10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2013

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)

NOT APPLICABLE

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

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

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

The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of June 21, 2013, was:

36,695,537	Shares of Class A Common Stock, $.01 Par Value
4,722,684	Shares of Class B Common Stock, $.01 Par Value
0	Shares of Class C Common Stock, $.01 Par Value

INDEX

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Condensed Consolidated Statements of Operations for the three-month periods ended May  31, 2012 and 2013		3
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three-month periods ended May  31, 2012 and 2013		5
Condensed Consolidated Balance Sheets as of February 28, 2013 and May 31, 2013		6
Condensed Consolidated Statement of Changes in Equity for the three-month period ended May 31, 2013		8
Condensed Consolidated Statements of Cash Flows for the three-month periods ended May  31, 2012 and 2013		9
Notes to Condensed Consolidated Financial Statements		11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3. Quantitative and Qualitative Disclosures about Market Risk		40
Item 4. Controls and Procedures		41
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 6. Exhibits		42
Signatures		44

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended May 31,
	2012			2013
NET REVENUES	$	48,968		$	50,586
OPERATING EXPENSES:
Station operating expenses excluding depreciation and amortization expense of $ 664 and $656, respectively		40,572			37,712
Corporate expenses excluding depreciation and amortization expense of $461 and $520, respectively		4,972			4,400
Hungary license litigation and related expenses		204			252
Impairment loss on intangible assets		10,971			—
Depreciation and amortization		1,125			1,176
Gain on sale of assets		(10,000	)		—
Total operating expenses		47,844			43,540
OPERATING INCOME		1,124			7,046
OTHER EXPENSE:
Interest expense		(5,767	)		(1,921	)
Loss on debt extinguishment		(484	)		—
Other income, net		198			7
Total other expense		(6,053	)		(1,914	)
(LOSS) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS		(4,929	)		5,132
(BENEFIT) PROVISION FOR INCOME TAXES		(4,415	)		175
(LOSS) INCOME FROM CONTINUING OPERATIONS		(514	)		4,957
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		(2,359	)		—
CONSOLIDATED NET (LOSS) INCOME		(2,873	)		4,957
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		1,262			1,481
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY		(4,135	)		3,476
GAIN ON EXTINGUISHMENT OF PREFERRED STOCK		—			249
PREFERRED STOCK DIVIDENDS		(896	)		—
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(5,031	)	$	3,725

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(Unaudited)

(In thousands, except per share data)

	Three Months Ended May 31,
	2012			2013
Amounts attributable to common shareholders for basic and diluted earnings per share:
Continuing operations	$	(2,672	)	$	3,725
Discontinued operations		(2,359	)		—
Net income attributable to common shareholders	$	(5,031	)	$	3,725
Amounts attributable to common shareholders for diluted earnings per share:
Continuing operations	$	(2,672	)	$	3,476
Discontinued operations		(2,359	)		—
Net income attributable to common shareholders	$	(5,031	)	$	3,476
Basic net (loss) income per share attributable to common shareholders:
Continuing operations	$	(0.07	)	$	0.09
Discontinued operations, net of tax		(0.06	)		—
Net (loss) income per share attributable to common shareholders	$	(0.13	)	$	0.09
Basic weighted average common shares outstanding		38,779			41,174
Diluted net (loss) income per share attributable to common shareholders:
Continuing operations	$	(0.07	)	$	0.08
Discontinued operations, net of tax		(0.06	)		—
Net (loss) income per share attributable to common shareholders	$	(0.13	)	$	0.08
Diluted weighted average common shares outstanding		38,779			45,504

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands)

	Three Months Ended May 31,
	2012			2013
CONSOLIDATED NET (LOSS) INCOME	$	(2,873	)	$	4,957
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXES:
Change in value of derivative instrument and related income tax effects		—			(44	)
Cumulative translation adjustment		229			30
COMPREHENSIVE (LOSS) INCOME		(2,644	)		4,943
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		1,285			1,481
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(3,929	)	$	3,462

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

-5-

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

			May 31,
	February 28,		2013
	2013		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,735	$	4,959
Accounts receivable, net		28,126		32,540
Prepaid expenses		7,674		9,647
Other current assets		5,411		4,238
Current assets — discontinued operations		762		528
Total current assets		50,708		51,912
PROPERTY AND EQUIPMENT, NET		32,553		32,398
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles		150,522		150,522
Goodwill		12,639		12,639
Other intangibles, net		225		220
Total intangible assets		163,386		163,381
OTHER ASSETS, NET		14,977		16,109
Total assets	$	261,624	$	263,800

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

-6-

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except share data)

				May 31,
	February 28,			2013
	2013			(Unaudited)
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	8,301		$	8,223
Current maturities of long-term debt (Note 4)		12,126			12,228
Accrued salaries and commissions		7,535			5,819
Accrued interest		396			392
Deferred revenue		10,862			12,629
Other current liabilities		3,518			4,174
Current liabilities — discontinued operations		2,169			1,126
Total current liabilities		44,907			44,591
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 4)		131,494			129,537
OTHER NONCURRENT LIABILITIES		10,052			9,145
DEFERRED INCOME TAXES		38,072			38,721
Total liabilities		224,525			221,994
COMMITMENTS AND CONTINGENCIES
EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 35,907,925 shares at February 28, 2013 and 36,695,537 shares at May 31, 2013		359			367
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,722,684 shares at February 28, 2013 and May 31, 2013		47			47
Series A non-cumulative convertible preferred stock, $.01 par value; $50.00 liquidation preference per share, $46,882 aggregate liquidation preference and redemption amount; authorized 2,875,000 shares; issued and outstanding 1,337,641 shares at February 28, 2013 and 1,330,991 at May 31, 2013, which includes 400,000 shares in trust		9			9
Additional paid-in capital		578,555			579,240
Accumulated deficit		(588,836	)		(585,360	)
Accumulated other comprehensive income		(118	)		(74	)
Total shareholders’ deficit		(9,984	)		(5,771	)
NONCONTROLLING INTERESTS		47,083			47,577
Total equity		37,099			41,806
Total liabilities and equity	$	261,624		$	263,800

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)

(Unaudited)

(In thousands, except share data)

																				Accumulated
	Class A Common Stock				Class B Common Stock				Series A Preferred Stock					Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			Deficit			Income			Interests			Equity (Deficit)
BALANCE, FEBRUARY 28, 2013		35,907,925	$	359		4,722,684	$	47		937,641		$	9	$	578,555		$	(588,836	)	$	(118	)	$	47,083		$	37,099
Net income																		3,476						1,481			4,957
Issuance of Common Stock to employees and officers		696,362		7											709												716
Exercise of stock options		91,250		1											59												60
Payments of dividends and distributions to noncontrolling interests																								(957	)		(957	)
Purchase of preferred stock										(6,650	)				(83	)											(83	)
Change in value of derivative instrument																					44						44
Cumulative translation adjustment																								(30	)		(30	)
BALANCE, MAY 31, 2013		36,695,537	$	367		4,722,684	$	47		930,991		$	9	$	579,240		$	(585,360	)	$	(74	)	$	47,577		$	41,806

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Three Months Ended May 31,
	2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net (loss) income	$	(2,873	)	$	4,957
Adjustments to reconcile consolidated net (loss) income to net cash (used in) provided by operating activities -
Discontinued operations		2,359			—
Impairment loss		10,971			—
Depreciation and amortization		1,420			1,401
Noncash accretion of debt instruments to interest expense		3,231			—
Loss on debt extinguishment		484			—
Provision for bad debts		90			166
(Benefit) provision for deferred income taxes		(3,920	)		649
Noncash compensation		389			663
Gain on sale of assets		(10,000	)		—
Other		—			(47	)
Changes in assets and liabilities -
Accounts receivable		(3,079	)		(4,452	)
Prepaid expenses and other current assets		(578	)		(1,292	)
Other assets		(200	)		(853	)
Accounts payable and accrued liabilities		(854	)		(1,485	)
Deferred revenue		891			1,767
Income taxes		(664	)		192
Other liabilities		(3,809	)		(95	)
Net cash provided by (used in) operating activities — discontinued operations		705			(68	)
Net cash (used in) provided by operating activities		(5,437	)		1,503
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(750	)		(1,016	)
Cash paid for investments		(2,000	)		(250	)
Other		21			—
Net cash used in investing activities — discontinued operations		(25	)		(807	)
Net cash used in investing activities		(2,754	)		(2,073	)

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

(Dollars in thousands)

	Three Months Ended May 31,
	2012			2013
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt		(75,019	)		(6,983	)
Proceeds from long-term debt		92,198			5,000
Debt-related costs		(3,423	)		(79	)
Payments of dividends and distributions to noncontrolling interests		(824	)		(957	)
Proceeds from the exercise of stock options		21			59
Purchase of preferred stock		—			(83	)
Settlement of tax withholding obligations on stock issued to employees		—			(133	)
Net cash provided by (used in) financing activities		12,953			(3,176	)
Effect of exchange rates on cash and cash equivalents		105			(30	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		4,867			(3,776	)
CASH AND CASH EQUIVALENTS:
Beginning of period		5,619			8,735
End of period	$	10,486		$	4,959
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	7,696		$	1,699
Cash paid (refund from) income taxes, net		194			(666	)
Noncash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives		389			842

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)

May 31, 2013

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2013. The Company’s results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

In the opinion of Emmis, the accompanying condensed consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of Emmis at May 31, 2013, and the results of its operations and cash flows for the three-month periods ended May 31, 2012 and 2013.

Basic and Diluted Net (Loss) Income Per Common Share

Basic net (loss) income per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net (loss) income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at May 31, 2012 and 2013 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”).

The following table sets forth the calculation of basic and diluted net (loss) income per share from continuing operations:

	Three Months Ended
	May 31, 2012								May 31, 2013
						Net Loss								Net Income
	Net Loss			Shares		Per Share			Net Income			Shares		Per Share
	(amounts in 000’s, except per share data)
Basic net (loss) income per common share:
Net (loss) income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,725			41,174	$	0.09
Impact of equity awards		—			—					—			2,043
Impact of conversion of preferred stock into common stock		—			—					(249	)		2,287
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,476			45,504	$	0.08

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Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended May 31,
	2012		2013
	(shares in 000’s )
6.25% Series A convertible preferred stock		2,288		—
Stock options and restricted stock awards		9,166		2,399
Antidilutive common share equivalents		11,454		2,399

Discontinued Operations – Summary of results

The results of operations and related disposal costs, gains and losses for business units that the Company has sold or expects to sell are classified in discontinued operations for all periods presented.

A summary of the income from discontinued operations is presented below:

	Three months ended May 31,
	2012			2013
Income (loss) from operations:
KXOS-FM (Radio)		(141	)		—
Emmis Interactive Inc. (Radio)		(727	)		—
Slovakia Radio Network (Radio)		7			—
Bulgaria Radio Network (Radio)		(307	)		—
Sampler Publications (Publishing)		116			—
Total		(1,052	)		—
Provision for income taxes		1,307			—
Total loss from operations, net of tax		(2,359	)		—

Discontinued Operation – KXOS-FM

On August 23, 2012, Emmis completed the sale of KXOS-FM in Los Angeles for $85.5 million in cash. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $32.8 million. KXOS-FM had previously been operating pursuant to a local programming and marketing agreement, which is discussed in more detail below.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the portion of term loans required to be repaid as a result of the sale of KXOS-FM to its operations for all periods presented.

-12-

The operations of KXOS-FM had historically been included in the radio segment. The following table summarizes certain operating results of KXOS-FM for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,750	$	—
Station operating expenses, excluding depreciation and amortization expense		20		—
Depreciation and amortization expense		104		—
Interest expense		1,767		—
Provision for income taxes		1,096		—

Discontinued Operation — Emmis Interactive

On October 31, 2012, Emmis completed the sale of Emmis Interactive Inc., a subsidiary of Emmis that provided a content management system, data analytic tools and related services, to Marketron Broadcast Solutions, LLC (“Marketron”) for no net proceeds. The sale of Emmis Interactive Inc. allows Emmis to mitigate expected future operating losses and more clearly focus on core radio and publishing operating strategies. Marketron had assumed operating control of Emmis Interactive, Inc., on October 4, 2012. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $0.7 million, which was primarily related to severance for former employees.

The operations of Emmis Interactive Inc. had historically been included in the radio segment. The following table summarizes certain operating results of the Emmis Interactive Inc. for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,239	$	—
Station operating expenses, excluding depreciation and amortization expense		1,962		—
Depreciation and amortization		137		—
Other income		133		—

Discontinued Operation – Country Sampler, Smart Retailer and related publications

On October 1, 2012, Emmis completed the sale of Country Sampler magazine, Smart Retailer magazine, and related publications (altogether the “Sampler Publications”) and certain real estate used in their operations to subsidiaries of DRG Holdings, LLC. Emmis believed the sale of the Sampler Publications, which were niche crafting publications, would enable it to more clearly focus on its core city and regional publications. Emmis received gross proceeds from the sale of $8.7 million, incurred approximately $0.2 million in transaction expenses and tax obligations, and used the remaining $8.5 million to repay term loans under the Company’s 2006 Credit Agreement. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $0.7 million.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the estimate of term loans required to be repaid as a result of the sale of the Sampler Publications to its operations for all periods presented.

-13-

The operations of the Sampler Publications had historically been included in the publishing segment. The following table summarizes certain operating results of the Sampler Publications for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	2,319	$	—
Station operating expenses, excluding depreciation and amortization expense		1,992		—
Depreciation and amortization		22		—
Interest expense		189		—
Provision for income taxes		129		—

Discontinued Operation –Slovakia Radio

On February 25, 2013, Emmis completed the sale of its Slovakian radio network to Bauer Ausland 1 GMBH for $21.2 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $14.8 million.

The operations of our Slovakian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Slovakian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	2,277	$	—
Station operating expenses, excluding depreciation and amortization expense		1,665		—
Depreciation and amortization		180		—
Interest expense		400		—
Other expense, net		25		—
Provision for income taxes		82		—

Discontinued Operation – Bulgaria Radio

On January 3, 2013, Emmis completed the sale of its Bulgarian radio network to Reflex Media EEOD for $1.7 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $1.3 million. The loss on disposal primarily resulted from the reclassification of accumulated currency translation adjustments.

The operations of our Bulgarian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Bulgarian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	234	$	—
Station operating expenses, excluding depreciation and amortization expense		429		—
Depreciation and amortization		110		—
Other expense, net		2		—

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Summary of Assets and Liabilities of Discontinued Operations:

	As of February 28, 2013		As of May 31, 2013
Current assets:
Cash and cash equivalents	$	579	$	528
Accounts receivable, net		128		—
Prepaid expenses		17		—
Other		38		—
Total current assets	$	762	$	528
Current liabilities:
Accounts payable and accrued expenses	$	2,169	$	1,126
Total current liabilities	$	2,169	$	1,126

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the FCC licenses. In such cases where the Company enters into an LMA in connection with a disposition, the Company generally receives specified periodic payments in exchange for the counterparty receiving the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. Nevertheless, as the holder of the FCC license, the Company retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis recognized $0.9 million and $2.6 million of LMA fees, recorded as net revenues in the accompanying condensed consolidated statements of operations, related to the 98.8FM LMA during the three months ended May 31, 2012 and 2013, respectively.

Grupo Radio Centro, S.A.B. de C.V (“GRC”), a Mexican broadcasting company, provided programming and sold advertising for KXOS-FM in Los Angeles pursuant to an LMA from April 2009 until affiliates of GRC consummated the purchase of KXOS-FM on August 23, 2012. Emmis recognized $1.8 million of LMA fees, recorded as income from discontinued operations, net of tax, related to the KXOS-FM LMA during the three months ended May 31, 2012.

Note 2. Share Based Payments

The amounts recorded as share based compensation expense consist of stock option and restricted stock grants, common stock issued to employees and directors in lieu of cash payments, and Preferred Stock contributed to the 2012 Retention Plan.

Stock Option Awards

The Company has granted options to purchase its common stock to employees and directors of the Company under various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company. Generally, these options either vest annually over three years (one-third each year for three years), or cliff vest at the end of three years. The Company issues new shares upon the exercise of stock options.

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The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The Company includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of awards. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the three months ended May 31, 2012 and 2013:

	Three Months Ended May 31,
	2012	2013
Risk-Free Interest Rate:	0.7%	0.6%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.2	4.3
Expected Volatility:	129.5% – 131.4%	115.9%

The following table presents a summary of the Company’s stock options outstanding at May 31, 2013, and stock option activity during the three months ended May 31, 2013 (“Price” reflects the weighted average exercise price per share):

					Weighted Average		Aggregate
					Remaining		Intrinsic
	Options		Price		Contractual Term		Value
Outstanding, beginning of period		7,132,459	$	4.31
Granted		330,000		1.64
Exercised (1)		86,250		0.65
Forfeited		—		—
Expired		549,926		11.08
Outstanding, end of period		6,826,283		3.68		6.6	$	4,255
Exercisable, end of period		3,728,179		5.94		4.8	$	2,000

(1) The Company did not record an income tax benefit related to option exercises in the three months ended May 31, 2012 and 2013.

The weighted average grant date fair value of options granted during the three months ended May 31, 2012 and 2013, was $0.71 and $1.27, respectively.

A summary of the Company’s nonvested options at May 31, 2013, and changes during the three months ended May 31, 2013, is presented below:

			Weighted Average
			Grant Date
	Options		Fair Value
Nonvested, beginning of period		3,188,104	$	0.76
Granted		330,000		1.27
Vested		420,000		1.00
Forfeited		—		—
Nonvested, end of period		3,098,104		0.78

There were 3.9 million shares available for future grants under the Company’s various equity plans at May 31, 2013. The vesting dates of outstanding options at May 31, 2013 range from July 2013 to March 2017, and expiration dates range from March 2014 to March 2023.

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Restricted Stock Awards

The Company grants restricted stock awards to directors annually, though it has granted restricted stock to employees in prior years. These awards to directors are granted on the date of our annual meeting of shareholders and vest on the earlier of (i) the completion of the director’s three-year term or (ii) the third anniversary of the date of grant. Restricted stock award grants are granted out of the Company’s 2012 Equity Compensation Plan. The Company may also award, out of the Company’s 2012 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares may be immediately lapsed on the grant date.

The following table presents a summary of the Company’s restricted stock grants outstanding at May 31, 2013, and restricted stock activity during the three months ended May 31, 2013 (“Price” reflects the weighted average share price at the date of grant):

	Awards		Price
Grants outstanding, beginning of period		537,405	$	1.72
Granted		787,346		1.58
Vested (restriction lapsed)		277,346		1.46
Forfeited		181		1.73
Grants outstanding, end of period		1,047,224		1.68

The total grant date fair value of shares vested during the three months ended May 31, 2013 was $0.4 million. No shares vested during the three months ended May 31, 2012.

Preferred Stock and the 2012 Retention Plan

On April 2, 2012, the shareholders of the Company approved the 2012 Retention Plan and Trust Agreement (the “Trust” or the “2012 Retention Plan”) at a special meeting of shareholders. The Company contributed 400,000 shares of its Preferred Stock to the Trust in connection with the approval of the 2012 Retention Plan. Awards granted under the 2012 Retention Plan entitle the participants to receive a distribution two years from the date of shareholder approval of the plan, provided the participant is still an employee and was an employee upon inception of the plan. Distributions may be in the form of Class A common stock if the Company elects to convert the Preferred Stock to common stock at the then-current conversion ratio prior to distribution. The initial Trustee of the plan is Jeffrey H. Smulyan, our Chairman of the Board, President and Chief Executive Officer.

As of the Trust’s inception and May 31, 2013, no preferred shares have been allocated to individual employees, nor is any individual entitled to any minimum number of shares. As a result, the service inception date for these awards precedes the grant date, and the Company is accounting for the 2012 Retention Plan as a liability plan, using variable accounting. Prior to establishment of a grant date, the Company will estimate the fair value of the shares at each reporting period, and will recognize the compensation expense over a two-year period that began on April 2, 2012. Upon the second anniversary of the Trust’s inception, the Trust’s governance will allocate the shares to individual employees, at which point fully vested shares will be distributed to employees. The Trust is consolidated by the Company and both the assets and deferred compensation obligation of the Trust are accounted for within the applicable preferred stock classification in the accompanying condensed consolidated balance sheets. The Company recognized approximately $0.1 million and $0.2 million of compensation expense related to the 2012 Retention Plan during the three months ended May 31, 2012 and 2013, respectively.

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Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company in the three months ended May 31, 2012 and 2013:

	Three months ended May 31,
	2012		2013
Station operating expenses	$	151	$	253
Corporate expenses		238		410
Stock-based compensation expense included in operating expenses		389		663
Tax benefit		—		—
Recognized stock-based compensation expense, net of tax	$	389	$	663

As of May 31, 2013, there was $3.0 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 1.6 years.

Note 3. Intangible Assets and Goodwill

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Company’s Federal Communications Commission (“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 annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.5 million as of February 28, 2013 and May 31, 2013. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. As of February 29, 2012, our two stations in New York were considered a single unit of accounting. In connection with the execution of the LMA discussed in Note 1, the Company separated the two New York stations into separate units of accounting. The Company performed an interim impairment test of the 98.7FM license as of May 1, 2012 which resulted in an impairment charge of $11.0 million. The carrying value of the 98.7FM license subsequent to the impairment charge is $60.5 million, which approximates its fair value.

The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, as was the case with 98.7FM as noted above, the Company will perform an interim impairment test. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

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Valuation of Goodwill

ASC Topic 350-20-35 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 conducts the two-step impairment test on December 1 of each fiscal year, unless indications of impairment exist during an interim period. During the quarter ended May 31, 2013, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations.

As of February 28, 2013 and May 31, 2013, the carrying amount of the Company’s goodwill was $12.6 million. Approximately $4.6 million of our goodwill was attributable to our radio division as of February 28, 2013 and May 31, 2013. Approximately $8.0 million of our goodwill was attributable to our publishing division as of February 28, 2013 and May 31, 2013.

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of trademarks which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The trademarks have a weighted average remaining useful life of 12.1 years. Amortization expense related to trademarks is expected to be less than $0.1 million in each of the next five successive fiscal years.

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Note 4. Long-term Debt

Long-term debt was comprised of the following at February 28, 2013 and May 31, 2013:

	As of February 28,			As of May 31,
	2013			2013
2012 Credit Agreement debt :
Revolver	$	5,000		$	6,000
Term Loan		62,000			60,000
Total 2012 Credit Agreement debt		67,000			66,000
98.7FM nonrecourse debt		79,068			78,085
Current maturities		(12,126	)		(12,228	)
Unamortized original issue discount		(2,448	)		(2,320	)
Total long-term debt	$	131,494		$	129,537

2012 Credit Agreement Debt

On December 28, 2012, Emmis Operating Company (“EOC”), a wholly owned subsidiary of Emmis, entered into a credit facility (the “2012 Credit Agreement”) to provide for total borrowings of up to $100 million, including (i) an $80 million term loan and (ii) a $20 million revolver, of which $5 million may be used for letters of credit.

A portion of the proceeds under the 2012 Credit Agreement were used to repay (i) EOC’s indebtedness under and terminate the 2006 Credit Agreement, for which Bank of America, N.A. acted as administrative agent and (ii) the Notes issued under the Note Purchase Agreement dated as of November 11, 2011 between Emmis Communications Corporation, as Issuer, and Zell Credit Opportunities Master Fund, L.P., as Purchaser, as amended, (“Senior Unsecured Notes”).

In addition to repaying in full the 2006 Credit Agreement and the Senior Unsecured Notes, the proceeds of the borrowings under the 2012 Credit Agreement were used for working capital needs and other general corporate purposes of Emmis, and certain other transactions permitted under the 2012 Credit Agreement.

All outstanding amounts under the 2012 Credit Agreement bear interest, at the option of EOC, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the 2012 Credit Agreement) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies (ranging from 2.50% to 5.00%), depending on Emmis’ ratio of consolidated total debt to consolidated EBITDA, as defined in the agreement. Interest is due on a calendar month basis under the alternative base rate and at least every three months under the Eurodollar Rate. Beginning 60 days after closing, the 2012 Credit Agreement required Emmis to maintain fixed interest rates, for at least one year, on a minimum of 50% of its total outstanding debt, as defined. See Note 6 for more discussion of our interest rate swap agreement.

The term loan and revolver both mature on December 28, 2017. Beginning on April 1, 2013, the borrowings under the term loan are payable in quarterly installments equal to 2.50% of the original balance of the term loan, with the remaining balance payable December 28, 2017. Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow, subject to certain exceptions, are required to be used to repay amounts outstanding under the 2012 Credit Agreement.

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Approximately $0.5 million of transaction fees related to the 2012 Credit Agreement were capitalized and are being amortized over the life of the 2012 Credit Agreement. These deferred debt costs are included in other assets, net in the condensed consolidated balance sheets. The 2012 Credit Agreement is carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $2.5 million as of the issuance of the debt on December 28, 2012 and $2.3 million as of May 31, 2013, is being amortized as additional interest expense over the life of the 2012 Credit Agreement.

Borrowing under the 2012 Credit Agreement depends upon our continued compliance with certain operating covenants and financial ratios, including leverage and fixed charge coverage as specifically defined. 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 certain dividends, redeeming or repurchasing capital stock of Emmis, acquisitions and asset sales. No default or event of default has occurred or is continuing. The 2012 Credit Agreement provides that an event of default will occur if there is a “change in control” of Emmis, as defined. The payment of principal, premium and interest under the 2012 Credit Agreement is fully and unconditionally guaranteed, jointly and severally, by ECC 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 2012 Credit Agreement.

We were in compliance with all financial and non-financial covenants as of May 31, 2013. Our Senior Leverage Ratio, Total Leverage Ratio and Minimum Fixed Charge Coverage Ratio (each as defined in the 2012 Credit Agreement) requirements and actual amounts as of May 31, 2013 were as follows:

	As of May 31, 2013
	Covenant
	Requirement		Actual Results
Maximum Senior Leverage Ratio		4.00 : 1.00		3.21 : 1.00
Maximum Total Leverage Ratio		4.75: 1.00		3.21 : 1.00
Minimum Fixed Charge Coverage Ratio		1.25 : 1.00		1.50 : 1.00

98.7FM Nonrecourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of nonrecourse notes. Teachers Insurance and Annuity Association of America (“TIAA”), through a participation agreement with Wells Fargo Bank Northwest, National Association (“Wells Fargo”), is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company’s subsidiaries and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

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Based on amounts outstanding at May 31, 2013, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:

	2012 Credit Agreement
Year Ended	Revolver		Term Loan		98.7FM Debt		Total
February 28 (29),	Amortization		Amortization		Amortization		Amortization
2014	$	—	$	6,000	$	3,143	$	9,143
2015		—		8,000		4,541		12,541
2016		—		8,000		4,990		12,990
2017		—		8,000		5,453		13,453
2018		6,000		30,000		6,039		42,039
Thereafter		—		—		53,919		53,919
Total	$	6,000	$	60,000	$	78,085	$	144,085

Note 5. Liquidity

The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. As of the filing of this Form 10-Q, management believes the Company can meet its liquidity needs through the end of fiscal year 2014 with cash and cash equivalents on hand and projected cash flows from operations. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2014.

Note 6. Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage interest rate exposure with the following objectives:

• manage current and forecasted interest rate risk while maintaining optimal financial flexibility and solvency

• proactively manage the Company’s cost of capital to ensure the Company can effectively manage operations and execute its business strategy, thereby maintaining a competitive advantage and enhancing shareholder value

• comply with covenant requirements in the Company’s credit facility

Cash Flow Hedges of Interest Rate Risk

The Company utilizes interest rate derivatives to add stability to cash payments for interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Under the terms of its 2012 Credit Agreement, the Company is required to fix or cap the interest rate on at least 50% of its Term Loan exposure for a two-year period ending December 28, 2014. The requirement to fix or cap interest rates can be reduced to a one-year period provided the Company’s Senior Leverage Ratio (as defined in the 2012 Credit Agreement) is at or under 2.50:1:00 as of May 31, 2014.

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The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company’s interest rate derivatives are used to hedge the interest payment cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company did not record any hedge ineffectiveness in earnings during the three months ended May 31, 2012 and 2013. Amounts reported in accumulated other comprehensive loss related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During fiscal 2014, the Company estimates that less than $0.1 million will be reclassified as an increase to interest expense.

In February 2013, the Company entered into a two-year interest rate exchange agreement (a “Swap”), whereby the Company pays a fixed rate of 0.42% on $40 million of notional principal to Fifth Third Bank, and Fifth Third Bank pays to the Company a variable rate on the same amount of notional principal based on the one-month London Interbank Offered Rate (“LIBOR”). This agreement was the Company’s only interest rate derivative designated as a cash flow hedge of interest rate risk outstanding as of May 31, 2013.

The Company does not generally use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of February 28, 2013 and May 31, 2013. The accumulated other comprehensive loss balance related to our derivative instruments at May 31, 2013 was less than $0.1 million. The fair value of the derivative instruments was estimated by obtaining quotations from the financial institution that was the counterparty to the instrument. The fair value was an estimate of the net amount that the Company would have been required to pay on May 31, 2013, if the agreement was transferred to another party or cancelled by the Company, as further adjusted by a credit adjustment required by ASC Topic 820, Fair Value Measurements and Disclosures, as discussed below. For the three months ended May 31, 2013, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments
	Liability Derivatives
	As of February 28, 2013			As of May 31, 2013
	Balance Sheet			Balance Sheet
	Location	Fair Value		Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Swap Agreements (Long- Term Portion)	Other Noncurrent Liabilities		107	Other Noncurrent Liabilities		63
Total derivatives designated as hedging instruments		$	107		$	63

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended May 31, 2012 and 2013.

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	For the three months ended May 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded  from Effectiveness Testing)		Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2012		2013				2012		2013					2012		2013
Interest Rate Swap
Agreements	$	—	$	66		Interest expense	$	—	$	(22	)		N/A	$	—	$	—
Total	$	—	$	66			$	—	$	(22	)			$	—	$	—

Credit-risk-related Contingent Features

The Company manages its counterparty risk by entering into derivative instruments with financial institutions where it believes the risk of credit loss resulting from nonperformance by the counterparty is low. As discussed above, the Company’s counterparty to its interest rate swap is Fifth Third Bank.

In accordance with ASC Topic 820, the Company makes a Credit Value Adjustment (CVA) to adjust the valuation of a derivative to account for our own credit risk with respect to all derivative liability positions. The CVA is accounted for as a decrease to the derivative position with the corresponding increase or decrease reflected in other comprehensive income (loss) for derivatives designated as cash flow hedges. The CVA also accounts for nonperformance risk of our counterparties in the fair value measurement of all derivative asset positions, when appropriate. As of May 31, 2013, this CVA was immaterial to the fair value of our derivative instrument.

The Company’s interest rate swap agreement with Fifth Third Bank incorporates the loan covenant provisions of the Company’s 2012 Credit Agreement. Fifth Third Bank is a lender under the Company’s 2012 Credit Agreement. Failure to comply with the loan covenant provisions of the 2012 Credit Agreement could result in the Company being in default of its obligations under the interest rate swap agreement.

As of May 31, 2013, the Company has not posted any collateral related to the interest rate swap agreement.

Note 7. Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2013 and May 31, 2013. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

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	As of May 31, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,739	$	6,739
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,739	$	6,739
Interest rate swap agreement	$	—	$	63	$	—	$	63
Total liabilities measured at fair value on a recurring basis	$	—	$	63	$	—	$	63
	As of February 28, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,489	$	6,489
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,489	$	6,489
Interest rate swap agreement	$	—	$	107	$	—	$	107
Total liabilities measured at fair value on a recurring basis	$	—	$	107	$	—	$	107

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. At February 28, 2013 and May 31, 2013, the investments are carried at their cost basis, which management believes approximates fair value, due to the recent purchase of these investments and recent third party transactions that corroborate Emmis’ carrying value approximates current fair value.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company pays a fixed rate and receives a variable interest rate that was observable based upon a forward interest rate curve and is therefore considered a level 2 measurement.

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the three months ended May 31,
	2012		2013
	Available		Available
	For Sale		For Sale		Derivative
	Securities		Securities		Instruments
Beginning Balance	$	160	$	6,489	$	107
Purchases		—		250		—
Unrealized gains in other comprehensive income		—		—		(44	)
Ending Balance	$	160	$	6,739	$	63

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Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 1, Impairment Losses, and Note 3, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 1 and Note 3 for more discussion).

Fair Value of Other Financial Instruments

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents, accounts receivable and accounts payable, including accrued liabilities: The carrying amount of these assets and liabilities approximates fair value because of the short maturity of these instruments.

- Long-term debt: The Company’s long-term debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its long-term debt approximates its fair value.

Note 8. Segment Information

The Company’s operations are aligned into two business segments: (i) Radio and (ii) Publishing. These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate expenses are not allocated to reportable segments. The results of operations of various sold businesses have been classified as discontinued operations and have been excluded from the segment disclosures below. See Note 1 for more discussion of our discontinued operations. The Company’s segments operate exclusively in the United States.

The accounting policies as described in the summary of significant accounting policies included in the Company’s Annual Report filed on Form 10-K, for the year ended February 28, 2013, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months ended May 31, 2013	Radio		Publishing			Corporate			Consolidated
Net revenues	$	36,926	$	13,660		$	—		$	50,586
Station operating expenses excluding depreciation and amortization expense		22,911		14,801			—			37,712
Corporate expenses excluding depreciation and amortization expense		—		—			4,400			4,400
Hungary license litigation and related expenses		252		—			—			252
Depreciation and amortization		594		62			520			1,176
Operating income (loss)	$	13,169	$	(1,203	)	$	(4,920	)	$	7,046

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Three Months ended May 31, 2012	Radio			Publishing			Corporate			Consolidated
Net revenues	$	34,876		$	14,092		$	—		$	48,968
Station operating expenses excluding depreciation and amortization expense		26,320			14,252			—			40,572
Corporate expenses excluding depreciation and amortization expense		—			—			4,972			4,972
Hungary license litigation and related expenses		204			—			—			204
Impairment loss		10,971			—			—			10,971
Depreciation and amortization		578			86			461			1,125
Gain on sale of fixed assets		(10,000	)		—			—			(10,000	)
Operating income (loss)	$	6,803		$	(246	)	$	(5,433	)	$	1,124
				As of February 28, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	209,721		$	21,005		$	30,136		$	260,862
Assets — discontinued operations		630			132			—			762
Total assets	$	210,351		$	21,137		$	30,136		$	261,624
				As of May 31, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	216,892		$	19,099		$	27,281		$	263,272
Assets — discontinued operations		528			—			—			528
Total assets	$	217,420		$	19,099		$	27,281		$	263,800

Note 9. Regulatory, Legal and Other Matters

Emmis 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 that we believe are likely to have a material adverse effect on the Company.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied plaintiffs request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. The matter is currently set for trial in January 2014. Emmis is defending this lawsuit vigorously.

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words “expect,” “should,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

• general economic and business conditions;

• fluctuations in the demand for advertising and demand for different types of advertising media;

• our ability to service our outstanding debt;

• loss of key personnel;

• increased competition in our markets and the broadcasting industry;

• our ability to attract and secure programming, on-air talent, writers and photographers;

• inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;

• increases in the costs of programming, including on-air talent;

• new or changing regulations of the Federal Communications Commission or other governmental agencies;

• changes in radio audience measurement methodologies;

• competition from new or different technologies;

• war, terrorist acts or political instability; and other factors mentioned in other documents filed by the Company with the Securities and Exchange Commission.

For a more detailed discussion of these and other risk factors, see the Risk Factors section of our Annual Report on Form 10-K, for the year ended February 28, 2013. Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

GENERAL

We are a diversified media company. We own and operate radio 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 approximately 70% 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. Arbitron Inc. generally measures radio station ratings in our domestic markets on a weekly basis using a passive digital system of measuring listening (the Portable People Meter^TM). Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research and 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.

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In addition to the sale of advertising time for cash, stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to 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 the three-month periods ended May 31, 2012 and 2013. All revenues generated by our international radio properties are included in the “Local” category. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations and magazines conduct in their local markets. The category “Other” includes, among other items, revenues generated by the websites of our entities and barter.

	Three Months Ended May 31,
	2012		% of Total			2013		% of Total
	(Dollars in thousands)
Net revenues:
Local	$	27,832		56.8	%	$	28,837		57.0	%
National		8,162		16.7	%		7,854		15.5	%
Political		863		1.8	%		208		0.4	%
Publication Sales		1,552		3.2	%		1,564		3.1	%
Non Traditional		3,118		6.4	%		3,373		6.7	%
LMA Fees		861		1.8	%		2,601		5.1	%
Other		6,580		13.3	%		6,149		12.2	%
Total net revenues	$	48,968				$	50,586

As previously mentioned, we derive approximately 70% of our net revenues from advertising sales. Our radio stations derive a higher percentage of their advertising revenues from local sales than our publishing entities. In the three-month period ended May 31, 2013, local sales, excluding political revenues, represented approximately 81% and 71% of our advertising revenues for our radio and publishing divisions, respectively.

No customer represents more than 10% of our consolidated net revenues. Our top ten categories for radio represent approximately 61% and 62% of our radio division’s total advertising net revenues for the three-month periods ended May 31, 2012 and 2013, respectively. The automotive industry was the largest category for our radio division for the three-month periods ended May 31, 2012 and 2013, representing approximately 12% our radio net revenues in both periods.

The majority of our expenses are fixed in nature, principally consisting of salaries and related employee benefit costs, office and tower rent, utilities, property and casualty insurance and programming-related expenses. However, approximately 20% of our expenses vary in connection with changes in revenues. These variable expenses primarily relate to sales commissions and bad debt reserves. In addition, costs related to our marketing and promotions department are highly discretionary and incurred primarily to maintain and/or increase our audience and market share.

KNOWN TRENDS AND UNCERTAINTIES

Although advertising revenues have stabilized following the recent global recession, radio revenue growth remains challenged. Management believes this is principally the result of two factors: (1) the proliferation of advertising inventory caused by the emergence of new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks and social coupon sites, all of which are gaining advertising share against radio and other traditional media and (2) the perception of investors and advertisers that satellite radio and portable media players diminish the effectiveness of radio advertising.

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The Company and the radio industry have begun several initiatives to address these issues. The radio industry is working aggressively to increase the number of portable digital media devices that contain an FM tuner, including smartphones and music players. In many countries, FM tuners are common features in portable digital media devices. The radio industry is working with leading United States network providers, device manufacturers, regulators and legislators to ensure that FM tuners are included in future portable digital media devices. Including FM as a feature on these devices has the potential to increase radio listening and improve perception of the radio industry while offering network providers the benefits of a proven emergency notification system, reduced network congestion from audio streaming services, and a host of new revenue generating applications. Emmis is at the leading edge of this initiative and has developed TagStation^®, a cloud-based software platform that allows a broadcaster to manage album art, meta data and enhanced advertising on its various broadcasts, and NextRadio^®, a hybrid radio smartphone application, as an industry solution to make the user experience of listening to free over-the-air radio broadcasts on their enabled smartphones a rich experience.

The Company has also aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by becoming one of the fifteen largest streaming audio providers in the United States, developing highly interactive websites with content that engages our listeners, using SMS texting and delivering real-time traffic to navigation devices.

Along with the rest of the radio industry, the majority of our stations have deployed HD Radio^®. HD Radio^® offers listeners advantages over standard analog broadcasts, including improved sound quality and additional digital channels. To make the rollout of HD Radio^® more efficient, a consortium of broadcasters representing a majority of the radio stations in nearly all of our markets have agreed to work together in each radio market to ensure the most diverse consumer offering possible and to accelerate the rollout of HD Radio^® receivers, particularly in automobiles. In addition to offering secondary channels, the HD Radio^® spectrum allows broadcasters to transmit other forms of data. We are participating in a joint venture with other broadcasters to provide the bandwidth that a third party uses to transmit location-based data to hand-held and in-car navigation devices. It is unclear what impact HD Radio^® will have on the markets in which we operate.

The results of our radio operations are heavily dependent on the results of our stations in the New York and Los Angeles markets. These markets account for nearly 50% of our radio net revenues. During the three months ended May 31, 2013, KPWR-FM in Los Angeles experienced revenue growth that was better than its overall market, but revenue growth at WQHT-FM in New York lagged its overall market growth. Our results in New York and Los Angeles are often more volatile than our larger competitors due to our lack of scale in these markets. Relative to our competitors, we are overly dependent on the performance of one station in each of these markets, and as the competitive environment shifts, our ability to adapt is limited. Furthermore, some of our competitors that operate larger station clusters in New York and Los Angeles are able to leverage their market share to extract a greater percentage of available advertising revenue through discounting unit rates and may be able to realize operating efficiencies by programming multiple stations in these markets.

As part of our business strategy, we continually evaluate potential acquisitions of radio stations, publishing properties and other businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. However, Emmis Operating Company’s (the Company’s principal operating subsidiary, hereinafter “EOC”) 2012 Credit Agreement substantially limits our ability to make acquisitions. We also regularly review our portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so. See Note 1 to our condensed consolidated financial statements for a discussion of various dispositions.

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CRITICAL ACCOUNTING POLICIES

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

Revenue Recognition

Broadcasting revenue is recognized as advertisements are aired. Publication revenue is recognized in the month of delivery of the publication. Both broadcasting revenue and publication revenue recognition is subject to meeting certain conditions such as persuasive evidence that an arrangement exists and collection is reasonably assured. LMA fee revenue is recognized on a straight-line basis over the term of the LMA. These criteria are generally met at the time the advertisement is aired for broadcasting revenue and upon delivery of the publication for publication revenue. Advertising revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is recorded based on management’s judgment of the collectability of receivables. When assessing the collectability of receivables, management considers, among other things, historical loss experience and existing economic conditions.

FCC Licenses and Goodwill

We have made acquisitions in the past for which a significant amount of the purchase price was allocated to FCC licenses and goodwill assets. As of May 31, 2013, we have recorded approximately $163.2 million in goodwill and FCC licenses, which represents approximately 62% of our total assets.

In the case of our U.S. radio 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 our stations’ compliance with the various regulatory requirements. Historically, all of our FCC licenses have been renewed at the end of their respective periods, and we expect that all FCC licenses will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles.

We do not amortize goodwill or other indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by Accounting Standards Codification (“ASC”) Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster.

We complete our annual impairment tests on December 1 of each year and perform additional interim impairment testing whenever triggering events suggest such testing is warranted.

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Valuation of Indefinite-lived Broadcasting Licenses

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control.

Valuation of Goodwill

ASC Topic 350 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 conducts the two-step impairment test on December 1 of each fiscal year, unless indications of impairment exist during an interim period. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units is based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations.

Deferred Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company’s financial statements or income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the consolidated statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities as recorded for financial reporting purposes and amounts recorded for income tax purposes. After determining the total amount of deferred tax assets, the Company determines whether it is more likely than not that some portion of the deferred tax assets will not be realized. If the Company determines that a deferred tax asset is not likely to be realized, a valuation allowance will be established against that asset to record it at its expected realizable value.

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Estimate of Effective Tax Rates

We estimate the effective tax rates and associated liabilities or assets for each legal entity within Emmis. 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 advisors in the various tax jurisdictions to evaluate our position and to assist in our calculation of our tax expense and related assets and liabilities.

Results of Operations for the Three-month Periods Ended May 31, 2013, Compared to May 31, 2012

Net revenues:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Net revenues:
Radio	$	34,876	$	36,926	$	2,050			5.9	%
Publishing		14,092		13,660		(432	)		(3.1	)%
Total net revenues	$	48,968	$	50,586	$	1,618			3.3	%

Radio net revenues increased during the three-month period ended May 31, 2013 as compared to the same period of the prior year due to strong station performance in most of the markets in which we operate. We typically monitor the performance of our domestic stations against the aggregate performance of the markets in which we operate based on reports for the periods prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter arrangements. Miller Kaplan reported gross revenues for our domestic radio markets increased 5.1% for the three-month period ended May 31, 2013 as compared to the same period of the prior year. Our gross revenues as reported to Miller Kaplan increased 7.4% for the three-month period ended May 31, 2013 as compared to the same period of the prior year. For the three-month period ending May 31, 2013, our gross revenues exceeded the market average in Los Angeles, St. Louis and Austin, but trailed market performance in New York and Indianapolis. Miller Kaplan does not report gross revenue market data for our Terre Haute market. For the three-month period ended May 31, 2013 as compared to the same period of the prior year, our average rate per minute for our domestic radio stations was up 3.5%, and our minutes sold were up 1.8%.

Publishing net revenues decreased in the three-month period ended May 31, 2013 as compared to the same period of the prior year mostly due to the division’s effort to increase the percentage of its advertising sales settled in cash and reduce the amount settled in barter. While this generally does not impact operating income, reported revenues have declined due to the reduction of barter activity. Excluding barter revenue, publishing net revenues for the three-month period ended May 31, 2013 would have increased approximately 0.4%.

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Station operating expenses excluding depreciation and amortization expense:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Station operating expenses excluding depreciation and amortization expense:
Radio	$	26,320	$	22,911	$	(3,409	)		(13.0	)%
Publishing		14,252		14,801		549			3.9	%
Total station operating expenses excluding depreciation and amortization expense	$	40,572	$	37,712	$	(2,860	)		(7.0	)%

Station operating expenses, excluding depreciation and amortization expense for our radio division were significantly affected by the execution of the LMA of 98.7FM on April 26, 2012. Excluding the effects of the 98.7FM LMA (including severance for the employees of WRKS), station operating expenses excluding depreciation and amortization expense would have increased approximately 4% in the three-month period ended May 31, 2013 mostly due to costs that were previously shared across our radio station cluster in New York that are now solely borne by WQHT-FM, our lone remaining station in New York that we program.

Station operating expenses excluding depreciation and amortization expense for publishing increased during the three-month period ended May 31, 2013 mostly due to the increased print production costs, increased advertising expenses, and continued strategic investments in sales, marketing and digital initiatives.

Corporate expenses excluding depreciation and amortization expense:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Corporate expenses excluding depreciation and amortization expense	$	4,972	$	4,400	$	(572	)		(11.5	)%

Corporate expenses excluding depreciation and amortization expense decreased primarily due to lower legal expenses related to the Company’s ongoing preferred stock litigation.

Hungary license litigation and related expenses:

	For the three months ended May 31,
	2012		2013		$ Change		% Change
	(As reported, amounts in thousands)
Hungary license litigation and related expenses	$	204	$	252	$	48		23.5	%

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On October 28, 2009, the Hungarian National Radio and Television Board (ORTT) announced that it was awarding to another bidder the national radio license then held by our majority-owned subsidiary, Slager. Slager ceased broadcasting effective November 19, 2009. The Company believes that the awarding of the license to the other bidder was unlawful. In October 2011, Emmis filed for arbitration with the International Centre for Settlement of Investment Disputes (“ICSID”) seeking resolution of its claim. A jurisdictional hearing has been scheduled by the ICSID in December 2013, and the Company believes that final resolution of its claim will not occur until calendar 2015 at earliest.

Impairment loss:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Impairment loss:
Radio	$	10,971	$	—		(10,971	)		(100.0	)%

Pursuant to the Company’s accounting policy, a station operating under an LMA is considered a single unit of accounting. In connection with the execution of the 98.7FM LMA during the three months ended May 31, 2012, the Company determined that the 98.7FM FCC License, considered a single unit of accounting due to the execution of an LMA, was impaired, and recorded an $11.0 million impairment charge.

Depreciation and amortization:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	578	$	594	$	16			2.8	%
Publishing		86		62		(24	)		(27.9	)%
Corporate		461		520		59			12.8	%
Total depreciation and amortization	$	1,125	$	1,176	$	51			4.5	%

The increase in depreciation and amortization is mostly due to corporate depreciation and amortization expense increases related to new computer equipment and software placed into service throughout fiscal 2013.

Gain on sale of assets:

	For the three months ended May 31,
	2012			2013		$ Change		% Change
	(As reported, amounts in thousands)
Gain on sale of assets:
Radio	$	(10,000	)	$	—	$	10,000		(100.0	)%

In April 2012, Emmis sold the intellectual property of WRKS-FM in New York for $10.0 million.

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Operating income:

	For the three months ended May 31,
	2012			2013			$ Change			% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	6,803		$	13,169		$	6,366			93.6	%
Publishing		(246	)		(1,203	)		(957	)		389.0	%
Corporate		(5,433	)		(4,920	)		513			9.4	%
Total operating income:	$	1,124		$	7,046		$	5,922			526.9	%

Radio operating income increased in the three-month period ended May 31, 2013 principally due to the 98.7FM LMA, which greatly reduced our operating expenses in New York, coupled with strong revenue performance at most of our markets as discussed earlier.

Publishing operating income decreased due to the changes in net revenues and operating expenses as noted above.

Corporate operating losses decreased mostly due to a reduction in legal expenses related to our ongoing preferred stock litigation.

Interest expense:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Interest expense	$	5,767	$	1,921	$	(3,846	)		(66.7	)%

Interest expense decreased due to significant repayments of long-term debt throughout fiscal 2013, coupled with lower interest rates on long-term debt as a result of our refinancing activity in December 2012.

Loss on debt extinguishment:

	For the three months ended May 31,
	2012		2013		$ Change			% Change
	(As reported, amounts in thousands)
Loss on debt extinguishment	$	484	$	—	$	(484	)		(100.0	)%

During the three-month period ended May 31, 2012, the Company recorded a loss on debt extinguishment of $0.5 million related to the write-off of debt fees associated with term loans repaid during the quarter.

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(Benefit) provision for income taxes:

	For the three months ended May 31,
	2012			2013		$ Change		% Change
	(As reported, amounts in thousands)
(Benefit) provision for income taxes	$	(4,415	)	$	175	$	4,590		104.0	%

The Company is recording a valuation allowance for its net deferred tax assets, including its net operating loss carryforwards, but excluding deferred tax liabilities related to indefinite-lived intangibles. The provision associated with deferred tax liabilities related to indefinite-lived intangibles is estimated to be approximately $2.6 million in the fiscal year ending February 2014. During the three months ended May 31, 2013, the Company recorded a benefit of approximately $0.5 million related to lower than expected state tax liabilities on asset dispositions.

The benefit in the three months ended May 31, 2012 principally relates to the tax benefit associated with our impairment loss on the 98.7FM FCC License.

Loss from discontinued operations, net of tax:

	For the three months ended May 31,
	2012			2013		$ Change		% Change
	(As reported, amounts in thousands)
Loss from discontinued operations, net of tax	$	(2,359	)	$	—	$	2,359		(100.0	)%

Our international radio operations in Hungary, Slovakia and Bulgaria, our Emmis Interactive operations, our operations of KXOS-FM and our Country Sampler operations were classified as discontinued operations in the accompanying condensed consolidated statements. These operations all terminated prior to February 28, 2013.

Consolidated net (loss) income:

	For the three months ended May 31,
	2012			2013		$ Change		% Change
	(As reported, amounts in thousands)
Consolidated net (loss) income	$	(2,873	)	$	4,957	$	7,830		272.5	%

Consolidated net income increased due the various factors described above.

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Gain on extinguishment of preferred stock:

	For the three months ended May 31,
	2012		2013		$ Change
	(As reported, amounts in thousands)
Gain on extinguishment of preferred stock	$	—	$	249	$	249

During the three-month period ended May 31, 2013, the Company purchased 6,650 shares of its preferred stock for $12.50 per share. Emmis recognized a gain on extinguishment of the preferred stock equal to the difference of the acquisition price and the liquidation preference of $50 per share.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operations and cash available through revolver borrowings under our 2012 Credit Agreement. Our primary uses of capital during the past few years have been, and are expected to continue to be, capital expenditures, working capital, debt service requirements and the repayment of debt.

At May 31, 2013, we had cash and cash equivalents of $5.0 million and net working capital of $7.3 million. At February 28, 2013, we had cash and cash equivalents of $8.7 million and net working capital of $5.8 million. The decrease in combined working capital and cash from February 28, 2013 is mostly due to the use of cash on hand to fund $1.0 million of capital expenditures and repay $2.0 million of long-term debt. Cash and cash equivalents held at various European banking institutions at February 28, 2013 and May 31, 2013 was $6.3 million and $4.6 million, respectively. We intend to use the cash held internationally to fund costs of our ongoing litigation related to our former broadcasting license in Hungary.

In recent years, the Company has recorded significant impairment charges, mostly attributable to our FCC licenses. These impairment charges have had no impact on our liquidity or compliance with debt covenants.

Operating Activities

Cash used in operating activities was $5.4 million for the three-month period ended May 31, 2012 as compared to cash provided by operating activities of $1.5 million for the three-month period ended May 31, 2013. The increase in cash provided by operating activities is mostly due to a decrease in cash paid for interest as a result of the Company’s substantial debt repayments and lower interest rates on outstanding debt.

Investing Activities

Cash used in investing activities was $2.8 million and $2.1 million for the three-month period ended May 31, 2012 and 2013, respectively. Cash used in investing activities during the three-month period ended May 31, 2012 mostly consisted of $0.8 million of capital expenditures and a $2.0 million investment in the preferred stock of Courseload, Inc., a company that provides online access to textbooks and other course material. Cash used in investing activities during the three-month period ended May 31, 2013 mostly consisted of $1.0 million of capital expenditures, $0.8 million related to the settlement of transaction fees associated with the sale of our Bulgarian and Slovakian radio operations which are included in discontinued operations and a $0.3 million investment in the preferred stock of Courseload, Inc.

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We expect capital expenditures related to continuing operations to be approximately $3 million in the current fiscal year, compared to $3.4 million in fiscal 2013. We expect that future requirements for capital expenditures will include capital expenditures incurred during the ordinary course of business. We expect to fund future investing activities with cash generated from operating activities and borrowings under our 2012 Credit Agreement.

Financing Activities

Cash provided by financing activities was $13.0 million for the three-month period ended May 31, 2012 as compared to cash used in financing activities of $3.2 million for the three-month period ended May 31, 2013. Cash used in financing activities in the three-month period ended May 31, 2013 primarily relates $2.0 million of net debt repayments and $1.0 million of distributions made to noncontrolling interests. Cash provided by financing activities in the three-month period ended May 31, 2012 primarily relates to the net borrowings of $17.2 million under our Credit Agreement and the 98.7FM nonrecourse debt, which is partially offset by $3.4 million of debt related costs incurred in connection with the issuance of the 98.7FM nonrecourse debt, and $0.8 million used to pay distributions to noncontrolling interests.

As of May 31, 2013, Emmis had $66 million of borrowings under the 2012 Credit Agreement ($8.0 million current and $58 million long-term), $78.1 million of non-recourse debt ($4.2 million current and $73.9 million long-term) and $46.9 million of Preferred Stock liquidation preference. Borrowings under the 2012 Credit Agreement debt bears interest, at our option, at a rate equal to the Eurodollar rate or an alternative Base Rate plus a margin. The non-recourse debt bears interest at 4.1% per annum. As of May 31, 2013, our weighted average borrowing rate under our 2012 Credit Agreement was approximately 4.53%.

The debt service requirements of Emmis over the next twelve-month period are expected to be $8.0 million for mandatory repayment of term notes under our 2012 Credit Agreement and $7.3 million related to our 98.7FM non-recourse debt ($4.2 million of principal repayments and $3.1 million of interest payments). The Company expects that proceeds from the 98.7FM LMA will be sufficient to pay all debt service related to the 98.7FM non-recourse debt. The 2012 Credit Agreement debt bears interest at variable rates and is not included in the debt service requirements previously discussed.

As part of our business strategy, we continually evaluate potential acquisitions of radio stations, publishing properties and other businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. However, Emmis Operating Company’s Credit Agreement substantially limits our ability to make acquisitions. We also regularly review our portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so.

Intangibles

Approximately 62% of our total assets consisted of intangible assets, such as FCC broadcast licenses and goodwill, the value of which depends significantly upon the operational results of our businesses. In the case of our U.S. radio 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 our stations’ compliance with the various regulatory requirements. Historically, all of our FCC licenses have been renewed at the end of their respective periods, and we expect that all FCC licenses will continue to be renewed in the future.

Regulatory, Legal and Other Matters

Emmis 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 that we believe are likely to have a material adverse effect on the company.

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On October 28, 2009, the Hungarian National Radio and Television Board (ORTT) announced that it was awarding to another bidder the national radio license then held by our majority-owned subsidiary, Slager. Slager ceased broadcasting effective November 19, 2009. The Company believes that the awarding of the license to the other bidder was unlawful. In October 2011, Emmis filed for arbitration with the International Centre for Settlement of Investment Disputes (“ICSID”) seeking resolution of its claim. During the three months ended May 31, 2012 and 2013, the Company incurred Hungary license litigation expenses of approximately $0.2 million and $0.3 million, respectively.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied plaintiffs request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. The matter is currently set for trial in January 2014. Emmis is defending this lawsuit vigorously.

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

Item 3. 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). 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.

Interest Rates

Under the terms of its 2012 Credit Agreement, the Company is required to fix or cap the interest rate on at least 50% of its Term Loan exposure for a two-year period ending December 28, 2014. The requirement to fix or cap interest rates can be reduced to a one-year period provided the Company’s Senior Leverage Ratio (as defined in the 2012 Credit Agreement) is at or under 2.50:1:00 as of May 31, 2014. In February 2013, the Company entered into a two-year interest rate exchange agreement (a “Swap”), whereby the Company pays a fixed rate of 0.42% on $40 million of notional principal to Fifth Third Bank, and Fifth Third Bank pays to the Company a variable rate on the same amount of notional principal based on the one-month London Interbank Offered Rate (“LIBOR”).

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Based on amounts outstanding at May 31, 2013, if the interest rate on our variable debt were to increase by 1.0%, our annual interest expense would increase by approximately $0.3 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly 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 May 31, 2013 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.

Changes in Internal Control over Financial Reporting

During the period covered by this quarterly report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

It should be noted that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of various legal proceedings pending against the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended May 31, 2013, there was withholding of shares of common stock upon vesting of restricted stock to cover withholding tax obligations. The following table provides information on our repurchases during the three months ended May 31, 2013:

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Period	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number  of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in 000’s)
Class A Common Stock
March 1, 2013 — March 31, 2013		—		N/A		—	$	—
April 1, 2013 — April 30, 2013		—		N/A		—	$	—
May 1, 2013 — May 31, 2013		90,803	$	1.46		—	$	—
		90,803				—
Series A Non-Cumulative Convertible Preferred Stock
March 1, 2013 — March 31, 2013		—		N/A		—	$	—
April 1, 2013 — April 30, 2013		—		N/A		—	$	—
May 1, 2013 — May 31, 2013		6,650	$	12.50		6,650	$	416,875
		6,650				6,650

Item 6. Exhibits

(a) Exhibits.

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

Exhibit		Filed	Incorporated by Reference
Number	Exhibit Description	Herewith	Form	Period Ending	Exhibit	Filing Date
3.1	Second Amended and Restated Articles of Incorporation of Emmis Communications Corporation, as amended effective September 4, 2012		10-Q	8/31/12	3.1	10/11/12
3.2	Second Amended and Restated Bylaws of Emmis Communications Corporation		10-K	2/28/13	3.2	5/8/13
4.1	Form of stock certificate for Class A common stock		S-1		3.5	12/22/93
10.1	Employment Agreement, effective as of March 1, 2013, by and between Emmis Operating Company and Richard F. Cummings ++		10-K	2/28/13	10.37	5/8/13
10.2	Amendment to Employment Agreement, effective as of March 1, 2013, by and between Emmis Operating Company and Gary L. Kaseff ++		10-K	2/28/13	10.23	5/8/13
10.3	Bonus Plan for Fiscal Year Ending 2013 ++		8-K		Item 5.02	5/3/13
31.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act	X
31.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act	X

-42-

Exhibit		Filed	Incorporated by Reference
Number	Exhibit Description	Herewith	Form	Period Ending	Exhibit	Filing Date
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	X
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	X
101.INS	XBRL Instance Document *	X
101.SCH	XBRL Taxonomy Extension Schema Document *	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *	X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document *	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *	X

++ Management contract or compensatory plan or arrangement

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

-43-

SIGNATURES

Pursuant to the requirements 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
Date: June 28, 2013	By:	/s/ PATRICK M. WALSH
		Patrick M. Walsh
		Executive Vice President, Chief Financial Officer and Chief Operating Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 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 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: June 28, 2013

/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 FINANCIAL OFFICER

I, Patrick Walsh, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 officers 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 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: June 28, 2013

/s/ PATRICK M. WALSH

Patrick M. Walsh

Executive Vice President, Chief Financial Officer and

Chief Operating 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 Quarterly Report of the Company on Form 10-Q for the period ended May 31, 2013, 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: June 28, 2013

/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 Quarterly Report of the Company on Form 10-Q for the period ended May 31, 2013, 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: June 28, 2013

/s/ PATRICK M. WALSH

Patrick M. Walsh

Executive Vice President, Chief Financial Officer and

Chief Operating Officer

XML

Regulatory, Legal and Other Matters

3 Months Ended

May 31, 2013

Regulatory, Legal and Other Matters

Note 9. Regulatory, Legal and Other Matters

Emmis 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 that we believe are likely to have a material adverse effect on the Company.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied plaintiffs request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. The matter is currently set for trial in January 2014. Emmis is defending this lawsuit vigorously.

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

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Consolidated net (loss) income	$ 4,957	$ (2,873)
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXES:
Change in value of derivative instrument and related income tax effects	(44)
Cumulative translation adjustment	30	229
COMPREHENSIVE (LOSS) INCOME	4,943	(2,644)
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,481	1,285
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$ 3,462	$ (3,929)

XML

Share Based Payments

3 Months Ended

May 31, 2013

Share Based Payments

Note 2. Share Based Payments

The amounts recorded as share based compensation expense consist of stock option and restricted stock grants, common stock issued to employees and directors in lieu of cash payments, and Preferred Stock contributed to the 2012 Retention Plan.

Stock Option Awards

The Company has granted options to purchase its common stock to employees and directors of the Company under various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company. Generally, these options either vest annually over three years (one-third each year for three years), or cliff vest at the end of three years. The Company issues new shares upon the exercise of stock options.

The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The Company includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of awards. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the three months ended May 31, 2012 and 2013:

	Three Months Ended May 31,
	2012	2013
Risk-Free Interest Rate:	0.7%	0.6%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.2	4.3
Expected Volatility:	129.5% – 131.4%	115.9%

The following table presents a summary of the Company’s stock options outstanding at May 31, 2013, and stock option activity during the three months ended May 31, 2013 (“Price” reflects the weighted average exercise price per share):

					Weighted Average		Aggregate
					Remaining		Intrinsic
	Options		Price		Contractual Term		Value
Outstanding, beginning of period		7,132,459	$	4.31
Granted		330,000		1.64
Exercised (1)		86,250		0.65
Forfeited		—		—
Expired		549,926		11.08
Outstanding, end of period		6,826,283		3.68		6.6	$	4,255
Exercisable, end of period		3,728,179		5.94		4.8	$	2,000

(1) The Company did not record an income tax benefit related to option exercises in the three months ended May 31, 2012 and 2013.

The weighted average grant date fair value of options granted during the three months ended May 31, 2012 and 2013, was $0.71 and $1.27, respectively.

A summary of the Company’s nonvested options at May 31, 2013, and changes during the three months ended May 31, 2013, is presented below:

			Weighted Average
			Grant Date
	Options		Fair Value
Nonvested, beginning of period		3,188,104	$	0.76
Granted		330,000		1.27
Vested		420,000		1.00
Forfeited		—		—
Nonvested, end of period		3,098,104		0.78

There were 3.9 million shares available for future grants under the Company’s various equity plans at May 31, 2013. The vesting dates of outstanding options at May 31, 2013 range from July 2013 to March 2017, and expiration dates range from March 2014 to March 2023.

Restricted Stock Awards

The Company grants restricted stock awards to directors annually, though it has granted restricted stock to employees in prior years. These awards to directors are granted on the date of our annual meeting of shareholders and vest on the earlier of (i) the completion of the director’s three-year term or (ii) the third anniversary of the date of grant. Restricted stock award grants are granted out of the Company’s 2012 Equity Compensation Plan. The Company may also award, out of the Company’s 2012 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares may be immediately lapsed on the grant date.

The following table presents a summary of the Company’s restricted stock grants outstanding at May 31, 2013, and restricted stock activity during the three months ended May 31, 2013 (“Price” reflects the weighted average share price at the date of grant):

	Awards		Price
Grants outstanding, beginning of period		537,405	$	1.72
Granted		787,346		1.58
Vested (restriction lapsed)		277,346		1.46
Forfeited		181		1.73
Grants outstanding, end of period		1,047,224		1.68

The total grant date fair value of shares vested during the three months ended May 31, 2013 was $0.4 million. No shares vested during the three months ended May 31, 2012.

Preferred Stock and the 2012 Retention Plan

On April 2, 2012, the shareholders of the Company approved the 2012 Retention Plan and Trust Agreement (the “Trust” or the “2012 Retention Plan”) at a special meeting of shareholders. The Company contributed 400,000 shares of its Preferred Stock to the Trust in connection with the approval of the 2012 Retention Plan. Awards granted under the 2012 Retention Plan entitle the participants to receive a distribution two years from the date of shareholder approval of the plan, provided the participant is still an employee and was an employee upon inception of the plan. Distributions may be in the form of Class A common stock if the Company elects to convert the Preferred Stock to common stock at the then-current conversion ratio prior to distribution. The initial Trustee of the plan is Jeffrey H. Smulyan, our Chairman of the Board, President and Chief Executive Officer.

As of the Trust’s inception and May 31, 2013, no preferred shares have been allocated to individual employees, nor is any individual entitled to any minimum number of shares. As a result, the service inception date for these awards precedes the grant date, and the Company is accounting for the 2012 Retention Plan as a liability plan, using variable accounting. Prior to establishment of a grant date, the Company will estimate the fair value of the shares at each reporting period, and will recognize the compensation expense over a two-year period that began on April 2, 2012. Upon the second anniversary of the Trust’s inception, the Trust’s governance will allocate the shares to individual employees, at which point fully vested shares will be distributed to employees. The Trust is consolidated by the Company and both the assets and deferred compensation obligation of the Trust are accounted for within the applicable preferred stock classification in the accompanying condensed consolidated balance sheets. The Company recognized approximately $0.1 million and $0.2 million of compensation expense related to the 2012 Retention Plan during the three months ended May 31, 2012 and 2013, respectively.

Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company in the three months ended May 31, 2012 and 2013:

	Three months ended May 31,
	2012		2013
Station operating expenses	$	151	$	253
Corporate expenses		238		410
Stock-based compensation expense included in operating expenses		389		663
Tax benefit		—		—
Recognized stock-based compensation expense, net of tax	$	389	$	663

As of May 31, 2013, there was $3.0 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 1.6 years.

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Segment Information (Tables)

3 Months Ended

May 31, 2013

Results of Operations of Business Segments

Three Months ended May 31, 2013	Radio		Publishing			Corporate			Consolidated
Net revenues	$	36,926	$	13,660		$	—		$	50,586
Station operating expenses excluding depreciation and amortization expense		22,911		14,801			—			37,712
Corporate expenses excluding depreciation and amortization expense		—		—			4,400			4,400
Hungary license litigation and related expenses		252		—			—			252
Depreciation and amortization		594		62			520			1,176
Operating income (loss)	$	13,169	$	(1,203	)	$	(4,920	)	$	7,046

Three Months ended May 31, 2012	Radio			Publishing			Corporate			Consolidated
Net revenues	$	34,876		$	14,092		$	—		$	48,968
Station operating expenses excluding depreciation and amortization expense		26,320			14,252			—			40,572
Corporate expenses excluding depreciation and amortization expense		—			—			4,972			4,972
Hungary license litigation and related expenses		204			—			—			204
Impairment loss		10,971			—			—			10,971
Depreciation and amortization		578			86			461			1,125
Gain on sale of fixed assets		(10,000	)		—			—			(10,000	)
Operating income (loss)	$	6,803		$	(246	)	$	(5,433	)	$	1,124
				As of February 28, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	209,721		$	21,005		$	30,136		$	260,862
Assets — discontinued operations		630			132			—			762
Total assets	$	210,351		$	21,137		$	30,136		$	261,624
				As of May 31, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	216,892		$	19,099		$	27,281		$	263,272
Assets — discontinued operations		528			—			—			528
Total assets	$	217,420		$	19,099		$	27,281		$	263,800

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

May 31, 2013

Preparation of Interim Financial Statements

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2013. The Company’s results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

In the opinion of Emmis, the accompanying condensed consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of Emmis at May 31, 2013, and the results of its operations and cash flows for the three-month periods ended May 31, 2012 and 2013.

Basic and Diluted Net (Loss) Income Per Common Share

Basic and Diluted Net (Loss) Income Per Common Share

Basic net (loss) income per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net (loss) income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at May 31, 2012 and 2013 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”).

The following table sets forth the calculation of basic and diluted net (loss) income per share from continuing operations:

	Three Months Ended
	May 31, 2012								May 31, 2013
						Net Loss								Net Income
	Net Loss			Shares		Per Share			Net Income			Shares		Per Share
	(amounts in 000’s, except per share data)
Basic net (loss) income per common share:
Net(loss) income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,725			41,174	$	0.09
Impact of equity awards		—			—					—			2,043
Impact of conversion of preferred stock into common stock		—			—					(249	)		2,287
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,476			45,504	$	0.08

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended May 31,
	2012		2013
	(shares in 000’s)
6.25% Series A convertible preferred stock		2,288		—
Stock options and restricted stock awards		9,166		2,399
Antidilutive common share equivalents		11,454		2,399

Discontinued Operations-Summary of results

Discontinued Operations – Summary of results

The results of operations and related disposal costs, gains and losses for business units that the Company has sold or expects to sell are classified in discontinued operations for all periods presented.

A summary of the income from discontinued operations is presented below:

	Three months ended May 31,
	2012			2013
Income (loss) from operations:
KXOS-FM (Radio)		(141	)		—
Emmis Interactive Inc. (Radio)		(727	)		—
Slovakia Radio Network (Radio)		7			—
Bulgaria Radio Network (Radio)		(307	)		—
Sampler Publications (Publishing)		116			—
Total		(1,052	)		—
Provision for income taxes		1,307			—
Total loss from operations, net of tax		(2,359	)		—

Discontinued Operation – KXOS-FM

On August 23, 2012, Emmis completed the sale of KXOS-FM in Los Angeles for $85.5 million in cash. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $32.8 million. KXOS-FM had previously been operating pursuant to a local programming and marketing agreement, which is discussed in more detail below.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the portion of term loans required to be repaid as a result of the sale of KXOS-FM to its operations for all periods presented.

The operations of KXOS-FM had historically been included in the radio segment. The following table summarizes certain operating results of KXOS-FM for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,750	$	—
Station operating expenses, excluding depreciation and amortization expense		20		—
Depreciation and amortization expense		104		—
Interest expense		1,767		—
Provision for income taxes		1,096		—

Discontinued Operation — Emmis Interactive

On October 31, 2012, Emmis completed the sale of Emmis Interactive Inc., a subsidiary of Emmis that provided a content management system, data analytic tools and related services, to Marketron Broadcast Solutions, LLC (“Marketron”) for no net proceeds. The sale of Emmis Interactive Inc. allows Emmis to mitigate expected future operating losses and more clearly focus on core radio and publishing operating strategies. Marketron had assumed operating control of Emmis Interactive, Inc., on October 4, 2012. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $0.7 million, which was primarily related to severance for former employees.

The operations of Emmis Interactive Inc. had historically been included in the radio segment. The following table summarizes certain operating results of the Emmis Interactive Inc. for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,239	$	—
Station operating expenses, excluding depreciation and amortization expense		1,962		—
Depreciation and amortization		137		—
Other income		133		—

Discontinued Operation – Country Sampler, Smart Retailer and related publications

On October 1, 2012, Emmis completed the sale of Country Sampler magazine, Smart Retailer magazine, and related publications (altogether the “Sampler Publications”) and certain real estate used in their operations to subsidiaries of DRG Holdings, LLC. Emmis believed the sale of the Sampler Publications, which were niche crafting publications, would enable it to more clearly focus on its core city and regional publications. Emmis received gross proceeds from the sale of $8.7 million, incurred approximately $0.2 million in transaction expenses and tax obligations, and used the remaining $8.5 million to repay term loans under the Company’s 2006 Credit Agreement. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $0.7 million.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the estimate of term loans required to be repaid as a result of the sale of the Sampler Publications to its operations for all periods presented.

The operations of the Sampler Publications had historically been included in the publishing segment. The following table summarizes certain operating results of the Sampler Publications for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	2,319	$	—
Station operating expenses, excluding depreciation and amortization expense		1,992		—
Depreciation and amortization		22		—
Interest expense		189		—
Provision for income taxes		129		—

Discontinued Operation –Slovakia Radio

On February 25, 2013, Emmis completed the sale of its Slovakian radio network to Bauer Ausland 1 GMBH for $21.2 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $14.8 million.

The operations of our Slovakian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Slovakian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	2,277	$	—
Station operating expenses, excluding depreciation and amortization expense		1,665		—
Depreciation and amortization		180		—
Interest expense		400		—
Other expense, net		25		—
Provision for income taxes		82		—

Discontinued Operation – Bulgaria Radio

On January 3, 2013, Emmis completed the sale of its Bulgarian radio network to Reflex Media EEOD for $1.7 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $1.3 million. The loss on disposal primarily resulted from the reclassification of accumulated currency translation adjustments.

The operations of our Bulgarian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Bulgarian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	234	$	—
Station operating expenses, excluding depreciation and amortization expense		429		—
Depreciation and amortization		110		—
Other expense, net		2		—

Summary of Assets and Liabilities of Discontinued Operations:

	As of February 28, 2013		As of May 31, 2013
Current assets:
Cash and cash equivalents	$	579	$	528
Accounts receivable, net		128		—
Prepaid expenses		17		—
Other		38		—
Total current assets	$	762	$	528
Current liabilities:
Accounts payable and accrued expenses	$	2,169	$	1,126
Total current liabilities	$	2,169	$	1,126

Local Programming and Marketing Agreement Fees

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the FCC licenses. In such cases where the Company enters into an LMA in connection with a disposition, the Company generally receives specified periodic payments in exchange for the counterparty receiving the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. Nevertheless, as the holder of the FCC license, the Company retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis recognized $0.9 million and $2.6 million of LMA fees, recorded as net revenues in the accompanying condensed consolidated statements of operations, related to the 98.8FM LMA during the three months ended May 31, 2012 and 2013, respectively.

Grupo Radio Centro, S.A.B. de C.V (“GRC”), a Mexican broadcasting company, provided programming and sold advertising for KXOS-FM in Los Angeles pursuant to an LMA from April 2009 until affiliates of GRC consummated the purchase of KXOS-FM on August 23, 2012. Emmis recognized $1.8 million of LMA fees, recorded as income from discontinued operations, net of tax, related to the KXOS-FM LMA during the three months ended May 31, 2012.

Valuation of Indefinite-lived Broadcasting Licenses

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Company’s Federal Communications Commission (“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 annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.5 million as of February 28, 2013 and May 31, 2013. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. As of February 29, 2012, our two stations in New York were considered a single unit of accounting. In connection with the execution of the LMA discussed in Note 1, the Company separated the two New York stations into separate units of accounting. The Company performed an interim impairment test of the 98.7FM license as of May 1, 2012 which resulted in an impairment charge of $11.0 million. The carrying value of the 98.7FM license subsequent to the impairment charge is $60.5 million, which approximates its fair value.

The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, as was the case with 98.7FM as noted above, the Company will perform an interim impairment test. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

Valuation of Goodwill

Valuation of Goodwill

ASC Topic 350-20-35 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 conducts the two-step impairment test on December 1 of each fiscal year, unless indications of impairment exist during an interim period. During the quarter ended May 31, 2013, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations.

As of February 28, 2013 and May 31, 2013, the carrying amount of the Company’s goodwill was $12.6 million. Approximately $4.6 million of our goodwill was attributable to our radio division as of February 28, 2013 and May 31, 2013. Approximately $8.0 million of our goodwill was attributable to our publishing division as of February 28, 2013 and May 31, 2013.

Definite-lived intangibles

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of trademarks which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The trademarks have a weighted average remaining useful life of 12.1 years. Amortization expense related to trademarks is expected to be less than $0.1 million in each of the next five successive fiscal years.

Fair Value Measurements and Disclosure

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2013 and May 31, 2013. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. At February 28, 2013 and May 31, 2013, the investments are carried at their cost basis, which management believes approximates fair value, due to the recent purchase of these investments and recent third party transactions that corroborate Emmis’ carrying value approximates current fair value.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company pays a fixed rate and receives a variable interest rate that was observable based upon a forward interest rate curve and is therefore considered a level 2 measurement.

Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 1, Impairment Losses, and Note 3, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 1 and Note 3 for more discussion).

Fair Value of Other Financial Instruments

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents, accounts receivable and accounts payable, including accrued liabilities: The carrying amount of these assets and liabilities approximates fair value because of the short maturity of these instruments.

- Long-term debt: The Company’s long-term debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its long-term debt approximates its fair value.

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Reconciliation of Beginning and Ending Balances for Fair Value Measurements using Significant Unobservable Inputs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Available For Sale Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 6,489	$ 160
Purchases	250
Unrealized gains in other comprehensive income
Ending Balance	6,739	160
Derivative Instruments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	107
Purchases
Unrealized gains in other comprehensive income	(44)
Ending Balance	$ 63

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Stock-Based Compensation Expense and Related Tax Benefits Recognized (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 663	$ 389
Tax benefit
Recognized stock-based compensation expense, net of tax	663	389
Station operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	253	151
Corporate expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 410	$ 238

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Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock (Parenthetical) (Detail) (Series A preferred stock)	3 Months Ended
	May 31, 2013	May 31, 2012
Series A preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Series A convertible preferred stock, dividend rate	6.25%	6.25%

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Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock (Detail) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive common share equivalents	2,399	11,454
Stock options and restricted stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive common share equivalents	2,399	9,166
Series A preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive common share equivalents		2,288

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Effect of Derivative Financial Instruments on Consolidated Statement of Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI on derivative (effective portion)	$ 66
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(22)
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Interest Rate Swap Agreements
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI on derivative (effective portion)	66
Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Interest expense
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(22)
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	N/A
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

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Summary of Stock Options Outstanding and Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	May 31, 2013
Options
Outstanding, beginning of period	7,132,459
Granted	330,000
Exercised	86,250	[1]
Forfeited
Expired	549,926
Outstanding, end of period	6,826,283
Exercisable, end of period	3,728,179
Price
Outstanding, beginning of period	$ 4.31
Granted	$ 1.64
Exercised	$ 0.65	[1]
Forfeited
Expired or exchanged	$ 11.08
Outstanding, end of period	$ 3.68
Exercisable, end of period	$ 5.94
Outstanding	6 years 7 months 6 days
Exercisable, end of period	4 years 8 months 12 days
Outstanding, end of period	$ 4,255
Exercisable, end of period	$ 2,000

[1] The Company did not record an income tax benefit related to option exercises in the three months ended May 31, 2012 and 2013.

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Long-Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	Feb. 28, 2013	Dec. 28, 2012
Debt Instrument [Line Items]
Total Credit Agreement debt	$ 144,085
98.7FM nonrecourse debt	78,085	79,068
Current maturities	(12,228)	(12,126)
Unamortized original issue discount	(2,320)	(2,448)
Total long-term debt	129,537	131,494
Revolver
Debt Instrument [Line Items]
Total Credit Agreement debt	6,000
Term Loan
Debt Instrument [Line Items]
Total Credit Agreement debt	60,000
2012 Credit Agreement
Debt Instrument [Line Items]
Total Credit Agreement debt	66,000	67,000
Unamortized original issue discount			(2,500)
2012 Credit Agreement | Revolver
Debt Instrument [Line Items]
Total Credit Agreement debt	6,000	5,000
2012 Credit Agreement | Term Loan
Debt Instrument [Line Items]
Total Credit Agreement debt	$ 60,000	$ 62,000

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Results of Operations of Business Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012	Feb. 28, 2013
Segment Reporting Information [Line Items]
NET REVENUES	$ 50,586	$ 48,968
Station operating expenses excluding depreciation and amortization expense	37,712	40,572
Corporate expenses excluding depreciation and amortization expense	4,400	4,972
Hungary license litigation and related expenses	252	204
Impairment loss		10,971
Depreciation and amortization	1,176	1,125
Gain on sale of fixed assets		(10,000)
Operating income (loss)	7,046	1,124
Total Assets	263,800		261,624
Continuing Operations
Segment Reporting Information [Line Items]
Total Assets	263,272		260,862
Discontinued Operations
Segment Reporting Information [Line Items]
Total Assets	528		762
Radio
Segment Reporting Information [Line Items]
NET REVENUES	36,926	34,876
Station operating expenses excluding depreciation and amortization expense	22,911	26,320
Corporate expenses excluding depreciation and amortization expense
Hungary license litigation and related expenses	252	204
Impairment loss		10,971
Depreciation and amortization	594	578
Gain on sale of fixed assets		(10,000)
Operating income (loss)	13,169	6,803
Total Assets	217,420		210,351
Radio | Continuing Operations
Segment Reporting Information [Line Items]
Total Assets	216,892		209,721
Radio | Discontinued Operations
Segment Reporting Information [Line Items]
Total Assets	528		630
Publishing
Segment Reporting Information [Line Items]
NET REVENUES	13,660	14,092
Station operating expenses excluding depreciation and amortization expense	14,801	14,252
Corporate expenses excluding depreciation and amortization expense
Hungary license litigation and related expenses
Impairment loss
Depreciation and amortization	62	86
Gain on sale of fixed assets
Operating income (loss)	(1,203)	(246)
Total Assets	19,099		21,137
Publishing | Continuing Operations
Segment Reporting Information [Line Items]
Total Assets	19,099		21,005
Publishing | Discontinued Operations
Segment Reporting Information [Line Items]
Total Assets			132
Corporate
Segment Reporting Information [Line Items]
NET REVENUES
Station operating expenses excluding depreciation and amortization expense
Corporate expenses excluding depreciation and amortization expense	4,400	4,972
Hungary license litigation and related expenses
Impairment loss
Depreciation and amortization	520	461
Gain on sale of fixed assets
Operating income (loss)	(4,920)	(5,433)
Total Assets	27,281		30,136
Corporate | Continuing Operations
Segment Reporting Information [Line Items]
Total Assets	27,281		30,136
Corporate | Discontinued Operations
Segment Reporting Information [Line Items]
Total Assets

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Summary of Assets and Liabilities of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	Feb. 28, 2013
Current assets:
Cash and cash equivalents	$ 528	$ 579
Accounts receivable, net		128
Prepaid expenses		17
Other		38
Total current assets	528	762
Current liabilities:
Accounts payable and accrued expenses	1,126	2,169
Total current liabilities	$ 1,126	$ 2,169

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Summary of Long-Term Debt Principal Repayments (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013
Debt Instrument [Line Items]
2014	$ 9,143
2015	12,541
2016	12,990
2017	13,453
2018	42,039
Thereafter	53,919
Total	144,085
Revolver
Debt Instrument [Line Items]
2014
2015
2016
2017
2018	6,000
Thereafter
Total	6,000
Term Loan
Debt Instrument [Line Items]
2014	6,000
2015	8,000
2016	8,000
2017	8,000
2018	30,000
Thereafter
Total	60,000
98.7 FM nonrecourse debt
Debt Instrument [Line Items]
2014	3,143
2015	4,541
2016	4,990
2017	5,453
2018	6,039
Thereafter	53,919
Total	$ 78,085

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Calculation of Basic and Diluted Net Income Per Share from Continuing Operations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Basic net (loss) income per common share:
Net (loss) income available to common shareholders from continuing operations	$ 3,725	$ (5,031)
Impact of equity awards
Impact of conversion of preferred stock into common stock	(249)
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$ 3,476	$ (2,672)
Basic shares:
Basic weighted average common shares outstanding	41,174	38,779
Impact of equity awards	2,043
Impact of conversion of preferred stock into common stock	2,287
Diluted shares:
Diluted weighted average common shares outstanding	45,504	38,779
Basic net income per common share:
Net income available to common shareholders from continuing operations, per basic shares	$ 0.09	$ (0.07)
Impact of equity awards
Impact of conversion of preferred stock into common stock
Diluted net income per common share:
Net income available to common shareholders from continuing operations, per dilutive shares	$ 0.08	$ (0.07)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	May 31, 2013	Feb. 28, 2013
Class A Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	170,000,000	170,000,000
Common stock, shares issued	36,695,537	35,907,925
Common stock, shares outstanding	36,695,537	35,907,925
Class B Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	4,722,684	4,722,684
Common stock, shares outstanding	4,722,684	4,722,684
Series A preferred stock
Series A non-cumulative convertible preferred stock, par value	$ 0.01	$ 0.01
Series A non-cumulative convertible preferred stock, liquidation preference	$ 50.00	$ 50.00
Series A non-cumulative convertible preferred stock, aggregate liquidation preference and redemption amount	$ 46,882	$ 46,882
Series A non-cumulative convertible preferred stock, shares authorized	2,875,000	2,875,000
Series A non-cumulative convertible preferred stock, shares issued	1,330,991	1,337,641
Series A non-cumulative convertible preferred stock, shares outstanding	1,330,991	1,337,641
Shares in trust
Series A non-cumulative convertible preferred stock, shares in trust	400,000	400,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net (loss) income	$ 4,957	$ (2,873)
Adjustments to reconcile consolidated net (loss) income to net cash (used in) provided by operating activities -
Discontinued operations		2,359
Impairment loss		10,971
Depreciation and amortization	1,401	1,420
Noncash accretion of debt instruments to interest expense		3,231
Loss on debt extinguishment		484
Provision for bad debts	166	90
(Benefit) provision for deferred income taxes	649	(3,920)
Noncash compensation	663	389
Gain on sale of assets		(10,000)
Other	(47)
Changes in assets and liabilities -
Accounts receivable	(4,452)	(3,079)
Prepaid expenses and other current assets	(1,292)	(578)
Other assets	(853)	(200)
Accounts payable and accrued liabilities	(1,485)	(854)
Deferred revenue	1,767	891
Income taxes	192	(664)
Other liabilities	(95)	(3,809)
Net cash provided by (used in) operating activities - discontinued operations	(68)	705
Net cash (used in) provided by operating activities	1,503	(5,437)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,016)	(750)
Cash paid for investments	(250)	(2,000)
Other		21
Net cash used in investing activities - discontinued operations	(807)	(25)
Net cash used in investing activities	(2,073)	(2,754)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(6,983)	(75,019)
Proceeds from long-term debt	5,000	92,198
Debt-related costs	(79)	(3,423)
Payments of dividends and distributions to noncontrolling interests	(957)	(824)
Proceeds from the exercise of stock options	59	21
Purchase of preferred stock	(83)
Settlement of tax withholding obligations on stock issued to employees	(133)
Net cash provided by (used in) financing activities	(3,176)	12,953
Effect of exchange rates on cash and cash equivalents	(30)	105
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(3,776)	4,867
CASH AND CASH EQUIVALENTS:
Beginning of period	8,735	5,619
End of period	4,959	10,486
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	1,699	7,696
Cash paid (refund from) income taxes, net	(666)	194
Noncash financing transactions -
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives	$ 842	$ 389

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Intangible Assets and Goodwill

3 Months Ended

May 31, 2013

Intangible Assets and Goodwill

Note 3. Intangible Assets and Goodwill

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Company’s Federal Communications Commission (“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 annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.5 million as of February 28, 2013 and May 31, 2013. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. As of February 29, 2012, our two stations in New York were considered a single unit of accounting. In connection with the execution of the LMA discussed in Note 1, the Company separated the two New York stations into separate units of accounting. The Company performed an interim impairment test of the 98.7FM license as of May 1, 2012 which resulted in an impairment charge of $11.0 million. The carrying value of the 98.7FM license subsequent to the impairment charge is $60.5 million, which approximates its fair value.

The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, as was the case with 98.7FM as noted above, the Company will perform an interim impairment test. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

Valuation of Goodwill

ASC Topic 350-20-35 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 conducts the two-step impairment test on December 1 of each fiscal year, unless indications of impairment exist during an interim period. During the quarter ended May 31, 2013, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations.

As of February 28, 2013 and May 31, 2013, the carrying amount of the Company’s goodwill was $12.6 million. Approximately $4.6 million of our goodwill was attributable to our radio division as of February 28, 2013 and May 31, 2013. Approximately $8.0 million of our goodwill was attributable to our publishing division as of February 28, 2013 and May 31, 2013.

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of trademarks which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The trademarks have a weighted average remaining useful life of 12.1 years. Amortization expense related to trademarks is expected to be less than $0.1 million in each of the next five successive fiscal years.

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Summary of Significant Accounting Policies

3 Months Ended

May 31, 2013

Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2013. The Company’s results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

In the opinion of Emmis, the accompanying condensed consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of Emmis at May 31, 2013, and the results of its operations and cash flows for the three-month periods ended May 31, 2012 and 2013.

Basic and Diluted Net (Loss) Income Per Common Share

Basic net (loss) income per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net (loss) income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at May 31, 2012 and 2013 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”).

The following table sets forth the calculation of basic and diluted net (loss) income per share from continuing operations:

	Three Months Ended
	May 31, 2012								May 31, 2013
						Net Loss								Net Income
	Net Loss			Shares		Per Share			Net Income			Shares		Per Share
	(amounts in 000’s, except per share data)
Basic net (loss) income per common share:
Net (loss) income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,725			41,174	$	0.09
Impact of equity awards		—			—					—			2,043
Impact of conversion of preferred stock into common stock		—			—					(249	)		2,287
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,476			45,504	$	0.08

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended May 31,
	2012		2013
	(shares in 000’s )
6.25% Series A convertible preferred stock		2,288		—
Stock options and restricted stock awards		9,166		2,399
Antidilutive common share equivalents		11,454		2,399

Discontinued Operations – Summary of results

The results of operations and related disposal costs, gains and losses for business units that the Company has sold or expects to sell are classified in discontinued operations for all periods presented.

A summary of the income from discontinued operations is presented below:

	Three months ended May 31,
	2012			2013
Income (loss) from operations:
KXOS-FM (Radio)		(141	)		—
Emmis Interactive Inc. (Radio)		(727	)		—
Slovakia Radio Network (Radio)		7			—
Bulgaria Radio Network (Radio)		(307	)		—
Sampler Publications (Publishing)		116			—
Total		(1,052	)		—
Provision for income taxes		1,307			—
Total loss from operations, net of tax		(2,359	)		—

Discontinued Operation – KXOS-FM

On August 23, 2012, Emmis completed the sale of KXOS-FM in Los Angeles for $85.5 million in cash. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $32.8 million. KXOS-FM had previously been operating pursuant to a local programming and marketing agreement, which is discussed in more detail below.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the portion of term loans required to be repaid as a result of the sale of KXOS-FM to its operations for all periods presented.

The operations of KXOS-FM had historically been included in the radio segment. The following table summarizes certain operating results of KXOS-FM for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,750	$	—
Station operating expenses, excluding depreciation and amortization expense		20		—
Depreciation and amortization expense		104		—
Interest expense		1,767		—
Provision for income taxes		1,096		—

Discontinued Operation — Emmis Interactive

On October 31, 2012, Emmis completed the sale of Emmis Interactive Inc., a subsidiary of Emmis that provided a content management system, data analytic tools and related services, to Marketron Broadcast Solutions, LLC (“Marketron”) for no net proceeds. The sale of Emmis Interactive Inc. allows Emmis to mitigate expected future operating losses and more clearly focus on core radio and publishing operating strategies. Marketron had assumed operating control of Emmis Interactive, Inc., on October 4, 2012. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $0.7 million, which was primarily related to severance for former employees.

The operations of Emmis Interactive Inc. had historically been included in the radio segment. The following table summarizes certain operating results of the Emmis Interactive Inc. for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,239	$	—
Station operating expenses, excluding depreciation and amortization expense		1,962		—
Depreciation and amortization		137		—
Other income		133		—

Discontinued Operation – Country Sampler, Smart Retailer and related publications

On October 1, 2012, Emmis completed the sale of Country Sampler magazine, Smart Retailer magazine, and related publications (altogether the “Sampler Publications”) and certain real estate used in their operations to subsidiaries of DRG Holdings, LLC. Emmis believed the sale of the Sampler Publications, which were niche crafting publications, would enable it to more clearly focus on its core city and regional publications. Emmis received gross proceeds from the sale of $8.7 million, incurred approximately $0.2 million in transaction expenses and tax obligations, and used the remaining $8.5 million to repay term loans under the Company’s 2006 Credit Agreement. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $0.7 million.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 205-20-45, the Company allocated interest expense associated with the estimate of term loans required to be repaid as a result of the sale of the Sampler Publications to its operations for all periods presented.

The operations of the Sampler Publications had historically been included in the publishing segment. The following table summarizes certain operating results of the Sampler Publications for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	2,319	$	—
Station operating expenses, excluding depreciation and amortization expense		1,992		—
Depreciation and amortization		22		—
Interest expense		189		—
Provision for income taxes		129		—

Discontinued Operation –Slovakia Radio

On February 25, 2013, Emmis completed the sale of its Slovakian radio network to Bauer Ausland 1 GMBH for $21.2 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a gain on sale of assets of approximately $14.8 million.

The operations of our Slovakian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Slovakian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	2,277	$	—
Station operating expenses, excluding depreciation and amortization expense		1,665		—
Depreciation and amortization		180		—
Interest expense		400		—
Other expense, net		25		—
Provision for income taxes		82		—

Discontinued Operation – Bulgaria Radio

On January 3, 2013, Emmis completed the sale of its Bulgarian radio network to Reflex Media EEOD for $1.7 million in cash. Emmis believed the sale of its international radio properties would better enable the Company to focus its efforts on its domestic radio stations. In connection with the sale, Emmis recorded a loss on sale of assets of approximately $1.3 million. The loss on disposal primarily resulted from the reclassification of accumulated currency translation adjustments.

The operations of our Bulgarian radio network had historically been included in the radio segment. The following table summarizes certain operating results of our Bulgarian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	234	$	—
Station operating expenses, excluding depreciation and amortization expense		429		—
Depreciation and amortization		110		—
Other expense, net		2		—

Summary of Assets and Liabilities of Discontinued Operations:

	As of February 28, 2013		As of May 31, 2013
Current assets:
Cash and cash equivalents	$	579	$	528
Accounts receivable, net		128		—
Prepaid expenses		17		—
Other		38		—
Total current assets	$	762	$	528
Current liabilities:
Accounts payable and accrued expenses	$	2,169	$	1,126
Total current liabilities	$	2,169	$	1,126

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the FCC licenses. In such cases where the Company enters into an LMA in connection with a disposition, the Company generally receives specified periodic payments in exchange for the counterparty receiving the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. Nevertheless, as the holder of the FCC license, the Company retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis recognized $0.9 million and $2.6 million of LMA fees, recorded as net revenues in the accompanying condensed consolidated statements of operations, related to the 98.8FM LMA during the three months ended May 31, 2012 and 2013, respectively.

Grupo Radio Centro, S.A.B. de C.V (“GRC”), a Mexican broadcasting company, provided programming and sold advertising for KXOS-FM in Los Angeles pursuant to an LMA from April 2009 until affiliates of GRC consummated the purchase of KXOS-FM on August 23, 2012. Emmis recognized $1.8 million of LMA fees, recorded as income from discontinued operations, net of tax, related to the KXOS-FM LMA during the three months ended May 31, 2012.

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Long-Term Debt - Additional Information (Detail) (USD $)				3 Months Ended				1 Months Ended
	May 31, 2013	Feb. 28, 2013	May 30, 2012	May 31, 2013 2012 Credit Agreement	Dec. 28, 2012 2012 Credit Agreement	May 31, 2013 2012 Credit Agreement Minimum	May 31, 2013 2012 Credit Agreement Maximum	Dec. 28, 2012 2012 Credit Agreement Term Loan	Dec. 28, 2012 2012 Credit Agreement Revolver	Dec. 28, 2012 2012 Credit Agreement Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity under credit facility					$ 100,000,000			$ 80,000,000	$ 20,000,000	$ 5,000,000
Credit agreement bear interest rate						2.50%	5.00%
Minimum fixed interest rates for at least one year				50.00%
Quarterly payment of term loan percentage								2.50%
Debt instrument maturity date								Dec. 28, 2017	Dec. 28, 2017
Loan repayment commencement date								Apr. 01, 2013
Transaction fees related to the issuance of note				500,000
Original issue discount of issuance of debt	2,320,000	2,448,000			2,500,000
Additional interest expense				2,300,000
Principal amount of nonrecourse notes issued			$ 82,200,000
Interest rate during period			4.10%

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Summary of Income from Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		$ (1,052)
Provision for income taxes		1,307
Total loss from operations, net of tax		(2,359)
KXOS-FM (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		(141)
Emmis Interactive Inc. (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		(727)
Slovakia Radio Network (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		7
Bulgaria Radio Network (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		(307)
Sampler Publications
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations		$ 116

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Share Based Payments - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Apr. 30, 2012	May 31, 2013	May 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted, term		10 years
Stock options vesting period		3 years
Annual percentage over three years		33.33%
Stock options weighted average grant date fair value		$ 1.27	$ 0.71
Shares available for future grants		3,900,000
Restricted stock awards requisite service period		3 years
Grant date fair value of shares vested		$ 400,000
Shares vested
Compensation expenses		663,000	389,000
Unrecognized compensation cost		3,000,000
Compensation cost of weighted average period		1 year 7 months 6 days
2012 Retention Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred stock contributed by company	400,000
Compensation expenses		$ 200,000	$ 100,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting dates of outstanding options		2013-07
Expiration dates of options		2014-03
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting dates of outstanding options		2017-03
Expiration dates of options		2023-03

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Summary of Restricted Stock Grants Outstanding and Activity (Detail) (USD $)	3 Months Ended
	May 31, 2012	May 31, 2013 Restricted Stock
Awards
Grants outstanding, beginning of year		537,405
Granted		787,346
Vested (restriction lapsed)		277,346
Forfeited		181
Grants outstanding, end of year		1,047,224
Price
Grants outstanding, beginning of year		$ 1.72
Granted		$ 1.58
Vested (restriction lapsed)		$ 1.46
Forfeited		$ 1.73
Grants outstanding, end of year		$ 1.68

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Fair Values of Derivative Instruments (Detail) (Derivatives designated as hedging instruments, USD $) In Thousands, unless otherwise specified	May 01, 2013	Feb. 28, 2013
Derivatives, Fair Value [Line Items]
Liability Derivative Fair Value	$ 63	$ 107
Interest Rate Swap Agreements (Long-Term Portion)
Derivatives, Fair Value [Line Items]
Liability Derivative Fair Value	$ 63	$ 107

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Depreciation and amortization expense excluded from station operating expenses	$ 656	$ 664
Depreciation and amortization expenses excluded from corporate expenses	$ 520	$ 461

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Derivative Instruments and Hedging Activities

3 Months Ended

May 31, 2013

Derivative Instruments and Hedging Activities

Note 6. Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage interest rate exposure with the following objectives:

• manage current and forecasted interest rate risk while maintaining optimal financial flexibility and solvency

• proactively manage the Company’s cost of capital to ensure the Company can effectively manage operations and execute its business strategy, thereby maintaining a competitive advantage and enhancing shareholder value

• comply with covenant requirements in the Company’s credit facility

Cash Flow Hedges of Interest Rate Risk

The Company utilizes interest rate derivatives to add stability to cash payments for interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Under the terms of its 2012 Credit Agreement, the Company is required to fix or cap the interest rate on at least 50% of its Term Loan exposure for a two-year period ending December 28, 2014. The requirement to fix or cap interest rates can be reduced to a one-year period provided the Company’s Senior Leverage Ratio (as defined in the 2012 Credit Agreement) is at or under 2.50:1:00 as of May 31, 2014.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company’s interest rate derivatives are used to hedge the interest payment cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company did not record any hedge ineffectiveness in earnings during the three months ended May 31, 2012 and 2013. Amounts reported in accumulated other comprehensive loss related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During fiscal 2014, the Company estimates that less than $0.1 million will be reclassified as an increase to interest expense.

In February 2013, the Company entered into a two-year interest rate exchange agreement (a “Swap”), whereby the Company pays a fixed rate of 0.42% on $40 million of notional principal to Fifth Third Bank, and Fifth Third Bank pays to the Company a variable rate on the same amount of notional principal based on the one-month London Interbank Offered Rate (“LIBOR”). This agreement was the Company’s only interest rate derivative designated as a cash flow hedge of interest rate risk outstanding as of May 31, 2013.

The Company does not generally use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of February 28, 2013 and May 31, 2013. The accumulated other comprehensive loss balance related to our derivative instruments at May 31, 2013 was less than $0.1 million. The fair value of the derivative instruments was estimated by obtaining quotations from the financial institution that was the counterparty to the instrument. The fair value was an estimate of the net amount that the Company would have been required to pay on May 31, 2013, if the agreement was transferred to another party or cancelled by the Company, as further adjusted by a credit adjustment required by ASC Topic 820, Fair Value Measurements and Disclosures, as discussed below. For the three months ended May 31, 2013, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments
	Liability Derivatives
	As of February 28, 2013			As of May 31, 2013
	Balance Sheet			Balance Sheet
	Location	Fair Value		Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Swap Agreements (Long- Term Portion)	Other Noncurrent Liabilities		107	Other Noncurrent Liabilities		63
Total derivatives designated as hedging instruments		$	107		$	63

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended May 31, 2012 and 2013.

	For the three months ended May 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded  from Effectiveness Testing)		Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2012		2013				2012		2013					2012		2013
Interest Rate Swap
Agreements	$	—	$	66		Interest expense	$	—	$	(22	)		N/A	$	—	$	—
Total	$	—	$	66			$	—	$	(22	)			$	—	$	—

Credit-risk-related Contingent Features

The Company manages its counterparty risk by entering into derivative instruments with financial institutions where it believes the risk of credit loss resulting from nonperformance by the counterparty is low. As discussed above, the Company’s counterparty to its interest rate swap is Fifth Third Bank.

In accordance with ASC Topic 820, the Company makes a Credit Value Adjustment (CVA) to adjust the valuation of a derivative to account for our own credit risk with respect to all derivative liability positions. The CVA is accounted for as a decrease to the derivative position with the corresponding increase or decrease reflected in other comprehensive income (loss) for derivatives designated as cash flow hedges. The CVA also accounts for nonperformance risk of our counterparties in the fair value measurement of all derivative asset positions, when appropriate. As of May 31, 2013, this CVA was immaterial to the fair value of our derivative instrument.

The Company’s interest rate swap agreement with Fifth Third Bank incorporates the loan covenant provisions of the Company’s 2012 Credit Agreement. Fifth Third Bank is a lender under the Company’s 2012 Credit Agreement. Failure to comply with the loan covenant provisions of the 2012 Credit Agreement could result in the Company being in default of its obligations under the interest rate swap agreement.

As of May 31, 2013, the Company has not posted any collateral related to the interest rate swap agreement.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	May 31, 2013	Feb. 28, 2013
CURRENT ASSETS:
Cash and cash equivalents	$ 4,959	$ 8,735
Accounts receivable, net	32,540	28,126
Prepaid expenses	9,647	7,674
Other current assets	4,238	5,411
Current assets - discontinued operations	528	762
Total current assets	51,912	50,708
PROPERTY AND EQUIPMENT, NET	32,398	32,553
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles	150,522	150,522
Goodwill	12,639	12,639
Other intangibles, net	220	225
Total intangible assets	163,381	163,386
OTHER ASSETS, NET	16,109	14,977
Total assets	263,800	261,624
CURRENT LIABILITIES:
Accounts payable and accrued expenses	8,223	8,301
Current maturities of long-term debt (Note 4)	12,228	12,126
Accrued salaries and commissions	5,819	7,535
Accrued interest	392	396
Deferred revenue	12,629	10,862
Other current liabilities	4,174	3,518
Current liabilities - discontinued operations	1,126	2,169
Total current liabilities	44,591	44,907
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 4)	129,537	131,494
OTHER NONCURRENT LIABILITIES	9,145	10,052
DEFERRED INCOME TAXES	38,721	38,072
Total liabilities	221,994	224,525
COMMITMENTS AND CONTINGENCIES
EQUITY:
Additional paid-in capital	579,240	578,555
Accumulated deficit	(585,360)	(588,836)
Accumulated other comprehensive income	(74)	(118)
Total shareholders' deficit	(5,771)	(9,984)
NONCONTROLLING INTERESTS	47,577	47,083
Total equity	41,806	37,099
Total liabilities and equity	263,800	261,624
Class A Common Stock
EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 35,907,925 shares at February 28, 2013 and 36,695,537 shares at May 31, 2013	367	359
Class B Common Stock
EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 35,907,925 shares at February 28, 2013 and 36,695,537 shares at May 31, 2013	47	47
Series A preferred stock
EQUITY:
Series A non-cumulative convertible preferred stock, $.01 par value; $50.00 liquidation preference per share, $46,882 aggregate liquidation preference and redemption amount; authorized 2,875,000 shares; issued and outstanding 1,337,641 shares at February 28, 2013 and 1,330,991 at May 31, 2013, which includes 400,000 shares in trust	$ 9	$ 9

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
NET REVENUES	$ 50,586	$ 48,968
OPERATING EXPENSES:
Station operating expenses excluding depreciation and amortization expense of $664 and $656, respectively	37,712	40,572
Corporate expenses excluding depreciation and amortization expense of $461 and $520, respectively	4,400	4,972
Hungary license litigation and related expenses	252	204
Impairment loss on intangible assets		10,971
Depreciation and amortization	1,176	1,125
Gain on sale of assets		(10,000)
Total operating expenses	43,540	47,844
OPERATING INCOME	7,046	1,124
OTHER EXPENSE:
Interest expense	(1,921)	(5,767)
Loss on debt extinguishment		(484)
Other income, net	7	198
Total other expense	(1,914)	(6,053)
(LOSS) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS	5,132	(4,929)
(BENEFIT) PROVISION FOR INCOME TAXES	175	(4,415)
(LOSS) INCOME FROM CONTINUING OPERATIONS	4,957	(514)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		(2,359)
CONSOLIDATED NET (LOSS) INCOME	4,957	(2,873)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,481	1,262
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY	3,476	(4,135)
GAIN ON EXTINGUISHMENT OF PREFERRED STOCK	249
PREFERRED STOCK DIVIDENDS		(896)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	3,725	(5,031)
Amounts attributable to common shareholders for basic and diluted earnings per share:
Continuing operations	3,725	(2,672)
Discontinued operations		(2,359)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	3,725	(5,031)
Amounts attributable to common shareholders for diluted earnings per share:
Continuing operations	3,476	(2,672)
Discontinued operations		(2,359)
Net income attributable to common shareholders	$ 3,476	$ (5,031)
Basic net (loss) income per share attributable to common shareholders:
Continuing operations	$ 0.09	$ (0.07)
Discontinued operations, net of tax		$ (0.06)
Net (loss) income per share attributable to common shareholders	$ 0.09	$ (0.13)
Basic weighted average common shares outstanding	41,174	38,779
Diluted net (loss) income per share attributable to common shareholders:
Continuing operations	$ 0.08	$ (0.07)
Discontinued operations, net of tax		$ (0.06)
Net (loss) income per share attributable to common shareholders	$ 0.08	$ (0.13)
Diluted weighted average common shares outstanding	45,504	38,779

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended		1 Months Ended	3 Months Ended	1 Months Ended
	Jan. 03, 2013 Bulgaria Radio Network (Radio)	May 31, 2013 98.7 FM [Member] Collaborative Arrangement [Member]	May 31, 2012 98.7 FM [Member] Collaborative Arrangement [Member]	Aug. 23, 2012 KXOS-FM (Radio)	May 31, 2012 KXOS-FM (Radio) Collaborative Arrangement [Member]	Oct. 31, 2012 Emmis Interactive Inc. (Radio)	Oct. 31, 2012 Sampler Publications	Feb. 25, 2013 Slovakia Radio Network (Radio)
Summary Of Significant Accounting Policies [Line Items]
Selling cash price of land, towers and other equipment	$ 1.7			$ 85.5			$ 8.7	$ 21.2
Gain (loss) on sale of business	(1.3)			32.8		(0.7)	0.7	14.8
Transaction expenses and tax obligations							0.2
Repayment of term loans under credit agreement							8.5
Annual license fees received		$ 2.6	$ 0.9		$ 1.8

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Fair Value Measurements (Tables)

3 Months Ended

May 31, 2013

Assets and Liabilities Accounted for at Fair Value on Recurring Basis

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

	As of May 31, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,739	$	6,739
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,739	$	6,739
Interest rate swap agreement	$	—	$	63	$	—	$	63
Total liabilities measured at fair value on a recurring basis	$	—	$	63	$	—	$	63
	As of February 28, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,489	$	6,489
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,489	$	6,489
Interest rate swap agreement	$	—	$	107	$	—	$	107
Total liabilities measured at fair value on a recurring basis	$	—	$	107	$	—	$	107

Reconciliation of Beginning and Ending Balances for Fair Value Measurements using Significant Unobservable Inputs

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the three months ended May 31,
	2012		2013
	Available		Available
	For Sale		For Sale		Derivative
	Securities		Securities		Instruments
Beginning Balance	$	160	$	6,489	$	107
Purchases		—		250		—
Unrealized gains in other comprehensive income		—		—		(44	)
Ending Balance	$	160	$	6,739	$	63

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Derivative Instruments and Hedging Activities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	1 Months Ended	3 Months Ended
	May 31, 2013 Interest Rate Cap BasisPoint	Feb. 28, 2013 Fixed to Floating Interest Rate Swap Y	May 31, 2013 Maximum
Interest Rate Risk [Line Items]
Percentage of term loan portion required to fix interest rate swap	50.00%
Senior leverage ratio by May 31, 2014 to reduce the requirement to fix or cap interest rate to one year period	2.50100
Increase in interest expense			$ 0.1
Interest Rate Swap Term		2
Interest Rate Swap Notional Principal Amount		40
Fixed rate payable on interest rate swap		0.42%
Accumulated other comprehensive loss balance related to derivative instruments			$ 0.1

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Intangible Assets and Goodwill - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended				3 Months Ended					3 Months Ended
	Feb. 29, 2012 Segment	May 31, 2012	May 31, 2013	Feb. 28, 2013	May 31, 2013 Maximum	May 31, 2013 Licensing Agreements [Member]	May 31, 2013 Trademarks	May 31, 2012 Radio	May 31, 2013 Radio	Feb. 28, 2013 Radio	May 31, 2012 Publishing	May 31, 2013 Publishing	Feb. 28, 2013 Publishing
Intangible Assets And Goodwill [Line Items]
Carrying amount of indefinite-lived intangibles			$ 150,500,000	$ 150,500,000
Number of stations in New York considered as single unit of accounting	2
Impairment charges		10,971,000				11,000,000		10,971,000
Carrying amount of indefinite-lived intangibles			150,522,000	150,522,000		60,500,000
Goodwill			12,639,000	12,639,000					4,600,000	4,600,000		8,000,000	8,000,000
Weighted average remaining useful life							12 years 1 month 6 days
2014					100,000
2015					100,000
2016					100,000
2017					100,000
2018					$ 100,000

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Summary of Stock Options Outstanding and Activity (Parenthetical) (Detail) (USD $)	3 Months Ended
	May 31, 2013	May 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tax benefit

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Summary of Nonvested Options and Changes (Detail) (USD $)	3 Months Ended
	May 31, 2013
Options
Nonvested, beginning of period	3,188,104
Granted	330,000
Vested	420,000
Forfeited
Nonvested, end of period	3,098,104
Weighted Average Grant Date Fair Value
Nonvested, beginning of period	$ 0.76
Granted	$ 1.27
Vested	$ 1.00
Forfeited
Nonvested, end of period	$ 0.78

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Liquidity

3 Months Ended

May 31, 2013

Liquidity

Note 5. Liquidity

The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. As of the filing of this Form 10-Q, management believes the Company can meet its liquidity needs through the end of fiscal year 2014 with cash and cash equivalents on hand and projected cash flows from operations. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2014.

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Operating Results of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 31, 2013	May 31, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Station operating expenses, excluding depreciation and amortization expense	$ 37,712	$ 40,572
Depreciation and amortization	1,176	1,125
Interest expense	1,921	5,767
KXOS-FM (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues		1,750
Station operating expenses, excluding depreciation and amortization expense		20
Depreciation and amortization		104
Interest expense		1,767
Provision for income taxes		1,096
Emmis Interactive Inc. (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues		1,239
Station operating expenses, excluding depreciation and amortization expense		1,962
Depreciation and amortization		137
Other expense, net		133
Sampler Publications
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues		2,319
Station operating expenses, excluding depreciation and amortization expense		1,992
Depreciation and amortization		22
Interest expense		189
Provision for income taxes		129
Slovakia Radio Network (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues		2,277
Station operating expenses, excluding depreciation and amortization expense		1,665
Depreciation and amortization		180
Interest expense		400
Other expense, net		25
Provision for income taxes		82
Bulgaria Radio Network (Radio)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net revenues		234
Station operating expenses, excluding depreciation and amortization expense		429
Depreciation and amortization		110
Other expense, net		$ 2

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Senior Leverage Ratio and Total Leverage Ratio Requirements and Actual Amounts (Detail)	May 31, 2013 BasisPoint
Covenant Requirement | Maximum
Line of Credit Facility [Line Items]
Maximum Senior Leverage Ratio	4.00
Maximum Total Leverage Ratio	4.75
Covenant Requirement | Minimum
Line of Credit Facility [Line Items]
Minimum Fixed Charge Coverage Ratio	1.25
Actual | Maximum
Line of Credit Facility [Line Items]
Maximum Senior Leverage Ratio	3.21
Maximum Total Leverage Ratio	3.21
Actual | Minimum
Line of Credit Facility [Line Items]
Minimum Fixed Charge Coverage Ratio	1.50

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Segment Information

3 Months Ended

May 31, 2013

Segment Information

Note 8. Segment Information

The Company’s operations are aligned into two business segments: (i) Radio and (ii) Publishing. These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate expenses are not allocated to reportable segments. The results of operations of various sold businesses have been classified as discontinued operations and have been excluded from the segment disclosures below. See Note 1 for more discussion of our discontinued operations. The Company’s segments operate exclusively in the United States.

The accounting policies as described in the summary of significant accounting policies included in the Company’s Annual Report filed on Form 10-K, for the year ended February 28, 2013, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months ended May 31, 2013	Radio		Publishing			Corporate			Consolidated
Net revenues	$	36,926	$	13,660		$	—		$	50,586
Station operating expenses excluding depreciation and amortization expense		22,911		14,801			—			37,712
Corporate expenses excluding depreciation and amortization expense		—		—			4,400			4,400
Hungary license litigation and related expenses		252		—			—			252
Depreciation and amortization		594		62			520			1,176
Operating income (loss)	$	13,169	$	(1,203	)	$	(4,920	)	$	7,046

Three Months ended May 31, 2012	Radio			Publishing			Corporate			Consolidated
Net revenues	$	34,876		$	14,092		$	—		$	48,968
Station operating expenses excluding depreciation and amortization expense		26,320			14,252			—			40,572
Corporate expenses excluding depreciation and amortization expense		—			—			4,972			4,972
Hungary license litigation and related expenses		204			—			—			204
Impairment loss		10,971			—			—			10,971
Depreciation and amortization		578			86			461			1,125
Gain on sale of fixed assets		(10,000	)		—			—			(10,000	)
Operating income (loss)	$	6,803		$	(246	)	$	(5,433	)	$	1,124
				As of February 28, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	209,721		$	21,005		$	30,136		$	260,862
Assets — discontinued operations		630			132			—			762
Total assets	$	210,351		$	21,137		$	30,136		$	261,624
				As of May 31, 2013
	Radio			Publishing			Corporate			Consolidated
Assets — continuing operations	$	216,892		$	19,099		$	27,281		$	263,272
Assets — discontinued operations		528			—			—			528
Total assets	$	217,420		$	19,099		$	27,281		$	263,800

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Long-term Debt

3 Months Ended

May 31, 2013

Long-term Debt

Note 4. Long-term Debt

Long-term debt was comprised of the following at February 28, 2013 and May 31, 2013:

	As of February 28,			As of May 31,
	2013			2013
2012 Credit Agreement debt :
Revolver	$	5,000		$	6,000
Term Loan		62,000			60,000
Total 2012 Credit Agreement debt		67,000			66,000
98.7FM nonrecourse debt		79,068			78,085
Current maturities		(12,126	)		(12,228	)
Unamortized original issue discount		(2,448	)		(2,320	)
Total long-term debt	$	131,494		$	129,537

2012 Credit Agreement Debt

On December 28, 2012, Emmis Operating Company (“EOC”), a wholly owned subsidiary of Emmis, entered into a credit facility (the “2012 Credit Agreement”) to provide for total borrowings of up to $100 million, including (i) an $80 million term loan and (ii) a $20 million revolver, of which $5 million may be used for letters of credit.

A portion of the proceeds under the 2012 Credit Agreement were used to repay (i) EOC’s indebtedness under and terminate the 2006 Credit Agreement, for which Bank of America, N.A. acted as administrative agent and (ii) the Notes issued under the Note Purchase Agreement dated as of November 11, 2011 between Emmis Communications Corporation, as Issuer, and Zell Credit Opportunities Master Fund, L.P., as Purchaser, as amended, (“Senior Unsecured Notes”).

In addition to repaying in full the 2006 Credit Agreement and the Senior Unsecured Notes, the proceeds of the borrowings under the 2012 Credit Agreement were used for working capital needs and other general corporate purposes of Emmis, and certain other transactions permitted under the 2012 Credit Agreement.

All outstanding amounts under the 2012 Credit Agreement bear interest, at the option of EOC, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the 2012 Credit Agreement) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies (ranging from 2.50% to 5.00%), depending on Emmis’ ratio of consolidated total debt to consolidated EBITDA, as defined in the agreement. Interest is due on a calendar month basis under the alternative base rate and at least every three months under the Eurodollar Rate. Beginning 60 days after closing, the 2012 Credit Agreement required Emmis to maintain fixed interest rates, for at least one year, on a minimum of 50% of its total outstanding debt, as defined. See Note 6 for more discussion of our interest rate swap agreement.

The term loan and revolver both mature on December 28, 2017. Beginning on April 1, 2013, the borrowings under the term loan are payable in quarterly installments equal to 2.50% of the original balance of the term loan, with the remaining balance payable December 28, 2017. Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow, subject to certain exceptions, are required to be used to repay amounts outstanding under the 2012 Credit Agreement.

Approximately $0.5 million of transaction fees related to the 2012 Credit Agreement were capitalized and are being amortized over the life of the 2012 Credit Agreement. These deferred debt costs are included in other assets, net in the condensed consolidated balance sheets. The 2012 Credit Agreement is carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $2.5 million as of the issuance of the debt on December 28, 2012 and $2.3 million as of May 31, 2013, is being amortized as additional interest expense over the life of the 2012 Credit Agreement.

Borrowing under the 2012 Credit Agreement depends upon our continued compliance with certain operating covenants and financial ratios, including leverage and fixed charge coverage as specifically defined. 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 certain dividends, redeeming or repurchasing capital stock of Emmis, acquisitions and asset sales. No default or event of default has occurred or is continuing. The 2012 Credit Agreement provides that an event of default will occur if there is a “change in control” of Emmis, as defined. The payment of principal, premium and interest under the 2012 Credit Agreement is fully and unconditionally guaranteed, jointly and severally, by ECC 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 2012 Credit Agreement.

We were in compliance with all financial and non-financial covenants as of May 31, 2013. Our Senior Leverage Ratio, Total Leverage Ratio and Minimum Fixed Charge Coverage Ratio (each as defined in the 2012 Credit Agreement) requirements and actual amounts as of May 31, 2013 were as follows:

	As of May 31, 2013
	Covenant
	Requirement		Actual Results
Maximum Senior Leverage Ratio		4.00 : 1.00		3.21 : 1.00
Maximum Total Leverage Ratio		4.75: 1.00		3.21 : 1.00
Minimum Fixed Charge Coverage Ratio		1.25 : 1.00		1.50 : 1.00

98.7FM Nonrecourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of nonrecourse notes. Teachers Insurance and Annuity Association of America (“TIAA”), through a participation agreement with Wells Fargo Bank Northwest, National Association (“Wells Fargo”), is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company’s subsidiaries and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

Based on amounts outstanding at May 31, 2013, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:

	2012 Credit Agreement
Year Ended	Revolver		Term Loan		98.7FM Debt		Total
February 28 (29),	Amortization		Amortization		Amortization		Amortization
2014	$	—	$	6,000	$	3,143	$	9,143
2015		—		8,000		4,541		12,541
2016		—		8,000		4,990		12,990
2017		—		8,000		5,453		13,453
2018		6,000		30,000		6,039		42,039
Thereafter		—		—		53,919		53,919
Total	$	6,000	$	60,000	$	78,085	$	144,085

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) (USD $) In Thousands, except Share data	Total		Class A Common Stock	Class B Common Stock	Series A preferred stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Noncontrolling Interests
Beginning Balance at Feb. 28, 2013	$ 37,099		$ 359	$ 47	$ 9	$ 578,555	$ (588,836)	$ (118)	$ 47,083
Beginning Balance (In shares) at Feb. 28, 2013			35,907,925	4,722,684	937,641
Net income	4,957						3,476		1,481
Issuance of Common Stock to employees and officers	716		7			709
Issuance of Common Stock to employees and officers (In shares)			696,362
Exercise of stock options	60		1			59
Exercise of stock options (In shares)	86,250	[1]	91,250
Payments of dividends and distributions to noncontrolling interests	(957)								(957)
Purchase of preferred stock, Value	(83)					(83)
Purchase of preferred stock, Shares					(6,650)
Change in value of derivative instrument	44							44
Cumulative translation adjustment	(30)								(30)
Ending Balance at May. 31, 2013	$ 41,806		$ 367	$ 47	$ 9	$ 579,240	$ (585,360)	$ (74)	$ 47,577
Ending Balance, Shares at May. 31, 2013			36,695,537	4,722,684	930,991

[1] The Company did not record an income tax benefit related to option exercises in the three months ended May 31, 2012 and 2013.

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Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	Feb. 28, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 6,739	$ 6,489
Total assets measured at fair value on a recurring basis	6,739	6,489
Interest rate swap agreement	63	107
Total liabilities measured at fair value on a recurring basis	63	107
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities
Total assets measured at fair value on a recurring basis
Interest rate swap agreement
Total liabilities measured at fair value on a recurring basis
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities
Total assets measured at fair value on a recurring basis
Interest rate swap agreement	63	107
Total liabilities measured at fair value on a recurring basis	63	107
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	6,739	6,489
Total assets measured at fair value on a recurring basis	6,739	6,489
Interest rate swap agreement
Total liabilities measured at fair value on a recurring basis

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Assumptions used to Calculate Fair Value of Options on Date of Grant (Detail)	3 Months Ended
	May 31, 2013	May 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate:	0.60%	0.70%
Expected Dividend Yield:	0.00%	0.00%
Expected Life (Years):	4 years 3 months 18 days	4 years 2 months 12 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility:		129.50%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility:	115.90%	131.40%

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

May 31, 2013

Calculation of Basic and Diluted Net (loss) Income Per Share from Continuing Operations

The following table sets forth the calculation of basic and diluted net (loss) income per share from continuing operations:

	Three Months Ended
	May 31, 2012								May 31, 2013
						Net Loss								Net Income
	Net Loss			Shares		Per Share			Net Income			Shares		Per Share
	(amounts in 000’s, except per share data)
Basic net (loss) income per common share:
Net(loss) income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,725			41,174	$	0.09
Impact of equity awards		—			—					—			2,043
Impact of conversion of preferred stock into common stock		—			—					(249	)		2,287
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$	(5,031	)		38,779	$	(0.13	)	$	3,476			45,504	$	0.08

Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock would be Antidilutive

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended May 31,
	2012		2013
	(shares in 000’s)
6.25% Series A convertible preferred stock		2,288		—
Stock options and restricted stock awards		9,166		2,399
Antidilutive common share equivalents		11,454		2,399

Summary of Income from Discontinued Operations

A summary of the income from discontinued operations is presented below:

	Three months ended May 31,
	2012			2013
Income (loss) from operations:
KXOS-FM (Radio)		(141	)		—
Emmis Interactive Inc. (Radio)		(727	)		—
Slovakia Radio Network (Radio)		7			—
Bulgaria Radio Network (Radio)		(307	)		—
Sampler Publications (Publishing)		116			—
Total		(1,052	)		—
Provision for income taxes		1,307			—
Total loss from operations, net of tax		(2,359	)		—

Summary of Assets and Liabilities of Discontinued Operations

Summary of Assets and Liabilities of Discontinued Operations:

	As of February 28, 2013		As of May 31, 2013
Current assets:
Cash and cash equivalents	$	579	$	528
Accounts receivable, net		128		—
Prepaid expenses		17		—
Other		38		—
Total current assets	$	762	$	528
Current liabilities:
Accounts payable and accrued expenses	$	2,169	$	1,126
Total current liabilities	$	2,169	$	1,126

KXOS-FM (Radio)

Operating Results of Discontinued Operations

The operations of KXOS-FM had historically been included in the radio segment. The following table summarizes certain operating results of KXOS-FM for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,750	$	—
Station operating expenses, excluding depreciation and amortization expense		20		—
Depreciation and amortization expense		104		—
Interest expense		1,767		—
Provision for income taxes		1,096		—

Emmis Interactive Inc. (Radio)

Operating Results of Discontinued Operations

The following table summarizes certain operating results of the Emmis Interactive Inc. for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	1,239	$	—
Station operating expenses, excluding depreciation and amortization expense		1,962		—
Depreciation and amortization		137		—
Other income		133		—

Sampler Publications

Operating Results of Discontinued Operations

The following table summarizes certain operating results of the Sampler Publications for all periods presented:

	Three months ended May 31,
	2012		2013
Net revenues	$	2,319	$	—
Station operating expenses, excluding depreciation and amortization expense		1,992		—
Depreciation and amortization		22		—
Interest expense		189		—
Provision for income taxes		129		—

Slovakia Radio Network (Radio)

Operating Results of Discontinued Operations

The following table summarizes certain operating results of our Slovakian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	2,277	$	—
Station operating expenses, excluding depreciation and amortization expense		1,665		—
Depreciation and amortization		180		—
Interest expense		400		—
Other expense, net		25		—
Provision for income taxes		82		—

Bulgaria Radio Network (Radio)

Operating Results of Discontinued Operations

The following table summarizes certain operating results of our Bulgarian radio network for all periods presented:

	For the three months ended May 31,
	2012		2013
Net revenues	$	234	$	—
Station operating expenses, excluding depreciation and amortization expense		429		—
Depreciation and amortization		110		—
Other expense, net		2		—

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Fair Value Measurements

3 Months Ended

May 31, 2013

Fair Value Measurements

Note 7. Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2013 and May 31, 2013. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

	As of May 31, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,739	$	6,739
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,739	$	6,739
Interest rate swap agreement	$	—	$	63	$	—	$	63
Total liabilities measured at fair value on a recurring basis	$	—	$	63	$	—	$	63
	As of February 28, 2013
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Available for sale securities	$	—	$	—	$	6,489	$	6,489
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,489	$	6,489
Interest rate swap agreement	$	—	$	107	$	—	$	107
Total liabilities measured at fair value on a recurring basis	$	—	$	107	$	—	$	107

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. At February 28, 2013 and May 31, 2013, the investments are carried at their cost basis, which management believes approximates fair value, due to the recent purchase of these investments and recent third party transactions that corroborate Emmis’ carrying value approximates current fair value.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company pays a fixed rate and receives a variable interest rate that was observable based upon a forward interest rate curve and is therefore considered a level 2 measurement.

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the three months ended May 31,
	2012		2013
	Available		Available
	For Sale		For Sale		Derivative
	Securities		Securities		Instruments
Beginning Balance	$	160	$	6,489	$	107
Purchases		—		250		—
Unrealized gains in other comprehensive income		—		—		(44	)
Ending Balance	$	160	$	6,739	$	63

Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 1, Impairment Losses, and Note 3, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 1 and Note 3 for more discussion).

Fair Value of Other Financial Instruments

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents, accounts receivable and accounts payable, including accrued liabilities: The carrying amount of these assets and liabilities approximates fair value because of the short maturity of these instruments.

- Long-term debt: The Company’s long-term debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its long-term debt approximates its fair value.

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Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

May 31, 2013

Fair Value of Derivative Instrument

The fair value was an estimate of the net amount that the Company would have been required to pay on May 31, 2013, if the agreement was transferred to another party or cancelled by the Company, as further adjusted by a credit adjustment required by ASC Topic 820, Fair Value Measurements and Disclosures, as discussed below. For the three months ended May 31, 2013, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments
	Liability Derivatives
	As of February 28, 2013			As of May 31, 2013
	Balance Sheet			Balance Sheet
	Location	Fair Value		Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Swap Agreements (Long- Term Portion)	Other Noncurrent Liabilities		107	Other Noncurrent Liabilities		63
Total derivatives designated as hedging instruments		$	107		$	63

Derivative Financial Instrument Effect on Consolidated Statement of Operations

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended May 31, 2012 and 2013.

	For the three months ended May 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded  from Effectiveness Testing)		Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2012		2013				2012		2013					2012		2013
Interest Rate Swap
Agreements	$	—	$	66		Interest expense	$	—	$	(22	)		N/A	$	—	$	—
Total	$	—	$	66			$	—	$	(22	)			$	—	$	—

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Share Based Payments (Tables)

3 Months Ended

May 31, 2013

Assumptions used to Calculate Fair Value of Options on Date of Grant

The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the three months ended May 31, 2012 and 2013: 

	Three Months Ended May 31,
	2012	2013
Risk-Free Interest Rate:	0.7%	0.6%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.2	4.3
Expected Volatility:	129.5% – 131.4%	115.9%

Summary of Stock Options Outstanding and Activity

The following table presents a summary of the Company’s stock options outstanding at May 31, 2013, and stock option activity during the three months ended May 31, 2013 (“Price” reflects the weighted average exercise price per share):

					Weighted Average		Aggregate
					Remaining		Intrinsic
	Options		Price		Contractual Term		Value
Outstanding, beginning of period		7,132,459	$	4.31
Granted		330,000		1.64
Exercised (1)		86,250		0.65
Forfeited		—		—
Expired		549,926		11.08
Outstanding, end of period		6,826,283		3.68		6.6	$	4,255
Exercisable, end of period		3,728,179		5.94		4.8	$	2,000

(1) The Company did not record an income tax benefit related to option exercises in the three months ended May 31, 2012 and 2013.

Summary of Nonvested Options and Changes

A summary of the Company’s nonvested options at May 31, 2013, and changes during the three months ended May 31, 2013, is presented below:

			Weighted Average
			Grant Date
	Options		Fair Value
Nonvested, beginning of period		3,188,104	$	0.76
Granted		330,000		1.27
Vested		420,000		1.00
Forfeited		—		—
Nonvested, end of period		3,098,104		0.78

Summary of Restricted Stock Grants Outstanding and Activity

The following table presents a summary of the Company’s restricted stock grants outstanding at May 31, 2013, and restricted stock activity during the three months ended May 31, 2013 (“Price” reflects the weighted average share price at the date of grant):

	Awards		Price
Grants outstanding, beginning of period		537,405	$	1.72
Granted		787,346		1.58
Vested (restriction lapsed)		277,346		1.46
Forfeited		181		1.73
Grants outstanding, end of period		1,047,224		1.68

Stock-Based Compensation Expense and Related Tax Benefits Recognized

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company in the three months ended May 31, 2012 and 2013:

	Three months ended May 31,
	2012		2013
Station operating expenses	$	151	$	253
Corporate expenses		238		410
Stock-based compensation expense included in operating expenses		389		663
Tax benefit		—		—
Recognized stock-based compensation expense, net of tax	$	389	$	663

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Document and Entity Information	3 Months Ended
	May 31, 2013	Jun. 21, 2013 Class A Common Stock	Jun. 21, 2013 Class B Common Stock	Jun. 21, 2013 Class C Common Stock
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	EMMS
Entity Registrant Name	EMMIS COMMUNICATIONS CORP
Entity Central Index Key	0000783005
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		36,695,537	4,722,684	0

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Long-term Debt (Tables)

3 Months Ended

May 31, 2013

Long-Term Debt

Long-term debt was comprised of the following at February 28, 2013 and May 31, 2013:

	As of February 28,			As of May 31,
	2013			2013
2012 Credit Agreement debt :
Revolver	$	5,000		$	6,000
Term Loan		62,000			60,000
Total 2012 Credit Agreement debt		67,000			66,000
98.7FM nonrecourse debt		79,068			78,085
Current maturities		(12,126	)		(12,228	)
Unamortized original issue discount		(2,448	)		(2,320	)
Total long-term debt	$	131,494		$	129,537

Leverage Ratio Requirements

Our Senior Leverage Ratio, Total Leverage Ratio and Minimum Fixed Charge Coverage Ratio (each as defined in the 2012 Credit Agreement) requirements and actual amounts as of May 31, 2013 were as follows:

	As of May 31, 2013
	Covenant
	Requirement		Actual Results
Maximum Senior Leverage Ratio		4.00 : 1.00		3.21 : 1.00
Maximum Total Leverage Ratio		4.75: 1.00		3.21 : 1.00
Minimum Fixed Charge Coverage Ratio		1.25 : 1.00		1.50 : 1.00

Summary of Long-Term Debt Principal Repayments

Based on amounts outstanding at May 31, 2013, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:

	2012 Credit Agreement
Year Ended	Revolver		Term Loan		98.7FM Debt		Total
February 28 (29),	Amortization		Amortization		Amortization		Amortization
2014	$	—	$	6,000	$	3,143	$	9,143
2015		—		8,000		4,541		12,541
2016		—		8,000		4,990		12,990
2017		—		8,000		5,453		13,453
2018		6,000		30,000		6,039		42,039
Thereafter		—		—		53,919		53,919
Total	$	6,000	$	60,000	$	78,085	$	144,085