EMMIS COMMUNICATIONS CORP (Form: 10-K, Received: 05/11/2017 06:02:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)



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

for the Fiscal Year Ended February 28, 2017



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

for the Transition Period from to .

EMMIS COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

INDIANA

(State of incorporation or organization)

0-23264

(Commission file number)

35-1542018

(I.R.S. Employer Identification No.)

ONE EMMIS PLAZA

40 MONUMENT CIRCLE

SUITE 700

INDIANAPOLIS, INDIANA 46204

(Address of principal executive offices)

(317) 266-0100

(Registrant’s Telephone Number, Including Area Code)

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Class A common stock, $.01 par value of Emmis Communications Corporation

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

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

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

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	¨

Non-accelerated filer	¨	Smaller reporting company	ý

		Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ¨

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

The aggregate market value of the voting stock held by non-affiliates of the registrant, as of August 31, 2016 , the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $40,919,000 .

The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of May 5, 2017, was:

11,345,404 Class A Common Shares, $.01 par value

1,142,366 Class B Common Shares, $.01 par value

0 Class C Common Shares, $.01 par value

DOCUMENTS INCORPORATED BY REFERENCE



Documents		Form 10-K Reference
Proxy Statement for 2017 Annual Meeting of Shareholders expected to be filed within 120 days		Part III

Table of Contents

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS



	Page
PART I	5
Item 1. Business	5
Item 1A. Risk Factors	14
Item 1B. Unresolved Staff Comments	21
Item 2. Properties	21
Item 3. Legal Proceedings	21
Item 4. Mine Safety Disclosures	22

PART II	22
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6. Selected Financial Data	23
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	44
Item 8. Financial Statements and Supplementary Data	45
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	86
Item 9A. Controls and Procedures	86
Item 9B. Other Information	87

PART III	88
Item 10. Directors, Executive Officers and Corporate Governance	88
Item 11. Executive Compensation	88
Item 12. Security Ownership of Certain Beneficial Owners, and Management, and Related Stockholder Matters	88
Item 13. Certain Relationships and Related Transactions and Director Independence	88
Item 14. Principal Accounting Fees and Services	88

PART IV	88
Item 15. Exhibits and Financial Statement Schedules	89

Signatures	92

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CERTAIN DEFINITIONS

Unless the context requires otherwise, all references in this report to “Emmis,” “the Company,” “we,” “our,” “us,” and similar terms refer to Emmis Communications Corporation and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

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

Actual results or events could differ materially from the plans, intentions or expectations disclosed in the forward-looking statements we make. We have included important facts in various cautionary statements in this report that we believe could cause our actual results to differ materially from forward-looking statements that we make. These include, but are not limited to, the factors described in Part I, Item 1A, “Risk Factors.”

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

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PART I

ITEM 1. BUSINESS.

GENERAL

We are a diversified media company, principally focused on radio broadcasting. Emmis owns 16 FM and 3 AM radio stations in New York, Los Angeles, St. Louis, Austin (Emmis has a 50.1% controlling interest in Emmis’ radio stations located there) and Indianapolis. One of the FM radio stations that Emmis currently owns in New York is operated pursuant to a Local Marketing Agreement ("LMA") whereby a third party provides the programming for the station and sells all advertising within that programming. In addition, Emmis has entered into an agreement to sell its FM radio station in Los Angeles and that transaction is expected to close in the back half of 2017. Emmis also developed and licenses TagStation ^® , a cloud-based software platform that allows a broadcaster to manage album art, meta data and enhanced advertising on its various broadcasts, developed NextRadio ^® , a smartphone application that marries over-the-air FM radio broadcasts with visual and interactive features on smartphones, and has introduced the Dial Report ^TM to give radio advertising buyers and sellers big data analytics derived from a nationwide radio station network, smartphone usage, location-based data, demographic profiling and listening data.

In addition to our radio properties, we also publish Indianapolis Monthly and operate Digonex Technologies, Inc. ("Digonex"), a dynamic pricing business.

BUSINESS STRATEGY

We are committed to improving the operating results of our core assets while simultaneously seeking future growth opportunities in related businesses. Our strategy is focused on the following operating principles:

Develop unique and compelling content and strong local brands

Most of our established local media brands have achieved and sustained a leading position in their respective market segments over many years. Knowledge of local markets and consistently producing unique and compelling content that meets the needs of our target audiences are critical to our success. As such, we make substantial investments in areas such as market research, data analysis and creative talent to ensure that our content remains relevant, has a meaningful impact on the communities we serve and reinforces the core brand image of each respective property.

Extend the reach and relevance of our local brands through digital platforms

In recent years, we have placed substantial emphasis on enhancing the distribution of our content through digital platforms, such as the Internet and smartphones. We believe these digital platforms offer excellent opportunities to further enhance the relationships we have with our audiences by allowing them to consume and share our content in new ways and providing us with new distribution channels for one-to-one communication with them.

Deliver results to advertisers

Competition for advertising revenue is intense and becoming more so. To remain competitive, we focus on sustaining and growing our audiences, optimizing our pricing strategy and developing innovative marketing programs for our clients that allow them to interact with our audiences in more direct and measurable ways. These programs often include elements such as on-air endorsements, events, contests, special promotions, Internet advertising, email marketing, interactive mobile advertising and online video. Our ability to deploy multi-touchpoint marketing programs allows us to deliver a stronger return-on-investment for our clients while simultaneously generating ancillary revenue streams for our media properties.

Extend sales efforts into new market segments

Given the competitive pressures in many of our “traditional” advertising categories, we are expanding our network of advertiser relationships into not-for-profits, political advertising, corporate philanthropy, environmental initiatives and government agencies. These efforts primarily focus on the health care and education sectors. We believe our capabilities can address these clients’ under-served needs. The early return on these efforts has been encouraging and we plan to shift additional resources toward these efforts over time.

Enhance the efficiency of our operations

We believe it is essential that we operate our businesses as efficiently as possible. We regularly review our business operations and reduce costs or realign resources as necessary. We have also invested in common technology platforms across all of our radio stations to help further standardize our business processes.

Effectively deploy technology to enhance the value of our media assets

We continue to seek innovative ways to combine or enhance our scalable, low cost radio distribution system with digital systems like HD Radio ^® and wireless broadband, as well as to enhance radio’s future through advances like TagStation, NextRadio and the Dial Report.

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RADIO STATIONS

In the following table, “Market Rank by Revenue” is the ranking of the market revenue size of the principal radio market served by our stations among all radio markets in the United States. Market revenue rankings are from BIA/Kelsey’s Media Access Pro database as of March 28, 2017. “Ranking in Primary Demographic Target” is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the March 2017 Nielsen Audio, Inc. ("Nielsen") Portable People Meter results. A “t” indicates the station tied with another station for the stated ranking. “Station Audience Share” represents a percentage generally computed by dividing the average number of persons in the primary demographic listening to a particular station during specified time periods by the average number of such persons in the primary demographic for all stations in the market area as determined by Nielsen.



STATION AND MARKET	MARKET RANK BY REVENUE	FORMAT	PRIMARY DEMOGRAPHIC TARGET AGES	RANKING IN PRIMARY DEMOGRAPHIC TARGET	STATION AUDIENCE SHARE
Los Angeles, CA	1
KPWR-FM		Hip-Hop	18-34	4t	5.2
New York, NY ¹	2
WQHT-FM		Hip-Hop	18-34	2	7.9
WBLS-FM		Urban Adult Contemporary	25-54	4	5.4
WLIB-AM		Urban Gospel	25-54	44t	0.2
St. Louis, MO	23
KPNT-FM		Alternative Rock	18-34	1	9.3
KSHE-FM		Album Oriented Rock	25-54	1	8.5
KNOU-FM		Contemporary Hit Radio	18-34	9	5.3
KFTK-FM		Talk	25-54	12t	4.1
Austin, TX	32
KLBJ-AM		News/Talk	25-54	12	3.1
KLZT-FM		Mexican Regional	18-34	4	7.1
KBPA-FM		Adult Hits	25-54	1	9.8
KLBJ-FM		Album Oriented Rock	25-54	9	4.1
KGSR-FM		Adult Album Alternative	25-54	13t	3.0
KROX-FM		Alternative Rock	18-34	3	7.4
Indianapolis, IN	37
WFNI-AM		Sports Talk	25-54	18	2.1
WYXB-FM		Soft Adult Contemporary	25-54	4	6.7
WLHK-FM		Country	25-54	5	5.7
WIBC-FM		News/Talk	35-64	10	3.6

¹ Our fourth owned station in New York, WEPN-FM, is being operated pursuant to an LMA. Under the terms of the LMA, New York AM Radio LLC, a subsidiary of Disney Enterprises, Inc., provides the programming for the station and sells all advertising within that programming. Emmis continues to own and operate WEPN-FM.

In addition to our other radio broadcasting operations, we own and operate Network Indiana, a radio network that provides news and other programming to 60 affiliated radio stations in Indiana.

NEW TECHNOLOGIES

We believe that the growth of new technologies present not only a challenge, but an opportunity for broadcasters and publishers. The primary challenge is increased competition for the time and attention of our listeners and readers. The opportunity is to further enhance the relationships we already have with our listeners and readers by expanding products and services offered by our radio stations and Indianapolis Monthly and to increase distribution to portable devices like smartphones and tablets.

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COMMUNITY INVOLVEMENT

We believe that to be successful, we must be integrally involved in the communities we serve. We see ourselves as community partners. To that end, each of our radio stations and Indianapolis Monthly participates in many community programs, fundraisers and activities that benefit a wide variety of causes. Charitable organizations that have been the beneficiaries of our contributions, marathons, walkathons, concerts, fairs and festivals include, among others, The Salvation Army, Wish for Heroes, Habitat for Humanity, United Way, Juvenile Diabetes Research Foundation, Make-A-Wish Foundation, March of Dimes, Homeboy Industries, Los Angeles Unified School District, American Red Cross, St. Jude, and the Harlem Chamber of Commerce.

The National Association of Broadcasters Education Foundation (“NABEF”) has honored us with the Hubbard Award, honoring a broadcaster “for extraordinary involvement in serving the community.” Emmis was the second broadcaster to receive this prestigious honor, after the Hubbard family, for which the award is named. The NABEF also recognized Emmis’ WQHT-FM in New York for its outreach after Hurricane Sandy, both for the news coverage it provided and the relief efforts it organized in the weeks after the storm. WIBC-FM was nominated for a national Crystal Award from the National Association of Broadcasters for our efforts in the community in 2014 and in 2016 and WBLS-FM won a national Crystal Award in 2017.

INDUSTRY INVOLVEMENT

We have an active leadership role in a wide range of industry organizations. Our senior managers have served in various capacities with industry associations, including as directors of the National Association of Broadcasters, the Radio Advertising Bureau, the Radio Futures Committee, the Nielsen Audio Advisory Council, the Media Financial Management Association, the City and Regional Magazine Association and as founding members of the Magazine Publishers of America. Our chief executive officer has been honored with the National Association of Broadcasters’ “National Radio Award,” was named Radio Ink’s “Radio Executive of the Year,” and was recently named the 2017 recipient of the Broadcasters Foundation of America's "Lowry Mays Excellence in Broadcasting Award." Our management and on-air personalities have won numerous industry awards.

COMPETITION

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

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

ADVERTISING SALES

Our stations derive their advertising revenue from local and regional advertising in the marketplaces in which they operate, as well as from the sale of national advertising. Local and most regional sales are made by a station’s or magazine’s sales staff. National sales are made by firms specializing in such sales, which are compensated on a commission-only basis. We believe that the volume of national advertising revenue tends to adjust to shifts in a station’s audience share position more rapidly than does the volume of local and regional advertising revenue. During the year ended February 28, 2017 , approximately 15% of our total advertising revenues were derived from national sales, and 85% were derived from local sales.

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EMPLOYEES

As of February 28, 2017 , Emmis had approximately 540 full-time employees and approximately 290 part-time employees. Approximately 35 employees are represented by unions at our various radio stations. We consider relations with our employees to be good.

INTERNET ADDRESS AND INTERNET ACCESS TO SEC REPORTS

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

FEDERAL REGULATION OF BROADCASTING

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

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

LICENSE RENEWAL. Radio stations operate pursuant to broadcast licenses that are ordinarily granted by the FCC for maximum terms of eight years and are subject to renewal upon approval by the FCC. The following table sets forth our FCC license expiration dates in addition to the call letters, license classification, antenna elevation above average terrain (for our FM stations only), power and frequency of all owned stations as of February 28, 2017:

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Expiration Date

of License ¹

Height Above

Average

Terrain (in feet)

Power (in Kilowatts)

Radio Market

Stations

City of License

Frequency

FCC Class

Los Angeles, CA

KPWR-FM

Los Angeles, CA

105.9

December 2021

3,035

New York, NY

WQHT-FM

New York, NY

97.1

June 2022

1,339

6.7

WBLS-FM

New York, NY

107.5

June 2022

1,362

4.2

WLIB-AM

New York, NY

1190

June 2022

N/A

10 D / 30 N

WEPN-FM

New York, NY

98.7

June 2022

1,362

St. Louis, MO

KFTK-FM

Florissant, MO

97.1

February 2021

561

100

KNOU-FM

St. Louis, MO

96.3

February 2021

1,014

KPNT-FM

Collinsville, IL

105.7

December 2020

835

KSHE-FM

Crestwood, MO

94.7

February 2021

1,014

100

Austin, TX

KBPA-FM

San Marcos, TX

103.5

August 2021

1,257

100

KGSR-FM

Cedar Park, TX

93.3

August 2021

1,926

100

KLZT-FM

Bastrop, TX

107.1

August 2021

499

KLBJ-AM

Austin, TX

590

August 2021

N/A

5 D / 1 N

KLBJ-FM

Austin, TX

93.7

August 2021

1,050

KROX-FM

Buda, TX

101.5

August 2021

847

12.5

Indianapolis, IN

WFNI-AM

Indianapolis, IN

1070

August 2020

N/A

50 D / 10 N

WLHK-FM

Shelbyville, IN

97.1

August 2020

732

WIBC-FM

Indianapolis, IN

93.1

August 2020

991

13.5

WYXB-FM

Indianapolis, IN

105.7

August 2020

492

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

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


•	has served the public interest, convenience and necessity;


•	has committed no serious violations of the Communications Act or the FCC rules; and


•	has committed no other violations of the Communications Act or the FCC rules which would constitute a pattern of abuse.

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

REVIEW OF OWNERSHIP RESTRICTIONS. The FCC is required by statute to review all of its broadcast ownership rules on a quadrennial basis ( i.e. , every four years) and to repeal or modify any of its rules that are no longer “necessary in the public interest.”

Despite several such reviews and appellate remands, the FCC’s rules limiting the number of radio stations that may be commonly owned, or owned in combination with a television station or newspaper, in a local market have remained largely intact. The FCC's previous ownership reviews have been subject to litigation. The most recent court decision was issued by the Third Circuit in May 2016 and concerned the FCC's then-pending 2010 and 2014 reviews. In August 2016, the FCC concluded its 2010 and 2014 reviews, deciding to retain the local radio ownership rule, the radio-television cross-ownership rule, and the prohibition on newspaper/broadcast cross-ownership without significant alteration. Various parties have appealed the FCC's August 2016 order, and other parties have filed petitions for reconsideration, all of which remain pending. We cannot predict whether the appeals or reconsideration proceedings will result in modifications of the ownership rules or the impact (if any) that such modifications would have on our business.

The discussion below reviews the pertinent ownership rules currently in effect as a result of the FCC's August 2016 order.

Local Radio Ownership :

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

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


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


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


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

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

For purposes of applying these numerical limits, the FCC has also adopted rules with respect to (i) so-called local marketing agreements, or “LMAs,” by which the licensee of one radio station provides programming for another licensee’s radio station in the same market and sells all of the advertising within that programming and (ii) so-called joint sale agreements, or “JSAs,” by which the licensee of one station sells the advertising time on another station in the market. Under these rules, an entity that owns one or more radio stations in a market and programs more than 15% of the broadcast time, or sells more than 15% of the advertising time, on another radio station in the same market pursuant to an LMA or JSA is generally required to count the station toward its media ownership limits even though it does not own the station. As a result, in a market where we own one or more radio stations, we generally cannot provide programming to another station under an LMA, or sell advertising on another station pursuant to a JSA, if we could not acquire that station under the local radio ownership rule. In its August 2016 order, the FCC declined to make other types of agreements such as “shared services agreements” (or "SSAs") and/or “local news service” agreements, attributable, and adopted a disclosure requirement for SSAs between commercial television stations.

On April 26, 2012, a subsidiary of Emmis entered into an LMA with New York AM Radio, LLC pursuant to which, commencing April 30, 2012, it began purchasing from Emmis the right to provide programming on radio station WEPN-FM, 98.7 FM, New York, NY until August 31, 2024, subject to certain conditions. Disney Enterprises, Inc., the parent company of New York AM Radio, LLC, has guaranteed the obligations under the LMA. Emmis’ subsidiary will retain ownership of the 98.7 FM FCC license during the term of the LMA and received an annual fee of $8.4 million for the first year of the term under the LMA, which fee increases by 3.5% each year thereafter until the LMA’s termination.

Although the FCC’s quadrennial review decisions have not changed the numerical caps under the local radio rule, the FCC adjusted the rule in June 2003 by deciding that both commercial and noncommercial stations could be counted in determining the number of stations in a radio market. The decision also altered the definition of the relevant local market for purposes of the rule. The FCC “grandfathered” existing station “clusters” not in compliance with the numerical caps as calculated pursuant to the new market definition, but provided that they could be sold intact only to small businesses meeting certain requirements. In December 2007, the FCC expanded this policy to allow an owner to sell a grandfathered station cluster to any buyer, so long as the buyer committed to file, within 12 months, an application with the FCC to transfer the excess station(s) to an eligible small business or to a trust for ultimate sale to such an entity. Although the Third Circuit vacated the FCC’s selected definition of small businesses eligible to purchase clusters that exceed the numerical limits in 2011, the FCC reinstated that definition in its August 2016 order. The change in market definition appears to impact the Austin, Texas market, such that we exceed the numerical cap for FM stations. If we chose to sell our Austin cluster of stations, we would likely therefore have to “spin off” one FM station to a separate buyer or to transfer the cluster to an entity meeting the FCC's small business definition.

Cross-Media Ownership :

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


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


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


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

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

FCC rules also generally prohibit common ownership of a daily newspaper and a radio or television station in the same local market, subject to an exception for combination involving "failed" or "failing" stations or newspapers.

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


•	all officer and director positions in a licensee or its direct/indirect parent(s);


•	voting stock interests of at least 5% (or 20%, if the holder is a passive institutional investor, i.e. , a mutual fund, insurance company or bank);


•	any equity interest in a limited partnership or limited liability company where the limited partner or member has not been “insulated” from the media-related activities of the LP or LLC pursuant to specific FCC criteria;

•

equity and/or debt interests which, in the aggregate, exceed 33% of the total asset value of a station or other media entity (the “equity/debt plus policy”), if the interest holder supplies more than 15% of the station’s total weekly programming (usually pursuant to a time brokerage, local marketing or network affiliation agreement) or is a same-market media entity ( i.e. , broadcast company or newspaper). In December 2007, the FCC increased these limits under certain circumstances where the equity and/or debt interests are in a small business meeting certain requirements. Although the Third Circuit vacated the FCC’s selected definition of small businesses eligible to take advantage of these increased limits in 2011, the FCC reinstated that definition in its August 2016 order.

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

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

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

ALIEN OWNERSHIP. Under the Communications Act, no FCC license may be held by a corporation if more than one-fifth of its capital stock is owned or voted by aliens or their representatives, a foreign government or representative thereof, or an entity organized under the laws of a foreign country (collectively, “Non-U.S. Persons”). Furthermore, the Communications Act provides that no FCC license may be granted to an entity directly or indirectly controlled by another entity of which more than one-fourth of its capital stock is owned or voted by Non-U.S. Persons if the FCC finds that the public interest will be served by the denial of such license. The FCC staff had interpreted this provision to require an affirmative public interest finding to permit the grant or holding of a license, and had made such a finding only in limited circumstances. In November 2013 the FCC clarified that it would accept requests to allow foreign investment above 25% in broadcast holding companies, and that it would evaluate those requests on a case-by-case basis to determine whether the requesting party had provided a sufficient public interest showing. In September 2016, the FCC adopted rules to simplify and streamline the process for requesting authority to exceed the 25% indirect foreign ownership limit in broadcast licensees and revised the methodology that publicly traded broadcasters must use to assess their compliance with the foreign ownership restrictions. The foregoing restrictions on alien ownership apply in modified form to other types of business organizations, including partnerships and limited liability companies. In addition, an LMA with a foreign owned company is not prohibited as long as the non-foreign holder of the FCC license continues to control and operate the station. Our Second Amended and Restated Articles of Incorporation and Second Amended and Restated Code of By-Laws authorize the Board of Directors to prohibit such restricted alien ownership, voting or transfer of capital stock as would cause Emmis to violate the Communications Act or FCC regulations.

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

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interest might be served by an assignment of the broadcast license or transfer of control of the licensee to a party other than the assignee or transferee specified in the application.

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

Federal law prohibits the broadcast of obscene material at any time and the broadcast of indecent material during specified time periods; these prohibitions are subject to enforcement by the FCC and carry fines of up to $325,000 per violation. The company has received, and may receive in the future, letters of inquiry or other notifications concerning alleged violations of the indecency rules at certain of its stations. We cannot predict the outcome of any indecency complaint proceeding or investigation or the extent or nature of future FCC enforcement actions.

The FCC’s indecency rules have also been the subject of litigation. In July 2010, the Second Circuit held the FCC’s indecency standards to be unconstitutionally vague in violation of the First Amendment. The Second Circuit later vacated the agency decision at issue in another appeal based on its earlier decision. The FCC challenged these rulings in the Supreme Court. In June 2012 the Supreme Court vacated the Second Circuit’s decision, finding that the FCC had failed to provide adequate notice regarding the contours of its indecency policy with respect to the broadcasts at issue in the underlying proceedings, but leaving open the possibility that the agency might be able to enforce the prohibition on broadcast indecency in the future. The Third Circuit issued a decision vacating another FCC indecency ruling in November 2011, and the Supreme Court denied the FCC’s request for review of this decision. It is not clear how the FCC will apply these judicial decisions to outstanding complaints, including any that may involve Emmis stations, or how they will impact future FCC policies in this area. The FCC has also solicited public comment on whether, and if so how, to revise its indecency enforcement policies, in a proceeding that remains pending.

Federal law also imposes sponsorship identification (or “payola”) requirements, which mandate the disclosure of information concerning programming that is paid for by third parties. The company has received, and may receive in the future, letters of inquiry or other notifications concerning alleged violations of the sponsorship identification rules at certain of its stations. We cannot predict the outcome of any sponsorship identification complaint proceeding or investigation or the extent or nature of future FCC enforcement actions.

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

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

ADDITIONAL DEVELOPMENTS AND PROPOSED CHANGES. The FCC has adopted rules implementing a low power FM (“LPFM”) service, and approximately 800 such stations are in operation. In November 2007, the FCC adopted rules that, among other things, enhance LPFM’s interference protection from subsequently-authorized full-service stations. Congress then passed legislation eliminating certain minimum distance separation requirements between full-power and LPFM stations, thereby reducing the interference protection afforded to FM stations. As required by the legislation, the FCC in January 2012 submitted a report to Congress indicating that the results of a statutorily mandated economic study indicated that, on the whole, LPFM stations do not currently have, and in the future are unlikely to have, a demonstrable economic impact on full-service commercial FM radio stations. In March 2012, the FCC modified its rules to permit the processing of additional LPFM applications and to implement the legislative requirements regarding interference protection. The FCC opened a window for the filing of applications seeking authority to construct or make major changes to LPFM facilities which extended from October 15 through November 14, 2013, and in which it received more than 2,800 LPFM applications. The FCC continues to process the applications submitted during the window and, although to date there have been very few, if any, instances of LPFM stations interfering with full-power radio stations, we cannot predict whether any LPFM stations will actually interfere with the coverage of our radio stations in the future.

In June 2009, the FCC adopted rules that allow an AM radio station to use currently authorized FM translator stations to retransmit the AM station’s programming within the AM station’s authorized service area. In October 2015, the FCC issued an Order that adopted a two-stage process for AM radio stations to acquire additional FM translators, which began in early 2016 and is expected to conclude in 2017. The FCC also adopted certain changes to its rules that govern AM radio stations, and sought comment on additional changes to those rules. The October 2015 proceeding remains pending.

The FCC also previously authorized the launch and operation of a satellite digital audio radio service (“SDARS”) system. In July 2008, the two original SDARS companies-Sirius Satellite Radio, Inc. and XM Satellite Radio Holdings, Inc.-merged into

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a new company called Sirius XM, which currently provides nationwide programming service. Sirius XM also offers channels that provide local traffic and weather information for major cities.

In October 2002, the FCC issued an order selecting a technical standard for terrestrial digital audio broadcasting (“DAB,” also known as high definition radio or “HD Radio”). The in-band, on-channel (“IBOC”) technology chosen by the agency allows AM and FM radio broadcasters to introduce digital operations and permits existing stations to operate on their current frequencies in either full analog mode, full digital mode, or a combination of both (at reduced power). In March 2005, the FCC announced that, pending adoption of final rules, it would allow stations on an interim basis to broadcast multiple digital channels. In March 2007, the FCC adopted service rules for HD Radio ^® . Significantly, the FCC decided to allow FM stations to broadcast digital multicast streams without seeking prior FCC authority, to provide datacasting services, to lease excess digital capacity to third parties, and to offer subscription services pursuant to requests for experimental authority. Under the new rules, FM stations may operate in the “extended hybrid mode,” which provides more flexibility for multicasting and datacasting services; and may use separate analog and digital antennas without seeking prior FCC authority. FM translators, FM boosters and low power FM stations may also broadcast digitally where feasible, and AM stations may now operate digitally during nighttime hours. The new rules mandate that broadcasters offering digital service provide at least one free over-the-air signal comparable in quality to their analog signal and that they simulcast their analog programming on their main digital stream, and prohibit broadcasters from operating exclusively in digital. The FCC declined either to set any mandatory deadline for broadcasters to convert to digital operations or to impose additional public interest obligations (beyond those that already apply to analog broadcasters) on digital broadcasters. The FCC did, however, adopt a Further Notice of Proposed Rulemaking seeking comment on (among other things) whether additional public interest obligations are necessary, including consideration of a requirement that radio stations report their public service programming in detail on a standardized form and post that form and all other contents of their public inspection files on the station’s website. The FCC subsequently imposed an online public file requirement on television stations and, in January 2016, announced that it would extend that requirement to radio stations. In January 2010, the FCC revised its DAB service rules to allow FM DAB stations to increase the permitted power levels of DAB transmissions. In September 2008, shortly after approving the Sirius-XM merger, the FCC sought comment on whether it should mandate the inclusion of HD Radio ^® features in satellite radio receivers. That proceeding remains pending, and we cannot predict its outcome or the impact that a decision might have on our business.

In order to broadcast musical compositions or to stream them over the Internet, Emmis must pay royalties to copyright owners of musical compositions (typically, songwriters and publishers). These copyright owners often rely on organizations known as performing rights organizations, which negotiate licenses with copyright users for the public performance of their compositions, collect royalties, and distribute them to copyright owners. The three major performing rights organizations, from which Emmis has licenses and to which Emmis pays royalties, are the American Society of Composers, Authors, and Publishers, Broadcast Music, Inc., and SESAC, Inc.. These rates are set periodically, are often negotiated by organizations acting on behalf of broadcasters, and may increase in the future. It also is possible that songwriters or publishers may disassociate with these performing rights organizations, or that additional such organizations could emerge in the future. In 2013 a new performing rights organization, named Global Music Rights ("GMR"), was formed. GMR has obtained the rights to certain high-value copyrights and is seeking to negotiate individual licensing agreements with radio stations for songs within its repertoire. GMR and the Radio Music License Committee, Inc. ("RMLC"), which negotiates music licensing fees with performance rights organizations on behlaf of many radio stations, have initiated antitrust litigation against one another, which remains pending. In addition, the Department of Justice ("DOJ") has recently disagreed with a federal court regarding whether the DOJ's consent decrees with major performance rights organizations require so-called "full-work" licenses (which would allow a license-holder to play all of the works in a performance rights organization's repertoire). If a significant number of musical composition copyright owners withdraw from the established performing rights organizations, or if new performing rights organizations form to license compositions that are not already licensed, Emmis’ royalty rates or negotiation costs could increase. Emmis' royalty rates or negotiation costs could also change as a result of GMR/RMLC litigation or the resolution of the full-work licensing issue.

In order to stream music over the Internet, Emmis must also obtain licenses and pay royalties to the owners of copyrights in sound recordings (typically, artists and record companies). These royalties are in addition to royalties for Internet streaming that must also be paid to performance rights organizations. The Copyright Royalty Board (“CRB”) recently completed its proceeding to set rates for the 2016-2020 license period. The CRB set a rate during this period for performances by non-subscription noninteractive services of 0.17 cent per listener per song, and a rate for noninteractive subscription services of 0.22 cent per listener per song, both of which are subject to changes that mirror changes in the Consumer Price Index. The CRB's 2016-2020 rates represent a decrease from the 2015 CRB rates applicable to broadcasters and other webcasters, but the determination has been appealed.

In addition, lawsuits have been filed under various state laws challenging the right of digital audio transmission services and broadcasters to publicly perform or reproduce sound recordings fixed prior to February 15, 1972 (“pre-1972 sound recordings”) without a license. Such sound recordings currently are exempt from federal copyright protection. The 1976 Copyright Act provides that pre-1972 sound recordings may be the subject of state copyright protection until 2067. As a result, there are various protections of pre-1972 sound recordings in place across various states, and the scope of protections and of exceptions and limitations to those

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protections varies from state to state. Moreover, the existence or scope of any public performance right in pre-1972 sound recordings is unclear. For example, courts in California have issued decisions in favor of the putative copyright owners against a digital transmission service. One of these cases is currently pending on appeal in the Ninth Circuit. On the other hand, courts in New York and Florida have held that there are no public performance rights under the common law in those states. The New York case was recently resolved in favor of the digital transmission service, while an appeal of the Florida case is pending. If the courts find that there are public performance rights in pre-1972 recordings and the decisions are interpreted to apply to radio broadcasting or Internet streaming, this could impede Emmis’ ability to broadcast and/or stream pre-1972 sound recordings and/or increase its costs.

Legislation also has previously been introduced in Congress that would require the payment of performance royalties to artists, musicians, or record companies whose music is played on terrestrial radio stations, ending a long-standing copyright law exception. If enacted, such legislation could have an adverse impact on the cost of music programming.

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

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


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


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


•	proposals to change rules relating to political broadcasting;


•	technical and frequency allocation matters;


•	AM stereo broadcasting;


•	proposals to modify service and technical rules for digital radio, including possible additional public interest requirements for terrestrial digital audio broadcasters;


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


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


•	proposals permitting FM stations to accept formerly impermissible interference;


•	proposals to reinstate holding periods for licenses;


•	changes to broadcast technical requirements related to the implementation of SDARS;


•	proposals to modify broadcasters’ public interest obligations;


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


•	proposals to regulate violence and hate speech in broadcasts.

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

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

ITEM 1A. RISK FACTORS.

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

Risks Related to our Business

Our results of operations could be negatively impacted by weak economic conditions and instability in financial markets.

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

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

Radio revenues in the markets in which we operate have been challenged and may remain so.

Radio revenues in the markets in which we operate have lagged the growth of the general United States economy. Our market revenues, as measured by the accounting firm Miller Kaplan Arase LLP ("Miller Kaplan"), during the years ended February 2015, 2016 and 2017 were down 3.7%, down 1.5%, and up 1.7% respectively. During this same period, the U.S. Bureau of Economic Analysis reports that U.S. current-dollar gross domestic product growth has been 3% to 4% each year. Our results of operations could be negatively impacted if radio revenue performance in the markets in which we operate continues to lag general United States economic growth.

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

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

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

From time to time, other stations may change their format or programming, a new station may adopt a format to compete directly with our stations for audiences and advertisers, or stations might engage in aggressive promotional campaigns. These tactics could result in lower ratings and advertising revenue or increased promotion and other expenses and, consequently, lower earnings and cash flow for us. Any failure by us to respond, or to respond as quickly as our competitors, could also have an adverse effect on our business and financial performance. In February 2015, one of our large competitors changed the format of one of its radio stations in the Los Angeles radio market to more directly compete with our radio station in Los Angeles. This development in Los Angeles negatively impacted our financial performance in fiscal 2016 and 2017 and the early months of fiscal 2018. On May 8, 2017, we entered into an agreement to sell our radio station in Los Angeles, subject to certain regulatory approvals and closing conditions.

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

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

Our radio operations in New York and Los Angeles, including the LMA fee we receive from a subsidiary of Disney, accounted for approximately 50% of our radio revenues in fiscal 2017. Our results from operations can be materially affected by decreased ratings or resulting revenues in either one of these markets. On May 8, 2017, we entered into an agreement to sell our radio station in Los Angeles, subject to certain regulatory approvals and closing conditions. Our exposure to the Los Angeles radio market will be eliminated if we are able to close this transaction, as expected, in the back half of 2017.

Our radio operations lack the scale of some of our competitors, especially in the New York and Los Angeles markets.

We currently own one station in Los Angeles and four stations in New York, one of which is being programmed by another broadcaster under the terms of an LMA. Some of our competitors in these markets have larger clusters of radio stations. Our competitors may be able to leverage their market share to extract a greater percentage of available advertising revenues in these markets and may be able to realize operating efficiencies by programming multiple stations in a market. Also, given our reliance on urban formats in each of these markets, our results from operations can be materially affected by additional urban format competition by our competitors. On May 8, 2017, we entered into an agreement to sell our radio station in Los Angeles, subject to certain regulatory approvals and closing conditions. Our exposure to the Los Angeles radio market will be eliminated if we are able to close this transaction, as expected, in the back half of 2017.

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We must respond to the rapid changes in technology, services and standards that characterize our industry in order to remain competitive, and changes in technology may increase the risk of material intellectual property infringement claims.

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


•	satellite-delivered digital audio radio service, which has resulted in subscriber-based satellite radio services with numerous niche formats;


•	audio programming by cable systems, direct-broadcast satellite systems, Internet content providers and other digital audio broadcast formats;


•	personal digital audio devices (e.g., audio via Wi-Fi, smartphones, iPods ^® , iPhones ^® , WiMAX, the Internet and MP3 players);


•	HD Radio ^® , which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services; and


•	low-power FM radio, which could result in additional FM radio broadcast outlets, including additional low-power FM radio signals authorized in December 2010 under the Local Community Radio Act.

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

A number of automakers are introducing more advanced, interactive dashboard technology including the introduction of technologies like Apple CarPlay and Google Android Auto that enable vehicle entertainment systems to more easily interface with a consumer’s smartphone and include alternative audio entertainment options.

Programmatic buying, which enables an advertiser to purchase advertising inventory through an exchange or other service and bypass the traditional personal sales relationship, has become widely adopted in the purchase of digital advertising and is an emerging trend in the radio industry. We cannot predict the impact programmatic buying may have on the radio industry or our financial condition and results of operations.

Additionally, technological advancements in the operation of radio stations and related businesses have increased the number of patent and other intellectual property infringement claims brought against broadcasters, including Emmis. While Emmis has not historically been subject to material patent and other intellectual property claims and takes certain steps to limit the likelihood of, and exposure to, such claims, no assurance can be given that material claims will not be asserted in the future.

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

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

Each of our radio stations operates pursuant to one or more licenses issued by the FCC. Under FCC rules, radio licenses are granted for a term of eight years. Our licenses expire at various times through June 2022. Although we will apply to renew these licenses, third parties may challenge our renewal applications. While we are not aware of facts or circumstances that would prevent us from having our current licenses renewed, there can be no assurance that the licenses will be renewed or that renewals will not include conditions or qualifications that could adversely affect our business and operations. Failure to obtain the renewal of any of our broadcast licenses may have a material adverse effect on our business and operations. In addition, if we or any of our officers, directors or significant stockholders materially violates the FCC’s rules and regulations or the Communications Act, is convicted of a felony or is found to have engaged in unlawful anticompetitive conduct or fraud upon another government agency, the FCC may, in response to a petition from a third party or on its own initiative, in its discretion, commence a proceeding to impose sanctions upon us which could involve the imposition of monetary fines, the revocation of our broadcast licenses or other sanctions. If the FCC were to issue an order denying a license renewal application or revoking a

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license, we would be required to cease operating the applicable radio station only after we had exhausted all rights to administrative and judicial review without success.

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

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

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

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

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

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

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

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

Our business strategy and our ability to operate profitably depend on the continued services of our key employees, the loss of whom could have a material adverse effect on our business.

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

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

Impairment losses related to our intangible assets have reduced our earnings.

We have reported significant net losses in our consolidated statement of operations in the past as a result of recording noncash impairment charges, mostly related to FCC licenses and goodwill. During the years ended February 28 (29), 2015, 2016 and 2017, we incurred impairment losses of $67.9 million, $9.5 million, and $9.8 million, respectively. As of February 28, 2017 , our FCC licenses and goodwill comprise 70% of our total assets. If events occur or circumstances change that would reduce the fair value of the FCC licenses and goodwill below the amount reflected on the balance sheet, we may be required to recognize impairment charges, which may be material, in future periods.

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Future operation of our business may require significant additional capital.

The continued development, growth and operation of our businesses may require substantial capital. In particular, additional acquisitions may require large amounts of capital. We intend to fund our growth, including acquisitions, if any, with cash generated from operations, borrowings under our Credit Agreement dated June 10, 2014 (the “2014 Credit Agreement”), as amended, and proceeds from future issuances of debt and equity, both public and private. Currently, the 2014 Credit Agreement substantially limits our ability to make acquisitions. Our ability to raise additional debt or equity financing is subject to market conditions, our financial condition and other factors. If we cannot obtain financing on acceptable terms when needed, our results of operations and financial condition could be adversely impacted.

We may fail to realize any benefits and incur unanticipated losses related to any acquisition.

The success of our strategic acquisitions will depend, in part, on our ability to successfully integrate the acquired assets with our existing assets. It is possible that the integration process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers and employees or to achieve the anticipated benefits of the acquisition. Successful integration may also be hampered by any differences between the operations and corporate culture of the two organizations. If we experience difficulties with the integration process, the anticipated benefits of the acquisition may not be realized fully, or at all, or may take longer to realize than expected. Finally, any cost savings that are realized may be offset by losses in revenues from the acquired business.

We may fail to consummate dispositions or complete them in a timely manner.

We regularly review our portfolio of assets and periodically dispose of assets when we believe it is appropriate to do so. In that respect, on August 19, 2016, we announced that we were exploring strategic alternatives for our publishing division (except Indianapolis Monthly ), our radio stations in Terre Haute, Indiana, and WLIB-AM in New York. We completed our sale of Texas Monthly on November 1, 2016, our sale of radio stations in Terre Haute, Indiana on January 30, 2017, and the sale of the remainder of our publishing division (except Indianapolis Monthly ) on February 28, 2017. We continue to explore our options with WLIB-AM in New York. In addition, the amendment to our credit agreement that we executed on April 18, 2017, requires Emmis to divest of assets that will yield at least $80 million of proceeds beyond the transactions that had closed through February 28, 2017. We have nine months from the date of the amendment to enter into definitive agreements for the requisite sales and six additional months to close the transactions. The sale and transfer of an FCC license requires approval by the FCC. While we have entered into an agreement to sell our radio station in Los Angeles for $82.8 million, which satisfies the requirement to enter into definitive agreements within nine months, the closing is subject to certain regulatory approvals and closing conditions. Accordingly, we cannot assure investors that necessary regulatory approvals will be obtained and other closing conditions will be met that will allow the disposition to close by July 18, 2018.

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

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

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

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

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

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We have significant obligations relating to our current operating leases.

In February 2016, the Financial Accounting Standards Board released Accounting Standards Update 2016-02, Leases (Topic 842) ("ASU 2016-02"). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

As of February 28, 2017 , we had operating lease commitments of approximately $58.4 million . These leases are classified as operating leases and disclosed in Note 11 to our accompanying consolidated financial statements. Currently, operating leases are classified as off-balance sheet transactions and only the current year operating lease expense is accounted for in the consolidated statements of operations as rent expense. All of our leases classified as operating leases require us to make certain estimates at the inception of the lease in order to determine whether the lease is operating or capital. ASU 2016-02 requires that substantially all operating leases be recognized as assets (the right to use the leased property) and liabilities (the present value of future lease payments). This guidance will be effective for the Company as of March 1, 2019 and requires a modified retrospective implementation. When adopted, ASU 2016-02 will result in an increase in the assets and liabilities reflected on our consolidated balance sheets.

Our business is dependent upon the proper functioning of our internal business processes and information systems and modification or interruption of such systems may disrupt our business, processes and internal controls.

The proper functioning of our internal business processes and information systems is critical to the efficient operation and management of our business. If these information technology systems fail or are interrupted, our operations may be adversely affected and operating results could be harmed. Our business processes and information systems need to be sufficiently scalable to support the future growth of our business and may require modifications or upgrades that expose us to a number of operational risks. Our information technology systems, and those of third party providers, may also be vulnerable to damage or disruption caused by circumstances beyond our control. These include catastrophic events, power anomalies or outages, natural disasters, computer system or network failures, viruses or malware, physical or electronic intrusions, unauthorized access and cyber-attacks. Any material disruption, malfunction or similar challenges with our business processes or information systems, or disruptions or challenges relating to the transition to new processes, systems or providers, could have a material adverse effect on our financial position, results of operations and cash flows.

Because of our holding company structure, we depend on our subsidiaries for cash flow, and our access to this cash flow is restricted.

We operate as a holding company. All of our radio stations and other assets are currently owned and operated by our subsidiaries. Emmis Operating Company (“EOC”), our wholly-owned subsidiary, is the borrower under our credit facility. All of our station and other operating subsidiaries and FCC license subsidiaries are subsidiaries of EOC. Further, we guarantee EOC’s obligations under the credit facility and substantially all of EOC’s assets are pledged as collateral under the credit facility. As a holding company, our only source of cash to pay our obligations, including corporate overhead expenses, is cash distributed from our subsidiaries. We currently expect that the majority of the net earnings and cash flow of our subsidiaries will be retained and used by them in their operations, including servicing their debt obligations. Even if our subsidiaries elect to make distributions to us, we cannot be assured that applicable state law and contractual restrictions, including covenants contained in our credit facility, would permit such dividends or distributions.

Risks Related to our Indebtedness:

Our substantial indebtedness could adversely affect our financial health.

We have a significant amount of indebtedness. At February 28, 2017 , our total indebtedness was $221.0 million , consisting of $152.2 million under our 2014 Credit Agreement, $60.0 million of 98.7FM nonrecourse debt and $8.8 million of other nonrecourse debt. The Company expects that proceeds from the LMA in New York with a subsidiary of Disney will be sufficient to pay all debt service related to the 98.7FM nonrecourse debt. Our shareholders’ deficit was $36.9 million . Our substantial indebtedness could have important consequences to investors. For example, it could:


•	make it more difficult for us to satisfy our obligations with respect to our indebtedness;


•	increase our vulnerability to generally adverse economic and industry conditions;


•	require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;


•	result in higher interest expense in the event of increases in interest rates because some of our debt is at variable rates of interest;

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•	limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;


•	place us at a competitive disadvantage compared to some of our competitors that have less debt; and


•	limit, along with the financial and other restrictive covenants in our 2014 Credit Agreement, our ability to borrow additional funds.

If we cannot continue to comply with the financial covenants in our debt instruments, or obtain waivers or other relief from our lenders, we may default, which could result in loss of our sources of liquidity and acceleration of our indebtedness.

We have a substantial amount of indebtedness, and the instruments governing such indebtedness contain restrictive financial covenants. Our ability to comply with the covenants in our debt instruments will depend upon our future performance and various other factors, such as business, competitive, technological, legislative and regulatory factors, some of which are beyond our control. We may not be able to maintain compliance with all of these covenants. In that event, we would need to seek an amendment to our debt instruments, or would need to refinance our debt instruments. There can be no assurance that we can obtain future amendments or waivers of our debt instruments, or refinance our debt instruments and, even if so, it is likely that such relief would only last for a specified period, potentially necessitating additional amendments, waivers or refinancings in the future. In the event that we do not maintain compliance with the covenants under our debt instruments, the lenders could declare an event of default, subject to applicable notice and cure provisions, resulting in a material adverse impact on our financial position. Upon the occurrence of an event of default under our debt instruments, the lenders could elect to declare all amounts outstanding under our 2014 Credit Agreement to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure that indebtedness. Our lenders under our 2014 Credit Agreement have taken security interests in substantially all of our consolidated assets. If the lenders accelerate the repayment of borrowings, we may be forced to liquidate certain assets to repay all or part of our debt instruments, and we cannot be assured that sufficient assets will remain for us to continue our business operations after we have paid all of the borrowings under our debt instruments. Our ability to liquidate assets is affected by the regulatory restrictions associated with radio stations, including FCC licensing, which may make the market for these assets less liquid and increase the chances that these assets will be liquidated at a significant loss.

Our 98.7FM debt is not subject to these risks to the same degree as the debt under our 2014 Credit Agreement, as certain rights and payments under the 98.7FM LMA have been assigned to the holder of the 98.7FM debt, the 98.7FM debt is generally nonrecourse to the rest of Emmis, and the LMA payments have been guaranteed by Disney Enterprises, Inc.

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

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

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

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

Our 2014 Credit Agreement, as amended, requires us to repay approximately $12.1 million of our term notes in fiscal 2018 and $4.7 million annually thereafter until maturity in addition to periodic interest payments. Our ability to make payments on our indebtedness and to fund capital expenditures will depend on our ability to generate cash in the future. This ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our businesses might not generate sufficient cash flow from operations. We might not be able to complete future offerings, and future borrowings might not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

Risks Related to our Common Stock:

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

As of May 5, 2017, our Chairman of the Board of Directors and Chief Executive Officer, Jeffrey H. Smulyan, beneficially owned shares representing approximately 51.6% of the outstanding combined voting power of all classes of our common stock, as calculated pursuant to Rule 13d-3 of the Exchange Act. He therefore is in a position to exercise substantial influence over the outcome of most matters submitted to a vote of our shareholders, including the election of directors.

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

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

Our stock price and trading volume could be volatile.

Our Class A common stock is currently listed on the National Association of Securities Dealers Automated Quotation ("Nasdaq") Global Select Market under the symbol “EMMS.” The market price of our Class A common stock and our trading volume have been subject to fluctuations since our initial public offering in 1994. Accordingly, the market price of our Class A common stock could experience volatility, regardless of our operating performance.

Our Class A common stock may cease to be listed on the Nasdaq Global Select Market.

Our common stock is currently listed on the Nasdaq Global Select Market under the symbol “EMMS.” We may not be able to meet the continued listing requirements of the Nasdaq Global Select Market, which require, among other things, a minimum closing price of our common stock and a minimum market capitalization. In the past, we have received written deficiency notices from The Nasdaq Stock Market advising us that the closing bid price of our Class A common stock did not meet the continued listing requirements pursuant to NASDAQ Listing Rule 5450(a)(1). In each of these instances, we were able to satisfy the requirements for continued listing. If we are unable to satisfy the requirements of the Nasdaq Global Select Market for continued listing, our common stock would be subject to delisting from that market, and we might or might not be eligible to list our shares on another Nasdaq market.

A delisting of our Class A common stock from the Nasdaq Global Select Market could negatively impact us by, among other things, reducing the liquidity and market price of our common stock. There can be no assurance that we will be able to comply with the Minimum Bid Price Rule, or any other requirement in the future.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

The types of properties required to support each of our radio stations include offices, studios and transmitter/antenna sites. We typically lease our studio and office space, although we do own some of our facilities. Most of our studio and office space leases contain lease terms with expiration dates of five to fifteen years. A station’s studios are generally housed with its offices in downtown or business districts. We generally consider our facilities to be suitable and of adequate size for our current and intended purposes. We own several of our main transmitter/antenna sites and lease the remainder of our transmitter/antenna sites with lease terms that generally range from five to twenty years. The transmitter/antenna site for each station is generally located so as to provide maximum market coverage, consistent with the station’s FCC license. In general, we do not anticipate difficulties in renewing facility or transmitter/antenna site leases or in leasing additional space or sites if required. We have approximately $58.4 million in aggregate minimum rental commitments under real estate leases. Many of these leases contain escalation clauses such as defined contractual increases or cost-of-living adjustments.

Our principal executive offices are located at 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, in approximately 91,500 square feet of owned office space which is shared by our Indianapolis radio stations and our Indianapolis Monthly publication. This property is subject to a mortgage under our 2014 Credit Agreement.

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

ITEM 3. LEGAL PROCEEDINGS.

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

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EXECUTIVE OFFICERS OF THE REGISTRANT

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



NAME	POSITION	AGE AT FEBRUARY 28, 2017	YEAR FIRST ELECTED OFFICER
Paul V. Brenner	President - TagStation / NextRadio	48	2007
J. Scott Enright	Executive Vice President, General Counsel and Secretary	54	1998
Ryan A. Hornaday	Executive Vice President, Chief Financial Officer and Treasurer	43	2006
Gregory T. Loewen	President - Publishing Division and Chief Strategy Officer	45	2007

Mr. Brenner was appointed as an executive officer of Emmis in July 2016 and has served as President - TagStation / NextRadio since March 2016. Previously, Mr. Brenner served as Senior Vice President and Chief Technology Officer from March 2009 to February 2016. Mr. Brenner joined Emmis in 1998.

Mr. Enright was appointed Executive Vice President, General Counsel and Secretary in March 2009. Previously, Mr. Enright served as Senior Vice President, Associate General Counsel and Secretary of Emmis from September 2006 to February 2009 and as Vice President, Associate General Counsel and Assistant Secretary from the date he joined Emmis in October 1998, adding the office of Secretary in 2002.

Mr. Hornaday was appointed Executive Vice President, Chief Financial Officer and Treasurer in August 2015. Previously, Mr. Hornaday served as Senior Vice President - Finance and Treasurer from December 2008 to July 2015. Mr. Hornaday joined Emmis in 1999.

Mr. Loewen was appointed President – Publishing Division and Chief Strategy Officer in March 2010. Mr. Loewen has also served as President of Digonex since our acquisition of a controlling interest in June 2014. Previously, Mr. Loewen served as Chief Strategy Officer from February 2007 to February 2010. Prior to joining Emmis in February 2007, Mr. Loewen served as Vice President of Digital Media and Strategy for The Toronto Star.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

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

MARKET INFORMATION FOR OUR COMMON STOCK

Emmis’ Class A common stock is traded in the over-the-counter market and is quoted on the Nasdaq Global Select Market under the symbol EMMS. There is no established public trading market for Emmis’ Class B common stock or Class C common stock. On July 8, 2016, we effected a one-for-four reverse stock split for all classes of our common stock.

The following table sets forth the high and low sales prices of the Class A common stock for the periods indicated. Sales prices have been adjusted for all periods presented to reflect the impact of the reverse stock split.



QUARTER ENDED	HIGH		LOW
May 2015	$	8.52	$	4.16
August 2015	$	5.96	$	3.96
November 2015	$	5.76	$	2.44
February 2016	$	3.24	$	1.72

May 2016	$	2.76	$	1.92
August 2016	$	4.33	$	2.20
November 2016	$	4.17	$	3.22
February 2017	$	3.68	$	2.76

HOLDERS

At May 5, 2017, there were 511 record holders of the Class A common stock, and there was one record holder of the Class B common stock.

DIVIDENDS

Emmis currently intends to retain future earnings for use in its business and has no plans to pay any dividends on shares of its common stock in the foreseeable future. Emmis’ 2014 Credit Agreement sets forth certain restrictions on our ability to pay dividends. See Note 5 to the accompanying consolidated financial statements for more discussion of the 2014 Credit Agreement.

SHARE REPURCHASES

During the three-month period ended February 28, 2017 , 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 February 28, 2017 :



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
December 1, 2016 - December 31, 2016	—	$	—	—	$	—
January 1, 2017 - January 31, 2017	24,462	$	3.16	—	$	—
February 1, 2017 - February 28, 2017	11,411	$	2.77	—	$	—
	35,873			—

ITEM 6. SELECTED FINANCIAL DATA.

As a smaller reporting company, we are not required to provide this information.

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

GENERAL

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

We principally own and operate radio properties located 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. The Nielsen Company generally measures radio station ratings weekly for markets measured by the Portable People Meter ^™ and two times a year for markets measured by diaries. Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research, advertising and promotion to attract and retain audiences in each station’s chosen demographic target group.

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

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

The following table summarizes the sources of our revenues for the past three years. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations and magazines conduct in their local markets. The category “Other” includes, among other items, revenues related to our TagStation and Digonex businesses, network revenues and barter. We sold Texas Monthly and our radio stations in Terre Haute, Indiana on November 1, 2016 and January 30, 2017, respectively, which impacts the comparability of fiscal 2015 and 2016 to fiscal 2017. Our sale of Los Angeles Magazine , Atlanta Magazine , Cincinnati Magazine and Orange Coast Magazine on February 28, 2017 does not affect the comparability of results in the table below, but will effect comparability of results in future periods.



	Years ended February 28 (29),
	2015		% of Total		2016		% of Total		2017		% of Total
Net revenues:
Local	$	136,283	57.3	%	$	130,486	56.4	%	$	121,841	56.8	%
National	29,793		12.5	%	26,994		11.7	%	21,706		10.1	%
Political	1,434		0.6	%	661		0.3	%	2,163		1.0	%
Publication Sales	6,076		2.6	%	5,612		2.4	%	4,193		2.0	%
Non Traditional	23,810		10.0	%	25,683		11.1	%	22,936		10.7	%
Interactive	12,894		5.4	%	13,223		5.7	%	14,737		6.9	%
LMA Fees	10,331		4.3	%	10,331		4.5	%	10,331		4.8	%
Other	17,317		7.3	%	18,443		7.9	%	16,661		7.7	%
Total net revenues	$	237,938			$	231,433			$	214,568

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

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KNOWN TRENDS AND UNCERTAINTIES

The U.S. radio industry is a mature industry and its growth rate has stalled. Management believes this is principally the result of two factors: (1) new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks, have gained advertising share against radio and other traditional media and created a proliferation of advertising inventory and (2) the fragmentation of the radio audience and time spent listening caused by satellite radio, audio streaming services and podcasts has led some investors and advertisers to conclude that the effectiveness of radio advertising has diminished.

The Company and the radio industry are leading several initiatives to address these issues. The radio industry is working aggressively to increase the number of smartphones and other wireless devices that contain an enabled FM tuner. Most smartphones currently sold in the United States contain an FM tuner. However, most wireless carriers in the United States have not historically permitted the FM tuner to receive the free over-the-air local radio stations it was designed to receive. Furthermore, in many countries outside the United States, enabled FM tuners are made available to smartphone consumers; consequently, radio listening increases. Activating FM as a feature on smartphones sold in the United States has the potential to increase radio listening and improve the perception of the radio industry while offering wireless 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 smartphone application that marries over-the-air FM radio broadcasts with visual and interactive features, as an industry solution to enrich the user experience of listening to free over-the-air radio broadcasts on their FM-enabled smartphones and other wireless devices. Recently, we introduced the Dial Report ^TM , an online data portal that enables advertisers and other users of radio to access rich data about the usage and consumption of radio and the behavior of radio listeners.

On August 9, 2013, NextRadio LLC, a wholly-owned subsidiary of Emmis, entered into an agreement with Sprint whereby Sprint agreed to pre-load the Company's NextRadio smartphone application on a minimum of 30 million FM-enabled wireless devices on the Sprint wireless network over a three-year period. In return, NextRadio LLC agreed to serve as a conduit for the radio industry to pay Sprint $15 million per year in equal quarterly installments over the three year term and to share with Sprint certain revenue generated by the NextRadio application. NextRadio LLC collected money from the radio industry and forwarded it to Sprint. During the years ended February 2015 and 2016, Emmis' funding of its share of NextRadio's payment to Sprint was $0.5 million and $0.4 million, respectively. These amounts are included in station operating expenses in the accompanying consolidated statements of operations. Emmis has not guaranteed NextRadio LLC's performance under this agreement and Sprint does not have recourse to any Emmis related entity other than NextRadio LLC. Additionally, the agreement does not limit the ability of NextRadio LLC to place the NextRadio application on FM-enabled devices on other wireless networks. Through February 28, 2017, the NextRadio application had not generated a material amount of revenue.

Since the inception of NextRadio LLC's agreement with Sprint through December 7, 2016, NextRadio LLC had remitted to Sprint approximately $33.2 million. Effective December 8, 2016, NextRadio LLC and Sprint entered into an amendment of their original agreement. The amendment called for NextRadio LLC to make installment payments totaling $6.0 million through March 15, 2017, which have been paid. In exchange, Sprint agreed to forgive the remaining $5.8 million that it was due under the original agreement, and in return receive a higher share of certain revenue generated by the NextRadio application. In addition, Sprint agreed, so long as commercially reasonable, to continue to pre-load the NextRadio application through March 31, 2020 with no additional cash payments from NextRadio (other than revenue share payments). NextRadio LLC received a loan of $4.0 million for the sole purpose of fulfilling the payment obligations to Sprint under the amendment. The loan will be repaid out of proceeds from sales of enhanced advertising through the NextRadio application. Through February 28, 2017, NextRadio LLC received $3.4 million under the loan, which was promptly remitted to Sprint and included in station operating expenses in the accompanying consolidated statement of operations. The remaining $0.6 million of loan proceeds was received in March 2017, remitted to Sprint, and included in station operating expenses in the quarter ending May 31, 2017.

On July 27, 2015, NextRadio LLC entered into an agreement with AT&T whereby AT&T agreed to include FM chip activation in its Android device specifications to wireless device manufacturers. In exchange, AT&T will receive a share of certain revenue generated by the NextRadio application. This agreement was subsequently assigned to TagStation LLC (the parent entity of NextRadio LLC and owner of the TagStation and NextRadio applications). In August 2015, T-Mobile expressed its intent to include FM chip activation in its device specifications. On September 9, 2016, TagStation LLC entered into an agreement with T-Mobile whereby T-Mobile agreed to include FM chip activation in its Android device specifications to wireless device manufacturers. In exchange, T-Mobile will receive a share of certain revenue generated by the NextRadio application. TagStation LLC has been working directly with numerous device manufacturers to accelerate the availability of NextRadio to consumers. BLU Products, an American mobile phone manufacturer, has chosen to make NextRadio the native

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FM tuner on its Android smartphones. In April 2016, Alcatel entered into a similar arrangement for NextRadio. The Samsung S7 and S8 family of smartphones are FM-enabled and NextRadio compatible across all major U.S. wireless networks. TagStation LLC and the radio industry continue to work with other leading United States wireless network providers, device manufacturers, regulators and legislators to cause FM tuners to be enabled in all smartphones.

Emmis granted the U.S. radio industry (as defined in the funding agreements) a call option on substantially all of the assets used in the NextRadio and TagStation businesses in the United States. The call option may be exercised in August 2017 or August 2019 by paying Emmis a purchase price equal to the greater of (i) the appraised fair market value of the NextRadio and TagStation businesses, or (ii) two times Emmis' cumulative investments in the development of the businesses through August 2015. If the call option is exercised, the businesses will continue to be subject to the operating limitations applicable today, and no radio operator will be permitted to own more than 30% of the NextRadio and TagStation businesses.

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. 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. The number of radio receivers incorporating HD Radio has increased in the past year, particularly in new automobiles. It is unclear what impact HD Radio will have on the markets in which we operate.

The Company has also aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by developing highly interactive websites with content that engages our listeners, deploying mobile applications and streaming our content, harnessing the power of digital video on our websites and YouTube channels, and delivering real-time traffic to navigation devices.

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 approximately 50% of our radio net revenues. Our acquisition of WBLS-FM and WLIB-AM in New York in fiscal 2015 enhanced our ability to adapt to competitive environment shifts in that market, but our single station in the Los Angeles market, KPWR-FM, has less ability to adapt. 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 packaging a variety of advertising inventory at discounted unit rates and may be able to realize operating efficiencies by programming multiple stations in these markets. In February 2015, one of our large competitors changed the format of one of its radio stations in the Los Angeles radio market to more directly compete with our radio station in Los Angeles. In addition, the new station hired our former KPWR-FM morning radio host to be its morning radio host. This development in Los Angeles negatively impacted our financial performance in fiscal 2016 and 2017, as well as the early months of fiscal 2018. On May 8, 2017, we entered into an agreement to sell our radio station in Los Angeles, subject to certain regulatory approvals and closing conditions.

Both the Los Angeles and New York radio markets showed signs of improvement during the year ended February 2017. Market revenues for Los Angeles and New York as measured by Miller Kaplan Arase LLP ("Miller Kaplan"), an independent public accounting firm used by the radio industry to compile revenue information, were up 3.3% and 0.2%, respectively, for the twelve months ended February 28, 2017, as compared to the same period of the prior year. However, during the same period, our station in Los Angeles, KPWR-FM, and our cluster in New York both lagged their respective market performance. As discussed above, KPWR-FM has been adversely affected by the introduction of a format competitor. Our New York operations were negatively impacted by severe weather at our largest outdoor concert in June 2016, as well as intensifying competition for transactional business in the local market. We have made changes in our local sales organization in New York to derive more local, direct business and reduce our reliance on transactional, agency business.

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' 2014 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. In that respect, on August 19, 2016, we announced that we were exploring strategic alternatives for our publishing division (except Indianapolis Monthly ), our radio stations in Terre Haute, Indiana, and WLIB-AM in New York. We completed our sale of Texas Monthly on November 1, 2016, our sale of radio stations in Terre Haute, Indiana on January 30, 2017, and the sale of the remainder of our publishing division (except Indianapolis Monthly ) on February 28, 2017. We continue to explore our options with WLIB-AM in New York. In addition, the amendment to our credit agreement that we executed on April 18, 2017, requires that Emmis divest of assets that will yield at least $80 million of proceeds beyond the transactions that have closed as of February 28, 2017. We have nine months from the date of the amendment to enter into definitive agreements for these sales. On May 8, 2017, we entered into an

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agreement to sell our radio station in Los Angeles for $82.8 million, which satisfies this requirement. Closing is subject to certain regulatory approvals and closing conditions, but we expect it to occur in the back half of 2017.

CRITICAL ACCOUNTING POLICIES

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

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. 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.

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 February 28, 2017 , we have recorded approximately $202.3 million in goodwill and FCC licenses, which represents approximately 70% of our total assets.

In the case of our 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 a Local Marketing Agreement 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.

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 or paid to transfer a liability 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. The projections incorporated into our license valuations take current economic conditions into consideration.

Below are some of the key assumptions used in our annual impairment assessments. In recent years, we have reduced long-term growth rates in the markets in which we operate based on recent industry trends and our expectations for the markets going forward. The methodology used to value our FCC licenses has not changed in the three-year period ended February 28, 2017 .

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	December 1, 2014	December 1, 2015	December 1, 2016
Discount Rate	12.1% - 12.5%	12.0% - 12.4%	12.2% - 12.5%
Long-term Revenue Growth Rate	1.5% - 3.0%	1.3% - 2.5%	1.0% - 2.0%
Mature Market Share	3.2% - 29.2%	3.2% - 29.3%	3.1% - 30.4%
Operating Profit Margin	25.1% - 39.2%	25.0% - 39.1%	25.1% - 39.1%

The Company has recorded impairment charges related to FCC licenses in each of the past three years. Impairment charges recognized as part of our December 1, 2014, 2015 and 2016 annual testing were $9.5 million, $5.4 million and $6.9 million, respectively. These impairments were mostly related to declining market revenues combined with lowered expectations for future long-term revenue growth rates as noted in the table above.

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, excluding any stations being operated pursuant to an LMA, 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. For the annual assessment performed as of December 1, 2016, the Company applied a market multiple of 8.0 times the reporting unit’s operating performance for our radio reporting units. As of December 1, 2016, all of the Company's goodwill related to our radio reporting units, so no assessment of goodwill impairment for our publishing reporting units was required. Management believes this methodology for valuing radio properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and market transactions, including our own recent 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. The methodology used to value our goodwill has not changed in the three-year period ended February 28, 2017 .

During our December 1, 2014 annual goodwill impairment test, the Company wrote off $58.4 million of goodwill associated with our WBLS-FM and WLIB-AM radio stations in New York. We began programming these stations on March 1, 2014 pursuant to an LMA and completed our first closing of the stations on June 10, 2014, with the second closing on February 13, 2015. We accounted for the acquisition of the stations as a purchase in June 2014. According to Miller Kaplan, gross revenues for the New York radio market were down 7.0% during fiscal 2015, which was significantly below our expectations for the year. Although our New York cluster outperformed the market for the year, financial performance at the newly acquired stations did not meet the expectations of management and resulted in a step-one indication of impairment on both the market and income approaches. Upon completing the step-two analysis, the Company determined that the full carrying amount of our New York cluster goodwill of $58.4 million, all of which related to our acquisition of WBLS-FM and WLIB-AM, was impaired.

During our December 1, 2015 annual goodwill impairment test, the Company wrote off $0.7 million of goodwill associated with Digonex, our dynamic pricing business. Emmis acquired a controlling interest in Digonex in June 2014. In connection with our acquisition of a controlling interest of Digonex, Emmis recorded approximately $2.8 million of goodwill. Although Emmis still believes that Digonex's long-term prospects remain strong, Digonex's performance since Emmis' acquisition of a controlling interest has lagged original expectations. Digonex failed the step-one analysis and upon completing the step-two analysis, Emmis determined that the goodwill of Digonex was partially impaired and recorded a $0.7 million impairment charge during the three months ended February 29, 2016.

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During the quarter ended August 31, 2016, the Company lowered its growth expectations for Digonex for the next several years due to slow client adoption of dynamic pricing services. While the Company continues to believe in the long-term growth prospects of Digonex, the lengthy sales cycle has caused Digonex to perform below expectations to date. Despite lowering near-term growth expectations for Digonex in connection with our annual impairment review for fiscal 2016, which led to a goodwill impairment charge of $0.7 million as discussed above, performance in the first six months of fiscal 2017 indicated that a further revision was appropriate. Our then-current projections assumed that Digonex would generate cash flow losses in the short and medium-term. The combination of lower-than-expected current period results, coupled with downward revisions to future revenue projections, resulted in an impairment indicator that caused the Company to assess goodwill and related intangibles on an interim basis during the quarter ended August 31, 2016. The Company's discounted cash flow analysis for Digonex indicated a nominal enterprise value. Therefore, in connection with the interim impairment test, Emmis determined that Digonex's goodwill was fully impaired and recorded an impairment loss of $2.1 million.

Sensitivity Analysis

Based on the results of our December 1, 2016 annual impairment assessment, the fair value of our broadcasting licenses was approximately $277.3 million , which was in excess of the $198.3 million carrying value by $79.0 million, or 39.8% . Should our estimates or assumptions worsen, or should negative events or circumstances occur in the units that have limited fair value cushion, additional license impairments may be needed.



	Radio Broadcasting Licenses
	As of December 1, 2016
Unit of Accounting	Carrying Value	Fair Value	Percentage by which fair value exceeds carrying value
New York Cluster	71,615	101,914	42.3	%
98.7FM (New York)	46,390	46,390	—	%
Austin Cluster	34,719	34,719	—	%
St. Louis Cluster	24,758	24,758	—	%
Indianapolis Cluster	18,166	19,064	4.9	%
KPWR-FM (Los Angeles)	2,018	49,774	2,366.5	%
Terre Haute Cluster	643	643	—	%
Total	198,309	277,262	39.8	%

If we were to assume a 100 basis point change in any of our three key assumptions (a reduction in the long-term revenue growth rate, a reduction in local commercial share or an increase in the discount rate) used to determine the fair value of our broadcasting licenses on December 1, 2016, the resulting impairment charge would have been $31.0 million, $22.5 million and $19.7 million, respectively. Also, if we were to assume a market multiple decrease of one or a 10% decrease in the two-year average station operating income, two of the key assumptions used to determine the fair value of our goodwill on December 1, 2016, the resulting estimates of enterprise valuations would still exceed the carrying values of the enterprises. As such, step two of the goodwill impairment testing would not be required, thus no goodwill impairment would be recognized if either of these two key assumptions were lowered.

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 recorded for financial reporting purposes as compared to 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.

Insurance Claims and Loss Reserves

The Company is self-insured for most healthcare claims, subject to stop-loss limits. Claims incurred but not reported are recorded based on historical experience and industry trends, and accruals are adjusted when warranted by changes in facts and circumstances. The Company had $0.7 million and $0.8 million accrued for employee healthcare claims as of February 28 (29), 2016 and 2017 , respectively. The Company also maintains large deductible programs (ranging from $100 thousand to $250 thousand per occurrence) for workers’ compensation, employment liability, automotive liability and media liability claims.

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ACQUISITIONS, DISPOSITIONS AND INVESTMENTS

The transactions described below impact the comparability of operating results for the three years ended February 28, 2017 .

Sale of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine

On February 28, 2017, Emmis closed on its sale of substantially all of the assets of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine (the "Hour Magazines") for gross proceeds of $6.5 million to Hour Media Group, LLC. The Company previously announced that it was exploring strategic alternatives for its publishing division, excluding Indianapolis Monthly . Emmis decided to sell most of its publishing assets to reduce debt outstanding. Emmis received net proceeds of $2.9 million, consisting of the stated purchase price of $6.5 million, less $0.7 million held in escrow and disposition costs totaling $2.9 million. The $2.9 million of disposition costs primarily relate to $1.6 million of severance costs and transaction advisory fees of $1.0 million. The funds held in escrow secure Emmis' post closing indemnification obligations in the purchase agreement and are scheduled to be released six months after the closing of the transaction. After settling retention bonuses to affected employees, net proceeds were used to repay term loan indebtedness under Emmis’ senior credit facility. Emmis recorded a $2.7 million gain on the sale of the Hour Magazines. These magazines had historically been included in our Publishing segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C.

Sale of Terre Haute, Indiana radio stations

On January 30, 2017, Emmis closed on its sale of substantially all of the assets of its radio stations in Terre Haute, Indiana, in two contemporaneous transactions. In one transaction, Emmis sold the assets of WTHI-FM and the intellectual property of WWVR-FM to Midwest Communications, Inc. In the other transaction, Emmis sold the assets of WFNF-AM, WFNB-FM, WWVR-FM (other than the intellectual property for that station) and an FM translator to DLC Media, Inc. The Company previously announced that it was exploring strategic alternatives for these radio stations. Emmis believed that operating stations in Terre Haute, Indiana was not a core part of its radio strategy and its strong market position in the Terre Haute market would be attractive to potential buyers. At closing, Emmis received gross proceeds of approximately $5.2 million for both transactions. After payment of brokerage and other transaction costs, net proceeds totaled $4.8 million and were used to repay term loan indebtedness under Emmis’ senior credit facility. Emmis recorded a $3.5 million gain on the sale of its Terre Haute radio stations . The Terre Haute radio stations had historically been included in our Radio segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C.

Sale of Texas Monthly

On November 1, 2016, Emmis closed on its sale of Texas Monthly for gross proceeds of $25.0 million in cash to a subsidiary of Genesis Park, LP. The Company previously announced that it was exploring strategic alternatives for its publishing division, excluding Indianapolis Monthly . Emmis believed that its publishing portfolio had significant brand value and planned to use proceeds from the sale of its publishing properties to repay debt. Emmis received net proceeds of $23.4 million, consisting of the stated purchase price of $25.0 million, net of estimated purchase price adjustments totaling $0.7 million and disposition costs totaling $0.9 million. The $0.9 million of disposition costs primarily related to severance costs. Proceeds were used to repay term and revolving loan indebtedness under Emmis’ senior credit facility. Emmis recorded a $17.4 million gain on the sale of Texas Monthly . Texas Monthly had historically been included in our Publishing segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C.

Acquisition of a controlling interest in Digonex Technologies, Inc.

On June 16, 2014, Emmis invested $3.0 million in Digonex Technologies, Inc., an Indiana corporation that provides dynamic pricing solutions to customers in various industries. Emmis believes that its acquisition of Digonex gives it entry into the growing dynamic pricing marketplace which can serve a diverse clientèle, and can possibly help Emmis with yields on its own advertising inventory and special events. Emmis’ initial investment of $3.0 million ($1.0 million in Digonex Preferred Stock and $2.0 million in the form of convertible debt) resulted in Emmis appointing a majority of the board of directors of Digonex and holding rights convertible into 51% of the fully diluted common equity of Digonex. As Emmis controlled the board of directors of Digonex as of its initial investment on June 16, 2014, Emmis began consolidating the results of Digonex as of that date. Subsequent to its consolidation of Digonex, Emmis has contributed an additional $6.5 million to Digonex in the form of convertible debt, which has resulted in Emmis owning rights that are convertible into at least 80% of the common equity of Digonex.

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RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 29, 2016 COMPARED TO YEAR ENDED FEBRUARY 28, 2017

Net revenues:



	For the years ended February 28 (29),
	2016		2017		$ Change			% Change
	(As reported, amounts in thousands)
Net revenues:
Radio	$	169,228	$	165,148	$	(4,080	)	(2.4	)%
Publishing	60,992		48,559		(12,433		)	(20.4	)%
Emerging Technologies	1,213		861		(352		)	(29.0	)%
Total net revenues	$	231,433	$	214,568	$	(16,865	)	(7.3	)%

Radio net revenues decreased during the year ended February 28, 2017 as our radio division underperformed the aggregate performance of the markets in which we operate. We typically monitor the performance of our stations against the aggregate performance of the markets in which we operate based on reports for the periods prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter arrangements. A summary of market revenue performance and Emmis’ revenue performance in those markets for the year ended February 28, 2017 is presented below:



	For the year ended February 28, 2017
	Overall Market		Emmis
Market	Revenue Performance		Revenue Performance ¹
New York	0.2	%	(2.8	%)
Los Angeles	3.3	%	(14.7	%)
St. Louis	1.4	%	11.0	%
Indianapolis	0.8	%	(4.3	%)
Austin	0.3	%	(0.9	%)
All Markets	1.7	%	(3.1	%)

¹ Emmis revenue performance in New York excludes the results of WEPN-FM which is being operated pursuant to an LMA

Our weak performance in Los Angeles mostly related to a format competitor that began directly competing against our

station there in February 2015. The revenue impact has been most pronounced since the fall of 2015. On May 8, 2017, we entered into an agreement to sell our radio station in Los Angeles, subject to certain regulatory approvals and closing conditions. Our exposure to the Los Angeles radio market will be eliminated if we are able to close this transaction, as expected, in the back half of 2017. Excluding Los Angeles, our radio revenues would have been down 0.3% in markets that were up 0.5% according to Miller Kaplan.

For the year ended February 28, 2017, as compared to the prior year, our average rate per minute for our domestic radio stations was down 1.9%, and our minutes sold were down 2.9%.

Publishing net revenues were down for the year ended February 28, 2017 mostly due to the sale of Texas Monthly on November 1, 2016.

Emerging technologies net revenues, which primarily relate to licensing fees of our TagStation software and pricing

services provided by Digonex, decreased during the year as a large retail customer of Digonex did not renew for fiscal 2017.

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Station operating expenses excluding LMA fees and depreciation and amortization expense:



	For the years ended February 28 (29),
	2016		2017		$ Change			% Change
	(As reported, amounts in thousands)
Station operating expenses excluding LMA fees and depreciation and amortization expense:
Radio	$	116,862	$	115,366	$	(1,496	)	(1.3	)%
Publishing	58,891		51,063		(7,828		)	(13.3	)%
Emerging Technologies	7,641		13,656		$	6,015		78.7	%
Total station operating expenses excluding LMA fees and depreciation and amortization expense	$	183,394	$	180,085	$	(3,309	)	(1.8	)%

Radio station operating expenses, excluding LMA fees and depreciation and amortization expense decreased due to nonrecurring severance expenses incurred during Q4 of the prior year.

Station operating expenses excluding depreciation and amortization expense for publishing decreased during the year ended February 28, 2017 due to the sale of Texas Monthly on November 1, 2016, partially offset by severance and retention bonuses for employees of the five magazines that were sold in fiscal 2017.

Station operating expenses excluding depreciation and amortization expense for emerging technologies increased during the year ended February 28, 2017 mostly due to (i) NextRadio funding $3.35 million of its obligation to Sprint with the proceeds of a third party loan and (ii) increased NextRadio headcount during the year across all departments to support increased activity expected in the next fiscal year and beyond.

Corporate expenses excluding depreciation and amortization expense:



	For the years ended February 28 (29),
	2016		2017		$ Change			% Change
	(As reported, amounts in thousands)
Corporate expenses excluding depreciation and amortization expense	$	13,023	$	11,359	$	(1,664	)	(12.8	)%

Corporate expenses excluding depreciation and amortization expense decreased during the year ended February 28, 2017 mostly due to personnel bonuses, which totaled approximately $1.0 million in fiscal 2016, but there were no such bonuses in fiscal 2017. Also contributing to the decrease in corporate expenses excluding depreciation and amortization expense was the effect of cost reduction actions taken in January 2016, which were partially offset by costs incurred related to the evaluation of a go-private offer received by the Company during fiscal 2017.

Impairment loss on intangible assets:



	For the years ended February 28 (29),
	2016		2017		$ Change			% Change
	(As reported, amounts in thousands)
Impairment loss on intangible assets:
Radio	$	5,440	$	6,855	$	1,415		26.0	%
Emerging Technologies	4,059		2,988		$	(1,071	)	(26.4	)%
Impairment loss on intangible assets	$	9,499	$	9,843	$	344		3.6	%

In connection with the annual impairment review conducted on December 1, 2015, the Company concluded that its FCC license for 98.7FM in New York, and the licenses for our Austin, St. Louis and Terre Haute clusters were impaired by $5.4 million. The Company also concluded that the goodwill and patents associated with Digonex were impaired and recorded an impairment loss of $4.1 million related to these assets.

In connection with an interim review for impairment during the quarter ended August 31, 2016, the Company recorded an

impairment loss of $2.1 million related to goodwill and $0.9 million related to definite-lived intangible assets, all of which

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related to Digonex. This impairment loss reduced the carrying value of Digonex goodwill and definite-lived intangible assets

to zero. In connection with the annual impairment review conducted on December 1, 2016, the Company concluded that its its FCC license for 98.7FM in New York, and the licenses for our Austin, St. Louis and Terre Haute clusters were impaired by $6.9 million.

We could record impairment charges in future periods if we determine the carrying value of our intangible assets exceeds their fair value. Our annual impairment test of our broadcasting licenses and goodwill is performed each year as of December 1. We may be required to retest prior to our next annual evaluation, which could result in additional impairment charges.

Gain on sale of radio and publishing assets, net of disposition costs:



	For the years ended February 28 (29),
	2016		2017			$ Change			% Change
	(As reported, amounts in thousands)
Gain on sale of radio and publishing assets, net of disposition costs:
Radio	$	—	$	(3,478	)	$	(3,478	)	N/A
Publishing	—		(20,079		)	(20,079		)	N/A
Emerging Technologies	—		—			$	—		N/A
Gain on sale of radio and publishing assets, net of disposition costs	$	—	$	(23,557	)	$	(23,557	)	N/A

On November 1, 2016, we closed on the sale of Texas Monthly . We recognized a $17.4 million gain on sale of Texas Monthly . On January 30, 2017, we closed on the sale of our Terre Haute, Indiana radio cluster. We recognized a $3.5 million gain on sale of the cluster. On February 28, 2017, we closed on the sale of Los Angeles Magazine , Atlanta Magazine , Cincinnati Magazine and Orange Coast Magazine . We recognized a $2.7 million gain on sale of these magazines.

Depreciation and amortization:



	For the years ended February 28 (29),
	2016		2017		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	3,345	$	3,462	$	117		3.5	%
Publishing	266		230		(36		)	(13.5	)%
Corporate & Emerging Technologies	2,186		1,114		(1,072		)	(49.0	)%
Total depreciation and amortization	$	5,797	$	4,806	$	(991	)	(17.1	)%

The increase in depreciation and amortization for the year ended February 28, 2017 for our radio division is mostly due to depreciation expense associated with broadcasting equipment and other equipment that was placed into service toward the end of the prior fiscal year.

The decrease in depreciation and amortization for the year ended February 28, 2017 for corporate & emerging technologies is mostly due to reduced amortization expense of Digonex-related definite-lived intangible assets. The Company recorded impairment charges related to these definite-lived intangible assets in connection with its annual review of impairment during fiscal 2016 and with its interim review of impairment as of August 31, 2016, the latter of which reduced the carrying value of these definite-lived intangibles to zero.

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Operating income (loss):



	For the years ended February 28 (29),
	2016			2017			$ Change			% Change
	(As reported, amounts in thousands)
Operating income (loss):
Radio	$	43,527		$	42,819		$	(708	)	(1.6	)%
Publishing	1,835			17,345			15,510			845.2	%
Corporate & Emerging Technologies	(25,698		)	(28,256		)	(2,558		)	(10.0	)%
Total operating income (loss)	$	19,664		$	31,908		$	12,244		62.3	%

Radio operating income decreased for year ended February 28, 2017 principally due to the effect of revenue declines for all of our markets except St. Louis and larger impairment losses recorded during the year. The gain on sale of our Terre Haute, Indiana cluster and lower radio operating expenses partially offset the effect of the revenue declines and larger impairment losses.

Publishing operating income increased due to the gain on sale of the five publications that were sold during the year.

Corporate and Emerging Technologies operating losses increased mostly due to additional investments in TagStation and NextRadio and proceeds from a third party loan to NextRadio that were remitted to Sprint, as previously discussed. These increases were partially offset by lower overall corporate expenses.

Interest expense:



	For the years ended February 28 (29),
	2016			2017			$ Change		% Change
	(As reported, amounts in thousands)
Interest expense	$	(18,956	)	$	(18,018	)	$	938	4.9	%

The decrease in interest expense is attributable to lower debt balances as the Company used the proceeds from its various asset sales during fiscal 2017 to reduce debt outstanding.

Loss on debt extinguishment:



	For the years ended February 28 (29),
	2016		2017			$ Change			% Change
	(As reported, amounts in thousands)
Loss on debt extinguishment	$	—	$	(620	)	$	(620	)	N/A

The Company repaid outstanding term loans under its credit facility with proceeds from asset sales during fiscal 2017. The pro-rata portion of unamortized debt discount that was written-off in connection with these repayments was classified as a loss on debt extinguishment.

Other (expense) income, net:



	For the years ended February 28 (29),
	2016		2017			$ Change			% Change
	(As reported, amounts in thousands)
Other (expense) income, net	$	1,057	$	(160	)	$	(1,217	)	(115.1)%

Other income in fiscal 2016 mostly relates to various nonrecurring recoveries and noncash gains. Other expense in fiscal 2017 mostly relates to a $0.3 million other-than-temporary impairment of an equity method investment that reduced the carrying value of the investment to zero as of February 28, 2017.

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Provision (benefit) for income taxes:



	For the years ended February 28 (29),
	2016		2017			$ Change			% Change
	(As reported, amounts in thousands)
Provision (benefit) for income taxes	$	2,069	$	(110	)	$	(2,179	)	(105.3	)%

The Company has recorded a full valuation allowance against its net deferred tax assets, except for the deferred tax liabilities related to indefinite-lived intangibles. Although the Company continues to record a full valuation allowance, the income tax expense related to deferred tax liabilities for indefinite-lived intangibles must still be recorded. Because this amount is based on tax amortization, the full year amount of associated tax expense is known at the beginning of the year and the Company recognizes the tax expense related to deferred tax liabilities for indefinite-lived intangibles evenly through the year as a discrete item. Separately, the company recorded tax benefits of $1.3 million and $2.4 million related to impairment charges on FCC licenses during the years ended February 29, 2016 and February 28, 2017, respectively.

Consolidated net income (loss):



	For the years ended February 28 (29),
	2016			2017		$ Change		% Change
	(As reported, amounts in thousands)
Consolidated net income (loss)	$	(304	)	$	13,220	$	13,524	N/M

The increase in consolidated net income (loss) is principally due to the $23.6 million gain on sale associated with the sale of our Terre Haute, Indiana radio cluster and five magazines during the year ended February 28, 2017. This gain is partially offset by other items, including lower radio division revenues and higher expenses at our TagStation and NextRadio businesses.

Loss on modification of preferred stock:



	For the years ended February 28 (29),
	2016			2017		$ Change		% Change
	(As reported, amounts in thousands)
Loss on modification of preferred stock	$	(162	)	$	—	$	162	(100.0	)%

On February 17, 2016, Emmis filed amendments to its Articles of Incorporation that modified the rights of holders of the Company's Preferred Stock. The amendments, among other things, modified the conversion ratio for shares of Preferred Stock into Class A Common Stock from 2.44 shares of Class A Common Stock to 2.80 shares of Class A Common Stock. In connection with this modification, the Company recorded a loss of $0.2 million.

YEAR ENDED FEBRUARY 28, 2015 COMPARED TO YEAR ENDED FEBRUARY 29, 2016

Net revenues:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Net revenues:
Radio	$	176,250	$	169,228	$	(7,022	)	(4.0	)%
Publishing	61,142		60,992		(150		)	(0.2	)%
Emerging Technologies	546		1,213		$	667		122.2	%
Total net revenues	$	237,938	$	231,433	$	(6,505	)	(2.7	)%

Radio net revenues decreased during the year ended February 29, 2016 due to general declines in radio revenues in the markets where we operate radio stations, coupled with below-market performance for our stations in New York, Los Angeles and Austin. We typically monitor the performance of our stations against the aggregate performance of the markets in which we operate based on reports for the periods prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter arrangements. Miller Kaplan reports are not available for the Terre Haute

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radio market. A summary of market revenue performance and Emmis’ revenue performance in those markets for the year ended February 29, 2016 is presented below:



	For the year ended February 29, 2016
	Overall Market		Emmis
Market	Revenue Performance		Revenue Performance ¹
New York	(2.5	%)	(4.8	%)
Los Angeles	(0.2	%)	(14.2	%)
St. Louis	(3.2	%)	2.0	%
Indianapolis	(1.2	%)	4.5	%
Austin	(2.7	%)	(4.3	%)
All Markets	(1.5	%)	(4.6	%)

¹ Emmis revenue performance in New York reflects only WQHT-FM and Los Angeles reflects only KPWR-FM

In Los Angeles, our weak performance mostly related to a new format competitor that began directly competing against our station there in February 2015. The revenue impact was most pronounced in the second half of fiscal 2016.

Publishing net revenues were flat for the year ended February 29, 2016 as strong performance by the division in general, and Texas Monthly in particular, in the first half of the fiscal year were offset by weakness in the second half of the fiscal year.

Emerging Technologies consist of our NextRadio, TagStation, and Digonex businesses. Current revenues primarily relate to licensing fees of our TagStation software. These fees are recognized as revenue over the life of the license agreement, which is typically two years. TagStation supplements radio broadcasts with visual content (e.g., album art, artist information, etc.) and enhanced ads for display on HD Radio dashboards, HD Radio devices, and the NextRadio application. The increase in net revenues of Emerging Technologies for the year ended February 29, 2016 is due to additional stations licensing the TagStation software as well as Digonex revenues. Since Emmis acquired its controlling interest in Digonex on June 16, 2014, Digonex net revenues were included in our consolidated results for only a portion of the prior year.

Station operating expenses excluding depreciation and amortization expense:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Station operating expenses, excluding depreciation and amortization expense:
Radio	$	117,167	$	116,862	$	(305	)	(0.3	)%
Publishing	60,083		58,891		(1,192		)	(2.0	)%
Emerging Technologies	3,759		7,641		$	3,882		103.3	%
Total station operating expenses, excluding depreciation and amortization expense	$	181,009	$	183,394	$	2,385		1.3	%

Radio station operating expenses, excluding LMA fees and depreciation and amortization expense were mostly flat for the year ended February 29, 2016 due to a variety of offsetting items. These items include (i) increased marketing expenses in Los Angeles for KPWR-FM, (ii) severance costs of $2.3 million primarily associated with cost reductions implemented in January 2016, (iii) reduced operating expenses in January 2016 and February 2016 as a result of the January 2016 cost reductions and (iv) lower commission expense and other revenue-related expenses due to lower revenues.

Station operating expenses excluding depreciation and amortization expense for publishing decreased during the year ended February 29, 2016 primarily due to lower magazine production costs.

Station operating expenses excluding depreciation and amortization expense for emerging technologies increased during the year ended February 29, 2016 mostly due to increased headcount and development expenses associated with TagStation and NextRadio as well as expenses of Digonex, which was acquired in the second quarter of fiscal 2015 and only included in our consolidated results for a portion of the prior year.

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Corporate expenses excluding depreciation and amortization expense:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Corporate expenses excluding depreciation and amortization expense	$	14,922	$	13,023	$	(1,899	)	(12.7	)%

Corporate expenses excluding depreciation and amortization expense decreased during the year ended February 29, 2016 mostly due to lower legal fees associated with our preferred stock litigation coupled with reduced discretionary spending. Additionally, effective January 2016, our executive officers and other key employees agreed to a 5% pay reduction for calendar 2016.

LMA fees:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
LMA fees	$	4,208	$	—	$	(4,208	)	(100.0	)%

On February 11, 2014, Emmis and YMF entered into an LMA for WBLS-FM and WLIB-AM in New York. As discussed in Note 1 to the accompanying consolidated financial statements, on March 1, 2014, Emmis began providing programming and selling advertising for the two stations. Under the terms of the LMA, Emmis paid $1.275 million per month to YMF for the right to program the stations and sell advertising. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the stations, which occurred on June 10, 2014, and ceased effective with the second closing on February 13, 2015. The LMA fees paid after the first closing were recognized as a liability as of the date of purchase of the stations on June 10, 2014. Accordingly, LMA fees incurred after June 10, 2014 did not impact our results of operations.

Hungary license litigation expense:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Hungary license litigation expense	$	521	$	—	$	(521	)	(100.0	)%

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 believed 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. In April 2014, the ICSID arbitral tribunal ruled that ICSID did not have the jurisdiction to hear the merits of Emmis' claim. We sold our Hungarian legal entities in October 2014 for a nominal amount and liquidated our Dutch holding companies in December 2014. We do not expect future Hungary license litigation expenses.

Impairment loss on intangible assets:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Impairment loss on intangible assets	$	67,915	$	9,499	$	(58,416	)	(86.0	)%

In connection with the annual impairment review conducted on December 1, 2014, the Company concluded that its FCC license for 98.7FM in New York, which is accounted for as a single unit of accounting as it is subject to an LMA, and the licenses of our Terre Haute radio cluster were impaired by $9.5 million. The Company also concluded that the goodwill associated with its acquisition of WBLS-FM and WLIB-AM in New York was fully impaired. The Company recorded an impairment loss of $58.4 million related to this goodwill impairment.

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million. The Company also concluded that the goodwill and patents associated with Digonex were impaired and recorded an impairment loss of $4.1 million related to these assets.

Depreciation and amortization:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	3,143	$	3,345	$	202		6.4	%
Publishing	245		266		21			8.6	%
Corporate & Emerging Technologies	2,538		2,186		(352		)	(13.9	)%
Total depreciation and amortization	$	5,926	$	5,797	$	(129	)	(2.2	)%

The increase in depreciation and amortization for the year ended February 29, 2016 for our radio division is mostly due to the June 2014 acquisition of WBLS-FM and WLIB-AM. The decrease in Corporate and Emerging Technologies is mostly due to certain computer equipment and software becoming fully depreciated in fiscal 2015. This decrease in Corporate and Emerging Technologies depreciation and amortization expense is partially offset by the amortization of Digonex intangibles, which we began amortizing with the commencement of our consolidation of Digonex in June 2014. See Note 7 of the accompanying consolidated financial statements for a discussion of our acquisitions.

Gain on contract settlement:



	For the years ended February 28 (29),
	2015			2016		$ Change		% Change
	(As reported, amounts in thousands)
Gain on contract settlement	$	(2,500	)	$	—	$	2,500	(100	)%

Emmis and YMF Media executed an amendment to their Asset Purchase Agreement dated April 5, 2012 relating to Emmis' sale of the intellectual property of WRKS-FM to YMF Media. The amendment, executed on June 10, 2014, fixed all future earn-out payments YMF Media owed to Emmis pursuant to the April 5, 2012 Asset Purchase Agreement based upon the parties' estimate of the earn-out payments that would otherwise be owed to Emmis under this pre-existing contractual relationship. Emmis recognized a gain on settlement of the contract of $2.5 million.

Operating income (loss):



	For the years ended February 28 (29),
	2015			2016			$ Change			% Change
	(As reported, amounts in thousands)
Operating income (loss):
Radio	$	(14,204	)	$	43,527		$	57,731		(406.4	)%
Publishing	814			1,835			1,021			125.4	%
Corporate & Emerging Technologies	(20,673		)	(25,698		)	(5,025		)	24.3	%
Total operating income (loss)	$	(34,063	)	$	19,664		$	53,727		(157.7	)%

Radio operating income increased in the year ended February 29, 2016 principally due to the effect of impairment losses recorded during fiscal 2015 and 2016. Excluding the impairment losses, radio operating income would have decreased $4.7 million mostly due to lower net revenues partially offset by the elimination of LMA fees.

Publishing operating income increased in the year ended February 29, 2016 mostly due to operating expense savings as discussed above.

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Corporate and Emerging Technologies operating losses increased mostly due to additional investments in TagStation and NextRadio as previously discussed and the losses of Digonex, which was acquired in June 2014 and only included in our consolidated results for a portion of the prior year.

Interest expense:



	For the years ended February 28 (29),
	2015			2016			$ Change			% Change
	(As reported, amounts in thousands)
Interest expense	$	(17,101	)	$	(18,956	)	$	(1,855	)	10.8	%

The increase in interest expense is attributable to additional debt incurred to finance our acquisition of WBLS-FM and WLIB-AM and higher rates on amounts borrowed. The weighted-average interest rate of debt outstanding under our 2014 Credit Agreement was 7.0% at February 29, 2016. The weighted-average interest rate of debt outstanding under our 2012 Credit Agreement was 4.3% prior to its retirement on June 10, 2014. This increase in interest expense is partially offset by $3.1 million of interest expense related to the accretion of certain liabilities recognized as part of our acquisition of WBLS-FM and WLIB-AM in fiscal 2015. For more discussion of this transaction, refer to Note 7 of our accompanying consolidated financial statements.

Loss on debt extinguishment:



	For the years ended February 28 (29),
	2015			2016		$ Change		% Change
	(As reported, amounts in thousands)
Loss on debt extinguishment	$	(1,455	)	$	—	$	1,455	(100.0	)%

The loss on debt extinguishment for the year ended February 28, 2015 relates to the write-off of unamortized deferred debt issuance costs and original issue discount related to our 2012 Credit Agreement that was retired on June 10, 2014.

Other income (expense), net:



	For the years ended February 28 (29),
	2015			2016		$ Change		% Change
	(As reported, amounts in thousands)
Other income (expense), net	$	(6,418	)	$	1,057	$	7,475	116.5	%

Other expense for the year ended February 28, 2015 included a $6.7 million write-off of an investment in preferred stock of Courseload, Inc, a provider of online textbooks and other course material. While an unrealized loss on this type of investment is generally included as a component of other comprehensive income until it is realized, Emmis concluded that this loss was other-than-temporary and included the loss in its statement of operations. The activity in fiscal 2016 mostly relates to various nonrecurring recoveries and noncash gains.

Provision for income taxes:



	For the years ended February 28 (29),
	2015		2016		$ Change			% Change
	(As reported, amounts in thousands)
Provision for income taxes	$	36,948	$	2,069	$	(34,879	)	(94.4	)%

During the fourth quarter of the year ended February 28, 2015, we recorded a full valuation allowance for our net deferred tax assets, including our net operating loss carryforwards, but excluding deferred tax liabilities related to indefinite-lived intangibles, as substantial impairment losses recorded in the fourth quarter of that year caused us to be in a three year cumulative loss position.

Consolidated net loss:



	For the years ended February 28 (29),
	2015			2016			$ Change		% Change
	(As reported, amounts in thousands)
Consolidated net loss	$	(95,985	)	$	(304	)	$	95,681	99.7	%

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The change in consolidated net loss is principally due to the $34.9 million change in our provision for income taxes and the $58.4 million change in impairment loss, both of which were recorded in the prior year and are discussed above.

Loss on modification of preferred stock:



	For the years ended February 28 (29),
	2015		2016			$ Change		% Change
	(As reported, amounts in thousands)
Loss on modification of preferred stock	$	—	$	(162	)	$	162	N/A

LIQUIDITY AND CAPITAL RESOURCES

2014 CREDIT AGREEMENT

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, EOC, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”), the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent. Capitalized terms in this section not defined elsewhere in this 10-K are defined in the 2014 Credit Agreement and related amendments.

The 2014 Credit Agreement includes a senior secured term loan facility (the “Term Loan”) of $185.0 million and a senior secured revolving credit facility of $20.0 million, and contains provisions for an uncommitted increase of up to $20.0 million principal amount (plus additional amounts so long as a pro forma total net senior secured leverage ratio condition is met) of the revolving credit facility and/or the Term Loan subject to the satisfaction of certain conditions. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. Pursuant to the 2014 Credit Agreement, the Borrower borrowed $185.0 million of the Term Loan on June 10, 2014.

As a result of the Fourth Amendment, as discussed below, the Term Loan is due not later than April 18, 2019 and, prior to the Second Amendment to the 2014 Credit Agreement discussed below, amortized in an amount equal to 1% per annum of the total principal amount outstanding, payable in quarterly installments commencing April 1, 2015, with the balance payable on the maturity date. As a result of the Fourth Amendment, as discussed below, the revolving credit facility expires not later than August 31, 2018. Prior to the Fourth Amendment, an unused commitment fee of 50 basis points per annum is payable quarterly on the average unused amount of the revolving credit facility. Prior to the First Amendment, Second Amendment, and Fourth Amendment to the 2014 Credit Agreement discussed below, the Term Loan and amounts borrowed under the revolving credit facility bore interest, at the Borrower’s option, at either (i) the Alternate Base Rate (as defined in the 2014 Credit Agreement) (but not less than 2.00%) plus 3.75% or (ii) the Adjusted LIBO Rate (as defined in the 2014 Credit Agreement) (but not less than 1.00%) plus 4.75%.

Approximately $1.0 million of transaction fees related to the 2014 Credit Agreement were originally capitalized and included in other assets, net. The Company adopted the provisions of Accounting Standards Update 2015-03 during the year ended February 29, 2016. As such, the unamortized balance of existing deferred debt fees was reclassified and is now shown as a direct reduction of the carrying amount of long-term debt. These fees, along with an original issue discount of $9.7 million ($6.1 million incurred in connection with the original issuance of the 2014 Credit Agreement debt on June 10, 2014, $1.0 million incurred in connection with the November 7, 2014 amendment to the 2014 Credit Agreement, $1.1 million incurred in connection with the April 30, 2015 amendment to the 2014 Credit Agreement, and $1.5 million incurred in connection with the April 18, 2017 amendment to the 2014 Credit Agreement) are being amortized as additional interest expense over the life of the 2014 Credit Agreement.

The obligations under the 2014 Credit Agreement are secured by a perfected first priority security interest in substantially all of the assets of the Company, the Borrower and the Subsidiary Guarantors.

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prepayments of the Term Loan to November 7, 2015, (iv) increased the Applicable Margin by 0.25% for at least six months from the date of the First Amendment and until the Total Leverage Ratio is less than 5.00:1.00, and (v) made certain technical adjustments to the definition of Consolidated Excess Cash Flow and to address the Foreign Account Tax Compliance Act. Emmis paid a total of approximately $1.0 million of transaction fees to the Lenders that consented to the First Amendment, which were recorded as original issue discount and are being amortized as interest expense over the remaining life of the 2014 Credit Agreement

On April 30, 2015, Emmis entered into a Second Amendment to our 2014 Credit Agreement. The Second Amendment (i) increased the maximum Total Leverage Ratio to (A) 6.75:1.00 during the period from May 31, 2015 through February 29, 2016, (B) 6.50:1.00 for the quarter ended May 31, 2016, (C) 6.25:1.00 for the quarter ended August 31, 2016, (D) 6.00:1.00 for the quarter ended November 30, 2016, and (E) 5.75:1.00 for the quarter ended February 28, 2017, after which it reverts to the original ratio of 4.00:1.00 for the quarters ended May 31, 2017 and thereafter, (ii) required Emmis to pay a 2.00% fee on certain prepayments of the Term Loan prior to the first anniversary of the Second Amendment and requires Emmis to pay a 1.00% fee on certain prepayments of the Term Loan from the first anniversary of the Second Amendment until the second anniversary of the Second Amendment, (iii) increased the Applicable Margin throughout the remainder of the term of the Credit Agreement to 5.00% for ABR Loans (as defined in the Credit Agreement) and 6.00% for Eurodollar Loans (as defined in the 2014 Credit Agreement), and (iv) increased the amortization to 0.50% per calendar quarter through January 1, 2016 and to 1.25% per calendar quarter thereafter commencing April 1, 2016. The Second Amendment also required Emmis to pay a fee of 0.50% of the Term Loan and Revolving Commitment of each Lender that consented to the Second Amendment. This fee totaled $1.1 million and was recorded as additional original issue discount and is being amortized as interest expense over the remaining life of the 2014 Credit Agreement.

On August 22, 2016, Emmis entered into the Third Amendment to the 2014 Credit Agreement. The Third Amendment made certain changes to the Credit Agreement to facilitate the Company's consideration of and, if approved by the Company's Board of Directors and shareholders, entry into a transaction that would have resulted in the Class A common stock of the Company ceasing to be registered under the Securities Act of 1934 (such potential transaction, a "Going Private Transaction"). Specifically, the Third Amendment added an exception to the covenant restricting transactions with affiliates that (i) permitted the Company to enter into a Going Private Transaction with an affiliate of the Company and (ii) permitted the Borrower to pay any costs incurred or reimbursed by an affiliate of the Company in connection with a Going Private Transaction, whether or not the transaction was consummated. The Third Amendment also allowed the Company to add certain costs and expenses incurred in connection with a Going Private Transaction to Consolidated EBITDA, as defined in the Credit Agreement, for purposes of determining compliance with the financial covenants in the Credit Agreement, subject to caps of (i) $2.5 million if a Going Private Transaction was not recommended by a special committee of the Company’s Board of Directors and (ii) $8.0 million if a Going Private Transaction was recommended by a special committee of the Company’s Board of Directors but not consummated. Finally, the Third Amendment made certain changes to the Credit Agreement that would have been effective only if a Going Private Transaction was consummated. The Third Amendment also required the Borrower to pay a 50 basis point fee to the lenders that consented to it either if a Going Private Transaction was consummated or if such a transaction was recommended by a special committee of the board of directors of the Company but not consummated. The special committee of the board of directors did not recommend the Going Private Transaction and no such transaction was consummated.

On April 18, 2017, Emmis entered into a Fourth Amendment to our 2014 Credit Agreement. The Fourth Amendment (i) eliminated the maximum Total Leverage Ratio covenant through May 31, 2018 and replaced it with a minimum Consolidated EBITDA covenant of $20.0 million, after which it reverts to a Total Leverage Ratio of 4.00:1.00 for the quarters ended August 31, 2018 and thereafter, (ii) reduced the Interest Coverage Ratio from 2.00:1.00 to 1.60:1.00, (iii) required Emmis to enter into definitive agreements by January 18, 2018 to sell assets that generate at least $80 million of sale proceeds and close such transactions no later than July 18, 2018, (iv) increased the Applicable Margin throughout the remainder of the term of the Credit Agreement to 6.00% for ABR Loans (as defined in the Credit Agreement) and 7.00% for Eurodollar Loans (as defined in the 2014 Credit Agreement) and increased the unused commitment fee on the revolving credit facility to 75 basis points, and (v) accelerated the maturity of the Term Loans to April 18, 2019 and the Revolving Loans to August 31, 2018. In addition to tightening or eliminating baskets and other credit enhancements for lenders, the Fourth Amendment contains ratcheting fees and premiums if the existing credit facility is not refinanced by July 18, 2018. The Fourth Amendment also required Emmis to pay a fee of 1.0% of the Term Loan and Revolving Commitment of each Lender that consented to the Fourth Amendment. This fee totaled $1.5 million and was recorded as additional original issue discount and is being amortized as interest expense over the remaining life of the 2014 Credit Agreement.

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among other things, expiration or early termination of the waiting period under the Hart-Scott-Rodino Act, FCC approval and other customary closing conditions and is expected to close in the back half of 2017.

2012 CREDIT AGREEMENT

On December 28, 2012, EOC 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. On June 10, 2014, Emmis entered into the 2014 Credit Agreement. In connection with the execution of the 2014 Credit Agreement, the 2012 Credit Agreement was terminated effective June 10, 2014, and all amounts outstanding under that agreement were paid in full. During the three months ended August 31, 2014, the Company recorded a loss on debt extinguishment of $1.5 million related to the termination of the 2012 Credit Agreement.

SOURCES OF LIQUIDITY

Our primary sources of liquidity are cash provided by operations and cash available through revolver borrowings under our credit facility. 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, repayment of debt and investments in future growth opportunities in related businesses.

At February 28, 2017 , we had cash and cash equivalents of $11.3 million and net working capital of $(8.1) million . At February 29, 2016 , we had cash and cash equivalents of $4.5 million and net working capital of $0.4 million . The decrease in net working capital is largely due to a $6.0 million increase of current maturities of long-term debt, which includes $5.5 million of Digonex non-recourse debt that is classified as current as of February 28, 2017. We are currently in discussion with the holders of Digonex's non-recourse debt to extend the maturity date of the debt past its current maturity date of December 31, 2017.

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-K, management believes the Company

can meet its liquidity needs through the end of fiscal year 2018 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 2018.

Since we manage cash on a consolidated basis, any cash needs of a particular segment or operating entity are met by intercompany transactions. See Investing Activities below for a discussion of specific segment needs.

Operating Activities

Cash flows provided by operating activities were $25.1 million and $19.1 million for the years ended February 28 (29), 2016 and 2017, respectively. The decrease in cash flows provided by operating activities was mainly attributable to lower operating income (excluding the effect of gains on the sale of businesses) of our radio and publishing businesses.

Cash flows provided by operating activities were $18.5 million and $25.1 million for the years ended February 28 (29), 2015 and 2016, respectively. The increase in cash flows provided by operating activities was mainly attributable to additional operating cash flows provided by the acquisition of WBLS-FM and WLIB-AM midway through fiscal 2015.

Investing Activities

Cash flows provided by investing activities of $28.5 million for the year ended February 28, 2017 primarily consisted of $31.3 million of proceeds from the sale of our Terre Haute, Indiana radio cluster and five of our magazines, partially offset by $2.9 million of capital expenditures.

Cash used in investing activities of $3.3 million for the year ended February 29, 2016 primarily consisted of $3.4 million of capital expenditures partially offset by $0.1 million of cash distributed from investments.

Cash used in investing activities of $140.2 million for the year ended February 28, 2015 primarily consisted of $136.0 million of cash used in our acquisitions of WBLS-FM and WLIB-AM in New York and Digonex Technologies, Inc. In addition, we used $3.5 million of cash for capital expenditures and made $0.5 million of additional investments, net of distributions from investments.

Financing Activities

Cash used in financing activities for the year ended February 28, 2017 primarily relates to net payments on our long-term debt of $34.6 million, distributions to noncontrolling interests of $5.6 million, and the settlement of tax withholding obligations of $0.5 million.

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Cash used in financing activities for the year ended February 29, 2016 primarily relates to net payments on our long-term debt of $13.2 million, distributions to noncontrolling interests of $5.8 million, debt-related costs of $1.1 million and the settlement of tax withholding obligations of $1.0 million.

Cash flows provided by financing activities for the year ended February 28, 2015 primarily relates to net borrowings related to our senior credit agreement of $134.5 million. Partially offsetting our net borrowings were payments of debt-related costs of $7.8 million, distributions to noncontrolling interests of $5.4 million and the settlement of tax withholding obligations of $1.5 million.

As of February 28, 2017 , Emmis had $152.2 million of borrowings under the 2014 Credit Agreement ($12.1 million current and $140.1 million long-term) and $68.8 million of non-recourse debt ($11.5 million current and $57.3 million long-term). Borrowings under the 2014 Credit Agreement bear 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 ranging from 4.0% to 5.0% per annum. As of February 28, 2017 , our weighted average borrowing rate under our 2014 Credit Agreement was approximately 7.0%.

The debt service requirements of Emmis over the next twelve-month period are expected to be $23.9 million related to our 2014 Credit Agreement, as amended, ($12.1 million of principal repayments and $11.8 million of interest payments) and $8.3 million related to our 98.7FM non-recourse debt ($6.0 million of principal repayments and $2.3 million of interest payments). Digonex non-recourse debt ($6.2 million face amount, $5.5 million carrying amount as of February 28, 2017) is due in December 2017. The Company is currently working with with holders of the debt to extend the maturity date of the debt. 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 2014 Credit Agreement debt bears interest at variable rates. The Company estimated interest payments for the 2014 Credit Agreement above by using the amounts outstanding as of February 28, 2017 and estimated interest rates subsequent to the closing of the Fourth Amendment to the Credit Agreement on April 18, 2017 .

The Company's Preferred Stock was delisted by Nasdaq on March 28, 2016. Pursuant to the Company's Articles of Incorporation, all Preferred Stock was automatically converted to Class A common stock on April 4, 2016 at a ratio of 2.80 shares of Class A common stock for each share of Preferred Stock. The aggregate liquidation preference of the Company's Preferred Stock as of February 29, 2016 that was eliminated as a result of its conversion to Class A common stock was $43.3 million.

As of May 5, 2017, we had $12.0 million available for additional borrowing under our credit facility. Availability under the credit facility depends upon our continued compliance with certain operating covenants and financial ratios. Emmis was in compliance with these covenants as of February 28, 2017 . 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 facility 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 7 to our consolidated financial statements for a discussion of various acquisitions and dispositions that occurred during the three years ended February 2017.

INTANGIBLES

As of February 28, 2017 , approximately 70% of our total assets consisted of FCC licenses and goodwill, the value of which depends significantly upon the operational results of our businesses. In the case of our 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 the activities of our stations for compliance with regulatory requirements. Historically, all of our FCC licenses have been renewed (or a waiver has been granted pending renewal) at the end of their respective eight-year periods, and we expect that all of our FCC licenses will continue to be renewed in the future.

SEASONALITY

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

INFLATION

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

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OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

Other than lease commitments, legal contingencies incurred in the normal course of business, contractual commitments to purchase goods and services and employment contracts for key employees, all of which are discussed in Note 11 to the consolidated financial statements, the Company does not have any material off-balance sheet financings or liabilities. The Company does not have any majority-owned and controlled subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in or relationships with any “special-purpose entities” that are not reflected in the consolidated financial statements or disclosed in the Notes to Consolidated Financial Statements.

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

As a smaller reporting company, we are not required to provide this information.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Emmis Communications Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Emmis Communications Corporation and Subsidiaries as of February 28 (29), 2016 and 2017, and the related consolidated statements of operations, comprehensive income (loss), changes in deficit, and cash flows for each of the three years in the period ended February 28, 2017. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Emmis Communications Corporation and Subsidiaries at February 28 (29), 2016 and 2017, and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 28, 2017, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Indianapolis, Indiana

May 11, 2017

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



	For the years ended February 28 (29),
	2015			2016			2017
NET REVENUES	$	237,938		$	231,433		$	214,568
OPERATING EXPENSES:
Station operating expenses excluding depreciation and amortization expense of $3,984, $4,713, and $3,998 respectively	181,009			183,394			180,085
Corporate expenses excluding depreciation and amortization expense of $1,942, $1,084, and $808 respectively	14,922			13,023			11,359
LMA fees	4,208			—			—
Hungary license litigation expense	521			—			—
Impairment loss on intangible assets	67,915			9,499			9,843
Depreciation and amortization	5,926			5,797			4,806
Gain on contract settlement	(2,500		)	—			—
Gain on sale of radio and publishing assets, net of disposition costs	—			—			(23,557		)
Loss on sale of assets	—			56			124
Total operating expenses	272,001			211,769			182,660
OPERATING (LOSS) INCOME	(34,063		)	19,664			31,908
OTHER EXPENSE:
Interest expense	(17,101		)	(18,956		)	(18,018		)
Loss on debt extinguishment	(1,455		)	—			(620		)
Other (expense) income, net	(6,418		)	1,057			(160		)
Total other expense	(24,974		)	(17,899		)	(18,798		)
(LOSS) INCOME BEFORE INCOME TAXES	(59,037		)	1,765			13,110
PROVISION (BENEFIT) FOR INCOME TAXES	36,948			2,069			(110		)
CONSOLIDATED NET (LOSS) INCOME	(95,985		)	(304		)	13,220
NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	3,274			(2,418		)	101
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY	(99,259		)	2,114			13,119
LOSS ON MODIFICATION OF PREFERRED STOCK	—			(162		)	—
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(99,259	)	$	1,952		$	13,119

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



	For the years ended February 28 (29),
	2015			2016		2017
Amounts attributable to common shareholders for basic earnings per share	$	(99,259	)	$	1,952	$	13,119
Amounts attributable to common shareholders for diluted earnings per share	$	(99,259	)	$	1,952	$	13,119

Basic net (loss) income per share attributable to common shareholders:	$	(9.33	)	$	0.18	$	1.09
Diluted net (loss) income per share attributable to common shareholders:	$	(9.33	)	$	0.17	$	1.07

Basic weighted average common shares outstanding	10,634			11,034		12,040
Diluted weighted average common shares outstanding	10,634			11,316		12,229

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)



	For the year ended February 28 (29),
	2015			2016			2017
CONSOLIDATED NET (LOSS) INCOME	$	(95,985	)	$	(304	)	$	13,220
OTHER COMPREHENSIVE INCOME:
Change in value of derivative instrument	99			—			—
COMPREHENSIVE (LOSS) INCOME	(95,886		)	(304		)	13,220
LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	3,274			(2,418		)	101
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(99,160	)	$	2,114		$	13,119

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



	FEBRUARY 28 (29),
	2016		2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,456	$	11,349
Restricted cash	1,464		2,323
Accounts receivable, net of allowance for doubtful accounts of $934 and $903, respectively	34,906		26,484
Prepaid expenses	7,413		4,798
Other	3,452		1,503
Total current assets	51,691		46,457
PROPERTY AND EQUIPMENT:
Land and buildings	27,689		27,242
Leasehold improvements	13,934		13,142
Broadcasting equipment	43,926		43,566
Office equipment and automobiles	31,248		27,810
Construction in progress	544		1,474
	117,341		113,234
Less-accumulated depreciation and amortization	83,498		82,389
Total property and equipment, net	33,843		30,845
INTANGIBLE ASSETS:
Indefinite lived intangibles	205,129		197,666
Goodwill	14,697		4,603
Other intangibles	6,224		3,165
	226,050		205,434
Less-accumulated amortization	2,925		1,642
Total intangible assets, net	223,125		203,792
OTHER ASSETS:
Investments	1,137		800
Deposits and other	6,810		7,444
Total other assets	7,947		8,244
Total assets	$	316,606	$	289,338

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



	FEBRUARY 28 (29),
	2016			2017
LIABILITIES AND DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	8,127		$	13,398
Current maturities of long-term debt	17,573			23,600
Accrued salaries and commissions	8,375			6,238
Deferred revenue	11,435			4,560
Other	5,775			6,807
Total current liabilities	51,285			54,603
LONG-TERM DEBT, NET OF CURRENT PORTION	228,027			190,372
OTHER NONCURRENT LIABILITIES	7,728			4,842
DEFERRED INCOME TAXES	43,715			43,537
Total liabilities	330,755			293,354
COMMITMENTS AND CONTINGENCIES (NOTE 11)
SHAREHOLDERS’ DEFICIT:	`
Class A common stock, $0.01 par value; authorized 42,500,000 shares; issued and outstanding 10,402,400 shares and 11,278,065 shares at February 29, 2016 and February 28, 2017, respectively	104			113
Class B common stock, $0.01 par value; authorized 7,500,000 shares; issued and outstanding 1,142,366 shares at February 28 (29), 2016 and 2017	11			11
Class C common stock, $0.01 par value; authorized 7,500,000 shares; none issued	—			—
Series A convertible preferred stock, $.01 par value; $50.00 liquidation preference per share, aggregate liquidation preference and redemption amount of $43,316 at February 29, 2016; authorized 2,875,000 shares; issued and outstanding 866,319 at February 29, 2016	9			—
Additional paid-in capital	589,830			592,320
Accumulated deficit	(642,500		)	(629,381		)
Total shareholders’ deficit	(52,546		)	(36,937		)
NONCONTROLLING INTERESTS	38,397			32,921
Total deficit	(14,149		)	(4,016		)
Total liabilities and deficit	$	316,606		$	289,338

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

FOR THE THREE YEARS ENDED FEBRUARY 28, 2017

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



	Class A Common Stock				Class B Common Stock			Series A Preferred Stock
	Shares		Amount		Shares	Amount		Shares		Amount
BALANCE, FEBRUARY 28, 2014	9,316,781		$	93	1,142,366	$	11	928,991		$	9
Net (loss) income	—		—		—	—		—		—
Exercise of stock options and related income tax benefits	198,096		2		—	—		—		—
Issuance of Common Stock to employees and officers and related income tax benefits	96,978		1		—	—		—		—
Distribution of 2012 Retention Plan Trust, net of taxes	151,825		2		—	—		—		—
Distributions to noncontrolling interests	—		—		—	—		—		—
Acquisition of noncontrolling interest	—		—		—	—		—		—
Change in value of derivative instrument	—		—		—	—		—		—
BALANCE, FEBRUARY 28, 2015	9,763,680		$	98	1,142,366	$	11	928,991		$	9
Net (loss) income	—		—		—	—		—		—
Exercise of stock options and related income tax benefits	47,500		—		—	—		—		—
Issuance of Common Stock to employees and officers and related income tax benefits	552,990		6		—	—		—		—
Conversion of Preferred Stock to Class A Common Stock	38,230		—			—		(62,672	)	—
Distributions to noncontrolling interests	—		—		—	—		—		—
BALANCE, FEBRUARY 29, 2016	10,402,400		$	104	1,142,366	$	11	866,319		$	9
Net income	—		—		—	—		—		—
Exercise of stock options and related income tax benefits	57,738		1		—	—		—		—
Issuance of Common Stock to employees and officers and related income tax benefits	213,197		2		—	—		—		—
Conversion of Preferred Stock to Class A Common Stock	606,423		6			—		(866,319	)	(9		)
Purchase of Class A Common Stock	(1,693	)	—
Distributions to noncontrolling interests	—		—		—	—		—		—
BALANCE, FEBRUARY 28, 2017	11,278,065		$	113	1,142,366	$	11	—		$	—

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) – (CONTINUED)

FOR THE THREE YEARS ENDED FEBRUARY 28, 2017

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



	Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity (Deficit)
BALANCE, FEBRUARY 28, 2014	581,091		(545,355	)	(99	)	47,618		83,368
Net (loss) income	—		(99,259	)	—		3,274		(95,985	)
Exercise of stock options and related income tax benefits	417		—		—		—		419
Issuance of Common Stock to employees and officers and related income tax benefits	2,122		—		—		—		2,123
Distribution of 2012 Retention Plan Trust, net of taxes	2,056		—		—		—		2,058
Distributions to noncontrolling interests	—		—		—		(5,428	)	(5,428	)
Acquisition of noncontrolling interests	—		—		—		1,197		1,197
Change in value of derivative instrument	—		—		99		—		99
BALANCE, FEBRUARY 28, 2015	585,686		(644,614	)	—		46,661		(12,149	)
Net (loss) income	—		2,114		—		(2,418	)	(304	)
Exercise of stock options and related income tax benefits	135		—		—		—		135
Issuance of Common Stock to employees and officers and related income tax benefits	4,008		—		—		—		4,014
Conversion of Preferred Stock to Class A Common Stock	1		—		—		—		1
Distributions to noncontrolling interests	—		—		—		(5,846	)	(5,846	)
BALANCE, FEBRUARY 29, 2016	589,830		(642,500	)	—		38,397		(14,149	)
Net income	—		13,119		—		101		13,220
Exercise of stock options and related income tax benefits	114		—		—		—		115
Issuance of Common Stock to employees and officers and related income tax benefits	2,372		—		—		—		2,374
Conversion of Preferred Stock to Class A Common Stock	9		—		—		—		6
Purchase of Class A Common Stock	(5	)	—		—		—		(5	)
Distributions to noncontrolling interests	—		—		—		(5,577	)	(5,577	)
BALANCE, FEBRUARY 28, 2017	592,320		(629,381	)	—		32,921		(4,016	)

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)



	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2015		2016		2017
OPERATING ACTIVITIES:
Consolidated net (loss) income	(95,985	)	(304	)	13,220
Adjustments to reconcile net (loss) income to net cash provided by operating activities—
Gain on sale of radio and publishing assets, net of disposition costs	—		—		(23,557	)
Impairment losses on intangible assets	67,915		9,499		9,843
Loss on debt extinguishment	1,455		—		620
Noncash accretion of debt instruments to interest expense	3,472		743		743
Amortization of deferred financing costs, including original issue discount	1,227		1,667		1,661
Depreciation and amortization	5,926		5,797		4,806
Provision for bad debts	627		626		377
Provision (benefit) for deferred income taxes	36,719		2,100		(178	)
Noncash compensation	2,813		4,904		2,920
Loss on investments including other-than-temporary impairment	6,682		—		254
Loss on sale of assets	—		56		124
Changes in assets and liabilities—
Restricted cash	(501	)	1,276		(209	)
Accounts receivable	(6,954	)	1,796		3,460
Prepaid expenses and other current assets	(1,527	)	1,289		1,639
Other assets	(682	)	(1,583	)	(644	)
Accounts payable and accrued liabilities	(373	)	(1,236	)	5,131
Deferred revenue	62		(133	)	(294	)
Income taxes	(30	)	(117	)	(76	)
Other liabilities	(2,390	)	(1,266	)	(788	)
Net cash provided by operating activities	18,456		25,114		19,052
INVESTING ACTIVITIES:
Purchases of property and equipment	(3,514	)	(3,388	)	(2,850	)
Cash paid for acquisitions	(136,006	)	—		—
Proceeds from the sale of assets	3		—		31,330
(Cash paid for) received from investments, net	(516	)	107		54
Other	(185	)	—		(35	)
Net cash (used in) provided by investing activities	(140,218	)	(3,281	)	28,499

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS – (CONTINUED)

(DOLLARS IN THOUSANDS)



	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2015			2016			2017
FINANCING ACTIVITIES:
Payments on long-term debt	(79,541		)	(24,228		)	(55,970		)
Proceeds from long-term debt	214,000			11,000			21,350
Settlement of tax withholding obligations	(1,466		)	(971		)	(539		)
Dividends and distributions paid to noncontrolling interests	(5,428		)	(5,846		)	(5,577		)
Proceeds from exercise of stock options and employee stock purchases	411			133			115
Payments for debt related costs	(7,849		)	(1,134		)	(32		)
Other	—			—			(5		)
Net cash provided by (used in) financing activities	120,127			(21,046		)	(40,658		)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,635		)	787			6,893
CASH AND CASH EQUIVALENTS:
Beginning of period	5,304			3,669			4,456
End of period	$	3,669		$	4,456		$	11,349
SUPPLEMENTAL DISCLOSURES:
Cash paid for —
Interest	$	9,781		$	16,742		$	15,618
Income taxes	243			216			112
Noncash financing transactions—
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives	5,637			4,963			2,920

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The following discussion pertains to Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “Emmis,” the “Company,” or “we”). All significant intercompany balances and transactions have been eliminated.

Organization

In addition to our radio properties, we also publish Indianapolis Monthly and operate Digonex, a dynamic pricing business.

Substantially all of ECC’s business is conducted through its subsidiaries. Our credit agreement, dated June 10, 2014 (the “2014 Credit Agreement”), contains certain provisions that may restrict the ability of ECC’s subsidiaries to transfer funds to ECC in the form of cash dividends, loans or advances.

Common Stock Reverse Split

On July 8, 2016, the Company effected a one-for-four reverse stock split for its Class A, Class B and Class C common

stock. All share and per share information has been retroactively adjusted to reflect the reverse stock split.

Revenue Recognition

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. Amounts are written off after all normal collection efforts have been exhausted. The activity in the allowance for doubtful accounts for the three years ended February 28, 2017 was as follows:



	Balance At Beginning Of Year		Provision		Write-Offs			Balance At End Of Year
Year ended February 28, 2015	$	574	$	627	$	(536	)	$	665
Year ended February 29, 2016	665		626		(357		)	934
Year ended February 28, 2017	934		377		(408		)	903

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Local Programming and Marketing Agreement Fees

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

Active LMA

On April 26, 2012, the Company entered into an LMA with New York AM Radio, LLC (“98.7FM Programmer”) pursuant to which, commencing April 30, 2012, 98.7FM Programmer purchased from Emmis the right to provide programming on 98.7FM until August 31, 2024. Disney Enterprises, Inc., the parent company of 98.7FM Programmer, has guaranteed the obligations of 98.7FM Programmer under the LMA. The Company retains ownership and control of the station, including the related FCC license during the term of the LMA and received an annual fee from 98.7FM Programmer of $8.4 million for the first year of the term under the LMA, which fee increases by 3.5% each year thereafter until the LMA’s termination. This LMA fee revenue is recorded on a straight-line basis over the term of the LMA. Emmis retains the FCC license of 98.7FM after the term of the LMA expires.

Terminated LMAs

On February 11, 2014, the Company entered into an LMA in connection with its agreement to purchase WBLS-FM and WLIB-AM in New York City from YMF Media New York LLC and YMF Media New York License LLC (collectively, "YMF"). The LMA, which commenced on March 1, 2014, gave Emmis the right to program and sell advertising for the two New York stations. Emmis paid YMF $1.3 million per month and reimbursed YMF for certain monthly expenses. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the stations, which occurred on June 10, 2014, and ceased effective with the second closing on February 13, 2015. The LMA fees paid after the first closing were recognized as a liability as of the date of purchase of the stations on June 10, 2014. Accordingly, LMA fees incurred after June 10, 2014 did not impact our results of operations. During the year ended February 28, 2015, Emmis recorded $4.2 million of LMA expense. See Note 7 for more discussion of the Company's purchase of WBLS-FM and WLIB-AM from YMF.

LMA fees recorded as net revenues in the accompanying consolidated statements of operations were as follows for the years ended February 2015, 2016 and 2017:



	For the years ended February 28 (29),
	2015		2016		2017
98.7FM, New York	$	10,331	$	10,331	$	10,331

Share-based Compensation

The Company determines the fair value of its employee stock options at the date of grant using a Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the value of exchange-traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different than these traded options. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility and expected term of the options granted. The Company relies heavily upon historical data of its stock price when determining expected volatility, but each year the Company reassesses whether or not historical data is representative of expected results. See Note 4 for more discussion of share-based compensation.

Cash and Cash Equivalents

Emmis considers time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of three months or less to be cash equivalents. At times, such deposits may be in excess of FDIC insurance limits.

Restricted Cash

Restricted cash relates to cash on deposit in trust accounts related to our 98.7FM LMA in New York City that services long-term debt, cash collected by our wholly-owned subsidiary, NextRadio LLC, from other radio broadcasters for payments to Sprint, and cash held in escrow as part of our sale of four magazines in February 2017. Usage of cash collected by NextRadio

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LLC is restricted for specific purposes by funding agreements. The table below summarizes restricted cash held by the Company as of February 28 (29), 2016 and 2017:



	For the years ending February 28 (29),
	2016		2017
98.7FM LMA restricted cash (see Note 8)	$	1,464	$	1,550
NextRadio LLC restricted cash (see Note 8)	—		123
Cash held in escrow from magazine sale restricted cash (see Note 7)	—		650
Total investments	$	1,464	$	2,323

Property and Equipment

Property and equipment are recorded at cost. Depreciation is generally computed using the straight-line method over the estimated useful lives of the related assets, which are 39 years for buildings, the shorter of economic life or expected lease term for leasehold improvements, five to seven years for broadcasting equipment, five years for automobiles, and three to five years for office equipment. Maintenance, repairs and minor renewals are expensed as incurred; improvements are capitalized. On a continuing basis, the Company reviews the carrying value of property and equipment for impairment. If events or changes in circumstances were to indicate that an asset carrying value may not be recoverable, a write-down of the asset would be recorded through a charge to operations. See below for more discussion of impairment policies related to our property and equipment. Depreciation expense for the years ended February 2015, 2016 and 2017 was $5.0 million , $4.3 million and $4.1 million , respectively.

Intangible Assets and Goodwill

Indefinite-lived Intangibles and Goodwill

In connection with past acquisitions, a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired. In accordance with ASC Topic 350, “ Intangibles—Goodwill and Other,” goodwill and radio broadcasting licenses are not amortized, but are tested at least annually for impairment at the reporting unit level and unit of accounting level, respectively. We test for impairment annually, on December 1 of each year, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. Impairment exists when the asset carrying values exceed their respective fair values, and the excess is then recorded to operations as an impairment charge. See Note 9, Intangible Assets and Goodwill, for more discussion of our interim and annual impairment tests performed during the three years ended February 28, 2017.

Definite-lived Intangibles

The Company’s definite-lived intangible assets primarily consist of trademarks, customer lists and radio programming contracts which are amortized over the period of time the intangible assets are expected to contribute directly or indirectly to the Company’s future cash flows.

Advertising and Subscription Acquisition Costs

Advertising and subscription acquisition costs are expensed when incurred. Advertising expense for the years ended February 2015, 2016 and 2017 was $3.2 million , $4.1 million and $5.7 million , respectively.

Investments

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. For other investments held at February 28, 2017, the Company applies the accounting guidance for certain investments in debt and equity securities. Emmis’ equity method investment reports on a fiscal year ending December 31, which Emmis incorporates into its fiscal year ended February 28 (29).

Emmis has two investments, the carrying values of which are summarized in the following table and discussed below:

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	For the years ending February 28 (29),
	2016		2017
Available-for-sale investment	$	800	$	800
Equity method investment	337		—
Total investments	$	1,137	$	800

Equity method investment

Emmis has a minority interest in a partnership that owns and operates various entertainment websites. During the year ended February 28, 2017, Emmis recorded a noncash impairment charge of $0.3 million in other income (expense), net in the accompanying consolidated statements of operations as it deemed the investment was impaired and the impairment was other-than-temporary. This impairment charge reduced the carrying value of this investment to zero as of February 28, 2017.

Available for sale investment

Emmis’ available for sale investment is an investment in the preferred shares of a non-public company. During the year ended February 29, 2016, Emmis received an additional $0.3 million of preferred shares of this non-public company in exchange for promotional airtime on its various radio stations. This investment is accounted for under the provisions of ASC 320, and as such, is carried at its fair value which Emmis believes approximates its cost basis of $0.8 million .

During the year ended February 28, 2013, Emmis made investments totaling $6.0 million in Courseload, Inc, a provider of online textbooks and other course material. Emmis made additional investments in Courseload Inc. of $0.3 million and $0.4 million during the years ended February 28, 2014 and 2015, respectively. During the year ended February 28, 2015, Emmis recorded a noncash impairment charge of $6.7 million in other income (expense), net in the accompanying consolidated statements of operations as it deemed the investment was impaired and the impairment was other-than-temporary. The impairment charge recorded during the year ended February 28, 2015 reduced the carrying value of this investment to zero as of February 28, 2015.

Unrealized gains and losses would be reported in other comprehensive income until realized, at which point they would be recognized in the consolidated statements of operations. If the Company determines that the value of an investment is other-than-temporarily impaired, the Company will recognize, through the statements of operations, a loss on the investment.

Deferred Revenue and Barter Transactions

Deferred revenue includes deferred barter, other transactions in which payments are received prior to the performance of services (i.e. cash-in-advance advertising and prepaid LMA payments), and deferred magazine subscription revenue. Barter transactions are recorded at the estimated fair value of the product or service received. Revenue from barter transactions is recognized when commercials are broadcast or a publication is delivered. The appropriate expense or asset is recognized when merchandise or services are used or received. Magazine subscription revenue is recognized when the publication is shipped. Barter revenues for the years ended February 2015, 2016 and 2017 were $8.5 million , $8.5 million and $7.8 million , respectively, and barter expenses were $8.7 million , $8.5 million , and $7.9 million , respectively.

Earnings Per Share

ASC Topic 260 requires dual presentation of basic and diluted income (loss) per share (“EPS”) on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at February 2015, 2016 and 2017 consisted of stock options, restricted stock awards and preferred stock.

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

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	For the year ended
	February 28, 2015							February 29, 2016					February 28, 2017
	Net Loss			Shares	Net Loss Per Share			Net Income		Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income (loss) per common share:
Net income (loss) available to common shareholders from continuing operations	$	(99,259	)	10,634	$	(9.33	)	$	1,952	11,034	$	0.18	$	13,119	12,040	$	1.09
Impact of equity awards	—			—				—		282			—		189
Diluted net income (loss) per common share:
Net income (loss) available to common shareholders from continuing operations	$	(99,259	)	10,634	$	(9.33	)	$	1,952	11,316	$	0.17	$	13,119	12,229	$	1.07

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



	For the year ended February 28 (29),
	2015	2016	2017
	(shares in 000’s )
Preferred stock	567	607	—
Stock options and restricted stock awards	1,081	1,279	1,341
Antidilutive common share equivalents	1,648	1,886	1,341

Income 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.

Long-Lived Tangible Assets

The Company periodically considers whether indicators of impairment of long-lived tangible assets are present. If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets in question are less than their carrying value. If less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals and other methods. If the assets determined to be impaired are to be held and used, the Company recognizes an impairment charge to the extent the asset’s carrying value is greater than the fair value. The fair value of the asset then becomes the asset’s new carrying value, which, if applicable, the Company depreciates or amortizes over the remaining estimated useful life of the asset.

Noncontrolling Interests

The Company follows Accounting Standards Codification paragraph 810-10-65-1 to report the noncontrolling interests related to our Austin radio partnership and Digonex. We have a 50.1% controlling interest in our Austin radio partnership. We do not own any of the common equity of Digonex, but we consolidate the entity because we control its board of directors via rights granted in convertible preferred stock and convertible debt that we own.

Noncontrolling interests represents the noncontrolling interest holders' proportionate share of the equity of the Austin radio partnership and Digonex. Noncontrolling interests are adjusted for the noncontrolling interest holders' proportionate share of the earnings or losses of the applicable entity. The noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance. Below is a summary of the noncontrolling interest activity for the years ended February 2016 and 2017:

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	Austin radio partnership			Digonex			Total noncontrolling interests
Balance, February 28, 2015	$	47,883		$	(1,222	)	$	46,661
Net income (loss)	5,519			(7,937		)	(2,418		)
Payments of dividends and distributions to noncontrolling interests	(5,846		)	—			(5,846		)
Balance, February 29, 2016	47,556			(9,159		)	38,397
Net income (loss)	4,851			(4,750		)	101
Payments of dividends and distributions to noncontrolling interests	(5,577		)	—			(5,577		)
Balance, February 28, 2017	$	46,830		$	(13,909	)	$	32,921

Estimates

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

National Representation Agreement

On October 1, 2007, Emmis terminated its existing national sales representation agreement with Interep National Radio Sales, Inc. (“Interep”) and entered into a new agreement with Katz Communications, Inc. (“Katz”) extending through March 2018. Emmis’ existing contract with Interep at the time extended through September 2011. Emmis, Interep and Katz entered into a tri-party termination and mutual release agreement under which Interep agreed to release Emmis from its future contractual obligations in exchange for a one-time payment of $15.3 million , which was paid by Katz on behalf of Emmis as an inducement for Emmis to enter into the new long-term contract with Katz. Emmis measured and recognized the charge associated with terminating the Interep contract as of the effective termination date, which was recorded as a noncash contract termination fee in the year ended February 2008. The liability established as a result of the termination represents an incentive received from Katz that is being recognized as a reduction of our national agency commission expense over the term of the agreement with Katz. At February 28, 2017, the entire balance of this liability is included in other current liabilities in the accompanying consolidated balance sheets.

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-K, management believes the Company can meet its liquidity needs through the end of fiscal year 2018 with cash and cash equivalents on hand, projected cash flows from operations, and, to the extent necessary, through its borrowing capacity under the 2014 Credit Agreement, which was $20.0 million at February 28, 2017. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2018.

Recent Accounting Standards Updates

Adoption of New Accounting Standards Updates

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09) to simplify the accounting for share-based payment transactions, including the income tax consequences, and standardize certain classifications on the statement of cash flows. As permitted by ASU 2016-09, the Company chose to early adopt the provisions of this update as of March 1, 2016. The adoption of this guidance did not have any effect on the Company's consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in the provisional amount as if the accounting had been completed at the acquisition date. This guidance was effective for the Company as of March 1, 2016. The adoption of this guidance did not have any effect on the Company's consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update 2015-05, Intangibles - Goodwill and Other: Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides

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guidance as to when a company using a cloud computing service that includes a software license should capitalize and depreciate the software license. This guidance was effective for the Company as of March 1, 2016. The adoption of this guidance did not have any effect on the Company's consolidated financial statements.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 was effective for the fiscal year ending February 28, 2017, and for annual periods and interim periods thereafter. The adoption of this guidance did not have any effect on the Company's consolidated financial statements.

Recent Accounting Standards Updates Not Yet Adopted

In January 2017, the FASB issued Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU was issued to simplify goodwill impairment by removing the second step of the goodwill impairment test. This standard is required to be adopted by the Company as of March 1, 2020, but as permitted by the FASB, the Company plans to early adopt this guidance as of March 1, 2017. The adoption of this guidance will affect future goodwill impairments which will also be influenced by a number of other factors used by the Company when assessing the valuation of goodwill.

In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU was issued to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for the Company as of March 1, 2018. The Company does not expect adoption of this guidance will have a material impact on the Company's consolidated financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will be effective for the Company as of March 1, 2018, and requires a retrospective transition method. The Company does not expect adoption of this guidance will have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance will be effective for the Company as of March 1, 2019. A modified retrospective transition method is required. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles used to recognize revenue for all entities. The FASB deferred implementation of this guidance by one year with the issuance of Accounting Standards Update 2015-14. As such, this guidance will be effective for the Company as of March 1, 2018. The Company expects to use the modified retrospective method of adoption. The Company has completed its initial evaluation of potential changes from adopting the new standard on its financial reporting and disclosures, which included a detailed review of contractual terms for all of its significant revenue streams. The Company will continue to progress on its implementation plan during the remainder of fiscal 2018. Based on its initial evaluation, the Company does not expect adoption of this guidance will have a material impact on the Company's consolidated financial statements, but disclosures related to revenue recognition will likely be expanded.

2. COMMON STOCK

Emmis has authorized Class A common stock, Class B common stock, and Class C common stock. The rights of these three classes are essentially identical except that each share of Class A common stock has one vote with respect to substantially all matters, each share of Class B common stock has 10 votes with respect to substantially all matters, and each share of Class C common stock has no voting rights with respect to substantially all matters. Class B common stock is owned by our Chairman, CEO and President, Jeffrey H. Smulyan. All shares of Class B common stock automatically convert to Class A common stock upon sale or other transfer to a party unaffiliated with Mr. Smulyan. At February 28 (29), 2016 and 2017 , no shares of Class C common stock were issued or outstanding.

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On July 8, 2016, the Company effected a one-for-four reverse stock split. As a result of the reverse stock split, every four shares of each class of the Company's outstanding common stock were combined into one share of the same class of common stock and the authorized shares of each class of the Company's common stock were reduced by the same ratio. In lieu of issuing fractional shares, the Company paid in cash the fair value of such fractions of a share as of July 7, 2016 . Such fair value was $0.695 for each pre-split share of our outstanding common stock, which was the average closing sales price of the Class A common stock as reported by the Nasdaq Global Select Market for the thirty trading days preceding such date. The number and strike price of the Company's outstanding stock options were adjusted proportionally. The par value of the Company's common stock was not adjusted as a result of the reverse stock split.

3. REDEEMABLE PREFERRED STOCK

The Company's redeemable Preferred Stock was delisted from the Nasdaq Global Select Market on March 28, 2016. Pursuant to the Company's Articles of Incorporation, all shares of Preferred Stock were converted into shares of Class A common stock on April 4, 2016. Subsequent to the mandatory conversion on April 4, 2016, no shares of the Company's redeemable Preferred Stock remain outstanding. On various dates during the year ended February 28, 2017, including the mandatory conversion date of April 4, 2016, 866,319 shares of Preferred Stock were originally converted into 2,452,692 shares of Class A common stock ( 606,423 shares of Class A common stock after the one-for-four reverse stock split).

Each share of redeemable Preferred Stock was convertible into a number of shares of common stock, which was determined by dividing the liquidation preference of the share of preferred stock ( $50.00 per share) by the conversion price. The conversion price was originally $20.495 , which resulted in a conversion ratio of approximately 2.44 shares of common stock per share of Preferred Stock. On February 17, 2016, shareholders of Emmis' common stock and Preferred Stock approved amendments to Emmis' Articles of Incorporation which, among other things, modified the conversion ratio to 2.80 shares of Class A common stock per share of Preferred Stock. In connection with this modification, the Company recorded a loss of $0.2 million .

4. 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 3 years ( one-third each year for 3 years ), or cliff vest at the end of 3 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 years ended February 2015, 2016 and 2017 :



	For the Years Ended February 28 (29),
	2015	2016	2017
Risk-Free Interest Rate:	1.2% - 1.5%	1.2% - 1.4%	0.9% - 1.8%
Expected Dividend Yield:	0%	0%	0%
Expected Life (Years):	4.3	4.3	4.3 - 4.4
Expected Volatility:	69.0% - 73.9%	57.2% - 64.6%	52.9% - 60.0%

The following table presents a summary of the Company’s stock options outstanding at February 28, 2017 , and stock option activity during the year ended February 28, 2017 (“Price” reflects the weighted average exercise price per share):

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	Options	Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	1,948,384	$	6.36
Granted	704,678	2.68
Exercised (1)	57,738	1.98
Forfeited	12,499	7.12
Expired	23,182	36.62
Outstanding, end of period	2,559,643	5.17		7.0	$	346
Exercisable, end of period	1,469,268	5.63		5.4	$	254


(1)	The Company did not record an income tax benefit related to option exercises in the years ended February 2015, 2016 and 2017. Cash received from option exercises during the years ended February 2015, 2016 and 2017 was $0.4 million, $0.1 million and $0.1 million, respectively.

The weighted average grant date fair value of options granted during the years ended February 2015, 2016 and 2017 , was $6.53 , $2.98 and $1.20 , respectively.

A summary of the Company’s nonvested options at February 28, 2017 , and changes during the year ended February 28, 2017 , is presented below:



	Options	Weighted Average Grant Date Fair Value
Nonvested, beginning of period	830,803	$	3.71
Granted	704,678	1.20
Vested	432,607	3.28
Forfeited	12,499	3.62
Nonvested, end of period	1,090,375	2.26

There were 0.9 million shares available for future grants under the Company’s various equity plans at February 28, 2017 ( 0.6 million shares under the 2016 Equity Compensation Plan and 0.3 million shares under other plans). The vesting dates of outstanding options at February 28, 2017 range from March 2017 to July 2019, and expiration dates range from March 2017 to February 2027.

Restricted Stock Awards

The Company grants restricted stock awards to directors annually, and periodically grants restricted stock to employees in connection with employment agreements. 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 3 -year term or (ii) the third anniversary of the date of grant. Restricted stock award grants are granted out of the Company’s 2016 Equity Compensation Plan. The Company may also award, out of the Company’s 2016 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 February 28, 2017 , and restricted stock activity during the year ended February 28, 2017 (“Price” reflects the weighted average share price at the date of grant):



	Awards	Price
Grants outstanding, beginning of period	212,995	$	7.12
Granted	389,084	3.11
Vested (restriction lapsed)	405,373	4.48
Forfeited	—	—
Grants outstanding, end of period	196,706	4.64

The total grant date fair value of shares vested during the years ended February 2015, 2016 and 2017 , was $4.1 million , $3.4 million and $1.8 million , 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 years ended February 2015, 2016 and 2017 :



	Year Ended February 28 (29),
	2015		2016		2017
Station operating expenses	$	720	$	1,760	$	1,012
Corporate expenses	2,093		3,144		1,908
Stock-based compensation expense included in operating expenses	2,813		4,904		2,920
Tax benefit	—		—		—
Recognized stock-based compensation expense, net of tax	$	2,813	$	4,904	$	2,920

As of February 28, 2017 , there was $1.7 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 1.2 years.

5. LONG-TERM DEBT

Long-term debt was comprised of the following at February 28 (29), 2016 and 2017 :



	As of February 29, 2016			As of February 28, 2017
Revolver	3,000			—
Term Loan	181,762			152,245
Total 2014 Credit Agreement debt	184,762			152,245

Other nonrecourse debt ⁽¹⁾	4,714			8,807
98.7FM nonrecourse debt	65,411			59,958
Current maturities	(17,573		)	(23,600		)
Unamortized original issue discount	(9,287		)	(7,038		)
Total long-term debt	$	228,027		$	190,372

⁽¹⁾ The face value of other nonrecourse debt was $6.2 million and $9.5 million at February 29, 2016 and February 28, 2017, respectively.

2014 Credit Agreement

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, EOC, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”), the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent. Capitalized terms in this section not defined elsewhere in this Form 10-K are defined in the 2014 Credit Agreement and related amendments.

The 2014 Credit Agreement includes a senior secured term loan facility (the “Term Loan”) of $185.0 million and a senior secured revolving credit facility of $20.0 million , and contains provisions for an uncommitted increase of up to $20.0 million principal amount (plus additional amounts so long as a pro forma total net senior secured leverage ratio condition is met) of the revolving credit facility and/or the Term Loan subject to the satisfaction of certain conditions. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. Pursuant to the 2014 Credit Agreement, the Borrower borrowed $185.0 million of the Term Loan on June 10, 2014; $109.0 million was disbursed to the Borrower (the “Initial Proceeds”) and the remaining $76.0 million was funded into escrow (the “Subsequent Acquisition Proceeds”).

The Initial Proceeds, coupled with $13.0 million of revolving credit facility borrowings, were used by the Borrower on June 10, 2014 to repay all amounts outstanding under its previous credit agreement, to make a $55.0 million initial payment associated with our acquisition of WBLS-FM and WLIB-AM, and to pay fees and expenses. The Subsequent Acquisition Proceeds were used to make the final $76.0 million payment related to the acquisition of WBLS-FM and WLIB-AM on February 13, 2015. See Note 7 for more discussion of our acquisition of WBLS-FM and WLIB-AM.

As a result of the Fourth Amendment to the 2014 Credit Agreement (See Note 16), the Term Loan is due not later than April 18, 2019 and, prior to the Second Amendment to the 2014 Credit Agreement discussed below, amortized in an amount

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equal to 1% per annum of the total principal amount outstanding, payable in quarterly installments commencing April 1, 2015, with the balance payable on the maturity date. As a result of the Fourth Amendment to the 2014 Credit Agreement, the revolving credit facility expires not later than August 31, 2018. Prior to the Fourth Amendment to the 2014 Credit Agreement, an unused commitment fee of 50 basis points per annum is payable quarterly on the average unused amount of the revolving credit facility. Prior to the First Amendment and Second Amendment to the 2014 Credit Agreement discussed below, as well as the Fourth Amendment to the 2014 Credit Agreement, the Term Loan and amounts borrowed under the revolving credit facility bore interest, at the Borrower’s option, at either (i) the Alternate Base Rate (as defined in the 2014 Credit Agreement) (but not less than 2.00% ) plus 3.75% or (ii) the Adjusted LIBO Rate (as defined in the 2014 Credit Agreement) (but not less than 1.00% ) plus 4.75% .

Approximately $1.0 million of transaction fees related to the 2014 Credit Agreement were originally capitalized and included in other assets, net. The Company adopted the provisions of Accounting Standards Update 2015-03 during the year ended February 29, 2016. As such, the unamortized balance of existing deferred debt fees was reclassified and is now shown as a direct reduction of the carrying amount of long-term debt. These fees, along with an original issue discount of $8.2 million as of February 28, 2017, ( $6.1 million incurred in connection with the original issuance of the 2014 Credit Agreement debt on June 10, 2014, $1.0 million incurred in connection with the November 7, 2014 amendment to the 2014 Credit Agreement and $1.1 million incurred in connection with the April 30, 2015 amendment to the 2014 Credit Agreement) are being amortized as additional interest expense over the life of the 2014 Credit Agreement.

On November 7, 2014, Emmis entered into the First Amendment (the “First Amendment”) to the 2014 Credit Agreement. The First Amendment (i) increased the maximum Total Leverage Ratio to 6.00 :1.00 for the period February 28, 2015 through February 29, 2016, (ii) adjusted the definition of Consolidated EBITDA to exclude during the term of the 2014 Credit Agreement up to $5 million in severance and/or contract termination expenses and up to $2.5 million in losses attributable to the reformatting of the Company’s radio stations, (iii) extended the requirement for the Borrower to pay a 1.00% fee on certain prepayments of the Term Loan to November 7, 2015, (iv) increased the Applicable Margin by 0.25% for at least six months from the date of the First Amendment and until the Total Leverage Ratio is less than 5.00 :1.00, and (v) made certain technical adjustments to the definition of Consolidated Excess Cash Flow and to address the Foreign Account Tax Compliance Act. Emmis paid a total of approximately $1.0 million of transaction fees to the Lenders that consented to the First Amendment, which were recorded as original issue discount and are being amortized over the remaining life of the 2014 Credit Agreement.

On April 30, 2015, Emmis entered into a Second Amendment to our 2014 Credit Agreement. The Second Amendment (i) increased the maximum Total Leverage Ratio to (A) 6.75 :1.00 during the period from May 31, 2015 through February 29, 2016, (B) 6.50 :1.00 for the quarter ended May 31, 2016, (C) 6.25 :1.00 for the quarter ended August 31, 2016, (D) 6.00 :1.00 for the quarter ended November 30, 2016, and (E) 5.75 :1.00 for the quarter ended February 28, 2017, after which it reverts to the original ratio of 4.00 :1.00 for the quarters ended May 31, 2017 and thereafter, (ii) required Emmis to pay a 2.00% fee on certain prepayments of the Term Loan prior to the first anniversary of the Second Amendment and requires Emmis to pay a 1.00% fee on certain prepayments of the Term Loan from the first anniversary of the Second Amendment until the second anniversary of the Second Amendment, (iii) increased the Applicable Margin throughout the remainder of the term of the Credit Agreement to 5.00% for ABR Loans (as defined in the Credit Agreement) and 6.00% for Eurodollar Loans (as defined in the 2014 Credit Agreement), and (iv) increased the amortization to 0.50% per calendar quarter through January 1, 2016 and to 1.25% per calendar quarter thereafter commencing April 1, 2016. The Second Amendment also required Emmis to pay a fee of 0.50% of the Term Loan and Revolving Commitment of each Lender that consented to the Second Amendment. This fee totaled $1.1 million and was recorded as additional original issue discount and is being amortized as interest expense over the remaining life of the 2014 Credit Agreement.

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consummated. Finally, the Third Amendment made certain changes to the Credit Agreement that would have been effective only if a Going Private Transaction was consummated. The Third Amendment also required the Borrower to pay a 50 basis point fee to the lenders that consented to it either if a Going Private Transaction was consummated or if such a transaction was recommended by a special committee of the board of directors of the Company but not consummated. The special committee of the board of directors did not recommend the Going Private Transaction and no such transaction was consummated. See Note 10 for discussion of the Going Private Transaction.

On April 18, 2017, Emmis entered into the Fourth Amendment to the 2014 Credit Agreement. See Note 16, Subsequent Events, for more discussion of the Fourth Amendment.

In connection with the closing of the sale of Texas Monthly on November 1, 2016, Emmis repaid $15.0 million of Term Loans and $8.5 million of Revolver borrowings (see Note 7 for more discussion of the sale of Texas Monthly ). Under the terms of the 2014 Credit Agreement, Emmis was required to use all Net Available Proceeds (as defined in the 2014 Credit Agreement) from the sale of Texas Monthly to repay Term Loans unless it exercised its right under the 2014 Credit Agreement to reinvest a portion of the Net Available Proceeds in new long-term assets of the Company. On November 1, 2016, Emmis exercised this reinvestment right for up to $10.0 million of Net Available Proceeds. This election allows the Company to reduce the amount of Net Available Proceeds by amounts used to purchase assets within 365 days of the election, or 545 days of the election so long as the asset purchase is under contract within 365 days. Routine capital expenditures qualify as a reinvestment under the terms of the 2014 Credit Agreement. Future changes in these estimates will impact the calculation of Net Available Proceeds. The calculation of Net Available Proceeds was also reduced by working capital and other closing adjustments and $1.4 million of transaction costs, including severance obligations. The current calculation of Net Available Proceeds, reinvestments and Term Loan repayments related to the sale of Texas Monthly is as follows:



	Term Loan Mandatory Repayment Texas Monthly Sale
Gross proceeds from the sale of Texas Monthly	$	25,000
Working capital and other closing adjustments	(747		)
Transaction costs, including severance	(1,378		)
Subtotal	22,875
Less: Reinvestments (estimated)	(3,475		)
Less: Term Loan repayment on November 1, 2016	(15,000		)
Remaining Net Available Proceeds, subject to finalization of reinvestments	$	4,400

The current estimate of $4.4 million of remaining net available proceeds is included as a current maturity of long-term debt in the accompanying consolidated balance sheets as of February 28, 2017. The amount is not yet final as reinvestments are estimated and could change prior to the conclusion of the reinvestment period as described above.

In connection with the closing of our sale of our Terre Haute, Indiana cluster, the Company repaid approximately $4.7 million of Term Loans in January 2017. In connection with the sale Los Angeles Magazine , Atlanta Magazine , Cincinnati Magazine and Orange Coast Magazine , the Company repaid approximately $1.9 million of Term Loans in March 2017, subsequent to our fiscal 2017 year-end.

Borrowing under the 2014 Credit Agreement depends upon our continued compliance with certain operating covenants and financial ratios, including leverage and interest 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 2014 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 2014 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 most of Emmis’ wholly-owned, domestic subsidiaries, are pledged to secure the 2014 Credit Agreement.

2012 Credit Agreement

On December 28, 2012, 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 could be used for letters of credit. On June 10, 2014, Emmis entered into the 2014 Credit Agreement. In connection with the execution of the 2014 Credit Agreement, the 2012 Credit Agreement was terminated effective June 10, 2014, and all amounts outstanding under that agreement were paid in full. During the three months ended August 31, 2014, the Company recorded a loss on debt extinguishment of $1.5 million related to the termination of the 2012 Credit Agreement.

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2014 Credit Agreement Covenants

We were in compliance with all financial and non-financial covenants as of February 28, 2017 . Our Total Leverage Ratio and Minimum Interest Coverage Ratio (each as defined in the 2014 Credit Agreement) requirements and actual amounts as of February 28, 2017 were as follows:



	As of February 28, 2017
	Covenant Requirement	Actual Results
Maximum Total Leverage Ratio	5.75 : 1.00	5.20 : 1.00
Minimum Interest Coverage Ratio	2.00 : 1.00	2.35 : 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, through a participation agreement with Wells Fargo Bank Northwest, National Association, 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% .

Other Nonrecourse Debt

Digonex issued $6.2 million of notes payable prior to Emmis’ acquisition of a controlling interest of Digonex on June 16, 2014. Emmis recorded these notes at fair value in its purchase price allocation as of June 16, 2014. The difference between the fair value recorded on June 16, 2014 and the face value of the notes is being accreted as additional interest expense through the maturity date of the notes. The notes are obligations of Digonex only and are non-recourse to the rest of Emmis' subsidiaries. Approximately $1.5 million of the Digonex notes are secured by the assets of Digonex and the remaining $4.7 million are unsecured. The notes bear simple interest at 5% with interest due at maturity of the secured notes on December 1, 2017 and the unsecured notes on December 31, 2017. Digonex is seeking to extend the maturity date of the notes to December 31, 2020. This extension requires the consent of all noteholders. As of May 11, 2017, the holders of the secured notes had agreed to the extension if the unsecured noteholders also consented, but consent from the unsecured noteholders had not yet been obtained. See Note 7 for more discussion of the acquisition of Digonex.

During the quarter ended February 28, 2017, NextRadio, LLC issued $3.4 million of notes payable. The notes initially bear interest at 4.0% with interest due quarterly beginning in August 2018. The notes mature on December 23, 2021 and are to be repaid through revenues generated by enhanced advertisement revenues earned by NextRadio, LLC. If any portion of the notes remain unpaid at maturity, the lender has the option to exchange the notes for senior preferred equity of NextRadio, LLC's parent entity, TagStation, LLC. These notes are obligations of NextRadio, LLC and TagStation, LLC and are non-recourse to the rest of Emmis' subsidiaries.

Subsequent to the Fourth Amendment to the 2014 Credit Agreement as discussed in Note 16 and based on amounts outstanding at February 28, 2017 , mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:



	2014 Credit Agreement
Year ended February 28 (29),	Revolver		Term Loan		98.7FM Debt		Other Nonrecourse Debt		Total
2018	$	—	$	12,104	$	6,039	$	6,199	$	24,342
2019	—		4,717		6,587		—		11,304
2020	—		135,424		7,150		—		142,574
2021	—		—		7,755		—		7,755
2022	—		—		8,394		—		8,394
Thereafter	—		—		24,033		3,350		27,383
Total	$	—	$	152,245	$	59,958	$	9,549	$	221,752

6. 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

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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 (29), 2016 and 2017. 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 February 28, 2017
	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	$	—	$	—	$	800	$	800
Total assets measured at fair value on a recurring basis	$	—	$	—	$	800	$	800

	As of February 29, 2016
	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	$	—	$	—	$	800	$	800
Total assets measured at fair value on a recurring basis	$	—	$	—	$	800	$	800

Available for sale securities — Emmis’ available for sale securities are comprised of preferred stock of a private company that is not traded in active markets. The preferred stock is recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. The carrying value of our available for sale securities is determined by using implied valuations of recent rounds of financing and by other corroborating evidence, including the application of various valuation methodologies including option-pricing and discounted cash flow based models.

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



	Year Ended February 28 (29),
	2016		2017
	Available For Sale Securities
Beginning Balance	$	500	$	800
Purchases	300		—
Ending Balance	$	800	$	800

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 9, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying

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values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 9 for more discussion).

Fair Value of Other Financial Instruments

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. Refer to Note 7 for the fair values of assets acquired and liabilities assumed in connection with the Company's acquisitions. 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 : The carrying amount of these assets approximates fair value because of the short maturity of these instruments.

- 2014 Credit Agreement debt : As of February 28, 2017 , the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $140.0 million and $152.2 million , respectively. The Company's estimate of fair value was based on quoted prices of this instrument and is considered a Level 2 measurement.

- Other long-term debt : The Company’s 98.7FM non-recourse debt and other non-recourse debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its other long-term debt approximates its fair value.

7. ACQUISITIONS AND DISPOSITIONS

For the year ended February 28, 2017

Sale of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine

On February 28, 2017, Emmis closed on its sale of substantially all of the assets of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine (the "Hour Magazines") for gross proceeds of $6.5 million to Hour Media Group, LLC. The Company previously announced that it was exploring strategic alternatives for its publishing division, excluding Indianapolis Monthly . Emmis decided to sell most of its publishing assets to reduce debt outstanding. Emmis received net proceeds of $2.9 million , consisting of the stated purchase price of $6.5 million , less $0.7 million held in escrow and disposition costs totaling $2.9 million . The $2.9 million of disposition costs primarily relate to $1.6 million of employee-related costs, including severance, and transaction advisory fees of $1.0 million . The funds held in escrow secure Emmis' post closing indemnification obligations in the purchase agreement and are scheduled to be released six months after the closing of the transaction. The funds held in escrow are classified as restricted cash in our accompanying consolidated balance sheets. After settling retention bonuses to affected employees, substantially all of the net proceeds were used to repay term loan indebtedness under Emmis' senior credit facility. Emmis recorded a $2.7 million gain on the sale of the Hour Magazines. The Hour Magazines had historically been included in our Publishing segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C. The following table summarizes certain operating results of the Hour Magazines for all periods presented. Pursuant to Accounting Standards Codification 205-20-45-6, interest expense associated with the required Term Loan repayment associated with the sale of the Hour Magazines is included in the magazines' results below.

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	For the year ended February 28 (29),
	2015			2016		2017
Net revenues	$	31,380		$	31,819	$	29,112
Station operating expenses, excluding depreciation and amortization expense	31,139			31,385		31,076
Depreciation and amortization	106			125		122
Gain on sale of publishing assets, net of disposition costs	—			—		(2,677		)
Operating income	135			309		591
Interest expense	136			173		176
(Loss) income before income taxes	(1		)	136		415

Sale of Terre Haute, Indiana radio stations



	For the year ended February 28 (29),
	2015			2016			2017
Net revenues	$	2,684		$	2,418		$	2,298
Station operating expenses, excluding depreciation and amortization expense	2,607			2,395			2,258
Depreciation and amortization	147			163			117
Impairment loss	58			39			79
Gain on sale of radio assets, net of disposition costs	—			—			(3,478		)
Operating (loss) income	(128		)	(179		)	3,322
Interest expense	254			324			330
(Loss) income before income taxes	(382		)	(503		)	2,992

Sale of Texas Monthly

On November 1, 2016, Emmis closed on its sale of Texas Monthly for gross proceeds of $25.0 million in cash to a subsidiary of Genesis Park, LP. The Company previously announced that it was exploring strategic alternatives for its publishing division, excluding Indianapolis Monthly . Emmis decided to sell most of its publishing assets to reduce debt outstanding. Emmis received net proceeds of $23.4 million , consisting of the stated purchase price of $25.0 million , net of estimated purchase price adjustments totaling $0.7 million and disposition costs totaling $0.9 million . The $0.9 million of disposition costs primarily related to severance costs. Proceeds were used to repay term and revolving loan indebtedness under Emmis’ senior credit facility. Emmis recorded a $17.4 million gain on the sale of Texas Monthly . Texas Monthly had historically been included in our Publishing segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C. The following table summarizes certain operating results of Texas Monthly for all periods presented. Pursuant to Accounting Standards Codification 205-20-45-6, interest expense associated with the required Term Loan repayment associated with the sale of Texas Monthly is included in the magazine's results below. The required Term Loan repayment is preliminary and may be adjusted for

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revisions to estimates and the Company's reinvestment of proceeds of the Texas Monthly transaction. See Note 5 for more discussion.



	For the year ended February 28 (29),
	2015			2016			2017
Net revenues	$	24,186		$	23,561		$	14,685
Station operating expenses, excluding depreciation and amortization expense	22,446			21,527			14,465
Depreciation and amortization	116			118			84
Gain on sale of publishing assets, net of disposition costs	—			—			(17,402		)
Operating income	1,624			1,916			17,538
Interest expense	1,047			1,334			1,358
Other income	(15		)	(370		)	(37		)
Income before income taxes	592			952			16,217

Unaudited pro forma summary information is presented below for the years ended February 28 (29), 2016 and 2017, assuming the dispositions discussed above and related mandatory debt repayments had occurred on the first day of the pro forma periods presented below.



	For the year ended February 28 (29),
	2016			2017
	(unaudited)			(unaudited)
Net revenues	$	173,635		$	168,473
Station operating expenses, excluding depreciation and amortization	128,087			132,286
Consolidated net loss	(889		)	(6,404		)
Net income (loss) attributable to the Company	1,529			(6,505		)
Net income (loss) per share - basic	$	0.12		$	(0.54	)
Net income (loss) per share - diluted	$	0.12		$	(0.54	)

For the year ended February 29, 2016

There were no acquisitions or dispositions during this period.

For the year ended February 28, 2015

Acquisition of WBLS-FM & WLIB-AM

On February 11, 2014, subsidiaries of Emmis entered into a Purchase and Sale Agreement with YMF, pursuant to which Emmis agreed to purchase the assets of New York radio stations WBLS-FM and WLIB-AM (collectively, the "Stations") for $131.0 million , subject to customary adjustments and prorations. The purchase of the Stations enhances the Company's scale in New York, the second largest market in the United States as measured by total radio revenues. Additionally, the Stations' adult urban and urban gospel formats complement the hip-hop format of our existing station in New York.

Upon approval of the transaction by the Federal Communications Commission, Emmis and YMF executed the first closing of the transaction on June 10, 2014, whereby YMF transferred the assets of the Stations to Emmis and Emmis paid YMF $55.0 million of cash and transferred to YMF Media New York a 49.9% ownership interest in the Emmis subsidiaries that own the Stations' assets. The second closing occurred on February 13, 2015 and involved the payment of the balance of the purchase price of $76.0 million to YMF in exchange for the transfer to Emmis of YMF Media New York's interest in the Emmis subsidiaries that own the Stations' assets.

On February 11, 2014, Emmis and YMF entered into an LMA for the Stations. On March 1, 2014, Emmis began providing programming and selling advertising for the Stations. Under the terms of the LMA, Emmis paid $1.275 million per month to YMF for the right to program the Stations and sell advertising. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the Stations on June 10, 2014. The ongoing, reduced monthly LMA fees were recognized as additional purchase price of the Stations on June 10, 2014. Prior to the first closing of the purchase, LMA fees were recognized as operating expenses.

Emmis gained control over the Stations effective with the first closing on June 10, 2014 and consolidated the Stations beginning on that date. YMF was entitled to the remaining purchase price of $76.0 million at the second closing and the $0.74

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million monthly LMA fees until the second closing, but did not otherwise share in the income or loss of the Stations subsequent to the first closing.

On June 10, 2014, Emmis entered into the 2014 Credit Agreement which included a senior secured term loan facility of $185.0 million and a senior secured revolving credit facility of $20.0 million . Pursuant to the 2014 Credit Agreement, the Company borrowed $185.0 million of the senior secured term loans on June 10, 2014; $109.0 million was disbursed to the Company and the remaining $76.0 million was funded into escrow. The proceeds from the term loan and additional funding from the revolving credit facility were used to fund the first closing of the acquisition described above, settle amounts due under the Company's former credit facility, and pay fees related to the issuance of the Credit Agreement. The $76.0 million of funds in escrow were used to fund substantially all of the second closing of the acquisition on February 13, 2015. See Note 5 for more discussion of the 2014 Credit Agreement.

Goodwill was calculated as the excess of the purchase price over the net assets acquired. Management attributed the goodwill recognized in the acquisition of the Stations to the power of the existing WBLS-FM and WLIB-AM brands in the New York marketplace as well as the synergies and growth opportunities expected through the combination of the adult urban and urban gospel stations with the Company's existing hip-hop station. The $58.4 million of goodwill recognized in the transaction was included in our Radio segment and is deductible for tax purposes. As part of our annual impairment testing conducted in December 2014, the Company determined that the goodwill associated with this transaction was fully impaired. See Note 9 for more discussion of the goodwill impairment.

The indefinite-lived intangible assets are comprised entirely of the Stations' FCC licenses. FCC broadcasting licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, all of our FCC broadcasting licenses have been renewed at or after the end of their respective periods, and we expect that these FCC broadcasting licenses will continue to be renewed in the future. Our indefinite-lived intangibles are not amortized.

Other intangibles consist of a customer list intangible asset of $0.3 million and a syndicated programming intangible asset of $2.2 million . The customer list intangible asset is being amortized over 3 years and the syndicated programming intangible asset is being amortized over 7 years , which is the remaining term of the programming agreement, including renewals which are at the option of the Company.

The results of operations of the Stations are largely included in the Company's results of operations for the year ended February 28, 2015 as the Company began providing programming and selling advertising of the Stations on March 1, 2014 pursuant to an LMA. Net revenues and station operating expenses, excluding LMA fees and depreciation and amortization expense, of WBLS-FM and WLIB-AM were $28.1 million and $20.3 million , respectively, for the year ended February 28, 2015.

We incurred acquisition costs related to the Stations totaling $0.7 million for the year ended February 28, 2015. Acquisition costs included in station operating expenses, excluding LMA fees and depreciation and amortization expense, in the accompanying consolidated statements of operations were $0.4 million for the year ended February 28, 2015. Acquisition costs included in corporate expenses, excluding depreciation and amortization expense, in the accompanying consolidated statements of operations were $0.3 million for the year ended February 28, 2015. Including acquisition costs incurred during the year ended February 28, 2014 of $0.9 million , cumulative acquisition costs related to the Stations through February 28, 2015 were $1.6 million .

In connection with the first closing, Emmis and YMF executed an amendment to their Asset Purchase Agreement dated April 5, 2012 relating to Emmis' sale of the intellectual property of WRKS-FM. The amendment, executed on June 10, 2014, fixed all future earn-out payments YMF owed to Emmis pursuant to the April 5, 2012 Asset Purchase Agreement based upon the parties' estimate of the earn-out payments that would otherwise be owed to Emmis under this pre-existing contractual relationship. Emmis recognized a gain on settlement of the contract of $2.5 million , which is included in gain on contract settlement in the accompanying consolidated statements of operations. All amounts owed to Emmis pursuant to Emmis' sale of WRKS-FM intellectual property were collected prior to February 28, 2015.

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Acquisition of a controlling interest in Digonex Technologies, Inc.

On June 16, 2014, Emmis invested $3.0 million in Digonex Technologies, Inc ("Digonex"), an Indiana corporation that provides dynamic pricing solutions to customers in various industries. Emmis believes that its acquisition of Digonex gives it entry into the growing dynamic pricing marketplace which can serve a diverse clientèle, and can possibly help Emmis with yields on its own advertising inventory and special events. Emmis’ initial investment of $3.0 million ( $1.0 million in Digonex Preferred Stock and $2.0 million in the form of convertible debt) resulted in Emmis appointing a majority of the board of directors of Digonex and holding rights convertible into 51% of the fully diluted common equity of Digonex. As Emmis controlled the board of directors of Digonex as of its initial investment on June 16, 2014, Emmis began consolidating the results of Digonex as of that date. Emmis has contributed $6.5 million to Digonex in the form of convertible debt, which resulted in Emmis owning rights that are convertible into at least 80% of the common equity of Digonex.

Digonex reports on a calendar year ending December 31, which Emmis consolidates into its fiscal year ending February 28(29). Net revenues and operating expenses, excluding depreciation and amortization expense, of Digonex for the period June 16, 2014 to December 31, 2014, which Emmis consolidated into its results of operations for the year ended February 28, 2015 were $0.2 million and $1.4 million , respectively.

The goodwill recognized in the acquisition of Digonex is attributable to the assembled workforce and existing business processes. The $2.8 million of goodwill recognized in the transaction is included in our corporate and emerging technologies segment and is not deductible for tax purposes. As part of our annual impairment testing conducted in December 2015, the Company determined that the goodwill associated with Digonex was partially impaired, and recorded an impairment charge of $0.7 million . During the year ended February 28, 2017, the Company determined that the remaining goodwill associated with Digonex was fully impaired and recorded an impairment charge of $2.1 million . See Note 9 for more discussion of the goodwill impairments.

Other intangibles consist of patents of $5.2 million , a customer list intangible asset of $0.7 million and trademarks of $0.3 million . The patents were being amortized over 7 years , the customer list intangible asset was being amortized over 3 years and the trademarks were being amortized over 15 years . During the year ended February 29, 2016, the Company recorded an impairment charge of $3.4 million related to the patents of Digonex. During the year ended February 28, 2017, the Company determined that the patents, customer list, and trademarks of Digonex were fully impaired and recorded an impairment charge of $0.9 million. See Note 9 for more discussion of the definite-lived intangible impairments.

8. OTHER SIGNIFICANT TRANSACTIONS

Going private offer

On August 18, 2016, the Board of Directors of the Company received a letter from E Acquisition Corporation ("EAC"), an Indiana corporation owned by Jeffrey H. Smulyan, the Company’s Chairman of the Board, Chief Executive Officer and controlling shareholder, setting forth a non-binding proposal by which E Acquisition Corporation (the “Proposing Person”), would acquire all the outstanding shares of Class A Common Stock of the Company that were not owned by the Proposing Person at a cash purchase price of $4.10 per share (the “Proposal”). The Proposal contemplated that, following the closing of the proposed transaction, the Company’s shares would no longer be registered with the Securities and Exchange Commission and the Company would no longer be a reporting company or have any public shares traded on Nasdaq.

The Company’s Board of Directors formed a special committee of independent and disinterested directors (the “Special Committee”) to review and evaluate the Proposal. The members of the Special Committee were Susan Bayh and Peter Lund. On October 14, 2016, EAC delivered to the Special Committee a letter (the “Proposal Expiration Letter”) confirming that the offer had expired on October 14, 2016 and had not been extended.

The Special Committee engaged independent legal counsel and independent financial advisors to assist the Special Committee in the evaluation of the Proposal. During the year ended February 28, 2017, the Company incurred $0.9 million of costs associated with the Proposal, which are included in corporate expenses, excluding depreciation and amortization expense in the accompanying consolidated statements of operations. No further costs are expected to be incurred in connection with the going private offer as it has expired.

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Next Radio LLC - Sprint Agreement

On August 9, 2013, NextRadio LLC, a wholly-owned subsidiary of Emmis, entered into an agreement with Sprint whereby Sprint agreed to pre-load the Company's smartphone application, NextRadio, in a minimum of 30 million FM-enabled wireless devices on the Sprint wireless network over a three -year period. In return, NextRadio LLC agreed to pay Sprint $15 million per year in equal quarterly installments over the three year term and to share with Sprint certain revenue generated by the NextRadio application. Emmis has not guaranteed NextRadio LLC's performance under this agreement and Sprint does not have recourse to any Emmis related entity other than NextRadio LLC. Additionally, the agreement does not limit the ability of NextRadio LLC to place the NextRadio application on FM-enabled devices on other wireless networks. Through February 28, 2017, the NextRadio application had not generated a material amount of revenue.

Nearly all of the largest radio broadcasters and many smaller radio broadcasters expressed support for NextRadio LLC's agreement with Sprint. Accordingly, NextRadio LLC entered into a number of funding agreements with radio broadcasters and other participants in the radio industry to collect and remit cash to Sprint to fulfill the quarterly payment obligation. As part of some of these funding agreements, Emmis agreed to certain limitations on the operation of its NextRadio and TagStation businesses, including assurances of access to the NextRadio app and to TagStation (the cloud-based engine that provides data to the NextRadio application), and limitations on the sale of the businesses to potential competitors of the U.S. radio industry. Emmis also granted the U.S. radio industry (as defined in the funding agreements) a call option on substantially all of the assets used in the NextRadio and TagStation businesses in the United States. The call option may be exercised in August 2017 or August 2019 by paying Emmis a purchase price equal to the greater of (i) the appraised fair market value of the NextRadio and TagStation businesses, or (ii) two times Emmis' cumulative investments in the development of the businesses. If the call option is exercised, the businesses will continue to be subject to the operating limitations applicable today, and no radio operator will be permitted to own more than 30% of the NextRadio and TagStation businesses.

Since the inception of NextRadio LLC's agreement with Sprint through December 7, 2016, NextRadio LLC had remitted to Sprint approximately $33.2 million . Effective December 8, 2016, NextRadio LLC and Sprint entered into an amendment of their original agreement. The amendment called for NextRadio LLC to make installment payments totaling $6.0 million million through March 15, 2017, which have been paid. In exchange, Sprint agreed to forgive the remaining $5.8 million that it was due under the original agreement, and in return receive a higher share of certain revenue generated by the NextRadio application. In addition, Sprint agreed to continue to pre-load the NextRadio application through March 31, 2020 with no additional cash payments from NextRadio (other than revenue share payments). NextRadio LLC received a loan of $4.0 million for the sole purpose of fulfilling the payment obligations to Sprint under the amendment. The loan will be repaid out of proceeds from sales of enhanced advertising through the NextRadio application. Through February 28, 2017, NextRadio LLC received $3.4 million under the loan, which was promptly remitted to Sprint and is included in station operating expenses, excluding depreciation and amortization expense in the accompanying consolidated statement of operations. The remaining $0.6 million of loan proceeds was received in March 2017 and was promptly remitted to Sprint.

Emmis determined that NextRadio LLC is a variable interest entity (VIE) and that Emmis is the primary beneficiary because the Company has the power to direct substantially all of the activities of NextRadio LLC, and because the Company may absorb certain losses and receive certain benefits from the operations of the VIE. Emmis does not record any revenue or expense related to the amounts that are collected and remitted to Sprint except the portion of any payment to Sprint that was actually contributed to NextRadio LLC by Emmis (or the amounts funded by NextRadio LLC via the loan discussed above). Emmis contributed approximately $0.5 million and $0.4 million to NextRadio LLC during the years ended February 2015 and 2016, respectively. These amounts were recorded as station operating expenses, excluding depreciation and amortization expense. Emmis did not fund any of NextRadio LLC's payments to Sprint during the year ended February 28, 2017 as it had already fully funded its share through that date.

As of February 28, 2017, the carrying value of assets within NextRadio LLC totaled $0.1 million , which represents cash collected by NextRadio LLC from other broadcasting companies and other companies in the radio industry. This cash is restricted because it must be remitted to Sprint. NextRadio LLC had $3.5 million of liabilities at February 28, 2017, which represents the obligation to remit $0.1 million of cash received from radio industry participants to Sprint along with NextRadio LLC's nonrecourse debt of $3.4 million. NextRadio LLC remitted all cash collected from other broadcasting companies and other companies in the radio industry to Sprint as of February 29, 2016, and thus had no assets or liabilities as of that date.

LMA of 98.7FM in New York, NY and Related Financing Transaction

On April 26, 2012 Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc., pursuant to which the Disney subsidiary purchased the right to provide programming for 98.7FM in New York, NY until August 24, 2024. Emmis retains ownership and control of 98.7FM, including the related FCC license during the term of the LMA and receives an annual fee from the Disney subsidiary. The fee, initially $8.4 million annually, increases by 3.5% annually until the LMA's termination.

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As discussed in Note 5, Emmis, through newly-created subsidiaries, issued $82.2 million of notes, which are nonrecourse to the rest of the Company's subsidiaries and are secured by the assets of the newly-created subsidiaries including the payments made in connection with the 98.7FM LMA. See Notes 1 and 5 for more discussion of the LMA payments and nonrecourse debt.

The following table summarizes Emmis' operating results of 98.7FM for all periods presented. Emmis programmed 98.7FM until the LMA commenced on April 26, 2012. 98.7FM is a part of our Radio segment. Results of operations of 98.7FM for the years ended February 2015, 2016 and 2017 were as follows:



	For the year ended February 28 (29),
	2015		2016		2017
Net revenues	$	10,331	$	10,331	$	10,331
Station operating expenses, excluding depreciation and amortization expense	1,002		1,000		1,275
Impairment loss on intangible assets (Note 9)	9,462		1,766		2,907
Depreciation and amortization	—		21		21
Interest expense	3,238		3,042		2,827

Assets and liabilities of 98.7FM as of February 28 (29), 2016 and 2017 were as follows:



	As of February 28 (29),
	2016		2017
Current assets:
Restricted cash	$	1,464	$	1,550
Prepaid expenses	545		445
Other	—		7
Total current assets	2,009		2,002
Noncurrent assets:
Property and equipment	253		229
Indefinite lived intangibles	49,297		46,390
Deposits and other	5,460		6,205
Total noncurrent assets	55,010		52,824
Total assets	$	57,019	$	54,826
Current liabilities:
Accounts payable and accrued expenses	$	14	$	54
Current maturities of long-term debt	5,453		6,039
Deferred revenue	779		807
Other current liabilities	223		205
Total current liabilities	6,469		7,105
Noncurrent liabilities:
Long-term debt, net of current portion	57,728		51,954
Other noncurrent liabilities	—		—
Total noncurrent liabilities	57,728		51,954
Total liabilities	$	64,197	$	59,059

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9. INTANGIBLE ASSETS AND GOODWILL

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Company reviews goodwill and other intangibles at least annually for impairment. In connection with any such review, if the recorded value of goodwill and other intangibles is greater than its fair value, the intangibles are written down and charged to results of operations. FCC licenses are renewed every eight years at a nominal cost, and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. Radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster.

Impairment testing

The Company generally performs its annual impairment review of indefinite-lived intangibles as of December 1 each year. At the time of each impairment review, if the fair value of the indefinite-lived intangible is less than its carrying value a charge is recorded to results of operations. When indicators of impairment are present, the Company will perform an interim impairment test. Impairment recorded as a result of our interim and annual impairment testing is summarized in the table below. We will perform additional interim impairment assessments whenever triggering events suggest such testing for the recoverability of these assets is warranted. The table below summarizes the results of our interim and annual impairment testing for the three years ending February 28, 2017.



	Interim Assessment			Annual Assessment
	FCC Licenses	Goodwill	Definite-lived	FCC Licenses	Goodwill	Definite-lived	Total
Year Ended February 28, 2015	—	—	—	9,520	58,395	—	67,915
Year Ended February 29, 2016	—	—	—	5,440	695	3,364	9,499
Year Ended February 28, 2017	—	2,058	930	6,855	—	—	9,843

Valuation of Indefinite-lived Broadcasting Licenses

Below are some of the key assumptions used in our annual impairment assessments. As part of our recent annual impairment assessments, we reduced long-term growth rates in most of the markets in which we operate based on recent industry trends and our expectations for the markets going forward. The methodology used to value our FCC licenses has not changed in the three-year period ended February 28, 2017 .



	December 1, 2014	December 1, 2015	December 1, 2016
Discount Rate	12.1% - 12.5%	12.0% - 12.4%	12.2% - 12.5%
Long-term Revenue Growth Rate	1.5% - 3.0%	1.3% - 2.5%	1.0% - 2.0%
Mature Market Share	3.2% - 29.2%	3.2% - 29.3%	3.1% - 30.4%
Operating Profit Margin	25.1% - 39.2%	25.0% - 39.1%	25.1% - 39.1%

As of February 28 (29), 2016 and 2017 , the carrying amounts of the Company’s FCC licenses were $205.1 million and $197.7 million , respectively. These amounts are entirely attributable to our radio division. The table below presents the changes to the carrying values of the Company’s FCC licenses for the years ended February 2016 and 2017 for each unit of accounting.

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	Change in FCC License Carrying Values
Unit of Accounting	As of February 28, 2015		Purchase		Impairment			As of February 29, 2016		Purchase		Sale of Stations			Impairment			As of February 28, 2017
New York Cluster	$	71,616	$	—	$	—		$	71,616	$	—	$	—		$	—		71,616
98.7FM (New York)	51,063		—		(1,766		)	$	49,297	—		—			(2,907		)	46,390
Austin Cluster	39,255		—		(2,343		)	$	36,912	—		—			(2,192		)	34,720
St. Louis Cluster	27,692		—		(1,293		)	$	26,399	34		—			(1,677		)	24,756
Indianapolis Cluster	17,654		512		—			$	18,166	—		—			—			18,166
KPWR-FM (Los Angeles)	2,018		—		—			$	2,018	—		—			—			2,018
Terre Haute Cluster	759		—		(38		)	$	721	—		(642		)	(79		)	—
Total	$	210,057	$	512	$	(5,440	)	$	205,129	$	34	$	(642	)	$	(6,855	)	197,666

The FCC license purchase of $0.5 million during the year ended February 29, 2016 solely relates to our purchase of an FM translator in Indianapolis. In January 2017, we sold all of our stations in Terre Haute, Indiana (see Note 7 for more discussion).

Impairment was recorded for our New York station being operated pursuant to an LMA during the years ended February 2016 and 2017 along with impairment for our Austin, St. Louis and Terre Haute clusters. Stagnant market revenues in recent years, coupled with a reduction in the Company's estimate of long-term revenue growth rates, led to a lower estimate of fair value for these FCC licenses.

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, excluding any stations that are being operated pursuant to an LMA). 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 well as recent market transactions as a benchmark for the multiple it applies to its radio reporting units. For the annual assessment performed as of December 1, 2016, the Company applied a market multiple of 8.0 times the reporting unit’s operating performance. Management believes this methodology for valuing radio properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and 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.

The Company used an income approach to determine the enterprise value of Digonex. Digonex is a dynamic pricing business that does not have well-established industry trading multiples, analyst estimates of valuations, or recently completed transactions that would indicate fair values of these businesses. As such, the Company used a discounted cash flow method to determine the fair value of Digonex.

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indicator that caused the Company to assess goodwill and related intangibles on an interim basis during the quarter ended August 31, 2016. The Company's discounted cash flow analysis for Digonex indicated a nominal enterprise value. Therefore, in connection with the interim impairment test, Emmis determined that Digonex's goodwill was fully impaired and recorded an impairment loss of $2.1 million . Subsequent to our impairment of Digonex goodwill and the sale of Texas Monthly (see note 7 for more discussion), the Company's goodwill relates entirely to its Radio segment.

During our December 2015 annual goodwill impairment test, the Company wrote off $0.7 million of goodwill associated with Digonex. Emmis acquired a controlling interest in Digonex in June 2014 and recorded approximately $2.8 million of goodwill. The performance of Digonex since Emmis acquired its controlling interest has lagged the original assumptions used when estimating the fair values of the acquired assets and liabilities of the business. This, coupled with a reduction in long-term growth estimates for Digonex, resulted in a step-one indication of impairment. Upon completion of the step-two analysis, the Company determined that Digonex goodwill was partially impaired.

During our December 2014 annual goodwill impairment test, the Company wrote off $58.4 million of goodwill associated with our New York radio cluster. This goodwill related entirely to our purchase of WBLS-FM and WLIB-AM on June 10, 2014. Declining performance of the entire New York radio market significantly impacted our operating performance in New York. These declines, combined with lower projected revenue growth rates in the New York market, resulted in a step-one indication of impairment for our New York cluster on both the market and income approaches. Upon completing the step-two analysis, the Company determined that the full carrying amount of the New York cluster goodwill of $58.4 million was impaired.

As of February 28 (29), 2016 and 2017 , the carrying amount of the Company’s goodwill was $14.7 million and $4.6 million . The table below presents the changes to the carrying values of the Company’s goodwill for the years ended February 2016 and 2017 for each reporting unit. As noted above, each reporting unit is a cluster of radio stations in one geographical market (except for stations being operated pursuant to LMAs) and magazines on an individual basis. We sold Texas Monthly in November 2016 (see Note 7 for more discussion).



	Change in Goodwill Carrying Values
Reporting Unit (Segment)	As of February 28, 2015		Impairment			As of February 29, 2016		Sale of Entity			Impairment			As of February 28, 2017
Indianapolis Cluster (Radio)	$	265	$	—		$	265	$	—		$	—		$	265
Austin Cluster (Radio)	4,338		—			4,338		—			—			4,338
Texas Monthly (Publishing)	8,036		—			8,036		(8,036		)	—			—
Digonex (Corporate & Emerging Technologies)	2,753		(695		)	2,058		—			(2,058		)	—
Total	$	15,392	$	(695	)	$	14,697	$	(8,036	)	$	(2,058	)	$	4,603

Definite-lived intangibles

The following table presents the weighted-average remaining useful life at February 28, 2017 and gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at February 28 (29), 2016 and 2017 :



		As of February 29, 2016						As of February 28, 2017
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	8.5	$	1,240	$	727	$	513	$	696	$	545	$	151
Patents	N/A	1,815		1,141		674		—		—		—
Programming Contract	4.6	2,154		514		1,640		2,154		808		1,346
Customer List	0.3	1,015		543		472		315		289		26
Total		$	6,224	$	2,925	$	3,299	$	3,165	$	1,642	$	1,523

In accordance with Accounting Standards Codification paragraph 360-10, the Company performs an analysis to (i) determine if indicators of impairment of a long-lived asset are present, (ii) test the long-lived asset for recoverability by comparing undiscounted cash flows of the long-lived asset to its carrying value and (iii) measure any potential impairment by comparing the long-lived asset's fair value to its current carrying value. In connection with this analysis for the year ended February 29, 2016, the Company determined that the patents of Digonex were impaired and recorded an impairment charge of

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$3.4 million . As discussed above, performance below the Company's expectations, coupled with a downward revision of long-term forecasts for Digonex, led the Company to measure impairment for Digonex's definite-lived intangibles during the quarter ended August 31, 2016. The Company determined that the patents, customer list and trademarks of Digonex were fully impaired and recorded an impairment loss of $0.9 million .

Total amortization expense from definite-lived intangibles was $0.9 million , $1.5 million and $0.7 million for the years ended February 2015 , 2016 and 2017 , respectively. The following table presents the Company's estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles:



Year ended February 28 (29),		Expected Amortization Expense
		(in 000's)
2018		338
2019		311
2020		311
2021		311
2022		189

10. EMPLOYEE BENEFIT PLANS

a. Equity Incentive Plans

The Company has stock options and restricted stock grants outstanding that were issued to employees or non-employee directors under one or more of the following plans: the 2004 Equity Compensation Plan, the 2010 Equity Compensation Plan, the 2012 Equity Compensation Plan, the 2015 Equity Compensation Plan and the 2016 Equity Compensation Plan. These outstanding grants continue to be governed by the terms of the applicable plan.

2016 Equity Compensation Plan

At the 2016 annual meeting, the shareholders of Emmis approved the 2016 Equity Compensation Plan (“the 2016 Plan”). Under the 2016 Plan, awards equivalent to 1.5 million shares of common stock may be granted. Furthermore, any unissued awards from prior equity compensation plans (or shares subject to outstanding awards that would again become available for awards under this plan) increases the number of shares of common stock available for grant under the 2016 Plan. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, restricted stock units, stock appreciation rights or performance units. Under the 2016 Plan, all awards are granted with a purchase price equal to at least the fair market value of the stock except for shares of restricted stock and restricted stock units, which may be granted with any purchase price (including zero). The stock options under the 2016 Plan generally expire not more than 10 years from the date of grant. Under the 2016 Plan, awards equivalent to approximately 0.6 million shares of common stock were available for grant as of February 28, 2017.

2017 Equity Compensation Plan

On March 7, 2017, the board of directors of Emmis approved the 2017 Equity Compensation Plan ("the 2017 Plan"). The 2017 Plan won't become effective until it is approved by Emmis' shareholders at the annual meeting in July 2017. However, Emmis' Chairman and Chief Executive Officer, Jeffrey H. Smulyan, controls more than 50% of the vote on this matter and has informed the board of directors that he intends to vote in favor of approving the 2017 Plan. Under the 2017 Plan, awards equivalent to 2.0 million shares of common stock may be granted. Furthermore, any unissued awards from the 2016 Equity Compensation Plan (or shares subject to outstanding awards that would again become available for awards under this plan) increases the number of shares of common stock available for grant under the 2017 Plan. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, restricted stock units, stock appreciation rights or performance units. Under the 2017 Plan, all awards are granted with a purchase price equal to at least the fair market value of the stock except for shares of restricted stock and restricted stock units, which may be granted with any purchase price (including zero). The stock options under the 2017 Plan generally expire not more than 10 years from the date of grant.

b. 401(k) Retirement Savings Plan

Emmis sponsors a Section 401(k) retirement savings plan that is available to substantially all employees age 18 years and older who have at least 30 days of service. Employees may make pretax contributions to the plan up to 50% of their

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compensation, not to exceed the annual limit prescribed by the Internal Revenue Service (“IRS”). Emmis may make discretionary matching contributions to the plan in the form of cash or shares of the Company’s Class A common stock.

Emmis has historically matched employee contributions at 33% up to a maximum of 6% of eligible compensation. Emmis' discretionary contributions were made in cash until March 2015. From March 2015 through December 2015, Emmis' discretionary contributions were made in the form of Class A common stock. Emmis suspended its discretionary contributions on January 1, 2016. Emmis’ discretionary contributions to the plan totaled $1.1 million and $0.9 million for the years ended February 2015 and 2016, respectively. No discretionary matching contributions were made during the year ended February 28, 2017.

c. Defined Contribution Health and Retirement Plan

Emmis contributes to a multi-employer defined contribution health and retirement plan for employees who are members of a certain labor union. Amounts charged to expense related to the multi-employer plan were approximately $0.3 million for each of the years ended February 2015 , 2016 and 2017 .

11. OTHER COMMITMENTS AND CONTINGENCIES

a. Commitments

The Company has various commitments under the following types of material contracts: (i) operating leases; (ii) employment agreements and (iii) other contracts with annual commitments (mostly contractual services for audience measurement information) at February 28, 2017 as follows:



Year ending February 28 (29),	Operating Leases		Employment Agreements		Other Contracts		Total
2018	$	7,006	$	15,498	$	11,435	$	33,939
2019	7,006		8,019		10,894		25,919
2020	7,082		1,453		3,631		12,166
2021	6,960		37		104		7,101
2022	6,741		—		104		6,845
Thereafter	23,649		—		70		23,719
Total	$	58,444	$	25,007	$	26,238	$	109,689

Emmis leases certain office space, tower space, equipment and automobiles under operating leases expiring at various dates through March 2032. Some of the lease agreements contain renewal options and annual rental escalation clauses, as well as provisions for payment of utilities and maintenance costs. The Company recognizes escalated rents on a straight-line basis over the term of the lease agreement. Rental expense during the years ended February 2015, 2016 and 2017 was approximately $9.1 million , $8.9 million and $8.3 million , respectively. The Company recognized approximately $0.3 million , $0.3 million and $0.4 million of sublease income as a reduction of rent expense for the years ended February 2015, 2016, and 2017 respectively. Total minimum sublease rentals to be received in the future under noncancelable subleases as of February 28, 2017 amounted to $216 thousand, all of which is expected to be received during the year ended February 28, 2018.

b. Litigation

12. INCOME TAXES

United States and foreign income (loss) before income taxes for the years ended February 2015 , 2016 and 2017 was as follows:

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	2015			2016		2017
United States	$	(58,692	)	$	1,765	$	13,110
Foreign	(345		)	—		—
(Loss) income before income taxes	$	(59,037	)	$	1,765	$	13,110

The provision (benefit) for income taxes for the years ended February 2015 , 2016 , and 2017 consisted of the following:



	2015		2016			2017
Current:
State	$	229	$	(31	)	$	68
Total current	229		(31		)	68
Deferred:
Federal	27,431		1,793			(152		)
State	9,288		307			(26		)
Total deferred	36,719		2,100			(178		)
(Benefit) provision for income taxes	$	36,948	$	2,069		$	(110	)

The provision (benefit) for income taxes for the years ended February 2015 , 2016 and 2017 differs from that computed at the Federal statutory corporate tax rate as follows:



	2015			2016			2017
Computed income tax (benefit) provision at 35%	$	(20,663	)	$	618		$	4,588
State income tax	9,517			276			42
Foreign taxes	120			—			—
Tax benefit resulting from swap expiration and related OCI reversal	5			—			—
Nondeductible stock compensation	122			296			444
Entertainment disallowance	421			366			366
Disposal of goodwill with no tax basis	—			—			3,533
Change in federal valuation allowance	50,250			2,376			(7,387		)
Tax attributed to noncontrolling interest	(1,994		)	(1,932		)	(1,698		)
Federal tax credit	(173		)	(43		)	(171		)
Other	(657		)	112			173
Provision (benefit) for income taxes	$	36,948		$	2,069		$	(110	)

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The components of deferred tax assets and deferred tax liabilities at February 29, 2016 and February 28, 2017 are as follows:



	2016			2017
Deferred tax assets:
Net operating loss carryforwards	$	34,341		$	35,365
Intangible assets	28,737			22,130
Compensation relating to stock options	1,768			1,942
Deferred revenue	840			420
Accrued rent	2,275			1,892
Tax credits	3,265			3,438
Investments in subsidiaries	214			396
Capital loss carryforward	2,740			—
Other	1,628			993
Valuation allowance	(66,674		)	(60,379		)
Total deferred tax assets	9,134			6,197
Deferred tax liabilities
Indefinite-lived intangible assets	(43,673		)	(43,505		)
Property and equipment	(1,055		)	(814		)
Cancellation of debt income	(8,079		)	(5,386		)
Other	(42		)	(29		)
Total deferred tax liabilities	(52,849		)	(49,734		)
Net deferred tax liabilities	$	(43,715	)	$	(43,537	)

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset (“DTA”) will not be realized. The Company historically recorded a full valuation allowance on all U.S. (federal and state) deferred tax assets. The Company does not benefit its deferred tax assets based on the deferred tax liabilities (“DTLs”) related to indefinite-lived intangibles that are not expected to reverse during the carry-forward period. Because these DTLs would not reverse until some future indefinite period when the intangibles are either sold or impaired, any resulting temporary differences cannot be considered a source of future taxable income to support realization of the DTAs.

The Company decreased its valuation allowance by $6.3 million ( $5.1 million federal and $ 1.2 million state), from $66.7 million as of February 29, 2016, to $60.4 million as of February 28, 2017.

The Company has considered future taxable income and ongoing prudent and feasible tax-planning strategies in assessing the need for the valuation allowance. The Company will assess quarterly whether it remains more likely than not that the deferred tax assets will not be realized. In the event the Company determines at a future time that it could realize its deferred tax assets in excess of the net amount recorded, the Company will reduce its deferred tax asset valuation allowance and decrease income tax expense in the period when the Company makes such determination.

The Company has federal net operating losses ("NOLs") of $79 million and state NOLs of $168 million available to offset future taxable income. The federal net operating loss carryforwards begin expiring in 2030, and the state net operating loss carryforwards expire between the years ending February 2018 and February 2036. A valuation allowance has been provided for the net operating loss carryforwards related to states in which the Company no longer has operating results as it is more likely than not that substantially all of these net operating losses will expire unutilized.

The $3.4 million of tax credits at February 28, 2017 primarily relates to alternative minimum tax carryforwards that can be carried forward indefinitely. This amount also includes tax credits in Illinois, Texas, and a federal research credit, all of which have a full valuation allowance.

The activities of Digonex Technologies, Inc., a C Corporation under the Internal Revenue Code, are consolidated for financial statement purposes, but are not included in the U.S. consolidated income tax return of Emmis. As of February 28, 2017, Digonex has federal NOLs of $45 million and state NOLs of $45 million . If Digonex produces pretax income in the future, it is possible that the utilization of these NOL carryforwards will be limited due to Section 382 of the Internal Revenue Code. The Company is in the process of completing a Section 382 study to determine the applicable limitation, if any. As of

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February 28, 2017, the Company was able to determine that at least $15 million of federal NOLs and $15 million of state NOLs will be fully available to offset future taxable income. These amounts are included in the above consolidated federal and state NOL totals of $79 million and $168 million , respectively.

Accounting Standards Codification paragraph 740-10 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of February 28, 2017, the estimated value of the Company’s net uncertain tax positions is approximately $0.1 million , most of which is included in other noncurrent liabilities, as the Company does not expect to settle the items within the next 12 months.

The following is a tabular reconciliation of the total amounts of gross unrecognized tax benefits for the years ending February 29, 2016 and February 28, 2017 :



	For the year ending February 28 (29),
	2016			2017
Gross unrecognized tax benefit – opening balance	$	(172	)	$	(87	)
Gross increases – tax positions in prior periods	(21		)	—
Gross decreases—settlements with taxing authorities	81			—
Gross decreases – lapse of applicable statute of limitations	25			27
Gross unrecognized tax benefit – ending balance	$	(87	)	$	(60	)

Included in the balance of unrecognized tax benefits are tax benefits that, if recognized, would reduce the Company’s provision for income taxes totaling $0.1 million and $0.1 million as of February 29, 2016 and February 28, 2017 , respectively. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in liabilities that could be different from this estimate. In such case, the Company will record additional tax expense or tax benefit in the tax provision, or reclassify amounts on the accompanying consolidated balance sheets in the period in which such matter is effectively settled with the taxing authority.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the uncertain tax benefits noted above, the Company accrued an immaterial amount of interest during the year ending February 28, 2017 and in total, as of February 28, 2017 , has recognized a liability for interest of $8 thousand .

13. SEGMENT INFORMATION

The Company’s operations have historically been aligned into three business segments: (i) Radio, (ii) Publishing and (iii) Corporate & Emerging Technologies. Emerging Technologies includes our TagStation, NextRadio and Digonex businesses. Results of Emerging Technologies were reclassified from the Radio segment in the prior periods presented below and are not material.

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. Our radio operations in New York and Los Angeles, including the LMA fee we receive from a subsidiary of Disney, accounted for more than 50% of our radio revenues for the year ended February 28, 2017. The Company’s segments operate exclusively in the United States.

During the year ended February 28, 2017, we sold our radio cluster in Terre Haute, Indiana and sold five of our six magazines. See Note 7 for more discussion of our dispositions.

The accounting policies as described in the summary of significant accounting policies included in Note 1 to these consolidated financial statements, are applied consistently across segments.

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Year Ended February 28, 2017	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	$	165,148		$	48,559		$	861		$	214,568
Station operating expenses excluding depreciation and amortization expense	115,366			51,063			13,656			180,085
Corporate expenses excluding depreciation and amortization expense	—			—			11,359			11,359
Impairment loss	6,855			—			2,988			9,843
Depreciation and amortization	3,462			230			1,114			4,806
Gain on sale of radio and publishing assets, net of disposition costs	(3,478		)	(20,079		)	—			(23,557		)
Loss on disposal of fixed assets	124			—			—			124
Operating income (loss)	$	42,819		$	17,345		$	(28,256	)	$	31,908



Year Ended February 29, 2016	Radio		Publishing		Corporate & Emerging Technologies			Consolidated
Net revenues	$	169,228	$	60,992	$	1,213		$	231,433
Station operating expenses excluding depreciation and amortization expense	116,862		58,891		7,641			183,394
Corporate expenses excluding depreciation and amortization expense	—		—		13,023			13,023
Impairment loss	5,440		—		4,059			9,499
Depreciation and amortization	3,345		266		2,186			5,797
(Gain) loss on sale of fixed assets	54		—		2			56
Operating income (loss)	$	43,527	$	1,835	$	(25,698	)	$	19,664



Year Ended February 28, 2015	Radio			Publishing		Corporate & Emerging Technologies			Consolidated
Net revenues	$	176,250		$	61,142	$	546		$	237,938
Station operating expenses excluding depreciation and amortization expense	117,167			60,083		3,759			181,009
Corporate expenses excluding depreciation and amortization expense	—			—		14,922			14,922
LMA fee	4,208			—		—			4,208
Hungary license litigation and related expenses	521			—		—			521
Impairment loss	67,915			—		—			67,915
Depreciation and amortization	3,143			245		2,538			5,926
Gain on contract settlement	(2,500		)	—		—			(2,500		)
Operating income (loss)	$	(14,204	)	$	814	$	(20,673	)	$	(34,063	)



Total Assets	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
As of February 29, 2016	$	271,336	$	22,060	$	23,210	$	316,606
As of February 28, 2017	260,228		1,746		27,364		289,338

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14. OTHER INCOME (EXPENSE), NET

Components of other income (expense), net for the three years ended February 2015 , 2016 and 2017 were as follows:



	For the year ended February 28 (29),
	2015			2016			2017
Income (loss) from unconsolidated affiliate, including other-than-temporary impairment losses	$	11		$	(82	)	$	(28	)
Other-than-temporary impairment loss on investments	(6,682		)	—			(254		)
Interest income	78			36			38
Other	175			1,103			84
Total other income (expense), net	$	(6,418	)	$	1,057		$	(160	)

See Note 1 for further discussion of the other-than-temporary impairment loss on investments recorded in the years ended February 28, 2015 and 2017. Other income in the year ended February 29, 2016 mostly relates to various nonrecurring recoveries and noncash gains.

15. RELATED PARTY TRANSACTIONS

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

As previously discussed in Note 8, the Company received an offer from EAC, an Indiana corporation owned by Jeffrey H. Smulyan, the Company’s Chairman of the Board, Chief Executive Officer and controlling shareholder, setting forth a non-binding proposal by which EAC would acquire all the outstanding shares of Class A Common Stock of the Company. During the year ended February 28, 2017, the Company incurred $0.9 of costs associated with the offer, which are included in corporate expenses, excluding depreciation and amortization expense in the accompanying consolidated statements of operations. The going private offer expired on October 14, 2016. No further costs are expected to be incurred in connection with the going private offer as it has expired. See Note 8 for further discussion of the going private offer.

16. SUBSEQUENT EVENTS

Fourth Amendment to the 2014 Credit Facility

On April 18, 2017, Emmis entered into a Fourth Amendment to our 2014 Credit Agreement. The Fourth Amendment (i) eliminated the maximum Total Leverage Ratio covenant through May 31, 2018 and replaced it with a minimum Consolidated EBITDA covenant of $20.0 million , after which it reverts to a Total Leverage Ratio of 4.00 :1.00 for the quarters ended August 31, 2018 and thereafter, (ii) reduced the Interest Coverage Ratio from 2.00 :1.00 to 1.60 :1.00, (iii) required Emmis to enter into definitive agreements by January 18, 2018 to sell assets that generate at least $80 million of sale proceeds and close such transactions no later than July 18, 2018, (iv) increased the Applicable Margin throughout the remainder of the term of the Credit Agreement to 6.00% for ABR Loans (as defined in the 2014 Credit Agreement) and 7.00% for Eurodollar Loans (as defined in the 2014 Credit Agreement) and increased the unused commitment fee on the revolving credit facility to 75 basis points, and (v) accelerated the maturity of the Term Loans to April 18, 2019 and the Revolving Loans to August 31, 2018. In addition to tightening or eliminating baskets and other credit enhancements for lenders, the Fourth Amendment contains ratcheting fees and premiums if the existing credit facility is not refinanced by July 18, 2018. The Fourth Amendment also required Emmis to pay a fee of 1.0% of the Term Loan and Revolving Commitment of each Lender that consented to the Fourth Amendment. This fee totaled $1.5 million and was recorded as additional original issue discount and is being amortized as interest expense over the remaining life of the 2014 Credit Agreement, beginning with the three-month period ending May 31, 2017.

Sale of KPWR-FM

On May 8, 2017, Emmis entered into a definitive agreement to sell KPWR-FM in Los Angeles to KWHY-22 Broadcasting, LLC for $82.8 million. As discussed above, under the terms of the Fourth Amendment to the 2014 Credit Facility, Emmis was required to enter into definitive agreements to sell assets that generated at least $80 million of proceeds by January 18, 2018. Entering into this definitive agreement satisfies that requirement. Emmis found it more advantageous to sell its standalone radio station in Los Angeles than to sell other assets to meet this requirement. This transaction is subject to, among other things, expiration or early termination of the waiting period under the Hart-Scott-Rodino Act, FCC approval and other customary closing conditions and is expected to close in the back half of 2017. KPWR-FM had historically been included in our Radio

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segment. The following table summarizes certain operating results of KPWR-FM for all periods presented. Interest expense has not been allocated to KPWR-FM in the table below as the Company can not yet estimate the amount of required Term Loan repayments associated with the eventual sale of the radio station.



	For the year ended February 28 (29),
	2015		2016		2017
Net revenues	$	32,986	$	28,183	$	24,379
Station operating expenses, excluding depreciation and amortization expense	17,848		16,305		16,933
Depreciation and amortization	570		422		401
Operating income	14,568		11,456		7,045

The carrying amounts of major classes of assets expected to be included in the sale of KPWR-FM as of February 29, 2016 and February 28, 2017 were as follows:



	As of February 28 (29),
	2016	2017
Property and equipment, net	1,586	1,400
Indefinite-lived intangibles	2,018	2,018
Other intangibles, net	75	68
Other assets, long-term	21	39


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

None.


ITEM 9A.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Based upon the Controls Evaluation, our CEO and CFO concluded that as of February 28, 2017 , 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.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the fourth quarter of fiscal 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Management’s Report on Internal Control Over Financial Reporting

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


(1)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Emmis Communications Corporation;


(2)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Emmis Communications Corporation are being made only in accordance with authorizations of management and directors of Emmis Communications Corporation; and


(3)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Emmis Communications Corporation’s assets that could have a material effect on the financial statements.

Management has evaluated the effectiveness of its internal control over financial reporting as of February 28, 2017 , based on the control criteria established in a report entitled Internal Control—Integrated Framework (2013 Framework), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that Emmis Communications Corporation’s internal control over financial reporting is effective as of February 28, 2017 .

Jeffrey H. Smulyan Chairman and Chief Executive Officer

Ryan A. Hornaday Executive Vice President, Chief Financial Officer and Treasurer


ITEM 9B.	OTHER INFORMATION

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item with respect to directors or nominees to be directors of Emmis is incorporated by reference from the sections entitled “Proposal 1: Election of Directors,” “Corporate Governance – Certain Committees of the Board of Directors,” “Corporate Governance – Code of Ethics” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the proxy statement for the Annual Meeting of Shareholders expected to be filed within 120 days after the end of the fiscal year to which this report applies. Information about executive officers of Emmis or its affiliates who are not directors or nominees to be directors is presented in Part I under the caption “Executive Officers of the Registrant.”


ITEM 11.	EXECUTIVE COMPENSATION.

The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Compensation of Directors,” and “Executive Compensation” in the proxy statement for the Annual Meeting of Shareholders expected to be filed within 120 days after the end of the fiscal year to which this report applies.


ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Information required by this item is incorporated by reference from the section entitled “Security Ownership of Beneficial Owners and Management” in the proxy statement for the Annual Meeting of Shareholders expected to be filed within 120 days after the end of the fiscal year to which this report applies.

Equity Compensation Plan Information

The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under our 2004 Equity Compensation Plan, 2010 Equity Compensation Plan, 2012 Equity Compensation Plan, 2015 Equity Compensation Plan, and 2016 Equity Compensation Plan as of February 28, 2017. Our shareholders have approved these plans.



	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (A))
Plan Category	(A)	(B)		(C)
Class A common stock
Equity Compensation Plans
Approved by Security Holders	2,559,643	$	5.17	949,996
Equity Compensation Plans
Not Approved by Security Holders	—	—		—
Total	2,559,643	$	5.17	949,996

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Independent Directors” and “Corporate Governance – Transactions with Related Persons” in the proxy statement for the Annual Meeting of Shareholders expected to be filed within 120 days after the end of the fiscal year to which this report applies.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this item is incorporated by reference from the section entitled “Matters Relating to Independent Registered Public Accountants” in the proxy statement for the Annual Meeting of Shareholders expected to be filed within 120 days after the end of the fiscal year to which this report applies.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Financial Statements

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

Financial Statement Schedules

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

Exhibits

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

Incorporated by Reference

Exhibit

Number

Exhibit Description

Filed

Herewith

Form

Period

Ending

Exhibit

Filing

Date

3.1

Second Amended and Restated Articles of Incorporation of Emmis Communications Corporation, as amended effective July 7, 2016

8-K

3.1

7/7/2016

3.2

Second Amended and Restated Bylaws of Emmis Communications Corporation

10-K

2/28/2013

3.2

5/8/2013

4.1

Form of stock certificate for Class A common stock

S-1

3.5

12/22/1993

10.01

Form of Option Grant Agreement ++

8-K

10.1

7/7/2016

10.02

Form of Restricted Stock Agreement ++

8-K

10.1

7/7/2016

10.03

Credit Agreement, dated as of June 10, 2014, among Emmis Communications Corporation, Emmis Operating Company, certain other subsidiaries of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent

8-K

10.1

6/10/2014

10.04

First Amendment to 2014 Credit Agreement, dated as of November 7, 2014, among Emmis Communications Corporation, Emmis Operating Company, certain other subsidiaries of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent

8-K

10.1

11/7/2014

10.05

Second Amendment to 2014 Credit Agreement, dated as of April 30, 2015, among Emmis Communications Corporation, Emmis Operating Company, certain other subsidiaries of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent

8-K

10.1

4/30/2015

10.06

Third Amendment to 2014 Credit Agreement, dated as of August 18, 2016, among Emmis Communications Corporation, Emmis Operating Company, certain other subsidiaries of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent

8-K

10.1

8/26/2016

10.07

Successor agent agreement and amendment to credit agreement dated as of April 18, 2017 by and among JPMorgan Chase Bank, N.A., in its capacity as the existing administrative agent, the Bank of New York Mellon, in its capacity as successor administrative agent, Emmis Operating Company, certain other subsidiaries of the Company and the lenders party thereto.

8-K

10.1

4/24/2017

10.08

Change in Control Severance Agreement, dated as of May 7, 2012, by and between Emmis Communications Corporation and Jeffrey H. Smulyan ++

10-K

2/29/2012

10.18

5/10/2012

10.09

Change in Control Severance Agreement, dated as of July 10, 2012, by and between Emmis Operating Company and Jeffrey H. Smulyan ++

10-Q

5/31/2012

10.18

7/12/2012

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Incorporated by Reference

Exhibit

Number

Exhibit Description

Filed

Herewith

Form

Period

Ending

Exhibit

Filing

Date

10.10

Employment Agreement, dated as of December 26, 2012, by and between Emmis Operating Company and Jeffrey H. Smulyan ++

8-K

10.1

12/28/2012

10.11

Change in Control Severance Agreement, dated as of September 4, 2011, by and between Emmis Operating Company and Patrick M. Walsh ++

10-Q

11/30/2011

10.2

1/12/2012

10.12

Employment Agreement, dated as of September 4, 2013, by and between Emmis Operating Company and Patrick M. Walsh ++

8-K

10.1

10/25/2013

10.13

Employment Agreement, dated as of March 1, 2012, by and between Emmis Operating Company and J. Scott

Enright ++

10-K

10.25

5/10/2012

10.14

Employment Agreement, dated as of March 1, 2017, by and between Emmis Operating Company and J. Scott

Enright ++

10.15

Change in Control Severance Agreement, dated as of March 8, 2012, by and between Emmis Operating Company and J. Scott Enright ++

10-K

10.24

5/10/2012

10.16

Employment Agreement, effective as of March 3, 2009, by and between Emmis Operating Company and Gary L. Kaseff ++

10-K/A

2/28/2009

10.31

10/9/2009

10.17

Amendment to Employment Agreement, effective as of March 1, 2013, by and between Emmis Operating Company and Gary L. Kaseff ++

10-K

2/28/2013

10.23

5/8/2013

10.18

Emmis Communications Corporation 2015 Equity Compensation Plan ++

DEF14A

5/29/2015

10.19

Emmis Communications Corporation 2016 Equity Compensation Plan ++

DEF14A

5/26/2016

10.20

Local Programming and Marketing Agreement, dated as of April 26, 2012, between Emmis Radio License Corporation of New York and New York AM Radio, LLC

8-K

10.1

4/26/2012

10.21

Asset Purchase Agreement, dated as of October 13, 2016, by and between Emmis Publishing, L.P., Emmis Operating Company, GP TM Acquisition LLC and Genesis Park II LP

10-Q

10.1

1/4/2017

10.22

Asset Purchase Agreement, dated as of October 12, 2016, by and between Emmis Indiana Broadcasting, L.P., Emmis Radio License, LLC, Emmis Communications Corporation, and Midwest Communications, Inc.

10-Q

10.2

1/4/2017

10.23

Asset Purchase Agreement, dated as of October 12, 2016, by and between Emmis Indiana Broadcasting, L.P., Emmis Radio License, LLC, Emmis Communications Corporation, and DLC Media, Inc.

10-Q

10.3

1/4/2017

10.24

Asset Purchase Agreement between subsidiaries of Emmis Communications Corporation and Hour Media Group, LLC, dated February 23, 2017

8-K

10.1

2/28/2017

10.25

Asset Purchase Agreement, dated as of May 8, 2017, by and among Emmis Radio, LLC, Emmis Radio License, LLC and KWHY-22 Broadcasting, LLC

8-K

10.1

5/9/2017

10.26

Local Programming and Marketing Agreement, dated as of May 8, 2017, by and among Emmis Radio License, LLC and KWHY-22 Broadcasting, LLC

8-K

10.2

5/9/2017

Subsidiaries of Emmis

Consent of Independent Registered Public Accounting Firm

Powers of Attorney

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Incorporated by Reference

Exhibit

Number

Exhibit Description

Filed

Herewith

Form

Period

Ending

Exhibit

Filing

Date

31.1

Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act

31.2

Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act

32.1

Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document



++	Management contract or compensatory plan or arrangement.

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Signatures.

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



	EMMIS COMMUNICATIONS CORPORATION

Date: May 11, 2017	By:	/s/ Jeffrey H. Smulyan
		Jeffrey H. Smulyan
		Chairman of the Board and Chief Executive Officer

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



	SIGNATURE	TITLE

Date: May 11, 2017	/s/ Jeffrey H. Smulyan	Chairman of the Board, Chief Executive Officer
	Jeffrey H. Smulyan	and Director (Principal Executive Officer)

Date: May 11, 2007	/s/ Patrick M. Walsh	President, Chief Operating Officer and Director
	Patrick M. Walsh

Date: May 11, 2017	/s/ Ryan A. Hornaday	Executive Vice President, Chief Financial Officer
	Ryan A. Hornaday	and Treasurer (Principal Financial Officer and
		Principal Accounting Officer)

Date: May 11, 2017	Susan B. Bayh*	Director
	Susan B. Bayh

Date: May 11, 2017	James M. Dubin*	Director
	James M. Dubin

Date: May 11, 2017	Gary L. Kaseff*	Director
	Gary L. Kaseff

Date: May 11, 2017	Richard A. Leventhal*	Director
	Richard A. Leventhal

Date: May 11, 2017	Peter A. Lund*	Director
	Peter A. Lund

Date: May 11, 2017	Greg A. Nathanson*	Director
	Greg A. Nathanson

Date: May 11, 2017	Lawrence B. Sorrel*	Director
	Lawrence B. Sorrel



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

EXHIBIT 10.14

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of March 1, 2017, by and between EMMIS OPERATING COMPANY , an Indiana company (“Employer”), and J. SCOTT ENRIGHT , an Indiana resident (“Executive”).

RECITALS

WHEREAS, Employer and its affiliates are engaged in the ownership and operation of certain radio, magazine and related operations (together, the “Emmis Group”).

WHEREAS, Employer desires to employ Executive and Executive desires to be so employed.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

1. Employment Status and Duties . Upon the terms and subject to the conditions set forth in this Agreement, Employer hereby employs Executive, and Executive hereby accepts exclusive employment with Employer. During the Term (as defined below), Executive shall serve as Executive Vice President, General Counsel and Secretary. Executive shall have such duties, functions, authority and responsibilities as are commensurate with such positions or such other positions as may be assigned to Executive. Executive’s services hereunder shall be performed on an exclusive, full‑time basis in a professional, diligent and competent manner to the best of Executive’s abilities. Executive shall not undertake any outside employment or business activities without the prior written consent of Employer. Executive shall be permitted to serve on the board of charitable or civic organizations so long as such services: (i) are approved in writing in advance by Employer; and (ii) do not interfere with Executive’s duties and obligations under this Agreement. Employer hereby approves Executive’s participation as a member of the Board of Directors of EdChoice, Inc. and Goodwill of Central and Southern Indiana. It is understood and agreed that the location for the performance of Executive’s duties and services pursuant to this Agreement shall be the offices designated by Employer in Indianapolis, Indiana. If Executive is elected as a member of the Board of Directors of Emmis Communications Corporation (“ECC”), he shall serve in such position without additional remuneration (unless Employer elects to remunerate “inside directors”) but shall be entitled to the benefit of indemnification pursuant to the terms of Section 17.9 . Executive shall also serve without additional remuneration as a director and/or officer of one (1) or more of Employer’s subsidiaries or affiliates if appointed to such position(s) by Employer and shall also be entitled to the benefit of indemnification pursuant to the terms of Section 17.9 .

2. Term . The term of this Agreement shall be for a three (3) year period commencing on March 1, 2017 (the “Effective Date”) and continuing through and including February 29, 2020, unless earlier terminated in accordance with the provisions set forth in this Agreement (the “Term”). For purposes of this Agreement, the term “First Contract Year” shall be defined to mean the twelve (12) month period commencing on the Effective Date; the term “Second Contract Year” shall be defined to mean the twelve (12) month period commencing on the first anniversary of the Effective Date; and the term “Third Contract Year” shall be defined to mean the twelve (12) month period commencing on the second anniversary of the Effective Date (each, a “Contract Year”).

3. Base Salary; Auto Allowance . Upon the terms and subject to the conditions set forth in this Agreement, Employer shall pay or cause to be paid to Executive a base salary at an annualized rate (the “Base Salary”), payable pursuant to Employer’s customary payroll practices and subject to applicable taxes and withholdings as required by law, for each Contract Year, as set forth below:


First Contract Year:	$450,000


Second Contract Year:	Base Salary for First Contract Year, plus an amount equal to the average percentage merit increase, if any, for Employer’s corporate employees who do not have an employment agreement (the “Corporate Merit Increase”) for the Second Contract Year


Third Contract Year:	Base Salary for Second Contract Year, plus the Corporate Merit Increase for the Third Contract Year

Except as otherwise set forth herein, Employer shall have no obligation to pay Executive the Base Salary for any periods during which Executive fails or refuses to render services pursuant to this Agreement (except that Executive shall not be considered to have failed or refused to render services during any periods of Executive’s incapacity or absence from work due to sickness or other approved leave of absence in accordance with the Company’s policies, subject to Employer’s right to terminate Executive’s employment pursuant to Section 11 ) or for any period following the expiration or termination of this Agreement. In addition, it is understood and agreed that Employer may, at its sole election, pay up to ten percent (10%) of Executive’s Base Salary in Shares (as defined below); provided that: (i) the Shares are registered with the U.S. Securities and Exchange Commission (the “SEC”) on a then-effective Form S-8 or other applicable registration statement and are issued without restriction on resale (and further provided that the Shares are listed on a securities exchange or over-the-counter market, which does not include listing on the “pink sheets,” at the time of issuance), subject to any restrictions on resale under Employer’s insider trading policy or applicable federal and state law; and (ii) the percentage of Executive’s Base Salary payable in Shares shall be consistent with, and the exact number of Shares to be awarded

to Executive shall be determined in the same manner as, that utilized for the Key Executive Group. The term “Key Executive Group” refers to the Company’s President and Chief Operating Officer, the Company’s President – Publishing and Chief Strategy Officer and the Company’s Chief Financial Officer (or, if any of those positions are no longer comparable to Executive’s position, any other positions mutually agreed upon by the parties).

During the Term, Executive shall receive a monthly auto allowance in the amount of One Thousand Dollars ($1,000) (subject to withholding and applicable taxes as required by law) consistent with Employer’s policy or practices regarding such allowances, as such policy or practices may be amended from time to time during the Term in Employer’s sole and absolute discretion; provided , however , that in no event shall the auto allowance amount paid to Executive pursuant to this provision be reduced.

4. Incentive Compensation .

4.1 Equity Grants .

(i) On or about the first day of the Term, when Employer grants equity incentive compensation to its executive level employees (but in no event later than ninety (90) days after the first day of the Term), Executive shall be granted an option (the “Option”) to acquire Fifty Thousand (50,000) shares of Class A Common Stock of ECC (“Shares”), which shall vest on February 29, 2020, and is subject to the terms of this Section 4.1 .

(ii) Within one hundred eighty (180) days after the Effective Date, Executive shall be granted Twenty-Five Thousand (25,000) restricted Shares (“Restricted Shares”), which shall vest on February 29, 2020 and are subject to the terms of this Section 4.1 . Upon the vesting of any Restricted Shares, Employer shall withhold a sufficient number of Shares (not exceeding the minimum number required to be so withheld unless Executive requests withholding at a higher rate not to exceed Executive’s estimated total tax liability with respect to such Shares) to satisfy all federal, state and local withholding requirements.

(iii) The Option granted pursuant to this Section 4.1 shall: (i) have an exercise price per share equal to the Fair Market Value (“FMV”) of the stock on the date of grant (as FMV is defined in the applicable Equity Compensation Plan, or any subsequent equity compensation or similar plan adopted by ECC and generally used to make equity‑based awards to executive‑level employees of the Emmis Group (the “Plan”)); (ii) notwithstanding any other provisions in this Agreement, be granted according to the terms and subject to the conditions of the Plan; (iii) be evidenced by a written grant agreement containing such terms and conditions as are generally provided for other executive‑level employees of the Emmis Group; (iv) be exercisable for Shares with such restrictive legends on the certificates in accordance with the Plan and applicable securities laws; and

(v) not be entitled to any voting rights unless and until exercised. Employer shall use reasonable efforts to register the Shares subject to the award on a Form S-8 or other applicable registration statement at such time as the Shares are issued to Executive. The Option is intended to satisfy the regulatory exemption from the application of Section 409A (as defined below) for certain options for service recipient shares, and it shall be administered accordingly. The Restricted Shares shall (i) be granted according to the terms and subject to the conditions of the Plan; (ii) be evidenced by a written grant agreement; and (iii) include a restrictive legend as provided for by the Plan.

(iv) The equity grants made pursuant to this Section 4.1 , along with those previously made to Executive, are intended to be inclusive of all equity grants to Executive during the Term (other than payments that are permitted under this Agreement to be made in Shares).

4.2 Annual Bonus Amounts . Upon the terms and subject to the conditions set forth in this Section 4 , following the conclusion of each Contract Year, Executive shall be eligible to receive one (1) performance bonus in an annualized target amount equivalent to Seventy-Five Percent (75%) of Executive’s Base Salary earned during the subject Contract Year (each, an “Annual Bonus”), the exact amount of which, if any, shall be determined based upon attainment of certain performance and financial goals as determined each Contract Year by the Compensation Committee of ECC’s Board of Directors (the “Compensation Committee”), in its sole and absolute discretion, and communicated to Executive within ten (10) days after a final determination by the Compensation Committee.

4.3 Payment of Bonus Amounts . Employer shall pay or cause to be paid to Executive the bonus amounts, if earned according to the terms and conditions set forth in Section 4.2 ; provided that, unless provided otherwise in Sections 4.2 , 9 , 10 , 11 or 12 of this Agreement, on the final day of the applicable measuring period for such bonus: (i) this Agreement is in full force and effect and has not been terminated for any reason (other than due to a material breach of this Agreement by Employer); and (ii) Executive is fully performing all of Executive’s material duties and obligations pursuant to this Agreement and is not in breach of any of the material terms and conditions of this Agreement (provided that Executive’s failure or inability to perform his duties and obligations because of his death or incapacity (pursuant to Section 11 ), including during leaves of absence, shall not be considered a breach of this Agreement or non-performance under this provision). In addition, it is understood and agreed that Employer may, at its sole election, pay any bonus amounts earned by Executive pursuant to this Section 4 in cash or Shares; provided that the Shares evidencing any portion thereof are registered with the SEC on a then-effective Form S-8 or other applicable registration statement and are issued without restriction on resale (and further provided that the Shares are listed on a securities exchange or over-the-counter market, which does not include listing on the “pink sheets,” at the time of issuance), subject to any restrictions on resale under Employer’s insider

trading policy and applicable federal and state law. In the event that Employer elects pursuant to this Section 4.3 to pay any Annual Bonus amounts in Shares, the percentage of such bonus amounts payable in Shares shall be consistent with, and the exact number of Shares to be awarded to Executive shall be determined in the same manner as, that utilized for the Key Executive Group. Any Annual Bonus amounts earned by Executive pursuant to the terms and conditions of Section 4.2 shall be paid after the end of the Contract Year for which the bonus is earned (but in no event later than ninety (90) days after the end of such Contract Year). Any and all bonus amounts payable by Employer to Executive pursuant to this Section 4 shall be subject to applicable taxes and withholdings as required by law. Notwithstanding any other provisions of this Agreement, any bonus pursuant to Section 4.2 shall be paid to Executive by the earlier of the date specified herein or the date that is no later than two-and-a-half months after the end of either Employer’s or Executive’s first taxable year (whichever period is longer) in which any such bonus is no longer subject to a substantial risk of forfeiture for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

5. Expenses; Travel . Employer shall pay or reimburse Executive for all reasonable expenses actually incurred or paid by Executive during the Term in connection with the performance of Executive’s services hereunder upon presentation of expense statements, vouchers or other supporting documentation as Employer may require of Executive; provided that, such expenses are otherwise in accordance with Employer’s policies applicable to executive-level employees. Executive shall undertake such travel as may be required in the performance of Executive’s duties pursuant to this Agreement. Under no circumstances shall the Employer’s reimbursement for expenses incurred in a calendar year be made later than the end of the next following calendar year; provided, however, this requirement shall not alter the Employer’s obligation to reimburse Executive for eligible expenses on a current basis.

6. Fringe Benefits .

6.1 Vacation and Other Benefits . Each Contract Year, Executive shall be entitled to four (4) weeks of paid vacation in accordance with Employer’s applicable policies and procedures for executive-level employees. Executive shall also be eligible to participate in and receive the fringe benefits generally made available to other executive‑level employees of Employer in accordance with and to the extent that Executive is eligible under the general provisions of Employer’s fringe benefit plans or programs; provided , however , that Executive understands that these benefits may be increased, changed, eliminated or added from time to time during the Term as determined in Employer’s sole and absolute discretion.

6.2 Insurance and Estate Planning . Each Contract Year, Employer agrees to reimburse Executive in an amount not to exceed Five Thousand Dollars ($5,000) for the annual premium and other fees and expenses associated with estate planning services for Executive, including legal and tax services, and Executive’s purchase

or maintenance of a life or disability insurance policy or other insurance policies on the life, or related to the care, of Executive. Executive shall be entitled to freely select and change the beneficiary or beneficiaries under such policy or policies. Notwithstanding anything to the contrary contained in this Agreement, Employer’s obligations under this Section 6.2 are expressly contingent upon Executive providing required information and taking all necessary actions required of Executive in order to obtain and maintain the subject services, policy or policies, including without limitation passing any required physical examinations. Reimbursements pursuant to this Section 6.2 with respect to a Contract Year shall be made as soon as administratively feasible after Executive submits the information and documentation required for reimbursement; provided, however, under no circumstances shall such reimbursement be paid later than two-and-a-half months after the end of the calendar year or Employer’s taxable year in which such Contract Year commenced.

7. Confidential Information .

7.1 Non‑Disclosure . Executive acknowledges that certain information concerning the business of the Emmis Group and its members (including but not limited to trade secrets and other proprietary information) is of a highly confidential nature, and that, as a result of Executive’s employment with Employer prior to and during the Term, Executive shall receive and develop proprietary and confidential information concerning the business of Employer and/or other members of the Emmis Group which, if known to Employer’s competitors, would damage Employer, other members of the Emmis Group and their respective businesses. Accordingly, Executive hereby agrees that during the Term and thereafter, Executive shall not divulge or appropriate for Executive’s own use, or for the use or benefit of any third party (other than Employer and its representatives, or as directed in writing by Employer), any information or knowledge concerning the business of Employer, or any other member of the Emmis Group, which is not generally available to the public other than through the activities of Executive. Executive further agrees that, immediately upon termination of Executive’s employment for any reason, Executive shall promptly surrender to Employer all documents, brochures, plans, strategies, writings, illustrations, client lists, price lists, sales, financial or marketing plans, budgets and any and all other materials (regardless of form or character) which Executive received from or developed on behalf of Employer or any member of the Emmis Group in connection with Executive’s employment prior to or during the Term. Executive acknowledges that all such materials shall remain at all times during the Term and thereafter the sole and exclusive property of Employer and that nothing in this Agreement shall be deemed to grant Executive any right, title or interest in such material.

7.2 Work Product . Executive acknowledges and agrees that all writings, works of authorship, technology, inventions, discoveries, ideas and other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived or reduced to practice by Executive individually or

jointly with others during the Term by Employer and relating in any way to the business or contemplated business, research or development of the Emmis Group (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same) and all printed, physical and electronic copies, all improvements, rights and claims related to the foregoing, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations therefor, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of Employer. Executive acknowledges that, by reason of being employed by Employer at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by Employer. To the extent that the foregoing does not apply, Executive by these presents does hereby irrevocably assign to Employer, for no additional consideration, Executive’s entire right, title and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit Employer’s rights, title or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that Employer would have had in the absence of this Agreement. During and after his employment, Executive agrees to reasonably cooperate with Employer to (a) apply for, obtain, perfect and transfer to Employer the Work Product as well as an Intellectual Property Right in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, executing and delivering to Employer any and all applications, oaths, declarations, affidavits, waivers, assignments and other documents and instruments as shall be requested by Employer. Executive hereby irrevocably grants Employer power of attorney to execute and deliver any such documents on Executive’s behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to Employer and further the transfer, issuance, prosecution and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if Executive does not promptly cooperate with Employer’s request (without limiting the rights Employer shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by Executive’s subsequent incapacity. Executive understands that this Agreement does not, and shall not be construed to, grant Executive any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any confidential information, materials, software or other tools made available to him by Employer or the Emmis Group.

7.3 Injunctive Relief . Executive acknowledges that Executive’s breach of this Section 7 will cause irreparable harm and damage to Employer, the exact amount of which will be difficult to ascertain; that the remedies at law for any such breach would be inadequate; and that the provisions of this Section 7 have been specifically negotiated and carefully written to prevent such irreparable harm and damage. Accordingly, if Executive breaches this Section 7 , Employer shall be entitled to injunctive relief (including attorneys’ fees and costs) enforcing this Section 7 to the extent reasonably necessary to protect Employer’s legitimate interests, without posting bond or other security.

8. Non‑Competition; Non-Solicitation; Anti-Raiding; Injunctive Relief .

8.1 To the extent permitted by law, Executive (whether on Executive’s own behalf or on behalf of any other person or entity) shall not directly or indirectly:

(i) During the Term, and for a period of one (1) year (which shall be extended by the length of any period during which Executive is in violation of this Section 8.1(i) ) immediately following the expiration or early termination of the Term for any reason, voluntary or involuntary (“Termination”), within the “Geographic Territory” (as defined below), own, manage, operate, or otherwise engage or participate in any business that competes directly or indirectly with the business of Employer or any member of the Emmis Group (“Competitor”) if Executive performs any duties, responsibilities, or functions on behalf of the Competitor that (a) are the same as or similar to the duties, responsibilities, or functions Executive performed for Employer or a member of the Emmis Group during any portion of the 24-month period immediately preceding the Termination (“Pre-Termination Period”), (b) relate in any respect to any aspect of the business of a member of the Emmis Group as to which, during any portion of the Pre-Termination Period, Executive performed any duties or services or received any confidential information, or (c) relate in any respect to, or would benefit from the use of, any confidential information Executive received during the Pre-Termination Period. For purposes of this Section 8.1(i) , Geographic Territory shall mean Indiana, United States, and/or any other state, market, country, or geographic territory in which Employer or a member of the Emmis Group delivered, sold or marketed its products or services or conducted business during the Pre-Termination Period. At least five (5) business days prior to Executive’s commencement of any duties, responsibilities or functions for a Competitor, Executive and the Competitor shall provide Employer with a written notice that describes the duties, responsibilities and functions to be performed by Executive and certifies that such duties, responsibilities and functions will comply with the terms and conditions of this Agreement. The parties acknowledge and agree that Employer’s and the Emmis Group’s business is generally located at least within the Geographic Territory, extends throughout the Geographic Territory and is not limited to any particular

region of the Geographic Territory. As long as Executive does not engage in any activity prohibited by this Section 8.1(i) , Executive’s ownership of less than five percent (5%) of the issued and outstanding stock of any corporation whose stock is traded on an established securities market shall not constitute competition with Employer or the Emmis Group for the purpose of this Section 8.1 . Notwithstanding the foregoing, with Employer’s written consent, which shall not be unreasonably withheld, E xecutive may join a commercial enterprise with multiple divisions or business lines, even if a division or business line engages in a business competitive with Employer, if such competitive business represents an insignificant portion of the commercial enterprise’s operations and revenue and Executive's services are not primarily for the competitive divisions or business lines.

(ii) During the Term, and for a period of two (2) years (which shall be extended by the length of any period during which Executive is in violation of this Section 8.1(ii)) immediately following Termination, sell or otherwise provide or solicit the sale or provision of (or supervise such activities) any products or services that directly or indirectly compete with any products or services of Employer or any member of the Emmis Group to any person or entity as to which, during any portion of the Pre-Termination Period, Executive sold or supervised the sale of products or services, or otherwise performed any duties or services on behalf of Employer or a member of the Emmis Group, or received any confidential information.

(iii) During the Term, and for a period of two (2) years (which shall be extended by the length of any period during which Executive is in violation of this Section 8.1(iii)) immediately following Termination, hire or otherwise engage any employee of Employer or a member of the Emmis Group, or any other person or entity who during any portion of the three (3) months immediately preceding Termination had an actual or prospective employment, consulting, or contractor relationship with Employer or a member of the Emmis Group or solicit, induce, or influence any such employee or other person or entity to discontinue, reduce, reject, or otherwise change in any manner adverse to the interests of Employer or a member of the Emmis Group the nature or extent of such relationship with Employer or a member of the Emmis Group.

8.2 Injunctive Relief . Executive acknowledges the special and unique nature of Executive’s employment with Employer as an executive-level employee, and understands that, as a result of Executive’s employment with Employer prior to and during the Term, Executive has gained and will continue to gain knowledge of and have access to highly sensitive and valuable information regarding the operations of Employer and its subsidiaries and affiliated entities, including but not limited to the confidential information described more fully in Section 7.1 . Accordingly, Executive acknowledges Employer’s interest in preventing the disclosure of such

information through the engagement of Executive’s services by any of Employer’s or the Emmis Group’s competitors following the expiration or termination of the Term for any reason. Executive acknowledges and agrees that the provisions of this Section 8 have been specifically negotiated and carefully worded in recognition of the opportunities which will be afforded to Executive by Employer by virtue of Executive’s continued association with Employer during the Term, and the influence that Executive has and will continue to have over Employer’s and the Emmis Group’s employees, customers and suppliers. Executive further acknowledges that Executive’s breach of Section 8.1 herein will cause irreparable harm and damage to Employer, the exact amount of which will be difficult to ascertain; that the remedies at law for any such breach would be inadequate; and that the provisions of this Section 8 have been specifically negotiated and carefully written to prevent such irreparable harm and damage. Accordingly, if Executive breaches Section 8.1 , Employer shall be entitled to injunctive relief (including attorneys’ fees and costs) enforcing Section 8.1 , to the extent reasonably necessary to protect Employer’s legitimate interests, without posting bond or other security. Notwithstanding anything to the contrary contained in this Agreement, if Executive violates Section 8.1 , and Employer brings legal action for injunctive or other relief, Employer shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full restrictive covenant periods set forth therein. Accordingly, the obligations set forth in Section 8.1 shall have the duration set forth therein, computed from the date such relief is granted but reduced by the time expired between the date the restrictive period began to run and the date of the first violation of the obligation(s) by Executive.

8.3 Construction . Despite the express agreement herein between the parties, in the event that any provisions set forth in this Section 8 shall be determined by any court or other tribunal of competent jurisdiction to be unenforceable for any reason whatsoever, the parties agree that this Section 8 shall be interpreted to extend only to the maximum extent as to which it may be enforceable, and that this Section 8 shall be severable into its component parts, all as determined by such court or tribunal. In accordance with Rule 5.6 of the Indiana Rules of Professional Conduct, nothing in this Section 8 shall restrict the Executive from practicing law.

9. Termination of Agreement by Employer for Cause .

9.1 Termination . Employer may terminate this Agreement and Executive’s employment hereunder for Cause (as defined in Section 9.3 below) in accordance with the terms and conditions of this Section 9 . Following a determination by Employer that Executive should be terminated for Cause, Employer shall give written notice (the “Preliminary Notice”) to Executive specifying the grounds for such termination, and Executive shall have ten (10) days after receipt of the Preliminary Notice to attempt to cure any acts or omissions giving rise to Cause, if under Section 9.3(i), and/or to respond to Employer in writing. If following the expiration of such ten (10) day period Employer reaffirms its determination that

Executive should be terminated for Cause, such termination shall be effective upon delivery by Employer to Executive of a final notice of termination.

9.2 Effect of Termination . In the event of termination for Cause

as provided in Section 9.1 above:

(i) Executive shall have no further obligations or liabilities hereunder except Executive’s obligations under Sections 7 and 8 , which shall survive the termination of this Agreement, and except for any obligations arising in connection with any conduct of Executive described in Section 9.3 ;

(ii) Employer shall have no further obligations or liabilities hereunder, except that Employer shall, not later than two (2) weeks after the termination date:

(a) Pay to Executive any Base Salary which has been earned on or prior to the termination date, but which remains unpaid as of the termination date, in a lump-sum cash payment; and

(b) Pay to Executive any bonus amounts which have been earned on or prior to the termination date pursuant to Section 4 , if any, but which are unpaid as of the termination date, in a lump-sum cash payment.

Additionally, Employer shall comply with the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and the provisions of any Employer benefit plans in which Executive or Executive’s eligible dependents or beneficiaries are participating at the time of termination.

9.3 Definition of Cause . For purposes of this Agreement, “Cause” shall be defined to mean any of the following: (i) Executive’s failure, refusal or neglect to perform any of Executive’s material duties or obligations under this Agreement, or any material duties assigned to Executive consistent with the terms of this Agreement (Executive’s inability or failure to perform his obligations hereunder because of his death or incapacity, subject to Employer’s right to terminate Executive’s employment pursuant to Section 11 , including during approved periods of absence, shall not be considered Cause for termination under this provision), or abide by any applicable policy of Employer, or Executive’s breach of any material term or condition of this Agreement, and continuation of such failure, refusal, neglect, or breach after written notice and the expiration of a ten (10) day cure period; provided , however , that it is not the parties’ intention that the Employer shall be required to provide successive such notices, and in the event Employer has provided Executive with a notice and opportunity to cure pursuant to this Section 9.3 ,

Employer may terminate this Agreement for a subsequent breach similar or related to the breach for which notice was previously given or for a continuing series or pattern of breaches (whether similar or related) without providing notice and an opportunity to cure; (ii) commission of any felony or any other crime involving an act of moral turpitude which is harmful to Employer’s business or reputation; (iii) Executive’s action or omission, or knowing allowance of actions or omissions, which are in violation of any law or any of the rules or regulations of the Federal Communications Commission, or which otherwise jeopardize any of the licenses granted to Employer or any member of the Emmis Group in connection with the ownership or operation of any radio station; (iv) theft in any amount; (v) actual or threatened violence against any individual (in connection with his employment hereunder) or another employee; (vi) sexual or other prohibited harassment of others that is actionable under applicable laws; (vii) unauthorized disclosure or use of trade secrets or proprietary or confidential information, as described more fully in Section 7.1 ; (viii) any action which brings Employer or any member of the Emmis Group into public disrepute, contempt, scandal or ridicule, and which is harmful to Employer’s business or reputation; and (ix) any matter constituting cause or gross misconduct under applicable laws.

10. Termination by Employer Without Cause or Voluntary Resignation by Executive for Good Reason .

10.1 Effect of the Termination . If during the Term Employer terminates Executive’s Employment (as defined below) without Cause or Executive terminates his Employment for Good Reason (as defined below), then:

(i) Executive shall have no further obligations or liabilities hereunder, except Executive’s obligations under Sections 7 and 8 , which shall survive the termination of this Agreement.

(ii) Employer shall have no further obligations or liabilities to Executive, except that Employer shall:

(a) Pay to Executive any Base Salary which has been earned on or prior to the termination date, but which remains unpaid as of the termination date, in a lump-sum cash payment within two (2) weeks of the termination date;

(b) Pay to Executive any Annual Bonus amounts, if any, which Executive earned prior to the termination date pursuant to Section 4 but which are unpaid as of the termination date, in a lump-sum cash payment within two (2) weeks of the termination date;

(c) Pay to Executive an amount equal to the total amount of Base Salary that would have been payable to Executive hereunder had the termination not occurred for a period that is the greater of

one (1) year from the termination date or the period between the termination date and February 29, 2020, subject to any applicable tax withholding and deductions as required by law, in a lump-sum cash payment within two (2) weeks after the effective date of the general release referenced at the end of this Section 10.1 ;

(d) Pay an amount equal to Executive’s Annual Bonus opportunity, for the Contract Year in which the termination occurs, in a lump-sum cash payment within two (2) weeks after the effective date of the general release referenced at the end of this Section 10.1 ;

(e) Pay or reimburse, for the period applicable under Section 10.1(ii)(c) above, any medical, dental or vision insurance premiums (up to the amount that Employer is paying on behalf of Executive and his eligible dependents immediately prior to the date of termination, e.g., the employer-paid premium) for the continuation of such health coverage for Executive and Executive’s dependents pursuant to the provisions of COBRA or applicable state law. If Executive becomes eligible to participate in any other group insurance program of another employer and elects coverage thereunder, these payments shall cease at that time; and

(f) Accelerate in full the vesting of any equity granted to Executive prior to the termination date within two (2) weeks after the effective date of the general release referenced at the end of this Section 10.1 .

Each of the payments set forth in this Section 10.1(ii) shall be subject to any applicable tax withholding and deductions as required by law. As a material condition upon which Executive shall be entitled to receive the payments outlined in this Section 10.1(ii) (other than subsections (a) and (b) to which Executive shall be entitled without executing a general release), and as an inducement to Employer’s agreement to make such payments, Executive agrees to execute a general release in a form reasonably acceptable to Employer upon the termination of Executive’s employment.

10.2 Definition of Termination of Employment . For purposes of this Agreement, when capitalized, “Terminates Employment,” “Termination of Employment,” or any variation of that term means a separation from service within the meaning of Section 409A (defined below). If Executive’s employment terminates but does not qualify as a separation from service under Section 409A, then Executive shall become entitled to receive the severance pay and benefits set forth in this Agreement at such time as he incurs a separation from service.

10.3 Definition of Good Reason . For purposes of this Section 10 , the term “Good Reason” shall be defined to mean, without Executive’s written consent: (i) a reduction by Employer in Executive’s Base Salary or target Annual Bonus opportunity from the amounts set forth in this Agreement; (ii) failure of Employer to provide an office to Executive, or Employer requiring Executive to work in an office that is more than thirty-five (35) miles from the location of the Company’s principal executive offices at the time of this Agreement, except for required travel on business of the Company to the extent substantially consistent with Executive’s business travel obligations, or (iii) a material breach of the terms of this Agreement by Employer; provided that Executive has given Employer notice of such breach within thirty (30) days of the initial occurrence of the event that is alleged to constitute Good Reason, such breach remains uncured in the thirty (30) day period after such notice, and Executive terminates his employment no later than ten (10) days after the cure period has expired. Employer shall not take any position that a resignation by Executive for Good Reason fails to constitute on involuntary separation from service for purposes of Section 409A.

10.4 Non-Renewal of Agreement. Employer’s non-renewal of this Agreement, and/or failure to offer Executive continued employment following the expiration of the Term shall not be deemed a termination without Cause and shall be subject to Section 13.

11. Termination of Agreement by Employer for Incapacity .

11.1 Termination . If Executive shall become incapacitated (as defined in the Employer’s employee handbook or, if that is not applicable, as reasonably determined by Employer, in each case, consistent with state and/or federal law), Employer shall continue to compensate Executive under the terms of this Agreement without diminution and otherwise without regard to such incapacity or nonperformance of duties until Executive has been incapacitated for a cumulative period of ninety (90) days in any one hundred eighty (180) consecutive day period, at which time Employer may, in its sole discretion, elect to terminate Executive’s employment, subject to state and/or federal law. The date that Executive’s employment terminates pursuant to this Section 11 is referred to herein as the “Incapacity Termination Date.”

11.2 Obligations after Termination . Executive shall have no further obligations or liabilities hereunder after an Incapacity Termination Date except Executive’s obligations under Sections 7 and 8 , which shall survive the termination or expiration of this Agreement. After an Incapacity Termination Date, Employer shall have no further obligations or liabilities hereunder except that Employer shall, not later than two (2) weeks after an Incapacity Termination Date, pay to Executive those amounts described in Section 9.2(ii) ; provided , however , that in the event an Incapacity Termination Date occurs at least six (6) months after the commencement of a Contract Year during the Term, Employer shall pay to Executive a pro-rated

portion of the Annual Bonus for the Contract Year during which the Incapacity Termination Date occurs, such amount to be determined in the sole discretion of Employer. Additionally, Employer shall comply with the provisions of COBRA and the provisions of any Employer benefit plans in which Executive or Executive’s eligible dependents or beneficiaries are participating at the time of termination. Nothing in this Section 11 shall affect the amount of any benefits which may be payable to Executive under any insurance plan or policy maintained by Employer or Executive or pursuant to any Employer company practice, plan or program applicable to other executive-level employees of the Emmis Group.

12. Death of Executive . This Agreement shall terminate immediately upon Executive’s death. In the event of such termination, Employer shall have no further obligations or liabilities hereunder except that Employer shall, not later than two (2) weeks after Executive’s date of death, pay or grant to Executive’s estate or designated beneficiary those amounts described in Section 9.2(ii) . Additionally, Employer shall comply with the provisions of COBRA and the provisions of any Employer benefit plans in which Executive or Executive’s eligible dependents or beneficiaries are participating at the time of termination. In the event that Executive dies after termination of this Agreement pursuant to Sections 9 , 10 or 11 , all amounts required to be paid by Employer prior to Executive’s death in connection with such termination that remain unpaid as of Executive’s date of death shall be paid to Executive’s estate or designated beneficiary. Nothing in this Section 12 shall affect the amount of any benefits which may be payable to Executive under any insurance plan or policy maintained by Employer or Executive or pursuant to any Employer company practice, plan or program applicable to other executive-level employees of the Emmis Group.

13. Severance . Subject to the conditions set forth in this Section 13 , in the event that Employer does not offer Executive employment upon expiration of the Term on terms substantially similar to those contained herein (which shall include without limitation a Base Salary that is at least ninety-five percent (95%) of the Base Salary in effect at expiration of the Term) and Executive’s employment is terminated by Executive or Employer within ninety (90) days after expiration of the Term, Employer shall make a lump-sum severance payment to Executive in an amount equal to one year of Executive’s final Base Salary under this Agreement, subject to applicable taxes and withholdings (the “Severance Payment”) not later than two weeks after the effective date of the general release referenced below in this Section 13 . As a material condition upon which Executive shall be entitled to receive the Severance Payment, and as an inducement to Employer’s agreement to pay Executive the Severance Payment, Executive agrees to execute a general release in a form reasonably acceptable to Employer upon the termination of Executive’s employment. Executive shall not be entitled to any additional severance compensation upon the expiration of this Agreement other than the Severance Payment. Executive shall not be entitled to the Severance Payment for any reason other than as set forth in this Section 13 .

14. Application of Internal Revenue Code Section 409A . Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this

Agreement (the “Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless Employer reasonably determines that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.

It is intended that each installment of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if Employer (or, if applicable, the successor entity thereto) determines that the Severance Benefits constitute “deferred compensation” under Section 409A and Executive is, on the termination of service, a “specified employee” of Employer or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s Separation From Service, or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”), the Employer (or the successor entity thereto, as applicable) shall (A) pay to Executive a lump sum amount equal to the sum of the Severance Benefit payments that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Severance Benefits in accordance with the applicable payment schedules set forth in this Agreement.

This Agreement is intended to comply with Section 409A, and it is intended that no amounts payable hereunder shall be subject to tax under Section 409A. Employer shall use commercially reasonable efforts to comply with Section 409A with respect to payments of benefits hereunder.

15. Adjustments for Changes in Capitalization of Employer . In the event of any change in Employer’s outstanding Shares during the Term by reason of any reorganization, recapitalization, reclassification, merger, stock split, reverse stock split, stock dividend, asset spin-off, share combination, consolidation or other event, the number and class of Shares and/or Option awarded pursuant to Section 4 (and any applicable Option exercise price) shall be adjusted by the Compensation Committee in its sole and absolute discretion and, if applicable, in accordance with the terms of the Plan, and the option agreement evidencing the grant of the Option. The determination of the Compensation Committee shall be conclusive and binding. All adjustments pursuant to this Section 15 shall be made in a manner that does not result in taxation to the Executive under Section 409A.

16. Notices . All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be made in writing and shall be deemed to have been made as of: (a) the date that is the next date upon which an overnight delivery service (Federal Express, UPS or equivalent only) will make such delivery, if sent via such overnight delivery service, postage prepaid, (b) the date such delivery is made, if delivered in person to the notice party specified below, or (c) the date such delivery is made, if delivered via email. Such notice shall be delivered as follows (or to such other or additional address as either party shall designate by notice in writing to the other in accordance herewith):

(i) If to Employer :

Emmis Operating Company

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204

Attn: Jeffrey H. Smulyan

Email: Jeff@emmis.com

With a copy to :

Emmis Operating Company

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204

Attn: Legal Department

Email: legal@emmis.com

(ii) If to Executive, to Executive at Executive’s address in the personnel records of Employer.

17. Miscellaneous .

17.1 Governing Law; Venue . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Indiana without regard to its conflict of law principles. Any action to enforce, challenge or construe the terms or making of this Agreement or to recover for its breach shall be litigated exclusively in a state court located in Marion County, Indiana, except that the Employer may elect, at its sole and absolute discretion, to litigate the action in the county or state where any breach by Executive occurred or where Executive can be found. Executive acknowledges and agrees that this venue provision is an essential provision of this Agreement and Executive hereby waives any defense thereto, including but not limited to, lack of personal jurisdiction, improper or wrong venue, or inconvenience.

17.2 Captions . The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any of the terms and conditions of this Agreement.

17.3 Entire Agreement . This Agreement shall supersede and replace, in all respects, the Employment Agreement between the parties effective March 1, 2013 and such agreement shall immediately terminate and be of no further force or effect. For purposes of the preceding sentence, any change in control, restricted stock, option and other benefits-related agreement shall not constitute a “prior employment agreement.”

17.4 Assignment . This Agreement, and Executive’s rights and obligations hereunder, may not be assigned by Executive to any third party; provided , however , that Executive may designate pursuant to Section 17.6 one (1) or more beneficiaries to receive any amounts that would otherwise be payable hereunder to Executive’s estate. Employer may assign all or any portion of its rights and obligations hereunder to any other member of the Emmis Group or to any successor or assignee of Employer pursuant to a reorganization, recapitalization, merger, consolidation, sale of substantially all of the assets or stock of Employer, or otherwise.

17.5 Amendments; Waivers . Except as expressly provided in the following sentence, this Agreement cannot be changed, modified or amended, and no provision or requirement hereof may be waived, without the written consent of Executive and Employer. Employer may amend this Agreement to the extent that Employer reasonably determines that such change is necessary to comply with Section 409A and further guidance thereunder, provided that such change does not reduce the amounts payable to Executive hereunder. The failure of a party at any time to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce such provision. No waiver by a party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach or a waiver of the breach of any other term or covenant contained in this Agreement.

17.6 Beneficiaries . Whenever this Agreement provides for any payment to Executive’s estate, such payment may be made instead to such beneficiary as Executive may have designated in a writing filed with Employer. Executive shall have the right to revoke any such designation and to re‑designate a beneficiary by written notice to Employer (or to any applicable insurance company).

17.7 Change in Fiscal Year . If, at any time during the Term, Employer changes its fiscal year, Employer shall make such adjustments to the various dates and target amounts included herein as are necessary or appropriate, provided that no such change shall affect the date on which any amount is payable hereunder.

17.8 Executive’s Warranty and Indemnity . Executive hereby represents and warrants that Executive: (i) has the full and unqualified right to enter into and fully perform this Agreement according to each and every term and condition contained herein; (ii) has not made any agreement, contractual obligation or commitment in contravention of any of the terms and conditions of this Agreement

or which would prevent Executive from performing according to any of the terms and conditions contained herein; and (iii) has not entered into any agreement with any prior employer or other person, corporation or entity which would in any way adversely affect Executive’s or Employer’s right to enter into this Agreement. Furthermore, Executive hereby agrees to fully indemnify and hold harmless Employer and each of its subsidiaries, affiliates and related entities, and each of their respective officers, directors, employees, agents, attorneys, shareholders, insurers and representatives from and against any and all losses, costs, damages, expenses (including attorneys’ fees and expenses), liabilities and claims, arising from, in connection with, or in any way related to, Executive’s breach of any of the representations or warranties contained in this Section 17.8 .

17.9 Indemnification . Executive shall be entitled to the benefit of the indemnification provisions set forth in Employer’s Amended and Restated Articles of Incorporation and/or By‑Laws, or any applicable corporate resolution, as the same may be amended from time to time during the Term (not including any limiting amendments or additions, but including any amendments or additions that add to or broaden the protection afforded to Executive at the time of execution of this Agreement) to the fullest extent permitted by applicable law and the Director and Officer Indemnification Agreement executed by Executive and ECC dated December 15, 2011. Additionally, Employer shall cause Executive to be indemnified in accordance with Chapter 37 of the Indiana Business Corporation Law (the “IBCL”), as the same may be amended from time to time during the Term, to the fullest extent permitted by the IBCL as required to make Executive whole in connection with any indemnifiable loss, cost or expense incurred in Executive’s performance of Executive’s duties and obligations pursuant to this Agreement. Employer shall also maintain during the Term, and for a commercially reasonable period after the Term, an insurance policy providing directors’ and officers’ liability coverage in a commercially reasonable amount. It is understood that the foregoing indemnification obligations shall survive the expiration or termination of the Term.

17.10 Change in Control . In the event of a “Change in Control,” the rights and obligations of Executive and Employer are set forth in the Change in Control Severance Agreement executed by the parties, effective as of March 8, 2012 (the “CIC Agreement”). “Change in Control” shall have the meaning ascribed to it in the CIC Agreement.

17.11 Survival . The provisions of this Agreement shall survive the termination or expiration of this Agreement to the extent necessary in order to effectuate the intent of the parties hereunder, including without limitation Sections 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 16 and 17 .

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.



EMMIS OPERATING COMPANY
("Employer")

By:	/s/ Jeffrey H. Smulyan
	Jeffrey H. Smulyan
	Chief Executive Officer

J. SCOTT ENRIGHT
("Executive")

	/s/ J. Scott Enright
	J. Scott Enright
	Executive Vice President, General Counsel and Secretary

Exhibit 21

INFORMATION REGARDING SUBSIDIARIES OF THE REGISTRANT



Name Under Which Subsidiary Does Business	Jurisdiction of Organization
Emmis Communications Corporation ^*	IN
Emmis Operating Company	IN
Emmis Radio, LLC ¹	IN
Emmis Publishing, L.P. ²	IN
Emmis Indiana Broadcasting, L.P. ³	IN
Emmis Radio Holding Corporation	IN
Emmis Radio Holding II Corporation	IN
Emmis New York Radio LLC	DE
Emmis New York Radio License LLC	DE
WBLS-WLIB, LLC	IN
WBLS-WLIB License, LLC	IN
WLIB Tower, LLC	IN
Emmis International Broadcasting Corporation	CA
Emmis Publishing Corporation	IN
Emmis Radio License, LLC ⁴	IN
Emmis License Corporation of New York ⁴	CA
Emmis Radio License Corporation of New York ⁴	CA
NextRadio, LLC	IN
Tagstation, LLC	IN
NextRadio Sales, LLC	IN
Mediatex Communications Corporation	IN
Los Angeles Magazine Holding Company, Inc.	IN
Radio Austin Management, L.L.C.	TX
Emmis Austin Radio Broadcasting Company, L.P.	TX
Orange Coast Kommunications, Inc.	DE
Digonex Technologies, Inc. (80.7%, fully diluted basis)	IN
WHHL, LLC	IN
BTC, LLC (12.5%)	DE

Footnotes
^* Emmis Communications Corporation directly or indirectly owns 100% of all entities except as otherwise noted.
¹ Emmis Radio, LLC operates all our radio stations except for the stations held by Emmis Indiana Broadcasting, L.P., Emmis Austin Radio Broadcasting Company, L.P.
² Emmis Publishing, L.P. publishes Indianapolis Monthly.
³ Emmis Indiana Broadcasting, L.P. operates all our Indiana radio stations (WFNI-AM, WLHK-FM, WIBC-FM, WYXB-FM, WTHI-FM, WWVR-FM, WFNB-FM & WFNF-AM), and Network Indiana.
⁴ Emmis Radio License, LLC holds all our radio FCC licenses except for the FCC licenses in New York and Texas, which are held by other subsidiaries.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:


(1)	Registration Statement (Form S-8 No. 333-71904) pertaining to the Emmis Communications Corporation 2001 Equity Incentive Plan;


(2)	Registration Statement (Form S-8 No. 333-92318) pertaining to the Emmis Communications Corporation 2002 Equity Compensation Plan;


(3)	Registration Statement (Form S-8 No. 333-117033) pertaining to the Emmis Communications Corporation 2004 Equity Compensation Plan;


(4)	Registration Statement (Form S-8 No. 333-171463) pertaining to the Emmis Communications Corporation 2010 Equity Compensation Plan;


(5)	Registration Statement (Form S-8 No. 333-184933) pertaining to the Emmis Communications Corporation 2012 Equity Compensation Plan;


(6)	Registration Statement (Form S-8 No. 333-193245) pertaining to the Emmis Communications Corporation 2012 Retention Plan and Trust;


(7)	Registration Statement (Form S-8 No. 333-205579) pertaining to the Emmis Communications Corporation 2015 Equity Compensation Plan; and


(8)	Registration Statement (Form S-8 No. 333-212419) pertaining to the Emmis Communications Corporation 2016 Equity Compensation Plan

of our report dated May 11, 2017, with respect to the consolidated financial statements of Emmis Communications Corporation and Subsidiaries included in this Annual Report (Form 10-K) for the year ended February 28, 2017.

/s/ Ernst & Young LLP

Indianapolis, Indiana

May 11, 2017

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Patrick M. Walsh and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 28, 2017, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.



Dated: April 28, 2017	/s/ Susan B. Bayh
	Susan B. Bayh

Exhibit 24

POWER OF ATTORNEY



Dated: May 2, 2017	/s/ Lawrence B. Sorrel
	Lawrence B. Sorrel

Exhibit 24

POWER OF ATTORNEY



Dated: April 28, 2017	/s/ Richard A. Leventhal
	Richard A. Leventhal

Exhibit 24

POWER OF ATTORNEY



Dated: April 19, 2017	/s/ Peter A. Lund
	Peter A. Lund

Exhibit 24

POWER OF ATTORNEY



Dated: April 24, 2017	/s/ Greg A. Nathanson
	Greg A. Nathanson

Exhibit 24

POWER OF ATTORNEY



Dated: April 21, 2017	/s/ Gary L. Kaseff
	Gary L. Kaseff

Exhibit 24

POWER OF ATTORNEY



Dated: May 2, 2017	/s/ James M. Dubin
	James M. Dubin

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:


1.	I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer 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: May 11, 2017



	/s/ Jeffrey H. Smulyan
	Jeffrey H. Smulyan Chairman of the Board and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Ryan A. Hornaday, certify that:


1.	I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer 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: May 11, 2017



	/s/ Ryan A. Hornaday
	Ryan A. Hornaday
	Executive Vice President, Chief Financial Officer and Treasurer

Exhibit 32.1

SECTION 1350 CERTIFICATION

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:


(1)	the Annual Report of the Company on Form 10-K for the period ended February 28, 2017 , fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2017



	/s/ Jeffrey H. Smulyan
	Jeffrey H. Smulyan
	Chairman of the Board and Chief Executive Officer

Exhibit 32.2

SECTION 1350 CERTIFICATION


(1)	the Annual Report of the Company on Form 10-K for the period ended February 28, 2017 , fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2017



	/s/ Ryan A. Hornaday
	Ryan A. Hornaday
	Executive Vice President, Chief Financial Officer and Treasurer