Transactions		105
Item 14. Principal Accountant Fees and Services		105
PART IV		106
Item 15. Exhibits and Financial Statement Schedules		106
Signatures		111
Employment Agreement between Emmis Operating Co. and Randall D. Bongarten
Asset Exchange Agreement
Director Compensation Policy
Ratio of Earnings to Fixed Charges
Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer
Certification of Principal Financial Officer

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PART I

ITEM 1. BUSINESS.

GENERAL

     We are a diversified media company with radio broadcasting, television broadcasting and magazine publishing operations. We operate the eighth 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 sixteen FM and two AM radio stations with strong positions in Phoenix, St. Louis, Austin (we have a 50.1% controlling interest in our radio stations located there), Indianapolis and Terre Haute, IN. We also own and operate a leading portfolio of television stations covering geographically diverse mid-sized markets in the U.S., as well as the large markets of Portland and Orlando. The sixteen television stations we own and operate have a variety of network affiliations: five with CBS, five with FOX, three with NBC, one with ABC and two with WB.

     Our operational focus is on maintaining our leadership position in broadcasting by continuing to enhance the operating performance of our broadcast properties. We also are regularly looking to acquire underdeveloped properties that offer the potential for significant improvements through the application of our operational expertise. 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 2004 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. We seek to be the largest local television presence in our television markets by combining network-affiliated programming with leading local news. We have created television stations with a strong local “brand” within the station’s market, allowing viewers and advertisers to identify with the station as we build the station’s franchise value. We have generally improved the profitability of our television stations since our acquisition of them by applying the focused research and marketing techniques we utilize successfully in our radio operations and by concentrating our sales efforts locally.

     In addition to our domestic radio and TV broadcasting properties, we operate a news information radio network in Indiana, publish Texas Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati, Tu Ciudad, and Country Sampler and related magazines, and operate an international radio business and a regional book publisher. Internationally, we operate nine FM radio stations in the Flanders region of Belgium and have a 59.5% interest in a national top-ranked radio station in Hungary. Subsequent to year end, we purchased a radio network in Slovakia. We also engage in various businesses ancillary to our broadcasting business, such as consulting and broadcast tower leasing.

BUSINESS STRATEGY

     We are committed to maintaining our leadership position in broadcasting, enhancing the performance of our broadcast 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 and television 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. Our local sales force has capitalized on our local presence to increase the percentage of 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.

Focus Our Sales And Marketing Efforts. We design our local and national sales efforts based on advertiser demand and our programming compared to the competitive formats within each market. We provide our sales force with extensive training and the technology for sophisticated inventory management techniques, which provide frequent price adjustments based on regional and market conditions. Our sales philosophy is to maintain the price integrity of our available inventory. We will accept a lower sell-out percentage in periods of weak advertiser demand instead of cutting prices to fill all available inventory. Additional Company resources have been allocated to locate, hire, train and retain top sales people. Under the Emmis Sales Assault Plan, a

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Company-wide initiative geared toward attracting and developing sales leaders in the radio, television and magazine industries, we added and trained scores of sales people to our workforce in recent years, which was incremental to hirings in the normal course of business. As a result, we have significantly increased our share of local television revenues and maintained our share of local radio revenues, despite direct format attacks from competitors in our New York and Chicago markets.

Develop Strong Local Identities For Our Television Stations. We strive to create television stations with a strong local “brand” within the station’s market, allowing viewers and advertisers to identify with the station as we build the station’s franchise value. We believe that aggressive promotion and strong local station management, strategies which we have found successful in our radio operations, are critical to the creation of strong local television stations as well. Additionally, we believe that the production and broadcasting of local news and events programming can be an important link to the community and an aid to the station’s efforts to expand its viewership. Local news and events programming can provide access to advertising sources targeted specifically to the local or regional community. We believe that strong local news generates high viewership and results in higher ratings both for programs preceding and following the news.

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 ratings, revenues and cash flow with our marketing focus and innovative programming expertise. We intend to continue to selectively acquire media properties in desirable markets to create value by developing those properties to increase their cash flow. 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.

Encourage A Performance-Based, Entrepreneurial Management Approach. We believe that broadcasting is primarily a local business and that much of its success is the result of the efforts of regional and local management and staff. We have attracted and retained an experienced team of broadcast professionals who understand the viewing and listening preferences, demographics and competitive opportunities of their particular market. Our decentralized approach to station management gives local management oversight of station spending, long-range planning and resource allocation at their individual stations, and our approach also rewards all employees based on those stations’ performance. 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 broadcasting industry and significantly enhancing our ability to attract and retain experienced and highly motivated employees and management. In 2005, Fortune magazine recognized Emmis as one of the “100 Best Companies to Work For.”

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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 and ranking figures are from BIA’s Investing in Radio 2005 (1^st Edition). “Ranking in Primary Demographic Target” is the ranking of the station among all radio stations in its market based on the Fall 2004 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/R&B	18-34	1	4.9
KZLA-FM			Country	25-54	21	1.8
New York, NY		2
WQHT-FM			Hip-Hop	18-34	1	4.7
WRKS-FM			Classic Soul/Today’s R&B	25-54	3	4.3
WQCD-FM			Smooth Jazz	25-54	6	3.4
Chicago, IL		3
WKQX-FM			Alternative Rock	18-34	6	2.0
WLUP-FM			Classic Rock	25-54	10t	2.3
Phoenix, AZ		14
KKFR-FM			Rythmic CHR	18-34	2	4.5
St. Louis, MO		21
KPNT-FM			Alternative Rock	18-34	1	3.4
KIHT-FM			Classic Hits	25-54	7	3.8
KSHE-FM			Album Oriented Rock	25-54	4	4.3
WRDA-FM			New Standards	25-54	21	1.5
KFTK-FM			Talk	25-54	8	3.4
Indianapolis, IN		32
WIBC-AM			News/Talk/Sports	35-64	5	7.0
WNOU-FM			CHR	18-34	5	4.2
WYXB-FM			Soft Adult Contemporary	25-54	5	4.4
WLHK-FM			Country (1)	25-54	16	1.8
Austin, TX		37
KDHT-FM			Rythmic CHR	18-34	1	7.4
KLBJ-AM			News/Talk	25-54	2	7.2
KLBJ-FM			Album Oriented Rock	25-54	14	2.2
KGSR-FM			Adult Alternative	25-54	10	2.6
KROX-FM			Alternative Rock	18-34	4	3.5
KBPA-FM			Hot Adult Contemporary	25-54	1	6.3
Terre Haute, IN		232
WTHI-FM			Country	25-54	1	22.0
WWVR-FM			Classic Rock	25-54	2	11.4

(1) We switched to the country format in March 2005, after the Fall 2004 Arbitron Survey.

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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 operate nine FM radio stations in the Flanders region of Belgium and have a 59.5% interest in a national top-ranked radio station in Hungary. Subsequent to year end, we purchased a radio network in Slovakia. We also engage in various businesses ancillary to our broadcasting business, such as consulting and broadcast tower leasing.

TELEVISION STATIONS

     In the following table, “DMA Rank” is estimated by the A.C. Nielsen Company (“Nielsen”) as of January 2005. 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 during February 2005. A “t” indicates the station tied with another station for the stated ranking. “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		RANK		SHARE		EXPIRATION
WKCF-TV	Orlando, FL		20	WB/18		13		5		4	December 31, 2009
KOIN-TV	Portland, OR		24	CBS/6		8		2t		10	September 18, 2006
WVUE-TV	New Orleans, LA		43	Fox/8		8		2		11	March 5, 2006
KRQE-TV	Albuquerque, NM		47	CBS/13		14		1t		10	September 18, 2006
WSAZ-TV	Huntington, WV/Charleston, WV		62	NBC/3		7		1		21	January 1, 2009
WALA-TV	Mobile, AL/Pensacola, FL		63	Fox/10		9		1		14	August 24, 2006
WBPG-TV	Mobile, AL/Pensacola, FL		63	WB/55		9		5t		2	August 31, 2006
KSNW-TV	Wichita, KS		66	NBC/3		6		3t		12	January 1, 2009
WFTX-TV	Fort Myers, FL		68	Fox/36		7		3		8	N/A
WLUK-TV	Green Bay, WI		69	Fox/11		6		2t		13	November 1, 2005
KHON-TV (1)	Honolulu, HI		71	Fox/2		9		1		17	August 2, 2006
KGMB-TV (1)	Honolulu, HI		71	CBS/9		9		2		12	September 18, 2006
KGUN-TV	Tucson, AZ		72	ABC/9		9		3		11	February 6, 2005 (2)
KMTV-TV	Omaha, NE		76	CBS/3		5		3		13	September 18, 2006
KSNT-TV	Topeka, KS		137	NBC/27		4		2		14	January 1, 2009
WTHI-TV	Terre Haute, IN		149	CBS/10		3		1		19	December 31, 2005

(1)	We are currently operating KGMB-TV under a temporary waiver issued by the FCC. We may be required to sell one of these stations. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.
(2)	We are currently in negotiations to extend or renew this affiliation agreement and expect the extension or renewal to be on terms that are reasonably acceptable to us.

     Emmis also owns and operates nine satellite stations that primarily re-broadcast the signal of certain of our local stations. A local station and its satellite station are considered one station for FCC and multiple ownership purposes, provided that the stations are in the same market.

     Each of our television stations is affiliated with CBS, NBC, ABC, Fox or WB (each a “Network”) pursuant to a written network affiliation agreement, except WFTX in Ft. Myers, FL, which is affiliated with Fox pursuant to an oral affiliation agreement. Each affiliation agreement provides the affiliated television station with the right to rebroadcast all programs transmitted by the Network with which the television station is affiliated. In return, the Network has the right to sell a substantial portion of the advertising time during such broadcasts.

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     In the years ended February 2003, 2004 and 2005, we received approximately $3.3 million, $2.0 million and $2.0 million, respectively, in Network compensation payments, which represented less than 1% of our total net revenues in each year. The long established Networks (ABC, CBS and NBC) have historically paid the affiliated station to broadcast the Network’s programming. This Network compensation payment used to vary depending on the time of day that a station broadcast the Network programming. Typically, prime-time programming generated the highest hourly Network compensation payments. In the recent years, however, ABC, CBS and NBC have been eliminating or sharply reducing compensation payments to stations for clearance of Network programming. In some cases, Networks have undertaken to cut compensation when a station is to be sold and the affiliation agreement is to be assigned or transferred, or when an old affiliation agreement has expired. The more recently established Networks (Fox and WB) generally pay little or no cash compensation for the clearance of Network programming. They tend, however, to offer the affiliated station more advertising availability for local sale within Network programming than do the long established Networks.

PUBLISHING OPERATIONS

     We publish the following magazines through our publishing division:

	Monthly
	Paid
	Circulation(a)
Regional Magazines:
Texas Monthly		301,000
Los Angeles		152,000
Atlanta		67,000
Indianapolis Monthly		46,000
Cincinnati Magazine		31,000
Tu Ciudad (b)		N/A
Specialty Magazines (c):
Country Sampler		300,000
Country Sampler Decorating Ideas		140,000
Country Sampler Decorating Ideas with Paint		94,000
Country Marketplace		125,000
Country Business		26,000

(a)	Source: Publisher’s Statement subject to audit by the Audit Bureau of Circulations
(b)	This magazine is in a developmental stage and the first issue will be released in May 2005.
(c)	Our specialty magazines are circulated bimonthly.

     In addition to our monthly and bimonthly magazines, Emmis also owns and operates a regional book publisher, Emmis Books.

INTERNET AND NEW TECHNOLOGIES

     We believe that the development and explosive growth of the Internet 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, viewers and readers. The opportunity is to further enhance the relationships we already have with our listeners, viewers and readers by expanding products and services offered by our stations and magazines. For that reason, we have individuals at many of our properties dedicated to website maintenance and generating revenues from the properties’ websites.

     We believe that there are opportunities to improve and expand our television operations utilizing new technologies such as those that capitalize on the digital spectrum. Each television broadcaster has spent considerable capital complying with the digital conversion mandated by the FCC. Emmis has spent approximately $26.5 million converting its stations to digital. We believe we have developed a compelling business model to monetize this digital spectrum. Our model contemplates local television operators pooling their digital spectrum in individual markets and offering an over-the-air, low cost alternative to cable and satellite. Although we believe this subscription-based model is viable, its ultimate success will depend upon industry involvement, customer penetration and certain other contingencies. Emmis incurred approximately $4.0 million of costs in fiscal 2005 related to the development of a formal business plan

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and industry-related organizational costs. These costs are part of corporate expenses. Emmis continues to pursue industry participation for this business venture. Emmis expects to incur less than $1 million of costs in fiscal 2006 related to the organizational aspects of this venture.

COMMUNITY INVOLVEMENT

     We believe that to be successful, we must be integrally involved in the communities we serve. To that end, each of our stations 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, Give2Asia, United Way’s September 11^th Fund, The March of Dimes, American Cancer Society, Riley Children’s Hospital, The Salvation Army and research foundations seeking cures for ALS, cystic fibrosis, leukemia and AIDS and helping to fight drug abuse. In addition to our planned activities, our stations and magazines take leadership roles in community responses to natural disasters, such as commercial-free news broadcasts covering the events of September 11^th and the war in Iraq and special fundraisers for victims of the tsunami disaster. 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 only the second broadcaster to receive this prestigious honor.

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 Television Operators Caucus, the Radio Advertising Bureau, the Radio Futures Committee, the Arbitron Advisory Council, and as founding members of the Radio Operators Caucus. Our chief executive has been honored with the National Association of Broadcasters’ “National Radio Award” and as Radio Ink’s “Radio Executive of the Year.” At various times we have been voted Most Respected Broadcaster in polls of radio industry chief executive officers and managers, and our management and on-air personalities have won numerous prestigious 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 mail 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 broadcast advertising by emphasizing the effectiveness of radio and television advertising in increasing the advertisers’ revenues. Changes in the policies and rules of the FCC permit increased joint ownership and joint operation of local stations. Those stations taking advantage of these joint arrangements (including our New York, Los Angeles, Chicago, St. Louis, Indianapolis, Austin and Terre Haute clusters) may in certain circumstances have lower operating costs and may be able 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, MP3 players, satellite radio, satellite television, audio tapes and compact discs. 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

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in the future of any new media technology will not have an adverse effect on the radio or television broadcasting 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 28, 2005, approximately 24% of our total advertising revenues were derived from national sales and 76% were derived from local and regional sales. For the year ended February 28, 2005, our radio stations derived a higher percentage of their advertising revenues from local and regional sales (83%) than our television (73%) and publishing entities (61%).

EMPLOYEES

     As of February 28, 2005 Emmis had approximately 2,514 full-time employees and approximately 488 part-time employees. We have approximately 278 employees at various radio and television stations represented by unions. We consider relations with our employees to be good. In January 2005, Fortune magazine named Emmis one of the “100 Best Companies to Work For.”

INTERNET ADDRESS AND INTERNET ACCESS TO SEC REPORTS

     Our Internet address is www.emmis.com. You may obtain through our Internet website, free of charge, 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

     Television and radio broadcasting are subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended [in part by the Telecommunications Act of 1996 (the “1996 Act”)] (the “Communications Act”). Television or 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 television and 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 television and 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 and television 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. Our licenses currently have the following expiration dates, until renewed¹:

¹ Under the Communications Act, a license expiration date is extended automatically pending action on the renewal application.

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WIBC(AM)(Indianapolis)	August 1, 2004	Renewal application pending
WLHK(FM) (Indianapolis)	August 1, 2004	Renewal application pending
WNOU(FM) (Indianapolis)	August 1, 2004	Renewal application pending
WTHI(FM) (Terre Haute)	August 1, 2004	Renewal application pending
WWVR(FM) (Terre Haute)	August 1, 2004	Renewal application pending
WYXB(FM) (Indianapolis)	August 1, 2004	Renewal application pending
WKQX(FM) (Chicago)	December 1, 2004	Renewal application pending
WRDA(FM) (St. Louis)	December 1, 2004	Renewal application pending
KFTK(FM) (St. Louis)	February 1, 2005	Renewal application pending
KPNT(FM) (St. Louis)	February 1, 2005	Renewal application pending
KSHE(FM) (St. Louis)	February 1, 2005	Renewal application pending
WKCF(TV) (Orlando)	February 1, 2005	Renewal application pending
WALA(TV) (Mobile)	April 1, 2005	Renewal application pending
WBPG(TV) (Mobile)	April 1, 2005	Renewal application pending
WVUE(TV) (New Orleans)	June 1, 2005	Renewal application pending
KBPA(FM) (Austin)	August 1, 2005	Renewal application pending
KDHT(FM) (Austin)	August 1, 2005	Renewal application pending
KGSR(FM) (Austin)	August 1, 2005	Renewal application pending
KLBJ(AM) (Austin)	August 1, 2005	Renewal application pending
KLBJ(FM) (Austin)	August 1, 2005	Renewal application pending
KROX(FM) (Austin)	August 1, 2005	Renewal application pending
WTHI(TV) (Terre Haute)	August 1, 2005	Renewal application pending
KKFR(FM) (Phoenix)	October 1, 2005
KPWR(FM) (Los Angeles)	December 1, 2005
KZLA(FM) (Los Angeles)	December 1, 2005
WLUK(TV) (Green Bay)	December 1, 2005
KREZ(TV) (Durango)	April 1, 2006
KMTV(TV) (Omaha)	June 1, 2006
KSNC(TV) (Great Bend)	June 1, 2006
KSNG(TV) (Garden City)	June 1, 2006
KSNK(TV) (McCook-Oberlin)	June 1, 2006
KSNT(TV) (Topeka)	June 1, 2006
KSNW(TV) (Wichita)	June 1, 2006
WQCD(FM) (New York)	June 1, 2006
WQHT(FM) (New York)	June 1, 2006
WRKS(FM) (New York)	June 1, 2006
KBIM(TV) (Roswell)	October 1, 2006
KGUN(TV) (Tucson)	October 1, 2006
KRQE(TV) (Albuquerque)	October 1, 2006
KAII(TV) (Maui)	February 1, 2007
KGMB(TV) (Honolulu)	February 1, 2007
KGMD(TV) (Hawaii)	February 1, 2007
KGMV(TV) (Maui)	February 1, 2007
KHAW(TV) (Hawaii)	February 1, 2007
KHON(TV) (Honolulu)	February 1, 2007
KOIN(TV) (Portland)	February 1, 2007
WSAZ(TV) (Huntington)	October 1, 2012
WLUP(FM) (Chicago)	December 1, 2012
KIHT(FM) (St. Louis)	February 1, 2013
WFTX(TV) (Fort Myers)	February 1, 2013

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     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 an informal objection has been filed against the renewal applications of the Company’s Indiana radio stations. 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.

     On June 2, 2003, the FCC adopted its most recent broadcast ownership review decision, in which it modified several of its regulations governing the ownership of radio and television stations in local markets. On June 24, 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. As a result, the restrictions that were in place prior to the FCC’s 2003 decision generally continue to govern media transactions, pending completion of the agency proceedings on remand, possible legislative intervention and/or further judicial review. In January 2005, several parties filed petitions for review by the U.S. Supreme Court of the Third Circuit’s decision. These petitions remain pending. The discussion below reviews the changes contemplated in the FCC’s 2003 decision and the Third Circuit’s response to the revised ownership regulations that the Commission adopted.

     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, a single 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.

     Although the FCC’s June 2, 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. In addition, the agency determined that radio station Joint Sales Agreements (“JSAs”) will be attributable under the local ownership rule where the brokering party sells

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more than 15% of the brokered station’s advertising time per week and owns or has an attributable interest in another station in the local market. Existing JSAs that result in attribution and cause the brokering station to exceed the ownership limits will be grandfathered from the effective date of the Commission’s decision (which, as of this writing, has not occurred pursuant to the judicial stay discussed above). The Third Circuit upheld each of these changes to the local radio rule. In response to a rehearing request from the Commission, the court lifted its stay with respect to these modifications, allowing them to go into effect. However, the court questioned the FCC’s decision to maintain the pre-existing numerical caps listed above, and remanded them to the agency for further consideration.

     In addition, over the past several years, the FCC has been aggressive in examining issues of market concentration when considering radio station acquisitions, even where the numerical limits described above are not violated. In some instances, the FCC has delayed its approval of proposed radio station purchases because of market concentration concerns, and in several recent cases, the FCC has ordered evidentiary hearings to determine whether a proposed transaction would result in excessive concentration.

     Local Television Ownership:

     The local television ownership rule (or so-called “duopoly” rule) permits an entity to own two or more television stations in separate Designated Market Areas (“DMAs”). The rule also permits an entity to own two or more television stations in the same DMA if:

•	the coverage areas of the stations do not overlap, or
•	at least eight, independently-owned and -operated full-power non-commercial and commercial operating TV stations will remain in the market post-merger (the “eight voices test”), and one of the two commonly-owned stations is not among the top four television stations in the market based on audience share ratings (the “top four rule”).
	Permanent waivers of the television duopoly rule are considered if one of the stations is:
•	a “failed station,” i.e., off-air for more than four months or involved in an involuntary bankruptcy proceeding;
•	a “failing station,” i.e., having a low audience share and financially struggling; or
•	an unbuilt facility, where the permittee has made substantial progress towards constructing the facility.

     The FCC’s June 2003 decision significantly relaxed the restriction on television duopolies by permitting a company to own two TV stations in any DMA with at least five television stations (regardless of whether the stations are separately owned), but retaining the top four rule. In DMAs with 18 or more TV stations, the new rule would allow a company to own three TV stations so long as no more than one is among the market’s top four. In addition to retaining the failed, failing and unbuilt station waiver standards, the new rule also allows parties to seek waivers of the top four restriction in DMAs with 11 or fewer stations. The Third Circuit upheld the top four rule, but remanded for further consideration the other numerical limits applicable to same-market TV station combinations. The eight voices test of the pre-2003 rules therefore remains in effect.

     Emmis’ acquisition of the Lee Enterprises stations required a waiver of the pre-existing television duopoly rule because the signals of KHON-TV and KGMB-TV (one of the Lee Enterprises stations) overlap, the stations serve the same market, and both stations are rated among the top four in that market. In approving the acquisition, the FCC granted a temporary waiver of the rule, ordering that an application for divestiture of either KHON-TV or KGMB-TV (plus associated “satellite” stations) be filed on or before April 1, 2001; that deadline was subsequently extended at our request to April 1, 2002. In February 2002, we filed a request for a further extension to April 1, 2003, which was opposed by a Honolulu broadcaster. In response to our further extension request, the FCC required us to file additional information concerning our divestiture efforts. Pending its review of the information we submitted, the FCC granted us an interim extension of our waiver until July 1, 2002. In addition, in May 2002, we filed a request for interim relief with the Commission, asking that the divestiture requirement be stayed pending the outcome of the 2002 broadcast ownership review. That request was opposed by the same Honolulu broadcaster who opposed the February extension request, as well as by two local public interest groups. In September 2002, we supplemented the request for interim relief with additional information.

     As part of its June 2003 ownership decision, the Commission required all entities (including Emmis) with pending waiver requests of the local television ownership rule to come into compliance with the revised rule within 60 days of the effective date of the Order. As noted above, the effectiveness of the Commission’s decision has been stayed pending the outcome of judicial review. Since both KHON-TV and KGMB-TV are among the top four stations in the Honolulu market, Emmis’ Hawaii television holdings are not in compliance with the modified version of the ownership rule. Further, because the Honolulu market contains more than 11 television stations, Emmis is not eligible for a waiver of the rule under the additional waiver standard adopted in the June 2003 decision.

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Accordingly, when and if the stay is lifted, Emmis likely will be required either to divest one of its Honolulu stations or to seek a permanent waiver of the television duopoly rule. If such a waiver is requested and ultimately denied, divestiture of one station will be required.

     National Television Ownership:

     The 1996 Act required the FCC to relax its restriction on the number of television stations that a single entity may own nationwide. Specifically, the rule was adjusted to restrict ownership to stations reaching, in the aggregate, no more than 35 percent of the total national audience. An owner of a UHF station is attributed with only 50% of the TV households in the station’s market (“UHF discount”). In its June 2003 decision, the Commission adjusted the national cap to 45% and retained the UHF discount. Congress subsequently prevented implementation of the revised national cap through appropriations legislation. Specifically, the Consolidated Appropriations Act of 2004 included a compromise provision directing the FCC to set the cap at 39%. As a result of this congressional intervention, the national ownership cap is not under consideration in the pending judicial review of the June 2003 decision.

     Cross-Media Ownership:

     Pre-Existing Radio/Television Cross-Ownership Rule: 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:

•   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 cable operators. The Commission will consider permanent waivers of its revised radio/television cross-ownership rule only if one of the stations is a “failed station.”

     Pre-Existing Newspaper/Broadcast Cross-Ownership Rule: The FCC rules also prohibit common ownership of a daily newspaper and a radio or television station in the same local market.

     New Cross-Media Limits: The cross-media limits adopted in the June 2003 decision would replace both the newspaper/broadcast cross-ownership restriction and the radio/television cross-ownership limits as follows:

•   In DMAs with three or fewer commercial and noncommercial television stations, the FCC will not permit cross-ownership between TV stations, radio stations, and daily newspapers.

•   In DMAs with 4 to 8 television stations, the FCC will permit parties to have one of the three following combinations: (a) one or more daily newspaper(s), one TV station, and up to 50% of the radio stations that would be permissible under the local radio ownership limits; (b) one or more daily newspaper(s) and as many radio stations as can be owned pursuant to the local radio ownership limits (but no television stations); or (c) two television stations (so long as ownership would be permissible under the local television ownership rule) and as many radio stations as the local radio ownership limits permit (but no daily newspapers).

•   In DMAs with nine or more television stations, the FCC will permit any newspaper and broadcast cross-media combinations so long as they comply with the local television ownership rule and local radio ownership limits.

     The Third Circuit remanded the new cross-media limits to the Commission for further consideration, and the pre-existing radio/television and newspaper/broadcast cross-ownership rules were left in place in the meantime.

     We cannot predict the ultimate outcome of the proceedings described above, future biennial reviews or other agency or legislative initiatives or the impact, if any, that they will have on our business.

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     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).

     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.

     Because Jeffrey H. Smulyan’s voting interest in the Company has fallen below 50% for FCC control purposes, the Company is no longer eligible for an exemption from the broadcast attribution rules under which minority shareholders are not deemed to hold attributable interests in the Company. Accordingly, the other media interests of any shareholders whose voting interests in the Company meet or exceed the attribution thresholds described above will now 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.

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     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 recently 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, Congress is considering legislation that would substantially increase the current per-violation maximum fine for indecency violations and would mandate license revocation proceedings for licensees with multiple violations.

     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. A petition requesting that the FCC reconsider its approval of the Decree has been filed and remains pending. If the petition were to be granted by the FCC, or if a court appeal were taken and the court were to invalidate the Decree, then any indecent broadcasts that may have occurred on the Company’s stations could be considered by the FCC, which could have an adverse impact on the Company’s FCC licenses. In addition, petitions have been filed against the license renewal applications of stations WKQX and KPNT, and an informal objection has been filed against the license renewals of the Company’s Indiana radio stations, in each case based primarily on the matters covered by the Decree. Consequently, any invalidation of the Decree could result in the petitions and objections being considered in connection with those and possibly other license renewals, which could have an adverse affect on the Company’s FCC licenses.

     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, contest and lottery advertisements and technical operations, including limits on radio frequency radiation.

     In 1992, Congress enacted the Cable Television Consumer Protection and Competition Act of 1992 (the “1992 Cable Act”). Certain provisions of this law, such as signal carriage and retransmission consent, have a direct effect on television broadcasting.

     In April 1997, the FCC adopted rules that require television broadcasters to provide digital television (“DTV”) to consumers. The FCC also adopted a table of allotments for DTV, which assigns eligible broadcasters a second channel on which to provide DTV service. The FCC’s DTV allotment plan is based on the use of a “core” DTV spectrum between channels 2-51. Although the Communications Act mandates that each television station return one of its two channels to the FCC by the end of 2006, the Balanced Budget Act of 1997 may effectively extend the transition deadline in some markets by allowing broadcasters to keep both their analog and digital licenses until at least 85% of television households in their respective markets can receive a digital signal. Local zoning laws and the lack of qualified tall-tower builders to construct the facilities necessary for DTV operations, among other factors, including the pace of DTV production and sales, may cause delays in the DTV transition. The FCC has announced that it will review the progress of DTV every two years and make adjustments to the 2006 target date, if necessary.

     Television broadcasters are allowed to use their DTV channels according to their best business judgment, provided that they continue to offer at least one free programming service that is at least comparable to today’s analog service. Digital services and programming can include multiple standard definition program channels, data transfer, subscription video, interactive materials and audio signals (so-called “ancillary” services). The FCC has imposed a fee of 5% of the annual gross revenues for television broadcasters’ use of the DTV spectrum to offer ancillary services. The form and amount of these fees may have a significant effect on the profitability of such services. Broadcasters will not be required to air “high definition” programming. Beginning April 1, 2003, broadcasters operating in digital mode were required to simulcast at least 50% of their analog programming on the digital channel. Affiliates of ABC, CBS, NBC and Fox in the top 10 television markets were required to be on the air with a digital signal by May 1, 1999, and affiliates of those networks in markets 11-30, including KOIN-TV, were required to be on the air with a digital signal by

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November 1, 1999; KOIN-TV complied with this deadline. The remaining commercial stations, including all other television stations owned by Emmis, were required to file DTV construction permit applications by November 1, 1999, and were required to be on the air with a digital signal by May 1, 2002, absent an extension on a station-by-station basis. All Emmis’ stations met the November 1, 1999 application deadline. Stations WALA, WKCF and WFTX met the May 1, 2002 on-air deadline, and all other stations subsequently initiated DTV service prior to their extended deadlines, except stations KAII-TV, KHAW-TV, KGMD-TV and KGMV-TV, which, as “satellite” stations, have been granted an extension pending a decision by the FCC on when to require buildout of such stations. Additionally, all of the Emmis stations filed timely applications to “maximize” (expand the coverage of) the DTV facilities to ensure the DTV coverage is equal to or better than the coverage of our analog channels.

     WBPG is not subject to the usual DTV deadlines because it was not issued a second channel for DTV operation; rather, WBPG will be required to convert to DTV operation by the conclusion of the DTV transition period. Further, since Channel 55, on which WBPG operates, is to be reallocated by the FCC for other use at the end of the DTV transition period, the FCC will assign the station to a different channel at that time unless it has already changed its channel.

     When the FCC adopted service rules for the digital television transition, it stated that it would periodically review the transition’s progress. In its first review, completed in 2001, the Commission decided to permit broadcasters to construct initial minimal DTV facilities (i.e., facilities that cover only their cities of license) while retaining interference protection for their allotted and maximized facilities. In September 2004, the FCC issued a decision in its second periodic review of the DTV transition. Among other things, the decision set deadlines by which broadcasters operating with minimal (e.g., reduced power) DTV facilities must either provide DTV service to their full authorized coverage areas or else lose interference protection to the unserved areas. The Commission set July 1, 2005 as the date for affiliates of ABC, NBC, CBS and Fox in the top 100 markets to build out their full facilities or lose protection for the “unused” areas. This deadline applies to all the Emmis television stations except WTHI, KSNT and WKCF. All other stations, including WTHI, KSNT and WKCF, would be required to build out their full facilities by July 1, 2006. In addition, the decision established a multi-step process by which broadcasters may select their post-transition DTV channel within the core DTV spectrum (Channels 2-51). This process began in November 2004, with a goal of having all channel assignments finalized by the end of 2006.

     In January 2001, the FCC issued a preliminary decision regarding the carriage (“must-carry”) rights of digital broadcasters on local cable and certain DBS systems in which the FCC determined that (1) digital-only stations may immediately assert carriage rights on local cable systems; (2) stations that return their analog spectrum and convert to digital operations are entitled to must-carry rights; and (3) a digital-only station asserting must-carry rights is entitled to carriage only of a single programming stream and other “program-related” content, regardless of the number of programs broadcast simultaneously (or “multicast”) on its digital spectrum. In February 2005, the Commission released a decision on reconsideration in which it (1) affirmed its prior tentative conclusion not to impose a dual carriage requirement on cable operators (which would have required them to carry broadcasters’ analog and digital signals simultaneously); and (2) affirmed its prior determination that cable operators are not required to carry more than a single digital programming stream from any particular broadcaster. Further FCC action or legislation on these issues is possible.

     The FCC decided in August 2003 to require, by 2007, all new television sets with screens 13 inches and larger and all TV interface devices (VCRs, etc.) to include the capability of tuning and decoding over-the-air digital signals. In addition, on September 10, 2003, the FCC adopted “plug-and-play” rules for cable adaptability. Under these rules, consumers will be able to plug their cable directly into their digital televisions, without the need for a set-top box. These rules cover one-way programming only; the cable and electronics industries are negotiating an agreement on two-way “plug-and-play” standards that would eliminate the need for set-top boxes for advanced services such as video on demand, impulse pay-per-view and cable operator-enhanced electronic programming guides.

     On November 4, 2003, the Commission adopted anti-piracy protection for digital television in the form of a “broadcast flag.” A broadcast flag is a digital code that can be embedded into a digital broadcasting stream. This will allow a broadcaster, at its discretion, to prevent mass distribution of its digital signal over the Internet, without affecting consumers’ ability to make limited digital copies. Digital television equipment must comply with the FCC’s broadcast flag requirements by July 1, 2005.

     The FCC has authorized the provision of video programming directly to home subscribers through high-powered direct broadcast satellites (“DBS”). DBS systems currently are capable of broadcasting over 500 channels of digital television service directly to subscribers equipped with 18-inch receiving dishes and decoders. At this time, several entities provide DBS service to consumers throughout the country. In November 1999, Congress enacted the Satellite Home Viewer Improvement Act of 1999 (“SHVIA”), which established a copyright licensing system for limited distribution of television programming to DBS viewers and directed the FCC to initiate rule-making proceedings to implement the new system. The statute extended the pre-existing system of permitting satellite distribution of distant network signals only to unserved households in so-called “white areas” (i.e., those that do not receive a Grade B

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signal from a local network affiliate). This system was designed to protect network-affiliated broadcast stations from the effects of satellite importation of non-local network signals into their markets. SHVIA also “grandfathered” delivery of the signals of television stations via DBS to certain subscribers who may have been receiving such signals in violation of prior law.

     In addition, SHVIA authorized DBS companies to provide local television signals to their subscribers pursuant to a retransmission consent agreement with the station. Moreover, effective January 1, 2002, local television stations became entitled to “must-carry” rights on a DBS system if the system is providing any local television station(s) to its subscribers. In such markets, stations now can choose whether to demand carriage on a DBS system by electing must-carry status or to negotiate with the DBS operator for specific carriage terms by electing retransmission consent status. SHVIA further required broadcasters to negotiate non-exclusive retransmission consent agreements in good faith until January 1, 2006, but provided that broadcasters may enter into agreements with competing DBS carriers on different terms.

     Congress recently passed the Satellite Home Viewer Extension and Reauthorization Act of 2004 (“SHVERA”), which extends the compulsory copyright license for carriage of distant signals through December 31, 2009 and addresses a variety of other issues related to the carriage of broadcast television signals on DBS systems. Among other things, SHVERA requires satellite carriers to phase out the carriage of distant signals in markets where they offer local broadcast service. The new statute also permits satellite carriers to deliver the distant signal of a network station to consumers in unserved digital households (also referred to as “digital white areas”), but only if the local station affiliated with that network misses the FCC’s deadlines for increasing the station’s digital signal power.

     There are FCC rules and policies, and rules and policies of other federal agencies, that regulate matters such as the use of auctions to resolve mutually exclusive application requests, network-affiliate relations, the ability of stations to obtain exclusive rights to air syndicated programming, cable systems’ carriage of syndicated and network programming on distant stations, political advertising practices, application procedures and other areas affecting the business or operations of broadcast stations.

     Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary fines, the grant of “short” (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. The FCC has begun accepting applications for LPFM stations and has granted some of those applications. 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 news 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. We cannot predict the impact of SDARS on our radio stations’ listenership.

     In October 2002, the FCC issued an order selecting a technical standard for terrestrial digital audio broadcasting (“DAB”). 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 January 2001, the D.C. Circuit concluded that the FCC’s Equal Employment Opportunity (“EEO”) regulations were unconstitutional. The FCC adopted new EEO rules in November 2002, which went into effect in March 2003.

     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 impose spectrum use or other fees on FCC licensees;

17

•   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;

•   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 limit the tax deductibility of advertising expenses by advertisers.

     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.

GEOGRAPHIC FINANCIAL INFORMATION

     The Company’s segments operate primarily in the United States with one national radio station located in Hungary and nine radio stations located in Belgium. The following tables summarize relevant financial information by geographic area. Net revenues related to our two stations in Argentina and three stations exchanged in Phoenix are excluded for all periods presented.

	2003		2004		2005
Net Revenues:
Domestic	$	527,059	$	553,532	$	600,994
International		9,164		11,622		17,466
Total	$	536,223	$	565,154	$	618,460

	2003		2004		2005
Noncurrent Assets:
Domestic	$	1,991,069	$	2,116,536	$	1,646,563
International		14,663		17,220		12,014
Total	$	2,005,732	$	2,133,756	$	1,658,577

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     ITEM 2. PROPERTIES.

     The following table sets forth information as of February 28, 2005 with respect to offices, studios and broadcast towers of stations and publishing operations currently owned by Emmis. Management believes that the properties are in good condition and are suitable for Emmis’ operations.

			EXPIRATION
	YEAR PLACED	OWNED OR	DATE
PROPERTY	IN SERVICE	LEASED	OF LEASE
Corporate and Publishing Headquarters/	1998	Owned	—
WLHK-FM/ WIBC-AM/WNOU-FM/
WYXB-FM/ Indianapolis Monthly
One Emmis Plaza
40 Monument Circle
Indianapolis, IN
WLHK-FM Tower	1985	Owned	—
WNOU-FM Tower	1979	Owned	—
WIBC-AM Tower	1966	Owned	—
WYXB-FM Tower	2003	Owned	—
WRDA-FM/KFTK-FM/KIHT-FM/KPNT-FM/KSHE-FM	1998	Leased	December 2007
800 St. Louis Union Station
St. Louis, MO
WRDA-FM Tower	1984	Owned	—
KFTX-FM Tower	1987	Leased	August 2009 with option to March 2023
KIHT-FM Tower	1995	Leased	September 2005 with two 5-year options
KPNT-FM Tower	1987	Owned	—
KSHE-FM Tower	1985	Leased	April 2009
KPWR-FM	1988	Leased	October 2017
KZLA-FM	2002	Leased	October 2017
2600 West Olive
Burbank, CA
KPWR-FM Tower	1993	Leased	October 2012
KZLA-FM tower	1991	Leased	December 2005
WQHT-FM/WRKS-FM/WQCD-FM	1996	Leased	January 2013
395 Hudson Street, 7th Floor
New York, NY
WQHT-FM Tower	1984	Leased	January 2010
WRKS-FM Tower	1984	Leased	November 2005
WQCD-FM Tower	1984	Leased	February 2007
KKFR-FM
5300 N. Central Ave.
Phoenix, AZ	1994	Leased	November 2005
KKFR-FM Tower	1998	Leased	January 2010 (1)
WKQX-FM/WLUP-FM	2000	Leased	December 2015 with 5 year option
230 Merchandise Mart Plaza
Chicago, IL
WKQX-FM Tower	1975	Leased	September 2009
WLUP-FM Tower	1977	Leased	September 2009
KLBJ-AM/FM/KDHT-FM/KGSR-FM/KROX-FM/ KEYI-FM	1998	Leased	March 2008
8309 N. IH 35
Austin, TX
KLBJ-AM Tower	1963	Owned	—
KLBJ-FM Tower	1972	Leased	July 2008
KDHT-FM Tower	1986	Owned	—
KGSR-FM Tower	1997	Owned	—
KROX-FM Tower	1999	Leased	September 2008
KEYI-FM Tower	1985	Leased	August 2010

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			EXPIRATION
	YEAR PLACED	OWNED OR	DATE
PROPERTY	IN SERVICE	LEASED	OF LEASE
Atlanta Magazine Office	2003	Leased	July 2013
260 Peachtree St, Suite 300
Atlanta, GA
Cincinnati Magazine	1996	Leased	November 2006
705 Central Ave., Suite 175
Cincinnati, OH
Texas Monthly	1989	Leased	August 2009
701 Brazos, Suite 1600
Austin, TX
Emmis Books	2003	Leased	June 2006
1700 Madison Rd.
Cincinnati, OH
KHON-TV	1999	Owned	—
88 Piikoi Street
Honolulu, HI
KHON-TV Tower	1978	Leased	December 2008 with 10 year option
WALA-TV	2002	Owned	—
WBPG-TV	2003	Owned	—
1501 Satchel Paige Dr.
Mobile, AL
WALA-TV Tower	1962	Owned	—
WBPG-TV Tower	2001	Leased	July 2010
WFTX-TV	1987	Owned	—
621 Pine Island Road
Cape Coral, FL
WFTX-TV Tower	1985	Owned	—
WLUK-TV	1966	Owned	—
787 Lombardi Avenue
Green Bay, WI
WLUK-TV Tower	1961	Owned	—
WTHI-TV/FM/WWVR-FM	1954	Owned	—
918 Ohio Street
Terre Haute, IN
WTHI-TV Tower	1965	Owned	—
WTHI-FM Tower	1954	Owned	—
WWVR-FM Tower	1966	Owned	—
WVUE-TV	1972	Owned	—
1025 South Jefferson Davis Highway
New Orleans, LA
WVUE-TV Tower	1963	Owned	—
WKCF-TV	1998	Owned	—
31 Skyline Drive
Lake Mary, FL
WKCF-TV Tower	2001	Leased	April 2016
Los Angeles Magazine
5900 Wilshire Blvd., Suite 1000
Los Angeles, CA	2000	Leased	November 2010
Tu Ciudad
5900 Wilshire Blvd., Suite 2100
Los Angeles, CA	2005	Leased	December 2010
Country Sampler
707 Kautz Road
St. Charles, IL	1988	Owned	—
RDS/Co-Opportunities
324 Campus Lane, Suite B
Suisun, CA	1989	Leased	March 2007

20

			EXPIRATION
	YEAR PLACED	OWNED OR	DATE
PROPERTY	IN SERVICE	LEASED	OF LEASE
Emmis West (Corporate)
3500 West Olive Avenue, Suite 1450
Burbank, CA	2004	Leased	February 20141
Slager Radio
1011
Budapest
Fo u. 14-18	2005	Leased	March 2010
Slager Tower	1998	Leased	October 2009
Emmis Belgium
Assesteenweg 65
B-1740 Ternat	2003	Leased	April 2013
BeOneTower	2004	Owned	—
KOIN-TV
222 S.W. Columbia St.
Portland, OR	1984	Leased	June 2083 with 99 year option
KOIN-TV Tower	1953	Owned	—
KSNT-TV
6835 N.W. U.S. Hwy 24
Topeka, KS	1967	Owned	—
KSNT-TV Tower	1967	Owned	—
WSAZ-TV
645 5th Avenue
Huntington, WV	1971	Owned	—
WSAZ-TV Tower	1954	Owned	—
KGMB-TV
1534 Kapiolani Blvd.
Honolulu, HI	1952	Owned	—
KGMB-TV Tower	1962	Owned	—
KMTV-TV
10714 Mockingbird Dr.
Omaha, NE	1978	Owned	—
KMTV-TV Tower	1967	Owned	—
KGUN-TV
7280 E. Rosewood
Tucson, AZ	1990	Owned	—
KGUN-TV Tower	1956	Leased	July 2016
KRQE-TV
13 Broadcast Plaza S.W.
Albuquerque, NM	1953	Owned	—
KRQE-TV Tower	1959	Owned	—
KSNW-TV
833 N. Main St.
Wichita, KS	1955	Owned	—
KSNW-TV Tower	1955	Owned	—

1 Emmis has the right to terminate 5 years from inception of the lease

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.

     In January 2005, we received a subpoena from the Office of Attorney General of the State of New York, as have some of the other radio broadcasting companies operating in the State of New York. The subpoenas were issued in connection with the New York

21

Attorney General’s investigation of record company promotional practices. We are cooperating with this investigation. We do not expect that the outcome of this matter would have a material impact on our financial position, results of operations or cash flows.

     In March, 2005, we received a subpoena from the Office of Attorney General of the State of New York in connection with the New York Attorney General’s investigation of a contest at one of our radio stations in New York City. We are cooperating with this investigation and do not expect that the outcome of this matter would have a material impact on our financial position, results of operations or cash flows.

     During the Company’s fiscal quarter ended August 31, 2004, Emmis entered into a consent decree with the Federal Communications Commission to settle all outstanding indecency-related matters. Terms of the agreement call for Emmis to make a voluntary contribution of $0.3 million to the U.S. Treasury, with the FCC terminating all then-current indecency-related inquiries and fines against Emmis. Certain individuals and groups have requested that the FCC reconsider the adoption of the consent decree and have challenged applications for renewal of the licenses of certain of the Company’s stations based primarily on the matters covered by the decree. These challenges are currently pending before the Commission, but Emmis does not expect the challenges to result in any changes to the consent decree or in the denial of any license renewals. See “Federal Regulation of Broadcasting” for further discussion.

     In January 2005, a third party threatened claims against our radio station in Hungary seeking damages of approximately $4.6 million. Emmis is currently investigating this matter, but based on information gathered to date, Emmis believes the claims are without merit. Litigation has not been initiated and Emmis intends to defend itself vigorously in the matter.

     On May 16, 2005, the Company commenced its “Dutch Auction” tender offer and Emmis filed Articles of Correction with the Indiana Secretary of State to correct the anti-dilution adjustment provisions of its outstanding convertible preferred stock. The Articles of Correction will implement the original agreement of the parties by correcting a mistake in the anti-dilution provisions relating to a tender offer by Emmis involving the purchase of shares of common stock for consideration representing more than 15% of the Company’s market capitalization. Upon the completion of the “Dutch Auction” tender offer, the anti-dilution provisions, as originally filed, would have resulted in the holders of the convertible preferred stock receiving a substantially greater reduction in the conversion price than was the original expectation of the parties. The revised anti-dilution provisions in the Articles of Correction reflect the original intent of the parties by including a customary anti-dilution formula for tender offers. Following the filing of the Articles of Correction, Emmis filed a lawsuit in Indiana State Court seeking, in part, a declaratory judgment authorizing the correction or reformation of the anti-dilution provisions in its second amended and restated Articles of Incorporation so that they are consistent with those in the Articles of Correction. The “Dutch Auction” tender offer is contingent on Emmis either prevailing in the lawsuit for declaratory judgment or resolving the subject matter of the lawsuit in a manner satisfactory to it. Emmis intends to actively seek to settle the lawsuit in a manner that is consistent with the revised anti-dilution provisions in the Articles of Correction. If Emmis does not prevail in the lawsuit or resolve it in a timely manner, Emmis intends to examine other alternatives to deliver value to its shareholders, which may include reducing the size of the tender offer so that no anti-dilution adjustment is triggered.

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

     Not applicable.

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 28,	ELECTED
NAME	POSITION	2005	OFFICER
Randall D. Bongarten	Television Division President	54	2000
Richard F. Cummings	Radio Division President	52	1984
Michael Levitan	Executive Vice President of Human Resources	47	2002
Gary Thoe	Publishing Division President	48	1998
Paul W. Fiddick	International Division President	54	2002

     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.

     Randall D. Bongarten has been employed as President of Emmis Television since October 2000. He served as President of Emmis International from June 1998 to September 2002. Prior to June 1998, Mr. Bongarten had served as President of GAF Broadcasting and as Executive Vice President of Operations for Emmis Radio Division.

     Richard F. Cummings was the Program Director of WLHK (formerly WENS) 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.

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     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 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 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.

PART II

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

     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) National Market System 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. No dividends were paid during any such periods.

QUARTER ENDED	HIGH		LOW
May 2003		21.24		14.84
August 2003		23.87		18.68
November 2003		24.06		18.00
February 2004		28.65		22.74
May 2004		25.95		20.84
August 2004		21.96		18.90
November 2004		20.01		17.40
February 2005		19.43		17.08

     At May 6, 2005 there were 5,461 record holders of the Class A common stock, and there was one record holder of the Class B common stock.

     Emmis intends to retain future earnings for use in its business and does not anticipate paying any dividends on shares of its common stock in the foreseeable future.

     Emmis made no purchases of its equity securities during the fourth quarter or any previous quarter of its fiscal year ended February 28, 2005.

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ITEM 6. SELECTED FINANCIAL DATA

Emmis Communications Corporation
FINANCIAL HIGHLIGHTS

	YEAR ENDED FEBRUARY 28 (29)
	(in thousands, except per share data)
	2001			2002			2003			2004			2005
OPERATING DATA:
Net revenues	$	453,657		$	510,307		$	536,223		$	565,154		$	618,460
Station operating expenses, excluding noncash compensation		282,807			330,585			333,678			355,732			384,522
Corporate expenses, excluding noncash compensation		17,601			20,283			21,359			24,105			30,792
Time brokerage fees		3,494			—			—			—			—
Depreciation and amortization (1)		72,990			94,800			42,334			45,701			46,201
Noncash compensation		5,400			8,918			21,754			22,722			16,570
Restructuring fees		2,057			768			—			—			—
Impairment loss and other (2)		2,000			10,672			—			12,400			—
Operating income		67,308			44,281			117,098			104,494			140,375
Interest expense		71,936			128,807			103,617			85,958			66,657
Loss on debt extinguishment (3)		—			1,748			13,506			—			97,248
Other income (loss), net (4)		37,865			(4,379	)		5,722			(193	)		(1,746	)
Income (loss) before income taxes, discontinued operations minority interest and cumulative effect of accounting change		33,237			(90,653	)		5,697			18,343			(25,276	)
Income (loss) from continuing operations		14,837			(64,290	)		(1,761	)		6,440			(43,703	)
Net income (loss) (5)		13,736			(64,108	)		(164,468	)		2,256			(304,368	)
Net income (loss) available to common shareholders		4,752			(73,092	)		(173,452	)		(6,728	)		(313,352	)
Net income (loss) per share available to common shareholders:
Basic:
Continuing operations	$	0.12		$	(1.55	)	$	(0.20	)	$	(0.05	)	$	(0.94	)
Discontinued operations, net of tax		(0.02	)		0.01			0.09			(0.07	)		0.76
Cumulative effect of accounting change, net of tax		—			—			(3.16	)		—			(5.40	)
Net income (loss) available to common shareholders	$	0.10		$	(1.54	)	$	(3.27	)	$	(0.12	)	$	(5.58	)
Diluted:
Continuing operations	$	0.12		$	(1.55	)	$	(0.20	)	$	(0.05	)	$	(0.94	)
Discontinued operations, net of tax		(0.02	)		0.01			0.09			(0.07	)		0.76
Cumulative effect of accounting change, net of tax		—			—			(3.16	)		—			(5.40	)
Net income (loss) available to common shareholders	$	0.10		$	(1.54	)	$	(3.27	)	$	(0.12	)	$	(5.58	)
Weighted average common shares outstanding:
Basic		46,869			47,334			53,014			54,716			56,129
Diluted		47,940			47,334			53,014			54,716			56,129

24

	FEBRUARY 28 (29),
	(Dollars in thousands)
	2001		2002		2003		2004		2005
BALANCE SHEET DATA:
Cash	$	59,899	$	6,362	$	16,079	$	19,970	$	16,054
Working capital (6)		97,885		19,828		28,024		10,532		48,517
Net intangible assets (7)		1,838,961		1,794,826		1,586,786		1,723,371		1,348,610
Total assets		2,555,872		2,559,069		2,165,413		2,300,569		1,823,035
Long-term credit facility, senior subordinated debt, senior discount notes and liquidation preference of preferred stock (8)		1,523,750		1,487,257		1,338,539		1,367,929		1,317,558
Shareholders’ equity		807,471		735,557		704,705		748,946		452,592

	YEAR ENDED FEBRUARY 28 (29),
	(Dollars in thousands)
	2001			2002			2003			2004			2005
OTHER DATA:
Cash flows from (used in):
Operating activities	$	97,730		$	69,377		$	95,149		$	118,165		$	122,804
Investing activities		(1,110,755	)		(175,105	)		106,301			(146,359	)		54,349
Financing activities		1,055,554			52,191			(191,733	)		32,085			(181,069	)
Capital expenditures		26,225			30,135			30,549			30,191			25,233
Cash paid for taxes		550			1,281			887			1,143			286

(1)	Included in depreciation and amortization expense for fiscal 2001 and 2002 is amortization expense of $39.5 million and $54.6 million, respectively, related to amortization of our goodwill and FCC licenses. We ceased amortization of our goodwill and FCC licenses in fiscal 2003 in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.”
(2)	The loss in the fiscal year ended February 28, 2001 resulted from a $2.0 million impairment charge in connection with the sale of a radio asset. The loss in the fiscal year ended February 28, 2002 resulted from a $9.1 million asset impairment charge in connection with the planned sale of a radio station and a $1.6 million charge related to the early termination of certain TV contracts. The loss in the fiscal year ended February 29, 2004 resulted from our annual SFAS No. 142 review.
(3)	Loss on debt extinguishment in the fiscal year ended February 28, 2002 relates to the write-off of deferred debt fees associated with early debt extinguishments. Loss on debt extinguishment in the fiscal years ended February 28, 2003 and 2005 relates to the write-off of deferred debt fees and redemption premiums paid for the early retirement of outstanding debt obligations.
(4)	Other income (loss), net for the fiscal year ended February 28, 2001 includes a $22.0 million gain on exchange of assets and a $17.0 million break-up fee received in connection with the sale of WALR-FM in Atlanta, Georgia to Cox Radio, Inc., net of related expenses.
(5)	The net loss in the fiscal year ended February 28, 2003 includes a charge of $167.4 million, net of tax, to reflect the cumulative effect of an accounting change in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” The net loss in the fiscal year ended February 28, 2005 includes a charge of $303.0 million, net of tax, to reflect the cumulative effect of an accounting change in connection with our adoption of Emerging Issues Task Force (EITF) Topic D-108, “Use of the Residual Method to Value Acquired Assets other than Goodwill.”
(6)	February 28, 2002 balance excludes assets held for sale of $123.4 million and credit facility debt to be repaid with proceeds of assets held for sale of $135.0 million.
(7)	Excludes intangibles of our two Argentina radio stations sold and our three Phoenix radio stations exchanged.
(8)	February 28, 2002 balance excludes $135.0 million of credit facility debt to be repaid with proceeds of assets held for sale.

25

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, television and publishing properties located primarily in the United States. Our revenues are mostly affected by the advertising rates our entities charge, as advertising sales represent more than 85% 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. Broadcast entities’ ratings are measured principally four times a year by Arbitron Radio Market Reports for radio stations and by A.C. Nielsen Company for television stations. 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. Our television division’s revenues typically fluctuate from year to year due to political spending, which is the highest in our odd-numbered fiscal years.

     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. 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 pre-empt 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. 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 and barter.

	Year ended February 28 (29),
	2003		% of Total			2004		% of Total			2005		% of Total
Net revenues:
Local	$	314,483		58.6	%	$	347,407		61.5	%	$	383,164		62.0	%
National		127,568		23.8	%		134,421		23.8	%		128,048		20.7	%
Political		17,773		3.3	%		4,047		0.7	%		31,081		5.0	%
Publication Sales		20,683		3.9	%		21,765		3.9	%		18,762		3.0	%
Non Traditional		27,099		5.1	%		29,109		5.2	%		30,261		4.9	%
Other		28,617		5.3	%		28,405		4.9	%		27,144		4.4	%
Total net revenues	$	536,223				$	565,154				$	618,460

     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 and office 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.

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.

26

  Impairment of Goodwill and Indefinite-lived Intangibles

     The annual impairment tests for goodwill and indefinite-lived intangibles under 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 typically engage an independent appraisal firm to value assets acquired in a material acquisition. We use the appraisal report to allocate the purchase price of the acquisition among different categories of assets. To the extent that purchased assets are not allocated appropriately, depreciation and amortization expense could be materially different.

  Deferred Taxes and Effective Tax Rates

     We estimate the effective tax rates and associated liabilities or assets for each legal entity in accordance with FAS 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.

     The Company evaluates on a quarterly basis its ability to realize its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to support realization of certain deferred tax assets. Failure to achieve forecasted taxable income might affect the ultimate realization of certain deferred tax assets.

  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 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 has used historical data for its stock price and option life when determining expected volatility and expected term, 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 28, 2005, we acquired one television station, nine international radio stations in Belgium, and a controlling interest in six domestic radio stations for an aggregate cash purchase price of $121.1 million. We also disposed of two domestic radio stations two international radio stations and one television production company and we exchanged three domestic radio stations for one domestic radio station, collectively receiving cash proceeds of $216.7 million. A recap of the transactions completed during the three years ended February 28, 2005 is summarized hereafter. These transactions impact the comparability of operating results year over year.

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     On January 14, 2005, Emmis completed its exchange with Bonneville International Corporation (“Bonneville”) whereby Emmis swapped three of its radio stations in Phoenix (KTAR-AM, KMVP-AM and KKLT-FM) for Bonneville’s WLUP-FM located in Chicago and $74.8 million in cash including payments for working capital items. Emmis used the cash to repay amounts outstanding under its senior credit facility. Emmis has long sought a second radio station in Chicago to complement its existing station in the market, WKQX-FM. This transaction achieves that goal by marrying the heritage alternative rock format (WKQX) with the heritage classic rock format (WLUP). Emmis began programming WLUP-FM and Bonneville began programming KTAR-AM, KMVP-AM and KKLT-FM under time brokerage agreements on December 1, 2004. The assets and liabilities of the three radio stations in Phoenix and their results of operations have been classified as discontinued operations in the accompanying consolidated financial statements. These three radio stations had historically been included in the radio reporting segment. The Company recorded $13.0 million of goodwill associated with the asset swap, but none of this goodwill is deductible for tax purposes.

     On May 12, 2004, Emmis sold to its minority partners for $7.3 million in cash its entire 75% interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina. In connection with the sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. In fiscal 2005, Emmis recorded income from discontinued operations of $4.2 million, consisting of operational losses of $0.5 million, offset by tax benefits of $4.7 million. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The $10.0 million loss in fiscal 2004 was primarily attributable to the devaluation of the peso and resulting non-cash write-off of cumulative currency translation adjustments. Votionis had historically been included in the radio reporting segment.

     On December 19, 2003, the Flemish Government awarded licenses to operate nine FM radio stations in the Flanders region of Belgium to several not-for-profit entities that have granted Emmis the exclusive right to provide the programming and sell the advertising on the stations for the duration that the not-for-profit entities retain the licenses. Five of these licenses are for the stations that Emmis began programming in August 2003 and the remaining four related to new stations that Emmis began operating in May 2004. The licenses and Emmis’ exclusive right are for an initial term of nine years and do not require the payment of any license fees to the Flemish Government.

     On July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million. These six stations are KLBJ-AM, KLBJ-FM, KDHT-FM, (formerly KXMG-FM), KROX-FM, KGSR-FM and KEYI-FM. This acquisition allowed Emmis to diversify its radio portfolio and participate in another large, high-growth radio market. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $35.3 million of goodwill, all of which is deductible for income tax purposes. In addition, Emmis has the option, but not the obligation, to purchase its partner’s entire 49.9% interest in the partnership after a period of approximately five years from the acquisition date based on an 18-multiple of trailing 12-month cash flow.

     Effective March 1, 2003, Emmis completed its acquisition of substantially all of the assets of television station WBPG-TV in Mobile, AL-Pensacola, FL from Pegasus Communications Corporation for approximately $11.7 million, including transaction costs of $0.2 million. We financed the acquisition through borrowings under the credit facility, and the acquisition was accounted for as a purchase. This acquisition allowed us to achieve duopoly efficiencies in the market, such as lower programming acquisition costs and consolidation of general and administrative functions, since we already owned a television station in the market, WALA.

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for $88.0 million. Emmis had purchased KALC-FM on January 17, 2001, from Salem Communications Corporation for $98.8 million in cash plus a commitment fee of $1.2 million and transaction related costs of $0.9 million. On February 12, 2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and Entercom began operating KALC-FM under a time brokerage agreement on March 16, 2002. Proceeds were used to repay amounts outstanding under our credit facility. Since the agreed-upon sales price for this station was less than its carrying amount as of February 28, 2002, we recognized an impairment loss of $9.1 million in fiscal 2002. Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in connection with the sale, which is reflected in the accompanying consolidated statements of operations.

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000, from AMFM, Inc. for an allocated purchase price of $35.0 million in cash plus liabilities recorded of $1.2 million and transaction related costs of $0.4 million. Emmis entered into a definitive agreement to sell KXPK-FM to Entravision on February 12, 2002. Proceeds were used to repay amounts outstanding under our credit facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.

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RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 29, 2004 COMPARED TO YEAR ENDED FEBRUARY 28, 2005

Net revenue pro forma reconciliation:

     Since March 1, 2003, we have acquired a 50.1% controlling interest in six radio stations in Austin, Texas, sold two radio stations in Argentina, sold a television production company and exchanged three radio stations in Phoenix for cash and one radio station in Chicago (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The results of our two radio stations in Argentina and our three radio stations in Phoenix 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),
	2004			2005		$ Change		% Change
				(amounts in thousands)
Reported net revenues
Radio	$	253,108		$	275,920	$	22,812		9.0	%
Television		235,938			264,865		28,927		12.3	%
Publishing		76,108			77,675		1,567		2.1	%
Total		565,154			618,460		53,306		9.4	%
Plus: Net revenues from assets acquired
Radio		22,924			8,623
Television		—			—
Publishing		—			—
Total		22,924			8,623
Less: Net revenues from stations disposed
Radio		—			—
Television		(1,140	)		—
Publishing		—			—
Total		(1,140	)		—
Pro forma net revenues
Radio		276,032			284,543		8,511		3.1	%
Television		234,798			264,865		30,067		12.8	%
Publishing		76,108			77,675		1,567		2.1	%
Total	$	586,938		$	627,083	$	40,145		6.8	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all consummated acquisitions and dispositions through February 28, 2005, irrespective of materiality. These pro forma results include the impact of the sale of our television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles.

Net revenues discussion:

     Radio net revenues increased partially as a result of our acquisition of six radio stations in Austin in July 2003. On a pro forma basis (assuming the Austin radio stations had been purchased on March 1, 2003 and the Phoenix-Chicago radio station swap had occurred on March 1, 2003), radio net revenues for the year ended February 28, 2005 would have increased $8.5 million, or 3.1%. We

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typically monitor the performance of our 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, Arase & Co., LLP (“Miller, Kaplan”). For the year ended February 28, 2005, on a pro forma basis, net revenues of our domestic radio stations were up 1.0%, whereas Miller, Kaplan reported that net revenues of our domestic radio markets were up 0.5%. The pro forma effect of including WLUP in our results reduced our domestic radio growth by 1.6%. Still, we believe we were able to outperform the markets in which we operate due to our commitment to training and developing local sales forces, as well as higher ratings driven by our continued investment in quality on-air personalities and format revisions. The higher ratings allowed us to charge higher rates for the advertisements we sold. Our advertising inventory sellout percentage decreased slightly year over year.

     The increase in television net revenues for the year ended February 28, 2005 is principally due to a substantial increase in net political revenues, as there were more political election campaigns in our fiscal 2005 than there were in our fiscal 2004. Net political advertising revenues for fiscal 2004 and 2005 were approximately $4.0 million and $30.1 million, respectively. Excluding political net revenues, we exceeded the average local revenue growth of our markets in fiscal 2005. We believe our commitment to training and developing local sales forces has contributed to our local revenue share growth. In fiscal 2005, our television stations sold a higher percentage of their inventory and charged higher rates for the inventory sold due to ratings improvements at our stations and strong demand in several of our markets, primarily the result of political advertisements.

     Our publishing division has experienced slow, steady growth, as our magazines are generally mature properties with limited direct competition.

     On a consolidated basis, pro forma net revenues for the year ended February 28, 2005 increased $40.1 million, or 6.8%, due to the effect of the items described above.

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Station operating expenses, excluding noncash compensation pro forma reconciliation:

     Since March 1, 2003, we have acquired a 50.1% controlling interest in six radio stations in Austin, Texas, sold two radio stations in Argentina, sold a television production company and exchanged three radio stations in Phoenix for cash and one radio station in Chicago (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The results of our two radio stations in Argentina and our three radio stations in Phoenix 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),
	2004			2005		$ Change		% Change
	(amounts in thousands)
Reported station operating expenses, excluding noncash compensation
Radio	$	139,438		$	155,503	$	16,065		11.5	%
Television		150,485			161,149		10,664		7.1	%
Publishing		65,809			67,870		2,061		3.1	%
Total		355,732			384,522		28,790		8.1	%
Plus: Station operating expenses, excluding noncash compensation from assets acquired:
Radio		13,636			5,882
Television		—			—
Publishing		—			—
Total		13,636			5,882
Less: Station operating expenses, excluding noncash compensation from stations disposed:
Radio		—			—
Television		(944	)		—
Publishing		—			—
Total		(944	)		—
Pro forma station operating expenses, excluding noncash compensation
Radio		153,074			161,385		8,311		5.4	%
Television		149,541			161,149		11,608		7.8	%
Publishing		65,809			67,870		2,061		3.1	%
Total	$	368,424		$	390,404	$	21,980		6.0	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all consummated acquisitions and dispositions through February 28, 2005, irrespective of materiality. These pro forma results include the impact of the sale of our television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles.

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Station operating expenses, excluding noncash compensation discussion:

     Radio station operating expenses, excluding noncash compensation increased as a result of our acquisition of six radio stations in Austin in July 2003 and WLUP-FM in Chicago in the fourth quarter of fiscal 2005. The increase also relates to higher music license fees, higher sales-related costs, higher insurance and health-related costs, higher programming costs in our New York and Los Angeles markets and an incremental $2.1 million of cash compensation in the year ended February 28, 2005 due to the corresponding reduction in our noncash compensation expense (see noncash compensation discussion below).

     Television station operating expenses, excluding noncash compensation increased principally due to higher sales-related costs, higher programming costs and higher insurance and health-related costs. The increase also relates to an incremental $2.5 million of cash compensation in the year ended February 28, 2005 due to the corresponding reduction in our noncash compensation expense (see noncash compensation discussion below).

     Publishing station operating expenses, excluding noncash compensation increased due to an incremental $0.8 million of cash compensation in the year ended February 28, 2005 due to the corresponding reduction in our noncash compensation expense (see noncash compensation discussion below) as well as higher insurance and health-related costs.

     On a consolidated basis, pro forma station operating expenses, excluding noncash compensation, for the year ended February 28, 2005 increased $22.0 million, or 6.0%, due to the effect of the items described above.

Noncash compensation expenses:

	For the years ended February 28 (29),
	2004		2005		$ Change			% Change
	(As reported, amounts in thousands)
Noncash compensation expense:
Radio	$	6,954	$	4,822	$	(2,132	)		(30.7	)%
Television		7,715		5,197		(2,518	)		(32.6	)%
Publishing		2,780		2,007		(773	)		(27.8	)%
Corporate		5,273		4,544		(729	)		(13.8	)%
Total noncash compensation expense	$	22,722	$	16,570	$	(6,152	)		(27.1	)%

     Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees at our discretion, Company matches of common stock in our 401(k) plans and common stock issued to employees pursuant to our stock compensation program. Effective January 1, 2004, we curtailed our stock compensation program by eliminating mandatory participation for employees making less than $52,000 per year. For calendar 2004, this change resulted in a $4.3 million decrease in the Company’s noncash compensation expense and a corresponding increase in the Company’s cash operating expense. In all other respects, the 2004 stock compensation program remains comparable to the stock compensation programs in effect for each of the last two calendar years. Effective January 1, 2005, we further curtailed our stock compensation program by eliminating mandatory participation for employees making less than $180,000 per year. For calendar 2005, this change is expected to result in an estimated $7 million decrease in the Company’s noncash compensation expense and a corresponding increase in the Company’s cash operating expense. No formal decisions have been made regarding the stock compensation program’s status beyond December 2005.

     As a result of the modifications to our stock compensation programs for calendar 2004 and 2005, the noncash compensation expense of the stock compensation program decreased approximately $4.2 million from $16.0 million in fiscal 2004 to $11.8 million in fiscal 2005. The remaining decrease of $2.0 million is primarily attributable to a higher portion of bonuses and incentive awards being paid in cash at the election of the Company as opposed to being paid in the form of stock in the prior periods.

     On March 1, 2005, Emmis granted approximately 250,000 shares of restricted stock to certain of its employees in lieu of stock options, which significantly reduced the Company’s annual stock option grant. Although Emmis does not expect to begin expensing stock options until at least March 1, 2006 (pursuant to SFAS No. 123R), it will expense the value of these restricted stock grants over

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their applicable vesting period, which ranges from 2 to 3 years. The Company expects the expense associated with these restricted stock grants to be approximately $2.0 million in fiscal 2006.

Corporate expenses, excluding noncash compensation:

	For the years ended February 28 (29),
	2004		2005		$ Change		% Change
	(As reported, amounts in thousands)
Corporate expenses, excluding noncash compensation	$	24,105	$	30,792		6,687		27.7	%

     Approximately $4.0 million of the increase in corporate expenses, excluding noncash compensation in the year ended February 28, 2005 consists of professional fees associated with our television digital spectrum initiative. An additional $1.0 million of the increase relates to our donation to tsunami relief efforts. The remaining increase is due to higher insurance and health care costs, as well as higher corporate governance costs associated with compliance with the Sarbanes-Oxley Act and related regulations. We expect to incur less than $1.0 million of professional fees associated with our continued organizational efforts for our television digital spectrum initiative in our year ended February 28, 2006.

Depreciation and amortization:

	For the years ended February 28 (29),
	2004		2005		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	8,564	$	8,683	$	119			1.4	%
Television		30,174		30,156		(18	)		(0.1	)%
Publishing		873		858		(15	)		(1.7	)%
Corporate		6,090		6,504		414			6.8	%
Total depreciation and amortization	$	45,701	$	46,201	$	500			1.1	%

     The increase in corporate depreciation and amortization is primarily related to the depreciation of computer software and equipment added in recent years.

Operating income:

	For the years ended February 28 (29),
	2004			2005			$ Change			% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	98,152		$	106,912		$	8,760			8.9	%
Television		35,164			68,363			33,199			94.4	%
Publishing		6,646			6,940			294			4.4	%
Corporate		(35,468	)		(41,840	)		(6,372	)		18.0	%
Total operating income	$	104,494		$	140,375		$	35,881			34.3	%

     Radio operating income increased due to our Austin radio acquisition and higher net revenues at our existing stations, partially offset by higher expenses at our existing stations. As discussed above, the net revenue growth of our stations exceeded the revenue growth of the markets in which we operate. We expect our stations to continue to outperform the markets in which we operate as we seek to monetize sustained audience ratings momentum by leveraging the investments we have made to train and develop our sales people.

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     Television operating income increased due to substantially higher net revenues, partially offset by higher operating expenses. In fiscal 2005 there were many more political elections than the prior fiscal year. In addition, our television stations have collectively gained market revenue share as they monetize higher station ratings. Accordingly, our television operating income was substantially higher in fiscal 2005 as compared to fiscal 2004. However, given that our political advertising net revenues will be significantly lower in our next fiscal year, we expect our television operating income to be lower in fiscal 2006 as compared to fiscal 2005.

     Publishing operating income increased slightly. As previously stated, our publishing division has experienced slow, steady growth as our magazines are generally mature properties with limited direct competition. In the third quarter of fiscal 2005, we initiated the launch of a new magazine targeting acculturated, bilingual, affluent Hispanics in Los Angeles, with the first issue expected to be released in our quarter ended May 31, 2005. We expect to incur approximately $2.1 million of operating losses in our fiscal 2006 related to this new venture.

     Corporate operating loss increased due to the items discussed in corporate operating expenses, excluding noncash compensation as discussed above.

     On a consolidated basis, operating income increased due to the changes in radio, television and publishing operating income, partially offset by higher corporate expenses, as discussed above.

Interest expense:

	For the years ended February 28 (29),
	2004			2005			$ Change		% Change
	(As reported, amounts in thousands)
Interest expense:	$	(85,958	)	$	(66,657	)	$	19,301		(22.5	)%

     Interest expense decreased as a result of lower interest rates paid on a portion of our senior credit facility debt and interest savings realized with our debt refinancing activity completed in the quarter ended May 31, 2004. During the year ended February 29, 2004, we had interest rate swap agreements outstanding with an aggregate notional amount ranging from $40 million to $230 million that fixed LIBOR at a weighted-average rate of 4.76% to 5.13%. We had no interest rate swap agreements outstanding in the year ended February 28, 2005, and one-month LIBOR as of February 28, 2005 was approximately 2.6%. On May 10, 2004, we completed several debt refinancing transactions that significantly lowered our future interest expense. Based on current debt levels and current LIBOR rates, we expect our annual interest expense to be approximately $63 million. See “Liquidity and Capital Resources” below for further discussion.

Income (loss) before income taxes, minority interest, discontinued operations and accounting change:

	For the years ended February 28 (29),
	2004		2005			$ Change			% Change
	(As reported, amounts in thousands)
Income (loss) before income taxes, minority interest, discontinued operations and accounting change:	$	18,343	$	(25,276	)	$	(43,619	)	Not Applicable

     In connection with our debt refinancing activities completed on May 10, 2004, we recorded a loss on debt extinguishment of $97.2 million, primarily consisting of tender premiums and the write-off of deferred debt costs for the debt redeemed. Higher operating income and lower interest expense in the year ended February 28, 2005 were more than offset by this loss on debt extinguishment. Also, in the fourth quarter of the year ended February 28, 2005, the Company recorded a loss on disposal of assets of approximately $2.0 million.

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Net income (loss):

	For the years ended February 28 (29),
	2004		2005			$ Change			% Change
	(As reported, amounts in thousands)
Net income (loss):	$	2,256	$	(304,368	)	$	(306,624	)	Not Applicable

     The net loss available to common shareholders in the year ended February 28, 2005 is attributable to the loss on debt extinguishment discussed above, net of tax benefits, and the loss associated with the adoption of a new accounting pronouncement, EITF Topic D-108, of $303.0 million, net of tax benefits, partially offset by gains on discontinued operations of $42.3 million, net of tax. Approximately $59.3 million of the loss on debt extinguishment was not deducted for purposes of calculating the provision for income taxes. In our third quarter we completed our evaluation of our statutory tax rate due to changes in our income dispersion in the various tax jurisdictions in which we operate. As a result of this review, we increased the statutory rate we use for our income tax provision from 38% to 41%.

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RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2003 COMPARED TO YEAR ENDED FEBRUARY 29, 2004

Net revenue pro forma reconciliation:

     In the years ended February 28 (29), 2003 and 2004, we sold two radio stations in Denver, Colorado, acquired a 50.1% controlling interest in six radio stations in Austin, Texas, purchased one television station in Mobile, Alabama, and sold a television production company (see Note 6 in the accompanying Notes to Consolidated Financial Statements). Subsequent to February 29, 2004, Emmis sold two radio stations in Argentina and exchanged three of its radio stations in Phoenix for one radio station in Chicago. The historical results of the two Argentina radio stations and three Phoenix radio stations have been classified as discontinued operations and are not included in the reported results below for all periods presented. The following table reconciles actual results to pro forma results.

	Year ended February 28 (29),
	2003			2004			$ Change		% Change
	(amounts in thousands)
Reported net revenues
Radio	$	228,678		$	253,108		$	24,430		10.7	%
Television		234,752			235,938			1,186		0.5	%
Publishing		72,793			76,108			3,315		4.6	%
Total		536,223			565,154			28,931		5.4	%
Plus: Net revenues from stations acquired
Radio		23,395			8,860
Television		1,033			—
Publishing		—			—
Total		24,428			8,860
Less: Net revenues from stations disposed
Radio		(1,238	)		—
Television		(3,401	)		(1,140	)
Publishing		—			—
Total		(4,639	)		(1,140	)
Pro forma net revenues
Radio		250,835			261,968			11,133		4.4	%
Television		232,384			234,798			2,414		1.0	%
Publishing		72,793			76,108			3,315		4.6	%
Total	$	556,012		$	572,874		$	16,862		3.0	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all consummated acquisitions and dispositions in the years ended February 28 (29), 2003 and 2004, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and the television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles.

36

Net revenues discussion:

     Radio net revenues increased principally as a result of our acquisition of six radio stations in Austin in July 2003. On a pro forma basis (assuming the Austin radio stations had been purchased on March 1, 2002 and the Denver radio stations had been sold on March 1, 2002), radio net revenues for the year ended February 29, 2004 would have increased $11.1 million, or 4.4%. We monitor the performance of our stations against the aggregate performance of the markets in which we operate. On a pro forma basis, for the year ended February 29, 2004 net revenues of our domestic radio stations were up 3.5%, whereas net revenues in the domestic radio markets in which we operate were up only 2.7%, based on reports for the periods prepared by Miller, Kaplan, Arase & Co., LLP. We believe we were able to outperform the markets in which we operate due to our commitment to training and developing local sales forces, as well as higher ratings, resulting, in part, from increased promotional spending in prior quarters. The higher ratings allowed us to charge higher rates for the advertisements we sold in the current period versus the same period in the prior year. Our advertising inventory sellout decreased slightly year over year.

     The increase in television net revenues for the year ended February 29, 2004 is due to strong growth in local advertising revenues offset by a substantial reduction in net political revenues, as there were fewer political election campaigns in our fiscal 2004. Net political advertising revenues for the year ended February 29, 2004 were approximately $4.0 million. Net political advertising revenues for the year ended February 28, 2003 were approximately $17.5 million. Despite this decrease in net political revenues, ratings improvements and our commitment to training and developing local sales forces have enabled us to increase our share of local advertising revenues.

     Although publishing revenues increased for the year ended February 29, 2004 as compared to the same period in the prior year, the national advertising environment continued to be challenging for our publishing division. However, our magazines have been able to overcome shortfalls in national advertising revenues by producing more custom publications and by increasing special advertiser sections in our magazines.

     On a consolidated basis, net revenues for the year ended February 29, 2004 increased due to the effect of the items described above. On a pro forma basis, net revenues for the year ended February 29, 2004 increased $16.9 million, or 3.0% due to the effect of the items described above.

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Station operating expenses, excluding noncash compensation pro forma reconciliation:

     In the years ended February 28 (29), 2003 and 2004, we sold two radio stations in Denver, Colorado, acquired a 50.1% controlling interest in six radio stations in Austin, Texas, purchased one television station in Mobile, Alabama, and sold a television production company (see Note 6 in the accompanying Notes to Consolidated Financial Statements). Subsequent to February 29, 2004, Emmis sold two radio stations in Argentina and exchanged three of its radio stations in Phoenix for one radio station in Chicago. The historical results of the two Argentina radio stations and three Phoenix radio stations have been classified as discontinued operations and are not included in the reported results below for all periods presented. The following table reconciles actual results to pro forma results.

	Year ended February 28 (29),
	2003			2004			$ Change		% Change
	(amounts in thousands)
Reported station operating expenses, excluding noncash compensation
Radio	$	122,812		$	139,438		$	16,626		13.5	%
Television		148,041			150,485			2,444		1.7	%
Publishing		62,825			65,809			2,984		4.7	%
Total		333,678			355,732			22,054		6.6	%
Plus: Station operating expenses, excluding noncash compensation from stations acquired:
Radio		13,704			5,182
Television		2,431			—
Publishing		—			—
Total		16,135			5,182
Less: Station operating expenses, excluding noncash compensation from stations disposed:
Radio		(708	)		—
Television		(2,322	)		(944	)
Publishing		—			—
Total		(3,030	)		(944	)
Pro forma station operating expenses, excluding noncash compensation
Radio		135,808			144,620			8,812		6.5	%
Television		148,150			149,541			1,391		0.9	%
Publishing		62,825			65,809			2,984		4.7	%
Total	$	346,783		$	359,970		$	13,187		3.8	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the Company, the pro forma results above include the impact of all consummated acquisitions and dispositions in the years ended February 28 (29), 2003 and 2004, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and the television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles.

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Station operating expenses, excluding noncash compensation discussion:

     Radio station operating expenses, excluding noncash compensation increased as a result of our acquisition of six radio stations in Austin in July 2003. The increase also relates to higher sales-related costs, higher insurance and health-related costs, higher programming costs and the reduction of $2.4 million in noncash compensation expense as more bonuses were paid in cash as opposed to stock in fiscal 2004, which had the impact of increasing cash expenses by an equal amount. On a pro forma basis (assuming the Austin radio stations had been purchased on March 1, 2002 and the Denver radio stations had been sold on March 1, 2002), radio station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 would have increased $8.8 million, or 6.5%.

     Our acquisition of WBPG-TV in March 2003 contributed to the increase in television station operating expenses, excluding noncash compensation. On a pro forma basis (assuming the purchase of WBPG-TV and sale of Mira Mobile Television had occurred on March 1, 2002), television station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 would have increased $1.4 million, or 0.9%. Higher programming costs and higher insurance and health-related costs were generally offset by lower sales-related costs.

     As previously discussed, our publishing division has replaced lost national advertising revenues with revenues from custom publications and special advertiser sections, which are more expensive to produce due principally to higher editorial and production costs. Our publishing division also experienced higher insurance and health-related costs.

     On a consolidated basis, station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 increased due to the effect of the items described above. On a pro forma basis, station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 increased $13.2 million, or 3.8% due to the effect of the items described above.

Noncash compensation expenses:

	For the years ended February 28 (29),
	2003		2004		$ Change			% Change
	(As reported, amounts in thousands)
Noncash compensation expense:
Radio	$	9,377	$	6,954	$	(2,423	)		(25.8	)%
Television		6,528		7,715		1,187			18.2	%
Publishing		2,358		2,780		422			17.9	%
Corporate		3,491		5,273		1,782			51.0	%
Total noncash compensation expense	$	21,754	$	22,722	$	968			4.4	%

     Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches of common stock in our 401(k) plans and common stock issued to employees in exchange for cash compensation pursuant to our stock compensation program. Our stock compensation program resulted in noncash compensation expense of approximately $15.7 million and $16.0 million for the years ended February 28 (29), 2003 and 2004, respectively. Effective March 1, 2003, Emmis elected to double its 401(k) match to $2 thousand per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of making a contribution to the Company’s profit sharing plan. This resulted in approximately $1.5 million of additional noncash compensation expense for the year ended February 29, 2004, over the same period in the prior year. These increases were partially offset by the payment of more bonuses in cash as opposed to stock in fiscal 2004 as compared to fiscal 2003.

     Effective January 1, 2004, we curtailed our stock compensation program by eliminating mandatory participation for employees making less than $52,000 per year. For calendar 2004, this change resulted in a $4.3 million decrease in the Company’s non-cash compensation expense and a corresponding increase in the Company’s cash operating expense. In all other respects, the 2004 stock compensation program remained comparable to the stock compensation programs in effect for each of the last two calendar years.

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Corporate expenses, excluding noncash compensation:

	For the years ended February 28 (29),
	2003		2004		$ Change		% Change
	(As reported, amounts in thousands)
Corporate expenses, excluding noncash compensation	$	21,359	$	24,105		2,746		12.9	%

     Corporate expenses, excluding noncash compensation increased due to higher insurance and health care costs, professional fees associated with our television digital spectrum initiative, funding for training and diversity initiatives and higher corporate governance costs.

Depreciation and amortization:

	For the years ended February 28 (29),
	2003		2004		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	7,097	$	8,564	$	1,467			20.7	%
Television		28,453		30,174		1,721			6.0	%
Publishing		1,917		873		(1,044	)		(54.5	)%
Corporate		4,867		6,090		1,223			25.1	%
Total depreciation and amortization	$	42,334	$	45,701	$	3,367			8.0	%

     Substantially all of the increase in radio depreciation and amortization expense is attributable to our Austin radio acquisition, which closed on July 1, 2003.

     Television depreciation and amortization expense increased due to additional depreciation of digital equipment upgrades.

     Publishing depreciation and amortization expense decreased due to certain definite-lived intangible assets becoming fully amortized during fiscal 2003.

     Corporate depreciation and amortization expense increased due to higher depreciation expense related to computer equipment and software purchases over the past twelve months.

     Consolidated depreciation and amortization expense increased due to the effect of the items described above.

Operating income:

	For the years ended February 28 (29),
	2003			2004			$ Change			% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	89,392		$	98,152		$	8,760			9.8	%
Television		51,730			35,164			(16,566	)		(32.0	)%
Publishing		5,693			6,646			953			16.7	%
Corporate		(29,717	)		(35,468	)		(5,751	)		19.4	%
Total operating income	$	117,098		$	104,494		$	(12,604	)		(10.8	)%

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     Radio operating income increased due to our Austin radio acquisition, partially offset by higher station operating expenses at our existing stations and depreciation and amortization expense, as discussed above. Also noncash compensation in our radio segment decreased by approximately $2.4 million in fiscal 2004, as we paid more bonuses in cash as opposed to stock. As discussed above, the net revenue growth of our stations exceeded the revenue growth in the markets in which we operate.

     Television operating income in fiscal 2004 includes a $12.4 million impairment charge relating to the Company’s annual SFAS No. 142 review. The remaining decrease is attributable to higher noncash compensation expense, higher depreciation and amortization expense, and the reduction in political net revenues, as discussed above.

     Publishing operating income increased due to higher net revenues and lower depreciation and amortization, partially offset by higher station operating expenses, as discussed above. Our publishing division has experienced slow, steady growth, which we expect to continue. Our magazines are generally mature properties with limited direct competition.

     Corporate operating loss increased due to higher corporate expenses, noncash compensation expense, and depreciation and amortization, as discussed above.

     On a consolidated basis, total operating income decreased due to the changes in radio, television and publishing operating income and higher corporate expenses, as discussed above.

Interest expense:

	For the years ended February 28 (29),
	2003		2004		$ Change			% Change
	(As reported, amounts in thousands)
Interest expense:	$	103,617	$	85,958	$	(17,659	)		(17.0	)%

     Interest expense decreased primarily due to a decrease in the interest rates we pay on amounts outstanding under our credit facility, which is variable rate debt, repayments of amounts outstanding under our credit facility and redemption of amounts outstanding under our senior discount notes. The decreased interest rates reflect both a decrease in the base interest rate for our credit facility due to a lower overall interest rate environment, and a decrease in the margin applied to the base rate resulting from the June 2002 credit facility amendment. A portion of the decrease in interest expense is attributable to the expiration of interest rate swap agreements originally entered into in fiscal 2001. These swaps, which began expiring in February 2003, had an original aggregate notional amount of $350.0 million and fixed LIBOR at a weighted-average 4.76%. As of February 29, 2004, we had no interest rate swap agreements outstanding and LIBOR was at approximately 1.13%. In the quarter ended May 31, 2002, we repaid amounts outstanding under our credit facility with the proceeds of our Denver radio asset sales in May 2002 and a portion of the proceeds from our equity offering in April 2002, with the remaining portion being used to redeem amounts outstanding under our senior discount notes in the quarter ended August 31, 2002. We reduced our total debt outstanding by $270.6 million during the year ended February 28, 2003.

Income (loss) before income taxes, minority interest, discontinued operations and accounting change:

	For the years ended February 28 (29),
	2003		2004		$ Change		% Change
	(As reported, amounts in thousands)
Income (loss) before income taxes, minority interest, discontinued operations and accounting change:	$	5,697	$	18,343	$	12,646		222.0	%

     Income before income taxes, minority interest, discontinued operations and accounting change increased due to lower interest expense, partially offset by lower operating income as discussed above and due to the following prior year items: (1) the gain on sale of our Denver radio assets of $8.9 million in fiscal 2003, offset by (2) loss on debt extinguishment of $13.5 million in fiscal 2003, and (3) a loss from unconsolidated affiliates of $4.5 million in fiscal 2003.

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Net income (loss):

	For the years ended February 28 (29),
	2003			2004		$ Change		% Change
	(As reported, amounts in thousands)
Net income (loss):	$	(164,468	)	$	2,256	$	166,724	Not Applicable

     Net income increased mainly due to (1) the inclusion in the prior year of a $167.4 million impairment charge, net of a deferred tax benefit, under the cumulative effect of accounting change as an accumulated transition adjustment attributable to the adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets,” and (2) a reduction in interest expense as a result of the factors described above, partially offset by the gain on sale of our Denver radio assets of $8.9 million, loss on debt extinguishment of $13.5 million and loss from unconsolidated affiliates of $4.5 million, all included in the prior year, all net of tax.

LIQUIDITY AND CAPITAL RESOURCES

     OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

     Other than lease commitments, legal contingencies incurred in the normal course of business, agreements for future barter and program rights not yet available for broadcast at February 28, 2005, and employment contracts for key employees, all of which are discussed in Note 9 to the consolidated financial statements, the Company does not have any off-balance sheet financings or liabilities. The Company does not have any majority-owned and controlled subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in or relationships with any “special-purpose entities” that are not reflected in the consolidated financial statements or disclosed in the Notes to Consolidated Financial Statements.

     SUMMARY DISCLOSURES ABOUT CONTRACTUAL CASH OBLIGATIONS

     The following table reflects a summary of our contractual cash obligations as of February 28, 2005:

	PAYMENTS DUE BY PERIOD
	(AMOUNTS IN THOUSANDS)
			Less than		1 to 3		4 to 5		After 5
	Total		1 Year		Years		Years		Years
Contractual Cash Obligations:
Long-term debt	$	1,186,924	$	7,688	$	15,870	$	16,502	$	1,146,864
Operating leases		68,781		9,676		18,134		15,912		25,059
TV program rights payable (1)		49,544		30,910		15,967		2,641		26
Future TV program rights payable (1)		105,569		8,526		40,614		37,956		18,473
Radio broadcast agreements		5,418		1,889		2,718		811		—
Purchase obligations (2)		82,737		27,512		34,949		20,173		103
Employment agreements		66,526		31,745		28,727		5,822		232
Total Contractual Cash Obligations	$	1,565,499	$	117,946	$	156,979	$	99,817	$	1,190,757

(1)

TV program rights payable represents payments to be made to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future TV program rights payable represents commitments for program rights not available for broadcast as of February 28, 2005.

(2)

Includes contractual commitments to purchase goods and services, including audience measurement information, network affiliation fees and music license fees. Certain of our network affiliation fees are variable based on the financial and/or ratings performance of the station or network. Amounts included above are estimates based on current performance projected through the life of the corresponding affiliation agreement.

We expect to fund these payments primarily with cash flows from operations, but we may also issue additional debt or equity or sell assets.

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SOURCES OF LIQUIDITY

     Our primary sources of liquidity are cash provided by operations and cash available through revolving loan borrowings under our credit facility. Our primary uses of capital have been historically, and are expected to continue to be, capital expenditures, working capital, debt service, funding acquisitions and preferred stock dividend requirements. Since we manage cash on a consolidated basis, any cash needs of a particular segment or operating entity are met by intercompany transactions. See Investing Activities below for discussion of specific segment needs.

     At February 28, 2005, we had cash and cash equivalents of $16.1 million and net working capital of $48.5 million. At February 29, 2004, we had cash and cash equivalents of $20.0 million and net working capital of $10.5 million. The increase in net working capital primarily relates to the repayment of $37.4 million of senior debt classified as current as of February 29, 2004 with the proceeds from our radio station asset exchange with Bonneville.

  Operating Activities

     Net cash flows provided by operating activities were $122.8 million for the year ended February 28, 2005, compared to $118.2 million for the same period of the prior year. The increase in cash flows provided by operating activities for the year ended February 28, 2005, as compared to the same period in the prior year, is due to our increase in net revenues less station operating expenses and corporate expenses, including an increase of approximately $27.0 million in net political revenues in the current year. Cash flows provided by operating activities are historically the highest in our third and fourth fiscal quarters, as a significant portion of our accounts receivable collections is derived from revenues recognized in our second and third fiscal quarters, which are our highest revenue quarters.

  Investing Activities

     Cash flows provided by investing activities were $54.3 million for the year ended February 28, 2005, compared to cash used in investing activities of $146.4 million in the same period of the prior year. The increase is primarily attributable to cash received from the sale of two international radio stations and cash received in connection with an exchange of domestic radio stations in the year ended February 28, 2005 as opposed to our purchase of radio stations in the year ended February 29, 2004. Investing activities include capital expenditures and business acquisitions and dispositions.

     As discussed in results of operations above and in Note 6 to the accompanying consolidated financial statements, on January 14, 2005, Emmis closed on its exchange of three radio stations in Phoenix for $74.8 million in cash and one radio station in Chicago. On May 12, 2004, Emmis sold to its minority partners for $7.3 million in cash its interest in Votionis, S.A., which owns and operates two radio stations in Buenos Aires, Argentina. The proceeds from both transactions were used to repay amounts outstanding under our credit facility. On July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million, all of which was funded with borrowings under the credit facility.

     In the years ended February 28 (29), 2003, 2004 and 2005, we had capital expenditures of $30.5 million, $30.2 million and $25.2 million, respectively. These capital expenditures primarily relate to leasehold improvements to various office and studio facilities, broadcast equipment purchases, tower upgrades and costs associated with our conversion to digital television. We expect that future requirements for capital expenditures will include capital expenditures incurred during the ordinary course of business and digital conversion upgrade costs. Although all but one of our television stations as of April 2005 were broadcasting a digital signal, we expect to incur approximately $3 million of costs in our fiscal 2006, $1 million in our fiscal 2007 and $11 million beyond fiscal 2007 through the end of the digital transition to upgrade the digital transmission facilities of our local television stations and satellite stations, and to accommodate the channel changes required by the FCC’s second periodic review. We expect to fund such capital expenditures with cash generated from operating activities and borrowings under our credit facility.

     Emmis recently entered into an agreement with Ibiquity Digital Corporation to employ high-definition (HD) radio technology at seventeen of our radio stations over the next three years. Under the agreement, the Company incurred approximately $0.4 million to implement HD radio at two of our stations in fiscal 2005 and expects to incur approximately $3.0 million beyond fiscal 2005 to convert

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the remaining fifteen stations. Amounts related to our digital radio build-out are included in contractual cash obligations under the heading “Purchase obligations.”

  Financing Activities

     Cash flows used in financing activities were $181.1 million for the year ended February 28, 2005. Cash flows provided by financing activities were $32.1 million for the same period of the prior year.

     On May 10, 2004, Emmis refinanced substantially all of its long-term debt. Emmis received $368.4 million in proceeds from the issuance of its 6?% senior subordinated notes due 2012 in the principal amount of $375 million, net of the initial purchasers’ discount of $6.6 million, and borrowed $978.5 million under a new $1.025 billion senior credit facility. The gross proceeds from these transactions and $2.9 million of cash on hand were used to (i) repay the $744.3 million remaining principal indebtedness under its former credit facility, (ii) repurchase $295.1 million aggregate principal amount of its 8?% senior subordinated notes due 2009, (iii) repurchase $227.7 million aggregate accreted value of its 12¹/2% senior discount notes due 2011, (iv) pay $4.6 million in accrued interest, (v) pay $12.1 million in transaction fees and (vi) pay $72.6 million in prepayment and redemption fees.

     On May 10, 2004, Emmis gave notice to redeem the remaining $4.9 million of principal amount of its 8?% senior subordinated notes due 2009. These notes were redeemed on June 10, 2004 at 104.063% plus accrued and unpaid interest and the redemption was financed with additional borrowings on our new credit facility. The transaction resulted in an additional loss on debt extinguishment of $0.3 million, which Emmis recorded in its quarter ended August 31, 2004.

     The new senior credit facility provides for total borrowings of up to $1.025 billion, including (i) a $675.0 million term loan and (ii) a $350.0 million revolver, of which $100.0 million may be used for letters of credit. The new senior credit facility also provides for the ability to have incremental facilities of up to $675.0 million, of which up to $350.0 million may be allocated to a revolver. Emmis may access the incremental facility on one or more occasions, subject to certain provisions, including a potential market adjustment to pricing of the entire credit facility. All outstanding amounts under the new credit facility bear interest, at the option of Emmis, at a rate equal to the Eurodollar rate or an alternative base rate (as defined in the new credit facility) plus a margin. The margin over the Eurodollar rate or the alternative base rate varies under the revolver (ranging from 0% to 2.5%), depending on Emmis’ ratio of debt to consolidated operating cash flow, as defined in the agreement. The margins over the Eurodollar rate or the alternative base rate are 1.75% and 0.75%, respectively, for the term loan facility. Interest is due on a calendar quarter basis under the alternative base rate and at least every three months under the Eurodollar rate. Beginning one year after closing, the new credit facility requires Emmis to maintain fixed interest rates, for at least a two year period, on a minimum of 30% of its total outstanding debt, as defined (including the senior subordinated debt, but excluding the senior discount notes). This ratio of fixed to floating rate debt must be maintained if Emmis’ total leverage ratio, as defined, is greater than 6:1 at any quarter end. Both the term loan and revolver mature on November 10, 2011. The borrowings due under the term loan are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first six and one quarter years of the loan (beginning on February 28, 2005), with the remaining balance payable November 10, 2011.

     On August 5, 2004, Emmis exchanged the $375.0 million aggregate principal amount of its 6?% senior subordinated notes for a new series of notes registered under the Securities Act. The terms of the new series of notes were substantially the same as the terms of the senior subordinated notes. The notes have no sinking fund requirement and are due in full on May 15, 2012. Interest is payable semi-annually on May 15 and November 15 of each year. Prior to May 15, 2008, Emmis may redeem the notes, in whole or in part, at a price of 100% of the principal amount thereof plus the payment of a make-whole premium. After May 15, 2008, Emmis can choose to redeem some or all of the notes at specified redemption prices ranging from 101.719% to 103.438% plus accrued and unpaid interest. On or after May 15, 2010, the notes may be redeemed at 100% plus accrued and unpaid interest. Upon a change of control (as defined), Emmis is required to make an offer to purchase the notes then outstanding at a purchase price equal to 101% plus accrued and unpaid interest. The payment of principal, premium and interest on the notes is fully and unconditionally guaranteed, jointly and severally, by Emmis and most of Emmis’ existing wholly-owned domestic subsidiaries that guarantee the new credit facility.

     As discussed in Note 2 to the accompanying consolidated financial statements, in April 2002, Emmis completed the sale of 4.6 million shares of its Class A common stock at $26.80 per share resulting in total proceeds of $123.3 million. Fifty percent of the net proceeds were used in April 2002 to repay outstanding borrowings under our credit facility. The remainder was invested, and in July 2002 used to redeem approximately 22.6% of our $370.0 million, face value, senior discount notes (see discussion below). As indicated in Investing Activities above, we paid $106.5 million on July 1, 2003 for a controlling 50.1% interest in six radio stations in Austin,

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Texas. These funds were borrowed under our senior credit facility. Also, net proceeds of $135.5 million from the sale of two radio stations in Denver were also used to repay outstanding indebtedness under the credit facility during the year ended February 28, 2003.

     As of February 28, 2005, Emmis had $1,179.2 million of long-term corporate indebtedness outstanding under its credit facility ($797.6 million), senior subordinated notes ($375.0 million), senior discount notes ($1.2 million) and an additional $5.4 million of other long-term indebtedness. Emmis also had $143.8 million of convertible preferred stock outstanding. All outstanding amounts under our credit facility bear interest, at our option, at a rate equal to the Eurodollar rate or an alternative base rate plus a margin. As of February 28, 2005, our weighted average borrowing rate under our credit facility was approximately 4.4%, and our overall weighted average borrowing rate, after taking into account amounts outstanding under our senior subordinated notes and senior discount notes, was approximately 5.2%.

     Emmis has incurred significant debt as a result of numerous acquisitions in our radio, television and publishing divisions since 1999. These acquisitions were financed primarily with debt as the Company did not want to dilute the ownership of its common shareholders. The Company has repaid approximately $353.8 million of debt, net of new borrowings, since March 2002 with the proceeds from stock sales, station sales and cash from operations. The Company expects to continue to use its significant cash flows from operations to primarily repay outstanding debt obligations.

     Under the terms of Emmis’ credit facility, our total consolidated debt-to-EBITDA leverage ratio was 5.9x as of February 28, 2005, and the maximum debt-to-EBITDA leverage ratio permitted under our credit facility was 7.25x as of February 28, 2005.

     The debt service requirements of Emmis over the next twelve month period (net of interest under our credit facility) are expected to be $41.6 million. This amount is comprised of $25.8 million for interest under our senior subordinated notes, $6.8 million for repayment of term notes under our credit facility and $9.0 million in preferred stock dividend requirements. Although interest will be paid under the credit facility at least every three months, the amount of interest is not presently determinable given that the credit facility bears interest at variable rates. The terms of Emmis’ preferred stock provide for a quarterly dividend payment of $.78125 per share on each January 15, April 15, July 15 and October 15.

     On March 10, 2005, we acquired a national radio network in Slovakia for approximately $17.4 million, which was financed with borrowings under our credit facility.

     At April 22, 2005, we had $206.5 million available under our credit facility, net of $2.5 million in outstanding letters of credit and exclusive of Term B Loan mandatory repayments of up to $37.4 million (see Note 4 of the accompanying consolidated financial statements). As part of our business strategy, we continually evaluate potential acquisitions of radio and television stations, as well as publishing properties. If we elect to take advantage of future acquisition opportunities, we may incur additional debt or issue additional equity or debt securities, depending on market conditions and other factors. In addition, Emmis has the option, but not the obligation, to purchase our minority partner’s entire interest in six radio stations in Austin, Texas after a period of approximately five years from the acquisition date based on an 18-multiple of trailing 12-month cash flow.

     On May 10, 2005, Emmis announced that it has engaged advisors to assist in evaluating strategic alternatives for the Company’s television assets. This process could result in a decision to sell all or a portion of its television assets.

     On May 10, 2005, Emmis also announced that its Board of Directors approved a “Dutch Auction” tender offer to purchase up to 20,250,000 shares of its Class A common stock at a price per share not less than $17.25 and not greater than $19.75. The purchase will be financed from a combination of new borrowings under Emmis’ existing credit facility and new financing. As a result, the tender offer will be subject to the receipt of debt financing on terms and conditions satisfactory to Emmis, in its reasonable judgment, in an amount sufficient to purchase the Class A shares in the tender offer and to pay related fees and expenses. In addition, the Board of Directors authorized a share repurchase program to be made effective after the completion of the tender offer. The share repurchase program would permit Emmis, to the extent that it does not purchase 20,250,000 Class A shares in the tender offer, to purchase up to a number of Class A shares equal to the shortfall plus an additional number of Class A shares equal to 5% of the total outstanding shares after the tender offer. Whether or to what extent Emmis chooses to make such purchases will depend upon market conditions and Emmis’ capital needs, and there is no assurance that Emmis will conclude such purchases for any or all of the authorized amounts remaining.

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INTANGIBLES

     At February 28, 2005, approximately 74% of our total assets consisted of intangible assets, such as FCC broadcast licenses, goodwill, subscription lists and similar assets, the value of which depends significantly upon the operational results of our businesses. In the case of our radio and television stations, we would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor the activities of our stations for compliance with regulatory requirements. Historically, all of our licenses have been renewed at the end of their respective eight-year periods, and we expect that all of our FCC licenses will continue to be renewed in the future.

NEW ACCOUNTING PRONOUNCEMENTS

     On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment [“SFAS No. 123(R)”]. SFAS No. 123(R) requires companies to measure all employee stock-based compensation awards, including employee stock options, using a fair value method and record such expense in their consolidated financial statements. In addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS No. 123(R) was expected to be effective as of September 1, 2005 for Emmis, but the SEC recently delayed the effective date, and it is now expected to be effective as of March 1, 2006 for Emmis. We expect the adoption of this accounting pronouncement to have a material impact on our financial results. The historical effect of this accounting pronouncement on our stock options for the years ended February 2003, 2004 and 2005 is presented in Note 1 to our accompanying consolidated financial statements.

     On September 30, 2004, the EITF issued Topic D-108, “Use of the Residual Method to Value Acquired Assets Other than Goodwill.” For all of the Company’s acquisitions completed prior to its adoption of SFAS No. 141 on June 30, 2001, the Company allocated a portion of the purchase price to the acquisition’s tangible assets in accordance with a third party appraisal, with the remainder of the purchase price being allocated to the FCC license. This allocation method is commonly called the residual method and results in all of the acquisition’s intangible assets, including goodwill, being included in the Company’s FCC license value. Although the Company has directly valued the FCC license of stations acquired since its adoption of SFAS No. 141, the Company had retained the use of the residual method to perform its annual impairment tests in accordance with SFAS No. 142 for acquisitions effected prior to the adoption of SFAS No. 141. EITF Topic D-108 prohibits the use of the residual method and precludes companies from reclassifying to goodwill any goodwill that was originally included in the value of the FCC license, resulting in a write-off. Implementation of EITF Topic D-108 was required no later than Emmis’ fiscal year ending February 28, 2006, but the Company elected to adopt it as of December 1, 2004 and recorded a noncash charge of $303.0 million, net of tax, in its fourth quarter as a cumulative effect of an accounting change. This loss has no impact on the Company’s cash flows or compliance with its debt covenants. Since its adoption of SFAS No. 142 on March 1, 2002, the Company no longer amortizes goodwill for financial statement purposes. Accordingly, reported and pro forma results reflecting the impact of this accounting pronouncement are the same for all periods presented in the accompanying consolidated financial statements.

     On January 1, 2003, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 addresses consolidation of business enterprises which are variable interest entities. FIN 46 was effective immediately for all variable interest entities created after January 31, 2003 and for the first fiscal year or interim period ending after March 15, 2004 for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not acquired any variable interest entities subsequent to January 31, 2003 and has no interests in structures that are commonly referred to as special-purpose entities. The Company adopted FIN 46 in its quarter ended May 31, 2004, and the adoption of this pronouncement did not have a material impact on its consolidated results of operations or financial position.

SEASONALITY

     Our results of operations are usually subject to seasonal fluctuations, which result in higher second and third quarter revenues and operating income. For our radio operations, this seasonality is due to the younger demographic composition of many of our stations. Advertisers increase spending during the summer months to target these listeners. In addition, advertisers generally increase spending across all of our segments during the months of October and November, which are part of our third quarter, in anticipation of the holiday season. Finally, particularly in our television operations, revenues from political advertising tend to be higher in our odd-numbered fiscal years.

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INFLATION

     The impact of inflation on our operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operating results, particularly since our senior bank debt is entirely floating-rate debt.

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.

Decreased spending by advertisers or a decrease in our market ratings or market share 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, the recent downturn in the United States economy had an adverse effect on our advertising revenue and, therefore, our results of operations. A recession or another downturn in the United States economy or in the economy of any individual geographic market, particularly a major market such as Los Angeles, New York or Orlando, 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 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.

     In addition, since political advertising at times accounts for a significant portion of our advertising revenues, normal election cycles may cause our revenues to fluctuate. Changes in government limitations on spending or fundraising for campaign advertisements may also have a negative effect on our earnings derived from political advertising.

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

     We operate in highly competitive industries. Our television and radio stations compete for audiences and advertising revenue with other television and radio stations and station groups, as well as with other media. Shifts in population, demographics, audience tastes 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 television and 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 television and radio stations may not be able to maintain or increase their current audience ratings and advertising revenue in the face of such competition.

     In addition, 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 have an adverse effect on our business and financial performance.

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

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

     The television and radio broadcasting industries are subject to rapid technological change, evolving industry standards and the emergence of competition from new media technologies and services. We cannot assure you 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;

•   MP3 players and other personal audio systems that create new ways for individuals to listen to music and other content of their own choosing;

•   in-band on-channel digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services;

•   low-power FM radio, which could result in additional FM radio broadcast outlets; and

•   digital video recorders that allow viewers to digitally record and play back television programming, which may decrease viewership of commercials and, as a result, lower our advertising revenues.

     In addition, cable providers and direct broadcast satellite companies are developing new techniques that allow them to transmit more channels on their existing equipment to highly targeted audiences, reducing the cost of creating channels and potentially leading to the division of the television industry into ever more specialized niche markets. Competitors who target programming to such sharply defined markets may gain an advantage over us for television advertising revenues. Lowering the cost of creating channels may also encourage new competitors to enter our markets and compete with us for advertising revenue.

     We cannot predict the effect, if any, that competition arising from new technologies or regulatory change may have on the television and radio broadcasting industries or on our financial condition and results of operations.

Our substantial indebtedness could adversely affect our financial health.

     We have a significant amount of indebtedness. At February 28, 2005, our total indebtedness was approximately $1,186.9 million, and our shareholders’ equity was approximately $452.6 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 general 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

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•   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 and our bond indenture impose 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.

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

     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, the war in Iraq caused the networks to pre-empt regularly scheduled programming in the last month of the first quarter of fiscal 2003 and caused several advertisers to cancel their advertising spots, resulting in a loss of revenue in the first quarter of fiscal 2003. 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 or the war in Iraq 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.

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Television programming costs may negatively impact our operating results.

     One of our most significant operating cost components is television programming. We may be exposed in the future to increased programming costs which may adversely affect our operating results. Acquisitions of program rights are usually made two or three years in advance and may require multi-year commitments, making it difficult to accurately predict how a program will perform. In some instances, programs must be replaced before their costs have been fully amortized, resulting in write-offs that increase station operating costs. In addition, we have recently experienced increased competition to acquire programming, primarily due to the increased acquisition of syndicated programming by cable operators.

Our television stations depend on affiliations with major networks that may be canceled or revoked by the networks.

     All of our television stations are affiliated with a network. Under the affiliation agreements, the networks possess, under certain circumstances, the right to terminate the agreement without giving the station enough advance notice to implement a contingency plan. The affiliation agreements may not remain in place, and the networks may not continue to provide programming to affiliates on the same basis that currently exists. The non-renewal or termination of any of our stations’ network affiliation agreements could have a material adverse effect on our operations.

The success of our television stations depends on the success of the network each station carries.

     The ratings of each of the television networks, which is based in large part on their programming, vary from year to year, and this variation can significantly impact a station’s revenues. The future success of any network or its programming is unpredictable.

To continue to grow our business, we will require significant additional capital.

     The continued development, growth and operation of our businesses will require substantial capital. In particular, additional acquisitions will require large amounts of capital. We intend to fund our growth, including acquisitions, if any, with cash generated from operations, borrowings under our new 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 radio and television stations and publishing properties, when appropriate, in order to grow. To be successful with this strategy, we must be effective at quickly evaluating markets, obtaining financing to buy stations and publishing properties on satisfactory terms and obtaining the necessary regulatory approvals, including, as discussed below, approvals of the FCC and the Department of Justice. We also must accomplish these tasks at reasonable costs. The radio industry in particular has rapidly consolidated. In general, we compete with many other buyers for radio and television stations as well as publishing properties. These other buyers may be larger and have more resources. We cannot predict whether we will be successful in buying stations or publishing properties, or whether we will be successful with any station or publishing 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.

If we are not able to obtain regulatory approval for future acquisitions, our growth may be impaired.

     Although part of our growth strategy is the acquisition of additional radio and television stations, we may not be able to complete all the acquisitions that we agree to make. Station acquisitions are subject to the approval of the FCC and, potentially, other regulatory authorities. Also, the FCC sometimes undertakes review of transactions to determine whether they would result in excessive concentration, even where the transaction complies with the numerical ownership limits. Specifically, the staff has had a policy of ‘‘flagging’’ for closer scrutiny the anticompetitive impact of any transactions that will put one owner in a position to earn 50% or more of the market’s radio advertising revenues or will result in the two largest owners receiving 70% or more of those revenues. While the FCC has noted ‘‘flagging’’ in public notices in the past, current transactions may be ‘‘flagged’’ internally by the FCC without public

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notice. As discussed below, the FCC’s new rules with respect to media ownership are under court review. We cannot predict how the FCC’s approval process will change based on the outcome of the FCC’s media ownership proceeding or whether such changes would adversely impact us.

     Additionally, since the passage of the Telecommunications Act of 1996, the U.S. Department of Justice has become more involved in reviewing proposed acquisitions of radio stations and radio station networks. The Justice Department is particularly concerned when the proposed buyer already owns one or more radio stations in the market of the station it is seeking to buy. Recently, the Justice Department has challenged a number of radio broadcasting transactions. Some of those challenges ultimately resulted in consent decrees requiring, among other things, divestitures of certain stations. In general, the Justice Department has more closely scrutinized radio broadcasting acquisitions that result in local market shares in excess of 40% of radio advertising revenue.

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

     Our ability to operate our Company effectively depends, in part, on our success in integrating acquired stations into our operations. These efforts may impose significant strains on our management and financial resources. The pursuit and integration of acquired stations 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 stations will depend primarily on our ability to manage our combined operations. If we fail to successfully integrate acquired stations or manage our growth or if we encounter unexpected difficulties during expansion, it could have a negative impact on the performance of acquired stations as well as on our Company as a whole.

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

     In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, ‘‘Goodwill and Other Intangible Assets,’’ that requires companies to cease amortizing goodwill and certain other indefinite-lived intangible assets, including broadcast licenses. Under SFAS 142, goodwill and some indefinite-lived intangibles will not be amortized into results of operations, but instead will be tested for impairment at least annually, with impairment being measured as the excess of the carrying value of the goodwill or intangible over its fair value. In addition, goodwill and intangible assets will be tested more often for impairment as circumstances warrant. Intangible assets that have finite useful lives will continue to be amortized over their useful lives and will be measured for impairment in accordance with SFAS 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived Assets.’’ After initial adoption, any impairment losses under SFAS 142 or 144 will be recorded as operating expenses. In connection with the adoption of SFAS 142 effective March 1, 2002, we recorded an impairment loss of $167.4 million, net of tax, reflected as the cumulative effect of an accounting change in the accompanying consolidated statements of operations. The adoption of this accounting standard reduced our amortization of goodwill and intangibles by approximately $54.6 million in the year ended February 28, 2003. We also incurred a $12.4 million impairment loss in the fiscal year ended February 29, 2004 as a result of our annual SFAS 142 review. Although we did not recognize any impairment losses in the year ended February 28, 2005 related to SFAS 142, our future impairment reviews could result in additional write-downs.

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

     As of April 30, 2005, our Chairman of the Board of Directors, Chief Executive Officer and President, Jeffrey H. Smulyan, beneficially owned shares representing approximately 52% 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 FCC has recently 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.

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     Recently, the FCC has begun more vigorous enforcement of its indecency rules against the broadcasting industry as a whole. Two Congressional committees have recently conducted hearings relating to indecency. Legislation has also been introduced in Congress that would increase the penalties for broadcasting indecent programming, and depending on the number of violations engaged in, would automatically subject broadcasters to license revocation, renewal or qualifications proceedings in the event that they broadcast indecent material. The FCC has indicated that it is stepping up its enforcement activities as they apply to indecency, and has threatened to initiate license revocation proceedings against broadcast licensees for future ‘‘serious indecency violations.’’ The FCC has found on a number of occasions recently, chiefly with regard to radio stations, that the content of broadcasts has contained indecent material. The FCC issued fines to the offending licensees. Moreover, the FCC has recently begun imposing separate fines for each allegedly indecent ‘‘utterance,’’ in contrast with its previous policy, which generally considered all indecent words or phrases within a given program as constituting a single violation.

     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. A petition requesting that the FCC reconsider its approval of the Decree has been filed and remains pending. If the petition were to be granted by the FCC, or if a court appeal were taken and the court were to invalidate the decree, then any indecent broadcasts that may have occurred on the Company’s stations could be considered by the FCC, which could have an adverse impact on the Company’s FCC licenses. In addition, petitions have been filed against the license renewal applications of stations WKQX and KPNT, and an informal objection has been filed against the license renewals of the Company’s Indiana radio stations, in each case based primarily on the matters covered by the Decree. Consequently, any invalidation of the Decree could result in the petitions and objections being considered in connection with those and possibly other license renewals.

     The Communications Act provides that the FCC must renew a broadcast license if (i) the station involved has served the ‘‘public interest, convenience and necessity’’ and (ii) there have been no ‘‘serious violations’’ of the Act or FCC rules, and no ‘‘other violations’’ of the Act or rules which ‘‘taken together, would constitute a pattern of abuse.’’ If the Commission were to determine that indecency or other violations by one or more of our stations fall within either or both of those definitions, the agency could (x) grant the license renewal applications of the stations with burdensome conditions, such as requirements for periodic reports, (y) grant the applications for less than the full eight-year term in order to allow an early reassessment of the stations, or (z) order an evidentiary hearing before an administrative law judge to determine whether renewal of the stations’ licenses should be denied. If a station’s license renewal were ultimately denied, the station would be required to cease operation permanently. As a result of these developments, we have implemented measures to reduce the risk of broadcasting indecent material in violation of the FCC’s rules. These and other future modifications to our programming to reduce the risk of indecency violations could have an adverse effect on our competitive position.

     Legislation is pending in Congress which would, among other things, (i) increase very substantially the fines for indecent broadcasts, (ii) specify that all indecency violations are “serious” violations for license renewal purposes and (iii) mandate an evidentiary hearing on the license renewal application of any station that has had three indecency violations during its license term.

Our need to comply with comprehensive, complex and sometimes unpredictable federal regulations could have an adverse effect on our businesses.

     We are dependent on licenses from the FCC, which regulates the radio and television broadcasting industries in the United States. The radio and television broadcasting industries in the United States are subject to extensive and changing regulation by the FCC. Among other things, the FCC is responsible for the following:

–   assigning frequency bands for broadcasting;

–   determining the particular frequencies, locations and operating power of stations;

–   issuing, renewing, revoking and modifying station licenses;

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–   determining whether to approve changes in ownership or control of station licenses;

–   regulating equipment used by stations; and

–   adopting and implementing regulations and policies that directly affect the ownership, operation, programming and employment practices of stations.

     The FCC has the power to impose penalties for violation of its rules or the applicable statutes. While in the vast majority of cases licenses are renewed by the FCC, we cannot be sure that any of our United States stations’ licenses will be renewed at their expiration date. Even if our licenses are renewed, we cannot be sure that the FCC will not impose conditions or qualifications that could cause problems in our businesses.

     The FCC regulations and policies also affect our growth strategy because the FCC has specific regulations and policies about the number of stations, including radio and television stations, and daily newspapers that an entity may own in any geographic area. As a result of these rules, we may not be able to acquire more properties in some markets or, on the other hand, we may have to sell some of our properties in a particular market. For example, as a result of our acquisition of Lee Enterprises in October 2000, we own two ‘‘top 4’’ rated television stations in the Honolulu market, which is not permitted by FCC rules. As a result, we have been operating both stations under various temporary waivers to the FCC’s ownership rules. The FCC has adopted new local television ownership rules which continue to prohibit the ownership of two top-rated television stations in a single market, and in so doing the FCC ordered companies with temporary waivers (including us) to file divesting applications to achieve compliance. However, the implementation of the new rules has been appealed in Federal court by a number of broadcasters (including us) and other groups, and the court has issued an indefinite stay, which has prevented the new rules from becoming effective. We cannot predict when or how the court will rule on the appeal. When and if the stay is lifted, we will likely have to either file a divesting application or seek a permanent waiver of the new rules. If we are required to divest a station on short notice, we may not realize the full value of that station.

     Jeffrey H. Smulyan’s voting interest in the Company has fallen below 50% for FCC control purposes. The FCC does not take into account stock options exercisable within 60 days as does Exchange Act Rule 13d-3. As a result, the Company is no longer eligible for an exemption from the FCC’s “ownership attribution” rules. Therefore, the media interests of minority shareholders who have voting interests in the Company of 5% or more—20% or more in the case of certain categories of institutional investors—will be attributed to us. Attribution of minority shareholders’ media interests to us could materially and adversely affect our business as a result of the increased cost of regulatory compliance and monitoring activities, the increased obstacles to our growth strategy or the mandatory divestment of our properties. Further, though we obtained FCC approval for the reduction in Mr. Smulyan’s voting interest, we may need to seek additional approval prior to further material reductions in his interest.

     FCC regulations also limit the ability of non-U.S. persons to own our capital stock and to participate in our affairs, which could limit our ability to raise equity. Our articles of incorporation contain provisions which place restrictions on the ownership, voting and transfer of our capital stock in accordance with the law.

     A 2002 court decision invalidated an FCC rule that prohibited common ownership of a broadcast station and a cable television system in the same market. The elimination of that restriction could increase the amount of competition that our television stations face. Finally, a number of federal rules governing broadcasting have changed significantly in recent years and additional changes may occur, particularly with respect to the rules governing digital television, digital audio broadcasting, satellite radio services, multiple ownership and attribution. We cannot predict the effect that these regulatory changes may ultimately have on our operations.

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

     In June of 2003, the FCC substantially modified its rules governing ownership of broadcast stations. The new rules (i) increase to 45% the national ‘‘cap’’ on the number of television stations that can be owned nationwide by an entity or affiliated group, (ii) generally permit common ownership of two television stations within a given market (and three stations in some of the largest markets), (iii) allow, for the first time in many years, common ownership of broadcast stations and daily newspapers in most markets, (iv) generally allow common ownership of television and radio stations within a given market, and (v) change the definition of ‘‘market’’ for purposes of the rules restricting the number of radio stations that may be commonly owned within a given market. The new rules were appealed in federal court, and in September of 2003, the court stayed the effectiveness of the new rules, pending a decision in the appeal. As a result of the stay, the former ownership rules were reinstated. We cannot predict the outcome of the appeal.

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     Recent federal legislation set the national TV ownership ‘‘cap’’ at 39%, superseding the increase to 45% adopted by the FCC. This represents an increase from the 35% limit previously in place, and its immediate effect is to allow on a permanent basis the existing levels of station ownership by the Fox and CBS networks, which previously had been allowed only as a result of a temporary waiver of the 35% limit. This may give Fox and CBS a competitive advantage over us, since they have much greater financial and other resources than we have.

     We cannot predict the impact of these developments on our business. In particular, we cannot predict the outcome of FCC’s media ownership proceeding or its 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 the method of defining radio markets contained in the new ownership rules, 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. Consequently, if the new rules go into effect and we wish to sell our interest in the Austin stations, we will have to either sell to an entity that meets the FCC definition or exclude at least one FM station from the transaction.

     As a result of our acquisition of Lee Enterprises in October 2000, we own two ‘‘top 4’’ rated television stations in the Honolulu market, which is not permitted by FCC rules. As a result, we have been operating both stations under various temporary waivers to the FCC’s ownership rules. The FCC has adopted new local television ownership rules which continue to prohibit the ownership of two top-rated television stations in a single market, and in so doing the FCC ordered companies with temporary waivers (including us) to file divesting applications to achieve compliance. However, the implementation of the new rules has been appealed in Federal court by a number of broadcasters (including us) and other groups, and the court has issued an indefinite stay, which has prevented the new rules from becoming effective. We cannot predict when or how the court will rule on the appeal. When and if the stay is lifted, we will likely have to either file a divesting application or seek a permanent waiver of the new rules. If we are required to divest a station on short notice, we may not realize the full value of that station.

Our business strategy and our ability to operate profitably depends 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 all of our executive officers are currently 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 and television stations employ or independently contract with several on-air personalities and hosts of syndicated radio and television 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 and television stations and may not retain their audiences.

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 a 59.5% interest in a national radio station in Hungary, as well as operations in Slovakia and Belgium, and, therefore, we are exposed to risks inherent in international business operations. We may pursue opportunities to buy additional broadcasting properties in 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;

54

–   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.

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. Compliance was required as of February 28, 2005. This effort included documenting and testing our internal controls. As of February 28, 2005, 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.

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 actually 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;

•   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.

55

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

GENERAL

     Market risk represents the risk of loss that may impact the financial position, results of operations or cash flows of Emmis due to adverse changes in financial and commodity market prices and rates. Emmis is exposed to market risk from changes in domestic and international interest rates (i.e. prime and LIBOR) and foreign currency exchange rates. To manage interest-rate exposure, Emmis periodically enters into interest-rate derivative agreements. Emmis does not use financial instruments for trading and is not a party to any leveraged derivatives. As of February 28, 2005, Emmis was not a party to any interest-rate derivative agreements.

INTEREST RATES

     At February 28, 2005, the entire outstanding balance under our credit facility, approximately 68% of Emmis’ total outstanding debt (credit facility, senior subordinated debt and senior discount notes), bears interest at variable rates. The credit facility requires Emmis to maintain fixed interest rates, for at least a two year period, on a minimum of 30% of Emmis’ total outstanding debt, as defined (including the senior subordinated debt, but excluding the senior discount notes). This ratio of fixed to floating rate debt must be maintained if Emmis’ total leverage ratio, as defined, is greater than 6:1 at any quarter end. Emmis currently has no interest rate derivative arrangements, as its total leverage ratio, as defined, was less than 6:1 as of February 28, 2005.

     Based on amounts outstanding at February 28, 2005, if the interest rate on our variable debt were to increase by 1.0%, our annual interest expense would be higher by approximately $8.0 million.

FOREIGN CURRENCY

     Emmis owns a 59.5% interest in a Hungarian subsidiary which is consolidated in the accompanying financial statements. This subsidiary’s operations are measured in its local currency (forint). Emmis has a natural hedge against currency fluctuations between the forint and the U.S. dollar since most of the subsidiary’s long-term obligations are denominated in Hungarian forints. Emmis owns nine radio stations in Belgium, which are consolidated in the accompanying financial statements, and its investment to date is approximately $7.8 million. These subsidiaries’ operations are measured in their local currency (Euro). Subsequent to the balance sheet date, Emmis purchased a radio network in Slovakia for approximately $17.4 million. This subsidiary is measured in its local currency (koruna). While Emmis management cannot predict the most likely average or end-of-period forint to dollar, Euro to dollar, or koruna to dollar exchange rates for calendar 2005, we believe any devaluation of the forint, Euro or koruna would have an immaterial effect on our financial statements taken as a whole, as the Hungarian, Belgian and Slovakian stations accounted for approximately 2.8% of Emmis’ total revenues and approximately 1.1% of Emmis’ total assets as of, and for the year ended, February 28, 2005.

     At February 28, 2005, the Hungarian subsidiary had $0.7 million of U.S. dollar denominated loans outstanding. The Hungarian subsidiary repaid less than $0.1 million of U.S. dollar denominated loans during fiscal 2005. The Belgium stations had no U.S. dollar denominated loans outstanding during fiscal 2005 or at February 28, 2005.

Emmis currently does not maintain any derivative instruments to mitigate the exposure to foreign currency translation and/or transaction risk. However, this does not preclude the adoption of specific hedging strategies in the future.

56

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     Emmis Communications Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, Emmis Communications Corporation’s principal executive and principal financial officers and effected by Emmis Communications Corporation’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(1)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Emmis Communications Corporation;
(2)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Emmis Communications Corporation are being made only in accordance with authorizations of management and directors of Emmis Communications Corporation; and
(3)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Emmis Communications Corporation’s assets that could have a material effect on the financial statements.

     Management has evaluated the effectiveness of its internal control over financial reporting as of February 28, 2005, based on the control criteria established in a report entitled Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that Emmis Communications Corporation’s internal control over financial reporting is effective as of February 28, 2005.

     The Company’s independent registered public accounting firm, Ernst & Young, LLP, has issued an attestation report on management’s assessment of Emmis Communications Corporation’s internal control over financial reporting as of February 28, 2005, which report is included herein.

/s/ Jeffrey H. Smulyan	/s/ Walter Z. Berger
Jeffrey H. Smulyan	Walter Z. Berger
President and Chief Executive Officer	Executive Vice President, Treasurer and Chief Financial Officer

57

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Emmis Communications Corporation and Subsidiaries

We have audited management’s assessment, included in the accompanying “Management Report on Internal Control over Financial Reporting”, that Emmis Communications Corporation and Subsidiaries maintained effective internal control over financial reporting as of February 28, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Emmis Communication Corporation and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Emmis Communications Corporation and Subsidiaries maintained effective internal control over financial reporting as of February 28, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Emmis Communications Corporation and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of February 28, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Emmis Communications Corporation and Subsidiaries as of February 28, 2005 and February 29, 2004, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended February 28, 2005 of Emmis Communications Corporation and Subsidiaries and our report dated May 16, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Indianapolis, Indiana
May 16, 2005

58

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Emmis Communications Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Emmis Communications Corporation and Subsidiaries as of February 28, 2005 and February 29, 2004 and the related statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended February 28, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Emmis Communications Corporation and Subsidiaries at February 28, 2005 and February 29, 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 28, 2005, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1t and Note 8 to the financial statements, effective March 1, 2002 and December 1, 2004, the Company changed its method of accounting for goodwill and other intangible assets upon adoption of SFAS No. 142 “Goodwill and Other Intangible Assets,” and EITF Topic D-108, “Use of the Residual Method to Value Acquired Assets Other than Goodwill,” respectively.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Emmis Communications Corporation and Subsidiaries’ internal control over financial reporting as of February 28, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 16, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Indianapolis, Indiana
May 16, 2005

59

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2003			2004			2005
NET REVENUES	$	536,223		$	565,154		$	618,460
OPERATING EXPENSES:
Station operating expenses, excluding noncash compensation		333,678			355,732			384,522
Corporate expenses, excluding noncash compensation		21,359			24,105			30,792
Depreciation and amortization		42,334			45,701			46,201
Noncash compensation		21,754			22,722			16,570
Impairment loss		—			12,400			—
Total operating expenses		419,125			460,660			478,085
OPERATING INCOME		117,098			104,494			140,375
OTHER INCOME (EXPENSE):
Interest expense		(103,617	)		(85,958	)		(66,657	)
Gain (loss) on sale of assets		9,313			1,247			(2,630	)
Loss in unconsolidated affiliates		(4,544	)		(375	)		(1,235	)
Loss on debt extinguishment		(13,506	)		—			(97,248	)
Other income (expense), net		953			(1,065	)		2,119
Total other income (expense)		(111,401	)		(86,151	)		(165,651	)
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST, DISCONTINUED OPERATIONS AND ACCOUNTING CHANGE		5,697			18,343			(25,276	)
PROVISION FOR INCOME TAXES		7,458			10,025			15,941
MINORITY INTEREST EXPENSE, NET OF TAX		—			1,878			2,486
INCOME (LOSS) FROM CONTINUING OPERATIONS		(1,761	)		6,440			(43,703	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX		4,693			(4,184	)		42,335
INCOME (LOSS) BEFORE ACCOUNTING CHANGE		2,932			2,256			(1,368	)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX OF $102,600 IN 2003 AND $185,450 IN 2005		(167,400	)		—			(303,000	)
NET INCOME (LOSS)		(164,468	)		2,256			(304,368	)
PREFERRED STOCK DIVIDENDS		8,984			8,984			8,984
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS	$	(173,452	)	$	(6,728	)	$	(313,352	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

In the years ended February 28 (29), 2003, 2004 and 2005, $18.3 million, $17.4 million and $12.1 million, respectively, of our noncash compensation was attributable to our stations, while $3.5 million, $5.3 million and $4.5 million was attributable to corporate.

60

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

BASIC NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS:
Continuing operations, before accounting change	$	(0.20	)	$	(0.05	)	$	(0.94	)
Discontinued operations, net of tax		0.09			(0.07	)		0.76
Cumulative effect of accounting change, net of tax		(3.16	)		—			(5.40	)
Net income (loss) available to common shareholders	$	(3.27	)	$	(0.12	)	$	(5.58	)
DILUTED NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS:
Continuing operations, before accounting change	$	(0.20	)	$	(0.05	)	$	(0.94	)
Discontinued operations, net of tax		0.09			(0.07	)		0.76
Cumulative effect of accounting change, net of tax		(3.16	)		—			(5.40	)
Net income (loss) available to common shareholders	$	(3.27	)	$	(0.12	)	$	(5.58	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

61

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	FEBRUARY 28 (29),
	2004		2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	19,970	$	16,054
Accounts receivable, net of allowance for doubtful accounts of $3,453 and $3,185, respectively		105,225		106,987
Current portion of TV program rights		13,373		16,562
Prepaid expenses		14,650		16,562
Other		10,145		8,293
Current assets — discontinued operations		3,450		—
Total current assets		166,813		164,458
PROPERTY AND EQUIPMENT:
Land and buildings		92,402		94,342
Leasehold improvements		15,125		15,395
Broadcasting equipment		183,347		194,477
Office equipment and automobiles		59,252		56,957
Construction in progress		12,810		6,799
		362,936		367,970
Less-Accumulated depreciation and amortization		150,950		174,652
Total property and equipment, net		211,986		193,318
INTANGIBLE ASSETS:
Indefinite lived intangibles		1,601,480		1,216,723
Goodwill		94,042		107,020
Other intangibles		69,548		59,173
		1,765,070		1,382,916
Less-Accumulated amortization		41,699		34,306
Total intangible assets, net		1,723,371		1,348,610
OTHER ASSETS:
Deferred debt issuance costs, net of accumulated amortization of $16,120 and $1,246, repectively		25,268		10,852
TV program rights, net of current portion		10,909		12,170
Investments		10,025		10,323
Deferred tax assets		—		73,219
Deposits and other		6,011		10,085
Total other assets, net		52,213		116,649
Noncurrent assets — discontinued operations		146,186		—
Total assets	$	2,300,569	$	1,823,035

The accompanying notes to consolidated financial statements are an integral part of these statements.

62

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	FEBRUARY 28 (29),
	2004			2005
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	35,514		$	28,595
Current maturities of long-term debt		6,539			7,688
Credit facility debt to be repaid with proceeds from asset dispositions		37,389			—
Current portion of TV program rights payable		27,502			30,910
Accrued salaries and commissions		14,337			16,434
Accrued interest		11,697			9,582
Deferred revenue		14,342			14,335
Other		7,589			8,397
Current liabilities — discontinued operations		1,372			—
Total current liabilities		156,281			115,941
CREDIT FACILITY AND SENIOR SUBORDINATED DEBT, NET OF CURRENT PORTION		1,000,756			1,172,563
SENIOR DISCOUNT NOTES		223,423			1,245
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION		5,909			5,428
TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION		26,266			18,634
OTHER NONCURRENT LIABILITIES		9,309			8,611
MINORITY INTEREST		47,672			48,021
DEFERRED INCOME TAXES		81,994			—
NONCURRENT LIABILITIES — DISCONTINUED OPERATIONS		13			—
Total liabilities		1,551,623			1,370,443
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDERS’ EQUITY:
Series A cumulative convertible preferred stock, $0.01 par value; $50.00 liquidation preference; authorized 10,000,000 shares; issued and outstanding 2,875,000 shares in 2004 and 2005		29			29
Class A common stock, $0.01 par value; authorized 170,000,000 shares; issued and outstanding 50,689,834 shares and 51,621,958 shares in 2004 and 2005, respectively		507			516
Class B common stock, $0.01 par value; authorized 30,000,000 shares; issued and outstanding 5,038,920 shares and 4,850,762 shares in 2004 and 2005, respectively		50			48
Additional paid-in capital		1,025,483			1,041,128
Accumulated deficit		(276,002	)		(589,354	)
Accumulated other comprehensive income (loss)		(1,121	)		225
Total shareholders’ equity		748,946			452,592
Total liabilities and shareholders’ equity	$	2,300,569		$	1,823,035

The accompanying notes to consolidated financial statements are an integral part of these statements.

63

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE YEARS ENDED FEBRUARY 28, 2005
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	Series A				Class A				Class B
	Preferred Stock				Common Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares			Amount
BALANCE, FEBRUARY 28, 2002		2,875,000	$	29		42,761,299	$	428		5,250,127		$	53
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		300,000		3		(300,000	)		(3	)
Issuance of common stock to employees and officers and related income tax benefits		—		—		1,212,718		12		61,221			—
Sale of Class A Common Stock via secondary offering		—		—		4,600,000		46		—			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Change in fair value of hedged derivatives		—		—		—		—		—			—
Total comprehensive loss		—		—		—		—		—			—
BALANCE FEBRUARY 28, 2003		2,875,000		29		48,874,017		489		5,011,348			50
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		—		—		—			—
Exercise of stock options and related income tax benefits		—		—		657,857		6		—			—
Issuance of Class A Common Stock to employees and officers and related income tax benefits		—		—		1,157,960		12		27,572			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Change in fair value of hedged derivatives		—		—		—		—		—			—
Total comprehensive income		—		—		—		—		—			—
BALANCE, FEBRUARY 29, 2004		2,875,000		29		50,689,834		507		5,038,920			50
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		200,000		2		(200,000	)		(2	)
Exercise of stock options and related income tax benefits		—		—		101,401		1		—			—
Issuance of Class A Common Stock to employees and officers and related income tax benefits		—		—		630,723		6		11,842			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Total comprehensive loss		—		—		—		—		—			—
BALANCE, FEBRUARY 28, 2005		2,875,000	$	29		51,621,958	$	516		4,850,762		$	48

The accompanying notes to consolidated financial statements are an integral part of these statements.

64

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY – (CONTINUED)
FOR THE THREE YEARS ENDED FEBRUARY 28, 2005
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

							Accumulated
	Additional						Other			Total
	Paid-in			Accumulated			Comprehensive			Shareholders’
	Capital			Deficit			Loss			Equity
BALANCE, FEBRUARY 28, 2002	$	843,254		$	(95,822	)	$	(12,385	)	$	735,557
Issuance of Class A Common Stock in exchange for Class B Common Stock		—			—			—			—
Issuance of common stock to employees and related income tax benefits		27,323			—			—			27,335
Sale of Class A Common Stock via secondary offering		120,193			—			—			120,239
Preferred stock dividends paid		—			(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—			(164,468	)		—
Cumulative translation adjustment		—			—			(8,079	)
Change in fair value of hedged derivatives		—			—			3,105
Total comprehensive loss		—			—			—			(169,442	)
BALANCE, FEBRUARY 28, 2003		990,770			(269,274	)		(17,359	)		704,705
Issuance of Class A Common Stock in exchange for Class B Common Stock		—			—			—			—
Exercise of stock options and related income tax benefits		12,826			—			—			12,832
Issuance of Class A Common Stock to employees and officers and related income tax benefits		21,887			—			—			21,899
Preferred stock dividends paid		—			(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—			2,256			—
Cumulative translation adjustment		—			—			13,859
Change in fair value of hedged derivatives		—			—			2,379
Total comprehensive income		—			—			—			18,494
BALANCE, FEBRUARY 29, 2004		1,025,483			(276,002	)		(1,121	)		748,946
Issuance of Class A Common Stock in exchange for Class B Common Stock		—			—			—			—
Exercise of stock options and related income tax benefits		(20	)		—			—			(19	)
Issuance of Class A Common Stock to employees and officers and related income tax benefits		15,665			—			—			15,671
Preferred stock dividends paid		—			(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—			(304,368	)		—
Cumulative translation adjustment		—			—			1,346
Total comprehensive loss		—			—			—			(303,022	)
BALANCE, FEBRUARY 28, 2005	$	1,041,128		$	(589,354	)	$	225		$	452,592

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2003			2004			2005
OPERATING ACTIVITIES:
Net income (loss)	$	(164,468	)	$	2,256		$	(304,368	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities -
Discontinued operations		(4,693	)		4,184			(42,335	)
Impairment loss		—			12,400			—
Loss on debt extinguishment		13,506			—			97,248
Cumulative effect of accounting change, net		167,400			—			303,000
Depreciation and amortization		67,157			74,144			75,974
Accretion of interest on senior discount notes, including amortization of related debt costs		25,777			26,524			5,707
Provision for bad debts		4,102			3,290			3,354
Provision for deferred income taxes		7,458			8,874			15,941
Noncash compensation		21,754			22,722			16,570
Net cash provided from operating activities — discontinued operations		10,445			9,791			3,614
Loss (gain) on sale of assets		(9,313	)		(1,247	)		2,630
Tax benefits of exercise of stock options		958			2,775			(2,305	)
Other		(8,657	)		3,640			1,070
Changes in assets and liabilities -
Accounts receivable		(11,207	)		(4,132	)		(5,116	)
Prepaid expenses and other current assets		(3,466	)		(67	)		(3,249	)
Other assets		(4,164	)		(2,777	)		(6,635	)
Accounts payable and accrued liabilities		702			(2,195	)		(4,390	)
Deferred revenue		(534	)		(1,281	)		(295	)
Cash paid for TV programming rights		(28,298	)		(27,854	)		(30,221	)
Other liabilities		10,690			(12,882	)		(3,390	)
Net cash provided by operating activities		95,149			118,165			122,804
INVESTING ACTIVITIES:
Purchases of property and equipment		(30,549	)		(30,191	)		(25,233	)
Disposal of property and equipment		2,354			2,106			—
Cash paid for acquisitions		—			(121,126	)		—
Proceeds from sale/exchange of stations, net		135,500			3,650			82,078
Deposits on acquisitions and other		(1,004	)		(798	)		(2,496	)
Net cash provided by (used in) investing activities		106,301			(146,359	)		54,349

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — (CONTINUED)
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2003			2004			2005
FINANCING ACTIVITIES:
Payments on long-term debt		(313,525	)		(105,066	)		(1,464,718	)
Proceeds from long-term debt		15,000			138,000			1,376,500
Settlement of tax withholding obligations		(1,937	)		(1,774	)		(1,586	)
Proceeds from the issuance of the Company’s Class A Common Stock, net of transaction costs		120,239			—			—
Proceeds from exercise of stock options and employee stock purchases		6,906			10,555			2,581
Premiums paid to redeem outstanding obligations		(6,678	)		—			(72,810	)
Payments for debt related costs		(2,754	)		(646	)		(12,052	)
Preferred stock dividends		(8,984	)		(8,984	)		(8,984	)
Net cash provided by (used in) financing activities		(191,733	)		32,085			(181,069	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		9,717			3,891			(3,916	)
CASH AND CASH EQUIVALENTS:
Beginning of period		6,362			16,079			19,970
End of period	$	16,079		$	19,970		$	16,054
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest	$	77,090		$	56,720		$	60,166
Income taxes		887			1,143			286
Non-cash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives		22,308			25,932			14,650
ACQUISITION OF WBPG-TV
Fair value of assets acquired				$	11,854
Cash paid					11,656
Liabilities recorded				$	198
ACQUISITION OF AUSTIN RADIO
Fair value of assets acquired				$	154,867
Cash paid					106,478
Liabilities recorded				$	48,389
ACQUISITION OF BELGIUM RADIO
Fair value of assets acquired				$	2,992
Cash paid					2,992
Liabilities recorded				$	—
EXCHANGE OF ASSETS FOR WLUP-FM:
Fair value of assets acquired							$	128,741
Basis in assets exchanged								147,169
Gain on exchange of assets								56,225
Cash received								(74,778	)
Liabilities recorded							$	125

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a. Principles of Consolidation

     The following discussion pertains to Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “Emmis,” the “Company,” or “we”). Emmis’ foreign subsidiaries report on a fiscal year ending December 31, which Emmis consolidates into its fiscal year ending February 28 (29). All significant intercompany balances and transactions have been eliminated.

     b. Organization

     Emmis Communications Corporation is a diversified media company with radio broadcasting, television broadcasting and magazine publishing operations. 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 sixteen FM and two AM radio stations with strong positions in Phoenix, St. Louis, Austin (we have a 50.1% controlling interest in our radio stations located there), Indianapolis and Terre Haute. The sixteen television stations Emmis operates serve geographically diverse, mid-sized markets in the U.S., as well as the large markets of Portland and Orlando, and have a variety of television network affiliations: five with CBS, five with Fox, three with NBC, one with ABC and two with WB. In addition to our domestic radio and TV broadcasting properties, we operate a radio news network in Indiana, publish Texas Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati and Country Sampler and related magazines. Internationally, we operate nine FM radio stations in the Flanders region of Belgium, have a 59.5% interest in a national radio station in Hungary and recently acquired a radio network in Slovakia. We also engage in various businesses ancillary to our business, such as broadcast consulting, broadcast tower leasing and book publishing.

     Substantially all of ECC’s business is conducted through its subsidiaries. The credit facility and senior subordinated notes indenture contain certain provisions that may restrict the ability of ECC’s subsidiaries to transfer funds to ECC in the form of cash dividends, loans or advances. See the accompanying condensed consolidating financial statements of Emmis Communications Corporation and subsidiaries (Note 14).

     c. Revenue Recognition

     Broadcasting revenue is recognized as advertisements are aired. Publication revenue is recognized in the month of delivery of the publication. Revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees by the advertising agencies, usually at a rate of 15% of gross revenues.

     d. Allowance for Doubtful Accounts

     A provision for doubtful accounts is recorded based on management’s judgement of the collectibility of receivables. When assessing the collectibility of receivables, management considers, among other things, historical loss activity and existing economic conditions. The activity in the allowance for doubtful accounts during the years ended February 2003, 2004 and 2005 was as follows:

	Balance At							Balance
	Beginning							At End
	Of Year		Provision		Write-Offs			Of Year
Year ended February 28, 2003	$	2,800		4,102		(3,662	)	$	3,240
Year ended February 29, 2004	$	3,240		3,290		(3,077	)	$	3,453
Year ended February 28, 2005	$	3,453		3,354		(3,622	)	$	3,185

     e. Television Programming

     Emmis has agreements with distributors for the rights to television programming over contract periods which generally run from one to five years. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the

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license period begins and the program is available for its first showing. The portion of program contracts which become payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

     The rights to program materials are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or estimated net realizable value. Estimated net realizable values are based upon management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material. Amortization of program contract costs is computed under either the straight-line method over the contract period or based on usage, whichever yields the greater amortization for each program on a monthly basis. Program contract costs that management expects to be amortized in the succeeding year are classified as current assets. Program contract liabilities are typically paid on a scheduled basis and are not affected by adjustments for amortization or estimated net realizable value. Certain program contracts provide for the exchange of advertising air time in lieu of cash payments for the rights to such programming. These contracts are recorded as the programs are aired at the estimated fair value of the advertising air time given in exchange for the program rights. Although the asset and liability for programming not currently available for air are not reflected in the accompanying consolidated balance sheets, this programming is evaluated at least annually for impairment.

     f. Time Brokerage Fees

     The Company often enters into time brokerage agreements in connection with acquisitions of radio and television stations, pending regulatory approval of transfer of the FCC licenses. Under the terms of these agreements, the Company makes specified periodic payments to the owner-operator in exchange for the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. The Company records revenues and expenses associated with the portion of the station’s inventory of broadcast time it manages. Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station. The Company also enters into time brokerage agreements in connection with dispositions of radio and television stations. In such cases the Company receives periodic payments in exchange for allowing the buyer to program and sell advertising for a portion of the station’s inventory of broadcast time.

     As discussed in Note 6, the Company entered into a time brokerage agreement on December 1, 2004 in connection with an exchange of radio stations that closed effective January 1, 2005. Emmis recorded $0.8 million of time brokerage fee revenue, which is reflected in discontinued operations, and recorded $0.2 million of time brokerage fee expense, which is reflected in corporate expenses. For the year ended February 28, 2005, amounts reflected in the Company’s income from operations for the radio station operated under the time brokerage agreement (excluding time brokerage agreement fees) were net revenues of $0.6 million and station operating expenses of $0.4 million.

     g. Noncash Compensation

     Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches of common stock in our 401(k) plans and common stock issued to employees in exchange for cash compensation pursuant to our stock compensation program. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” and plans to adopt SFAS No. 123(R), as revised, “Share Based Payments,” on March 1, 2006, assuming required implementation of SFAS No. 123R is not further delayed (see Note 1t and 1u).

     In December 2001, Emmis instituted a 10% pay cut for substantially all of its non-contract employees and also began a stock compensation program under its 2001 Equity Incentive Plan. All Emmis employees who were affected by the pay cut were automatically eligible to participate in the stock compensation program, and all other employees are eligible to participate in the program by taking a voluntary pay cut. Each participant in the program could elect to receive the portion of their compensation that was cut in the form of stock that was issued every two weeks or in the form of restricted stock that vested and was issued after the end of the award year in January 2003. The stock that was issued every two weeks was awarded based on the fair market value of Emmis’ Class A Common Stock on the date it was issued. The restricted stock was awarded based on a discount off the initial fair market value of Emmis’ Class A Common Stock. During the years ended February 2003, 2004 and 2005, the stock compensation program reduced cash compensation expense by approximately $15.7 million, $16.0 million and $11.8 million, respectively, but noncash compensation increased by the same amount. We issued approximately 0.7 million, 0.8 million and 0.5 million shares of common stock during the calendar 2002, 2003 and 2004 award years, respectively. Effective January 1, 2005, we further curtailed our stock compensation program by eliminating mandatory participation for employees making less than $180,000 per year.

     Effective March 1, 2003, Emmis elected to double its annual 401(k) match to $2 thousand per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of a contribution to the Company’s profit sharing

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plan. This resulted in approximately $1.5 million of additional noncash compensation expense for the year ended February 29, 2004, as compared to the prior year. Noncash compensation expense related to our 401(k) stock match was $1.7 million in fiscal 2005.

     On March 1, 2005, Emmis granted approximately 250,000 shares of restricted stock to certain of its employees in lieu of stock options, which significantly reduced the Company’s annual stock option grant. Although Emmis does not expect to begin expensing stock options until at least March 1, 2006 [pursuant to SFAS No. 123®], it will expense the value of these restricted stock grants over their applicable vesting period, which ranges from 2 to 3 years. The Company expects the expense associated with these restricted stock grants to be approximately $2.0 million in fiscal 2006.

     h. Cash and Cash Equivalents

     Emmis considers time deposits, money market fund shares and all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.

     i. Property and Equipment

     Property and equipment are recorded at cost. Depreciation is generally computed using the straight-line method over the estimated useful lives of the related assets which are 31.5 years for buildings, not more than 32 years or the life of the lease, whichever is lower for leasehold improvements, and 5 to 7 years for broadcasting equipment, office equipment and automobiles. Maintenance, repairs and minor renewals are expensed; improvements are capitalized. On a continuing basis, the Company reviews the carrying value of property and equipment for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” If events or changes in circumstances were to indicate that an asset carrying value may not be recoverable, a write-down of the asset would be recorded through a charge to operations. Depreciation expense for the years ended February 2003, 2004 and 2005 was $35.4 million, $38.8 million and $41.4 million, respectively.

     j. Intangible Assets

     Intangible assets are recorded at cost. The cost of the broadcast license for Slager Radio is being amortized over the five-year term of the license, which expires in November 2009. The cost of the broadcast licenses in Belgium is being amortized over the initial nine-year term of the licenses, which expire in December 2012. Other definite-lived intangibles are amortized using the straight-line method over varying periods, none in excess of 40 years. Effective March 1, 2002, we ceased amortization of goodwill and FCC licenses in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” (See Note 8). FCC licenses are renewed every eight years for a nominal amount, and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives.

     Subsequent to the acquisition of an intangible asset, Emmis evaluates whether later events and circumstances indicate the remaining estimated useful life of that asset may warrant revision or that the remaining carrying value of such an asset may not be recoverable in accordance with SFAS No. 142, “Goodwill and other Intangible Assets.”

     In connection with our fiscal 2004 annual impairment review, we recognized an impairment loss of $12.4 million, which related to our television division. This impairment charge is reflected in impairment loss and other in the accompanying consolidated statements of operations.

     k. Discontinued operations and assets held for sale

     On May 12, 2004, Emmis sold to its minority partners for $7.3 million in cash its entire 75% interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina. In connection with the sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. In fiscal 2005, Emmis recorded income from discontinued operations of $4.2 million, consisting of operational losses of $0.5 million, offset by tax benefits of $4.7 million. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The $10.0 million loss in fiscal 2004 was primarily attributable to the devaluation of the peso and resulting non-cash write-off of cumulative currency translation adjustments. Votionis had historically been included in the radio reporting segment. The following table summarizes the net revenues, station operating expenses, depreciation and amortization and pre-tax income (loss) for Votionis for all periods presented:

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	Year Ended February 28 (29),
	2003			2004		2005
Net revenues	$	2,646		$	4,703	$	1,693
Station operating expenses, excluding noncash compensation		2,578			3,656		2,019
Depreciation and amortization		306			372		164
Pre-tax income (loss)		(884	)		909		(490	)
Provision (benefit) for income taxes		—			—		(4,675	)

     Votionis operating results were reported on a calendar year and consolidated into the Company’s fiscal year for reporting purposes. Accordingly, the results for its calendar quarter ended March 31, 2004 were consolidated into Emmis’ fiscal quarter ended May 31, 2004. However, the quarter ended May 31, 2004, includes the results of Votionis from January 1, 2004 to May 12, 2004, as the results of operations of Votionis for the period April 1, 2004 through May 12, 2004 were immaterial. Votionis was historically included in the radio reporting segment.

     On January 14, 2005, Emmis completed its exchange with Bonneville International Corporation (“Bonneville”) whereby Emmis swapped three of its radio stations in Phoenix (KTAR-AM, KMVP-AM and KKLT-FM) for Bonneville’s WLUP-FM located in Chicago and $74.8 million in cash, including payments for working capital items. Emmis used the cash to repay amounts outstanding under its senior credit facility. Emmis has long sought a second radio station in Chicago to complement its existing station in the market, WKQX-FM. This transaction achieves that goal by marrying the heritage alternative rock format (WKQX) with the heritage classic rock format (WLUP). Emmis began programming WLUP-FM and Bonneville began programming KTAR-AM, KMVP-AM and KKLT-FM under time brokerage agreements on December 1, 2004. The assets and liabilities of the three radio stations in Phoenix and their results of operations have been classified as discontinued operations in the accompanying consolidated financial statements. These three radio stations had historically been included in the radio reporting segment. The Company recognized a gain on sale of $33.6 million, net of tax, which is included in income from discontinued operations for the year ended February 28, 2005 in the accompanying consolidated financial statements. The following table summarizes the net revenues, station operating expenses, depreciation and amortization and pre-tax income (loss) for the three Phoenix stations for all periods presented:

	Year ended February 28(29),
	2003		2004		2005
Net revenues	$	23,494	$	26,714	$	24,443
Station operating expenses, excluding noncash compensation		12,995		15,691		15,726
Noncash compensation		774		728		468
Depreciation and amortization		730		767		592
Pre-tax income		8,995		9,411		7,650
Provision for income taxes		3,418		3,576		3,142

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Net assets related to discontinued operations are classified in the consolidated balance sheet as follows:

	February 29, 2004
	Votionis		Phoenix		Total
Current assets	$	2,782	$	668	$	3,450
Noncurrent assets:
Property and equipment, net		1,144		5,316		6,460
Intangibles, net		3,750		135,486		139,236
Other noncurrent assets		312		178		490
Total assets	$	7,988	$	141,648	$	149,636
Current liabilities	$	638	$	734	$	1,372
Noncurrent liabilities		—		13		13
Total liabilities	$	638	$	747	$	1,385

     l. Advertising and Subscription Acquisition Costs

     Advertising and subscription acquisition costs are expensed the first time the advertising takes place, except for certain direct-response advertising related to the identification of new magazine subscribers, the primary purpose of which is to elicit sales from customers who can be shown to have responded specifically to the advertising and that results in probable future economic benefits. These direct-response advertising costs are capitalized as assets and amortized over the estimated period of future benefit, ranging from six months to two years subsequent to the promotional event. As of February 28 (29), 2004 and 2005, we had approximately $1.6 million and $2.1 million in direct-response advertising costs capitalized as assets. On an interim basis, the Company defers major advertising campaigns for which future benefits can be demonstrated. These costs are amortized over the shorter of the period benefited or the remainder of the fiscal year. Advertising expense for the years ended February 2003, 2004 and 2005 was $18.8 million, $17.1 million and $15.7 million, respectively.

     m. Investments

     Emmis has a 50% ownership interest (approximately $5,114 as of February 28 (29), 2004 and 2005) in a partnership in which the sole asset is land on which a transmission tower is located. The other owner has voting control of the partnership. Emmis has a 25% ownership interest (approximately $1,957 and $1,838 as of February 28 (29), 2004 and 2005, respectively) in a company that operates a tower site in Portland, Oregon. Emmis, through its investment in six radio stations in Austin, has a 25% ownership interest (approximately $1,308 and $1,306 as of February 28 (29), 2004 and 2005, respectively) in a company that operates a tower site in Austin, Texas. These investments are accounted for using the equity method of accounting. Emmis has numerous other investments that are accounted for using the equity method of accounting, as Emmis does not control these entities, but none had a balance exceeding $1.0 million as of February 28 (29), 2004 or 2005. Collectively, these investments totaled $1.8 million and $1.4 million, respectively, as of February 28 (29), 2004 and 2005.

     Emmis has numerous investments accounted for using the cost method of accounting and all are evaluated at least annually for impairment. No cost method investment balance exceeded $1.0 million as of February 28, (29), 2004 or 2005. Collectively, these investments totaled $1.2 million and $0.7 million, respectively, as of February 28 (29), 2004 and 2005. In fiscal 2004, Emmis reduced the carrying value of one of its cost method investments from approximately $1.0 million to zero as the decline in the value of the investment, as determined by management, was deemed to be other than temporary. This expense is reflected in other income (expense), net in the accompanying consolidated statements of operations.

     In fiscal 2003, the Company and other partners in the local media internet venture (LMIV) agreed to dissolve the joint venture. Consequently, in addition to recording our share of LMIV’s losses for the year, the Company recorded a $2.1 million charge to write off our investment in LMIV. This charge is reflected in loss from unconsolidated affiliates in the accompanying consolidated statements of operations.

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     n. Deferred Revenue and Barter Transactions

     Deferred revenue includes deferred magazine subscription revenue and deferred barter revenue. Magazine subscription revenue is recognized when the publication is shipped. Barter transactions are recorded at the estimated fair value of the product or service received. Broadcast revenue from barter transactions is recognized when commercials are broadcast or publication is delivered. The appropriate expense or asset is recognized when merchandise or services are used or received. Barter revenues for the years ended February 2003, 2004 and 2005 were $13.6 million, $15.3 million and $12.9 million, respectively, and barter expenses were $15.0 million, $15.6 million, and $13.0 million, respectively.

     o. Foreign Currency Translation

     The functional currency of Slager Radio is the Hungarian forint. Slager Radio’s balance sheet has been translated from forints to the U.S. dollar using the current exchange rate in effect at the subsidiary’s balance sheet date (December 31). Slager Radio’s results of operations have been translated using an average exchange rate for the period. The translation adjustment resulting from the conversion of Slager Radio’s financial statements was $2,474, ($1,197), and $836 for the years ended February 2003, 2004, and 2005, respectively. This adjustment is reflected in shareholders’ equity in the accompanying consolidated balance sheets.

     The functional currency of our nine Belgium radio stations is the Euro. These nine stations’ balance sheets have been translated from the Euro to the U.S. dollar using the current exchange rate in effect at the subsidiary’s balance sheet date (December 31). The results of operations have been translated using an average exchange rate for the period. The translation adjustment resulting from the conversion of nine Belgium radio stations’ financial statements was $510 for the year ended February 2005. This adjustment is reflected in shareholders’ equity in the accompanying consolidated balance sheets.

     The functional currency of the two stations in Argentina, which were sold in May 2004, is the Argentinean peso, which until January 2002 was tied to the U.S. dollar through the Argentine government’s convertibility plan. In January 2002, the Argentine government allowed the peso to devalue and trade against the U.S. dollar independently. These two stations’ balance sheets have been translated from pesos to U.S. dollars using the exchange rate in effect at the subsidiary’s balance sheet date. The results of operations have been translated using an average exchange rate for the period. The translation adjustment resulting from the conversion of their financial statements was $5,605 and ($12,662) for the years ended February 2003 and 2004, respectively. The 2004 adjustment relates primarily to the reclassification to loss on discontinued operations of translation losses previously reported in other comprehensive income.

     p. Earnings Per Share

     Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period (53,014,268 , 54,716,221 and 56,128,590 shares for the years ended February 2003, 2004 and 2005, respectively). Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at February 2003, 2004 and 2005 consisted of stock options and the 6.25% Series A cumulative convertible preferred stock. The conversion of stock options and the preferred stock is not included in the calculation of diluted net income per common share for each of the three years ended February 28, 2005 as the effect of these conversions would be antidilutive. Thus, the weighted average common equivalent shares used for purposes of computing diluted EPS are the same as those used to compute basic EPS for all periods presented. Excluded from the calculation of diluted net income per share are 3.7 million weighted average shares that would result from the conversion of preferred shares for the years ended February 2003, 2004 and 2005, respectively. In the years ended February 28, 2003, 2004 and 2005, approximately 0.2 million, 0.3 million and 0.2 million options, respectively, were excluded from the calculation of diluted net income per share as the effect of their conversion would be antidilutive.

q. Estimates

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

     r. Fair Value of Financial Instruments

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     The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and other current assets and liabilities approximate fair value because of the short maturity of these financial instruments. The Company had no interest-rate swap agreements outstanding as of February 28 (29), 2004 and 2005. Except for the senior subordinated notes and senior discount notes, the carrying amounts of long-term debt approximate fair value due to the variable interest rate on such debt. On February 28 (29), 2004 and 2005, the fair value of the senior subordinated notes was approximately $312.0 million and $383.4 million, respectively, and the fair value of the senior discount notes was approximately $267.7 million and $1.4 million, respectively. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument.

     s. Derivative Financial Instruments

     On March 1, 2001, Emmis adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting for Derivative Instruments and Hedging Activities.” These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts. These statements require that every derivative instrument be recorded in the balance sheet as either an asset or a liability measured at its fair value. Changes in the fair value of derivatives are to be recorded each period in earnings or comprehensive income, depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or losses on derivative instruments reported in the other comprehensive income must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective portion of all hedges must be recognized in earnings in the current period. These standards result in additional volatility in reported assets, liabilities, earnings and other comprehensive income. SFAS No. 133 further requires that the fair value and effectiveness of each hedging instrument must be measured quarterly. The result of each measurement could result in fluctuations in reported assets, liabilities, other comprehensive income and earnings as these changes in fair value and effectiveness are recorded to the financial statements.

     See footnote 4 for discussion of the interest rate swap agreements in effect during fiscal 2003 and 2004.

     t. Recent Accounting Pronouncements

     On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment [“SFAS No. 123®”]. SFAS No. 123® requires companies to measure all employee stock-based compensation awards, including employee stock options, using a fair-value method and record such expense in their consolidated financial statements. In addition, the adoption of SFAS No. 123® requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS No. 123® was expected to be effective as of September 1, 2005 for Emmis, but the SEC recently delayed the effective date, and it is now expected to be effective as of March 1, 2006 for Emmis. We expect the adoption of this accounting pronouncement to have a material impact on our financial results. The historical effect of this accounting pronouncement on our stock options for the years ended February 2003, 2004 and 2005 is presented in Note 1u. Also see Note 9f.

     On September 30, 2004, the EITF issued Topic D-108, “Use of the Residual Method to Value Acquired Assets Other than Goodwill.” For all of the Company’s acquisitions completed prior to its adoption of SFAS No. 141 on June 30, 2001, the Company allocated a portion of the purchase price to the acquisition’s tangible assets in accordance with a third party appraisal, with the remainder of the purchase price being allocated to the FCC license. This allocation method is commonly called the residual method and results in all of the acquisition’s intangible assets, including goodwill, being included in the Company’s FCC license value. Although the Company has directly valued the FCC license of stations acquired since its adoption of SFAS No. 141, the Company had retained the use of the residual method to perform its annual impairment tests in accordance with SFAS No. 142 for acquisitions effected prior to the adoption of SFAS No. 141. EITF Topic D-108 prohibits the use of the residual method and precludes companies from reclassifying to goodwill any goodwill that was originally included in the value of the FCC license, resulting in a write-off. Implementation of EITF Topic D-108 is required no later than Emmis’ fiscal year ending February 28, 2006, but the Company elected to adopt it as of December 1, 2004 and recorded a noncash charge of $303.0 million, net of tax, in its fourth quarter as a cumulative effect of an accounting change. This loss has no impact on the Company’s compliance with its debt covenants or cash flows. Since its adoption of SFAS No. 142 on March 1, 2002, the Company no longer amortizes goodwill for financial statement purposes. Accordingly, reported and pro forma results reflecting the impact of this accounting pronouncement are the same for all periods presented in the accompanying consolidated financial statements.

     On January 1, 2003, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 addresses consolidation of business enterprises which are

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variable interest entities. FIN 46 was effective immediately for all variable interest entities created after January 31, 2003 and for the first fiscal year or interim period ending after March 15, 2004 for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not acquired any variable interest entities subsequent to January 31, 2003 and has no interests in structures that are commonly referred to as special-purpose entities. The Company adopted FIN 46 in its quarter ended May 31, 2004, and the adoption of this pronouncement did not have a material impact on its consolidated results of operations or financial position.

     u. Pro Forma Information Related To Stock-Based Compensation

     As permitted under SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company measures compensation expense for its stock-based employee compensation plans using the intrinsic-value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and provides pro forma disclosures of net income and earnings per share as if the fair value-based method prescribed by SFAS No. 123 had been applied in measuring compensation expense. Options with pro rata vesting are expensed on a straight-line basis over the vesting periods.

     Had compensation cost for the Company’s 2003, 2004 and 2005 grants of stock-based compensation plans been determined consistent with SFAS No. 123, the Company’s net loss available to common shareholders for these years would approximate the pro forma amounts below (in thousands, except per share data):

	Year Ended February 28(29),
	2003			2004			2005
Net Loss Available to Common Shareholders:
As Reported	$	(173,452	)	$	(6,728	)	$	(313,352	)
Plus: Reported stock-based employee compensation costs, net of tax		13,487			14,088			9,776
Less: Stock-based employee compensation costs, net of tax, if fair value method had been applied to all awards		(19,730	)		(23,903	)		(19,272	)
Pro Forma	$	(179,695	)	$	(16,543	)	$	(322,848	)
Basic EPS:
As Reported	$	(3.27	)	$	(0.12	)	$	(5.58	)
Pro Forma	$	(3.39	)	$	(0.30	)	$	(5.75	)
Diluted EPS:
As Reported	$	(3.27	)	$	(0.12	)	$	(5.58	)
Pro Forma	$	(3.39	)	$	(0.30	)	$	(5.75	)

     Because the fair-value method of accounting has not been applied to options prior to March 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model utilizing the following weighted average assumptions:

	Year Ended February 28 (29),
	2003			2004			2005
Risk-Free Interest Rate:		3.6%-5.4%			3.4%-4.5%			3.5%-4.4%
Expected Dividend Yield:		0%			0%			0%
Expected Life (Years):		8.3-8.6			8.6-9.2			6.8
Expected Volatility:		57.7%-58.4	%		57.8%-58.1	%		55.7%-56.4	%

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     v. Reclassifications

     Certain reclassifications have been made to the prior years financial statements to be consistent with the February 28, 2005 presentation. The reclassifications have no impact on net income (loss) previously reported.

2. COMMON STOCK

     Emmis has authorized 170,000,000 shares of Class A common stock, par value $.01 per share, 30,000,000 shares of Class B common stock, par value $.01 per share, and 30,000,000 shares of Class C common stock, par value $.01 per share. The rights of these three classes are essentially identical except that each share of Class A common stock has one vote with respect to substantially all matters, each share of Class B common stock has 10 votes with respect to substantially all matters, and each share of Class C common stock has no voting rights with respect to substantially all matters. Class B common stock is owned by our Chairman, CEO and President, Jeffrey H. Smulyan. All shares of Class B common stock convert to Class A common stock upon sale or other transfer to a party unaffiliated with Mr. Smulyan. At February 28 (29), 2004 and 2005, no shares of Class C common stock were issued or outstanding. The financial statements presented reflect the issued and outstanding Class A and Class B common stock.

     In April 2002, Emmis completed the sale of 4.6 million shares of its Class A common stock at $26.80 per share resulting in total proceeds of $123.3 million. The net proceeds were $120.2 million and 50% were used in April 2002 to repay outstanding obligations under our credit facility. The remainder was invested, and in July 2002 was used to redeem approximately 22.6% of our outstanding 12 ¹/2% senior discount notes (see Note 4).

3. PREFERRED STOCK

     Emmis has authorized 10,000,000 shares of preferred stock, which may be issued with such designations, preferences, limitations and relative rights as Emmis’ Board of Directors may authorize.

     Emmis has 2.875 million shares of 6.25% Series A cumulative convertible preferred stock outstanding, which have a liquidation preference of $50 per share and a par value of $.01 per share. Each preferred share is convertible at the option of the holder into 1.28 shares of Class A common stock, subject to certain events. Dividends are cumulative and payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year at an annual rate of $3.125 per preferred share. While Emmis had sufficient liquidity to declare and pay the dividends as they became due, it was not permitted to do so for the October 15, 2001, January 15, 2002, and April 15, 2002 payments because Emmis’ leverage ratio under the senior discount notes indenture exceeded 8:1 and its leverage ratio under the senior subordinated notes indenture exceeded 7:1. Emmis’ board of directors set a record date for payments, but did not declare the dividends. Instead, a wholly-owned, unrestricted subsidiary of Emmis made a payment of $.78125 per share to each preferred shareholder of record. This subsidiary was permitted to make the payments to the preferred shareholders under the senior discount notes and senior subordinated notes indentures. Currently, Emmis meets its leverage ratio requirements under both the senior discount notes indenture and the senior subordinated notes indenture. On July 2, 2002, Emmis’ board of directors declared the April 15, 2002, October 15, 2001 and January 15, 2002 dividend, and deemed the obligation to pay each dividend to have been discharged by the subsidiary’s prior payment. Commencing with the July 15, 2002 dividend, all subsequent dividends have been timely declared and paid by Emmis.

     Emmis may redeem the preferred stock for cash at the following redemption premiums (which are expressed as a percentage of the liquidation preference per share and which step down on October 15 of each subsequent year), plus in each case accumulated and unpaid dividends, if any, whether or not declared to the redemption date:

Year	Amount
2005		100.893	%
2006 and thereafter		100.000	%

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4. CREDIT FACILITY, SENIOR SUBORDINATED NOTES AND SENIOR DISCOUNT NOTES

     The credit facility, senior subordinated notes and senior discount notes were comprised of the following at February 28 (29), 2004 and 2005:

	2004		2005
Credit Facility
Revolver	$	45,000	$	131,000
Term Note A		196,083		—
Term Note B		498,750		673,313
8 1/8% Senior Subordinated Notes Due 2009		300,000		—
6 7/8% Senior Subordinated Notes Due 2012		—		375,000
12 1/2% Senior Discount Notes Due 2011		223,423		1,245
		1,263,256		1,180,558
Less: Current Maturities		39,077		6,750
	$	1,224,179	$	1,173,808

     On May 10, 2004, Emmis refinanced substantially all of its long-term debt. Emmis received $368.4 million in proceeds from the issuance of its 6 7/8% senior subordinated notes due 2012 in the principal amount of $375 million, net of the initial purchasers’ discount of $6.6 million, and borrowed $978.5 million under a new $1.025 billion senior credit facility. The gross proceeds from these transactions and $2.9 million of cash on hand were used to (i) repay the $744.3 million remaining principal indebtedness under its former credit facility, (ii) repurchase $295.1 million aggregate principal amount of its 8 1/8% senior subordinated notes due 2009, (iii) repurchase $227.7 million aggregate accreted value of its 12 1/2% senior discount notes due 2011, (iv) pay $4.6 million in accrued interest, (v) pay $12.1 million in transaction fees and (vi) pay $72.6 million in prepayment and redemption fees. In connection with the transactions, Emmis incurred a loss of $97.0 million, consisting of (i) $72.6 million for the prepayment and redemption fees, (ii) $24.3 million for the write-off of deferred debt costs associated with the retired debt, and (iii) $0.1 million in expenses related to the repurchase of indebtedness existing at February 29, 2004. This charge is reflected in the accompanying consolidated statements of operations as loss on debt extinguishment in the year ended February 28, 2005. Approximately $59.3 million of this loss was not deducted for purposes of calculating the provision for income taxes.

     On May 10, 2004, Emmis gave notice to redeem the remaining $4.9 million of principal amount of its 8?% senior subordinated notes due 2009. These notes were redeemed on June 10, 2004 at 104.063% plus accrued and unpaid interest, and the redemption was financed with additional borrowings on its new credit facility. The transaction resulted in an additional loss on debt extinguishment of $0.3 million, which Emmis recorded in its year ended February 28, 2005.

CREDIT FACILITY

     Emmis’ credit facility provides for total borrowings of up to $1.025 billion, including (i) a $675 million term loan and (ii) a $350 million revolver, of which $100 million may be used for letters of credit. At February 28 (29), 2004 and 2005, $2.5 million and $2.7 million, respectively, in letters of credit were outstanding. The credit facility also provides for the ability to have incremental facilities of up to $675 million, of which up to $350 million may be allocated to a revolver. Emmis may access the incremental facility on one or more occasions, subject to certain provisions, including a potential market adjustment to pricing of the entire credit facility.

     All outstanding amounts under the credit facility bear interest, at the option of Emmis, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the credit facility) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies under the revolver (ranging from 0% to 2.5%), depending on Emmis’ ratio of debt to consolidated operating cash flow, as defined in the agreement. The margins over the Eurodollar Rate or the alternative base rate are 1.75% and 0.75%, respectively, for the term loan facility. Interest is due on a calendar quarter basis under the alternative base rate and at least every three months under the Eurodollar Rate. Beginning one year after closing, the credit facility requires Emmis to maintain fixed interest rates, for at least a two year period, on a minimum of 30% of its total outstanding debt, as defined (including the senior subordinated debt, but excluding the senior discount notes). This ratio of fixed to floating rate debt must be maintained if Emmis’ total leverage ratio, as defined, is greater than 6:1 at any

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quarter end. As of February 28, 2005, the Company’s total debt-to-EBITDA leverage ratio, as defined, was 5.9:1. Both the term loan and revolver mature on November 10, 2011. Net deferred debt costs of approximately $13.8 million and $3.7 million, respectively, relating to the credit facility are reflected in the accompanying consolidated balance sheets as of February 28 (29), 2004 and 2005, and are being amortized over the life of the credit facility as a component of interest expense. The borrowings due under the term loan are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first six and one quarter years of the loan (beginning on February 28, 2005), with the remaining balance payable November 10, 2011. The annual amortization and reduction schedule for the credit facility, assuming the total facility is outstanding, is as follows:

SCHEDULED AMORTIZATION/REDUCTION OF CREDIT FACILITY

	Term Loan A/
Year Ended	Revolver		Term Loan B		Total
February 28 (29),	Amortization		Amortization		Amortization
2006		—		6,750		6,750
2007		—		6,750		6,750
2008		—		6,750		6,750
2009		—		6,750		6,750
2010		—		6,750		6,750
2011		350,000		639,563		989,563
Total	$	350,000	$	673,313	$	1,023,313

     Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow, may be required to be used to repay amounts outstanding under the credit facility. Whether these mandatory repayment provisions apply depends on Emmis’ total leverage ratio, as defined under the credit facility. As a result of the radio station swap with Bonneville in January 2005, Emmis received $74.8 million, which Emmis used to repay amounts outstanding under the revolver of its senior credit facility. Under the terms of its senior credit facility, Emmis has twelve months to identify acquisitions to redeploy these proceeds, or one-half of the $74.8 million must be used to repay amounts outstanding under the term loan of its senior credit facility.

     Availability under the credit facility depends upon our continued compliance with certain operating covenants and financial ratios, including leverage, interest coverage and fixed charge coverage as specifically defined. Emmis was in compliance with these covenants at February 28, 2005. The operating covenants and other restrictions with which we must comply include, among others, restrictions on additional indebtedness, incurrence of liens, engaging in businesses other than our primary business, paying cash dividends on common stock, redeeming or repurchasing capital stock of Emmis, acquisitions and asset sales. No default or event of default has occurred or is continuing. The credit facility provides that an event of default will occur if there is a change of control of Emmis, as defined. The payment of principal, premium and interest under the credit facility is fully and unconditionally guaranteed, jointly and severally, by Emmis and most of its existing wholly-owned domestic subsidiaries. Substantially all of Emmis’ assets, including the stock of Emmis’ wholly-owned, domestic subsidiaries, are pledged to secure the credit facility.

     The following discussion pertains to the credit facility existing prior to May 10, 2004 and previous amendments thereto:

     On December 29, 2000, ECC entered into an amended and restated credit facility for $1.4 billion (consisting of a $320.0 million revolver, a $480.0 million term note A and a $600.0 million term note B). In June 2001, the Company repaid $93.0 million of term notes, which resulted in the cancellation of a portion of the term notes, and the Company recorded a loss on debt extinguishment of approximately $1.7 million related to unamortized deferred debt issuance costs for the year ended February 28, 2002. During fiscal 2002, Emmis repaid and cancelled an additional $35.0 million in term notes. On November 30, 2001, Emmis amended the financial covenants of its credit facility through November 30, 2002, which, among other things, reduced total availability under the revolver to $220.0 million and resulted in the amortization of $1.4 million of deferred debt issuance costs into interest expense during the year ended February 28, 2002.

     On June 21, 2002, Emmis amended its credit facility to (1) issue a $500.0 million new term B loan, which was used to repay amounts outstanding under the existing $552.1 million term B loan, (2) reset financial covenants for the remaining term of the credit facility, and (3) permit Emmis to make a one-time cash distribution for the purpose of redeeming a portion of its 12 1/2% senior discount notes. In connection with the repayment of the existing term B loan, the Company recorded a loss on debt extinguishment of $0.8 million relating to the write off of deferred debt fees.

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     In the first quarter of fiscal 2003, we repaid approximately $195.1 million of credit facility debt with the net proceeds from our Denver radio station asset sales and 50% of the net proceeds from our April 2002 equity offering. In connection with the repayment of existing term loans outstanding, the Company recorded loss on debt extinguishment of $3.6 million relating to the write off of deferred debt fees.

     On June 6, 2003, Emmis amended its credit facility to allow for the acquisition of the controlling interest in the Austin partnership (see Note 6). Specifically, the amendment increased the amount of Investments (as defined in the credit facility) that Emmis could make to allow for the investment in the partnership. In addition to permitting the Austin acquisition, previously required decreases in senior leverage and total leverage ratios were delayed from November 30, 2003 to June 1, 2004.

     The weighted-average interest rate on borrowings outstanding under the credit facility, including the effects of interest-rate swaps was approximately 4.7% and 3.4% at February 28 (29), 2003 and 2004, respectively. Due to its leverage at the time, Emmis was required to have interest-rate swap agreements in place in fiscal 2003 and fiscal 2004, although no such agreements were outstanding as of February 28 (29), 2004 and 2005. Interest paid under these swap arrangements was $11.0 million, $3.4 million and $0 million for the years ended February 2003, 2004 and 2005, respectively. As indicated in footnote 1s., Emmis accounts for interest rate swap agreements under SFAS No. 133 as amended by SFAS No. 138. The fair market value of these swaps at February 28, 2003 was a liability of $4.3 million, with an associated income tax asset of $1.9 million. As Emmis has designated these interest rate swap agreements as cash flow hedges, and the swaps were highly effective during the year ended February 29, 2004, the net liability was recorded as a component of comprehensive income and the ineffectiveness was not material.

SENIOR SUBORDINATED NOTES

     On May 10, 2004, Emmis issued $375 million of 6 7/8% senior subordinated notes. On August 5, 2004, Emmis exchanged the $375 million aggregate principal amount of its 6 7/8% senior subordinated notes for a new series of notes registered under the Securities Act. The terms of the new series of notes were identical to the terms of the senior subordinated notes.

     Prior to May 15, 2008, Emmis may redeem the notes, in whole or in part, at a price of 100% of the principal amount thereof plus the payment of a make-whole premium. After May 15, 2008, Emmis can choose to redeem some or all of the notes at specified redemption prices ranging from 101.719% to 103.438% plus accrued and unpaid interest. On or after May 15, 2010, the notes may be redeemed at 100% plus accrued and unpaid interest. Upon a change of control (as defined), Emmis is required to make an offer to purchase the notes then outstanding at a purchase price equal to 101% plus accrued and unpaid interest. Interest on the notes is payable semi-annually on May 15 and November 15 of each year. The notes have no sinking fund requirements and are due in full on May 15, 2012.

     The payment of principal, premium and interest on the notes is fully and unconditionally guaranteed, jointly and severally, by Emmis and most of Emmis’ existing wholly-owned domestic subsidiaries that guarantee the credit facility. The notes are expressly subordinated in right of payment to all existing and future senior indebtedness (as defined) of Emmis. The notes will rank pari passu with any future senior subordinated indebtedness (as defined) and senior to all subordinated indebtedness (as defined) of Emmis.

     The indenture governing the notes contains covenants limiting Emmis’ ability to, among other things, (1) incur additional indebtedness, (2) pay dividends or make other distributions to stockholders, (3) purchase or redeem capital stock or subordinated indebtedness, (4) make certain investments, (5) create restrictions on the ability of our subsidiaries to pay dividends or make payments to Emmis, (6) engage in certain transactions with affiliates, and (7) sell all or substantially all of the assets of Emmis and its subsidiaries, or consolidate or merge with or into other companies. Emmis was in compliance with these covenants at February 28, 2005.

     Prior to May 10, 2004, Emmis had $300 million of 8 1/8% senior subordinated notes outstanding. These notes were retired in connection with the issuance of the the 6 7/8% senior subordinated notes. Although the terms of the 8 1/8% senior subordinated notes were similar to the existing 6 7/8% senior subordinated notes, the terms of the 6 7/8% senior subordinated notes are less restrictive.

SENIOR DISCOUNT NOTES

     On March 27, 2001, Emmis received $202.6 million of proceeds from the issuance of senior discount notes due 2011, less approximately $12.0 million of debt issuance costs. Substantially all of these notes were redeemed on May 10, 2004 in connection with our debt refinancing activities, which eliminated the restrictive covenants contained in the indenture. The notes accrete interest at a rate of 12 1/2% per year, compounded semi-annually to an aggregate principal amount of $1.4 million on March 15, 2006, after considering the July 2002 and May 2004 redemptions. Commencing on September 15, 2006, interest is payable in cash on each March 15 and

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September 15, with the aggregate principal amount of $1.4 million due on March 15, 2011. The notes have no sinking fund requirement.

     On July 1, 2002, Emmis redeemed approximately 22.6% of its senior discount notes. Approximately $60.1 million of the proceeds from the Company’s April 2002 equity offering were used to repay approximately $53.4 million of the carrying value of the discount notes at July 1, 2002 and pay approximately $6.7 million for a redemption premium. The redemption premium and approximately $2.4 million of deferred debt fees related to the discount notes were recorded as loss on debt extinguishment in the year ended February 28, 2003.

5. OTHER LONG-TERM DEBT

     Other long-term debt was comprised of the following at February 28 (29), 2004 and 2005:

	2004		2005
Hungary:
License Obligation	$	9,901	$	5,653
Loans Payable		687		657
Other		172		56
Total Other Long-Term Debt		10,760		6,366
Less: Current Maturities		4,851		938
Other Long-Term Debt, Net of Current Maturities	$	5,909	$	5,428

     Our 59.5% owned Hungarian subsidiary, Slager Radio Rt., has certain obligations which are consolidated in our financial statements due to our majority ownership interest. However, Emmis is not a guarantor of or required to fund these obligations. Subsequent to the license restructuring completed in December 2002, Slager Radio must pay, in Hungarian forints, five equal annual installments that will commence in November 2005 and end in November 2009, for a radio broadcast license to the Hungarian government. The obligation is non-interest bearing; however, in accordance with the license purchase agreement, a Hungarian cost of living adjustment is calculated annually and is payable, concurrent with the principal payments, on the outstanding obligation. The cost of living adjustment is estimated each reporting period and is included in interest expense. The license obligation has been discounted at an imputed interest rate of approximately 7% to reflect the obligation at its fair value. The total license obligation of $5.7 million (in U.S. dollars) as of February 28, 2005, is reflected net of an unamortized discount of $1.2 million.

     In addition, Slager Radio is obligated to pay certain loans to its shareholders. At February 28, 2005, loans payable to the minority shareholders were (in U.S. dollars) approximately $0.7 million. The loans are due at maturity in September 2009 and bear interest at LIBOR plus 4% (6.6% at February 28, 2005). Interest payments on the loans are made quarterly.

     During the quarter ended August 31, 2003, the partners in our Hungarian subsidiary, including Emmis, agreed to forgive certain indebtedness and accrued interest owed to the partners by the subsidiary. The activity relating to Emmis eliminates in consolidation. The forgiveness of debt by our minority partners was accounted for as a capital transaction. Since the accrued interest was charged to expense by the Hungarian subsidiary, reversal of the portion of accrued interest attributable to the minority partners of $1.3 million was credited to income and is reflected in other income (expense), net in the accompanying consolidated statements of operations during the year ended February 29, 2004.

6. ACQUISITIONS, DISPOSITONS AND INVESTMENTS

Phoenix-Chicago Radio Station Exchange

     On January 14, 2005, Emmis completed its exchange with Bonneville International Corporation (“Bonneville”) whereby Emmis swapped three of its radio stations in Phoenix (KTAR-AM, KMVP-AM and KKLT-FM) for Bonneville’s WLUP-FM located in Chicago and $74.8 million in cash, including payments for working capital items. Emmis used the cash to repay amounts outstanding under its senior credit facility. Emmis has long sought a second radio station in Chicago to complement its existing station in the market, WKQX-FM. This transaction achieves that goal by marrying the heritage alternative rock format (WKQX) with the heritage classic rock format (WLUP). Emmis began programming WLUP-FM and Bonneville began programming KTAR-AM, KMVP-AM and

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KKLT-FM under time brokerage agreements on December 1, 2004. The assets and liabilities of the three radio stations in Phoenix and their results of operations have been classified as discontinued operations in the accompanying consolidated financial statements. These three radio stations had historically been included in the radio reporting segment. The Company recorded $13.0 million of goodwill, which is not deductible for tax purposes. The fair value of WLUP-FM was determined by Emmis and Bonneville to be $128.0 million. This amount, plus transaction costs of $0.7 million, was allocated as follows based on a preliminary, independent appraisal.

Asset Description	Amount			Asset Lives
Broadcasting equipment		171		5 to 7 years
Office equipment		5		5 to 7 years
Total tangible assets		176
Customer list		636		1 year
FCC license (Indefinite-lived intangible)		114,851		Non-amortizing
Goodwill		12,959		Non-amortizing
Total intangible assets		128,446
Investment and other long-term assets		244
Less: current liabilities		(125	)
Total purchase price	$	128,741

Sale of Radio Stations in Argentina

     On May 12, 2004, Emmis sold to its minority partners for $7.3 million in cash its entire 75% interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina. In connection with the sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. In fiscal 2005, Emmis recorded income from discontinued operations of $4.2 million, consisting of operational losses of $0.5 million, offset by tax benefits of $4.7 million. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The $10.0 million loss in fiscal 2004 was primarily attributable to the devaluation of the peso and resulting non-cash write-off of cumulative currency translation adjustments. Votionis had historically been included in the radio reporting segment. See Note 1k for further discussion.

Belgium radio licenses

     On December 19, 2003, the Flemish Government awarded licenses to operate nine FM radio stations in the Flanders region of Belgium to several not-for-profit entities that have granted Emmis the exclusive right to provide the programming and sell the advertising on the stations for the duration that the not-for-profit entities retain the licenses. Five of these licenses are for the stations that Emmis began programming in August 2003, and the remaining four related to new stations that Emmis began operating in May 2004. The licenses and Emmis’ exclusive right are for an initial term of nine years and do not require the payment of any license fees to the Flemish Government. Emmis consolidates these stations for financial reporting purposes.

Austin Radio Acquisition

     On July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million. These six stations are KLBJ-AM, KLBJ-FM, KDHT-FM (formerly KXMG-FM), KROX-FM, KGSR-FM and KEYI-FM. This acquisition allowed Emmis to diversify its radio portfolio and participate in another large, high-growth radio market. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $35.3 million of goodwill, all of which is deductible for income tax purposes. In addition, Emmis has the option, but not the obligation, to purchase its partner’s entire 49.9% interest in the partnership after December 2007 based on an 18-multiple of trailing 12-month cash flow.

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     For this transaction, the aggregate purchase price, including transaction costs of $1.0 million, was allocated as follows based upon an independent appraisal.

Asset Description	Amount			Asset Lives
Accounts receivable	$	4,893		Less than one year
Other current assets		85		Less than one year
Land and buildings		757		31.5 years for buildings
Broadcasting equipment		4,031		5 to 7 years
Office equipment		568		5 to 7 years
Vehicles		117		5 to 7 years
Other		176		Various
Total noncurrent tangible assets		5,649
Customer list		2,974		1 year
Talent contract		456		3.5 years
Lease rights		389		5 to 9 years
Affiliation agreement		189		15 years
FCC license (Indefinite-lived intangible)		103,291		Non-amortizing
Goodwill		35,329		Non-amortizing
Total intangible assets		142,628
Investment and other long-term assets		1,612
Less: minority interest		(47,894	)
Less: current liabilities		(495	)
Total purchase price	$	106,478

Sale of Mira Mobile

     Effective June 5, 2003, Emmis sold its mobile television production company, Mira Mobile Television, to Shooters Production Services, Inc. for $3.9 million in cash, plus payments for working capital. Emmis received $3.3 million of the purchase price at closing and received a promissory note due October 31, 2005 for the remaining $0.6 million. Emmis had acquired this business in connection with the Lee acquisition in October 2000. The book value of the long-lived assets as of May 31, 2003 was $3.1 million, and the operating performance of Mira Mobile was not material to the Company. Emmis recorded a gain on the sale of these assets of approximately $0.9 million in the accompanying consolidated statements of operations.

WBPG-TV Acquisition

     Effective March 1, 2003, the Company acquired substantially all of the assets of television station WBPG-TV in Mobile, AL – Pensacola, FL from Pegasus Communications Corporation for a cash purchase price of approximately $11.7 million, including transaction costs of $0.2 million. This acquisition allowed the Company to achieve duopoly efficiencies in the market, such as lower programming acquisition costs and consolidation of general and administrative functions, since Emmis already owns the Fox-affiliated television station in the market, WALA. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $0.2 million of goodwill, all of which is deductible for income tax purposes.

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     For this transaction, the aggregate purchase price, including transaction costs of $0.2 million, was allocated as follows based upon an independent appraisal.

Asset Description	Amount			Asset Lives
Accounts Receivable	$	154		Less than one year
Prepaids		35		Less than one year
Broadcasting equipment		2,458		5 to 7 years
Office equipment		97		5 to 7 years
Vehicles		42		5 to 7 years
Total noncurrent tangible assets		2,597
Customer list		229		1 year
Affiliation agreement		559		3.5 years
FCC license (Indefinite-lived intangible)		7,971		Non-amortizing
Goodwill		150		Non-amortizing
Total intangible assets		8,909
Programming acquired		159
Less: Programming liabilities assumed		(198	)
Total purchase price	$	11,656

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for $88.0 million. Emmis had purchased KALC-FM on January 17, 2001 from Salem Communications Corporation for $98.8 million in cash plus a commitment fee of $1.2 million and transaction related costs of $0.9 million. On February 12, 2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and Entercom began operating KALC-FM under a time brokerage agreement on March 16, 2002. Proceeds were used to repay amounts outstanding under our credit facility. Since the agreed-upon sales price for this station was less than its carrying amount as of February 28, 2002, we recognized an impairment loss of $9.1 million in fiscal 2002. Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in connection with the sale.

     Effective May 1, 2002, Emmis completed the sale of substantially all of the assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000 from AMFM, Inc. for an allocated purchase price of $35.0 million in cash plus liabilities recorded of $1.2 million and transaction related costs of $0.4 million. Emmis entered into a definitive agreement to sell KXPK-FM to Entravision on February 12, 2002. Proceeds were used to repay amounts outstanding under our credit facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.

7. PRO FORMA FINANCIAL INFORMATION

     Unaudited pro forma summary information is presented below for the years ended February 28 (29), 2004 and 2005, assuming the acquisition (and related net borrowings) of (i) WLUP-FM in January 2005 and (ii) a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area in July 2003 had occurred on the first day of the pro forma periods presented below.

     Preparation of the pro forma summary information was based upon assumptions deemed appropriate by the Company’s management. The pro forma summary information presented below is not necessarily indicative of the results that actually would have occurred if the transactions indicated above had been consummated at the beginning of the periods presented, and it is not intended to be a projection of future results.

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	Pro Forma
	2004		2005
Net revenues	$	588,078	$	627,083
Net income from continuing operations and before accounting change	$	11,672	$	(40,905	)
Net income available to common shareholders from continuing operations and before accounting change	$	2,688	$	(49,889	)
Net income per share available to common shareholders from continuing operations and before accounting change:
Basic	$	0.05	$	(0.89	)
Diluted	$	0.05	$	(0.89	)
Weighted average shares outstanding:
Basic		54,716		56,129
Diluted		55,066		56,129

     The pro forma results exclude approximately $0.9 million of costs recorded by the seller directly attributable to their sale of the Austin radio stations to us in the year ended February 29, 2004.

8. INTANGIBLE ASSETS AND GOODWILL

     Effective March 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” which requires the Company to cease amortizing goodwill and certain intangibles. Instead, these assets are reviewed at least annually for impairment, and will be written down and charged to results of operations in periods in which the recorded value of goodwill and certain intangibles is more than its fair value. On February 28, 2002, prior to the adoption of SFAS No. 142, the Company reflected unamortized goodwill and unamortized FCC licenses in the amounts of $175.1 million and $1,743.2 million, respectively. FCC licenses are renewed every eight years for a nominal amount, and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. The Company had previously amortized these assets over the maximum period allowed of 40 years. Adoption of this accounting standard eliminated the Company’s amortization expense for goodwill and FCC licenses.

     Effective December 1, 2004, the Company adopted EITF Topic D-108, “Use of the Residual Method to Value Acquired Assets Other than Goodwill.” EITF Topic D-108 prohibits the use of the residual method and precludes companies from reclassifying to goodwill any goodwill that was originally included in the value of the FCC license, resulting in a write-off. Implementation of EITF Topic D-108 is required no later than Emmis’ fiscal year ending February 28, 2006, but the Company elected to adopt it as of December 1, 2004 and recorded a non-cash charge of $303.0 million, net of tax, in the year ended February 28, 2005 as a cumulative effect of an accounting change. This loss has no impact on the Company’s compliance with its debt covenants or cash flows.

     Indefinite-lived Intangibles

     Under the guidance in SFAS No. 142, the Company’s FCC licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but are tested for impairment at least

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annually. As of February 28 (29), 2004 and 2005, the carrying amounts of the Company’s FCC licenses were $1,601.5 million and $1,216.7 million, respectively. The February 28, 2005 balance reflects the write-off related to the adoption of EITF Topic D-108.

     In accordance with SFAS No. 142, the Company tested these indefinite-lived intangible assets for impairment as of March 1, 2002 by comparing their fair value to their carrying value at that date. Prior to March 1, 2002, an impairment adjustment was recorded if the carrying value of an intangible asset exceeded its estimated undiscounted cash flows in accordance with SFAS No. 121. Upon adoption of SFAS No. 142, the Company recognized impairment on its FCC licenses of approximately $145.0 million, net of $88.8 million in tax benefit, which is recorded as a component of the cumulative effect of accounting change during the year ended February 28, 2003. Approximately $14.8 million of the charge, net of tax, related to our radio segment, and $130.2 million of the charge, net of tax, related to our television segment. The fair value of our FCC licenses used to calculate the impairment charge was determined using an independent appraiser or by management, using an enterprise valuation approach. Management determined enterprise value by applying an estimated market multiple to the station operating income generated by each reporting unit. Market multiples were determined based on information available regarding publicly traded peer companies, recently completed or contemplated transactions within the industry and reporting units’ competitive position in their respective markets. Appropriate allocation was then made to the tangible assets and unrecognized intangible assets, including network affiliation agreements and customer lists, with the residual amount representing the implied fair value of our indefinite-lived intangible assets. To the extent the carrying amount of the indefinite-lived intangible exceeded this implied fair value, the difference was recorded in the statement of operations, as described above. For FCC licenses valued using the residual method, the impairment test was based on a two-step approach, analogous to the two-step goodwill impairment test. In the case of radio, the Company determined the reporting unit to be all of our stations in a local market, and in the case of television and publishing, the Company determined the reporting unit to be each individual station or magazine. Throughout our fiscal 2002, unfavorable economic conditions persisted in the industries in which the Company engages. These conditions caused customers to reduce the amount of advertising dollars spent on the Company’s media inventory as compared to prior periods, adversely impacting the cash flow projections used to determine the fair value of each reporting unit and public trading multiples of media stocks, resulting in the write-off of a portion of the carrying amount of our FCC licenses.

     With the adoption of EITF Topic D-108 on December 1, 2004, the Company obtained an independent appraisal for each of its FCC licenses, most of which had previously been valued using a residual method. The Company compared the carrying value of each FCC license (grouped by the same reporting unit used for SFAS No. 142 testing) to the appraised value and recorded a noncash charge of $303.0 million, net of $185.5 million in tax benefit, which is recorded as a cumulative effect of an accounting change in the year ended February 28, 2005. Approximately $5.5 million, net of $3.8 million in tax benefit, related to our radio segment, and $297.5 million, net of $181.7 million in tax benefit, related to our television segment. Emmis performed its annual impairment test under SFAS No. 142 on December 1, 2004, after the adoption of EITF Topic D-108. Emmis compared the carrying value of each reporting unit to the fair value of the reporting unit, as determined using the same enterprise valuation technique outlined above, and determined that none of its entities exhibited impairment.

     Our annual impairment test for fiscal 2003 did not result in any further write-downs. However, in connection with our fiscal 2004 annual impairment review, we recognized an impairment loss of $12.4 million, which related to two stations in our television division. Although our television division as a whole performed well in fiscal 2004, one of our television stations underperformed its market and experienced a decline in its cash flows. We have replaced certain management personnel at this station. Also, a recently contemplated transaction in a market in which we operate led us to re-evaluate the value we had assigned to our station. The annual required impairment tests may result in future periodic write-downs.

     Goodwill

     SFAS No. 142 requires the Company to test goodwill for impairment at least annually using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. The Company completed the initial two-step impairment test during the first quarter of fiscal 2003. As a result of this test, the Company recognized impairment of approximately $22.4 million, net of $13.8 million in tax benefit, as a component of the cumulative effect of an accounting change during the year ended February 28, 2003. Approximately $18.5 million of the charge, net of tax, related to our television segment and $3.9 million of the charge, net of tax, related to our publishing segment. Consistent with the Company’s approach to determining the fair value of our FCC licenses, the enterprise valuation approach was used to determine the fair value of each of the Company’s reporting units, and a portion of the carrying value of our goodwill was written off due to reductions in cash flow and public trading multiples of media stocks resulting from the unfavorable economic conditions that reduced advertising expenditures throughout our fiscal 2002.

     As of February 28 (29), 2004 and 2005, the carrying amount of the Company’s goodwill was $94.0 million and $107.0 million, respectively. As of February 29, 2004, approximately $35.6 million, $0.2 million and $58.2 million was attributable to our radio,

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television and publishing divisions, respectively. As of February 28, 2005, approximately $48.6 million, $0.2 million and $58.2 million was attributable to our radio, television and publishing divisions, respectively. The required impairment tests may result in future periodic write-downs, but the annual impairment tests for fiscal 2003, 2004 and 2005, completed in the fourth quarter of each year, did not result in any further write-downs.

     Definite-lived intangibles

     The Company has definite-lived intangible assets recorded that continue to be amortized in accordance with SFAS No. 142. These assets consist primarily of foreign broadcasting licenses, favorable office leases, customer lists and non-compete agreements, all of which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. In accordance with the transitional requirements of SFAS No. 142, the Company reassessed the useful lives of these intangibles and determined that no changes to their useful lives were necessary. The following table presents the weighted-average remaining life, gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at February 28 (29), 2004 and 2005 (dollars in thousands):

			February 29, 2004						February 28, 2005
	Weighted Average		Gross				Net		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(in years)		Amount		Amortization		Amount		Amount		Amortization		Amount
Foreign Broadcasting Licenses		7.2	$	23,308	$	11,879	$	11,429	$	24,443	$	13,486	$	10,957
Subscription Lists		3.0		12,189		12,189		—		—		—		—
Favorable Office Leases		38.1		12,190		1,054		11,136		12,190		1,449		10,741
Customer Lists		2.2		10,574		8,607		1,967		11,210		10,654		556
Non-Compete Agreements		1.3		5,738		5,641		97		5,738		5,681		57
Other		12.6		5,549		2,329		3,220		5,592		3,036		2,556
TOTAL			$	69,548	$	41,699	$	27,849	$	59,173	$	34,306	$	24,867

     Total amortization expense from definite-lived intangibles for the years ended February, 2003, 2004 and 2005 was $6.9 million, $7.2 million and $4.8 million, respectively. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles recorded as of February 28, 2005 (dollars in thousands):

YEAR ENDED FEBRUARY,
2006	$	3,568
2007		3,069
2008		2,810
2009		2,644
2010		2,358

9. EMPLOYEE BENEFIT PLANS

     a. Equity Incentive Plans

     The Company has stock options and restricted stock grants outstanding that were issued to employees or non-employee directors under one or more of the following plans: 1994 Equity Incentive Plan, 1995 Equity Incentive Plan, Non-Employee Director Stock Option Plan, 1997 Equity Incentive Plan, 1999 Equity Incentive Plan, 2001 Equity Incentive Plan and 2002 Equity Incentive Plan. These outstanding grants continue to be governed by the terms of the applicable plan. However, all unissued awards under the 1999 Equity Incentive Plan, the 2001 Equity Incentive Plan and the 2002 Equity incentive Plan were transferred in June 2004 to the Company’s 2004 Equity Compensation Plan (discussed below) and no further awards will be issued from these plans.

     2004 Equity Incentive Plan

     At the 2004 annual meeting, the shareholders of Emmis approved the 2004 Equity Compensation Plan. Under this plan, awards equivalent to 4,000,000 shares of common stock may be granted. Furthermore, any unissued awards from the 1999 Equity Incentive Plan, the 2001 Equity Incentive Plan and the 2002 Equity Compensation Plan (or shares subject to outstanding awards that would again become available for awards under these plans) increase the number of shares of common stock available for grant. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights or performance units. Under this Plan, all awards are granted with a purchase price equal to at least the fair market value of the stock except for shares of restricted stock, which may be granted with any purchase price (including zero). No more than 1,000,000 shares of Class B common stock are available for grant and issuance from the 4,000,000 additional shares of stock authorized for

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delivery under this Plan. The stock options under this Plan generally expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 5,070,000 shares of common stock were available for grant at February 28, 2005. Certain stock awards remained outstanding as of February 28, 2005. On March 1, 2005, options were granted to employees under the 2004 Equity Compensation Plan to purchase an additional 634,820 shares of Emmis Communications Corporation common stock at $18.74 per share and an additional 249,054 shares of restricted stock were issued to employees.

     b. Other Disclosures Related to Stock Option and Equity Incentive Plans

     A summary of the status of options and restricted stock at February 2003, 2004 and 2005 and the related activity for the year is as follows:

	2003					2004					2005
	Number of			Weighted		Number of			Weighted		Number of			Weighted
	Options/			Average		Options/			Average		Options/			Average
	Restricted			Exercise		Restricted			Exercise		Restricted			Exercise
	Stock			Price		Stock			Price		Stock			Price
Outstanding at Beginning of Year		4,753,513			25.39		5,259,479			26.53		5,289,902			25.77
Granted		1,926,228			14.96		2,289,915			8.11		2,079,342			17.50
Exercised		(311,234	)		17.90		(657,857	)		15.74		(101,883	)		16.64
Lapsing of restrictions on stock awards		(920,571	)		—		(1,180,706	)		—		(642,506	)		—
Expired and other		(188,457	)		25.75		(420,929	)		22.69		(566,998	)		23.69
Outstanding at End of Year		5,259,479			26.53		5,289,902			25.77		6,057,857			25.75
Exercisable at End of Year		2,602,475			23.90		2,754,389			27.78		3,197,755			27.01
Total Available for Grant		4,595,000					2,726,000					5,070,000

     During the years ended February 2003, 2004 and 2005, all options were granted with an exercise price equal to the fair market value of the stock on the date of grant. During the years ended February 2003, 2004 and 2005, the Company granted restricted stock pursuant to employment agreements of 52,500, 57,500 and 8,325 shares, respectively, at a weighted average fair value of $27.16, $17.29, and $20.48, respectively.

     The following information relates to options outstanding and exercisable at February 28, 2005:

	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
Range of			Average		Average				Average
Exercise	Number of		Exercise		Remaining		Number of		Exercise
Prices	Options		Price		Contract Life		Options		Price
$3.80-$7.60		—		—		—		—		—
7.60-11.40		—		—		—		—		—
11.40-15.20		—		—		—		—		—
15.20-19.00		914,930		16.41		7.6		324,341		16.42
19.00-22.80		716,344		20.95		3.0		599,683		20.88
22.80-26.60		1,352,147		25.51		8.8		41,450		24.75
26.60-30.40		2,594,254		28.72		5.4		1,752,099		28.82
30.40-34.20		—		—		—		—		—
34.20-38.00		480,182		35.40		4.9		480,182		35.40

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     In addition to the benefit plans noted above, Emmis has the following employee benefit plans:

     c. Profit Sharing Plan

     In December 1986, Emmis adopted a profit sharing plan that covers all nonunion employees with six months of service. Contributions to the plan are at the discretion of the Emmis Board of Directors and can be made in the form of newly issued Emmis common stock or cash. Historically, all contributions to the plan have been in the form of Emmis common stock. No contributions were made to the profit sharing plan in the three years ended February 28, 2005.

     d. 401(k) Retirement Savings Plan

     Emmis sponsors two Section 401(k) retirement savings plans. One is available to substantially all nonunion employees age 18 years and older who have at least 30 days of service and the other is available to certain union employees that meet the same qualifications. Employees may make pretax contributions to the plans up to 15% of their compensation, not to exceed the annual limit prescribed by the Internal Revenue Service. Emmis may make discretionary matching contributions to the plans in the form of cash or shares of the Company’s Class A common stock. Effective March 1, 2003, Emmis elected to double its annual 401(k) match to $2 thousand per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of making a contribution to the Company’s profit sharing plan. Emmis’ contributions to the plans totaled $1,439, $2,918 and $3,377 for the years ended February 2003, 2004 and 2005, respectively.

     e. Defined Contribution Health and Retirement Plan

     Emmis contributes to a multi-employer defined contribution health and retirement plan for employees who are members of a certain labor union. Amounts charged to expense related to the multi-employer plan were approximately $414, $503 and $617 for the years ended February 2003, 2004 and 2005, respectively.

     f. Employee Stock Purchase Plan

     The Company has in place an employee stock purchase plan that allows employees to purchase shares of the Company’s Class A common stock at the lesser of 90% of the fair value of such shares at the beginning or end of each semi-annual offering period. Purchases are subject to a maximum limitation of $22.5 thousand annually per employee. The Company does not record compensation expense pursuant to this plan as it is designed to meet the requirements of Section 423(b) of the Internal Revenue Code. However, effective March 1, 2006, Emmis expects to begin recording compensation expense pursuant to this plan under SFAS No. 123R unless implementation of this rule is further delayed.

10. OTHER COMMITMENTS AND CONTINGENCIES

     a. TV Program Rights

     The Company has obligations to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future payments scheduled under contracts for programs available as of February 28, 2005, are as follows:

Fiscal year ended February 28 (29),
2006	$	30,910
2007		10,165
2008		5,802
2009		2,240
2010		401
Thereafter		26
		49,544
Less: Current Portion		30,910
TV Program Rights,
Net of Current Portion	$	18,634

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     In addition, the Company has entered into commitments for future program rights (programs not available as of February 28, 2005). Future payments scheduled under these commitments are summarized as follows: Year ended February 2006 - $8,526; 2007 - $20,457; 2008 - $20,157; 2009 - $21,282; 2010 - $16,674; and thereafter - $18,473.

     b. Commitments Related to Radio Broadcast Agreements

     The Company has entered into agreements to broadcast certain syndicated programs and sporting events. Future payments scheduled under these agreements are summarized as follows: Year ended February 2006 - $1,889; 2007 - $1,537; 2008 - $1,181; 2009 - $459; 2010 - $352; and thereafter - $0. Expense related to these broadcast rights totaled $1,771, $1,993 and $1,894 for the years ended February 2003, 2004 and 2005, respectively.

     c. Commitments Related to Operating Leases

     The Company leases certain office space, tower space, equipment, an airplane and automobiles under operating leases expiring at various dates through June 2083. Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the Consumer Price Index or increases in the lessor’s operating costs), as well as provisions for payment of utilities and maintenance costs. Maintenance costs are recorded using the accrual method.

     Future minimum rental payments (exclusive of future escalation costs) required by non-cancelable operating leases, with an initial term of one year or more as of February 28, 2005, are as follows:

Fiscal year ended February 28(29),
2006	$	9,676
2007		9,318
2008		8,816
2009		8,384
2010		7,528
Thereafter		25,059
	$	68,781

     Rent expense totaled $9,798, $8,764 and $9,506 for the years ended February 2003, 2004 and 2005, respectively. Rent expense for the years ended February 2003, 2004 and 2005 is net of sublease income of approximately $34, $32 and $26, respectively.

     d. Commitments Related to Employment Agreements

     The Company regularly enters into employment agreements with various officers and employees. These agreements generally specify base salary, along with bonuses and grants of stock and/or stock options based on certain criteria. Future minimum cash payments, consisting of primarily of base salary, scheduled under terms of these agreements are summarized as follows: Year ended February 2006 - $31,745; 2007 - $20,517; 2008 - $8,210; 2009 - $3,811; 2010 - $2,011; and thereafter - $232.

     In addition to future cash payments, at February 28, 2005, 46,325 shares of common stock and options to purchase 1,102,500 shares of common stock have been granted in connection with current employment agreements. Additionally, up to 307,750 shares, and options to purchase up to 1,097,500 shares of common stock, may be granted (or have been granted subject to forfeiture) under the agreements in the next four years.

     e. Litigation

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

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     In January 2005, we received a subpoena from the Office of Attorney General of the State of New York, as have some of the other radio broadcasting companies operating in the State of New York. The subpoenas were issued in connection with the New York Attorney General’s investigation of record company promotional practices. We are cooperating with this investigation. We do not expect that the outcome of this matter would have a material impact on our financial position, results of operations or cash flows.

     In March, 2005, we received a subpoena from the Office of Attorney General of the State of New York in connection with the New York Attorney General’s investigation of a contest at one of our radio stations in New York City. We are cooperating with this investigation and do not expect that the outcome of this matter would have a material impact on our financial position, results of operations or cash flows.

     During the Company’s fiscal quarter ended August 31, 2004, Emmis entered into a consent decree with the Federal Communications Commission to settle all outstanding indecency-related matters. Terms of the agreement call for Emmis to make a voluntary contribution of $0.3 million to the U.S. Treasury, with the FCC terminating all then-current indecency-related inquiries and fines against Emmis. Certain individuals and groups have requested that the FCC reconsider the adoption of the consent decree and have challenged applications for renewal of the licenses of certain of the Company’s stations based primarily on the matters covered by the decree. These challenges are currently pending before the Commission, but Emmis does not expect the challenges to result in any changes to the consent decree or in the denial of any license renewals. See “Federal Regulation of Broadcasting” for further discussion.

     In January 2005, a third party threatened claims against our radio station in Hungary seeking damages of approximately $4.6 million. Emmis is currently investigating this matter, but based on information gathered to date, Emmis believes the claims are without merit. Litigation has not been initiated and Emmis intends to defend itself vigorously in the matter.

11. INCOME TAXES

     The provision (benefit) for income taxes for the years ended February 2003, 2004 and 2005, consisted of the following:

	2003			2004			2005
Current:
Federal	$	—		$	—		$	—
State		—			—			—
		-			—			—
Deferred:
Federal		6,881			9,234			13,663
State		577			791			2,278
		7,458			10,025			15,941
Provision (benefit) for income taxes	$	7,458		$	10,025		$	15,941
Other Tax Related Information:
Tax benefit of minortiy interest income (expense)		—			(1,151	)		(1,725	)
Tax provision of discontinued operations		3,418			3,576			21,837
Tax benefit of accounting change		(102,600	)		—			(185,450	)

90

     The provision (benefit) for income taxes for the years ended February 2003, 2004 and 2005 differs from that computed at the Federal statutory corporate tax rate as follows:

	2003		2004			2005
Computed income taxes at 35%	$	1,994	$	6,420		$	(8,847	)
State income tax		577		791			2,278
Nondeductible foreign losses		724		(54	)		(189	)
Nondeductible interest		3,033		716			142
Nondeducted redemption premium on senior discount notes		—		—			20,755
Other		1,130		2,152			1,802
Provision (benefit) for income taxes	$	7,458	$	10,025		$	15,941

     During its year ended February 28, 2005, Emmis completed an evaluation of its statutory tax rate due to changes in its income dispersion in the various tax jurisdictions in which it operates. As a result of this review, Emmis increased the statutory rate it uses for its income tax provision from 38% to 41%.

     The components of deferred tax assets and deferred tax liabilities at February 28 (29), 2004 and 2005 are as follows:

	2004			2005
Deferred tax assets:
Net operating loss carryforwards	$	79,832		$	125,188
Compensation relating to stock options		4,152			2,263
Noncash interest expense		23,254			175
Deferred revenue		2,480			3,142
Other		2,169			3,324
Valuation allowance		(4,948	)		(14,800	)
Total deferred tax assets		106,939			119,292
Deferred tax liabilities
Intangible assets		(170,437	)		(31,458	)
Fixed Assets		(15,287	)		(14,615	)
Other		(3,209	)		—
Total deferred tax liabilities		(188,933	)		(46,073	)
Net deferred tax assets (liabilities)	$	(81,994	)	$	73,219

     A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. A valuation allowance has been provided for the net operating loss carryforwards related to the Company’s foreign subsidiaries. Additionally a valuation allowance has been provided for the net operating loss carryforwards related to certain state net operating losses as it is more likely than not that a portion of the state net operating losses will expire unutilized. Net operating loss carryforwards, excluding those at the Company’s Hungarian and Belgium subsidiaries which do not expire, of approximately $259,482 (exclusive of the $59.3 million senior discount note redemption premium, which we plan to deduct for income tax purposes) begin to expire in 2022. The net operating loss carryforwards primarily result from the amortization of indefinite-lived intangibles for tax purposes.

     Current levels of operating income generate sufficient taxable income to realize the net operating loss carryforward deferred tax asset, except as indicated above. Contributing to the net operating loss carryforwards is the tax amortization of indefinite-lived intangibles, namely FCC licenses, which are not amortized (but subject to impairment testing) for financial reporting purposes. The level of tax amortization expense will diminish significantly over the next 12 years from a current level of approximately $111 million per year to $16 million in fiscal 2017.

91

12. SEGMENT INFORMATION

     The Company’s operations are aligned into three business segments: Radio, Television and Publishing. These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate represents expense not allocated to reportable segments.

     The Company’s segments operate primarily in the United States, with one radio station located in Hungary and nine radio stations in Belgium (acquired in fiscal 2004). We sold our two radio stations in Argentina in May 2004. Results from operations for these two stations have been classified as discontinued operations in fiscal 2003 and 2004, and their assets and liabilities have been classified as held for sale as of February 29, 2004. Total revenues of the radio station in Hungary for the years ended February 28 (29) 2003, 2004, and 2005 were $9.2 million, $11.6 million and $17.4 million, respectively. This station’s long-lived assets as of February 28 (29), 2004 and 2005 were $8.9 million and $8.5 million, respectively. Total revenues of the radio stations in Belgium beginning February 2004 were not significant for the years ended February 28 (29), 2004 and 2005, and long-lived assets as of February 28 (29), 2004 and 2005 were $3.1 million and $4.2 million respectively. Total revenues of the radio stations in Argentina for the years ended February 28, 2002 and 2003 were $9.5 million and $2.6 million, respectively. Long-lived assets for these stations as of February 28, 2003 were $4.7 million.

YEAR ENDED FEBRUARY 28, 2005	Radio		Television		Publishing		Corporate			Consolidated
Net revenues	$	275,920	$	264,865	$	77,675	$	—		$	618,460
Station operating expenses, excluding noncash compensation		155,503		161,149		67,870		—			384,522
Corporate expenses, excluding noncash compensation		—		—		—		30,792			30,792
Depreciation and amortization		8,683		30,156		858		6,504			46,201
Noncash compensation		4,822		5,197		2,007		4,544			16,570
Operating income (loss)	$	106,912	$	68,363	$	6,940	$	(41,840	)	$	140,375
Total assets	$	1,069,617	$	546,680	$	84,434	$	122,304		$	1,823,035

YEAR ENDED FEBRUARY 29, 2004	Radio		Television		Publishing		Corporate			Consolidated
Net revenues	$	253,108	$	235,938	$	76,108	$	—		$	565,154
Station operating expenses, excluding noncash compensation		139,438		150,485		65,809		—			355,732
Corporate expenses, excluding noncash compensation		—		—		—		24,105			24,105
Depreciation and amortization		8,564		30,174		873		6,090			45,701
Noncash compensation		6,954		7,715		2,780		5,273			22,722
Impairment loss		—		12,400		—		—			12,400
Operating income (loss)	$	98,152	$	35,164	$	6,646	$	(35,468	)	$	104,494
Total assets	$	1,096,893	$	1,042,754	$	82,984	$	77,938		$	2,300,569

YEAR ENDED FEBRUARY 28, 2003	Radio		Television		Publishing		Corporate			Consolidated
Net revenues	$	228,678	$	234,752	$	72,793	$	—		$	536,223
Station operating expenses, excluding noncash compensation		122,812		148,041		62,825		—			333,678
Corporate expenses, excluding noncash compensation		—		—		—		21,359			21,359
Depreciation and amortization		7,097		28,453		1,917		4,867			42,334
Noncash compensation		9,377		6,528		2,358		3,491			21,754
Operating income (loss)	$	89,392	$	51,730	$	5,693	$	(29,717	)	$	117,098
Total assets	$	947,010	$	1,050,486	$	81,073	$	86,844		$	2,165,413

92

13. RELATED PARTY TRANSACTIONS

     No loans were made to directors, officers or employees during periods covered by these financial statements. However, one loan to Jeffrey H. Smulyan remains outstanding. The approximate amount of such loan at February 28 (29), 2004 and 2005 was $1,185 and $1,042, respectively. This loan bears interest at the Company’s average borrowing rate, which was approximately 3.6% and 4.4% as of February 28 (29), 2004 and 2005, respectively.

     Prior to 2002, the Company had made certain life insurance premium payments for the benefit of Mr. Smulyan. The Company discontinued making such payments in 2001; however, pursuant to a Split Dollar Life Insurance Agreement and Limited Collateral Assignment dated November 2, 1997, the Company retains the right, upon the death, resignation or termination of Mr. Smulyan’s employment, to recover all of the premium payments it has made, which total $1.1 million.

     Emmis leases a plane for business use and has a time-share agreement with Mr. Smulyan for personal use. Under the time-share agreement, whenever Mr. Smulyan uses the plane for non-business purposes, he pays Emmis for the aggregate incremental cost to Emmis of operating the plane up to the maximum amount permitted by Federal Aviation Authority regulations (which maximum generally approximates the total direct cost). Under the time-share agreement, Mr. Smulyan paid $149 and $51 for the years ending February 28 (29), 2004 and 2005, respectively. In addition, under Internal Revenue Service regulations, to the extent Mr. Smulyan allows non-business guests to travel on the plane on a business trip or takes the plane on a non-business detour as part of a business trip, additional compensation is attributed to Mr. Smulyan. Generally, these trips on which compensation is assessed pursuant to IRS regulations do not result in any material additional cost or expense to Emmis. The Company believes that the terms of these transactions were no less favorable to the Company than terms available from independent third parties.

     Also, during the year ended February 28, 2005, Emmis purchased approximately $186 of corporate gifts and specialty items from a company owned by the sister of Richard Leventhal, one of our directors.

14. FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND SUBSIDIARY NON-GUARANTORS

     Emmis conducts a significant portion of its business through subsidiaries. The 6 7/8% senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by certain direct and indirect subsidiaries (the “Subsidiary Guarantors”). As of February 28, 2005, subsidiaries holding Emmis’ interest in its radio stations in Austin, Texas, Hungary, and Belgium, as well as certain other subsidiaries (such as those conducting joint ventures with third parties), did not guarantee the senior subordinated notes (the “Subsidiary Non-Guarantors”). The claims of creditors of Subsidiary Non-Guarantors have priority over the rights of Emmis to receive dividends or distributions from such subsidiaries.

     Presented below is condensed consolidating financial information for the Emmis Communications (ECC) Parent Company Only, Emmis Operating (EOC) Parent Company only (issuer of the debt), the Subsidiary Guarantors and the Subsidiary Non-Guarantors as of February 28 (29), 2004 and 2005 and for each of the three years in the period ended February 28, 2005.

     Emmis uses the equity method in both of its Parent Company only information with respect to investments in subsidiaries when preparing the financial information for subsidiary guarantors and subsidiary non-guarantors. Separate financial statements for Subsidiary Guarantors are not presented based on management’s determination that they do not provide additional information that is material to investors.

93

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Balance Sheet
As of February 28, 2005

												Eliminations
	ECC Parent			EOC Parent					Subsidiary			and
	Company			Company			Subsidiary		Non-			Consolidating
	Only			Only			Guarantors		Guarantors			Entries			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	3,688		$	6,173	$	6,193		$	—		$	16,054
Accounts receivable, net		—			—			99,852		7,135			—			106,987
Prepaid expenses		—			1,413			14,765		384			—			16,562
Program rights		—			—			16,562		—			—			16,562
Other		—			1,966			4,459		1,868			—			8,293
Total current assets		—			7,067			141,811		15,580			—			164,458
Property and equipment, net		—			29,872			155,583		7,863			—			193,318
Intangible assets, net		—			—			1,198,069		150,541			—			1,348,610
Investment in affiliates		876,553			1,513,976			—		—			(2,390,529	)		—
Deferred tax assets		32,138			41,081			—		—			—			73,219
Other assets, net		28			41,236			19,511		1,429			(18,774	)		43,430
Total assets	$	908,719		$	1,633,232		$	1,514,974	$	175,413		$	(2,409,303	)	$	1,823,035
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	—		$	6,858		$	17,775	$	12,192		$	(8,230	)	$	28,595
Current maturities of other long-term debt		—			6,750			—		2,954			(2,016	)		7,688
Current portion of TV program rights payable		—			—			30,910		—			—			30,910
Accrued salaries and commissions		—			3,862			11,992		580			—			16,434
Accrued interest		—			9,582			—		—			—			9,582
Deferred revenue		—			—			14,335		—			—			14,335
Other		1,123			4,362			2,529		383			—			8,397
Total current liabilities		1,123			31,414			77,541		16,109			(10,246	)		115,941
Long-term debt, net of current maturities		1,245			1,172,563			—		—			—			1,173,808
Other long-term debt, net of current maturities		—			—			56		13,900			(8,528	)		5,428
TV program rights payable, net of current portion		—			—			18,634		—			—			18,634
Other noncurrent liabilities		—			6,461			2,123		27			—			8,611
Minority Interest		—			—			—		48,021			—			48,021
Deferred income taxes		—			—			—		—			—			—
Total liabilities		2,368			1,210,438			98,354		78,057			(18,774	)		1,370,443
SHAREHOLDERS’ EQUITY:
Preferred stock		29			—			—		—			—			29
Common stock		564			876,553			—		—			(876,553	)		564
Additional paid-in capital		1,041,128			—			—		4,393			(4,393	)		1,041,128
Subsidiary investment		—			—			1,096,856		118,490			(1,215,346	)		—
Retained earnings/(accumulated deficit)		(135,370	)		(453,984	)		319,764		(21,296	)		(298,468	)		(589,354	)
Accumulated other comprehensive loss		—			225			—		(4,231	)		4,231			225
Total shareholders’ equity		906,351			422,794			1,416,620		97,356			(2,390,529	)		452,592
Total liabilities and shareholders’ equity	$	908,719		$	1,633,232		$	1,514,974	$	175,413		$	(2,409,303	)	$	1,823,035

94

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2005

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	—		$	1,021		$	574,168		$	43,271		$	—		$	618,460
Operating expenses:
Station operating expenses, excluding noncash compensation		—			582			353,488			30,452			—			384,522
Corporate expenses, excluding noncash compensation		—			30,792			—			—			—			30,792
Noncash compensation		—			4,544			12,026			—			—			16,570
Depreciation and amortization		—			6,504			35,720			3,977			—			46,201
Total operating expenses		—			42,422			401,234			34,429			—			478,085
Operating income (loss)		—			(41,401	)		172,934			8,842			—			140,375
Other income (expense)
Interest expense		(5,707	)		(60,559	)		(9	)		(1,201	)		819			(66,657	)
Loss on debt extinguishment		(66,319	)		(30,929	)		—			—			—			(97,248	)
Other income (expense), net		—			198			(2,126	)		2,015			(1,833	)		(1,746	)
Total other income (expense)		(72,026	)		(91,290	)		(2,135	)		814			(1,014	)		(165,651	)
Income (loss) before income taxes, minority interest and discontinued operations		(72,026	)		(132,691	)		170,799			9,656			(1,014	)		(25,276	)
Provision (benefit) for income taxes		(5,051	)		16,862			—			4,130			—			15,941
Minority interest expense, net of tax		—			—			—			2,486			—			2,486
Income (loss) from continuing operations		(66,975	)		(149,553	)		170,799			3,040			(1,014	)		(43,703	)
Income (loss) from discontinued operations, net of tax		—			—			38,150			4,185			—			42,335
Income (loss) before accounting change		(66,975	)		(149,553	)		208,949			7,225			(1,014	)		(1,368	)
Cumulative effect of accounting change, net of tax		—			(303,000	)		(303,000	)		—			303,000			(303,000	)
Equity in earnings (loss) of subsidiaries		—			215,160			—			—			(215,160	)		—
Net income (loss)		(66,975	)		(237,393	)		(94,051	)		7,225			86,826			(304,368	)
Preferred stock dividends		8,984			—			—			—			—			8,984
Net income (loss) available to common shareholders	$	(75,959	)	$	(237,393	)	$	(94,051	)	$	7,225		$	86,826		$	(313,352	)

95

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2005

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(66,975	)	$	(237,393	)	$	(94,051	)	$	7,225		$	86,826		$	(304,368	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Discontinued operations		—			—			(38,150	)		(4,185	)		—			(42,335	)
Loss on debt extinguishment		66,319			30,929			—			—			—			97,248
Cumulative effect of accounting change		—			303,000			303,000			—			(303,000	)		303,000
Depreciation and amortization		—			8,534			62,682			4,758			—			75,974
Accretion of interest on senior discount notes, including amortization of related debt costs		5,707			—			—			—			—			5,707
Provision for bad debts		—			—			3,354			—			—			3,354
Provision (benefit) for deferred income taxes		(5,051	)		16,862			—			4,130			—			15,941
Noncash compensation		—			4,544			12,026			—			—			16,570
Net cash provided by operating activities - discontinued operations		—			—			3,614			—			—			3,614
Equity in earnings of subsidiaries		—			(215,160	)		—			—			215,160			—
Loss on sale of assets		—			—			2,630			—			—			2,630
Other		—			(2,305	)		6			50			1,014			(1,235	)
Changes in assets and liabilities -
Accounts receivable		—			—			(4,815	)		(301	)		—			(5,116	)
Prepaid expenses and other current assets		—			571			(3,200	)		(620	)		—			(3,249	)
Other assets		(45	)		(7,513	)		966			(43	)		—			(6,635	)
Accounts payable and accrued liabilities		—			(5,905	)		(3,648	)		5,163			—			(4,390	)
Deferred liabilities		—			—			(295	)		—			—			(295	)
Cash paid for program rights		—			—			(30,221	)		—			—			(30,221	)
Other liabilities		—			880			(3,277	)		(993	)		—			(3,390	)
Net cash provided by (used in) operating activities		(45	)		(102,956	)		210,621			15,184			—			122,804
INVESTING ACTIVITIES:
Purchases of property and equipment		—			(1,825	)		(20,392	)		(3,016	)		—			(25,233	)
Proceeds from sale of stations, net		—			—			74,778			7,300			—			82,078
Deposits on acquisitions and other		—			(1,755	)		(741	)		—			—			(2,496	)
Net cash provided by (used in) investing activities		—			(3,580	)		53,645			4,284			—			54,349
FINANCING ACTIVITIES:
Payments on long-term debt		(227,708	)		(1,237,010	)		—			—			—			(1,464,718	)
Proceeds from long-term debt		—			1,376,500			—			—			—			1,376,500
Premiums paid to redeem outstanding debt obligations		(59,905	)		(12,905	)		—			—			—			(72,810	)
Proceeds from exercise of stock options		2,285			—			—			—			—			2,285
Preferred stock dividends paid		(8,984	)		—			—			—			—			(8,984	)
Settlement of tax withholding obligations on stock issued to employees		(1,586	)		—			—			—			—			(1,586	)
Intercompany, net		295,647			(11,733	)		(267,125	)		(16,789	)		—			—
Debt related costs		—			(12,052	)		—			—			—			(12,052	)
Other		296			—			—			—			—			296
Net cash provided by (used in) financing activities		45			102,800			(267,125	)		(16,789	)		—			(181,069	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			(3,736	)		(2,859	)		2,679			—			(3,916	)
CASH AND CASH EQUIVALENTS:
Beginning of period		—			7,424			9,032			3,514			—			19,970
End of period	$	—		$	3,688		$	6,173		$	6,193		$	—		$	16,054

96

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Balance Sheet
As of February 29, 2004

												Eliminations
	ECC Parent			EOC Parent					Subsidiary			and
	Company			Company			Subsidiary		Non-			Consolidating
	Only			Only			Guarantors		Guarantors			Entries			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	7,424		$	9,032	$	3,514		$	—		$	19,970
Accounts receivable, net		—			—			98,391		6,834			—			105,225
Prepaid expenses		—			747			13,776		127			—			14,650
Program rights		—			—			13,373		—			—			13,373
Other		—			3,203			6,881		1,505			(1,444	)		10,145
Current assets - discontinued operations		—			—			668		2,782			—			3,450
Total current assets		—			11,374			142,121		14,762			(1,444	)		166,813
Property and equipment, net		—			34,551			171,010		6,425			—			211,986
Intangible assets, net		—			434			1,570,406		152,609			(78	)		1,723,371
Investment in affiliates		1,157,534			2,038,929			—		—			(3,196,463	)		—
Other assets, net		6,583			39,536			14,938		1,386			(10,230	)		52,213
Noncurrent assets - discontinued operations		—			—			140,980		5,206			—			146,186
Total assets	$	1,164,117		$	2,124,824		$	2,039,455	$	180,388		$	(3,208,215	)	$	2,300,569
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	—		$	10,676		$	19,375	$	7,257		$	(1,794	)	$	35,514
Current maturities of long-term debt		—			1,688			—		5,210			(359	)		6,539
Credit facility debt required to be repaid with assets held for sale		—			37,389			—		—			—			37,389
Current portion of TV program rights payable		—			—			27,502		—			—			27,502
Accrued salaries and commissions		—			3,782			10,203		352			—			14,337
Accrued interest		—			11,697			—		—			—			11,697
Deferred revenue		—			—			14,342		—			—			14,342
Other		1,123			2,229			3,933		304			—			7,589
Current liabilities - discontinued operations		—			—			734		638			—			1,372
Total current liabilities		1,123			67,461			76,089		13,761			(2,153	)		156,281
Long-term debt, net of current maturities		223,423			1,000,756			—		—			—			1,224,179
Other long-term debt, net of current maturities		—			41			130		15,337			(9,599	)		5,909
TV program rights payable, net of current portion		—			—			26,266		—			—			26,266
Other noncurrent liabilities		—			7,663			1,635		11			—			9,309
Minority Interest		—			—			—		47,672			—			47,672
Deferred income taxes		(27,087	)		109,081			—		—			—			81,994
Noncurrent liabilities - discontinued operations		—			—			13		—			—			13
Total liabilities		197,459			1,185,002			104,133		76,781			(11,752	)		1,551,623
SHAREHOLDERS’ EQUITY:
Preferred stock		29			—			—		—			—			29
Common stock		557			1,027,221			—		—			(1,027,221	)		557
Additional paid-in capital		1,025,483			130,313			—		4,393			(134,706	)		1,025,483
Subsidiary investment		—			—			1,521,507		131,070			(1,652,577	)		—
Retained earnings/(accumulated deficit)		(59,411	)		(216,591	)		413,815		(28,521	)		(385,294	)		(276,002	)
Accumulated other comprehensive loss		—			(1,121	)		—		(3,335	)		3,335			(1,121	)
Total shareholders’ equity		966,658			939,822			1,935,322		103,607			(3,196,463	)		748,946
Total liabilities and shareholders’ equity	$	1,164,117		$	2,124,824		$	2,039,455	$	180,388		$	(3,208,215	)	$	2,300,569

97

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Operations
For the Year Ended February 29, 2004

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	—		$	946		$	535,779		$	28,429		$	—		$	565,154
Operating expenses:
Station operating expenses, excluding noncash compensation		—			670			335,981			19,081			—			355,732
Corporate expenses, excluding noncash compensation		—			24,105			—			—			—			24,105
Noncash compensation		—			5,273			17,449			—			—			22,722
Depreciation and amortization		—			6,090			35,822			3,789			—			45,701
Impairment loss and other		—			—			12,400			—			—			12,400
Total operating expenses		—			36,138			401,652			22,870			—			460,660
Operating income (loss)		—			(35,192	)		134,127			5,559			—			104,494
Other income (expense)
Interest expense		(26,524	)		(58,719	)		(144	)		(1,484	)		913			(85,958	)
Loss on debt extinguishment		—			—			—			—			—			—
Other income (expense), net		—			(1,018	)		1,283			1,006			(1,464	)		(193	)
Total other income (expense)		(26,524	)		(59,737	)		1,139			(478	)		(551	)		(86,151	)
Income (loss) before income taxes, minority interest and discontinued operations		(26,524	)		(94,929	)		135,266			5,081			(551	)		18,343
Provision (benefit) for income taxes		(9,362	)		(33,680	)		51,401			1,666			—			10,025
Minority interest expense, net of tax		—			—			—			1,878			—			1,878
Income (loss) from continuing operations		(17,162	)		(61,249	)		83,865			1,537			(551	)		6,440
Income (loss) from discontinued operations, net of tax		—			—			5,835			(10,019	)		—			(4,184	)
Equity in earnings (loss) of subsidiaries		—			80,667			—			—			(80,667	)		—
Net income (loss)		(17,162	)		19,418			89,700			(8,482	)		(81,218	)		2,256
Preferred stock dividends		8,984			—			—			—			—			8,984
Net income (loss) available to common shareholders	$	(26,146	)	$	19,418		$	89,700		$	(8,482	)	$	(81,218	)	$	(6,728	)

98

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 29, 2004

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(17,162	)	$	19,418		$	89,700		$	(8,482	)	$	(81,218	)	$	2,256
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Discontinued operations		—			—			(5,835	)		10,019			—			4,184
Impairment loss		—			—			12,400			—			—			12,400
Depreciation and amortization		—			9,782			60,201			4,161			—			74,144
Accretion of interest on senior discount notes, including amortization of related debt costs		26,524			—			—			—			—			26,524
Provision for bad debts		—			—			3,290			—			—			3,290
Provision (benefit) for deferred income taxes		(9,362	)		(33,680	)		50,250			1,666			—			8,874
Noncash compensation		—			5,273			17,449			—			—			22,722
Net cash provided by operating activities - discontinued operations		—			—			11,195			(1,404	)		—			9,791
Equity in earnings of subsidiaries		—			(80,667	)		—			—			80,667			—
Other		2,775			—			(96	)		1,938			551			5,168
Changes in assets and liabilities -
Accounts receivable		—			—			(3,775	)		(357	)		—			(4,132	)
Prepaid expenses and other current assets		—			(1,712	)		4,403			(2,758	)		—			(67	)
Other assets		—			13,191			(16,809	)		841			—			(2,777	)
Accounts payable and accrued liabilities		—			(2,248	)		(2,134	)		2,187			—			(2,195	)
Deferred liabilities		—			—			(1,235	)		(46	)		—			(1,281	)
Cash paid for TV programming rights		—			—			(27,854	)		—			—			(27,854	)
Other liabilities		—			1,712			(7,688	)		(6,906	)		—			(12,882	)
Net cash provided by (used in) operating activities		2,775			(68,931	)		183,462			859			—			118,165
INVESTING ACTIVITIES:
Purchases of property and equipment		—			(4,767	)		(25,539	)		115			—			(30,191	)
Disposals of property and equipment		—			—			2,106			—			—			2,106
Cash paid for acquisitions		—			—			(11,656	)		(109,470	)		—			(121,126	)
Proceeds from sale of stations, net		—			—			3,650			—			—			3,650
Deposits on acquisitions and other		—			(798	)		—			—			—			(798	)
Net cash provided by (used in) investing activities		—			(5,565	)		(31,439	)		(109,355	)		—			(146,359	)
FINANCING ACTIVITIES:
Payments on long-term debt		—			(105,066	)		—			—			—			(105,066	)
Proceeds from long-term debt		—			138,000			—			—			—			138,000
Premiums paid to redeem outstanding debt obligations		—			—			—			—			—			—
Proceeds from exercise of stock options		10,555			—			—			—			—			10,555
Preferred stock dividends paid		(8,984	)		—			—			—			—			(8,984	)
Settlement of tax withholding obligations on stock issued to employees		(1,774	)		—			—			—			—			(1,774	)
Intercompany, net		(2,572	)		45,747			(148,835	)		105,660			—			—
Debt related costs		—			(646	)		—			—			—			(646	)
Net cash provided by (used in) financing activities		(2,775	)		78,035			(148,835	)		105,660			—			32,085
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			3,539			3,188			(2,836	)		—			3,891
CASH AND CASH EQUIVALENTS:
Beginning of period		—			3,885			5,844			6,350			—			16,079
End of period	$	—		$	7,424		$	9,032		$	3,514		$	—		$	19,970

99

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2003

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	—		$	923		$	526,136		$	9,164		$	—		$	536,223
Operating expenses:
Station operating expenses, excluding noncash compensation		—			702			326,181			6,795			—			333,678
Corporate expenses, excluding noncash compensation		—			21,359			—			—			—			21,359
Noncash compensation		—			3,491			18,263			—			—			21,754
Depreciation and amortization		—			4,867			34,789			2,678			—			42,334
Total operating expenses		—			30,419			379,233			9,473			—			419,125
Operating income (loss)		—			(29,496	)		146,903			(309	)		—			117,098
Other income (expense)
Interest expense		(25,777	)		(77,050	)		(771	)		(694	)		675			(103,617	)
Loss on debt extinguishment		(9,062	)		(4,444	)		—			—			—			(13,506	)
Other income (expense), net		—			(3,560	)		10,186			(229	)		(675	)		5,722
Total other income (expense)		(34,839	)		(85,054	)		9,415			(923	)		—			(111,401	)
Income (loss) before income taxes, minority interest and discontinued operations		(34,839	)		(114,550	)		156,318			(1,232	)		—			5,697
Provision (benefit) for income taxes		(9,935	)		(42,008	)		59,401			—			—			7,458
Minority interest expense, net of tax		—			—			—			—			—			—
Income (loss) from continuing operations		(24,904	)		(72,542	)		96,917			(1,232	)		—			(1,761	)
Income (loss) from discontinued operations, net of tax		—			—			5,577			(884	)		—			4,693
Cumulative effect of accounting change, net of tax		—			(167,400	)		(167,400	)		—			167,400			(167,400	)
Equity in earnings (loss) of subsidiaries		—			100,378			—			—			(100,378	)		—
Net income (loss)		(24,904	)		(139,564	)		(64,906	)		(2,116	)		67,022			(164,468	)
Preferred stock dividends		8,984			—			—			—			—			8,984
Net income (loss) available to common shareholders	$	(33,888	)	$	(139,564	)	$	(64,906	)	$	(2,116	)	$	67,022		$	(173,452	)

100

Emmis Communications Corporation and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2003

													Eliminations
	ECC Parent			EOC Parent						Subsidiary			and
	Company			Company			Subsidiary			Non-			Consolidating
	Only			Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(24,904	)	$	(139,564	)	$	(64,906	)	$	(2,116	)	$	67,022		$	(164,468	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Depreciation and amortization		—			8,806			55,673			2,678			—			67,157
Cumulative effect of accounting change		—			167,400			167,400			—			(167,400	)		167,400
Accretion of interest on senior discount notes, including amortization of related debt costs		25,777			—			—			—			—			25,777
Provision for bad debts		—			—			4,102			—			—			4,102
Provision (benefit) for deferred income taxes		(9,935	)		(42,008	)		59,401			—			—			7,458
Noncash compensation		—			3,491			18,263			—			—			21,754
Discontinued operations		—			—			(5,577	)		884			—			(4,693	)
Net cash provided by operating activities — discontinued operations		—			—			10,445			—			—			10,445
Loss on debt extinguishment		9,062			4,444			—			—			—			13,506
Equity in earnings of subsidiaries		—			(100,378	)		—			—			100,378			—
Other		958			(428	)		(9,313	)		(8,229	)		—			(17,012	)
Changes in assets and liabilities -
Accounts receivable		—			—			(11,657	)		450			—			(11,207	)
Prepaid expenses and other current assets		—			(1,355	)		(63	)		(2,048	)		—			(3,466	)
Other assets		—			(10,397	)		6,632			(399	)		—			(4,164	)
Accounts payable and accrued liabilities		—			(2,899	)		863			2,738			—			702
Deferred liabilities		—			—			(534	)		—			—			(534	)
Cash paid for TV program rights		—			—			(28,298	)		—			—			(28,298	)
Other liabilities		—			1,483			(6,146	)		15,353			—			10,690
Net cash provided by (used in) operating activities		958			(111,405	)		196,285			9,311			—			95,149
INVESTING ACTIVITIES:
Purchases of property and equipment		—			(5,354	)		(25,195	)		—			—			(30,549	)
Disposals of property and equipment		—			—			1,752			602			—			2,354
Cash paid for acquisitions		—			—			—			—			—			—
Proceeds from sale of stations, net		—			—			135,500			—			—			135,500
Deposits on acquisitions and other		—			(1,004	)		—			—			—			(1,004	)
Net cash provided by (used in) investing activities		—			(6,358	)		112,057			602			—			106,301
FINANCING ACTIVITIES:
Payments on long-term debt		(53,424	)		(260,101	)		—			—			—			(313,525	)
Proceeds from long-term debt		—			15,000			—			—			—			15,000
Proceeds from the issuance of the Company’s Class A Common Stock, net of transaction costs		120,239			—			—			—			—			120,239
Premiums paid to redeem outstanding debt obligations		(6,678	)		—			—			—			—			(6,678	)
Proceeds from exercise of stock options		6,906			—			—			—			—			6,906
Preferred stock dividends paid		(8,984	)		—			—			—			—			(8,984	)
Settlement of tax withholding obligations on stock issued to employees		(1,937	)		—			—			—			—			(1,937	)
Intercompany, net		(57,080	)		369,503			(307,468	)		(4,955	)		—			—
Debt related costs		—			(2,754	)		—			—			—			(2,754	)
Net cash provided by (used in) financing activities		(958	)		121,648			(307,468	)		(4,955	)		—			(191,733	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			3,885			874			4,958			—			9,717
CASH AND CASH EQUIVALENTS:
Beginning of period		—			—			4,970			1,392			—			6,362
End of period	$	—		$	3,885		$	5,844		$	6,350		$	—		$	16,079

101

15. SUBSEQUENT EVENTS

     During the fourth quarter of fiscal 2005, Emmis announced its agreement to acquire D.EXPRES, a.s., a Slovakian company that owns and operates Radio Expres, a national radio network in Slovakia, one of the world’s fastest growing economies. The purchase price was approximately $17.4 million, and the acquisition closed on March 10, 2005.

     On May 10, 2005, Emmis announced that it has engaged advisors to assist in evaluating strategic alternatives for the Company’s television assets. This process could result in a decision to sell all or a portion of its television assets.

     On May 10, 2005, Emmis also announced that its Board of Directors approved a “Dutch Auction” tender offer to purchase up to 20,250,000 shares of its Class A common stock at a price per share not less than $17.25 and not greater than $19.75. The purchase will be financed from a combination of new borrowings under Emmis’ existing credit facility and new financing. As a result, the tender offer will be subject to the receipt of debt financing on terms and conditions satisfactory to Emmis, in its reasonable judgment, in an amount sufficient to purchase the Class A shares in the tender offer and to pay related fees and expenses. In addition, the Board of Directors authorized a share repurchase program to be made effective after the completion of the tender offer. The share repurchase program would permit Emmis, to the extent that it does not purchase 20,250,000 Class A shares in the tender offer, to purchase up to a number of Class A shares equal to the shortfall plus an additional number of Class A shares equal to 5% of the total outstanding shares after the tender offer. Whether or to what extent Emmis chooses to make such purchases will depend upon market conditions and Emmis’ capital needs, and there is no assurance that Emmis will conclude such purchases for any or all of the authorized amounts remaining.

     On May 16, 2005, the Company commenced its “Dutch Auction” tender offer and Emmis filed Articles of Correction with the Indiana Secretary of State to correct the anti-dilution adjustment provisions of its outstanding convertible preferred stock. The Articles of Correction will implement the original agreement of the parties by correcting a mistake in the anti-dilution provisions relating to a tender offer by Emmis involving the purchase of shares of common stock for consideration representing more than 15% of the Company’s market capitalization. Upon the completion of the “Dutch Auction” tender offer, the anti-dilution provisions, as originally filed, would have resulted in the holders of the convertible preferred stock receiving a substantially greater reduction in the conversion price than was the original expectation of the parties. The revised anti-dilution provisions in the Articles of Correction reflect the original intent of the parties by including a customary anti-dilution formula for tender offers. Following the filing of the Articles of Correction, Emmis filed a lawsuit in Indiana State Court seeking, in part, a declaratory judgment authorizing the correction or reformation of the anti-dilution provisions in its second amended and restated Articles of Incorporation so that they are consistent with those in the Articles of Correction. The “Dutch Auction” tender offer is contingent on Emmis either prevailing in the lawsuit for declaratory judgment or resolving the subject matter of the lawsuit in a manner satisfactory to it. Emmis intends to actively seek to settle the lawsuit in a manner that is consistent with the revised anti-dilution provisions in the Articles of Correction. If Emmis does not prevail in the lawsuit or resolve it in a timely manner, Emmis intends to examine other alternatives to deliver value to its shareholders, which may include reducing the size of the tender offer so that no anti-dilution adjustment is triggered.

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

	Quarter Ended
											Full
	May 31			Aug. 31		Nov. 30		Feb. 28 (29)			Year
Year ended February 28, 2005
Net revenues	$	153,039		$	158,522	$	169,049	$	137,850		$	618,460
Operating income		34,662			39,775		48,475		17,463			140,375
Net income (loss) before accounting change		(73,570	)		15,296		19,805		37,101			(1,368	)
Net income (loss) available to common shareholders		(75,816	)		13,050		17,559		(268,145	)		(313,352	)
Basic earnings (loss) per common share:
Continuing operations, before accounting change	$	(1.37	)	$	0.21	$	0.28	$	(0.07	)	$	(0.94	)
Discontinued operations	$	0.01		$	0.02	$	0.03	$	0.69		$	0.76
Cumulative effect of accounting change, net of tax	$	—		$	—	$	—	$	(5.37	)	$	(5.40	)
Net income (loss) available to common shareholders	$	(1.36	)	$	0.23	$	0.31	$	(4.75	)	$	(5.58	)
Diluted earnings (loss) per common share:
Continuing operations, before accounting change	$	(1.37	)	$	0.21	$	0.28	$	(0.07	)	$	(0.94	)
Discontinued operations	$	0.01		$	0.02	$	0.03	$	0.69		$	0.76
Cumulative effect of accounting change, net of tax	$	—		$	—	$	—	$	(5.37	)	$	(5.40	)
Net income (loss) available to common shareholders	$	(1.36	)	$	0.23	$	0.31	$	(4.75	)	$	(5.58	)
Year ended February 29, 2004
Net revenues	$	134,343		$	147,346	$	152,068	$	131,397		$	565,154
Operating income		26,069			34,207		39,029		5,189			104,494
Net income (loss) before accounting change		2,602			9,754		11,316		(21,416	)		2,256
Net income (loss) available to common shareholders		356			7,508		9,070		(23,662	)		(6,728	)
Basic earnings (loss) per common share:
Continuing operations, before accounting change	$	(0.02	)	$	0.09	$	0.14	$	(0.26	)	$	(0.05	)
Discontinued operations	$	0.03		$	0.05	$	0.03	$	(0.17	)	$	(0.07	)
Cumulative effect of accounting change, net of tax	$	—		$	—	$	—	$	—		$	—
Net income (loss) available to common shareholders	$	0.01		$	0.14	$	0.17	$	(0.43	)	$	(0.12	)
Diluted earnings (loss) per common share:
Continuing operations, before accounting change	$	(0.02	)	$	0.09	$	0.14	$	(0.26	)	$	(0.05	)
Discontinued operations	$	0.03		$	0.05	$	0.02	$	(0.17	)	$	(0.07	)
Cumulative effect of accounting change, net of tax	$	—		$	—	$	—	$	—		$	—
Net income (loss) available to common shareholders	$	0.01		$	0.14	$	0.16	$	(0.43	)	$	(0.12	)

102

     Our results of operations are usually subject to seasonal fluctuations, which result in higher second and third quarter revenues and operating income. Net loss available to common shareholders in the quarter ended February 29, 2004 includes a $12.4 million impairment loss resulting from the Company’s annual SFAS No. 142 review and a $9.4 million loss from discontinued operations. The net loss available to common shareholders in the quarter ended May 31, 2005 includes a pre-tax loss on debt extinguishment of $97.3 million. The net loss available to common shareholders in the quarter ended February 28, 2005 includes a charge of $303.0 million, net of tax, to reflect the cumulative effect of an accounting change in connection with our adoption of EITF Topic D-108, “Use of the Residual Method to Value Acquired Assets other than Goodwill.” Operating results for fiscal 2004 and the first six months of fiscal 2005 have been reclassified to reflect the discontinued operations related to the three radio stations in Phoenix we exchanged in January 2005.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

               Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     As of the end of the period covered by this annual report, the Company evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” (“Disclosure Controls”). This evaluation (the “Controls Evaluation”) was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

     Based upon the Controls Evaluation, our CEO and CFO concluded that as of February 28, 2005, our Disclosure Controls are effective to provide reasonable assurance that information relating to Emmis Communications Corporation and Subsidiaries that is required to be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

     Management’s report on internal control over financial reporting and the attestation report of Emmis Communications Corporation’s independent auditors are included in Emmis Communications Corporation’s financial statements under the captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm” and are incorporated herein by this reference.

ITEM 9B. OTHER INFORMATION

               Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by this item with respect to directors or nominees to be directors of Emmis is incorporated by reference from the sections entitled “Proposal No. 1: Election of Directors,” “Corporate Governance – Certain Committees of the Board of Directors,” “Corporate Governance – Code of Ethics” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Emmis 2005 Proxy Statement. Information about executive officers of Emmis or its affiliates who are not directors or nominees to be directors is presented in Part I under the caption “Executive Officers of the Registrant.”

ITEM 11. EXECUTIVE COMPENSATION.

     The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Compensation of Directors,” “Compensation Committee Interlocks and Insider Participation,” “Employment and Change-in-Control Agreements” and “Compensation Tables” in the Emmis 2005 Proxy Statement.

103

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information required by this item is incorporated by reference from the section entitled “Security Ownership of Beneficial Owners and Management” in the Emmis 2005 Proxy Statement.

Equity Compensation Plan Information

     The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of February 28, 2005. These plans include the 2004 Equity Compensation Plan and the Employee Stock Purchase Plan. Our shareholders have approved all of these plans.

							Number of Securities Remaining
	Number of Securities to be Issued			Weighted-Average Exercise			Available for Future Issuance under
	Upon Exercise of Outstanding			Price of Outstanding Options,			Equity Compensation Plans (Excluding
	Options, Warrants and Rights			Warrants and Rights			Securities Reflected in Column (A))
Plan Category	(A)			(B)			(C)
Equity Compensation Plans Approved by Security Holders		6,322,857	(1)		$25.75	(1)		5,372,666	(2)
Equity Compensation Plans Not Approved by Security Holders		—			—			—
Total		6,322,857	(1)		$25.75	(1)		5,372,666	(2)

(1)   Includes 265,000 shares estimated to be issuable in 2005 to employees in lieu of current salary pursuant to contract rights under our stock compensation program. See Note 1g to our Consolidated Financial Statements. The exact number and price of shares to be issued depends upon actual compensation during the period prior to issuance and changes in our share price, neither of which can be determined at this time. Thus, the weighted averages in Column B do not reflect these shares. The amount in Column A excludes obligations under employment contracts to issue bonus shares in the future.

(2)   Includes 302,666 shares currently available under the initial authorization for the Employee Stock Purchase Plan. The number of shares reserved for issuance under this plan is automatically increased on the first day of each fiscal year by the lesser of 0.5% of the common shares outstanding on the last day of the immediately preceding fiscal year or a lesser amount determined by our board of directors. On March 1, 2005, options were granted to employees to purchase an additional 634,820 shares of Emmis Communications Corporation common stock at $18.74 per share and 249,054 shares of restricted stock were granted.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Certain Transactions” in the Emmis 2005 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this item is incorporated by reference from the section entitled “Matters Relating to Independent Registered Public Accountants” in the Emmis 2005 Proxy Statement.

104

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Financial Statements

     The financial statements filed as a part of this report are set forth under Item 8.

Financial Statement Schedules

     No financial statement schedules are required to be filed with this report.

105

Exhibits

The following exhibits are filed or incorporated by reference as a part of this report:

3.1	Second Amended and Restated Articles of Incorporation of Emmis Communications Corporation, incorporated by reference from Exhibit 3.1 to the Company’s Form 10-K/A for the fiscal year ended February 29, 2000, and an amendment thereto relating to certain 12 1/2% Senior Preferred Stock incorporated by reference from Exhibit 3.1 to the Company’s current report on Form 8-K filed December 13, 2001, and Articles of Correction incorporated by reference from Exhibit 99.2 to the Company’s current report on Form 8-K filed May 16, 2005.
3.2	Amended and Restated Bylaws of Emmis Communications Corporation, incorporated by reference from Exhibit 3.2 to the Company’s Form 10-Q for the quarter ended November 30, 2002.
4.1	Indenture dated May 10, 2004 (the “6 7/8% Subordinated Notes Indenture”) among Emmis Operating Company and The Bank of Nova Scotia Trust Company of New York, as trustee, including as an exhibit thereto the form of note, incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
4.2	Indenture dated March 27, 2001 (the “12 1/2% Senior Discount Notes Indenture”) among Emmis Communications Corporation and The Bank of Nova Scotia Trust Company of New York, as trustee, including as an exhibit thereto the form of note, incorporated by reference to Exhibit 4.1 to Emmis’ Registration Statement on Form S-4, File No. 333-621604, as amended.
4.3	Supplemental Indenture dated April 26, 2004 to the 12 1/2% Senior Discount Notes Indenture, incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
4.4	Form of stock certificate for Class A common stock, incorporated by reference from Exhibit 3.5 to the 1994 Emmis Registration Statement on Form S-1, File No. 33-73218 (the “1994 Registration Statement”).
10.1	Revolving Credit and Term Loan Agreement dated May 10, 2004, incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
10.2	Emmis Operating Company Profit Sharing Plan, as amended, effective March 1, 1997, incorporated by reference from Exhibit 10.1 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 2003 (the “2003 10-K”).++
10.3	Emmis Communications Corporation 1994 Equity Incentive Plan, incorporated by reference from Exhibit 10.5 to the 1994 Registration Statement.++
10.4	The Emmis Communications Corporation 1995 Non-Employee Director Stock Option Plan, incorporated by reference from Exhibit 10.15 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 1995 (the “1995 10-K”).++
10.5	The Emmis Communications Corporation 1995 Equity Incentive Plan incorporated by reference from Exhibit 10.16 to the 1995 10-K.++
10.6	Emmis Communications Corporation 1997 Equity Incentive Plan, incorporated by reference from Exhibit 10.5 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 1998.++
10.7	Emmis Communications Corporation 1999 Equity Incentive Plan, incorporated by reference from the Company’s proxy statement dated May 26, 1999.++
10.8	Emmis Communications Corporation 2001 Equity Incentive Plan, incorporated by reference from the Company’s proxy statement dated May 25, 2001.++
10.9	Emmis Communications Corporation 2002 Equity Compensation Plan, incorporated by reference from the Company’s proxy statement dated May 30, 2002.++

106

10.10	Emmis Communications Corporation 2004 Equity Compensation Plan, incorporated by reference from the Company’s proxy statement dated May 28, 2004.++
10.11	Employment Agreement and Change in Control Severance Agreement, dated as of March 1, 2004, by and between Emmis Operating Company and Jeffrey H. Smulyan, incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended August 31, 2004.++
10.12	Employment Agreement dated as of March 1, 2002, by and between Emmis Operating Company and Richard Cummings, incorporated by reference from Exhibit 10.21 to the 2003 10-K and Amendment to Employment Agreement dated February 7, 2005, incorporated by reference from Exhibit 10.2 to the Company’s Form 8-K filed February 11, 2005. ++
10.13	Employment Agreement dated as of September 9, 2002, by and between Emmis Operating Company and Michael Levitan, incorporated by reference from Exhibit 10.22 to the 2003 10-K and Amendment to Employment Agreement dated February 7, 2005, incorporated by reference from Exhibit 10.4 to the Company’s Form 8-K filed February 11, 2005. ++
10.14	Employment Agreement dated as of March 1, 2003, by and between Emmis Operating Company and Gary A. Thoe, incorporated by reference from Exhibit 10.23 to the 2003 10-K. ++
10.15	Employment Agreement dated as of March 1, 2002, by and between Emmis Operating Company and Walter Z. Berger, incorporated by reference from Exhibit 10.24 to the 2003 10-K and Amendment to Employment Agreement dated February 7, 2005, incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed February 11, 2005. ++
10.16	Employment Agreement, dated as of March 1, 2003, by and between Emmis Operating Company and Randall D. Bongarten, incorporated by reference from Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended May 31, 2003 and Amendment to Employment Agreement dated May 13, 2005. ++*
10.17	Employment agreement effective as of March 1, 2003, by and between Emmis Operating Company and Gary L. Kaseff, incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended August 31, 2003 and Amendment to Employment Agreement dated February 7, 2005, incorporated by reference from Exhibit 10.3 to the Company’s Form 8-K filed February 11, 2005. ++
10.18	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Walter Z. Berger, incorporated by reference from Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.19	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Gary L. Kaseff, incorporated by reference from Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.20	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Randall D. Bongarten, incorporated by reference from Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended August 31, 2003, amended by Amendment to Employment Agreement dated May 13, 2005. ++*
10.21	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Richard F. Cummings, incorporated by reference from Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.22	Change in Control Severance Agreement, dated as of February 7, 2005, by and between Emmis Communications Corporation and Michael Levitan, incorporated by reference from Exhibit 10.5 to the Company’s Form 8-K filed February 11, 2005. ++

107

10.23	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Paul Fiddick, incorporated by reference from Exhibit 10.7 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.24	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Gary A. Thoe, incorporated by reference from Exhibit 10.8 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.25	Asset Exchange Agreement, dated as of January 14, 2005, by and between Emmis Radio, LLC and Emmis Radio License, LLC and Bonneville International Corporation and Bonneville Holding Company. *
10.26	Agreement for Purchase of Limited Partner and Member Interests, dated as of March 3, 2003, by and between Emmis Operating Company and Sinclair Telecable, Inc., incorporated by reference from Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended May 31, 2003.
10.27	Registration Rights Agreement dated May 10, 2004, by and between Emmis Operating Company and Goldman, Sachs & Co., incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
10.28	Aircraft Time Sharing Agreement dated January 22, 2003, by and between Emmis Operating Company and Jeffrey H. Smulyan, incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
10.29	Tax Sharing Agreement dated May 10, 2004, by and between Emmis Communications Corporation and Emmis Operating Company, incorporated by reference to the Company’s Form 10-K for the year ended February 29, 2004.
10.30	2005 Stock Compensation Program Restricted Stock Agreement Form (tax vesting option), incorporated by reference to the Company’s Form 10-Q for the quarter ended November 30, 2004.++
10.31	2005 Stock Compensation Program Restricted Stock Agreement Form (non-tax vesting option), incorporated by reference to the Company’s Form 10-Q for the quarter ended November 30, 2004.++
10.32	2005 Stock Compensation Program, incorporated by reference to the Company’s Form 8-K filed December 21, 2004.++
10.33	2005 Outside Director Stock Compensation Program, incorporated by reference to the Company’s Form 8-K filed December 21, 2004.++
10.34	Form of Stock Option Grant Agreement, incorporated by reference to the Company’s Form 8-K filed March 7, 2005.++
10.35	Form of Restricted Stock Option Grant Agreement, incorporated by reference to the Company’s Form 8-K filed March 7, 2005.++

108

10.36	Director Compensation Policy effective May 13, 2005. ++*
12	Ratio of Earnings to Fixed Charges.*
21	Subsidiaries of Emmis.*
23	Consent of Independent Registered Public Accountants.*
24	Powers of Attorney.*
31.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act.*
31.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act.*
32.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

*	Filed with this report.
++	Management contract or compensatory plan or arrangement.

109

Signatures.

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EMMIS COMMUNICATIONS CORPORATION
May 16, 2005	By:	Date:/s/ Jeffrey H. Smulyan
		Jeffrey H. Smulyan
		Chairman of the Board, President and Chief Executive Officer

110

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and on the dates indicated.

		SIGNATURE	TITLE
Date:	May 16, 2005	/s/ Jeffrey H. Smulyan	President, Chairman of the Board and Director (Principal Executive Officer)
		Jeffrey H. Smulyan
Date:	May 16, 2005	/s/ Walter Z. Berger	Executive Vice President, Treasurer, Chief Financial Officer and Director (Principal Accounting Officer)
		Walter Z. Berger
Date:	May 16, 2005	Susan B. Bayh*	Director
		Susan B. Bayh
Date:	May 16, 2005	Gary L. Kaseff*	Executive Vice President, General Counsel and Director
		Gary L. Kaseff
Date:	May 16, 2005	Richard A. Leventhal*	Director
		Richard A. Leventhal
Date:	May 16, 2005	Peter A. Lund*	Director
		Peter A. Lund
Date:	May 16, 2005	Greg A. Nathanson*	Director
		Greg A. Nathanson
Date:	May 16, 2005	Frank V. Sica*	Director
		Frank V. Sica
Date:	May 16, 2005	Lawrence B. Sorrel*	Director
		Lawrence B. Sorrel

*By:	/s/ J. Scott Enright
	J. Scott Enright Attorney-in-Fact

111

EX-10.16

Exhibit 10.16

May 13, 2005

Randall D. Bongarten
c/o Emmis Communications Corporation
40 Monument Circle, Suite 700
Indianapolis, IN 46204

     Re: Amendment to Employment Agreement

Dear Randy:

     This letter shall confirm our agreement to amend your employment agreement with Emmis Operating Company dated March 1, 2003 (the “Agreement”), upon the terms and subject to the conditions set forth in this letter (the “Amendment”).

     Except as otherwise provided below, this Amendment is effective upon execution by you. Any capitalized words or phrases used and not defined in this Amendment shall have the meanings ascribed to them in the Agreement or Exhibit A to the Agreement. This shall confirm that the parties have agreed as follows:

1. The Term of the Agreement has been extended through February 28, 2009. After February 28, 2006, “Contract Year” shall mean the twelve (12) month period commencing on March 1, 2006 and on each anniversary thereof during the Term.

2. Effective March 1, 2006, the dollar amount set forth in the first sentence of Section 3.4 shall be increased from Five Hundred Thirty Five Thousand Dollars ($535,000) to Five Hundred Ninety Five Thousand Dollars ($595,000).

3. The Base Salary shall be increased to Four Hundred Ninety Five Thousand Dollars ($495,000) each Contract Year during the Term, commencing with the Contract Year beginning March 1, 2006 (“FYE 07”).

4. After payment of any Contract Year Bonus earned for the period ending February 28, 2006, Section 6.2 shall be modified to reflect the following: Commencing with FYE 07, the target amount of the Contract Year Bonus shall be increased to Three Hundred Forty One Thousand Five Hundred Dollars ($341,500) each Contract Year, and the third and fourth sentences of Section 6.2 shall be deleted and replaced with the following language:

     “Employer may pay all or a portion of any Contract Year Bonus in Shares in the same manner utilized for other senior management level employees.”

Unless subsequently changed by the Compensation Committee, the performance goals for FYE 07 shall be:

	Target Bonus		Performance Goal
1.	$	239,050	Television Station Operating Income Target
2.	$	102,450	Individual Performance (Discretionary)

Television Station Operating Income or any other applicable performance targets or goals shall be defined and determined by the Compensation Committee each Contract Year. The Compensation Committee reserves the right to amend the performance goals to the extent it deems appropriate in order to take into account any material acquisition, disposition, reorganization, recapitalization or other material transaction involving Employer or its properties. Executive shall earn a certain percentage of each Contract Year Bonus in accordance with the applicable bonus scale adopted by the Employer for the subject Contract Year.

5. Section 6.3 shall be deleted in its entirety and replaced with the following language:

     “6.3 Equity Incentive Compensation. For the Contract Year beginning March 1, 2005, at such time as Employer generally awards equity incentive compensation to members of Employer’s senior management team, Executive shall receive Seven Thousand Five Hundred (7,500) Shares (as defined below) and an option (“Option”) to acquire Twenty Five Thousand (25,000) Shares. Each Contract Year during the Term, beginning with FYE 07, at such time as Employer generally awards equity incentive compensation to members of Employer’s senior management team, Executive shall receive Nine Thousand (9,000) Shares and an Option to acquire Thirty Thousand (30,000) Shares. As used herein, “Shares” shall mean shares of Class A Common Stock of Emmis Communications Corporation. The grants of Options and Shares shall be pursuant to the terms and subject to the conditions of the applicable Equity Incentive Plan of Employer, the Option agreements evidencing the Option grants and the restricted stock agreements evidencing the grants of Shares. In the event of any change in the outstanding Shares by reason of any reorganization, recapitalization, reclassification, merger, stock split, reverse stock split, stock dividend, asset spinoff, share combination, consolidation, or similar event, the number and class of all Shares awarded pursuant to this Agreement or covered by an Option granted pursuant to this Agreement (and any applicable Option exercise price) shall be adjusted by the Compensation Committee in its sole discretion and in accordance with the terms of the applicable Equity Incentive Plan of Employer, the Option agreement evidencing the grant of the Option and the restricted stock agreement evidencing the grant of Shares. The determination of the Compensation Committee shall be conclusive and binding.”

6. After the delivery of any Bonus Shares earned for the period ending February 28, 2006 pursuant to Section 6.4, Section 6.4 shall be deleted in its entirety and replaced with the following language:

2

     “6.4 Completion Bonus. On or about February 28, 2009, Executive shall receive Fifty Thousand (50,000) Shares (the “Completion Shares”); provided, that (i) this Agreement is in effect on February 28, 2009 and has not been terminated for any reason (other than a breach of this Agreement by Employer); and (ii) Executive has fully performed all of Executive’s duties and obligations under this Agreement throughout the Term and is not in breach of any of the material terms and conditions of this Agreement. The Completion Shares shall be freely transferable when delivered to Executive subject to Employer’s securities trading policy and applicable federal and state law. Employer shall have the right, in its sole and absolute discretion, to pay to Executive the value of the Completion Shares (in the same manner applied to other senior management level employees) in cash in lieu of granting Executive the Completion Shares.”

7. Effective March 1, 2005, Section 15.9 shall be deleted and shall be of no further force and effect.

8. The third and fourth sentences of Section 11.4 shall be deleted and shall be of no further force and effect.

9. In Section 14, Gary Kaseff’s address has been changed to 3500 W. Olive Avenue, Suite 1450, Burbank, California 91505.

10. The Change in Control Agreement attached as Exhibit A to the Agreement shall be amended as follows:

     (a) Section 1(e)(iii)(B) shall be deleted in its entirety and replaced with the following language:

          “(iii) the consummation of (B) the sale or other disposition of all or substantially all of the assets of the Company to any Person or the sale or other disposition of all or substantially all of the television assets of the Company to any Person;”

     (b) The language at the end of the first paragraph of Section 1(e) beginning with “, or (b) in the event the Company separates...” and ending with “...of the Board of Directors of the Company or any Successor” shall be deleted.

     (c) The following shall be added at the end of the first paragraph of Section 1(e):

          “Notwithstanding the foregoing, a Change in Control of the Company shall be deemed not to have occurred with respect to any Executive, if (i) such Executive is, by written agreement executed prior to such Change in Control, a participant on such Executive’s own behalf in a transaction in which the persons (or their Affiliates) with whom such Executive has such written agreement acquire any of the television assets and, pursuant to the written agreement, the Executive has an equity or similar interest in the resulting entity or assets or a right to acquire such an equity or similar interest, or (ii) following the consummation of the sale or other disposition of all

3

or substantially all of the television assets of the Company to any Person, the Company or Affiliates of the Company manages such assets.”

     (d) In Sections 9(a) and 9(b), the term “Business Combination” shall include a sale of all or substantially all the television assets of the Company and the terms “surviving corporation” and “successor entity” shall also mean the purchaser of all or substantially all of the television assets of the Company, as applicable.

     (e) In Section 9(b), the specified failure of the Company to obtain such assumption and guarantee, while considered a breach of the Change in Control Agreement, shall not be considered a breach of the Agreement.

     (f) As used above, “substantially all of the television assets of the Company” means assets representing at least sixty-five percent (65%) of the Television Station Operating Income of the Company as reported by the Company for the fiscal year ending February 28, 2005.

All of the terms and conditions set forth in the Agreement and Exhibit A shall remain unchanged and in full force and effect unless specifically modified in this Amendment. All references to the Term or its expiration or termination shall be adjusted to properly reflect the language set forth above. This Amendment shall be incorporated by reference into the Agreement and made a part thereof. In the event of any conflict between any provision of this Amendment and any provision of the Agreement, this Amendment shall govern and control.

Please sign below where indicated to signify your acceptance of the terms and conditions set forth in this Amendment. Should you have any questions about this Amendment, please let me know.

Sincerely,

/s/ Jeffrey H. Smulyan

Jeffrey H. Smulyan, Chairman and Chief Executive

Officer, Emmis Operating Company and Emmis

Communications Corporation

ACCEPTED AND AGREED:

/s/ Randall D. Bongarten

Randall D. Bongarten

4

EX-10.25

Exhibit 10.25

ASSET EXCHANGE AGREEMENT

between

EMMIS RADIO, LLC
EMMIS RADIO LICENSE, LLC

and

BONNEVILLE INTERNATIONAL CORPORATION
BONNEVILLE HOLDING COMPANY

January 14, 2005

TABLE OF CONTENTS

RECITALS			1
ARTICLE I. TERMINOLOGY			2
	1.1	Defined Terms	2
	1.2	Additional defined Terms	6
ARTICLE II. EXCHANGE OF ASSETS			8
	2.1	Description of Exchange Assets	8
	2.2	Excluded Assets	11
	2.3	Emmis Entities’ Assumption of Liabilities	14
	2.4	Bonneville Entities’ Assumption of Liabilities	14
	2.5	Exchange of Assets; Boot and Noncompete Payments	16
	2.6	Asset Values and 1031 Schedules	16
	2.7	Proration Adjustment	17
	2.8	Accounts Receivable	20
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE EMMIS ENTITIES			21
	3.1	Organization, Good Standing and Requisite Power	21
	3.2	Authorization and Binding Effect of Documents	21
	3.3	Absence of Conflicts	22
	3.4	Consents	22
	3.5	Emmis Assets; Title	22
	3.6	Emmis FCC Licenses	23
	3.7	Station Agreements	24
	3.8	Tangible Personal Property	26
	3.9	Emmis Real Property	26
	3.10	Intellectual Property	29
	3.11	Emmis Stations Financial Condition	29
	3.12	Absence of Certain Changes or Events	30
	3.13	Litigation	31
	3.14	Labor Matters	31
	3.15	Employee Benefit Plans	32
	3.16	Compliance with Law	33
	3.17	[INTENTIONALLY OMITTED]	34
	3.18	Environmental Matters	34
	3.19	Broker’s or Finder’s Fees	35
	3.20	Insurance	35
	3.21	Transactions with Affiliates	35
	3.22	Emmis Entities’ Qualification	36
	3.23	WARN Act	36
	3.24	Certain Information Regarding Emmis Entities	36
	3.25	Exclusivity of Representations	37
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE BONNEVILLE ENTITIES			37
	4.1	Organization, Good Standing and Requisite Power	37
	4.2	Authorization and Binding Effect of Documents	37
	4.3	Absence of Conflicts	38

i

	4.4	Consents	38
	4.5	Bonneville Assets; Title	38
	4.6	Bonneville FCC Licenses	39
	4.7	Station Agreements	40
	4.8	Tangible Personal Property	42
	4.9	Bonneville Real Property	42
	4.10	Intellectual Property	44
	4.11	WLUP Financial Condition	44
	4.12	Absence of Certain Changes or Events	45
	4.13	Litigation	46
	4.14	Labor Matters	46
	4.15	Employee Benefit Plans	47
	4.16	Compliance with Law	48
	4.17	[INTENTIONALLY OMITTED]	48
	4.18	Environmental Matters	48
	4.19	Broker’s or Finder’s Fees	50
	4.20	Insurance	50
	4.21	Transactions with Affiliates	50
	4.22	Bonneville Entities’ Qualification	50
	4.23	WARN Act	51
	4.24	Exclusivity of Representations	51
ARTICLE V. OTHER COVENANTS			52
	5.1	Conduct of Each Station’s Business Prior to the Closing Date	52
	5.2	Notification of Certain Matters	54
	5.3	HSR Filings	54
	5.4	FCC Filing	54
	5.5	Title; Additional Documents	55
	5.6	Consents	55
	5.7	Inspection and Access; Financial Information	56
	5.8	Confidentiality	56
	5.9	Publicity	56
	5.10	Material Adverse Effect	57
	5.11	Commercially Reasonable Efforts	57
	5.12	FCC Reports and Applications	57
	5.13	Tax Returns and Payments	57
	5.14	No Solicitation	57
	5.15	Audited Financial Statements	57
	5.16	Disclosure Schedules	58
	5.17	Bulk Sales Law	59
	5.18	Multi-Station Agreements	59
	5.19	Noncompete Covenant	59
	5.20	Cooperation on Third Party Exchange	60
	5.21	South Mountain Sublicense Agreement	60
	5.22	Option Agreement for WLUP Auxiliary Antenna	61
	5.23	Transition Services Agreements	61
	5.24	John Hancock Sublicense Agreement	61

ii

	5.25	Shared Fire Alarm System	62
	5.26	Remediation	62
	5.27	Emmis Station Interference	62
	5.28	Release Regarding Mark	62
ARTICLE VI. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE EMMIS ENTITIES TO CLOSE			63
	6.1	Accuracy of Representations and Warranties; Closing Certificate	63
	6.2	Performance of Agreement	63
	6.3	FCC Order	63
	6.4	HSR Act	64
	6.5	Opinions of Bonneville Entities’ Counsel	64
	6.6	Required Consents	64
	6.7	Delivery of Closing Documents	65
	6.8	No Adverse Proceedings	65
	6.9	Settlement Statement	65
	6.10	Concurrent Conveyances	65
ARTICLE VII. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BONNEVILLE ENTITIES TO CLOSE			65
	7.1	Accuracy of Representations and Warranties; Closing Certificate	65
	7.2	Performance of Agreement	66
	7.3	FCC Order	66
	7.4	HSR Act	66
	7.5	Opinions of Emmis Entities’ Counsel	66
	7.6	Required Consents	67
	7.7	Delivery of Closing Documents	67
	7.8	No Adverse Proceedings	67
	7.9	Concurrent Conveyances	67
	7.10	Real Property Matters	68
ARTICLE VIII. CLOSING			69
	8.1	Time and Place	69
	8.2	Deliveries by the Bonneville Entities	70
	8.3	Deliveries by the Emmis Entities	71
ARTICLE IX. INDEMNIFICATION			72
	9.1	Survival	72
	9.2	Indemnification by the Emmis Entities	72
	9.3	Indemnification by the Bonneville Entities	73
	9.4	Administration of Indemnification	74
	9.5	Mitigation and Limitation of Damages	76
ARTICLE X. TERMINATION			76
	10.1	Right of Termination	76
	10.2	Obligations Upon Termination	76
	10.3	Termination Notice	77
	10.4	Single Party	77
ARTICLE XI. CONTROL OF STATIONS			77
ARTICLE XII. EMPLOYMENT MATTERS			77
	12.1	WLUP Employees	77

iii

	12.2	Emmis Stations’ Employees	77
ARTICLE XIII. MISCELLANEOUS			78
	13.1	Further Actions	78
	13.2	Payment of Expenses	78
	13.3	Specific Performance	78
	13.4	Notices	79
	13.5	Entire Agreement	80
	13.6	Binding Effect; Benefits	80
	13.7	Assignment	80
	13.8	Governing Law	80
	13.9	Amendments and Waivers	81
	13.10	Severability	81
	13.11	Headings	81
	13.12	Counterparts	81
	13.13	References	81
	13.14	Schedules and Exhibits	81
	13.15	Joint and Several Liability	82
	13.16	Bonneville Entities Not Responsible for Emmis Entities’ Actions Under Chicago TBA	82
	13.17	Emmis Entities Not Responsible for Bonneville Entities’ Actions Under Phoenix TBA	82

iv

SCHEDULES

Emmis Entities:
	Schedule 2.2(m)	Certain Emmis Excluded Assets
	Schedule 3.3	Absence of Conflicts
	Schedule 3.5(b)	Liens to be Released Prior to Closing
	Schedule 3.6	FCC Licenses
	Schedule 3.7(a)	Trade Agreements
	Schedule 3.7(b)	Station Agreements
	Schedule 3.7(c)	Affiliate Agreements
	Schedule 3.7(d)	Station Agreements Details
	Schedule 3.8	Tangible Personal Property
	Schedule 3.9	Real Property Interests
	Schedule 3.10	Intellectual Property
	Schedule 3.11	Emmis Stations Statements
	Schedule 3.12	Absence of Certain Changes or Events
	Schedule 3.13	Litigation
	Schedule 3.14(a)	Labor Matters
	Schedule 3.14(b)	Union Matters
	Schedule 3.14(c)	List of Employees
	Schedule 3.15	Employee Benefit Plans
	Schedule 3.16	Compliance with Law
	Schedule 3.18	Environmental Matters
	Schedule 3.19	Broker’s or Finder’s Fees
	Schedule 3.21	Transactions with Affiliates
	Schedule 3.22	Emmis Entities’ Qualification
	Schedule 5.4(c)	Changes in Association of FCC Licenses
Bonneville Entities:
	Schedule 2.1(b)(i)	Studio Equipment Included in Bonneville Assets
	Schedule 2.2(l)	Certain Bonneville Excluded Employees
	Schedule 4.3	Absence of Conflicts
	Schedule 4.5(b)	Liens to be Released Prior to Closing
	Schedule 4.6	FCC Licenses
	Schedule 4.7(a)	Trade Agreements
	Schedule 4.7(b)	Station Agreements
	Schedule 4.7(c)	Affiliate Agreements
	Schedule 4.7(d)	Station Agreement Details
	Schedule 4.8	Tangible Personal Property
	Schedule 4.9	Real Property Interests
	Schedule 4.10	Intellectual Property
	Schedule 4.11	WLUP Statements

v

	Schedule 4.12	Absence of Certain Changes or Events
	Schedule 4.13	Litigation
	Schedule 4.14(a)	Labor Matters
	Schedule 4.14(b)	Union Matters
	Schedule 4.14(c)	List of Employees
	Schedule 4.15	Employee Benefit Plans
	Schedule 4.16	Compliance with Law
	Schedule 4.18	Environmental Matters
	Schedule 4.19	Broker’s or Finder’s Fees
	Schedule 4.21	Transactions with Affiliates
	Schedule 4.22	Bonneville Entities’ Qualification
EXHIBITS
	Exhibit A	South Mountain Sublicense Agreement
	Exhibit B	WLUP Auxiliary Antenna Option Agreement
	Exhibit C	Phoenix Transition Services Agreement
	Exhibit D	Chicago Transition Services Agreement
	Exhibit E	John Hancock Sublicense Agreement

vi

ASSET EXCHANGE AGREEMENT

     THIS ASSET EXCHANGE AGREEMENT (the “Agreement”), dated as of January 14, 2005, is between EMMIS RADIO, LLC, an Indiana limited liability company (“Emmis Operating”), and EMMIS RADIO LICENSE, LLC, an Indiana limited liability company (“Emmis License”, and together with Emmis Operating, the “Emmis Entities”); and BONNEVILLE INTERNATIONAL CORPORATION, a Utah corporation (“Bonneville International”), and BONNEVILLE HOLDING COMPANY, a Utah corporation (“Bonneville Holding”, and together with Bonneville International, the “Bonneville Entities”).

RECITALS

     WHEREAS, Emmis Operating operates radio stations KKLT (FM) (“KKLT”), KTAR (AM) (“KTAR”) and KMVP (AM) (“KMVP”), each licensed to Phoenix, Arizona (collectively, the “Emmis Stations”), and Emmis License holds the broadcast licenses used in the operation of the Emmis Stations;

     WHEREAS, Bonneville International operates radio station WLUP-FM (“WLUP”) licensed to Chicago, Illinois, and Bonneville Holding holds the broadcast licenses used in the operation of WLUP;

     WHEREAS, Emmis Operating, Bonneville International and Bonneville Holding have entered into a Time Brokerage Agreement (the “Chicago TBA”) dated November 30, 2004, pursuant to which Emmis Operating is now purchasing airtime and providing programming on WLUP;

     WHEREAS, Bonneville International, Emmis Operating, and Emmis License have entered into a Time Brokerage Agreement (the “Phoenix TBA”) dated November 30, 2004, pursuant to which Bonneville International is now purchasing airtime and providing programming on the Emmis Stations;

     WHEREAS, subject to the terms and conditions of this Agreement, the Emmis Entities and the Bonneville Entities desire that (i) the Emmis Entities convey to the Bonneville Entities all of the Emmis Entities’ right, title and interest in substantially all the assets of the Emmis Stations, and (ii) the Bonneville Entities convey to the Emmis Entities all of the Bonneville Entities’ right, title and interest in certain of the assets of WLUP and, in addition, pay to the Emmis Entities $66,000,000; and

     WHEREAS, (i) Emmis Operating desires that its conveyance to and receipt from Bonneville International of like-kind assets as contemplated by this Agreement will, with respect to Emmis Operating, constitute like-kind exchanges qualifying for nonrecognition of gain treatment for Emmis Operating to the extent permitted under Section 1031 of the Code (as defined below); (ii) Bonneville International desires that its conveyance to and receipt from Emmis Operating of like-kind assets as contemplated by this Agreement will, with respect to Bonneville International, constitute like-kind exchanges qualifying for nonrecognition of gain

SIGNATURE PAGE TO ASSET EXCHANGE AGREEMENT

treatment for Bonneville International to the extent permitted under Section 1031 of the Code; (iii) Emmis License desires that its conveyance to and receipt from Bonneville Holding of like-kind assets as contemplated by this Agreement will, with respect to Emmis License, constitute like-kind exchanges qualifying for nonrecognition of gain treatment for Emmis License to the extent permitted under Section 1031 of the Code; and (iv) Bonneville Holding desires that its conveyance to and receipt from Emmis License of like-kind assets as contemplated by this Agreement will, with respect to Bonneville Holding, constitute like-kind exchanges qualifying for nonrecognition of gain treatment for Bonneville Holding to the extent permitted under Section 1031 of the Code; and

     WHEREAS, upon and subject to the terms and conditions set forth in this Agreement, the Bonneville Entities desire that the Emmis Entities grant, and the Emmis Entities agree to grant, a covenant not to compete, for which the Bonneville Entities will pay additional consideration of $4,000,000.

     NOW THEREFORE, in consideration of the foregoing recitals and the respective covenants, agreements, representations and warranties contained herein, the Parties hereto agree as follows:

ARTICLE I.
TERMINOLOGY

     1.1.Defined Terms.

     As used herein, the following terms have the meanings indicated:

     Affiliate: With respect to any specified Person, another Person which, directly or indirectly controls, is controlled by, or is under common control with, the specified Person.

     Assumed Obligations: Either the Emmis Assumed Obligations or the Bonneville Assumed Obligations.

     Benefit Plans: With respect to each Station of a Transferring Party, all compensation or benefit plans, policies, practices, arrangements and agreements covering any of the Transferring Party’s current or former employees now or previously employed at the Station, or the beneficiaries or dependents of any such employees or former employees, that are or have been established or maintained and are currently in effect, or to which contributions are being made by the Transferring Party or by any other trade or business, whether or not incorporated, that is or has been treated as a single employer together with the Transferring Party under Section 414 of the Code (such other trades and businesses referred to collectively as the “Related Persons”) or to which the Transferring Party or any Related Person is obligated to contribute, including, but not limited to, “employee benefit plans” within the meaning of Section 3(3) of ERISA, employment, retention, change of control, severance, stock option or other equity based, bonus, incentive compensation, deferred compensation, retirement, fringe benefit and welfare plans, policies, practices, arrangements and agreements.

2

     Bonneville Assets: The Bonneville Operating Assets and the Bonneville FCC Licenses collectively, but excluding the Bonneville Excluded Assets.

     Bonneville Excluded Assets: The assets excluded from the Bonneville Operating Assets pursuant to Section 2.2.

     Bonneville Operating Assets: All of the tangible and intangible assets used or held for use in the operation of WLUP, other than the Bonneville FCC Licenses and the Bonneville Excluded Assets.

     Chicago TBA Contracts: The contracts and agreements that Bonneville International assigned to Emmis Operating pursuant to the Chicago TBA.

     Chicago TBA Effective Date: December 1, 2004.

     Code: The Internal Revenue Code of 1986, as amended, together with all regulations and rulings thereunder by any governmental authority.

     Documents: This Agreement, all Exhibits and Schedules to this Agreement, the Chicago TBA, the Phoenix TBA and each other agreement, side letter, certificate or instrument executed and delivered in connection with this Agreement.

     Emmis Assets: The Emmis Operating Assets and the Emmis FCC Licenses collectively, but excluding the Emmis Excluded Assets.

     Emmis Excluded Assets: The assets excluded from the Emmis Operating Assets pursuant to Section 2.2.

     Emmis Operating Assets: All of the tangible and intangible assets used or held for use in the operation of the Emmis Stations, other than the Emmis FCC Licenses and the Emmis Excluded Assets.

     Exchange Assets: When used with respect to the Emmis Entities as the Transferring Party, the Emmis Assets; and when used with respect to the Bonneville Entities as the Transferring Party, the Bonneville Assets.

     ERISA: Employee Retirement Income Security Act of 1974, as amended.

     FCC: Federal Communications Commission.

     FCC Licenses: The licenses, permits and other authorizations issued by the FCC (including associated call signs), all applications for modification, extension or renewal thereof, and any applications pending for any new licenses, permits or authorizations.

3

     FCC Order: The order or decision of the FCC (or its delegatee) granting its consent to the assignment of all the Emmis FCC Licenses to Bonneville Holding and the assignment of all the Bonneville FCC Licenses to Emmis License.

     Final Action: An action of the FCC that has not been reversed, stayed, enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua sponte action of the FCC with comparable effect is pending; and as to which the normally applicable time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte action of the FCC has expired.

     GAAP: Generally accepted accounting principles as in effect for the United States of America as of the date of this Agreement.

     KKFR: Radio station KKFR(FM) in Phoenix, Arizona.

     Knowledge (or any derivative thereof): (i) In the case of the Emmis Entities, only the actual knowledge of the current or former President, Chief Executive Officer, or Chief Financial Officer of Emmis, any other current or former employee of Emmis designated as “vice president” or any higher office, any officer of the Emmis Entities, and the General Manager, Sales Manager or Chief Engineer of any Emmis Station; and (ii) in the case of the Bonneville Entities, only the actual knowledge of the President, Chief Executive Officer, or Chief Financial Officer of either Bonneville Entity, any other current or former employee of either Bonneville Entity designated as corporate “vice president,” a “group vice president,” any higher office or a “vice president” of the WLUP division, any other corporate officer of either Bonneville Entity, and the General Manager, Sales Manager or Chief Engineer of WLUP; provided, however, that any reference to a “former” employee or officer herein will mean only those persons whose employment with an Emmis Entity or a Bonneville Entity has been terminated since January 1, 2004.

     Liabilities: As to any Person, all debts, adverse claims, liabilities and obligations, direct, indirect, absolute or contingent of such Person, whether accrued, vested or otherwise, whether in contract, tort, strict liability or otherwise and whether or not actually reflected, or required by GAAP to be reflected, in such Person’s balance sheets or other books and records.

     Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect, right of first refusal, security interest or other similar adverse interest, encumbrance, easement, restriction, claim, option, lien or charge of any kind (including any liens of the Pension Benefit Guaranty Corporation, Internal Revenue Service or any governmental agency), whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any agreement to give or grant any of the foregoing, any conditional sale, financing lease or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction.

4

     Loss: With respect to any Person, any and all losses, costs, obligations, Liabilities, demands, claims, settlement payments, awards, judgments, fines, penalties, damages and reasonable out-of-pocket expenses, including court costs and reasonable attorney fees, whether or not arising out of a third party claim.

     Material Adverse Condition: A condition which would adversely affect or impair, in any material respect, the right of a Recipient Party to the ownership, use, control or operation of any Station to be transferred to the Recipient pursuant to this Agreement; provided, however, that any condition which requires (i) that the Recipient Party or any of its subsidiaries file periodic reports with the FCC regarding compliance with rules and policies of the FCC pertaining to affirmative action and equal opportunity employment, or (ii) that a Station be operated in accordance with conditions similar to and not more adverse than those contained in the present FCC Licenses issued for operation of such Station, will not be a Material Adverse Condition.

     Material Adverse Effect: A material adverse effect on the assets, business, operations, financial condition or results of operations, in the case of the Emmis Stations, of the Emmis Stations taken as a whole, and in the case of WLUP, of WLUP, except in either case for any such effect resulting from (i) general economic conditions applicable to the radio broadcast industry, (ii) general conditions in the markets in which the applicable Station or Stations operate, or (iii) circumstances that are not likely to recur and either have been substantially remedied or can be substantially remedied without substantial cost or delay.

     Party: Unless otherwise required by the context, the Bonneville Entities on the one hand and the Emmis Entities on the other hand.

     Permitted Lien: (i) Any Lien arising solely by statute (including encumbrances of a landlord) which secures a payment not yet due that arises, and is customarily discharged, in the ordinary course of the applicable Station’s business; (ii) Liens (other than with respect to real estate) arising in connection with operating leases (but not as to financing leases) under the terms of any Station Agreement; (iii) with respect to Emmis Real Property only, the Liens identified on Schedule 3.9 under the heading “Certain Permitted Liens”; (iv) with respect to tangible Bonneville Assets only, the Liens identified on Schedule 4.5(b) under the heading “Certain Permitted Liens”; (iv) such other Liens on the Emmis Assets as approved by the Bonneville Entities in writing, which approval will not be unreasonably withheld, conditioned or delayed; and (v) such other Liens on the Bonneville Assets as approved by the Emmis Entities in writing, which approval will not be unreasonably withheld, conditioned or delayed.

     Person: Any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

     Phoenix TBA Contracts: The contracts and agreements that Emmis Operating assigned to Bonneville International pursuant to the Phoenix TBA.

     Phoenix TBA Effective Date: December 1, 2004.

5

     Recipient Party: When used in relation to the Bonneville Entities as the Transferring Party, the Emmis Entities (or Emmis Operating or Emmis License, as the case may be); and when used in relation to the Emmis Entities as the Transferring Party, the Bonneville Entities (or Bonneville International or Bonneville Holding, as the case may be).

     Station, each Station, the Station, a Station or any Station: When used in reference to the Bonneville Entities as the Transferring Party, WLUP; and when used in reference to the Emmis Entities as the Transferring Party, any of the Emmis Stations.

     Station Agreements: The Emmis Station Agreements or Bonneville Stations Agreements, as the case may be.

     Taxes: All federal, state, local and foreign taxes including, without limitation, income, gains, transfer, unemployment, withholding, payroll, social security, real property, personal property, excise, sales, use and franchise taxes, levies, assessments, imposts, duties, licenses and registration fees and charges of any nature whatsoever, including interest, penalties and additions with respect thereto and any interest in respect of such additions or penalties.

     Tax Return: Any return, filing, report, declaration, questionnaire or other document required to be filed for any period with any taxing authority (whether domestic or foreign) in connection with any Taxes (whether or not payment is required to be made with respect to such document).

     TBA: Either the Chicago TBA or the Phoenix TBA.

     Trade Agreements: Emmis Station Agreements or Bonneville Station Agreements, as the case may be, providing for the sale of time on a Station for other than monetary consideration.

     Transfer Taxes: All sales, use, conveyance, recording and other similar transfer taxes and fees applicable to, imposed upon or arising out of the conveyance by the Transferring Party and the receipt by the Recipient of Exchange Assets whether now in effect or hereinafter adopted and regardless of which party such Transfer Tax is imposed upon. Transfer Taxes will in no event include any net or gross income taxes.

     Transferring Party: Either (i) the Emmis Entities collectively in their capacity as the transferors of the Emmis Assets under this Agreement, or (ii) the Bonneville Entities collectively in their capacity as the transferors of the Bonneville Assets under this Agreement.

     1.2. Additional Defined Terms.

     As used herein, the following terms have the meanings defined in the introduction, recitals or section indicated below:

Acquisition Proposal	Section 5.14
Act	Section 3.6(b)
Adjustment Amount	Section 2.7(a)

6

Agreement	Preamble
Arbitrating Firm	Section 2.7(e)
AZPB Agreement	Section 2.2(m)
Bonneville Assumed Obligations	Section 2.4(c)
Bonneville Benefit Plan	Section 4.15(a)
Bonneville Boot Payment	Section 2.5(b)
Bonneville Cap	Section 9.2(b)
Bonneville Entities	Preamble
Bonneville Entities’ Loss	Section 9.2(a)
Bonneville FCC Licenses	Section 4.6(a)
Bonneville Holding	Preamble
Bonneville Intellectual Property	Section 2.1(b)(iv)
Bonneville International	Preamble
Bonneville Leased Real Property	Section 4.9(b)
Bonneville Real Property Lease	Section 4.9(b)
Bonneville Station Agreements	Section 2.1(b)(iii)
Bonneville Threshold	Section 9.2(b)
CERCLA	Section 3.18(f)
Chicago TBA	Recitals
Chicago Transition Services Agreement	Section 5.23(b)
Closing	Section 8.1
Closing Date	Section 8.1
Collection Period	Section 2.8(a)
Commitments	Section 7.10(a)(ii)
Dispute Notice	Section 2.7(d)
Emmis	Section 5.15
Emmis Assumed Obligations	Section 2.3(v)
Emmis Benefit Plan	Section 3.15(a)
Emmis Cap	Section 9.3(b)
Emmis Entities	Preamble
Emmis Entities’ Loss	Section 9.3(a)
Emmis FCC Licenses	Section 3.6(a)
Emmis Intellectual Property	Section 2.1(a)(v)
Emmis License	Preamble
Emmis Operating	Preamble
Emmis Leased Real Property	Section 3.9(d)
Emmis Owned Real Property	Section 3.9(d)
Emmis Real Property	Section 2.1(a)(ii)
Emmis Real Property Lease	Section 3.9(c)
Emmis Station Agreements	Section 2.1(a)(iv)
Emmis Stations	Recitals
Emmis Stations Statements	Section 3.11
Emmis Threshold	Section 9.3(b)
Excluded Assets	Section 2.2
FTC	Section 3.22
Final Proration Notice	Section 2.7(d)

7

HSR Act	Section 5.3
HSR Filings	Section 5.3
Indemnified Party	Section 9.4(a)
Indemnifying Party	Section 9.4(a)
John Hancock Sublicense Agreement	Section 5.24
KKLT	Recitals
KMVP	Recitals
KTAR	Recitals
KTAR Easements	Section 3.9(c)
KTAR Easement Agreements	Section 3.9(c)
Multiemployer Plan	Section 3.15(c)
Multi-Station Agreement	Section 5.18(a)
Noncompete Payment	Section 5.19(b)
Phoenix TBA	Recitals
Phoenix Transition Services Agreement	Section 5.23(a)
Preliminary Adjustment Report	Section 2.7(d)
Retained Receivables	Section 2.8(a)
South Mountain Sublicense Agreement	Section 5.21
Survival Period	Section 9.1
WLUP	Recitals
WLUP Auxiliary Antenna Option Agreement	Section 5.22
WLUP Statements	Section 4.11

ARTICLE II.
EXCHANGE OF ASSETS

2.1 Description of Exchange Assets.

     (a) Emmis Assets. Upon and subject to the terms and conditions of this Agreement and as set forth in Section 2.5, and except to the extent already effected pursuant to the Phoenix TBA, the Emmis Entities will assign, transfer and convey to the Bonneville Entities all of the Emmis Entities’ right, title and interest in, to and under the Emmis Assets, which will include any right, title and interest in, to and under the following assets and properties of the Emmis Entities:

          (i) Tangible Personal Property. All transmitter equipment and transmission lines, antennas and other broadcast equipment and related spare parts used or held for use principally in the operation of any of the Emmis Stations (including the tower, community antenna, and transmitter building used by KKLT and KKFR on South Mountain, Phoenix, Arizona, but excluding any transmitter equipment, transmission lines, or broadcast equipment used or held for use principally in the operation of radio station KKFR); all studio equipment, office equipment, office furniture, fixtures, rolling stock, materials and supplies, inventories, spare parts and other tangible personal property, including all promotional, sales, marketing and format-specific programming materials, supplies, inventories and property, used or held for use principally in the operation of any of the Emmis Stations; all computer hardware and software used or held for use principally in the operation of any Emmis Station’s traffic, automation,

8

continuity, information technology (network, email, print, file, etc.) and office business systems; all personal and notebook computers (and the software and content thereon) used by those employees of the Emmis Stations hired by Bonneville International pursuant to the Phoenix TBA; the tangible personal property otherwise listed on Schedule 3.8; and in each case, such modifications, replacements, improvements and additional items, and subject to such deletions, made between the date of this Agreement and the Closing Date with respect to the foregoing tangible personal property of the Emmis Entities in compliance with this Agreement and the Phoenix TBA.

          (ii) Real Property. The real property listed on Schedule 3.9 for the Emmis Stations, including in each case the Emmis Entity’s interest in all structures, fixtures and improvements on such real property, all easements or other appurtenances for the benefit of such real property; and such additional fixtures, improvements and interests in real property made or acquired between the date of this Agreement and the Closing Date and used or held for use by the Emmis Entities principally in the operation of any Emmis Station (collectively, the “Emmis Real Property”).

          (iii) Permits. The FCC Licenses and all other governmental permits, licenses and authorizations (including any renewals, extensions, amendments or modifications thereof or applications therefor) that are listed on Schedule 3.6, and any other governmental permits, licenses or authorizations, whether now held or subsequently obtained on or before the Closing Date, that are necessary for or principally related to the operation of any Emmis Station.

          (iv) Station Agreements. All contracts, leases (including, but not limited to, real estate leases, use licenses, or occupancy agreements), agreements, commitments and other arrangements, and any amendments or modifications, used or held for use in the operation of the Emmis Stations as of the date of this Agreement (including, but not limited to, those listed on Schedules 3.7(a), 3.7(b) or 3.9 unless expressly designated as an “excluded” Station Agreement on such Schedules), or made or entered into by any Emmis Entity between the date of this Agreement and the Closing Date in compliance with this Agreement and the Phoenix TBA and used or held for use in the operation of any Emmis Station (collectively, the “Emmis Station Agreements”).

          (v) Intellectual Property. All trade names, trademarks, service marks, copyrights, patents, jingles, slogans, symbols, logos, the applicable call letters, telephone numbers (to the extent transferable), internet addresses, email addresses, websites and domain names, web-site content, inventions, and any other proprietary material, process, trade secret or trade right principally used in the operation of any Emmis Station, and all registrations, applications and licenses for any of the foregoing, including, without limitation, those set forth on Schedule 3.10; and any additional such items acquired between the date of this Agreement and the Closing Date and used or held for use principally in the operation of any Emmis Station; and all goodwill associated with any of the foregoing, if any (collectively, the “Emmis Intellectual Property”).

          (vi) Records. The originals or true and complete copies of all of the books, records, accounts, files, logs, ledgers, journals, data, plans, maps, engineering records, technical

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drawings and FCC applications principally pertaining to, or principally used or held for use in, the operation of any Emmis Station, including, but not limited to, computer-readable disk or tape copies of any of such items stored on computer disks or tapes.

          (vii) Miscellaneous Assets. Any other tangible or intangible assets, properties or rights of any kind or nature not otherwise described above in this Section 2.1(a) and now or before the Closing owned or used or held for use principally in connection with the operation of any Emmis Station.

     (b) Bonneville Assets. Upon and subject to the terms and conditions of this Agreement and as set forth in Section 2.5, and except to the extent already effected pursuant to the Chicago TBA, the Bonneville Entities will assign, transfer and convey to the Emmis Entities all of the Bonneville Entities’ right, title and interest in, to and under the Bonneville Assets, which will include any right, title and interest in, to and under the following assets and properties of the Bonneville Entities:

          (i) Tangible Personal Property. That certain studio equipment identified on Schedule 2.1(b)(i); all rolling stock, transmitter equipment and related spare parts, and transmission lines used or held for use principally in the operation of WLUP; all promotional, sales, marketing and format-specific programming materials, supplies, inventories, and property of that type used or held for use principally in the operation of WLUP; all personal and notebook computers (and the software and content thereon) used by those employees of WLUP hired by Emmis Operating pursuant to the Chicago TBA; and in each case, such modifications, replacements, improvements and additional items, and subject to such deletions, made between the date of this Agreement and the Closing Date with respect to the foregoing tangible personal property of WLUP in compliance with this Agreement and the Chicago TBA.

          (ii) Permits. The FCC Licenses and all other governmental permits, licenses and authorizations (including any renewals, extensions, amendments or modifications thereof or applications therefor) that are listed on Schedule 4.6, and any other governmental permits, licenses or authorizations, whether now held or subsequently obtained on or before the Closing Date, that are necessary for or principally related to the operation of WLUP.

          (iii) Station Agreements. All contracts, leases (including, but not limited to, real estate lease, use licenses or occupancy agreements), agreements, commitments and other arrangements, and any amendments or modifications, used or held for use in the operation of WLUP as of the date of this Agreement (including, but not limited to, those listed on Schedules 4.7(a), 4.7(b), or 4.9 unless expressly designated as an “excluded” Station Agreement on such Schedules), or made or entered into by a Bonneville Entity between the date of this Agreement and the Closing Date in compliance with this Agreement and the Chicago TBA and used or held for use in the operation of WLUP (collectively, the “Bonneville Station Agreements”).

          (iv) Intellectual Property. All trade names, trademarks, service marks, copyrights, patents, jingles, slogans, symbols, logos, the applicable call letters, telephone numbers (to the extent transferable), internet addresses, email addresses, website and domain names, web-site content, inventions, and any other proprietary material, process, trade secret or

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trade right principally used by the Bonneville Entities in the operation of WLUP, and all registrations, applications and licenses for any of the foregoing, including, without limitation, those set forth on Schedule 4.10; any additional such items acquired between the date of this Agreement and the Closing Date and used or held for use principally in the operation of WLUP; and all goodwill associated with any of the foregoing, if any (collectively, the “Bonneville Intellectual Property”).

          (v) Records. The originals or true and complete copies of all of the books, records, accounts, files, logs, ledgers, journals, data, plans, maps, engineering records, technical drawings and FCC applications principally pertaining to, or principally used or held for use in, the operation of WLUP, including, but not limited to, computer-readable disk or tape copies of any of such items stored on computer disks or tapes.

          (vi) Miscellaneous Assets. That portion of Bonneville International’s membership interest in FM Broadcasters, LLC relating to WLUP (a 12.5% interest); and any other intangible assets, properties or rights of any kind or nature not otherwise described above in this Section 2.1 (b) and now or before the Closing owned or used or held for use principally in connection with the operation of such Station, including but not limited to all goodwill of such Station, if any.

     (c) For purposes of this Section 2.1 and Section 2.2, when used with respect to the identification of any asset of any Station or Stations, the phrase “used or held for use principally”, means that such asset has been used or is held for use in the operation of such Station or Stations (individually or collectively) in greater part or other appropriate measure than any station or stations not being sold pursuant to this Agreement.

     2.2 Excluded Assets.

     Notwithstanding any provision of this Agreement to the contrary, the Exchange Assets of each Transferring Party will not include the following assets or property (the “Excluded Assets”):

     (a) Any and all cash, bank deposits and other cash equivalents, certificates of deposit, securities, cash deposits made on behalf of any Station of the Transferring Party to secure contract obligations (except to the extent the Transferring Party receives a credit therefor in determining the Adjustment Amount under Section 2.7), and all accounts receivable (other than non-cash receivables under Trade Agreements of the Transferring Party) for services performed or for goods sold or delivered by any Station of the Transferring Party prior to the Closing Date;

     (b) All rights and claims of the Transferring Party whether mature, contingent or otherwise, against third parties with respect to, or which are made under or pursuant to, other Excluded Assets of the Transferring Party or which relate to the period prior to the Closing;

     (c) All prepaid expenses of the Transferring Party (and rights arising therefrom or related thereto) except to the extent the Transferring Party is given a credit therefor in determining the Adjustment Amount under Section 2.7;

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     (d) All Benefit Plans of the Transferring Party, except for (i) any employee benefit specified and required to be provided to any employee of the Transferring Party at its Station or Stations under any written employment agreement (excluding, however, any such employee benefit generally provided by the Transferring Party to its employees at its Station or Stations), and (ii) any severance benefit required to be provided under any severance agreement, provided that, in each case, such employment agreement or severance agreement is expressly and individually included pursuant to the TBAs or this Agreement as a Transferring Party’s Station Agreement to be assigned to and assumed by the Recipient Party;

     (e) All Tax Returns (and supporting materials), and all claims of the Transferring Party with respect to any Tax refunds, relating to any Station of the Transferring Party;

     (f) All of the Transferring Party’s rights under or pursuant to this Agreement, the Chicago TBA, the Phoenix TBA, or any other rights in favor of the Transferring Party pursuant to the other Documents;

     (g) All loan agreements, letters of credit and other instruments evidencing indebtedness for borrowed money;

     (h) All contracts of insurance, all coverages and proceeds thereunder and all rights in connection therewith, including, without limitation, rights arising from any refunds due with respect to insurance premium payments to the extent they relate to such insurance policies;

     (i) All tangible personal property disposed of or consumed between the date of this Agreement and the Closing Date in accordance with and pursuant to the terms and provisions of this Agreement;

     (j) The Transferring Party’s corporate minute books, ownership transfer records and other entity records, and any records relating to other Excluded Assets of the Transferring Party and to Liabilities of the Transferring Party other than the Recipient Party’s Assumed Obligations;

     (k) All shares of capital stock, partnership interests, interests in limited liability companies or other equity interest, including, but not limited to, any options, warrants or voting trusts relating thereto which are owned by the Transferring Party and not expressly specified in Section 2.1;

     (l) In the case of WLUP, (i) Bonneville International’s lease of office and studio space for WLUP in the John Hancock Center in Chicago, Illinois and any other Station Agreement expressly designated on Schedules 4.7(a), 4.7(b) or 4.9 as “excluded”; (ii) all rights to the name “Bonneville” and any logo or variation of, and goodwill associated with, such name; (iii) any right to place or use any antenna, transmitter or other equipment on or in the AON Building in Chicago, Illinois, except as provided under the WLUP Auxiliary Antenna Option Agreement; (iv) the prior WLUP employees identified on Schedule 2.2(l); (v) any Bonneville Entity tangible assets not described in Section 2.1(b), including but not limited to any studio or

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office equipment and related spare parts, furniture or fixtures not identified on Schedule 2.1(b)(i); (vi) any items of financial, accounting, management information and network software; (vii), any computer hardware or software systems used in the hosting and operation of WLUP’s website or traffic, automation, continuity, information technology (network, email, print, file, etc.) and office business systems; and (viii) any Bonneville Entity intangible property used or held for use principally in connection with the Bonneville Excluded Assets;

     (m) In the case of the Emmis Stations: (i) the employees, items of financial, accounting, management information and network software, remote pick-up (RPU), studio/transmitter link (STL), FCC Licenses, and other items, as each is identified on Schedule 2.2(m); (ii) those assets used or held for use principally in the operation of KKFR (i.e., not used or held for use principally for the operation of the Emmis Stations collectively or individually when compared to the use, or the holding for use, of such assets in the operation of KKFR) or used or held for use principally by the employees of KKFR (i.e., not used or held for use principally by the employees of the Emmis Stations collectively or individually when compared to the use, or the holding for use, of such assets by the employees of KKFR collectively or individually); (iii) any computer hardware or software systems used in the hosting and operation of the Emmis Stations’ websites; (iv) Microsoft software licenses; (v) any Emmis Station Agreement (except for the Amended and Restated Broadcast Agreement, dated June 30, 2004, between Emmis Operating and AZPB Limited Partnership relating to the Arizona Diamondbacks the (“AZPB Agreement”), the Broadcast Rights Agreement (Phoenix Suns/KTAR), dated January 21, 1991, by and between Pulitzer Broadcasting Company and Phoenix Suns Limited Partnership, as amended July 11, 1995, and the Advertising, Promotion and Broadcasting Agreement (Phoenix Mercury/KMVP), dated February 18, 2003, by and between Emmis Communications, Inc. and Phoenix Arena Sports Limited Partnership, as amended on May 16, 2003) to the extent requiring the broadcast of advertising for casinos, casino operations or lotteries, and any other Station Agreement expressly designated on Schedules 3.7(a), 3.7(b) or 3.9 as “excluded;” (vi) any Emmis Entity intangible property used or held for use principally in connection with the Emmis Excluded Assets, and (vii) all rights to the name “Emmis” and any logo or variation of, and goodwill associated with, such name; and

     (n) Each Station Agreement relating to any Transferring Party’s Station that is either (i) required to be listed, but is not listed, on the Transferring Party’s Schedules to this Agreement and that is subsequently rejected by the Recipient Party pursuant to Section 5.16(a), or (ii) entered into by the Transferring Party on or after the date of this Agreement without the consent of the Recipient Party in violation of the terms and provisions of this Agreement, including but not limited to the covenants set forth in Section 5.1, unless the Recipient Party elects in its discretion that such Station Agreement will be assigned to and assumed by the Recipient Party pursuant to this Agreement.

     (o) Proprietary information of the Transferring Party unrelated to its Station(s) that is stored on any personal or notebook computer constituting an Exchange Asset, it being agreed that the Transferring Party will be entitled to remove or delete any such information prior to the Closing.

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     2.3 Emmis Entities’ Assumption of Liabilities.

     (a) To the extent not already assumed pursuant to the Chicago TBA, Emmis Operating will at the Closing assume and agree to pay, discharge and perform the following Liabilities of the Bonneville Entities:

     (i) All Liabilities arising under all Bonneville Station Agreements and the Permits (excluding the Bonneville FCC Licenses) assigned and transferred to the Emmis Entities in accordance with this Agreement to the extent such Liabilities arise during and relate to any period on or after the Closing Date (excluding, however, any Liability arising from or under (A) the breach of any Bonneville Station Agreement by reason of its assignment to the Emmis Entities without a required consent, (B) any other breach or default by any Bonneville Entity upon or prior to the Closing under any Bonneville Station Agreement unless caused by any Emmis Entity’s action or failure to perform under the Chicago TBA, or (C) any Bonneville Station Agreement to the extent relating to the use of any item of property unless possession of such item, and ownership or the right to use of such item in accordance with the terms of such Bonneville Station Agreement, are conveyed to an Emmis Entity as part of the Bonneville Assets).

     (ii) Other Liabilities of the Bonneville Entities to the extent, and only to the extent, the amount thereof is properly included as a credit to the Emmis Entities in calculating the Adjustment Amount for WLUP pursuant to Section 2.7.

     (b) Emmis License will at the Closing assume and agree to pay, discharge and perform when due the Liabilities arising under the Bonneville FCC Licenses assigned and transferred to Emmis License in accordance with this Agreement to the extent such Liabilities arise during and relate to any period on or after the Closing Date (excluding, however, any Liability arising from any breach or default by any Bonneville Entity upon or prior to the Closing under the Bonneville FCC Licenses unless caused by any Emmis Entity’s action or failure to perform under the Chicago TBA).

     (c) The Liabilities assumed by the Emmis Entities under this Section 2.3 are collectively referred to herein as the “Emmis Assumed Obligations.”

     (d) Except for the Emmis Assumed Obligations, the Emmis Entities will not assume or in any manner be liable for any Liabilities of either Bonneville Entity of any kind or nature, all of which each Bonneville Entity will pay, discharge and perform when due; provided, however, that the Bonneville Entities will have the right to contest in good faith any Liability of the Bonneville Entities.

     2.4 Bonneville Entities’ Assumption of Liabilities.

     (a) To the extent not already assumed pursuant to the Phoenix TBA, Bonneville International will at the Closing assume and agree to pay, discharge and perform the following Liabilities of the Emmis Entities:

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     (i) All Liabilities arising under all Emmis Station Agreements and the Permits (excluding the Emmis FCC Licenses) assigned and transferred to the Bonneville Entities in accordance with this Agreement to the extent such Liabilities arise during and relate to any period on or after the Closing Date (excluding, however, any Liability arising from or under (A) any Emmis Station Agreement to the extent relating to the broadcast of advertising for casinos, casino operations or lotteries other than as required under the Amended and Restated Broadcast Agreement, dated June 30, 2004, between Emmis Operating and AZPB Limited Partnership relating to the Arizona Diamondbacks, the Broadcast Rights Agreement (Phoenix Suns/KTAR), dated January 21, 1991, by and between Pulitzer Broadcasting Company and Phoenix Suns Limited Partnership, as amended July 11, 1995, and the Advertising, Promotion and Broadcasting Agreement (Phoenix Mercury/KMVP), dated February 18, 2003, by and between Emmis Communications, Inc. and Phoenix Arena Sports Limited Partnership, as amended on May 16, 2003, (B) the breach of any Emmis Station Agreement by reason of its assignment to either Bonneville Entity without a required consent, (C) any other breach or default by any Emmis Entity upon or prior to the Closing under any Emmis Station Agreement unless caused by any Bonneville Entity’s action or failure to perform under the Phoenix TBA, or (D) any Emmis Station Agreement to the extent relating to the use of any item of property unless possession of such item, and ownership or the right to use of such item in accordance with the terms of such Emmis Station Agreement, are conveyed to a Bonneville Entity as part of the Emmis Assets).

     (ii) Other Liabilities of the Emmis Entities to the extent, and only to the extent, the amount thereof is properly included as a credit to the Bonneville Entities in calculating the Adjustment Amount for the Emmis Stations pursuant to Section 2.7.

     (b) Bonneville Holding will at the Closing assume and agree to pay, discharge and perform when due the Liabilities arising under the Emmis FCC License Assets assigned and transferred to Bonneville Holding in accordance with this Agreement to the extent such Liabilities arise during and relate to any period on or after the Closing Date (excluding, however, any Liability arising from any breach or default by any Emmis Entity upon or prior to the Closing under the Emmis FCC Licenses unless caused by any Bonneville Entity’s action or failure to perform under the Phoenix TBA).

     (c) The Liabilities assumed by the Bonneville Entities under this Section 2.4 are collectively referred to herein as the “Bonneville Assumed Obligations.”

     (d) Except for the Bonneville Assumed Obligations, the Bonneville Entities will not assume or in any manner be liable for any Liabilities of any Emmis Entity of any kind or nature, all of which each Emmis Entity will pay, discharge and perform when due; provided, however, that the Emmis Entities will have the right to contest in good faith any Liability of the Emmis Entities.

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     2.5 Exchange of Assets; Boot and Noncompete Payments.

     (a) In consideration of the Bonneville Entities’ conveyance of the Bonneville Assets to the Emmis Entities, the Bonneville Entities’ payment of $66,000,000 and the Bonneville Entities’ assumption of the Bonneville Assumed Obligations, the Emmis Entities agree that, to the extent not already effected pursuant to the Phoenix TBA, at the Closing, (i) Emmis Operating will assign, transfer and convey to Bonneville International, free and clear of any Liens other than Permitted Liens, and Bonneville International will acquire and accept from Emmis Operating, all right, title and interest of Emmis Operating in, to and under all Emmis Operating Assets, and (ii) Emmis License will assign, transfer and convey to Bonneville Holding, free and clear of any Liens other than Permitted Liens, and Bonneville Holding will acquire and accept from Emmis License, all right, title and interest of Emmis License in, to and under all Emmis FCC Licenses.

     (b) In consideration of the Emmis Entities’ conveyance of the Emmis Assets to the Bonneville Entities and the Emmis Entities’ assumption of the Emmis Assumed Obligations, the Bonneville Entities agree that at the Closing, (i) to the extent not already effected pursuant to the Chicago TBA, (A) Bonneville International will assign, transfer and convey to Emmis Operating, free and clear of any Liens other than Permitted Liens, and Emmis Operating will acquire and accept from Bonneville International, all right, title and interest of Bonneville International in, to and under all Bonneville Operating Assets, and (B) Bonneville Holding will assign, transfer and convey to Emmis License, free and clear of any Liens other than Permitted Liens, and Emmis License will acquire and accept from Bonneville Holding, all right, title and interest of Bonneville Holding in, to and under all Bonneville FCC Licenses; and (ii) the Bonneville Entities will pay $66,000,000 (the “Bonneville Boot Payment”) to the Emmis Entities.

     (c) At the Closing, the Bonneville Entities will pay the Noncompete Payment to the Emmis Entities.

     (d) The Bonneville Boot Payment and the Noncompete Payment will be paid by wire transfer of immediately available funds pursuant to wire instructions specified by written notice from the Emmis Entities to the Bonneville Entities at least three (3) days prior to the Closing Date.

     2.6 Asset Values and 1031 Schedules.

     (a) The parties agree that the fair market value of the Emmis Assets is $194,000,000, and the fair market value of the Bonneville Assets is $128,000,000.

     (b) Within 30 days after execution of this Agreement, for the benefit of the other Party’s information, the Emmis Entities and Bonneville Entities will exchange their respective proposed schedules setting forth the respective Emmis Operating Assets and Bonneville Operating Assets in each “exchange group” and “residual group” (as each such term is defined in Treas. Reg. Section 1.1031(j)-1(b)(2)) for their reciprocal like-kind exchange as contemplated by this Agreement.

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     (c) No Party makes any representation, warranty or guaranty with respect to the tax consequences of any other Party arising from the transactions contemplated by this Agreement.

     2.7 Proration Adjustment.

     (a) As of 12:01 a.m. local time on the Closing Date, all operating income (meaning all operating revenues less all operating expenses as such amounts are calculated in compliance with GAAP applied in each case in a manner consistent with the preparation of the Transferring Party’s financial statements previously furnished to the Recipient Party) for each Station will be adjusted and allocated, in each case between the Transferring Party and the Recipient Party, and an adjustment will be made as provided in this Section to the extent necessary to reflect the principle that all operating revenue and operating expenses attributable to the operation of each Station on or before the date preceding the Closing Date will be for the account of the corresponding Transferring Party, and all operating revenue and operating expenses attributable to the operation of each Station on and after the Closing Date will be for the account of the corresponding Recipient Party. This Section 2.7 will only apply to the extent the applicable proration or adjustment is not addressed by the provisions included in Section 4.5 of the Chicago TBA in the case of WLUP, or Section 4.5 of the Phoenix TBA in the case of the Emmis Stations. The net adjustment amount determined in accordance with this Section with respect to the Emmis Stations, and the separate net amount determined in accordance with this Section with respect to WLUP, are each referred to as an “Adjustment Amount”. Notwithstanding the foregoing, (i) the monthly fixed fee or personnel service payments required to be paid under either TBA, and (ii) depreciation of property, plant and equipment, amortization of definite-lived intangibles, and impairment charges, if any, relating to goodwill and FCC licenses, will not be taken into account in determining the Adjustment Amount with respect to any Station.

     (b) Without limiting the generality of foregoing Subsection (a):

     (i) The Transferring Party will receive a credit for the unapplied portion, as of the Closing, of the security deposits made by the Transferring Party under those Stations Agreements assumed by the Recipient Party at the Closing in accordance with Section 2.3 or 2.4.

     (ii) An adjustment and proration will be made in favor of the Transferring Party for the amount, if any, of prepaid expenses, the benefit of which accrues to the Recipient Party, and other current assets acquired by the Recipient Party which are paid by the Transferring Party to the extent such prepaid expenses and other current assets relate to the period after the Closing, provided that the credit given the Transferring Party for each prepaid expense will not exceed an amount commensurate with the benefit therefrom to be received by the Recipient Party after the Closing.

     (iii) FCC regulatory fees applicable to the Emmis Stations or WLUP will be prorated.

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     (iv) Emmis Operating will receive a credit $50,000 at Closing for amounts to be applied by Emmis Operating to obtain from the landlord of the John Hancock Center the services of or access to an emergency power generator for the WLUP transmitter equipment located in the John Hancock Center. Such credit shall be reversed (and paid back to Bonneville International) in the event and to the extent that Emmis Operating does not pay $50,000 or more to obtain such services or access within two (2) years after the Closing Date.

     (v) To the extent Bonneville International has not yet made the proration payment in connection with the AZPB Agreement pursuant to the Phoenix TBA, Bonneville International agrees to make such payment ($4,642,857.14) at Closing (subject to such subsequent proration adjustments as contemplated under the Phoenix TBA to the extent such payment ultimately results in an overpayment by Bonneville International).

     (vi) The Recipient Party will receive a credit for any real property taxes to the extent assessed for and allocable to any period prior to Closing and unpaid as of Closing (whether then due or not).

     (c) To the extent not inconsistent with the express provisions of this Agreement, the allocations made pursuant to this Section will be calculated in compliance with GAAP, except materiality limitations or qualifications under GAAP.

     (d) Within sixty (60) days after the Closing Date, each Transferring Party will provide the Recipient Party with a statement setting forth a detailed computation of the Transferring Party’s reasonable and good faith estimate of the Adjustment Amount as of the Closing Date with respect the Transferring Party’s Station or Stations (each, a “Preliminary Adjustment Report”). If the Adjustment Amount reflected on the Preliminary Adjustment Report is a credit to the Recipient Party, the Transferring Party will pay the Recipient Party the amount of the preliminary Adjustment Amount within five (5) business days of receipt of such Preliminary Adjustment Report, and if the Adjustment Amount reflected on the Preliminary Adjustment Report is a charge to the Recipient Party, the Recipient Party will pay the Transferring Party the amount of such preliminary Adjustment Amount within five (5) business days of receipt of such Preliminary Adjustment Report. Within ninety (90) days after the Closing Date, each Recipient Party will deliver to the Transferring Party in writing and in reasonable detail a good faith final determination of the Adjustment Amount determined as of the Closing Date with respect to the Station or Stations transferred by the Transferring Party (“Final Proration Notice”). The Transferring Party will assist the Recipient Party in making such determination, and the Recipient Party will provide the Transferring Party with reasonable access to the properties, books and records relating to the applicable Station or Stations for the purpose of determining the applicable Adjustment Amount. The Transferring Party will have the right to review the computations and workpapers used in connection with the Recipient Party’s preparation of the Adjustment Amount. If the Transferring Party disagrees with the amount of the Adjustment Amount determined by the Recipient Party as set forth in its Final Proration Notice, the Transferring Party will so notify the Recipient Party in writing (the “Dispute Notice”) within thirty (30) days after the date of receipt of the Recipient Party’s Final Proration Notice,

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specifying in detail each item in dispute. If the Recipient Party does not receive a Dispute Notice within such 30-day period, then within five (5) business days after expiration of such 30-day period, the Transferring Party will pay to the Recipient Party or the Recipient Party shall pay to the Transferring Party, as the case may be, an amount equal to the difference between (i) the Adjustment Amount set forth in the Recipient Party’s Final Proration Notice and (ii) the preliminary Adjustment Amount indicated in the Preliminary Adjustment Report. After the receipt of any Dispute Notice, the Recipient Party and the Transferring Party will negotiate in good faith to resolve any disagreements regarding the applicable Adjustment Amount. If agreement is reached within thirty (30) days after the Recipient Party’s receipt of the Dispute Notice, then within five (5) business days after reaching such agreement, the Transferring Party will pay to the Recipient Party or the Recipient Party will pay to the Transferring Party, as the case may be, an amount equal to the difference between (i) the agreed Adjustment Amount and (ii) the preliminary Adjustment Amount indicated in the applicable Preliminary Adjustment Report. Any payment under this Section 2.7(d) will be made as provided in Section 2.7(g). If agreement is not reached within such 30-day period with respect to a disputed Adjustment Amount, then the dispute resolutions of Section 2.7(e) will apply.

     (e) If the Transferring Party and its auditors and the Recipient Party and its auditors do not, within the 30-day period specified in Section 2.(d), reach an agreement on an Adjustment Amount, then Parties will ask PricewaterhouseCoopers, LLP (the “Arbitrating Firm”) to resolve the disputed items. The Recipient Party and the Transferring Party will each inform the Arbitrating Firm in writing as to their respective positions concerning the disputed Adjustment Amount, and each will make readily available to the Arbitrating Firm any books and records and work papers relevant to the preparation of such firm’s computation of the disputed Adjustment Amount. The Arbitrating Firm will be instructed to complete its analysis within thirty (30) days from the date of its engagement and upon completion to inform the parties in writing of its own determination of the resolution of the disputed Adjustment Amount and the basis for its determination. Any determination by the Arbitrating Firm in accordance with this Section will be final and binding on the parties for purposes of this Section. The fees and expenses of the Arbitrating Firm shall be borne equally by the Transferring Party and the Recipient Party. Within five (5) business days after the Arbitrating Firm delivers to the parties its written determination of the resolution of the disputed Adjustment Amount, the Transferring Party will pay to the Recipient Party, or the Recipient Party will pay to the Transferring Party, as the case may be, an amount equal to the difference between (i) such Adjustment Amount as determined by the Arbitrating Firm and (ii) the preliminary Adjustment Amount indicated in the applicable Preliminary Adjustment Report. Any such payment will be made as provided in Section 2.7.

     (f) Notwithstanding the foregoing, if, at any time after payment is made under this Section 2.7 based upon a final Adjustment Amount determined in accordance with the preceding provisions of this Section, a Party identifies any additional item for which adjustment should have been made under this Section 2.7, such Party shall notify the other Party of each such item, and each Party shall then cooperate as reasonably requested by the other Party in determining, and effecting any payment or refund required to reconcile with, the Adjustment Amount as further revised in accordance with this Section 2.7.

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     (g) Each payment required under Section 2.7(d)-(f) will be paid by wire transfer in immediately available funds to the account of the payee at a financial institution in the United States. Any payment not received by the payee on or before the applicable due date under Section 2.7(d)-(f) will bear interest from such due date until paid in full at a rate per annum equal to the prime rate in effect on such due date (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal) plus three percent (3%).

     2.8 Accounts Receivable.

     (a) To the extent a Transferring Party’s accounts receivables (the “Retained Receivables”) are not already collected under the Chicago TBA with respect to WLUP and the Phoenix TBA with respect to the Emmis Stations, the Recipient Party shall continue the collections for the remainder of the Collection Period (as defined in the applicable TBA). Each Recipient Party will, without charge to the Transferring Party, use its usual and customary procedures (which may include referral to a collection agency) to collect the Retained Receivables as the Transferring Party’s agent (but Recipient Party will not have any fiduciary obligations with respect thereto) for collection, provided that (i) the Recipient Party will not be required to commence litigation, employ legal counsel or make any other extraordinary collection efforts, and (ii) the Recipient Party’s obligation to act as the Transferring Party’s agent in the collection of the Retained Receivables will terminate upon expiration of the Collection Period. For the purpose of determining amounts collected by the Recipient Party with respect to the Retained Receivables of the Transferring Party, each payment by an account debtor will be applied to the older or oldest accounts receivable of such account debtor unless the account debtor in writing (a copy of which the Recipient Party will provide to the Transferring Party) identifies such an account as being in dispute and directs that a particular payment be applied to a specific newer account receivable.

     (b) The Recipient Party shall promptly (but in no event more than three (3) business days after receipt) deliver to the Transferring Party the original checks, or deposit all collections, received by the Recipient Party on account of the Retained Receivable into a bank account designated by the Transferring Party under the applicable TBA. The Recipient Party shall deliver a monthly accounting of such collections and deposits to the Transferring Party by the 5th business day following the last day of the month of collection. A Recipient Party will have no right to setoff amounts owed under this Agreement by the Recipient Party to the Transferring Party against any amounts owed under this Agreement by such Transferring Party to the Recipient Party.

     (c) No Transferring Party will engage in any collection efforts against account debtors under its Retained Receivables, except with respect to Retained Receivables reassigned to the Transferring Party as contemplated under the applicable TBA.

     (d) A Recipient Party will not, without the Transferring Party’s prior written consent, compromise or settle for less than full value any of the Transferring Party’s Retained Receivables unless the Recipient Party pays the Transferring Party the full amount of any deficiency. A Recipient Party will be entitled to purchase any Retained Receivable from the Transferring Party for the full amount thereof at any time during or at the expiration of the

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Collection Period. The Recipient Party shall not be liable to the Transferring Party for any loss, claim, expense or liability arising in connection with its collection of the Transferring Party’s Retained Receivables except to the extent arising as a result of (i) the Recipient Party’s failure to comply with the terms and provisions of this Section 2.8 or (ii) the Recipient Party’s willful malfeasance or gross negligence.

     (e) At the end of the Collection Period, each Recipient Party will return to the Transferring Party all files concerning the collection or attempts to collect the Retained Receivables of the Transferring Party and the Recipient Party’s responsibility for the collection of such Retained Receivables will cease, provided that the Recipient Party will promptly pay over to the Transferring Party any amounts received with respect to the Retained Receivables of the Transferring Party after the Collection Period, together with a statement setting forth the components of such amounts. Any payment not received by the Party entitled thereto by the payment date specified in Section 2.8(b) will bear interest from such date until paid in full at a rate per annum equal to the prime rate in effect on such date plus three percent (3.0%) (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal).

ARTICLE III.
REPRESENTATIONS AND
WARRANTIES OF THE EMMIS ENTITIES

     The Emmis Entities, jointly and severally, represent and warrant to the Bonneville Entities as follows:

     3.1 Organization, Good Standing and Requisite Power.

     Each of the Emmis Entities is a limited liability company duly organized, validly existing and in good standing under the laws of Indiana, and has all requisite power to own, lease and operate the Emmis Assets and carry on its business. Emmis Operating is duly licensed, qualified to do business and in good standing as a foreign entity under the laws of Arizona and Illinois.

     3.2 Authorization and Binding Effect of Documents.

     Each Emmis Entity has all requisite limited liability company power and authority to enter into this Agreement and the other Documents and to consummate the transactions contemplated by this Agreement and each of the other Documents. The execution and delivery of this Agreement and each of the other Documents by each Emmis Entity (as appropriate) and the consummation by each Emmis Entity of the transactions contemplated hereby and thereby have been duly authorized by all necessary limited liability company action (including all necessary member approvals, if any) on the part of each Emmis Entity. This Agreement has been, and each of the other Documents at or prior to the Closing will be, duly executed and delivered by each Emmis Entity. This Agreement constitutes (and each of the other Documents, when executed and delivered, will constitute) the valid and binding obligation of each Emmis Entity enforceable against each Emmis Entity in accordance with its terms except as the enforceability of this Agreement or of any of the other Documents may be affected by

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bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

     3.3 Absence of Conflicts.

     Except as set forth on Schedule 3.3, and except for necessary clearances or approvals under the HSR Act or the Act, the execution, delivery and performance by each Emmis Entity of this Agreement and the other Documents, and consummation by each Emmis Entity of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, (iv) give any third party the right to modify, terminate or accelerate any obligation under, or (v) result in the creation of any Lien upon the Emmis Assets under, the provisions of the organizational documents of such Emmis Entity, any indenture, mortgage, lease, loan agreement or other agreement or instrument to which such Emmis Entity is bound or affected, or any law, statute, rule, judgment, order, decree or other legal restriction of any government, governmental agency or court to which such Emmis Entity is subject.

     3.4 Consents.

     Except as set forth on Schedule 3.3, Schedule 3.7(d) and Schedule 3.9, and except for any necessary clearances or approvals under the HSR Act or the Act, the execution, delivery and performance by each Emmis Entity of this Agreement and the other Documents, and consummation by each Emmis Entity of the transactions contemplated hereby and thereby, do not and will not require the authorization, consent, approval, exemption, clearance or other action by or notice or declaration to, or filing with, any court, any administrative or other governmental body, or any other third party.

     3.5 Emmis Assets; Title.

     (a) The Emmis Assets constitute all of the assets, properties and rights of every type and description, real, personal and mixed, tangible and intangible, that are currently used in, material to, or necessary for, the operation of the Emmis Stations as currently operated and as operated since January 1, 2004, with the exception of the Emmis Excluded Assets and personnel.

     (b) The representations and warranties of the Emmis Entities regarding title or rights to FCC Licenses, Emmis Real Property interests and Emmis Intellectual Property are set forth in Sections 3.6, 3.9 and 3.10. With respect to all other Emmis Assets, the Emmis Entities own and have good title to, or a valid lessee’s or licensee’s interest (pursuant to one or more Emmis Station Agreements included in the Emmis Assets) in, all of such Emmis Assets free and clear of all Liens except (i) Liens described on Schedule 3.5(b) (which the Emmis Entities will cause to be released prior to the Closing and released of record promptly after the Closing) and (ii) Permitted Liens. With respect to Emmis Assets that are Phoenix TBA Contracts, the representations and warranties under this Section 3.5(b) are made only as of the end of the day prior to the Phoenix TBA Effective Date.

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     3.6 Emmis FCC Licenses.

     Except as set forth on Schedule 3.6:

     (a) Emmis License is the valid and legal holder of each of the FCC Licenses listed on Schedule 3.6 (collectively, the “Emmis FCC Licenses”) free and clear of all Liens, and except as set forth on Schedule 3.6, any action of the FCC with respect to each Emmis FCC License is a Final Action with the exception of the FCC Order. The expiration date of the term of each main Emmis FCC License is shown on Schedule 3.6.

     (b) The Emmis FCC Licenses (i) are valid and in full force and effect, and constitute all of the licenses, permits and authorizations used in or required for the current operation of the Emmis Stations under the Communications Act of 1934, as amended, and the rules, regulations and policies of the FCC thereunder (collectively, the “Act”), and (ii) constitute all the currently in effect licenses and authorizations, including amendments and modifications thereto, issued by the FCC for the operation of the Emmis Stations.

     (c) Other than as set forth in the Emmis FCC Licenses or restrictions applicable to the radio broadcast industry generally, none of the Emmis FCC Licenses is subject to any restriction or condition which limits in any material respect the full operation of the applicable Emmis Station as now conducted, and as of the Closing Date, none of the Emmis FCC Licenses will be subject to any restriction or condition which would limit in any material respect the full operation of such Emmis Station as currently operated and as operated since January 1, 2004.

     (d) Subject to the Phoenix TBA, each Emmis Station is being operated by Emmis Operating in all material respects in accordance with the terms and conditions of the Emmis FCC Licenses and the Act, including but not limited to those pertaining to RF emissions; and, to the Knowledge of the Emmis Entities, none of the Emmis Stations is causing material interference to other stations, or is experiencing material interference from other stations in violation of the Act.

     (e) No applications, complaints or proceedings are pending or, to the Knowledge of any Emmis Entity, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Emmis FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any material fines, forfeitures or other administrative actions by the FCC with respect to any Emmis Station or its operation, other than actions or proceedings affecting the radio broadcasting industry in general.

     (f) To the Knowledge of each Emmis Entity, the Emmis Entities have complied in all material respects with all requirements to file registrations, reports, applications and other documents with the FCC with respect to each Emmis Station, and all such registrations, reports, applications and documents are true, correct and complete in all material respects.

     (g) Other than actions or proceedings affecting the radio broadcasting industry in general or facts relating to the Bonneville Entities, no Emmis Entity has Knowledge of matters (i) which might reasonably be expected to result in the adverse modification, suspension or revocation of or the refusal to renew any of the Emmis FCC Licenses or the imposition of any

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material fines or forfeitures by the FCC against any Emmis Entity, or (ii) which might reasonably be expected to result in the FCC’s denial or delay of approval of the assignment to the Bonneville Entities of any Emmis FCC License or the imposition of any Material Adverse Condition in connection with approval of the transfer to the Bonneville Entities of any Emmis FCC License.

     (h) There are no unsatisfied or otherwise outstanding citations issued by the FCC with respect to any Emmis Station or its operation.

     (i) True, complete and accurate copies of all Emmis FCC Licenses material to the operation of each Emmis Station have been delivered by the Emmis Entities to the Bonneville Entities.

     (j) Except for the Emmis FCC Licenses and the Emmis Permits identified on Schedule 3.6, there are no material licenses, permits or authorizations from governmental or regulatory authorities required for the lawful operation and conduct of the Emmis Stations as previously and currently operated by the Emmis Entities.

     3.7 Station Agreements.

     (a) Schedule 3.7(a) lists all Trade Agreements of the Emmis Stations as of the end of the day prior to the Phoenix TBA Effective Date, and sets forth the parties thereto, the contracted value of the remaining time required to be provided from and after the date noted on such Schedule and the contracted value of the goods or services to be received by Emmis Operating from and after the date noted on such Schedule. True and complete copies of all such written Trade Agreements in effect as of such date involving broadcast time of more than $25,000, and true and accurate summaries of all such Trade Agreements that are oral, including all related amendments, modifications and supplements, have been delivered to the Bonneville Entities. Schedule 3.7(a) identifies those Trade Agreements which relate in part to any station other than an Emmis Station.

     (b) Schedule 3.7(b) lists all the following types of agreements used in or relating to the operation of each Emmis Station as of the date of this Agreement (including the Station Agreements assigned under the Phoenix TBA):

     (i) Agreements for sale of broadcast time on such Emmis Station for monetary consideration that (A) are not terminable by the Emmis Entities without charge or penalty upon thirty (30) days’ or less prior written notice and (B) involve broadcast time of more than $25,000;

     (ii) All network affiliation agreements;

     (iii) All sales agency or advertising representation contracts;

     (iv) Each lease of any Emmis Asset (including a description of the property leased thereunder) other than such agreements not requiring expenditures of more than

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$25,000 in any calendar year and having a term (after taking into account any cancellation right of the Emmis Entities without charge or penalty) of one (1) year or less except for the Emmis Real Property Leases listed on Schedule 3.9; 1

     (v) All collective bargaining agreements;

     (vi) All severance agreements, employment agreements, talent agreements and agreements with independent contractors, other than such agreements that (A) do not provide for any severance payments or benefits, (B) do not require expenditures of more than $25,000 in any calendar year and (C) have a term (after taking into account any cancellation right of the Emmis Entities without charge or penalty) of one (1) year or less;

     (vii) All agreements requiring such Emmis Station or either Emmis Entity to acquire goods or services exclusively from a single supplier or provider, or prohibiting such Emmis Station or the owner or operator thereof from providing certain goods or services to any Person other than a specified Person;

     (viii) All agreements that have a remaining term (after taking into account any cancellation rights of the Emmis Entities without charge or penalty) of more than one (1) year or involve a commitment of more than $25,000; and

     (ix) Any other agreement that is material to the business, operations, financial condition or results of operations of any Emmis Station.

Schedule 3.7(b) also lists those Station Agreements relating in part to any station other than an Emmis Station. True and complete copies of all the foregoing Emmis Station Agreements that are in writing, and true and accurate summaries of all the foregoing Emmis Station Agreements that are oral, including all amendments, modifications and supplements, have been delivered to the Bonneville Entities. The Emmis Station Agreements that are not described in Section 3.7(a) or in the foregoing clauses (i) through (ix) of this Section 3.7(b) (without regard to the monetary thresholds set forth in Section 3.7(a) or in such clauses of Section 3.7(b)) do not involve commitments by parties thereto with an aggregate fair market value of more than $150,000.

     (c) Schedule 3.7(c) lists all of the contracts and agreements used in or relating to the operation of the Emmis Stations as of the date of this Agreement to which an Affiliate of any Emmis Entity is a party. True and complete copies of those in writing have been delivered to the Bonneville Entities, and summaries of those that are oral are set forth on Schedule 3.7(c).

     (d) Except as set forth on Schedule 3.7(d) and any other Schedule that relates to any Emmis Station Agreement, with respect to the Emmis Station Agreements which are, individually or in the aggregate, material to the assets, business, operations, financial condition or results of operations of an Emmis Station, (i) such Emmis Station Agreements are valid, binding, in full force and effect, and enforceable against the relevant Emmis Entity in accordance with their terms except as the enforceability of such Emmis Station Agreements may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial

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discretion in the enforcement of equitable remedies; (ii) neither the Emmis Entities nor, to the Knowledge of any Emmis Entity, any other party is in material default under, and no event has occurred which (after the giving of notice or the lapse of time or both) would constitute a material default under, or permit termination, modification or acceleration of, any such Emmis Station Agreements; (iii) neither the Emmis Entities nor any Affiliate of the Emmis Entities has granted or been granted any material waiver or forbearance with respect to any such Emmis Station Agreements not reflected in an amendment or modification; (iv) the Emmis Entities hold the right to enforce and receive the benefits under all such Emmis Station Agreements, free and clear of Liens (other than Permitted Liens) but subject to the terms and provisions of each such agreement; (v) none of the rights of any Emmis Entity or any of its Affiliates under any such Emmis Station Agreements is subject to termination or modification as a result of the consummation of the transactions contemplated by this Agreement; and (vi) except as set forth on Schedule 3.7(a), 3.7(b), or 3.9, no such Emmis Station Agreement requires the consent or approval by any party to such agreement for the consummation of the transactions contemplated by this Agreement. The foregoing to the contrary notwithstanding, with respect to Emmis Station Agreements that are Phoenix TBA Contracts, the representations and warranties under this Section 3.7(d) are made only as of the day prior to the Phoenix TBA Effective Date.

     (e) During the period commencing on the Phoenix TBA Effective Date, no Emmis Entity has entered into, modified, amended, renewed, extended or terminated any Emmis Station Agreement to be assigned to and assumed by the Bonneville Entities pursuant to this Agreement except in accordance with this Agreement (including Section 5.1).

     3.8 Tangible Personal Property.

     (a) Schedule 3.8 lists, as of the date stated on such Schedule, all tangible personal property (other than Emmis Excluded Assets, office supplies and other incidental items) necessary for the conduct of the business and operations of each Emmis Station as now operated.

     (b) Except as specified on Schedule 3.8, the Emmis Assets that consist of equipment used in or necessary for the operation of each Emmis Station as currently operated and as operated since January 1, 2004, have been properly maintained in all material respects in accordance with industry practices, are in a good state of repair and operating condition (subject to ordinary wear and tear), and comply in all material respects with the Act and other applicable material laws, rules, regulations and ordinances.

     (c) The tangible Emmis Assets include all tangible assets necessary to operate the Emmis Stations other than the Emmis Excluded Assets.

     3.9 Emmis Real Property.

     (a) The list of Emmis Real Property set forth on Schedule 3.9 is a correct and complete list of all of the interests in real estate used or held for use by either Emmis Entity to any material extent in the operation of any Emmis Station. To each Emmis Entity’s Knowledge, except as set forth on Schedule 3.9, there is no pending, threatened or contemplated lawsuit or

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other legal or administrative proceedings pertaining to any of the Emmis Real Property which would materially affect the current use, occupancy or value of the Emmis Real Property.

     (b) Emmis Operating holds good and marketable, insurable, fee simple title to the parcel of Emmis Real Property designated on Schedule 3.9 as owned in fee simple by Emmis Operating (the “Emmis Owned Real Property”) free and clear of any Liens except (i) Liens described on Schedule 3.5(b) (which the Emmis Entities will cause to be released prior to the Closing and released of record promptly after the Closing), and (ii) Permitted Liens.

     (c) Emmis Operating holds good, insurable title to the easements (the “KTAR Easements”) described on Schedule 3.9 and granted under the agreements or other documents listed on Schedule 3.9 under the heading “Easements” (the “KTAR Easement Agreements”), free and clear of all Liens except Permitted Liens, but subject to the terms and conditions of the KTAR Easement Agreements. The KTAR Easement Agreements constitute all of the agreements and other documents (including all amendments, modifications or supplements) under which either Emmis Entity holds an interest in the KTAR Easements.

     (d) Each lease or sublease (including all amendments, modifications or supplements) under which either Emmis Entity leases or subleases an interest in any Emmis Real Property (each, an “Emmis Real Property Lease”) is specified, and each leased or subleased Emmis Real Property, including but not limited to each transmitter or antenna site (the “Emmis Leased Real Property”), and its use by any Emmis Station are identified, on Schedule 3.9. Except as set forth on such Schedule, such Emmis Entity holds good title to the lessee’s or sublessee’s interest under each Emmis Real Property Lease free and clear of all Liens except Permitted Liens, but subject to the terms and provisions of each Emmis Real Property Lease and any Liens on the interest of each owner or other party through which such Emmis Entity directly or indirectly derives its interest as lessee or sublessee. True and complete copies of all Emmis Real Property Leases, including all amendments, modifications and supplements, have been delivered to the Bonneville Entities.

     (e) There are no unrecorded leases, subleases, or licenses, written or oral, to which either Emmis Entity is a party, or to the Knowledge of either Emmis Entity, any other unrecorded leases, subleases, or licenses, written or oral, granting any right of use or occupancy to any portion of the Emmis Real Property. To the Knowledge of each Emmis Entity, no party other than an Emmis Entity is in possession of the Emmis Real Property, except to the extent permitted under the terms of the KTAR Easements or Emmis Real Property Leases. There are no outstanding options or rights of first refusal pertaining to any of the Emmis Real Property to which any Emmis Entity is a party, or to the Knowledge of either Emmis Entity, any other outstanding options or rights of first refusal pertaining to any of the Emmis Real Property.

     (f) True and complete copies of all surveys, title policies and real property records in the possession of any Emmis Entity related to any Emmis Real Property have been delivered to the Bonneville Entities.

     (g) Except as set forth on Schedule 3.9, (i) each Emmis Real Property Lease is legal, valid, binding, in full force and effect and enforceable against the landlord thereunder in

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accordance with its terms; (ii) neither the Emmis Entities nor, to the Knowledge of any Emmis Entity, any other party is in material default under any Emmis Real Property Lease; (iii) to the Knowledge of each Emmis Entity, no event has occurred that, after the giving of notice or the lapse of time or both, would constitute a material default by any party under, or result in the material breach by any party of, or give rise to any right of termination, modification or acceleration of, any Emmis Real Property Lease, and no Emmis Entity has received or given notice alleging any such event has occurred; (iv) none of the rights of an Emmis Entity under any Emmis Real Property Lease is subject to termination or modification as a result of the consummation of the transactions contemplated by this Agreement; (v) no consent or approval by any party to any Emmis Real Property Lease is required for the consummation of the transactions contemplated hereby; and (vi) no Emmis Entity has granted or been granted any waiver or forbearance with respect to any Emmis Real Property Lease except as contained in amendments or modifications. To each Emmis Entity’s Knowledge, (i) no party to any Emmis Real Property Lease has repudiated any portion thereof, and (ii) there are no unresolved disputes or oral agreements currently in effect with respect to any Emmis Real Property Lease.

     (h) With respect to each Emmis Real Property Lease which is a sublease, to each Emmis Entity’s Knowledge, each of the representations and warranties in Section 4.9(g) is true and correct with respect to each underlying master lease.

     (i) Except as set forth on Schedule 3.9, to the Knowledge of each Emmis Entity, (i) each KTAR Easement Agreement is legal, valid, binding, in full force and effect and enforceable against the fee owners thereunder in accordance with its terms, except as superseded or terminated in accordance with the terms of another KTAR Easement Agreement; (ii) neither the Emmis Entities nor any other party is in material default under any KTAR Easement Agreement; (iii) no event has occurred that, after the giving of notice or the lapse of time or both, would constitute a material default by any party under, or result in the material breach by any party of, or give rise to any right of termination or modification of, any KTAR Easement Agreement, and no Emmis Entity has received or given notice alleging any such event has occurred; (iv) none of the rights of an Emmis Entity under any KTAR Easement Agreement is subject to termination or modification as a result of the consummation of the transactions contemplated by this Agreement; (v) no consent or approval by any party to any KTAR Easement Agreement is required for the consummation of the transactions contemplated hereby; (vi) no Emmis Entity has granted or been granted any waiver or forbearance with respect to any KTAR Easement Agreement; (vii) no party to any KTAR Easement Agreement has repudiated any portion thereof, (viii) no Emmis Entity has received notice alleging that any KTAR Easement is invalid, unenforceable or terminated other than as set forth in another KTAR Easement Agreement, and (ix) there are no unresolved disputes or oral agreements currently in effect with respect to any KTAR Easement Agreement.

     (j) Except as set forth on Schedule 3.9, (i) all improvements on the Emmis Owned Real Property, and all improvements owned by either Emmis Entity located on the Emmis Leased Real Property or KTAR Easements (which include the towers, antennas, transmitter buildings and transmitter equipment located thereon subject to the right and interest in such improvements held by the fee owner under the terms of the KTAR Easements), are in good working condition and repair (subject to ordinary wear and tear) and, to each Emmis Entitiy’s

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Knowledge, are in compliance in all material respects with applicable federal, state and local laws, building codes, ordinances and regulations, including but not limited to zoning and land use laws, ordinances and regulations. To each Emmis Entity’s Knowledge, the use by any Emmis Station of each portion of the Emmis Owned Real Property, Emmis Leased Real Property and KTAR Easements complies in all material respects with applicable zoning and land use laws, ordinances and regulations.

     3.10 Intellectual Property.

     Other than Emmis Excluded Assets, Schedule 3.10 lists all material trade names, trademarks, service marks, copyrights and patents principally used in the operation of the Emmis Stations, including all registrations, applications and licenses for any of the Emmis Intellectual Property. Except as disclosed on Schedule 3.10:

     (a) To the Knowledge of each Emmis Entity, the Emmis Entities own free and clear of Liens other than Permitted Liens, all right and interest in, and right and authority to use, or has a valid license to use, in connection with the conduct of the business of the applicable Emmis Station as presently conducted, all of the Emmis Intellectual Property listed on Schedule 3.10, and all of the rights and properties constituting a part of the Emmis Intellectual Property are in full force and effect.

     (b) There are no outstanding or, to the Knowledge of any Emmis Entity, threatened judicial or adversary proceedings with respect to any of the Emmis Intellectual Property.

     (c) No Emmis Entity has granted to any other person or entity any license or other right or interest in or to any of the Emmis Intellectual Property or to the use thereof.

     (d) No Emmis Entity has Knowledge of any infringement or unlawful use of any of the Emmis Intellectual Property.

     (e) To each Emmis Entity’s Knowledge, no Emmis Entity has violated any provisions of the Copyright Act of 1976, 17 U.S.C. §101, et seq., in any material respect with regard to the Emmis Intellectual Property.

     (f) The Emmis Entities have delivered to the Bonneville Entities copies of all state and federal registrations and other material documents, if any, establishing any of the rights and properties constituting a part of the Emmis Intellectual Property.

     3.11 Emmis Stations Financial Condition.

     Attached as Schedule 3.11 are the unaudited statements of income of each Emmis Station for the year ended February 28, 2004, and the interim period ended November 30, 2004. Such statements (the “Emmis Stations Statements”) (i) are in accordance with the books and records of Emmis Operating pertaining to each of the Emmis Stations, (ii) have been prepared in accordance with GAAP consistently applied, and (iii) accurately reflect the results of operations of the corresponding Emmis Station for the periods covered, in accordance with GAAP, except

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that the Emmis Stations Statements do not include (A) balance sheets or statements of cash flows, (B) federal income tax expense or benefit, (C) interest income and expense, (D) disclosures required by GAAP in notes accompanying financial statements, (E) retiree benefit expense (pension, health insurance, etc.), and (F) expenses associated with the operations of Emmis Operating or its parent entities generally.

     3.12 Absence of Certain Changes or Events.

     Since June 30, 2004, and through the date of this Agreement, other than as described on Schedule 3.12 or caused by or arising from any Bonneville Entity’s action or failure to perform under the Phoenix TBA:

     (a) There has not been any damage, destruction or other casualty loss with respect to the Emmis Assets (whether or not covered by insurance) which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect.

     (b) None of the Emmis Entities or the Emmis Stations has suffered any adverse change or development which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect.

     (c) With respect to the Emmis Stations, no Emmis Entity has:

     (i) amended, terminated, renewed or taken any action or inaction that would result in an amendment, termination or renewal of any Emmis Station Agreement, nor has such action been taken by any other party, except in the ordinary course of business consistent with past practices, or any Emmis Real Property Lease (other than any amendment noted on Schedule 3.9);

     (ii) mortgaged, pledged or subjected to any Lien, any of the Emmis Assets, except for Permitted Liens;

     (iii) acquired or disposed of any Emmis Assets or entered into any agreement or other arrangement for such acquisition or disposition, except for immaterial amounts in the ordinary course of business consistent with past practices ;

     (iv) entered into any agreement, commitment or other transaction except the Phoenix TBA and those that (A) were entered into in the ordinary course of business consistent with past practice or (B) are not material to the assets, business, operations, results of operations or financial condition of any Emmis Station;

     (v) paid any bonus to any officer, director or employee or granted to any officer, director or employee any other increase in compensation in any form, except in the ordinary course of business consistent with past practices;

     (vi) adopted, amended or renewed any collective bargaining, bonus, profit-sharing, compensation, stock option, pension, retirement, deferred compensation,

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severance or other plan, agreement, trust, fund or arrangement for the benefit of employees (whether or not legally binding) or made any material changes in its policies of employment;

     (vii) entered into any agreement (other than agreements that will be terminated prior to the Closing) with any Affiliate of any Emmis Entity; or

     (viii) operated its business other than in the ordinary course consistent with past practices and, after the Phoenix TBA Effective Date, as otherwise contemplated by the Phoenix TBA; or

     (ix) committed to undertake any of the foregoing.

     3.13 Litigation.

     Except as described in Schedule 3.13 or caused by or arising from any Bonneville Entity’s action or failure to perform under the Phoenix TBA, (i) there are no actions, suits, claims, investigations or administrative or arbitration proceedings pending or, to the Knowledge of any Emmis Entity, threatened against any Emmis Entity before or by any court, arbitration tribunal or governmental department or agency, domestic or foreign, that relates to any Emmis Station or the Emmis Assets; (ii) neither any Emmis Entity nor, to the Knowledge of any Emmis Entity, any of the officers or employees of any Emmis Entity, has been charged with, or to the Knowledge of any Emmis Entity, is under investigation with respect to, any violation of any provision of any federal, state, foreign or other applicable law or administrative regulation in respect of such officer’s or employee’s employment at any Emmis Station or with any Emmis Entity; and (iii) neither any Emmis Entity, any properties or assets of any Emmis Entity nor, to the Knowledge of any Emmis Entity, any officer or employee of any Emmis Entity is a party to or bound by any order, arbitration award, judgment or decree of any court, arbitration tribunal or governmental department or agency, domestic or foreign, in respect of any business practices, the acquisition of any property, or the conduct of any business of any Emmis Entity which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect or materially impair the ability of any Emmis Entity to perform its obligations hereunder and consummate the transactions contemplated hereby.

     3.14 Labor Matters.

     (a) Except as listed on Schedule 3.14(a), as of the Phoenix TBA Agreement Effective Date:

     (i) To each Emmis Entity’s Knowledge, no present or former employee or independent contractor of any Emmis Station has a pending claim or charge which has been asserted or threatened against any Emmis Entity for (A) overtime pay; (B) wages, salaries or profit sharing; (C) vacations, time off or pay in lieu of vacation or time off; (D) any material violation of any statute, ordinance, contract or regulation relating to minimum wages, maximum hours of work or the terms or conditions of employment; (E) discrimination against employees on any basis; (F) unlawful or wrongful employment or

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termination practices; (G) unlawful retirement, termination or labor relations practices or breach of contract; or (H) any material violation of occupational safety or health standards.

     (ii) There is not pending or, to the Knowledge of either Emmis Entity, threatened against either Emmis Entity any labor dispute, strike or work stoppage that affects or interferes or is reasonably likely to affect or interfere with the operation of any Emmis Station, and no Emmis Entity has Knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of any Emmis Station. There are no material unresolved unfair labor charges against any Emmis Station, and no Emmis Station has experienced any strike, work stoppage or other similar significant labor difficulties within the preceding twelve (12) months.

     (b) Except as set forth on Schedule 3.7(b), no Emmis Entity is a signatory or a party to, or otherwise bound by, a collective bargaining agreement now in effect which covers employees or former employees of any Emmis Station. Except as set forth on Schedule 3.14(b), (i) no Emmis Entity has agreed to recognize any union or other collective bargaining unit with respect to any employees of any Emmis Station, and (ii) no union or other collective bargaining unit has been certified as representing any employees of any Emmis Station.

     (c) Schedule 3.14(c) sets forth a true and complete list, as of the day preceding the Phoenix TBA Effective Date, of all persons employed by an Emmis Entity in connection with the operation of an Emmis Station who earn more than $15,000 per year, and states for each such employee the date hired, the level of compensation (including any projected bonus) payable to such employee (limited in the case of each employee who is compensated on a commission basis to a description of the manner in which such commissions are determined and the specification of compensation earned by such employee in 2003), and whether such employee is employed under a written contract or is covered by a written severance agreement. Except pursuant to written employment agreements or written severance agreements listed on Schedule 3.7(b), or on Schedule 4.4 to the Phoenix TBA, the only severance obligations of the Emmis Entities with respect to employees at the Emmis Stations are set forth on Schedule 3.14(c). A true and complete copy of any handbook, policy manual or similar written guidelines furnished to employees of any Emmis Station has been delivered to the Bonneville Entities.

     3.15 Employee Benefit Plans.

     (a) All Benefit Plans with respect to the Emmis Stations are disclosed in Schedule 3.15 (each, an “Emmis Benefit Plan”). Except pursuant to an Emmis Benefit Plan disclosed in Schedule 3.15 or any agreements disclosed in Schedule 3.7(b), the Emmis Entities and their Affiliates have no fixed or contingent liability or obligation to any of the current or former employees of either Emmis Entity now or previously employed at an Emmis Station, or the beneficiaries or dependents of any such employees or former employees, or to any person whose services are or were provided principally for any Emmis Station as an independent contractor to either Emmis Entity or any Emmis Station. True and complete copies of the summary plan

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descriptions of all Emmis Benefit Plans, to the extent subject to ERISA, have been provided to the Bonneville Entities.

     (b) All Emmis Benefit Plans have been administered and are in compliance in all material respects with applicable provisions, if any, of ERISA and the Code and all other applicable law. Neither Emmis Entity nor any Related Person (as defined in the definition of Benefit Plans in Section 1.1) of an Emmis Entity has engaged in a transaction with respect to any Emmis Benefit Plan that could result in a material Tax, penalty or other liability under the Code or ERISA being imposed against the Recipient Party, any Emmis Station or the Emmis Assets.

     (c) No Emmis Benefit Plan is a multiemployer plan within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA (a “Multiemployer Plan”).

     (d) Neither Emmis Entity nor any Related Person of an Emmis Entity has, to the Emmis Entities’ Knowledge, incurred or expects to incur, with respect to any Multiemployer Plan covering any past or present employee at any Emmis Station, any material withdrawal liability under Subtitle E of Title IV of ERISA regardless of whether based on contributions by any entity which is considered a predecessor of either Emmis Entity or one employer with either Emmis Entity under Section 4001 of ERISA.

     (e) All contributions required to have been made by each Emmis Entity or any Related Person under the terms of any Emmis Benefit Plan or applicable law have been timely made and all other contributions have been duly provided for on the Emmis Entity’s books and records.

     (f) Neither Emmis Entity nor any Related Person has any unfunded obligations (including projected obligations) for retiree health or life benefits under any Emmis Benefit Plan covering any of the current or former employees of either Emmis Entity now or previously employed at any Emmis Station, or the beneficiaries or dependents of any such employees or former employees, other than COBRA continuation coverage required by law.

     (g) Neither Emmis Entity nor any Related Person of an Emmis Entity, to the Emmis Entities’ Knowledge, has incurred any material liability under or pursuant to Part 4 of Title I or Title IV of ERISA or the penalty, excise tax or joint and several liability provisions of the Code relating to any Emmis Benefit Plans and, to the Emmis Entities’ Knowledge, no event or condition has occurred or exists which would reasonably be expected to have a Material Adverse Effect with respect to the Emmis Stations.

3.16 Compliance with Law

     Subject to the Phoenix TBA, and except as specified on Schedule 3.16, the Emmis Entities have operated and are operating the Emmis Stations in all material respects in compliance with the Act and all other material federal, state and local laws, statutes, ordinances, regulations, licenses, permits or exemptions therefrom and all applicable orders, writs, injunctions and decrees of any court, commission, board, agency or other instrumentality, and

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neither Emmis Entity has received any written notice of material noncompliance pertaining to the operation of any Emmis Station that has not been cured.

3.17 [INTENTIONALLY OMITTED]

3.18 Environmental Matters

     (a) Except as set forth on Schedule 3.18, the Emmis Entities have obtained all environmental, health and safety permits necessary for the operation of each Emmis Station, all such permits are valid and in full force and effect, and the Emmis Entities are in compliance in all material respects with all terms and conditions of such permits.

     (b) Except as set forth on Schedule 3.18, there is no proceeding pending or, to any Emmis Entity’s Knowledge, threatened which may result in the reversal, rescission, termination, modification or suspension of any environmental or health or safety permits necessary for the operation of the Emmis Stations, and to each Emmis Entity’s Knowledge, there is no basis for any such proceeding.

     (c) Except as set forth on Schedule 3.18, to each Emmis Entity’s Knowledge, each Emmis Station has operated and is operating in all material respects in compliance with all material federal, state, local and other laws, statutes, ordinances and regulations, and licenses, permits, exemptions, orders, writs, injunctions and decrees of any court, commission, board, agency or other governmental instrumentality, applicable to such Emmis Station relating to environmental matters.

     (d) Except as set forth on Schedule 3.18, to each Emmis Entity’s Knowledge, there are no conditions or circumstances associated with the Emmis Assets which may give rise to any material liability or material cost under applicable environmental law. Except as listed on Schedule 3.18, no Emmis Station owns or uses any electrical or other equipment containing polychlorinated biphenyls.

     (e) For the purposes of this Section 3.18, (i) “hazardous materials” will mean any waste, substance, materials, smoke, gas, emissions or particulate matter designated as hazardous or toxic under any applicable environmental law, including but not limited to, friable asbestos, urea formaldehyde, polychlorinated biphenyls, regulated substances and wastes, radioactive materials, radon, lead and petroleum and petroleum byproducts, including oil or any fraction thereof, but excluding any such substances below applicable governmental action levels, or small quantities of maintenance, cleaning and emergency generator fuel supplies customary for the operation of radio stations, and (ii) “environmental law” means any federal, state, local or other laws, statutes, ordinances, regulations, licenses, permits or any order, writ, injunction or decree of any court, commission, board, agency or other instrumentality relating to the regulation of hazardous materials.

     (f) Except as set forth on Schedule 3.18, with respect to the operation of any Emmis Station, neither Emmis Entity has filed or, to either Emmis Entity’s Knowledge, been required to file any notice under any applicable material law, rule, regulation, order, judgment, injunction,

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decree or ruling reporting a release of a hazardous material into the environment, and no notice pursuant to Section 103(a) or (c) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. §9601, et seq. (“CERCLA”) or any other applicable environmental law or regulation has been or, to any Emmis Entity’s Knowledge, was required to be filed.

     (g) Except as set forth on Schedule 3.18, neither Emmis Entity has received any notice letter under CERCLA or any other written notice, and, to each Emmis Entity’s Knowledge, there is no investigation pending or threatened, to the effect that any Emmis Entity has or may have material liability for or as a result of the release or threatened release of a hazardous material into the environment or for the suspected unlawful presence of hazardous material thereon nor, to any Emmis Entity’s Knowledge, does there exist any basis for such investigation, in connection with the operation of the Emmis Stations.

     (h) To each Emmis Entity’s Knowledge, except as disclosed on Schedule 3.18, or in the environmental site assessments identified in Schedule 3.18, none of the Emmis Operating Assets contains any hazardous materials or underground storage tanks; and no underground storage tank disclosed on Schedule 3.18 leaks or has leaked. The Emmis Entities have furnished to the Bonneville Entities copies of the environment reports, studies or analyses related to the Emmis Operating Assets which are listed on Schedule 3.18. The Emmis Entities are not aware of the existence of any other environmental reports, studies or analyses related to the Emmis Operating Assets.

     3.19 Broker’s or Finder’s Fees.

     Except as set forth on Schedule 3.19, no agent, broker, investment banker or other person or firm acting on behalf of or under the authority of any Emmis Entity or any Affiliate of any Emmis Entity is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement.

     3.20 Insurance.

     The Emmis Entities have in full force adequate insurance covering the Emmis Operating Assets relating to the Emmis Stations. The Emmis Entities also have in full force adequate workers compensation insurance and general liability insurance in amounts consistent with broadcasting industry standards for similar stations. All of such insurance policies are in full force and effect, and no person is in default with respect to its obligations under any such insurance policy and has not been denied insurance coverage thereunder.

     3.21 Transactions with Affiliates.

     Except as described on Schedule 3.21, no Emmis Entity has been involved in any business arrangement or relationship relating to any Emmis Station with any Affiliate of any Emmis Entity, and no Affiliate of any Emmis Entity owns any property or right, tangible or intangible, which is used in the operation of any Emmis Station or is material to the Emmis

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Assets or the business, operations, financial condition or results of operations of any Emmis Station.

     3.22 Emmis Entities’ Qualification.

     Except as disclosed in Schedule 3.22 and as provided in Section 5.3, the Emmis Entities are, and at all times between the date hereof and up until and including the Closing will be, legally, financially and otherwise qualified under the Act, HSR Act and all rules, regulations and policies of the FCC, the Department of Justice, the Federal Trade Commission (the “FTC”) and any other governmental agency, to acquire and operate WLUP. Except as disclosed in Schedule 3.22, to the Knowledge of the Emmis Entities, there are no facts or proceedings which would reasonably be expected to disqualify the Emmis Entities under the Act or HSR Act or otherwise from acquiring or operating WLUP or would cause the FCC not to approve the assignment of the Bonneville FCC Licenses to Emmis License or the Department of Justice and the FTC not to allow the waiting period under the HSR Act to terminate within thirty (30) days of the filing provided for in Section 5.3. Except as disclosed in Schedule 3.22, the Emmis Entities have no Knowledge of any fact or circumstance relating to the Emmis Entities or any of the Emmis Entities’ Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the Bonneville FCC Licenses to Emmis License, (b) lead to a material delay in the processing by the FCC of the applications for such assignment or (c) lead to a material delay in the termination of the waiting period required by the HSR Act. Except as disclosed in Schedule 3.22, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the Bonneville FCC Licenses to Emmis License, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein.

     3.23 WARN Act.

     The Emmis Entities are not planning or contemplating and have not made or taken any decisions or actions concerning the employees of WLUP after the Closing Date that would require the service of notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state law.

     3.24 Certain Information Regarding Emmis Entities.

     Emmis Operating is the successor in all respects (having the same assets, liabilities and business) as Emmis Radio Corporation as a result of a conversion of that entity from a corporate form to a limited liability company form in compliance with Indiana law. Emmis Operating operates all the radio stations in the United States owned by Emmis Communications Corporation or its Affiliates except for the stations in Indianapolis and Terre Haute, Indiana, held by Emmis Indiana Broadcasting, L.P. and the stations held by Emmis Austin Radio Broadcasting Company, L.P. in Austin, Texas. Emmis License holds all of the licenses issued by the FCC for use in the operation of each radio station owned by Emmis Operating except for WQCD(FM) and WRKS (FM) in New York, New York.

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     3.25 Exclusivity of Representations.

     THE REPRESENTATIONS AND WARRANTIES MADE BY THE EMMIS ENTITIES IN THIS AGREEMENT OR PURSUANT TO THIS AGREEMENT IN WRITING (AND IN THE CHICAGO TBA AND PHOENIX TBA) ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES. THE EMMIS ENTITIES HEREBY DISCLAIM ANY SUCH OTHER IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE BONNEVILLE ENTITIES OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING, WITHOUT LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). EXCEPT AS SET FORTH IN THIS AGREEMENT, ALL OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE EMMIS OPERATING ASSETS IS TO BE TRANSFERRED TO BONNEVILLE INTERNATIONAL WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE, ALL OF WHICH IS HEREBY DISCLAIMED.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE BONNEVILLE ENTITIES

     The Bonneville Entities, jointly and severally, represent and warrant to the Emmis Entities as follows:

     4.1 Organization, Good Standing and Requisite Power.

     Each Bonneville Entity is a corporation duly organized, validly existing and in good standing under the laws of Utah, and has all requisite power to own, lease and operate the Bonneville Assets and carry on the business of WLUP. Bonneville International is duly licensed, qualified to do business and in good standing as a foreign entity under the laws of Arizona and Illinois.

     4.2 Authorization and Binding Effect of Documents.

     Each Bonneville Entity has all requisite corporate power and authority to enter into this Agreement and the other Documents and to consummate the transactions contemplated by this Agreement and each of the other Documents. The execution and delivery of this Agreement and each of the other Documents by each Bonneville Entity (as appropriate) and the consummation by each Bonneville Entity of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action (including all necessary shareholder approvals, if any) on the part of each Bonneville Entity. This Agreement has been, and each of the other Documents at or prior to the Closing will be, duly executed and delivered by the appropriate Bonneville Entity. This Agreement constitutes (and each of the other Documents, when executed and delivered, will constitute) the valid and binding obligation of each Bonneville

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Entity enforceable against such Bonneville Entity in accordance with its terms except as the enforceability of this Agreement or of any of the other Documents may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

     4.3 Absence of Conflicts.

     Except as set forth on Schedule 4.3, and except for necessary clearances or approvals under the HSR Act or the Act, the execution, delivery and performance by each Bonneville Entity of this Agreement and the other Documents, and consummation by each Bonneville Entity of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, (iv) give any third party the right to modify, terminate or accelerate any obligation under, or (v) result in the creation of any Lien upon the Bonneville Assets under, the provisions of the organizational documents of such Bonneville Entity, any indenture, mortgage, lease, loan agreement or other agreement or instrument to which such Bonneville Entity is bound or affected, or any law, statute, rule, judgment, order, decree or other legal restriction of any government, governmental agency or court to which such Bonneville Entity is subject.

     4.4 Consents.

     Except as set forth on Schedule 4.3, Schedule 4.7(d) or Schedule 4.9, and except for any necessary clearances or approvals under the HSR Act or the Act, the execution, delivery and performance by each Bonneville Entity of this Agreement and the other Documents, and consummation by each Bonneville Entity of the transactions contemplated hereby and thereby, do not and will not require the authorization, consent, approval, exemption, clearance or other action by or notice or declaration to, or filing with, any court, any administrative or other governmental body, or any other third party.

     4.5 Bonneville Assets; Title.

     (a) The Bonneville Assets constitute all of the assets, properties and rights of every type and description, real, personal and mixed, tangible and intangible, that are currently used in, material to, or necessary for, the operation of WLUP as currently operated and as operated since January 1, 2004, with the exception of the Bonneville Excluded Assets and personnel.

     (b) The representations and warranties of the Bonneville Entities regarding title or rights to FCC Licenses, real property interests and Bonneville Intellectual Property are set forth in Sections 4.6, 4.9 and 4.10. With respect to all other Bonneville Assets, the Bonneville Entities own and have good title to, or a valid lessee’s or licensee’s interest (pursuant to one or more Bonneville Station Agreements included in the Bonneville Assets) in, all of such Bonneville Assets free and clear of all Liens except Permitted Liens. With respect to Bonneville Assets that are Chicago TBA Contracts, the representations and warranties under this Section 4.5(b) are made only as the end of the day prior to the Chicago TBA Effective Date.

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     4.6 Bonneville FCC Licenses.

     Except as set forth on Schedule 4.6:

     (a) Bonneville Holding is the valid and legal holder of each of the FCC Licenses listed on Schedule 4.6 (collectively, the “Bonneville FCC Licenses”) free and clear of all Liens, and except as set forth on Schedule 4.6, any action of the FCC with respect to each Bonneville FCC License is a Final Action with the exception of the FCC Order. The expiration date of the term of each main Bonneville FCC License is shown on Schedule 4.6.

     (b) The Bonneville FCC Licenses (i) are valid and in full force and effect, and constitute all of the licenses, permits and authorizations used in or required for the current operation of WLUP under the Act, and (ii) constitute all the currently in effect licenses and authorizations, including amendments and modifications thereto, issued by the FCC for the operation of WLUP.

     (c) Other than as set forth in the Bonneville FCC Licenses or restrictions applicable to the radio broadcast industry generally, none of the Bonneville FCC Licenses is subject to any restriction or condition which limits in any material respect the full operation of WLUP as now conducted, and as of the Closing Date, none of the Bonneville FCC Licenses will be subject to any restriction or condition which would limit in any material respect the full operation of WLUP as currently operated and as operated since January 1, 2004.

     (d) Subject to the Chicago TBA, WLUP is being operated by Bonneville International in all material respects in accordance with the terms and conditions of the Bonneville FCC Licenses and the Act, including but not limited to those pertaining to RF emissions; and, to the Knowledge of the Bonneville Entities, WLUP is not causing material interference to other stations, and is not experiencing material interference from other stations, in violation of the Act.

     (e) No applications, complaints or proceedings are pending or, to the Knowledge of any Bonneville Entity, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Bonneville FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any material fines, forfeitures or other administrative actions by the FCC with respect to WLUP or its operation, other than actions or proceedings affecting the radio broadcasting industry in general.

     (f) To the Knowledge of any Bonneville Entity, the Bonneville Entities have complied in all material respects with all requirements to file registrations, reports, applications and other documents with the FCC with respect to WLUP, and all such registrations, reports, applications and documents are true, correct and complete in all material respects.

     (g) Other than actions or proceedings affecting the radio broadcasting industry in general or facts relating to the Emmis Entities, no Bonneville Entity has Knowledge of matters (i) which might reasonably be expected to result in the adverse modification, suspension or revocation of or the refusal to renew any of the Bonneville FCC Licenses or the imposition of any material fines or forfeitures by the FCC against any Bonneville Entity, or (ii) which might

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reasonably be expected to result in the FCC’s denial or delay of approval of the assignment to the Emmis Entities of any Bonneville FCC License or the imposition of any Material Adverse Condition in connection with approval of the transfer to the Emmis Entities of any Bonneville FCC License.

     (h) There are no unsatisfied or otherwise outstanding citations issued by the FCC with respect to WLUP or its operation.

     (i) True, complete and accurate copies of all Bonneville FCC Licenses material to the operation of WLUP have been delivered by the Bonneville Entities to the Emmis Entities.

     (j) Except for the Bonneville FCC Licenses and the Bonneville Permits identified on Schedule 4.6, there are no material licenses, permits or authorizations from governmental or regulatory authorities required for the lawful operation and conduct of WLUP as previously and currently operated by the Bonneville Entities.

     4.7 Station Agreements.

     (a) Schedule 4.7(a) lists all Trade Agreements of WLUP as of the end of the day prior to the Chicago TBA Effective Date, and sets forth the parties thereto, the contracted value of the remaining time required to be provided from and after the date noted on such Schedule and the contracted value of the goods or services to be received by Bonneville International from and after the date noted on such Schedule. True and complete copies of all such written Trade Agreements in effect as of such date involving broadcast time of more than $25,000, and true and accurate summaries of all such Trade Agreements that are oral, including all related amendments, modifications and supplements, have been delivered to the Emmis Entities. Schedule 4.7(a) identifies those Trade Agreements which relate in part to any station other than WLUP.

     (b) Schedule 4.7(b) lists all the following types of agreements used in or relating to the operation of WLUP as of the date of this Agreement (including the Station Agreements assigned under the Chicago TBA):

     (i) Agreements for sale of broadcast time on WLUP for monetary consideration that (A) are not terminable by the Bonneville Entities without charge or penalty upon thirty (30) days’ or less prior written notice, and (B) involve broadcast time of more than $25,000;

     (ii) All network affiliation agreements;

     (iii) All sales agency or advertising representation contracts;

     (iv) Each lease of any Bonneville Asset (including a description of the property leased thereunder) other than such agreements not requiring expenditures of more than $25,000 in any calendar year and having a term (after taking into account any

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cancellation right of the Bonneville Entities without charge or penalty) of one (1) year or less except for the Bonneville Real Property Leases listed on Schedule 4.9;

     (v) All collective bargaining agreements;

     (vi) All severance agreements, employment agreements, talent agreements and agreements with independent contractors, other than such agreements that (A) do not provide for any severance payments or benefits, (B) do not require expenditures of more than $25,000 in any calendar year and (C) have a term (after taking into account any cancellation right of the Bonneville Entities without charge or penalty) of one (1) year or less;

     (vii) All agreements requiring WLUP or either Bonneville Entity to acquire goods or services exclusively from a single supplier or provider, or prohibiting WLUP or either Bonneville Entity from providing certain goods or services to any Person other than a specified Person;

     (viii) All agreements that have a remaining term (after taking into account any cancellation rights of the Bonneville Entities without charge or penalty) of more than one (1) year or involve a commitment of more than $25,000; and

     (ix) Any other agreement that is material to the business, operations, financial condition or results of operations of WLUP.

Schedule 4.7(b) lists those Station Agreements relating in part to any station other than WLUP. True and complete copies of all the foregoing Bonneville Station Agreements that are in writing, and true and accurate summaries of all the foregoing Bonneville Station Agreements that are oral, including all amendments, modifications and supplements, have been delivered to the Emmis Entities. The Bonneville Station Agreements that are not described in Section 4.7(a) or in the foregoing clauses (i) through (ix) of this Section 4.7(b) (without regard to the monetary thresholds set forth in Section 4.7(a) or in such clauses of Section 4.7(b)) do not involve commitments by parties thereto with an aggregate fair market value of more than $150,000.

     (c) Schedule 4.7(c) lists all of the contracts and agreements used in or relating to the operation of WLUP immediately prior to the Chicago TBA Effective Date to which an Affiliate of any Bonneville Entity is a party. True and complete copies of those in writing have been delivered to the Emmis Entities, and summaries of those that are oral are set forth on Schedule 4.7(c).

     (d) Except as set forth on Schedule 4.7(d) and any other Schedule that relates to any Bonneville Station Agreement, with respect to the Bonneville Station Agreements which are, individually or in the aggregate, material to the assets, business, operations, financial condition or results of operations of WLUP, (i) such Bonneville Station Agreements are valid, binding, in full force and effect, and enforceable against the relevant Bonneville Entity in accordance with their terms except as the enforceability of such Bonneville Station Agreements may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial

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discretion in the enforcement of equitable remedies; (ii) neither the Bonneville Entities nor, to the Knowledge of any Bonneville Entity, any other party is in material default under, and no event has occurred which (after the giving of notice or the lapse of time or both) would constitute a material default under, or permit termination, modification or acceleration of, any such Bonneville Station Agreements; (iii) neither the Bonneville Entities nor any Affiliate of the Bonneville Entities has granted or been granted any material waiver or forbearance with respect to any such Bonneville Station Agreements not reflected in an amendment or modification; (iv) the Bonneville Entities hold the right to enforce and receive the benefits under all such Bonneville Station Agreements, free and clear of Liens (other than Permitted Liens) but subject to the terms and provisions of each such agreement; (v) none of the rights of any Bonneville Entity or any Affiliate of any Bonneville Entity under any such Bonneville Station Agreements is subject to termination or modification as a result of the consummation of the transactions contemplated by this Agreement; and (vi) except as set forth on Schedule 4.7(a), 4.7(b) or 4.9, no such Bonneville Station Agreement requires the consent or approval by any party to such agreement for the consummation of the transactions contemplated by this Agreement. The foregoing to the contrary notwithstanding, (i) with respect to Bonneville Station Agreements that are Chicago TBA Contracts, the representations and warranties under this Section 4.7(d) are made only as of the end of the day prior to the Chicago TBA Effective Date, and (ii) the Bonneville Entities make no representations or warranties regarding the Station Agreements involving the AON Building.

     (e) During the period commencing on the Chicago TBA Effective Date, no Bonneville Entity has entered into, modified, amended, renewed, extended or terminated any WLUP Station Agreement to be assigned to and assumed by the Emmis Entities pursuant to this Agreement except in accordance with this Agreement (including Section 5.1).

     4.8 Tangible Personal Property.

     (a) Section 2.1(b)(i) lists all tangible personal property (other than the Bonneville Excluded Assets, office supplies and other incidental items) included in the Bonneville Assets.

     (b) Except as specified on Schedule 4.8, the Bonneville Assets that consist of equipment have been properly maintained in all material respects in accordance with industry practices, are in a good state of repair and operating condition (subject to ordinary wear and tear), and comply in all material respects with the Act and other applicable material laws, rules, regulations and ordinances.

     (c) The tangible Bonneville Assets include all tangible assets necessary to operate WLUP other than the Bonneville Excluded Assets.

     4.9 Bonneville Real Property.

     (a) The list of real property set forth on Schedule 4.9 is a correct and complete list of all of the interests in real estate used or held for use by either Bonneville Entity to any material extent in the operation of WLUP. Neither Bonneville Entity owns any real property in fee principally used in the operation of WLUP. To each Bonneville Entity’s Knowledge, except as

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set forth on Schedule 4.9, there is no pending, threatened or contemplated action to take by eminent domain or to condemn any of the real property used in the operation of WLUP.

     (b) Each lease (including all amendments, modifications, supplements, and subleases) under which either Bonneville Entity leases an interest in any real property used or held for use by either Bonneville Entity to any material extent in the operation of WLUP (each, a “Bonneville Real Property Lease”) is specified, and each such leased real property, including but not limited to studio and office space and each transmitter or antenna site (the “Bonneville Leased Real Property”), and its use by any Bonneville Entity are identified, on Schedule 4.9. Except as set forth on such Schedule, such Bonneville Entity holds good title to the lessee’s interest under each Bonneville Real Property Lease free and clear of all Liens except Permitted Liens, but subject to the terms and provisions of each Bonneville Real Property Lease and any Liens on the interest of each owner or other party through which such Bonneville Entity directly or indirectly derives its interest as lessee or sublessee. True and complete copies of all Bonneville Real Property Leases, including all amendments, modifications and supplements, together with all surveys and real property records in the possession of any Bonneville Entity related to any real property subject to a Bonneville Real Property Lease, have been delivered to the Emmis Entities.

     (c) Except as set forth on Schedule 4.9, (i) each Bonneville Real Property Lease is legal, valid, binding, in full force and effect, and enforceable against the landlord thereunder in accordance with its terms; (ii) neither the Bonneville Entities nor, to the Knowledge of any Bonneville Entity, any other party is in material default under any Bonneville Real Property Lease; (iii) to the Knowledge of each Bonneville Entity, no event has occurred that, after the giving of notice or the lapse of time or both, would constitute a material default by any party under or give rise to any right of termination, modification or acceleration, or result in the material breach by any party of, any Bonneville Real Property Lease, and no Bonneville Entity has received or given notice alleging any such event has occurred; (iv) none of the rights of the Bonneville Entities under any Bonneville Real Property Lease is subject to termination or modification as a result of the consummation of the transactions contemplated by this Agreement; (v) no consent or approval by any party to any Bonneville Real Property Lease is required for the consummation of the transactions contemplated hereby; and (vi) no Bonneville Entity has granted or been granted any waiver or forbearance with respect to any Bonneville Real Property Lease except as contained in amendments or modifications. To each Bonneville Entity’s Knowledge, (i) no party to any Bonneville Real Property Lease has repudiated any portion thereof, and (ii) there are no unresolved disputes or oral agreements currently in effect to which either Bonneville Entity is a party pertaining to any Bonneville Real Property Lease.

     (d) Except as set forth on Schedule 4.9, all improvements owned by either Bonneville Entity located on the Bonneville Leased Real Property are in good working condition and repair (subject to ordinary wear and tear) and are in compliance in all material respects with applicable federal, state and local laws, building codes, ordinances and regulations, including but not limited to zoning and land use laws, ordinances and regulations. The use by any Bonneville Entity of each portion of the Bonneville Leased Real Property complies in all material respects with applicable zoning and land use laws, ordinances and regulations.

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     4.10 Intellectual Property.

     Other than Bonneville Excluded Assets, Schedule 4.10 lists all material trade names, trademarks, service marks, copyrights and patents principally used in the operation of WLUP, including all registrations, applications and licenses for any of the Bonneville Intellectual Property. Except as disclosed on Schedule 4.10:

     (a) To the Knowledge of each Bonneville Entity, the Bonneville Entities own, free and clear of Liens other than Permitted Liens, all right and interest in, and right and authority to use, or has a valid license to use, in connection with the conduct of the business of WLUP as presently conducted, all of the Bonneville Intellectual Property listed on Schedule 4.10, and all of the rights and properties constituting a part of the Bonneville Intellectual Property are in full force and effect.

     (b) There are no outstanding or, to the Knowledge of any Bonneville Entity, threatened judicial or adversary proceedings with respect to any of the Bonneville Intellectual Property.

     (c) No Bonneville Entity has granted to any other person or entity any license or other right or interest in or to any of the Bonneville Intellectual Property or to the use thereof.

     (d) No Bonneville Entity has Knowledge of any infringement or unlawful use of any of the Bonneville Intellectual Property.

     (e) To each Bonneville Entity’s Knowledge, no Bonneville Entity has violated any provisions of the Copyright Act of 1976, 17 U.S.C. §101, et seq., in any material respect with regard to the Bonneville Intellectual Property.

     (f) The Bonneville Entities have delivered to the Emmis Entities copies of all state and federal registrations and other material documents, if any, establishing any of the rights and properties constituting a part of the Bonneville Intellectual Property.

     4.11 WLUP Financial Condition.

     Attached as Schedule 4.11 are the unaudited statements of income of WLUP for the year ended December 31, 2003, and the interim period ended November 30, 2004. Such statements (the “WLUP Statements”) (i) are in accordance with the books and records of Bonneville International pertaining to WLUP, (ii) have been prepared in accordance with GAAP consistently applied, and (iii) accurately reflect the results of operations of WLUP for the periods covered, in accordance with GAAP, except that the WLUP Statements do not include (A) balance sheets or statements of cash flows, (B) federal income tax expense or benefit, (C) interest income and expense, (D) disclosures required by GAAP in notes accompanying financial statements, (E) retiree benefit expense (pension, health insurance, etc.), (F) expense associated with the corporate operations of Bonneville International generally, and (G) trade (barter) programming expense or revenue.

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     4.12 Absence of Certain Changes or Events.

     Since June 30, 2004, and through the date of this Agreement, other than as described on Schedule 4.12 or caused by or arising from any Emmis Entity’s action or failure to perform under the Chicago TBA:

     (a) There has not been any damage, destruction or other casualty loss with respect to the Bonneville Assets (whether or not covered by insurance) which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect.

     (b) None of the Bonneville Entities or WLUP has suffered any adverse change or development which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect.

     (c) With respect to WLUP, no Bonneville Entity has:

     (i) amended, terminated, renewed or taken any action or inaction that would result in an amendment, termination or renewal of any Bonneville Station Agreement, nor has such action been taken by any other party, except in the ordinary course of business consistent with past practices, or any Bonneville Real Property Lease (other than any amendment noted on Schedule 4.9);

     (ii) mortgaged, pledged or subjected to any Lien, any of the Bonneville Assets, except for Permitted Liens;

     (iii) acquired or disposed of any Bonneville Assets or entered into any agreement or other arrangement for such acquisition or disposition, except for immaterial amounts in the ordinary course of business consistent with past practices;

     (iv) entered into any agreement, commitment or other transaction except the Chicago TBA and those that (A) were entered into in the ordinary course of business consistent with past practice or (B) are not material to the assets, business, operations, results of operations or financial condition of WLUP;

     (v) paid any bonus to any officer, director or employee or granted to any officer, director or employee any other increase in compensation in any form, except in the ordinary course of business consistent with past practices;

     (vi) adopted, amended or renewed any collective bargaining, bonus, profit-sharing, compensation, stock option, pension, retirement, deferred compensation, severance or other plan, agreement, trust, fund or arrangement for the benefit of employees (whether or not legally binding) or made any material changes in its policies of employment;

     (vii) entered into any agreement (other than agreements that will be terminated prior to the Closing) with any Affiliate of any Bonneville Entity;

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     (viii) operated its business other than in the ordinary course consistent with past practices and, after the Chicago TBA Effective Date, as otherwise contemplated by the Chicago TBA; or

     (ix) committed to undertake any of the foregoing.

     4.13 Litigation.

     Except as described in Schedule 4.13 or caused by or arising from any Emmis Entity’s action or failure to perform under the Chicago TBA, (i) there are no actions, suits, claims, investigations or administrative or arbitration proceedings pending or, to the Knowledge of any Bonneville Entity, threatened against any Bonneville Entity before or by any court, arbitration tribunal or governmental department or agency, domestic or foreign, that relates to WLUP or the Bonneville Assets; (ii) neither any Bonneville Entity nor, to the Knowledge of any Bonneville Entity, any of the officers or employees of any Bonneville Entity, has been charged with, or to the Knowledge of any Bonneville Entity, is under investigation with respect to, any violation of any provision of any federal, state, foreign or other applicable law or administrative regulation in respect of such officer’s or employee’s employment at WLUP; and (iii) neither any Bonneville Entity, any properties or assets of any Bonneville Entity nor, to the Knowledge of any Bonneville Entity, any officer or employee of any Bonneville Entity is a party to or bound by any order, arbitration award, judgment or decree of any court, arbitration tribunal or governmental department or agency, domestic or foreign, in respect of any business practices, the acquisition of any property, or the conduct of any business of any Bonneville Entity which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect or materially impair the ability of any Bonneville Entity to perform its obligations hereunder and consummate the transactions contemplated hereby.

     4.14 Labor Matters.

     (a) Except as listed on Schedule 4.14(a), as of the Chicago TBA Agreement Effective Date:

     (i) To each Bonneville Entity’s Knowledge, no present or former employee or independent contractor of WLUP has a pending claim or charge which has been asserted or threatened against any Bonneville Entity for (A) overtime pay; (B) wages, salaries or profit sharing; (C) vacations, time off or pay in lieu of vacation or time off; (D) any material violation of any statute, ordinance, contract or regulation relating to minimum wages, maximum hours of work or the terms or conditions of employment; (E) discrimination against employees on any basis; (F) unlawful or wrongful employment or termination practices; (G) unlawful retirement, termination or labor relations practices or breach of contract; or (H) any material violation of occupational safety or health standards.

     (ii) There is not pending or, to the Knowledge of either Bonneville Entity, threatened against either Bonneville Entity any labor dispute, strike or work stoppage that

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affects or interferes or is reasonably likely to affect or interfere with the operation of WLUP, and no Bonneville Entity has Knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of WLUP. There are no material unresolved unfair labor charges against any Bonneville Entity, and no Bonneville Entity has experienced any strike, work stoppage or other similar significant labor difficulties within the preceding twelve (12) months with respect to WLUP.

     (b) Except as set forth on Schedule 4.7(b), no Bonneville Entity is a signatory or a party to, or otherwise bound by, a collective bargaining agreement now in effect which covers employees or former employees of WLUP. Except as set forth on Schedule 4.14(b), (i) no Bonneville Entity has agreed to recognize any union or other collective bargaining unit with respect to any employees of WLUP, and (ii) no union or other collective bargaining unit has been certified as representing any employees of WLUP.

     (c) Schedule 4.14(c) sets forth a true and complete list, as of the day preceding the Chicago TBA Effective Date, of all persons employed by a Bonneville Entity in connection with the operation of WLUP who earn more than $15,000 per year, and states for each such employee the date hired, the level of compensation (including any projected bonus) payable to such employee (limited in the case of each employee who is compensated on a commission basis to a description of the manner in which such commissions are determined and the specification of compensation earned by such employee in 2003), and whether such employee is employed under a written contract or is covered by a written severance agreement. Except pursuant to written employment agreements or written severance agreements listed on Schedule 4.7(b), or on Schedule 4.4 to the Chicago TBA, the only severance obligations of the Bonneville Entities with respect to employees at WLUP are set forth on Schedule 4.14(c). A true and complete copy of any handbook, policy manual or similar written guidelines furnished to employees of WLUP has been delivered to the Emmis Entities.

     4.15 Employee Benefit Plans.

     (a) All Benefit Plans with respect to WLUP are disclosed in Schedule 4.15 (each, an “Bonneville Benefit Plan”). Except pursuant to a Bonneville Benefit Plan disclosed in Schedule 4.15 or any agreements disclosed in Schedule 4.7(b), the Bonneville Entities have no fixed or contingent liability or obligation to any of the current or former employees of either Bonneville Entity now or previously employed at WLUP, or the beneficiaries or dependents of any such employees or former employees, or to any person whose services are or were provided principally for WLUP as an independent contractor to either Bonneville Entity or WLUP. True and complete copies of the summary plan descriptions of all Bonneville Benefit Plans, to the extent subject to ERISA, have been provided to the Emmis Entities.

     (b) All Bonneville Benefit Plans have been administered and are in compliance in all material respects with applicable provisions, if any, of ERISA and the Code and all other applicable law. Neither Bonneville Entity nor any Related Person (as defined in the definition of Benefit Plans in Section 1.1) of a Bonneville Entity has engaged in a transaction with respect to

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any Bonneville Benefit Plan that could result in a material Tax, penalty or other liability under the Code or ERISA being imposed against the Recipient Party, WLUP or the Bonneville Assets.

     (c) Except as indicated on Schedule 4.15, No Bonneville Benefit Plan is a Multiemployer Plan.

     (d) Neither Bonneville Entity nor any Related Person of a Bonneville Entity has, to the Bonneville Entities’ Knowledge, incurred or expects to incur, with respect to any Multiemployer Plan covering any past or present employee at WLUP, any material withdrawal liability under Subtitle E of Title IV of ERISA regardless of whether based on contributions by any entity which is considered a predecessor of either Bonneville Entity or one employer with either Bonneville Entity under Section 4001 of ERISA.

     (e) All contributions required to have been made by each Bonneville Entity under the terms of each Bonneville Benefit Plan or applicable law have been timely made and all other contributions have been duly provided for on the Bonneville Entity’s books and records.

     (f) Neither Bonneville Entity has any unfunded obligations (including projected obligations) for retiree health or life benefits under any Bonneville Benefit Plan covering any of the current or former employees of either Bonneville Entity now or previously employed at WLUP, or the beneficiaries or dependents of any such employees or former employees, other than COBRA continuation coverage required by law.

     (g) Neither Bonneville Entity nor any Related Person of an Bonneville Entity, to the Bonneville Entities’ Knowledge, has incurred any material liability under or pursuant to Part 4 of Title I or Title IV of ERISA or the penalty, excise tax or joint and several liability provisions of the Code relating to any Bonneville Benefit Plans and, to the Bonneville Entities’ Knowledge, no event or condition has occurred or exists which would reasonably be expected to have a Material Adverse Effect with respect to WLUP.

     4.16 Compliance with Law.

     Subject to the Chicago TBA, and except as specified on Schedule 4.16, the Bonneville Entities have operated and are operating WLUP in all material respects in compliance with the Act and all other material federal, state and local laws, statutes, ordinances, regulations, licenses, permits or exemptions therefrom and all applicable orders, writs, injunctions and decrees of any court, commission, board, agency or other instrumentality, and neither Bonneville Entity has received any written notice of material noncompliance pertaining to the operation of WLUP that has not been cured.

     4.17 [INTENTIONALLY OMITTED]

     4.18 Environmental Matters.

     (a) Except as set forth on Schedule 4.18, the Bonneville Entities have obtained all environmental, health and safety permits necessary for the operation of WLUP, all such permits

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are valid and in full force and effect, and the Bonneville Entities are in compliance in all material respects with all terms and conditions of such permits.

     (b) Except as set forth on Schedule 4.18, there is no proceeding pending or, to any Bonneville Entity’s Knowledge, threatened which may result in the reversal, rescission, termination, modification or suspension of any environmental or health or safety permits necessary for the operation of WLUP, and to each Bonneville Entity’s Knowledge, there is no basis for any such proceeding.

     (c) Except as set forth on Schedule 4.18, to each Bonneville Entity’s Knowledge, each Bonneville Entity has operated and is operating WLUP in all material respects in compliance with all material federal, state, local and other laws, statutes, ordinances and regulations, and licenses, permits, exemptions, orders, writs, injunctions and decrees of any court, commission, board, agency or other governmental instrumentality, applicable to such Bonneville Entity relating to environmental matters.

     (d) Except as set forth on Schedule 4.18, to each Bonneville Entity’s Knowledge, there are no conditions or circumstances associated with the Bonneville Assets which may give rise to any material liability or material cost under applicable environmental law. Except as listed on Schedule 4.18, no Bonneville Entity owns or uses any electrical or other equipment containing polychlorinated biphenyls in connection with operation of WLUP.

     (e) For the purposes of this Section 4.18, (i) “hazardous materials” will mean any waste, substance, materials, smoke, gas, emissions or particulate matter designated as hazardous or toxic under any applicable environmental law, including but not limited to, friable asbestos, urea formaldehyde, polychlorinated biphenyls, regulated substances and wastes, radioactive materials, radon, lead and petroleum and petroleum byproducts, including oil or any fraction thereof, but excluding any such substances below applicable governmental action levels, or small quantities of maintenance, cleaning and emergency generator fuel supplies customary for the operation of radio stations, and (ii) “environmental law” means any federal, state, local or other laws, statutes, ordinances, regulations, licenses, permits or any order, writ, injunction or decree of any court, commission, board, agency or other instrumentality relating to the regulation of hazardous materials.

     (f) Except as set forth on Schedule 4.18, with respect to the operation of WLUP, neither Bonneville Entity has filed or, to either Bonneville Entity’s Knowledge, been required to file any notice under any applicable material law, rule, regulation, order, judgment, injunction, decree or ruling reporting a release of a hazardous material into the environment, and no notice pursuant to Section 103(a) or (c) of CERCLA or any other applicable environmental law or regulation has been or, to any Bonneville Entity’s Knowledge, was required to be filed.

     (g) Except as set forth on Schedule 4.18, neither Bonneville Entity has received any notice letter under CERCLA or any other written notice, and, to each Bonneville Entity’s Knowledge, there is no investigation pending or threatened, to the effect that any Bonneville Entity has or may have material liability for or as a result of the release or threatened release of a hazardous material into the environment or for the suspected unlawful presence of hazardous

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material thereon nor, to any Bonneville Entity’s Knowledge, does there exist any basis for such investigation in connection with the operation of WLUP.

     (h) To each Bonneville Entity’s Knowledge, except as identified on Schedule 4.18, none of the Bonneville Operating Assets contains any hazardous materials or underground storage tanks; and no underground storage tank disclosed on Schedule 4.18 leaks or has leaked. The Bonneville Entities have furnished to the Emmis Entities copies of the environment reports, studies or analyses related to the Bonneville Operating Assets which are listed on Schedule 4.18. The Bonneville Entities are not aware of the existence of any other environmental reports, studies or analyses related to the Bonneville Operating Assets.

     4.19 Broker’s or Finder’s Fees.

     Except as set forth on Schedule 4.19, no agent, broker, investment banker or other person or firm acting on behalf of or under the authority of any Bonneville Entity or any Affiliate of any Bonneville Entity is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement.

     4.20 Insurance.

     Bonneville International has in full force adequate insurance covering the Bonneville Operating Assets relating to WLUP. Bonneville International also has in full force adequate workers compensation insurance and general liability insurance in amounts consistent with broadcasting industry standards for similar stations. All of such insurance policies are in full force and effect, and no Bonneville Entity is in default with respect to its obligations under any such insurance policy and has not been denied insurance coverage thereunder.

     4.21 Transactions with Affiliates.

     Except as described on Schedule 4.21, no Bonneville Entity has been involved in any business arrangement or relationship relating to WLUP with any Affiliate of any Bonneville Entity, and no Affiliate of any Bonneville Entity owns any property or right, tangible or intangible, which is used in the operation of WLUP or is material to the Bonneville Assets or the business, operations, financial condition or results of operations of WLUP.

     4.22 Bonneville Entities’ Qualification.

     Except as disclosed in Schedule 4.22 and as provided in Section 5.3, the Bonneville Entities are, and at all times between the date hereof and up until and including the Closing will be, legally, financially and otherwise qualified under the Act, HSR Act and all rules, regulations and policies of the FCC, the Department of Justice, the FTC and any other governmental agency, to acquire and operate the Emmis Stations. Except as disclosed in Schedule 4.22, to the Knowledge of the Bonneville Entities, there are no facts or proceedings which would reasonably be expected to disqualify the Bonneville Entities under the Act or HSR Act or otherwise from acquiring or operating the Emmis Stations or would cause the FCC not to approve the

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assignment of the Emmis FCC Licenses to the Bonneville Holding or the Department of Justice and the FTC not to allow the waiting period under the HSR Act to terminate within thirty (30) days of the filing provided for in Section 5.3. Except as disclosed in Schedule 4.22, the Bonneville Entities have no Knowledge of any fact or circumstance relating to the Bonneville Entities or any of the Bonneville Entities’ Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the Emmis FCC Licenses to Bonneville Holding, (b) lead to a material delay in the processing by the FCC of the applications for such assignment or (c) lead to a material delay in the termination of the waiting period required by the HSR Act. Except as disclosed in Schedule 4.22, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the Emmis FCC Licenses to Bonneville Holding, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein.

     4.23 WARN Act.

     The Bonneville Entities are not planning or contemplating and have not made or taken any decisions or actions concerning the employees of the Emmis Stations after the Closing Date that would require the service of notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state law.

     4.24 Exclusivity of Representations.

     THE REPRESENTATIONS AND WARRANTIES MADE BY THE BONNEVILLE ENTITIES IN THIS AGREEMENT OR PURSUANT TO THIS AGREEMENT IN WRITING (AND IN THE CHICAGO TBA AND PHOENIX TBA) ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES. THE BONNEVILLE ENTITIES HEREBY DISCLAIM ANY SUCH OTHER IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE EMMIS ENTITIES OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING, WITHOUT LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). EXCEPT AS SET FORTH IN THIS AGREEMENT, ALL OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE BONNEVILLE OPERATING ASSETS IS TO BE TRANSFERRED TO EMMIS OPERATING WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE, ALL OF WHICH IS HEREBY DISCLAIMED.

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ARTICLE V.
OTHER COVENANTS

     5.1 Conduct of Each Station’s Business Prior to the Closing Date.

     Subject to the Chicago TBA or Phoenix TBA, as applicable, each Transferring Party covenants and agrees with the Recipient Party that from the date of this Agreement through the Closing Date, or the termination of this Agreement if earlier, unless the Recipient Party otherwise consents in writing (which consent will not be unreasonably withheld, delayed or conditioned), the Transferring Party will:

     (a) Operate each Station of the Transferring Party in the ordinary course of business consistent with past practices, including (i) incurring promotional expenses substantially consistent with the amount currently budgeted, (ii) making capital expenditures prior to the Closing Date as are necessary to repair or replace assets that are damaged or destroyed, (iii) using commercially reasonable efforts to preserve the Station’s present business operations, inventory levels, organization and goodwill, if any, and its relationships with customers, employees, advertisers, suppliers and other contractors (including independent contractors providing on-air or production services) and to maintain programming for the Station consistent in all material respects with the type and quantity of the Station’s programming consistent with past practice, and (iv) continuing the Station’s usual and customary policy with respect to extending credit, writing of sales orders and collection of accounts receivable and the maintenance of its facilities and equipment;

     (b) Operate each Station and otherwise conduct business of the Station in all material respects in compliance with the terms or conditions of the Station’s FCC Licenses, the Act, and all other material rules, regulations, laws and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Station;

     (c) Maintain each Station’s books and records in accordance with GAAP on a basis consistent with prior periods;

     (d) Promptly notify the Recipient Party in writing of any event or condition which, with notice or the lapse of time or both, would constitute an event of material default under any of the Transferring Party’s Station Agreements which are, individually or in the aggregate, material to the assets, business, operations, financial condition or results of operations of any Station;

     (e) Timely comply in all material respects with the Transferring Party’s Station Agreements which are, individually or in the aggregate, material to the assets, business, operations, financial condition or results of operations of any Station;

     (f) Not sell, lease, or grant any rights in or to or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of the Exchange Assets used or held for use in connection with any Station except for dispositions of assets that (i) are in the ordinary course of business

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consistent with past practice and (ii) if material, are replaced by similar assets of substantially equal or greater value or utility;

     (g) Not amend, enter into, renew, terminate early, or extend any agreement that would constitute a Transferring Party’s Station Agreement, including but not limited to any personal property lease, studio or office lease; antenna or transmitter space lease, network affiliation agreement, programming agreement, employment or talent agreement, or severance agreement;

     (h) Maintain in good operating condition and repair (except for ordinary wear and tear) the equipment that constitutes part of the Exchange Assets related to any Station and maintain the real property used in the operation of any Station (limited, however, in the case of leased real property, to maintenance required to be performed by the lessee under the terms of the applicable lease), including all of the improvements, in substantially the same condition as of the date of this Agreement, ordinary wear and tear excepted, and not demolish or remove any of the existing improvements, or erect new improvements on such real property or any portion thereof;

     (i) Not increase in any manner the compensation (including severance pay or plans) or benefits of any employees, independent contractors, consultants or commission agents of any Station, except in the ordinary course of business consistent with past practice or as required by an employment or consulting agreement or in connection with and commensurate with a change in responsibility;

     (j) Not enter into any agreement relating to any Station (other than agreements that will be terminated prior to Closing) with any Affiliate of the owner or operator of the Station;

     (k) Except as required by law, not voluntarily enter into or amend any collective bargaining agreement applicable to any employees of any Station or otherwise voluntarily recognize any union as the bargaining representative of any such employees; and not enter into or amend any collective bargaining agreement applicable to any employees of any Station to provide that it will be binding upon any “successor” employer or such employees;

     (l) Not impose or permit to exist any new Lien upon any of Exchange Assets (unless such Lien will be extinguished prior to the Closing); and

     (m) Not take or agree to take any action that would materially delay the consummation of the Closing as contemplated by this Agreement.

     The foregoing covenants of the Bonneville Entities will be subject to the Chicago TBA and the Bonneville Entities will not be in breach of such covenants as a result of any Emmis Entity’s action or failure to perform under the Chicago TBA. The foregoing covenants of the Emmis Entities will be subject to the Phoenix TBA and the Emmis Entities will not be in breach of such covenants as a result of any Bonneville Entity’s action or failure to perform under the Phoenix TBA.

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     5.2 Notification of Certain Matters.

     Each Party to this Agreement will give prompt notice to the other Party of (a) the occurrence, or failure to occur, of any event that would be likely to cause any of their respective representations and warranties contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, and (b) any failure on their respective parts to comply with or satisfy, in any material respect, any covenant, condition or agreement to be complied with or satisfied by any Party under this Agreement. No disclosure by any Party pursuant to this Section 5.2, however, shall be deemed to amend or supplement any schedule provided by such Party or to correct or cure any misrepresentation, breach of warranty, or breach of covenant.

     5.3 HSR Filings.

     The Emmis Entities and Bonneville Entities have previously made the filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), in connection with the transactions contemplated by this Agreement (the “HSR Filings”). The HSR Filings were made based on and as prescribed in the letter of intent dated October 4, 2004, between the Emmis Entities and the Bonneville Entities. The Emmis Entities and Bonneville Entities will use their commercially reasonable efforts to diligently take, or to fully cooperate in the taking of, all necessary and proper steps, and provide any additional information reasonably requested, in order to comply with the requirements of the HSR Act; provided, however, that the Bonneville Entities will not be required to disclose financial information regarding the Corporation of the President of the Church of Jesus Christ of Latter-Day Saints and its subsidiaries and affiliates (other than the Bonneville Entities) to any regulatory agency.

     5.4 FCC Filing.

     (a) The Emmis Entities and the Bonneville Entities have previously filed all applications with the FCC necessary to obtain the FCC Order, and will cooperate in taking all commercially reasonable action necessary and proper to promptly obtain the FCC Order without a Material Adverse Condition and to cause the FCC Order to become a Final Action as soon as practicable, provided that commercially reasonable action will not include payment or providing of material consideration to settle with an objecting party. The Emmis Entities and Bonneville Entities will oppose and file such papers and pleadings with the FCC or other appropriate forum opposing and objecting to any petitions to deny or other objections filed with respect to the application for the FCC Order and any requests for reconsideration or judicial review of the FCC Order.

     (b) If the Closing has not occurred for any reason within the original effective period of the FCC Order, and neither Party has terminated this Agreement under Article X, the Parties will jointly request an extension of the effective period of the FCC Order. No extension of the effective period of the FCC Order will limit the exercise by either Party of its right to terminate the Agreement under Article X.

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     (c) The Emmis Entities and Bonneville Entities agree to cooperate in taking such action as necessary and appropriate to change, prior to Closing, the association of the FCC License identified on Schedule 5.4(c) in the manner described on such Schedule.

     5.5 Title; Additional Documents.

     Except to the extent already effected pursuant to either the Chicago TBA or Phoenix TBA, at the Closing, each Transferring Party will transfer and convey to the Recipient Party good (and, in the case of fee simple real property, marketable) title to all of the Exchange Assets of the Transferring Party free and clear of any Liens, except (i) Permitted Liens and (ii) any Liens on the interest of each owner or other party through which the Transferring Party directly or indirectly derives its interest as lessee or sublessee under any lease or sublease included in the Transferring Party’s Exchange Assets. Each Transferring Party will, upon request of the Recipient Party, execute or cause to be executed such documents, in addition to those delivered at the Closing or in connection with either the Chicago TBA or Phoenix TBA, that are necessary to confirm in the Recipient Party such title to the Exchange Assets of the Transferring Party and to carry out the purposes and intent of this Agreement, which documents will be in a form reasonably acceptable to the Transferring Party and the Recipient Party. Each Recipient Party will execute or cause to be executed such documents, in addition to those delivered at the Closing or in connection with either the Chicago TBA or Phoenix TBA, that are necessary to confirm the Recipient Party’s assumption of the Recipient Party’s Assumed Obligations, which documents will be in a form reasonably acceptable to the Transferring Party and the Recipient Party.

     5.6 Consents.

     Each Transferring Party will use its commercially reasonable efforts to obtain the consents or waivers to the transactions contemplated by this Agreement required under the Transferring Party’s Station Agreements without any condition or modification adverse to the Recipient Party or any Station to be conveyed to the Recipient Party pursuant to this Agreement, and each Recipient Party will cooperate as reasonably requested by the Transferring Party in assisting the Transferring Party to obtain such consents. Neither the Transferring Party nor the Recipient Party will be required to pay or grant any material consideration or divulge any confidential information or otherwise unduly prejudice itself in order for the Transferring Party to obtain any such consent or waiver, except that the Transferring Party will be required to obtain releases of Liens which encumber any of the Transferring Party’s Exchange Assets (other than Permitted Liens and any Liens on the interest of each owner or other party through which the Transferring Party directly or indirectly derives its interest as lessee or sublessee under any lease or sublease included in the Transferring Party’s Exchange Assets). Except as otherwise specifically provided in this Agreement or another Document signed by the Parties, a Transferring Party will be liable to a Recipient Party for any breach of an assigned Transferring Party’s Station Agreement due to failure to obtain such consent. To the extent that a third-party consent is required under this Agreement and a third-party will provide it only using its own form or under certain conditions, absent separate written agreement with respect to such consent by Emmis Operating and Bonneville International, the allocation of liability and obligations under the Transferring Party’s Station Agreements as between the Emmis Entities and the

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Bonneville Entities shall remain as provided in this Agreement regardless of the form or terms of such consent.

     5.7 Inspection and Access; Financial Information.

     Each Transferring Party will, prior to the Closing Date, make available the assets, books, accounting records, correspondence and files of the Emmis Stations and WLUP (to the extent related to the operation thereof) for examination by the Recipient Party, its officers, attorneys, accountants and agents, with the right to make copies of all or portions of such books, records and files. Such access will be available during normal business hours upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of the business of any Station. If the Closing occurs, the books, records and files that are not part of but relate to the Exchange Assets conveyed by a Transferring Party will be preserved and maintained by the Transferring Party for four (4) years after the Closing, and the books, records and files that are part of the Exchange Assets conveyed to a Recipient Party will be maintained and preserved by the Recipient Party for a period of four (4) years after the Closing. Each such Party will give the other Party and its authorized representatives, during normal business hours, such access to, and the opportunity at the other Party’s expense to copy, such books and records retained by it as reasonably requested by the other Party.

     5.8 Confidentiality.

     Subject to Section 5.15, all information delivered or made available to a Recipient Party or a Recipient Party’s representatives or otherwise disclosed in writing by the Transferring Party (or its representatives) before or after the date of this Agreement, in connection with the transactions contemplated by this Agreement, will be kept confidential by the Recipient Party and its representatives and will not be used or disclosed to any third party other than as contemplated by this Agreement, except to the extent (i) such information was otherwise publicly available when received, (ii) is or hereafter becomes lawfully obtainable from third parties not related to the Recipient Party or its Affiliates, (iii) such information is required to be disclosed by law, judicial or other governmental rule or order, or the rules of any stock exchange, or (iv) such duty as to confidentiality is waived in writing by the Transferring Party. In the event of termination of this Agreement, upon a Transferring Party’s written request, the Recipient Party will promptly deliver to the other all such information, including all copies, reproductions, summaries, analyses or extracts thereof or based thereon in such Party’s possession or in the possession of any of its representatives or Affiliates.

     5.9 Publicity.

     The Parties agree that no public release or announcement concerning the transactions contemplated hereby will be issued by any Party without the prior written consent of the other Party (which will not be unreasonably withheld), except as required by law or applicable regulations, in which case the Party issuing the press release or announcement will provide the other Party with a copy thereof sufficiently in advance of such issuance to permit the other Party to comment thereon.

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     5.10 Material Adverse Effect.

     The Emmis Entities and the Bonneville Entities will promptly notify the other Party of any event of which the Emmis Entities or the Bonneville Entities, as the case may be, obtain Knowledge which has had or could reasonably be expected to have Material Adverse Effect with respect to either the Emmis Stations or WLUP.

     5.11 Commercially Reasonable Efforts.

     Subject to the terms and conditions of this Agreement, each Party will use its commercially reasonable efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement.

     5.12 FCC Reports and Applications.

     Each Transferring Party will file, on a current and timely basis and in all material respects in a truthful and complete fashion until the Closing Date, all reports and documents required to be filed with the FCC with respect to each Station of the Transferring Party. In addition, each Transferring Party will timely file all applications necessary for renewal of any of the FCC Licenses used in the operation of any Station of the Transferring Party, will prosecute each such application with diligence, will in each case seek renewal for a full term, and will diligently oppose any objection to, appeal from or petition to reconsider the grant of any such renewal application.

     5.13 Tax Returns and Payments.

     Each Transferring Party will timely file with the appropriate governmental agencies all Tax Returns required to be filed with respect to each Station of the Transferring Party prior to the Closing and timely pay all Taxes reflected on such Tax Returns as owing.

     5.14 No Solicitation.

     From the date hereof until the earlier of the Closing or termination of this Agreement, no Transferring Party or any Affiliate of a Transferring Party will directly or indirectly (i) knowingly discuss, solicit or encourage any proposal or offer from any Person relating specifically to the acquisition or purchase of any interest in the Transferring Party or any of the Transferring Party’s Exchange Assets (except in compliance with Section 5.1(f)), or any merger, consolidation or other business combination with the Transferring Party (each an “Acquisition Proposal”), or (ii) otherwise knowingly assist or negotiate with any Person with respect to an Acquisition Proposal.

     5.15 Audited Financial Statements.

     The Bonneville Entities recognize that the Emmis Entities are indirect, wholly-owned subsidiaries of Emmis Communications Corporation (“Emmis”), which is a publicly reporting

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company, and agree that the Emmis Entities will be entitled at their expense to cause audited and unaudited financial statements of WLUP to be prepared for such periods and filed with the Securities and Exchange Commission, and included in a prospectus distributed to prospective investors, as required by laws and regulations applicable to Emmis as a publicly reporting company or registrant. The Bonneville Entities agree to cooperate with the Emmis Entities and the auditing accountants as reasonably requested by the Emmis Entities in connection with the preparation and filing of such financial statements, including providing a customary management representation letter (to the best of the signatory’s knowledge and belief) in the form prescribed by generally accepted auditing standards and using their commercially reasonable efforts to obtain the consent of the Bonneville Entities’ independent accounting firm to permit the Emmis Entities and their auditors to have access to such firm’s workpapers as they relate solely to WLUP operations. Under no circumstance will the preparation of any financial statements pursuant to such audit (i) require a Bonneville Entity to change or modify any accounting policy, (ii) cause any unreasonable disruption in the business or operations of either Bonneville Entity, or (iii) cause any delay that is more than de minimis in any internal reporting requirements of either Bonneville Entity.

     5.16 Disclosure Schedules.

     (a) Each Party will use its commercially reasonable efforts to promptly supplement or amend its Schedules hereto with respect to any matter arising after the date of this Agreement that would have been required to be set forth or described in a Schedule or that is necessary to correct any information in a Schedule or in any representation or warranty; provided that if the other Party fails to object within fifteen (15) days after receipt of such supplement or amendment, such other Party will be deemed to have waived its rights to object to such proposed supplement or amendment. If such other Party makes a timely objection pursuant to this Section 5.16(a), any such proposed supplement or amendment will not be permitted, except as thereafter mutually agreed. Notwithstanding the foregoing, a Party shall have no right to object to any supplement or amendment of any Schedule to this Agreement, the Chicago TBA or Phoenix TBA by the other Party due to that Party’s entering into, amending, extending, renewing or terminating a Station Agreement or Real Property Lease in accordance with Section 5.1.

     (b) Each Recipient Party acknowledges and agrees that the Transferring Party will not be liable for the failure of the Transferring Party’s Schedules to be accurate as a result of the Recipient Party’s performance or failure to perform under the Phoenix TBA (in the case of the Bonneville Entities as the Recipient Party) or the Chicago TBA (in the case of Emmis Entities as the Recipient Party). The inclusion of any fact or item on a Schedule referenced by a particular section in this Agreement will, if the existence of the fact or item or its contents is relevant to any other section, be deemed disclosed with respect to such other section whether or not an explicit cross-reference appears in the Schedules if such relevance is readily apparent from examination of such Schedules.

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     5.17 Bulk Sales Law.

     Each Recipient Party hereby waives compliance by the Transferring Party with the provisions of any applicable bulk transfer laws in connection with the Transferring Party’s conveyances to the Recipient Party as contemplated by this Agreement.

     5.18 Multi-Station Agreements.

     (a) Each Station Agreement of a Transferring Party that relates in part to any station or business other than a Station (each, a “Multi-Station Agreement) will be included as an Exchange Asset of the Transferring Party, and will be assigned pursuant to Section 2.5 and assumed pursuant to Section 2.3 or Section 2.4, only to the extent such Multi-Station Agreement relates to one or more Stations and is not an Excluded Asset. After the Closing, the Transferring Party and Recipient Party will use commercially reasonable efforts (excluding for both parties, however, the incurrence of material cost or expense) to replace the portion of each Multi-Station Agreement relating to one or more Stations with a subcontract or new agreement relating only to such Station or Stations and providing substantially the same benefits to, and imposing substantially the same obligations upon, the Recipient Party as those relating to such Station or Stations under such Multi-Station Agreement.

     (b) The Emmis Entities covenant and agree to pay and perform after the Closing the obligations under each Multi-Station Agreement assigned in part to Bonneville International pursuant to Section 2.5, but only to the extent such obligations do not relate to one or more of the Emmis Stations and do not arise as a result of such assignment. The Bonneville Entities covenant and agree to pay and perform after the Closing the obligations under each Multi-Station Agreement assigned in part to Emmis Operating pursuant to Section 2.5, but only to the extent such obligations do not relate to WLUP and do not arise as a result of such assignment.

     5.19 Noncompete Covenant.

     (a) The Emmis Entities covenant and agree that during the two-year period commencing on the Closing Date, neither of the Emmis Entities nor any of their Affiliates will own, operate or program any radio station transmitting an over-the-air signal from a broadcast antenna located within the Phoenix, Arizona Metro Survey Area (as defined by Arbitron, Inc.) that offers a programming format known in the industry and classified by Arbitron, Inc. as either (i) Adult Contemporary, including Hot AC, Modern AC and Soft AC, (ii) all News, (iii) News/Talk/Information, (iv) All Sports, (v) Modern Rock, or (vi) All Talk; provided, however, that such restriction will not apply to (A) any future owner of radio station KKFR that is neither an Emmis Entity nor an Affiliate of an Emmis Entity or (B) any other person that is neither an Emmis Entity nor an Affiliate of an Emmis Entity.

     (b) In consideration for the noncompete covenant under this Section, the Bonneville Entities will pay the Emmis Entities $4,000,000 at the Closing (the “Noncompete Payment”) in accordance with Section 2.5.

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     (c) The Emmis Entities acknowledge and agree that the restriction in this Section is reasonable in scope and duration and necessary to protect the legitimate business interests of the Bonneville Entities as the purchasers of the Emmis Stations. The Emmis Entities further agree that the Bonneville Entities will be irreparably harmed in the event of a breach by the Emmis Entities of such restriction, and that in such event, the Bonneville Entities will be entitled to injunctive relief to enforce such restriction in addition to any other remedy available at law or in equity in connection with such a breach. In any action to enforce such restriction, the Emmis Entities will waive the defense that there is another adequate remedy at law or equity and agree that the Bonneville Entities will have the right to enforce such restriction under the terms of this Section without being required to prove actual damages, post bond or furnish other security.

     5.20 Cooperation on Third Party Exchange.

     If the Emmis Entities desire to effect an exchange involving a third party, the Bonneville Entities agree to cooperate as reasonably requested by the Emmis Entities in effecting a tax-deferred like-kind exchange under Section 1031 of the Code in which the Emmis Entities would assign all or part of their rights (but not their obligations) under this Agreement to a “qualified intermediary” (as defined in Treas. Reg. 1.1031(k)-(g)(4)); provided that (i) such exchange will not cause the Closing Date to be delayed beyond the first date on which the Bonneville Entities and the Emmis Entities would otherwise be required to close the exchange of the Bonneville Assets and the Emmis Assets under this Agreement without regard to this Section, (ii) the Bonneville Entities are reimbursed by the Emmis Entities for all of their costs and expenses incurred in cooperating with the Emmis Entities to effect such exchange, (iii) the Bonneville Entities are not required to incur or assume any liability or obligation in addition to the liabilities and obligations the Bonneville Entities are required to incur or assume under the terms of this Agreement determined as if this Section were not included in this Agreement (other than costs and expenses reimbursed by the Emmis Entities), (iv) the Emmis Entities’ ability to effect the exchange will not constitute a condition precedent to the Emmis Entities’ obligation to close the exchange of the Bonneville Assets and the Emmis Assets in accordance with the terms and conditions of this Agreement (excluding this Section), and (v) the Emmis Entities will indemnify the Bonneville Entities from and against any and all Losses arising from, relating to or in connection with such exchange (other than Losses resulting from (A) the Bonneville Entities’ breach of this Section or (B) any liability or obligation the Bonneville Entities are required to incur or assume under the terms of this Agreement determined as if this Section were not included in this Agreement), and indemnification of such Losses will not be subject to or count against the Bonneville Threshold or the Bonneville Cap. Emmis Operating will reimburse the Bonneville Entities their costs and expenses with 30 days of receipt of an invoice for such expenses and any payment not made when due shall accrue interest from such date until paid in full at a rate per annum equal to the prime rate in effect on such date plus three percent (3.0%) (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal).

     5.21 South Mountain Sublicense Agreement.

     The Parties acknowledge that upon Closing (i) Bonneville International will be acquiring Emmis Operating Assets located at Communication Site 16 on South Mountain in Phoenix, Arizona, (ii) Bonneville International will enter into a license for its use of Communication Site

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16 with the landlord of such site, and (iii) Emmis Operating, at the request of such landlord, will maintain its current license with such landlord for the purpose of continuing to use the Communication Site for transmission of KKFR’s radio signal. For purposes of establishing the rights and obligations between Bonneville International and Emmis Operating with respect to the use of the broadcast facilities located on Communication Site 16, on the Closing Date, Bonneville International and Emmis Operating will enter into a sublicense in the form and substance of Exhibit A that will grant Emmis Operating (or its assignee) the right to continue KKFR’s current use of the main community antenna, the auxiliary antenna and associated transmitter space at Communication Site 16 (the “South Mountain Sublicense Agreement”).

     5.22 Option Agreement for WLUP Auxiliary Antenna.

     On the Closing Date, Bonneville International and Emmis Operating will enter into an option agreement in the form and substance of Exhibit B granting Emmis Operating or any of its Affiliates the option to license space for a position on a tower for a WLUP auxiliary antenna on the AON Building in Chicago, Illinois if constructed by Bonneville International (the “WLUP Auxiliary Antenna Option Agreement”). Emmis Operating’s rights to any use of the AON Building facilities for WLUP shall be limited to that provided under the WLUP Auxiliary Antenna Option Agreement, notwithstanding the transfer by Bonneville International to Emmis Operating of the FCC Construction Permit for an auxiliary antenna on such building.

     5.23 Transition Services Agreements.

     (a) On the Closing Date, Bonneville International and Emmis will enter into a transition services agreement in the form and substance of Exhibit C (the “Phoenix Transition Services Agreement”) under which Emmis will have a limited right to use the current Emmis Stations’ studio and office facilities for the purpose of operating KKFR.

     (b) In the event that (i) the Closing occurs prior to December 1, 2005, and (ii) the WLUP studio and offices have not been moved prior to the Closing Date from their current location, then on the Closing Date, Bonneville International and Emmis Operating will also enter into a transition services agreement in the form and substance of Exhibit D (the “Chicago Transition Services Agreement”) under which Emmis Operating will have a limited right to use the studio and offices, equipment, furnishings and other facilities located on the 37th floor of the John Hancock Center in Chicago, Illinois, that are now used in the operation of WLUP.

     5.24 John Hancock Sublicense Agreement.

     Subject to obtaining the consent of the landlord under the FM Broadcast Lease and License Agreement identified in Schedule 4.9, Bonneville International and Emmis Operating on the Closing Date will enter into a sublicense in the form and substance of Exhibit E (the “John Hancock Sublicense Agreement”). If required, Emmis Operating will use reasonable efforts to obtain such consent (without incurring material cost or expense). The John Hancock Sublicense Agreement will grant Bonneville International (or its assignee) the right to continue using Bonneville International’s microwave dish constituting a part of the studio/transmitter link for a Bonneville Entity radio station licensed in Chicago (currently WILV (FM)), in the manner

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currently used and where currently positioned in WLUP’s transmitter room in the John Hancock Center, for a period of five (5) years at $1.00 per year, plus any additional rent or charges for such use imposed by the licensor under the FM Broadcast Lease and License Agreement or any subsequent license or agreement pursuant to which the owner of WLUP occupies such room.

     5.25 Shared Fire Alarm System.

     After expiration or earlier termination of the Chicago Transition Services Agreement, Bonneville International (i) will not be obligated to continue providing fire alarm service for WLUP’s transmitter room and (ii) may disconnect, remove and retain the sensor located in such room that is currently part of Bonneville International’s fire alarm system shared by other stations that it operates.

     5.26 Remediation.

     Emmis Operating shall reimburse Bonneville International for fifty percent (50%) of its out-of-pocket expenses reasonably incurred (up to a maximum reimbursement by Emmis Operating of $50,000) in its efforts to remediate the lead based paint on the KTAR antenna towers. Emmis Operating shall pay such amounts within thirty (30) days of invoice by Bonneville and payments not made when due will bear interest until paid in full at a rate per annum equal to the prime rate in effect on such due date (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal) plus three percent (3%). Each such invoice will itemize such costs and expenses in reasonable detail and be accompanied by supporting invoices for any amounts paid or payable to third-parties.

     5.27 Emmis Station Interference.

     The Emmis Entities agree to cooperate with the Bonneville Entities’ efforts, as they may reasonably request, to eliminate the interference to the radio signal of KTAR caused by the Mexican radio station believed by the Parties to be identified as “620 BAJA CALIFORNIA. XESS “La Tropical 6-20”. Emmis Operating shall reimburse Bonneville International for fifty percent (50%) of its out-of-pocket expenses reasonably incurred (up to a maximum reimbursement by Emmis Operating of $50,000) in its efforts to eliminate such radio signal (for hiring third party consultants and experts, for example), but shall not otherwise be required to incur any unreimbursed material expense. Emmis Operating shall pay such amounts within thirty (30) days of invoice by Bonneville and payments not made when due will bear interest until paid in full at a rate per annum equal to the prime rate in effect on such due date (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal) plus three percent (3%). Each such invoice will itemize such costs and expenses in reasonable detail and be accompanied by supporting invoices for any amounts paid or payable to third parties.

     5.28 Release Regarding Mark.

     Bonneville International agrees to not bring any action or otherwise hold the Emmis Entities liable in any manner for any use by Bonneville International of the mark “Mr. Peakerman” during the term of the Phoenix TBA or at any time following Closing.

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ARTICLE VI.
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE EMMIS ENTITIES TO CLOSE

     The Emmis Entities’ obligation under this Agreement to proceed with the Closing is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by the Emmis Entities in writing:

     6.1 Accuracy of Representations and Warranties; Closing Certificate.

     (a) The representations and warranties of the Bonneville Entities contained in this Agreement or in any other Document will be true and correct in all material respects on the date of this Agreement, and on and as of the Closing Date (except for representations and warranties made as of a specific date or time which need only be true and complete as of such date or time) with the same effect as though made on and as of the Closing Date, except for changes permitted under this Agreement or caused by any Emmis Entity’s action or failure to perform under the Chicago TBA, and except where the failure to be true and complete (determined without regard to any materiality or Knowledge qualifications therein) does not have a Material Adverse Effect with respect to WLUP.

     (b) The Bonneville Entities will have delivered to the Emmis Entities on the Closing Date an officer’s certificate that the conditions specified in Sections 6.1(a), 6.2, and 6.8 are satisfied as of the Closing Date.

     6.2 Performance of Agreement.

     Each Bonneville Entity will have performed in all material respects all of its covenants, agreements and obligations required by this Agreement to be performed or complied with by it prior to or at the Closing.

     6.3 FCC Order.

     (a) The FCC Order will have been granted without any Material Adverse Condition with respect to WLUP notwithstanding that it may not have become a Final Action; provided that if a petition to deny or other third-party objection is filed with the FCC prior to the Closing Date, and such petition or objection is not withdrawn as of such date and in the reasonable judgment of the Emmis Entities’ counsel such objection would reasonably be expected to result in a reversal or rescission of the FCC Order, then the Emmis Entities’ obligation to effect the Closing will be subject to the further condition that the FCC Order will have become a Final Action.

     (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body specifies and requires to be satisfied prior to transfer of the Bonneville FCC Licenses to Emmis License will have been satisfied.

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     (c) All of the Bonneville FCC Licenses material to the operation of WLUP as conducted as of the date hereof will be in full force and effect.

     6.4 HSR Act.

     The waiting period (including any extensions) under the HSR Act applicable to the transactions contemplated by this Agreement will have expired or been terminated.

     6.5 Opinions of Bonneville Entities’ Counsel.

     The Emmis Entities will have received (a) the written opinion or opinions of the Bonneville Entities’ counsel, dated as of the Closing Date, that (i) each Bonneville Entity is a corporation duly formed and in good standing under the laws of the State of Utah and Bonneville International is in good standing and is duly authorized to transact business as a foreign corporation under the laws of Arizona and Illinois, (ii) the execution, delivery and performance of the Agreement and each of the other Documents have been duly authorized by all requisite corporate action (including any necessary shareholder approval) on the part of each Bonneville Entity, and (iii) the Agreement and other Documents have been duly and validly executed and delivered by each Bonneville Entity and constitute valid and legally binding obligations enforceable against each Bonneville Entity in accordance with their terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally and general principles of equity; and (b) the written opinion of the Bonneville Entities’ FCC counsel, dated as of the Closing Date, that except as set forth in Schedule 4.6, (i) Bonneville Holding holds the Bonneville FCC Licenses listed in a schedule to such legal opinion, and the Bonneville FCC Licenses (A) are in full force and effect and constitute all of the licenses, permits and authorizations required by the FCC for the operation of WLUP and (B) constitute all of the licenses and authorizations issued by the FCC to the Bonneville Entities for, or in connection with, the operation of WLUP, (ii) all authorizations, approvals and consents of the FCC required under the Act to permit the assignment of the Bonneville FCC Licenses by Bonneville Holding to Emmis License have been obtained, are in effect, and have not been reversed, stayed, enjoined, set aside, annulled or suspended, and (iii) there is no FCC or judicial order, judgment, decree, notice of apparent liability or order of forfeiture outstanding, and to counsel’s knowledge, no action, suit, notice of apparent liability, order of forfeiture, investigation or other proceeding pending, by or before the FCC or any court of competent jurisdiction against any Bonneville Entity that might result in a revocation, cancellation, suspension, non-renewal, short-term renewal or materially adverse modification of the Bonneville FCC Licenses, except FCC proceedings generally affecting the radio industry. Each opinion may be subject to customary qualifications and limitations.

     6.6 Required Consents.

     The Bonneville Entities will have obtained prior to the Closing the written consents or waivers to the transactions contemplated by this Agreement, in form reasonably satisfactory to the Emmis Entities’ counsel and without any adverse modification or condition that is material to the Emmis Entities or WLUP, which are required under each Bonneville Station Agreement indicated with an asterisk on Schedule 4.9.

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     6.7 Delivery of Closing Documents.

     The Bonneville Entities will have delivered or caused to be delivered to the Emmis Entities on the Closing Date each of the Documents to be delivered pursuant to Section 8.2.

     6.8 No Adverse Proceedings.

     No judgment or order will have been rendered and remain in effect, and no action or proceeding by any governmental entity will be pending, against any of the Bonneville Entities that would make unlawful the purchase and sale of the Bonneville Assets as contemplated by this Agreement.

     6.9 Settlement Statement.

     Emmis Operating will have received a settlement statement, prepared by the applicable title company, duly executed by Bonneville International, in form and substance reasonably acceptable to Emmis Operating.

     6.10 Concurrent Conveyances.

     The Bonneville Entities will have conveyed the Bonneville Assets to the Emmis Entities as provided in this Agreement concurrently with the Emmis Entities’ conveyance of the Emmis Assets to the Bonneville Entities as provided in this Agreement.

ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE BONNEVILLE ENTITIES TO CLOSE

     The Bonneville Entities’ obligation under this Agreement to proceed with the Closing is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by the Bonneville Entities in writing:

     7.1 Accuracy of Representations and Warranties; Closing Certificate.

     (a) The representations and warranties of the Emmis Entities in this Agreement or in any other Document will be true and correct in all material respects on the date of this Agreement and on and as of the Closing Date (except for representations and warranties made as of a specific date or time which need only be true and complete as of such date or time) with the same effect as though made on and as of the Closing Date except for changes permitted under this Agreement or caused by any Bonneville Entity’s action or failure to perform under the Phoenix TBA, and except where the failure to be true and complete (determined without regard to any materiality or Knowledge qualifications therein) does not have a Material Adverse Effect with respect to the Emmis Stations.

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     (b) The Emmis Entities will have delivered to the Bonneville Entities on the Closing Date an officer’s certificate that the conditions specified in Sections 7.1(a), 7.2, and 7.8 are satisfied as of the Closing Date.

     7.2 Performance of Agreement.

     Each Emmis Entity will have performed in all material respects all of its covenants, agreements and obligations required by this Agreement to be performed or complied with by it prior to or at the Closing.

     7.3 FCC Order.

     (a) The FCC Order will have been granted without any Material Adverse Condition with respect to any of the Emmis Stations notwithstanding that it may not have become a Final Action; provided that if a petition to deny or other third-party objection is filed with the FCC prior to the Closing Date, and such petition or objection is not withdrawn as of such date and in the reasonable judgment of the Bonneville Entities’ counsel such objection would reasonably be expected to result in a reversal or rescission of the FCC Order, then the Bonneville Entities’ obligation to effect the Closing will be subject to the further condition that the FCC Order will have become a Final Action.

     (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body specifies and requires to be satisfied prior to transfer of the Emmis FCC Licenses to Bonneville Holding will have been satisfied.

     (c) All of the Emmis FCC Licenses material to the operation of any of the Emmis Stations as conducted as of the date hereof will be in full force and effect.

     7.4 HSR Act.

     The waiting period (including any extensions) under the HSR Act applicable to the transactions contemplated by this Agreement will have expired or been terminated.

     7.5 Opinions of Emmis Entities’ Counsel.

     The Bonneville Entities will have received (a) the written opinion or opinions of the Emmis Entities’ counsel, dated as of the Closing Date, that (i) each Emmis Entity is a limited liability company duly formed and in good standing under the laws of Indiana, and Emmis Operating is in good standing and is duly authorized to transact business as a foreign limited liability company under the laws of Arizona and Illinois, (ii) the execution, delivery and performance of the Agreement and each of the other Documents have been duly authorized by all requisite limited liability company action (including any necessary member approval) on the part of each Emmis Entity, and (iii) the Agreement and other Documents have been duly and validly executed and delivered by each Emmis Entity and constitute valid and legally binding obligations enforceable against each Emmis Entity in accordance with their terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally

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and general principles of equity; and (b) the written opinion of the Emmis Entities’ FCC counsel, dated as of the Closing Date, that except as set forth in Schedule 3.6, (i) Emmis License holds the Emmis FCC Licenses listed in a schedule to such legal opinion, and the Emmis FCC Licenses (A) are in full force and effect and constitute all of the licenses, permits and authorizations required by the FCC for the operation of the Emmis Stations and (B) constitute all of the licenses and authorizations issued by the FCC to Emmis License for, or in connection with, the operation of the Emmis Stations, (ii) all authorizations, approvals and consents of the FCC required under the Act to permit the assignment of the Emmis FCC Licenses by Emmis License to Bonneville Holding have been obtained, are in effect, and have not been reversed, stayed, enjoined, set aside, annulled or suspended, and (iii) there is no FCC or judicial order, judgment, decree, notice of apparent liability or order of forfeiture outstanding, and to counsel’s knowledge, no action, suit, notice of apparent liability, order of forfeiture, investigation or other proceeding pending, by or before the FCC or any court of competent jurisdiction against any Emmis Entity that might result in a revocation, cancellation, suspension, non-renewal, short-term renewal or materially adverse modification of the Emmis FCC Licenses, except FCC proceedings generally affecting the radio industry. Each opinion may be subject to customary qualifications and limitations.

     7.6 Required Consents.

     The Emmis Entities will have obtained prior to the Closing the written consents or waivers to the transactions contemplated by this Agreement, in form reasonably satisfactory to the Bonneville Entities’ counsel and without any adverse modification or condition that is material to the Bonneville Entities or any of the Emmis Stations, which are required under each Emmis Station Agreement indicated with an asterisk on Schedule 3.9.

     7.7 Delivery of Closing Documents.

     The Emmis Entities will have delivered or caused to be delivered to the Bonneville Entities on the Closing Date each of the Documents to be delivered pursuant to Section 8.3.

     7.8 No Adverse Proceedings.

     No judgment or order will have been rendered and remain in effect, and no action or proceeding by any governmental entity will be pending, against any of the Emmis Entities that would make unlawful the purchase and sale of the Emmis Assets as contemplated by this Agreement.

     7.9 Concurrent Conveyances.

     The Emmis Entities will have conveyed the Emmis Assets to the Bonneville Entities as provided in this Agreement concurrently with the Bonneville Entities’ conveyance of the Bonneville Assets to the Emmis Entities as provided in this Agreement.

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     7.10 Real Property Matters.

     (a) Bonneville International will have been able to obtain, using reasonable efforts:

     (i) Current, certified ALTA surveys of each separate parcel of Emmis Real Property prepared by a licensed surveyor in form and substance acceptable to Bonneville International and the title company providing the Commitments (as defined in Section 7.10(a)(ii)) in their reasonable judgment (the cost of which will be paid by Bonneville International, except for the cost of the survey of the KTAR Easements, which cost will be shared equally by Bonneville International and Emmis Operating), which surveys shall show that such property conforms to the legal description of such property included in the Commitments;

     (ii) Commitments to issue, at Bonneville International’s expense, (A) an owner’s policy of title insurance with extended coverage covering each parcel of Emmis Owned Real Property and (B) leasehold policies of title insurance with extended coverage covering each parcel of Emmis Leased Real Property, including such endorsements as Bonneville International may reasonably require, identifying such property and all easements appurtenant thereto by the legal descriptions set forth on the applicable survey for such property, containing no exceptions other than Permitted Liens, and which are in amounts and all other aspects reasonably satisfactory to Bonneville International (together with the title commitment described in Section 7.10(b)(iv), the “Commitments”);

     (iii) A zoning letter or certificate from Maricopa County or the City of Phoenix, as applicable, stating that the current use of the 5300 Central Avenue is an approved, non-conforming use; and

     (v) Consents and estoppels and/or attornment and non-disturbance agreements from each landlord or sub-landlord under each Emmis Real Property Lease or underlying lease, and fee owner, duly executed by such landlord, sub-landlord or fee owner, as the case may be, and in such form as Bonneville International may reasonably require;

     (vi) Valid, vesting documents in recordable form establishing an unbroken chain of title to the Emmis Owned Real Property and the KTAR Easements as required by the Title Company for the Commitments and to the reasonable satisfaction of Bonneville International; and

     (vii) Assignments of lease or other conveyance documents in recordable form establishing an unbroken chain of title to each Emmis Real Property Lease as required by the title company for the Commitments and to the reasonable satisfaction of Bonneville International.

     (b) The Emmis Entities shall have furnished to Bonneville International:

     (i) Written evidence of the release of Liens identified on Schedule 3.5;

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     (ii) An affidavit in compliance with Section 1445 of the Internal Revenue Code providing the United States taxpayer identification number and business address of each of the Emmis Entities and stating that neither is a “foreign person” as defined in the Code;

     (iii) A declaration of value, tax declaration or other similar document to the extent required by applicable law or ordinance to be furnished by Emmis Operating as the grantor of fee simple title to the Emmis Owned Real Property or assignor of the KTAR Easements;

     (iv) A Commitment to issue, at Bonneville International’s expense, a policy of title insurance with extended coverage insuring Bonneville International’s ownership of the KTAR Easements, including such endorsements as Bonneville International may reasonably require, identifying the KTAR Easements by the legal descriptions set forth on the applicable survey for the KTAR Easements, containing no exceptions other than Permitted Liens, and which is in amount and all other aspects reasonably satisfactory to Bonneville International;

     (v) An assignment and assumption agreement for each Emmis Real Property Lease, assigning the rights of the applicable Emmis Entity under such Emmis Real Property Lease to Bonneville International, in each case in form acceptable to Bonneville International in its reasonable judgment;

     (vi) Affidavits executed by the appropriate Emmis Entity regarding any mechanic’s liens caused by or derived through any Emmis Entity sufficient to allow deletion of such liens as a standard exception in final title insurance policies to be issued pursuant to the Commitments, together with any other documents or instruments which may be required by the title company an Emmis Entity in connection with issuance of such title insurance policies; and

     (viii) A settlement statement, prepared by the applicable title company, duly executed by Emmis Operating, in form and substance reasonably acceptable to Bonneville International.

ARTICLE VIII.
CLOSING

     8.1 Time and Place.

     Closing of the transactions under this Agreement (the “Closing”) will take place at the offices of Bose McKinney & Evans LLP, First Indiana Plaza, Suite 2700, 135 North Pennsylvania Street, Indianapolis, Indiana 46204, at 10:00 A.M. on the fifth business day following satisfaction or waiver of the conditions precedent hereunder to the Closing or such other date as mutually agreed upon by the Parties (the “Closing Date”).

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     8.2 Deliveries by the Bonneville Entities.

     At the Closing, the Bonneville Entities will deliver to, or cause to be delivered to, the Emmis Entities the following, in each case in form and substance reasonably satisfactory to the Emmis Entities:

     (a) The opinions of the Bonneville Entities’ counsel and FCC counsel, dated the Closing Date, to the effect set forth in Section 6.5;

     (b) To the extent available from applicable jurisdictions, governmental certificates, dated as of a date as near as reasonably practicable to the Closing Date, showing that each Bonneville Entity is duly organized and in good standing in the State of Utah and, as to Bonneville International, is authorized to transact business as a foreign corporation and in good standing in the States of Illinois and Arizona;

     (c) A certificate of a Secretary or Assistant Secretary of each Bonneville Entity attesting as to the incumbency of each officer of such Bonneville Entity who executes this Agreement and any of the other Documents and to similar customary matters;

     (d) A bill of sale, assignments and other instruments of transfer and conveyance transferring the Bonneville Assets (other than those transferred at the commencement of the Chicago TBA) to the Emmis Entities, in form acceptable to the Emmis Entities in their reasonable judgment;

     (e) The certificate described in Section 6.1(b);

     (f) The consents or waivers prescribed in Section 6.6;

     (g) A certificate for each of the Bonneville Entities dated as of the Closing Date and executed by the Secretary of the Bonneville Entity certifying that the resolutions, as attached to such certificate, were duly adopted by the Bonneville Entity’s Board of Directors to duly authorize and approve the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect;

     (h) An assumption agreement, in form acceptable to the Emmis Entities within their reasonable judgment, pursuant to which the Bonneville Entities will assume and agree to perform the Bonneville Assumed Obligations;

     (i) The South Mountain Sublicense Agreement, John Hancock Sublicense Agreement, WLUP Auxiliary Antenna Option Agreement, Phoenix Transition Services Agreement and, if required under Section 5.23(b), the Chicago Transition Services Agreement;

     (j) All keys to and actual possession of all of the Bonneville Operating Assets (other than the Bonneville Excluded Assets), including possession in Chicago, Illinois of the tangible assets itemized on Schedule 2.1(b);

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     (k) Payment of the Bonneville Boot Payment and the Noncompete Payment as provided in Section 2.5; and

     (l) Such additional information and materials as the Emmis Entities will have reasonably requested in writing to evidence the satisfaction of the conditions to their obligation to close hereunder, including without limitation, any documents expressly required by this Agreement to be delivered by the Bonneville Entities at the Closing.

     8.3 Deliveries by the Emmis Entities.

     At the Closing, the Emmis Entities will deliver to, or cause to be delivered to, the Bonneville Entities the following, in each case in form and substance reasonably satisfactory to the Bonneville Entities:

     (a) The opinions of the Emmis Entities’ counsel and FCC counsel, dated the Closing Date, to the effect set forth in Section 7.5;

     (b) To the extent available from applicable jurisdictions, governmental certificates, dated as of a date as near as reasonably practicable to the Closing Date, showing that each Emmis Entity is duly organized and in good standing in Indiana and, as to Emmis Operating, is authorized to transact business as a foreign corporation and in good standing in the States of Arizona and Illinois;

     (c) A certificate of the Secretary or Assistant Secretary of the Manager of each Emmis Entity attesting as to the incumbency of each officer of the Manager who executes this Agreement and any of the other Documents and to similar customary matters;

     (d) A bill of sale, assignments and other instruments of transfer and conveyance transferring the Emmis Assets (other than those transferred at the commencement of the Phoenix TBA) to the Bonneville Entities, and evidence of the termination or release of all Liens (other than Permitted Liens) on the Emmis Assets, in each case in form acceptable to the Bonneville Entities in their reasonable judgment, including, with respect to the Emmis Real Property, a special warranty deed conveying to Bonneville International insurable, marketable fee simple title to the Emmis Owned Real Property and an assignment in recordable form conveying insurable title to the KTAR Easements, including the right, title and interest of the Emmis Entities under the KTAR Easements in and to the improvements located on the KTAR Easements;

     (e) The certificate described in Section 7.1(b);

     (f) The consents or waivers prescribed in Section 7.6;

     (g) A certificate for each of the Emmis Entities dated as of the Closing Date and executed by the Secretary of its Manager certifying that the resolutions, as attached to such certificate, were duly adopted by the its Manager to duly authorize and approve the execution of

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this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect;

     (i) An assumption agreement, in form acceptable to the Bonneville Entities within their reasonable judgment, pursuant to which the Emmis Entities will assume and agree to perform the Emmis Assumed Obligations;

     (j) The South Mountain Sublicense Agreement, John Hancock Sublicense Agreement, WLUP Auxiliary Antenna Option Agreement, Phoenix Transition Services Agreement and, if required under Section 5.23(b), the Chicago Transition Services Agreement;

     (k) All keys to and actual possession of all of the Emmis Operating Assets (other than the Emmis Excluded Assets); and

     (m) Such additional information and materials as the Bonneville Entities will have reasonably requested in writing to evidence the satisfaction of the conditions to their obligation to close hereunder, including without limitation, any documents expressly required by this Agreement to be delivered by the Emmis Entities at the Closing.

ARTICLE IX.
INDEMNIFICATION

     9.1 Survival.

     All representations, warranties, covenants and agreements in this Agreement or any other Document will survive the Closing regardless of any investigation, inquiry or knowledge on the part of any Party, and the Closing will not be deemed a waiver by any Party of the representations, warranties, covenants or agreements of any other Party in this Agreement or any other Documents; provided, however, that the period of survival will, (i) with respect to all representations and warranties, end eighteen (18) months after the Closing Date, and (ii) with respect to all covenants and agreements, end upon expiration of the applicable statutory limitation period (in each case, the “Survival Period”). No claim for breach of any representation, warranty, covenant or agreement may be brought under this Agreement or any other Document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the applicable Survival Period. In the event such notice of a claim is so given, the right to indemnification with respect to such claim will survive the applicable Survival Period until the claim is finally resolved and any obligations with respect to the claim are fully satisfied.

     9.2 Indemnification by the Emmis Entities.

     (a) Subject to Section 9.2(b), the Emmis Entities will, jointly and severally, indemnify, defend, and hold harmless the Bonneville Entities and their officers, directors, employees, Affiliates, successors and assigns from and against, and pay or reimburse each of

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them for and with respect to, any Loss (each, a “Bonneville Entities’ Loss”) relating to, arising out of or resulting from:

     (i) Any breach, misrepresentation, failure or omission to perform, or other violations by any Emmis Entity of any of its representations, warranties, covenants or agreements in this Agreement, the Chicago TBA, the Phoenix TBA or any other Document; or

     (ii) Any obligation, indebtedness or Liability of any Emmis Entity (other than the Bonneville Assumed Obligations), regardless of whether disclosed to the Bonneville Entities and regardless of whether constituting a breach, misrepresentation, failure or omission to perform, or other violation by an Emmis Entity of any representation, warranty, covenant or agreement hereunder or under any other Document; or

     (iii) Noncompliance by any Emmis Entity with the provisions of any bulk sales act, if applicable, in connection with the transactions contemplated by this Agreement.

     (b) If the Closing occurs, notwithstanding anything to the contrary contained herein, the Emmis Entities will not be obligated to indemnify, defend, hold harmless, pay or reimburse the Bonneville Entities except to the extent that (i) the aggregate amount of the Bonneville Entities’ Losses exceeds $500,000 (the “Bonneville Threshold”) (and then only to the extent the aggregate amount of the Bonneville Entities’ Losses exceed $250,000) and (ii) the aggregate amount of the Bonneville Entities’ Losses is less than $25,000,000 (the “Bonneville Cap”), provided that any payment owed by the Emmis Entities to the Bonneville Entities for any of the Bonneville Entities’ Losses pursuant to, under or relating to Section 2.4(d), Section 2.7, Section 2.8, Section 3.18, Section 9.2(a)(ii) or (iii), Section 13.2, Section 5.26, Section 5.27, the Emmis Assumed Obligations, Taxes owed by any Emmis Entity or constituting a Lien on any Emmis Asset (other than Taxes and any related Lien included as a Bonneville Assumed Obligation in accordance with Section 2.4(a)(ii)), Sections 4.3, 4.5, 5, 10.1, 11, or 12(b) and (c) of the Chicago TBA, or any failure to pay amounts owed to the Bonneville Entities under the Chicago Transition Services Agreement, South Mountain Sublicense Agreement or Phoenix Transition Services Agreement, will not be counted in determining whether the Bonneville Threshold limitation is satisfied or the Bonneville Cap is reached, and the Bonneville Entities will have the right to recover any such Bonneville Entities’ Losses without regard to the Bonneville Threshold limitation or the Bonneville Cap limitation. No Emmis Entity will have any indemnification liability for those environmental conditions disclosed on Schedule 3.18 or disclosed pursuant to the reports listed on such schedule.

     9.3 Indemnification by the Bonneville Entities.

     (a) Subject to Section 9.3(b), the Bonneville Entities will, jointly and severally, indemnify, defend, and hold harmless the Emmis Entities and their officers, directors, employees, Affiliates, successors and assigns from and against, and pay or reimburse each of them for and with respect to, any Loss (each, an “Emmis Entities’ Loss”) relating to, arising out of or resulting from:

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     (i) Any breach, misrepresentation, failure or omission to perform, or other violation by any Bonneville Entity of any of its representations, warranties, covenants or agreements in this Agreement, the Chicago TBA, Phoenix TBA or any other Document; or

     (ii) Any obligation, indebtedness or Liability of any Bonneville Entity (other than the Emmis Assumed Obligations), regardless of whether disclosed to the Emmis Entities and regardless of whether constituting a breach, misrepresentation, failure or omission to perform, or other violation by a Bonneville Entity of any representation, warranty, covenant or agreement hereunder or under any other Document; or

     (iii) Noncompliance by any Bonneville Entity with the provisions of any bulk sales act, if applicable, in connection with the transactions contemplated by this Agreement.

     (b) If the Closing occurs, notwithstanding anything to the contrary contained herein, the Bonneville Entities will not be obligated to indemnify, defend, hold harmless, pay or reimburse the Emmis Entities except to the extent that (i) the aggregate amount of the Emmis Entities’ Losses exceeds $500,000 (the “Emmis Threshold”) (and then only to the extent the aggregate amount of the Emmis Entities’ Losses exceed $250,000) and (ii) the aggregate amount of the Emmis Entities’ Losses is less than $25,000,000 (the “Emmis Cap”), provided that any payment owed by the Bonneville Entities to the Emmis Entities for any of the Emmis Entities’ Losses pursuant to, under or relating to Section 2.3(d), Section 2.7, Section 2.8 Section 4.18, Section 9.3(a)(ii) or (iii), Section 13.2, the Bonneville Assumed Obligations, or Taxes owed by any Bonneville Entity or constituting a Lien on any Bonneville Asset (other than Taxes and any related Lien included as an Emmis Assumed Obligation in accordance with Section 2.3(a)(ii)), Sections 4.3, 4.5, 5, 10.1, 11, or 12(b) and (c) of the Phoenix TBA, or any failure to pay amounts owed to the Emmis Entities under the Chicago Transition Services Agreement or John Hancock Sublicense Agreement, will not be counted in determining whether the Emmis Threshold limitation is satisfied or the Emmis Cap is reached, and the Emmis Entities will have the right to recover any such Emmis Entities’ Losses without regard to the Emmis Threshold limitation or the Emmis Cap limitation.

     9.4 Administration of Indemnification.

     For purposes of administering the indemnification, defense, hold harmless, payment and reimbursement provisions set forth in Sections 9.2 and 9.3, the following procedure will apply:

     (a) Whenever a claim arises for indemnification, defense, hold harmless, payment or reimbursement under this Article, the party entitled to indemnification, defense, hold harmless, payment, or reimbursement (the “Indemnified Party”) will give reasonably prompt written notice to the party from whom indemnification, defense, hold harmless, payment, or reimbursement is sought (the “Indemnifying Party”) setting forth in reasonable detail, to the extent then available, the facts concerning the nature of such claim and the basis upon which the Indemnified Party believes that it is entitled to indemnification, defense, hold harmless payment, or reimbursement hereunder.

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     (b) In the event of any claim for indemnification, defense, hold harmless, payment, or reimbursement resulting from or in connection with any claim by a third party, the Indemnifying Party will be entitled, at its sole expense, either (i) to participate in defending against such claim or (ii) to assume the entire defense with counsel which is selected by it and which is reasonably satisfactory to the Indemnified Party, provided that the Indemnifying Party will not settle such claim or consent to any judgment on such claim without the prior written consent of the Indemnified Party, which will not be unreasonably withheld, conditioned or delayed; provided, however, that such defense may be subject to the Indemnifying Party’s right to contest the obligation to indemnify, defend, hold harmless, pay or reimburse. If, however, (i) the claim, action, suit or proceeding would, if successful, result in the imposition of damages for which the Indemnifying Party would not be solely responsible, or (ii) representation of both parties by the same counsel would otherwise be inappropriate due to actual or potential differing interests between them, then the Indemnifying Party will not be entitled to assume the entire defense and each party will be entitled to retain counsel (at each such party’s own expense) who will cooperate with one another in defending against such claim.

     (c) If the Indemnifying Party does not choose to defend against a claim by a third party, the Indemnified Party may defend in such manner as it reasonably determines is appropriate or settle the claim (after giving notice thereof to the Indemnifying Party) on such terms as the Indemnified Party may deem appropriate, and the Indemnified Party will be entitled to periodic reimbursement of defense expenses incurred and prompt indemnification from the Indemnifying Party in accordance with this Article; provided, however, that the Indemnifying Party will have the right to contest through appropriate proceedings its obligation to provide indemnification, defense, hold harmless, payment or reimbursement under this Agreement.

     (d) Failure or delay by an Indemnified Party to give a reasonably prompt notice of any claim (if given prior to expiration of any applicable Survival Period) will not release, waive or otherwise affect an Indemnifying Party’s obligations with respect to the claim, except to the extent that actual loss or prejudice occurs as a result of such failure or delay. A Recipient Party will not be deemed to have notice of any claim solely by reason of any knowledge acquired on or prior to the Closing Date by an employee of any Station acquired by the Recipient Party pursuant to this Agreement.

     (e) Any indemnification, defense, hold harmless, payment or reimbursement amounts not paid when due under this Article IX will bear interest from such due date until paid in full at a rate per annum equal to the prime rate at such due date plus three percent (3.0%) (as published in the Money Rates column of the Eastern Edition of The Wall Street Journal).

     (f) The right to indemnification, defense, hold harmless, payment or reimbursement hereunder will be the exclusive remedy of any Party after the Closing in connection with any breach by any other Party of its representations, warranties, covenants or agreements other than (i) breaches of the Chicago Transition Services Agreement, Phoenix Transition Services Agreement, WLUP Auxiliary Antenna Option Agreement or South Mountain Sublicense Agreement, (ii) a breach of Section 5.8 or 5.19, or (iii) exercise of the remedies provided under Section 13.3.

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     9.5 Mitigation and Limitation of Damages.

     Each Party agrees to use reasonable efforts to mitigate any Losses which form the basis for any claim for indemnification, defense, hold harmless, payment, or reimbursement hereunder. Notwithstanding anything contained in this Agreement to the contrary, except for damages arising out of a breach of Section 5.19, no Party will be entitled to lost profits, punitive damages or other special or consequential damages regardless of the theory of recovery.

ARTICLE X.
TERMINATION

     10.1 Right of Termination.

This Agreement may be terminated prior to the Closing:

     (a) By written agreement of the Emmis Entities and the Bonneville Entities; or

     (b) By written notice from a Party that is not then in material breach of this Agreement if:

     (i) The other Party has continued in material breach of this Agreement for thirty (30) days after written notice of such breach from the terminating Party is received by the other Party; or

     (ii) the Closing does not occur on or before January 1, 2006; or

     (iii) That Party has terminated either the Chicago TBA or the Phoenix TBA because of a material breach by the other Party thereunder; or

     (iv) By either Bonneville Entity if for any reason in connection with this Agreement, or consummation of any of the transactions contemplated hereunder either Bonneville Entity would be required to disclose financial information regarding the Corporation of the President of The Church of Jesus Christ of Latter-Day Saints or any of its subsidiaries or affiliates (other than a Bonneville Entity) to any third party.

10.2 Obligations Upon Termination.

     Sections 5.8, 5.9, 13.2 and 13.4 through 13.15 and Articles IX and X will survive the termination of this Agreement and remain in full force and effect. Each Party to this Agreement will remain liable after termination for breach of this Agreement prior to termination.

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     10.3 Termination Notice.

     If the terminating Party is entitled to terminate this Agreement pursuant to the Subsection of Section 10.1 specified in the termination notice, then termination will be deemed effected pursuant to the specified Subsection notwithstanding that termination could be effected pursuant to more than one such Subsection.

     10.4 Single Party.

     For purposes of this Article X, (i) no Emmis Entity will in any event constitute an “other Party” in relation to any other Emmis Entity, (ii) neither Bonneville Entity will in any event constitute an “other Party” in relation to the other Bonneville Entity, (iii) all Emmis Entities will together constitute but a single Party, (iv) both Bonneville Entities will together constitute but a single Party, (v) any breach of this Agreement by one Emmis Entity will be deemed to constitute a breach of this Agreement by all Emmis Entities, and (vi) any breach of this Agreement by one Bonneville Entity will be deemed to constitute a breach of this Agreement by both Bonneville Entities.

ARTICLE XI.
CONTROL OF STATIONS

     Between the date of this Agreement and the Closing Date, (i) the Emmis Entities will not control, manage or supervise the operation of WLUP or the conduct of its business, all of which will remain the sole responsibility and under the control of the Bonneville Entities, subject to the Bonneville Entities’ compliance with this Agreement and the Chicago TBA; and (ii) the Bonneville Entities will not control, manage or supervise the operation of the Emmis Stations or the conduct of their business, all of which will remain the sole responsibility and under the control of the Emmis Entities, subject to the Emmis Entities’ compliance with this Agreement and the Phoenix TBA.

ARTICLE XII.
EMPLOYMENT MATTERS

     12.1 WLUP Employees.

     Section 12 of the Chicago TBA will govern employment matters as to employees at WLUP.

     12.2 Emmis Stations’ Employees.

     Section 12 of the Phoenix TBA will govern employment matters as to employees at the Emmis Stations.

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ARTICLE XIII.
MISCELLANEOUS

     13.1 Further Actions.

     From time to time before, at and after the Closing, each Party, at its expense and without further consideration, will execute and deliver such documents as reasonably requested by the other Party in order more effectively to consummate the transactions contemplated hereby. Without limiting the generality of the foregoing, the Transferring Party will use commercially reasonable efforts after closing to obtain any required consents to the assignment of any Transferring Party’s Station Agreement, and will keep the Recipient Party informed of any problems or delays in obtaining such required consents.

     13.2 Payment of Expenses.

     (a) The fees for the HSR Filings, the fees for filing the applications with the FCC under Section 5.4, and any Transfer Taxes payable in connection with the transactions contemplated by this Agreement will be paid fifty percent (50%) by the Emmis Entities and fifty percent (50%) by the Bonneville Entities.

     (b) Except as otherwise expressly provided in this Agreement, each of the Parties will bear its own expenses, including the fees of any attorneys and accountants engaged by such Party, in connection with the transactions contemplated by this Agreement.

13.3 Specific Performance.

     Each Transferring Party acknowledges that the Station or Stations of the Transferring Party are of a special, unique and extraordinary character, and that damages alone are an inadequate remedy for a breach of this Agreement by the Transferring Party. Accordingly, as an alternative to termination of this Agreement under Section 10.1, if the Recipient Party is not then in material default hereunder, the Recipient Party will be entitled, in the event of the Transferring Party’s breach, to enforcement of this Agreement (subject to obtaining any required approval of the FCC or the Department of Justice) by a decree of specific performance or injunctive relief requiring the Transferring Party to fulfill its obligations under this Agreement. Such right of specific performance or injunctive relief will be in addition to, and not in lieu of, the Recipient Party’s right to recover damages and to pursue any other remedies available to the Recipient Party for the Transferring Party’s breach. In any action to specifically enforce the Transferring Party’s obligation to close the transactions contemplated by this Agreement, the Transferring Party will waive the defense that there is an adequate remedy at law or in equity and any requirement that the Recipient Party prove actual damages. As a condition to seeking specific performance, the Recipient Party will not be required to tender the Recipient Party’s Exchange Assets as contemplated by Section 2.5 but will be required to demonstrate that the Recipient Party is ready, willing and able to tender the Recipient Party’s Exchange Assets as contemplated by such Section.

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     13.4 Notices.

     All notices, payments (unless otherwise specified herein), demands or other communications given hereunder will be in writing and will be sufficiently given if delivered by courier (including overnight delivery service), sent by telecopy (with receipt personally confirmed by telephone) or sent by registered or certified mail, first class, postage prepaid, addressed as follows:

     (a) If to the Emmis Entities, to:

Emmis Radio, LLC
Emmis Radio License, LLC
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, IN 46204
Attention: Jeffrey H. Smulyan, President
Attention: J. Scott Enright, Esq.

Emmis Radio, LLC
Emmis Radio License, LLC
Suite 1450
3500 W. Olive Avenue
Burbank, CA 91505
Attention: Gary Kaseff, Esq.

Copy to:

Bose McKinney & Evans LLP
2700 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, IN 46204
Attention: David L. Wills

     (b) If to the Bonneville Entities, to:

Bonneville Holding Company
50 East North Temple, 17^th Floor
Salt Lake City, UT 84150
Attention: President

Bonneville International Corporation
55 North 300 West, Eighth Floor
Salt Lake City, UT 84180
Attention: President

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Copy to:

Bonneville International Corporation
55 North 300 West, Eighth Floor
Salt Lake City, UT 84180
Attention: General Counsel

or to such other address as a Party may from time to time give notice to the other Party in writing (as provided above). Any such notice, payment, demand or communication will be deemed to have been given or made (i) if so mailed, on the date indicated on the return receipt, and (ii) if delivered by courier or telecopy, on the date received.

     13.5 Entire Agreement.

This Agreement, the Schedules, the Exhibits, the Chicago TBA, the Phoenix TBA and the other Documents executed contemporaneously herewith constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements (including the letter agreement dated October 4, 2004) between the Parties hereto with respect to the subject matter hereof.

     13.6 Binding Effect; Benefits.

     Except as otherwise expressly provided in this Agreement, (i) the terms and provisions of this Agreement will inure to the benefit of and be binding upon the Parties to this Agreement and their respective successors or permitted assigns, and (ii) nothing in this Agreement, express or implied, will confer on any person other than the Parties hereto and their respective successors or permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

     13.7 Assignment.

     Except as provided in Section 5.20, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either Party without the prior written consent of the other Party, such consent not to be unreasonably withheld, provided that (i) either Party may assign its rights under this Agreement as collateral security to any lender providing financing to the Party or any of its Affiliates, and (ii) no such assignment will relieve any Party of its obligations hereunder.

     13.8 Governing Law.

     This Agreement and the other Documents will in all respects be governed by and construed in accordance with the laws of the State of Illinois without regard to its principles of conflicts of laws, except that with respect to matters of title and conveyance of real property in Arizona, this Agreement and the other Documents will be governed by and construed in accordance with the laws of the State of Arizona without regard to its principles of conflicts of laws.

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     13.9 Amendments and Waivers.

     No term or provision of this Agreement may be amended, waived, discharged or terminated orally but only by an instrument in writing signed by the Party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver will be effective only in accordance with its express terms and conditions, but any such waiver or failure to insist upon strict compliance with any obligation, representation, warranty, covenant, agreement or condition under this Agreement will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

     13.10 Severability.

     Any provision of this Agreement which is unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect.

     13.11 Headings.

     The captions in this Agreement are for convenience of reference only and will not define or limit any of the terms or provisions hereof.

     13.12 Counterparts.

     This Agreement may be executed in any number of counterparts, and by any Party on separate counterparts, each of which will be an original, and all of which together will constitute one and the same instrument. Facsimile or electronic “pdf” version copies of this Agreement shall have the same effect as originals, including for purposes of delivery by one Party to the other.

     13.13 References.

     All references in this Agreement to Articles and Sections are to Articles and Sections contained in this Agreement unless a different document is expressly specified.

     13.14 Schedules and Exhibits.

     Unless otherwise specified in this Agreement, each Schedule and Exhibit referenced in this Agreement is attached to, and is incorporated by reference into, this Agreement.

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     13.15 Joint and Several Liability.

     The Emmis Entities will be jointly and severally liable for each representation, warranty, covenant, agreement, liability or obligation of all or any one of the Emmis Entities under this Agreement or any other Document whether or not otherwise indicated in this Agreement or any other Document. The Bonneville Entities will be jointly and severally liable for each representation, warranty, covenant, agreement, liability or obligation of all or any one of the Bonneville Entities under this Agreement or any other Document whether or not otherwise indicated in this Agreement or any other Document.

     13.16 Bonneville Entities Not Responsible for Emmis Entities’ Actions Under Chicago TBA.

     Notwithstanding anything contained herein to the contrary, the Bonneville Entities will not be deemed to have breached any representation, warranty, covenant or agreement of the Bonneville Entities contained herein or to have failed to satisfy any condition precedent to the Emmis Entities’ obligations under this Agreement (nor will the Bonneville Entities have any liability or responsibility to the Emmis Entities in respect of any such representation, warranty, covenant, agreement or condition precedent), in each case to the extent that the inaccuracy of any such representation, the breach of any such warranty, covenant or agreement or the inability to satisfy any such condition precedent arises out of or otherwise relates to (i) any actions taken by or under the authorization of any Emmis Entity (or any of its managers, officers, directors, employees, affiliates, agents or representatives) in connection with any Emmis Entity’s performance of its obligations under the Chicago TBA or (ii) the failure of any Emmis Entity to perform any of its obligations under the Chicago TBA. The Emmis Entities acknowledge and agree that the Bonneville Entities will not be deemed to be responsible for, or to have authorized or consented to, any action or failure to act on the part of any Emmis Entity (or any of its managers, officers, directors, employees, affiliates, agents or representatives) in connection with the Chicago TBA by reason of the fact that prior to the Closing the Bonneville Entities will have the legal right to control, manage or supervise the operation of WLUP or the conduct of its business.

     13.17 Emmis Entities Not Responsible for Bonneville Entities’ Actions Under Phoenix TBA.

     Notwithstanding anything contained herein to the contrary, the Emmis Entities will not be deemed to have breached any representation, warranty, covenant or agreement of the Emmis Entities contained herein or to have failed to satisfy any condition precedent to the Bonneville Entities’ obligations under this Agreement (nor will the Emmis Entities have any liability or responsibility to the Bonneville Entities in respect of any such representation, warranty, covenant, agreement or condition precedent), in each case to the extent that the inaccuracy of any such representation, the breach of any such warranty, covenant or agreement or the inability to satisfy any such condition precedent arises out of or otherwise relates to (i) any actions taken by or under the authorization of any Bonneville Entity (or any of its officers, directors, employees, affiliates, agents or representatives) in connection with any Bonneville Entity’s performance of its obligations under the Phoenix TBA or (ii) the failure of any Bonneville Entity to perform any

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of its obligations under the Phoenix TBA. The Bonneville Entities acknowledge and agree that the Emmis Entities will not be deemed to be responsible for, or to have authorized or consented to, any action or failure to act on the part of any Bonneville Entity (or any of its officers, directors, employees, affiliates, agents or representatives) in connection with the Phoenix TBA by reason of the fact that prior to the Closing the Emmis Entities will have the legal right to control, manage or supervise the operation of the Emmis Stations or the conduct of their business.

[Signature Page Omitted]

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EX-10.36

Exhibit 10.36

Director Compensation Policy effective May 13, 2005.

Directors who are not officers or employees of our company are compensated for their services at the rate of $3,000 per regular meeting attended in person, $1,500 per regular meeting attended by phone and $2,000 per committee meeting attended, whether in person or by phone. In addition, each director who is not an officer or employee of the company receives an annual retainer of $30,000, the chairs of our Audit Committee and Compensation Committee each receive a $5,000 annual retainer, the chair of our Corporate Governance and Nominating Committee receives a $3,000 annual retainer, and the Lead Director receives a $5,000 annual retainer. All of these fees are paid in the form of Class A common stock at the end of each calendar year, discounted in accordance with our stock compensation program for the applicable calendar year. In addition, directors who are not officers or employees of our company are entitled to receive annually options to purchase 5,000 shares of Class A common stock and 1,500 shares of restricted stock. The options are granted on the date of our annual meeting of shareholders at the fair market value of the underlying shares on that date and are to vest annually in three equal installments. Restricted stock is also granted on the date of our annual meeting of shareholders and will vest at the conclusion of each director’s three year term. Directors who are not officers or employees of our company are also eligible to participate in our health insurance program by paying premiums equal to the “COBRA” rate charged to former employees of the company.

EX-12

Exhibit 12

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited, dollars in thousands)

	FEBRUARY 28 (29),
	2001		2002			2003		2004		2005
EARNINGS:
Pre-tax income (loss) from continuing operations before adjustment for minority interests in consolidated subsidiaries or income or loss from equity investees	$	34,597	$	(85,650	)	$	10,241	$	18,718	$	(24,041	)
Add:
Fixed charges		83,072		140,456			115,867		97,863		78,810
Amortization of capitalized interest		74		74			74		74		74
Less:
Capitalized interest		—		—			—		—		—
Preferred stock dividends		8,984		8,984			8,984		8,984		8,984
Earnings	$	108,759	$	45,896		$	117,198	$	107,671	$	45,859
FIXED CHARGES:
Interest expense (including amortization of debt expenses)	$	71,936	$	128,807		$	103,617	$	85,958	$	66,657
Capitalized interest		—		—			—		—		—
Portion of rents representative of the interest factor		2,152		2,665			3,266		2,921		3,169
Preferred stock dividends		8,984		8,984			8,984		8,984		8,984
Fixed Charges	$	83,072	$	140,456		$	115,867	$	97,863	$	78,810
Ratio of Earnings to Fixed Charges		1.3		N/A			1.0		1.1		N/A
Deficiency	$	—	$	94,560		$	—	$	—	$	32,951

EX-21

Exhibit 21

Emmis Communications Corporation
Listing of Subsidiaries

		NAME UNDER WHICH
LEGAL NAME	ORGANIZATION	ENTITY DOES BUSINESS
Emmis Communications Corporation	IN	Emmis Communications Corporation
Emmis Operating Company	IN	Emmis Operating Company
Emmis Radio, LLC	IN	WKQX-FM, WLUP-FM, KPWR-FM, KZLA-FM, WQCD-FM, WQHT-FM, WRKS-FM, KKFR-FM, KIHT-FM, WRDA-FM, KSHE-FM, KPNT-FM, KFTK-FM
Emmis Television Broadcasting, L.P.	IN	KRQE-TV, WFTX-TV, WLUK-TV, KHON-TV, KGMB-TV, WSAZ-TV, WALA-TV, WVUE-TV, KMTV-TV, WKCF-TV, KOIN-TV, WBPG-TV, KGUN-TV
Emmis Publishing, L.P.	IN	Atlanta Magazine, Texas Monthly, Country Sampler, Cincinnati Magazine, Indianapolis Monthly, Los Angeles Magazine
Emmis Indiana Broadcasting, L.P.	IN	WLHK-FM, WIBC-AM, WNOU-FM, WWVR-FM, WTHI-FM, WTHI-TV, WYXB-FM, Network Indiana
SJL of Kansas Corp.	KS	KSNW-TV
Topeka Television Corporation	MO	KSNT-TV
Emmis International Broadcasting Corporation	CA	Emmis International Broadcasting Corporation
Slager Radio Rt. (59.5%)	Hungary	Slager Radio Rt.
Slager Sales Kft.	Hungary	Slager Sales Kft.
Slovakia d’Expres	Slovakia	Slovakia d’Expres
Emmis Belgium Broadcasting NV	Belgium	Emmis Belgium Broadcasting NV
Emmis Meadowlands Corporation	IN	Emmis Meadowlands Corporation
Emmis Publishing Corporation	IN	Emmis Publishing Corporation
Emmis Television License, LLC	CA	Emmis Television License, LLC
Emmis Radio License, LLC	CA	Emmis Radio License, LLC
Emmis License Corporation of New York	CA	Emmis License Corporation of New York
Emmis Radio License Corporation of New York	CA	Emmis Radio License Corporation of New York
Emmis Television License Corporation of Wichita	CA	Emmis Television License Corporation of Wichita
Emmis Television License Corporation of Topeka	CA	Emmis Television License Corporation of Topeka
Emmis Enterprises, Inc.	IN	Emmis Enterprises, Inc.
Mediatex Communications Corporation	IN	Mediatex Communications Corporation
Los Angeles Magazine Holding Company, Inc.	IN	Los Angeles Magazine Holding Company, Inc.
Radio Austin Management, L.L.C.	TX	Radio Austin Management, L.L.C.
Emmis Austin Radio Broadcasting Company, L.P.	TX	KLBJ-AM, KLBJ-FM, KDHT-FM, KGSR-FM, KROX-FM, KBPA-FM
CIUDAD, LLC	IN	CIUDAD, LLC

	Footnotes
*	Emmis Communications Corporation directly or indirectly owns 100% of all entities except as otherwise noted.
1	Emmis Radio, LLC operates all our radio stations except for the stations held by Emmis Indiana Broadcasting, L.P. and Emmis Austin Radio Broadcasting Company, L.P.
2	Emmis Television Broadcasting, L.P. operates all our television stations except for KSNW-TV which is operated by SJL of Kansas Corp., KSNT-TV which is operated by Topeka Television Corporation, and WTHI-TV which is operated by Emmis Indiana Broadcasting, L.P.
3	Emmis Publishing, L.P. publishes Indianapolis Monthly, Atlanta Magazine, Cincinnati Magazine, Country Sampler, Texas Monthly and Los Angeles Magazine.
4	Emmis Indiana Broadcasting, L.P. operates all our Indiana radio stations WIBC-AM, WLHK-FM, WNOU-FM, WYXB-FM, WTHI-FM, WWVR-FM, Network Indiana, and our Indiana television station, WTHI-TV.
5	Emmis Television License, LLC holds all our television FCC licenses except for the KSNT-TV licenses which are held by Emmis Television License Corporation of Topeka and the KSNW-TV licenses which are held by Emmis Television License Corporation of Wichita.
6	Emmis Radio License, LLC holds all our radio FCC licenses except for the WRKS-FM licenses which are held by Emmis Radio License Corporation of New York and the WQHT-FM licenses which are held by Emmis License Corporation of New York.

EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the combined shelf Registration Statement (Form S-3, No. 333-62172) of Emmis Communications Corporation and Emmis Operating Company of our reports dated May 16, 2005, with respect to the consolidated financial statements of Emmis Communications Corporation, Emmis Communications Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Emmis Communications Corporation, included in this Annual Report (Form 10-K) for the year ended February 28, 2005.

We also consent to the incorporation by reference in the Registration Statements (Form S-8), pertaining to the Emmis Communications Corporation 1994 Equity Incentive Plan (No. 33-83890); the Emmis Communications Corporation 1995 Equity Incentive Plan and the Non-Employee Director Stock Option Plan (No. 333-14657); the Emmis Communications Corporation 1997 Equity Incentive Plan, the 1999 Equity Incentive Plan and the Employee Stock Purchase Agreement (No. 333-42878); the Emmis Communications Corporation 2001 Equity Incentive Plan (No. 333-71904); the Emmis Communications Corporation 2002 Equity Compensation Plan (No. 333-92318); the Emmis Operating Company 401(k) Plan and Emmis Operating Company 401(k) Plan Two (No. 333-105724), and the Emmis Communications Corporation 2004 Equity Compensation Plan (No. 333-117033) of Emmis Communications Corporation and Emmis Operating Company of our reports dated May 16, 2005, with respect to the consolidated financial statements of Emmis Communications Corporation, Emmis Communications Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Emmis Communications Corporation, included in this Annual Report (Form 10-K) for the year ended February 28, 2005.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
May 16, 2005

EX-24

Exhibit 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Susan B. Bayh
	Susan B. Bayh

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Lawrence B. Sorrel
	Lawrence B. Sorrel

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Richard A. Leventhal
	Richard A. Leventhal

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Peter A. Lund
	Peter A. Lund

POWER OF ATTORNEY

     KNOW BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his or her attorneys-in-fact and agents, with full power of substitution and resubstitution for him or her in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his or her substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Greg A. Nathanson
	Greg A. Nathanson

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Gary L. Kaseff
	Gary L. Kaseff

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2005, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 16, 2005	/s/ Frank V. Sica
	Frank V. Sica

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1.   I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2005

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Walter Z. Berger, certify that:

1.   I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2005

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1)   the Annual Report of the Company on Form 10-K for the period ended February 28, 2005, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2005

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1)   the Annual Report of the Company on Form 10-K for the period ended February 28, 2005, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2005

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer