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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the Fiscal Year Ended February 29, 1996

[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the Transition Period from _____ to _____.

Commission file number 0-23264

EMMIS BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)

Indiana 35-1542018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

950 North Meridian Street, Suite 1200
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)

317/266-0100
Registrant's Telephone Number

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
Title of Class

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

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 [X]
No [ ].

The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of May 1, 1996, was approximately $331,984,490.

The number of shares outstanding of each of the registrant's classes
of common stock, as of May 1, 1996, was:

8,305,878 Class A Common Shares, $.01 par value
2,603,685 Class B Common Shares, $.01 par value

Documents Incorporated by Reference: See Page 2
2
DOCUMENTS INCORPORATED BY REFERENCE

Documents Form 10-K Reference
--------- -------------------


Proxy Statement Dated May 24, 1996 Part III
- ---------------------------------------------------------------------------





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EMMIS BROADCASTING CORPORATION

FORM 10-K

TABLE OF CONTENTS



Page

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . .

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters . . . . . . . . . . . . . . .
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . .

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .






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PART I

ITEM 1. BUSINESS.

GENERAL

The Company owns and operates seven FM radio stations and one AM radio
station serving the nation's three largest radio markets, Los Angeles, New York
and Chicago, and the major markets of St. Louis and Indianapolis. The Company
has successfully created top-performing radio stations that are ranked among
the top five stations in terms of total audience share in three of the
Company's markets and among the top ten stations in terms of total audience
share in the other two markets according to the Winter 1996 Ratings (the
"Winter 1996 Arbitron Survey") published by The Arbitron Company ("Arbitron").
The Company has also received awards from organizations such as the National
Association of Broadcasters and Billboard and Rolling Stone magazines. The
Company has achieved this success primarily as a result of its ability to
attract and retain an experienced team of broadcast professionals who have
focused on creating innovative programming and developing effective marketing
and sales programs.

The five markets served by the Company's stations accounted for
approximately $1.4 billion in radio advertising revenues in calendar year 1995.
The Company's stations in these markets have consistently produced positive
Broadcast Cash Flow in each of the past five years. The Broadcast Cash Flow of
these eight stations was $45.9 million for the fiscal year ended February 29,
1996. The Company believes that its presence in large markets makes it
attractive to advertisers and that the geographic diversity of its markets
reduces its dependence on any economic sector or specific advertiser.

The Company began business in 1981 with one radio station in
Indianapolis. Historically, the Company's operating strategy has been to
acquire underperforming radio stations and improve their ratings, revenues and
Broadcast Cash Flow by utilizing the Company's programming and marketing
skills. The Company also publishes Indianapolis Monthly magazine, Atlanta
magazine and various leading statistical publications for the radio industry,
including Duncan's American Radio, and engages in certain businesses ancillary
to its radio business, such as advertising and program consulting and broadcast
tower leasing.

COMPANY STRATEGY

The Company has developed and implements several operating strategies
to enhance its audience and advertising revenue shares.

Innovative Programming. The Company's primary strategy has been and
will continue to be to use innovative programming to create valuable new radio
station niches. For example, the Company introduced the Dance/Contemporary Hit
format at KPWR-FM in Los Angeles which attracted the young Hispanic, white and
African-American audiences of Southern California. When the Company purchased
WRKS-FM in New York City, it developed a new "Classic Soul/Smooth R&B" format
which specifically targeted the adult African American audience. The Company
also developed the first all-sports radio station at WFAN-AM in New York. At
WKQX-FM in Chicago, the Company created a new niche by identifying and
exploiting a variation of Alternative Rock (or "New Rock") which had broader
audience appeal than existing Alternative Rock formats. Once a programming
niche has been developed, the Company's general strategy for maintaining
ratings and increasing revenue is to build franchise value through creative
music programming, rather than relying on particular high-profile on-air
talent. The Company also routinely conducts market research to assist in
refining and improving the programming of each of its stations.

Distinctive Corporate Culture. The Company believes its distinctive
corporate culture has contributed significantly to its ability to create and
successfully operate innovative radio stations. Each of the Company's stations
is managed by a team of experienced broadcasters who understand the musical
tastes, demographics and competitive opportunities of their particular market.
The Company has decentralized station operations to local management who are
rewarded based on the performance of the individual station. Corporate
management oversees and controls station spending, directs long-range planning,
establishes Company policies and allocates resources. The Company believes
that its entrepreneurial management approach has made it a highly desirable
employer in the radio broadcasting industry





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and has significantly enhanced the Company's ability to attract and retain
experienced and highly motivated employees, management and on-air talent.

Focused Marketing Strategy. In recent years, radio advertising
revenues have generally grown at a more rapid rate than total advertising
revenues. The Company expects that this trend will continue to create
potential for growth in advertising revenues for the radio broadcasting
industry. In order to increase its share of these revenues, the Company's
programming in each market is designed to appeal to a specific demographic
group which the Company believes can result in increased revenues by attracting
advertisers interested in reaching the targeted group. Within each radio
market, the Company targets key demographic groups based on advertiser demand
and the competitive formats in the market. Local and national sales efforts
are designed to maximize the Company's share of advertising budgets allocated
to its targeted demographic groups.

The Company's strategy is to be a leader in creating marketing and
sales development programs in each of its markets to attract new sources of
advertising revenue. The Company has won numerous awards for its marketing
efforts, particularly at KSHE-FM in St. Louis. The Company has led the
industry in developing "vendor co-op" advertising revenue (i.e., revenue from a
manufacturer or distributor which is used to promote its particular goods
together with local retail outlets for those goods). Although this source of
advertising revenue is common in the newspaper and magazine industry, the
Company was among the first radio broadcasters to recognize the potential of
vendor co-op advertising and implement a program to take advantage of this
potential. The Company has also formed a national association of radio
stations focusing on the age 12 to 24 demographic group to develop additional
advertising revenue.

Expansion Strategy. The Company believes it can enhance its ability
to dominate a programming format by acquiring two or more stations in a
particular market, because the Company can then program each station to deliver
a larger share of a targeted demographic group to advertisers, while being less
vulnerable to programming format competition. Accordingly, the Company has
acquired additional stations in New York City and in Indianapolis, and it
intends to pursue additional attractive acquisition opportunities in markets
where it has existing stations and can achieve the potential for significant
increases in Broadcast Cash Flow through programming enhancements and, to a
lesser extent, through costs savings. The Company will also consider
acquisitions of individual stations or groups of stations in other attractive
markets where it expects that it can ultimately achieve a dominant position
with one or more stations. The Company has entered into noncompetition
agreements, however, in connection with the sales of various radio stations
which restrict the Company from operating a station in New York City with a
format principally consisting of sports-related programming or carrying certain
sports programming until April 1997 and from entering the Boston market until
May 1998.

In analyzing potential acquisitions in new markets, the Company
generally considers (i) the amount of money spent on radio advertising each
year in the relevant market and the growth rate for this pool of revenue, (ii)
the number of competitive stations in the market, including whether there is a
niche in the local spectrum of programming formats or whether one of the
competitors has a perceived vulnerability, (iii) whether the station proposed
to be acquired has a competitive signal, (iv) whether value can be achieved
through ownership of multiple stations, and (v) the minimum level of
performance which can be expected from the station under the Company's
management.

BROADCAST PROPERTIES

In 1990, management of the Company decided to focus on a limited
number of radio markets judged to have the greatest long-term growth potential.
The Company's ongoing broadcasting operations are summarized in the following
table:





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OVERALL
STATION RANKING IN
STATION MARKET MARKET STATION RANKING PRIMARY PRIMARY
AND REVENUE RANK BY AUDIENCE IN DEMOGRAPHIC DEMOGRAPHIC
MARKET SIZE(1) REVENUE(1) SHARE(2) MARKET(2) TARGET FORMAT TARGET(3)
- ------ ------- ---------- -------- --------- ------ ------ ---------

KPWR-FM $476.2 1 5.0 2 Ages Dance/ 1
Los Angeles 12-24 Contemporary
Hit

WQHT-FM 428.0 2 5.4 1 Ages Dance/ 1
New York 12-24 Contemporary
Hit

WRKS-FM 428.0 2 5.1 2 Ages Classic Soul/ 1
New York 25-54 Smooth R & B

WKQX-FM 319.0 3 3.2 11 Ages New Rock 4
Chicago 18-34

KSHE-FM 90.0 18 5.6 5 Ages Album 2
St. Louis 18-34 Oriented
Rock

WENS-FM 62.0 27 5.8 5 Ages Adult 4
Indianapolis 25-54 Contemporary

WIBC-AM 62.0 27 9.7 3 Ages News/Talk 3
Indianapolis 25-54

WNAP-FM 62.0 27 4.9 8 Ages 70s Oldies 6
Indianapolis 25-54



(1) "Market Revenue Size" is based on aggregate gross radio revenue for
calendar year 1995. "Market Rank by Revenue" is the ranking of the Market
Revenue Size of the principal radio market served by the station among all
radio markets in the United States. Market revenue and ranking figures are
from Duncan's Radio Market Guide (1996 ed.). Market revenues are in
millions.

(2) "Station Audience Share" is from the Winter 1996 Arbitron Survey. The
generally accepted method of measuring the relative size of a radio
station's audience is by reference to total persons, age 12 and older,
Monday--Sunday, 6 a.m.--Midnight Average Quarter Hour shares as published
by Arbitron. Arbitron periodically samples radio listeners in defined
market areas, principally through the use of diaries returned by selected
listeners. A station's AQH share is a percentage computed by dividing the
average number of persons listening to a particular station for at least
five minutes during an average quarter hour in a given time period by the
average number of such persons for all stations in the market area.
Arbitron compiles ratings data for various demographic groups as well as
for total persons age 12 and older. "Overall Station Ranking in Market" is
the ranking of the station among all radio stations in its market based on
the station's AQH share according to the Winter 1996 Arbitron Survey.

(3) "Ranking in Primary Demographic Target" is the ranking of the station among
all radio stations in its market and is based on the station's AQH share in
the primary demographic target according to the Winter 1996 Arbitron
Survey.

ADVERTISING SALES

Virtually all of the revenue of a radio station is derived from local,
regional and national advertising. Advertising rates charged by a radio
station are a function of the station's ability to attract audiences in the
demographic groups which advertisers wish to reach, and the number of stations
competing in the market area. A station's listenership is reflected in rating
service surveys of the number of listeners tuned to the station and the time
spent listening. The





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Company believes that its presence in the nation's three largest radio markets
and its strong position in its targeted demographic groups in those markets
make it attractive to national, regional and local advertisers.

The number of advertisements that can be broadcast without
jeopardizing listening levels (and the resulting ratings) is limited, in part,
by the format of a particular station and the local competitive environment.
The Company strives to maximize revenue by constantly managing the number of
commercials available and adjusting prices based upon demand by advertisers to
reach the station's target demographic group.

The Company has led the industry in developing "vendor co-op"
advertising revenue (i.e., revenue from a manufacturer or distributor which is
used to promote its particular goods together with local retail outlets for
those goods). Although this source of advertising revenue is common in the
newspaper and magazine industry, the Company was among the first radio
broadcasters to recognize, and take advantage of, the potential of vendor co-op
advertising. The Company's Revenue Development Systems division has
established a network of radio stations which share information about sources
of vendor co-op revenue. In addition, each of the Company stations has a
salesperson devoted exclusively to the development of cooperative advertising.

In addition to the sale of advertising time for cash, radio stations
typically exchange advertising time for goods or services which can be used by
the station in its business operations, including television and billboard
advertising and such items as travel and entertainment services. The Company
generally confines the use of such "trade" transactions to promotional items or
services for which the Company would otherwise have paid cash. In addition, it
is the Company's general policy not to pre-empt advertising spots paid for in
cash with advertising spots paid for in trade.

Local and most regional sales are made by a station's sales staff.
National sales are made by firms specializing in such sales which are
compensated on a commission-only basis. The majority of national and local
advertising contracts are short-term, generally running for only a few weeks.

COMMUNITY INVOLVEMENT

The Company believes that to be successful in radio broadcasting, its
stations must be integrally involved in the communities they serve. To that
end, each of the Company's stations participates in many community programs,
fundraisers and activities that benefit a wide variety of organizations.
Charitable organizations that have been the beneficiaries of the Company's
marathons, walkathons, dance-a-thons, concerts, fairs and festivals include,
among others, The March of Dimes, American Cancer Society, Riley Children's
Hospital and research foundations seeking cures for cystic fibrosis, leukemia
and AIDS and helping to fight drug abuse.

In addition to its planned activities, the Company's stations take
leadership roles in community responses to natural disasters.

INDUSTRY INVOLVEMENT

The Company has taken an active leadership role in a wide range of
radio industry organizations. The Company's senior managers have served in
various capacities with radio industry associations, including as directors of
the National Association of Broadcasters, the Radio Advertising Bureau, the
Radio Futures Committee and the Arbitron Advisory Council and as founding
members of the Radio Operators Caucus. In addition, managers of the Company
have been voted Radio President of the Year and General Manager of the Year,
and at various times the Company was voted Most Respected Broadcaster in a poll
of radio industry chief executive officers and managers.

COMPETITION

The Company's radio broadcasting stations compete with the other
broadcasting stations in their respective market areas, as well as with other
advertising media such as newspapers, television, magazines, outdoor
advertising, transit advertising and direct mail marketing. Competition within
the radio broadcasting industry occurs primarily in individual market areas, so
that a station in one market does not generally compete with stations in other
market areas.





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In each of its markets, the Company's stations face competition from other
stations with substantial financial resources, including stations targeting the
same demographic groups. In addition to management experience, factors which
are material to competitive position include the station's rank in its market,
authorized power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other stations in the market
area. The Company attempts to improve its competitive position with
promotional campaigns aimed at the demographic groups targeted by its stations,
and 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. Recent changes in the policies and
rules of the Federal Communications Commission (the "FCC") permit increased
joint ownership and joint operation of local radio stations. Those stations
taking advantage of these joint arrangements may in certain circumstances have
lower operating costs and may be able to offer advertisers more attractive
rates and services. Although the Company believes that each of its stations
can compete effectively in its market, there can be no assurance that any of
the Company's stations will be able to maintain or increase its current
audience ratings or advertising revenue market share.

Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcasting station
requires a license from the FCC, and the number of radio stations that can
operate in a given market is limited by the availability of the FM and AM radio
frequencies that the FCC will license in that market.

The radio broadcasting industry historically has grown in terms of
total revenues despite the introduction of new technologies for the delivery of
entertainment and information, such as television broadcasting, cable
television, audio tapes and compact discs. The Company believes that radio's
portability makes it less vulnerable than other media to competition from new
methods of distribution or other technological advances. There can be no
assurance, however, that the development or introduction in the future of any
new media technology will not have an adverse effect on the radio broadcasting
industry.

PUBLISHING OPERATIONS

The Company publishes two regional magazines and various radio
industry statistical market guides. One of the magazines and the industry
publications were acquired in 1988, and the other magazine was acquired in
1993.

Duncan's American Radio. In 1988 the Company purchased the assets of
Duncan's American Radio, Inc., which publishes American Radio and Duncan's
Radio Market Guide. These publications, which consist of compilations of
ratings and market data, are a primary source of radio industry data and are
sold principally to broadcasters and financial institutions throughout the
country.

Indianapolis Monthly. The Company has also published Indianapolis
Monthly magazine since 1988. Indianapolis Monthly covers matters of interest in
the Indianapolis area and currently has a paid monthly circulation of
approximately 45,000. Over the last few years the performance of the magazine
has steadily improved despite a nationwide downturn in the city and regional
magazine business largely attributable to unfavorable economic conditions.
Competition for Indianapolis Monthly comes from other local publications,
although Indianapolis Monthly is now the only general interest magazine
focusing on the Indianapolis area.

Atlanta. The Company acquired the assets of and began publishing
Atlanta magazine on August 1, 1993. Atlanta covers matters of interest in the
Atlanta area and currently has a paid monthly circulation of approximately
60,000. The magazine was unprofitable for several years before it was acquired
by the Company for a nominal investment. Certain initiatives, including
decreasing the number of employees at the magazine and changing the sales focus
of the magazine from national advertising to local advertising, have
contributed to improving profitability. The Company also anticipates that the
1996 Olympics in Atlanta will augment the magazine's revenues.

EMPLOYEES

As of February 29, 1996 the Company had approximately 402 full-time
employees and approximately 112 part-time employees. The Company's on-air
employees at its New York and Chicago radio stations, totaling





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approximately 48 persons, are covered by a union contract with the American
Federation of Television and Radio Artists. The Company considers relations
with its employees to be excellent.

FEDERAL REGULATION

Radio broadcasting is subject to the jurisdiction of the FCC under The
Communications Act of 1934, as amended (the "Communications 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 radio licenses in such
manner as will provide a fair, efficient and equitable distribution of service
throughout the United States. The FCC determines the location of stations,
regulates the apparatus 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 a corporation holding a license without the prior approval of the
FCC. The Telecommunications Act of 1996 (the "Telecom Act") amended the
Communications Act in a number of important respects. Other legislation has
been introduced from time to time which would amend the Communications Act in
various respects and the FCC from time to time considers new regulations or
amendments to its existing regulations. The Company cannot predict whether any
such legislation will be enacted or new or amended FCC regulations adopted or
what their effect would be on the Company.

License Renewal. Radio station licenses are currently issued for
maximum terms of seven years and are renewable for maximum terms of seven
years. The Telecom Act authorizes maximum license terms of eight years, and
the FCC has initiated a proceeding looking toward implementing that change.
The Company's licenses currently have the following expiration dates, until
renewed:



WENS-FM (Indianapolis) . . . . . . . . . . . . . . . . . . . . . . . . . . August 1, 1996*
WKQX-FM (Chicago) . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 1, 1996
KSHE-FM (St. Louis) . . . . . . . . . . . . . . . . . . . . . . . . . . . February 1, 1997
KPWR-FM (Los Angeles) . . . . . . . . . . . . . . . . . . . . . . . . . . December 1, 1997
WQHT-FM (New York) . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 1, 1998
WIBC-AM (Indianapolis) . . . . . . . . . . . . . . . . . . . . . . . . . . August 1, 1996*
WNAP-FM (Indianapolis) . . . . . . . . . . . . . . . . . . . . . . . . . . August 1, 1996*
WRKS-FM (New York) . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 1, 1998


*License renewal applications pending at the FCC

Under the Telecom Act, at the time an application is filed for renewal
for a radio 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 grant of denial of the application. A
competing application for authority to operate a station and replace the
incumbent licensee may not be filed against a renewal application and
considered by the FCC in deciding whether to grant a renewal application. The
statute modified the license renewal process to provide for the grant of a
renewal application upon a finding by the FCC that the licensee (i) has served
the public interest, convenience and necessity; (ii) has committed no serious
violations of the Communications Act or the FCC's rules; and (iii) has
committed no other violations of the Communications Act or the FCC's rules
which would constitute a pattern of abuse. If the FCC cannot make such a
finding, it may deny a renewal application, and only then may the FCC accept
other applications to operate the station of the former licensee. In a vast
majority of cases, broadcast licenses are renewed by the FCC even when
petitions to deny applications are filed against broadcast license renewal
applications.

Ownership Matters. Under the Telecom Act, the number of radio
stations that may be owned by one entity in a given radio market is dependent
on the number of commercial stations in that market: if the market has 45 or
more stations, one entity may own not more than eight stations, of which not
more than five may be in one service (AM or FM); if the market has between 33
and 44 stations, one entity may own not more than seven stations, of which not
more than four may be in one service; if the market has between 15 and 29
stations, a single entity may own not more than






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six stations, of which not more than four may be in one service; and if
the market has fourteen or fewer stations, one entity may own not more than
five stations, of which not more than three may be in one service, except that
in such a market one entity may not own more than fifty percent of the stations
in the market. Each of the five markets in which the Company's radio stations
are located has at least 15 commercial radio stations. The Telecom Act
eliminated restrictions on the number of radio stations that may be owned by
one entity nationwide. One entity may not own a radio station together with a
television station or daily newspaper in the same market, although common
ownership of a radio station and a television station in the same market is
permitted upon a finding by the FCC that such ownership is in the public
interest. The FCC has established a liberal waiver policy to permit common
ownership of a radio station and a television station in any of the nation's 25
largest markets; the Telecom Act directs the FCC to extend that policy to the
50 largest markets.

In the case of all of these ownership rules, the FCC requires the
attribution of broadcast licenses between a broadcasting company and certain of
its stockholders, officers or directors so that there would be a violation of
FCC regulations where such a stockholder, officer or director and the
broadcasting company together held more than the permitted number of stations
or a prohibited combination of media outlets in the same market. Under FCC
rules, with certain exceptions, attribution of broadcast licenses occurs where
any five percent voting stockholder or officer or director of a broadcasting
company directly or indirectly owns, operates, controls or has a five percent
voting interest in or is an officer or director of any other broadcasting
company. Attribution also occurs in the case of general partnership interests
and in the case of limited partnership interests where a limited partner is
"materially involved" in the media-related activities of the partnership.
Passive investments of less than ten percent of the voting interest in a
broadcasting company held by certain categories of financial institutions are
generally not cognizable for purposes of the foregoing rules of attribution.
In cases involving competing media in the same market, however, FCC policy in
certain instances prohibits common ownership interests under its
"cross-interest" policy even where they are non-voting interests or fall below
the five percent and ten percent "benchmarks" discussed above, although the FCC
has initiated proceedings to inquire whether this policy should be liberalized
or eliminated. The Company's Amended and Restated Articles of Incorporation
and By-Laws authorize the Board of Directors to prohibit any ownership, voting
or transfer of its capital stock which would cause the Company to violate the
Communications Act or FCC regulations.

For purposes of the local radio ownership rules described above, a
station is considered to have an attributable interest in another station in
the same market if the first station provides the programming for more than 15%
of the broadcast time, on a weekly basis, of the second station. As a result,
such programming arrangements may not be entered into by station combinations
that could not be commonly owned under FCC rules.

In cases where one person or entity (such as Jeffrey H. Smulyan in the
case of the Company) holds more than 50% of the combined voting power of the
common stock of a broadcasting company, a minority shareholder of the company
generally would not acquire an "attributable" interest in the company.
However, any attributable interest by any such shareholder in another broadcast
station or daily newspaper in a market where such company owns, or seeks to
acquire, a station would still be subject to review by the FCC under its
"cross-interest" policy, and could result in the company's being unable to
obtain from the FCC one or more authorizations needed to conduct its radio
station business or being unable to obtain FCC consents for future
acquisitions. Further, in the event that a majority shareholder of a company
(such as Mr. Smulyan in the case of the Company) were no longer to hold more
than 50% of the combined voting power of the common stock of the company, the
interests of minority shareholders which had theretofore been considered
nonattributable could become attributable, with the result that any other media
interests held by such shareholders would be combined with the media interests
of such company for purposes of determining compliance with FCC ownership
rules. In the case of the Company, Mr. Smulyan's level of voting control could
decrease to or below 50% as a result of transfers of Common Stock pursuant to
agreement or conversion of the Class B Common Stock into Class A Common Stock.
In the event of any noncompliance, steps required to achieve compliance could
include divestitures by either the shareholder or the affected company.
Further, other media interests of shareholders having or acquiring an
attributable interest in such a company could result in the company being
unable to obtain from the FCC one or more authorizations needed to conduct its
radio station business or being unable to obtain FCC consents for future
acquisitions. Conversely, a company's media interests could operate to
restrict other media investments by shareholders having or acquiring an
interest in the company.






-10-
11
Under the Communications Act, no FCC license may be held by a
corporation of which more than one-fifth of its capital stock is owned of
record or voted by aliens or their representatives or by a foreign government
or representative thereof, or by any corporation organized under the laws of a
foreign country (collectively, "Aliens"). Furthermore, the Communications Act
provides that no FCC license may be granted to any corporation directly or
indirectly controlled by any other corporation of which more than one-fourth of
its capital stock is owned of record or voted by Aliens if the FCC finds the
public interest will be served by the refusal of such license. The FCC staff
has interpreted this provision to require an affirmative public interest
finding to permit the grant or holding of a license, and such a finding has
been made only in limited circumstances. The foregoing restrictions on alien
ownership apply in modified form to other forms of business organization,
including partnerships. The Company's Amended and Restated Articles of
Incorporation and Code of By-Laws authorize the Board of Directors to prohibit
such ownership, voting or transfer of its capital stock as would cause the
Company to violate the Communications Act or FCC regulations.

Programming and Operation. The Communications Act requires
broadcasters to serve the "public interest." Since the late 1970s, the FCC
gradually has relaxed or eliminated many of the more formalized procedures it
developed to promote the broadcast of certain types of programming responsive
to the needs of a station's community of license. However, licensees continue
to be required to present programming that is responsive to community problems,
needs and interests and to maintain certain records demonstrating such
responsiveness. Broadcast of obscene or indecent material is regulated by the
FCC as well as by state and federal law. Complaints from listeners concerning
a station's programming often will be considered by the FCC when it evaluates
renewal applications of a licensee, although such complaints may be filed at
any time. Stations also must follow various rules promulgated under the
Communications Act that regulate, among other things, political advertising,
sponsorship identifications, the advertisement of contests and lotteries, and
technical operations, including limits on radio frequency radiation. In
addition, licensees must develop and implement affirmative action programs
designed to promote equal employment opportunities, and must submit reports to
the FCC with respect to these matters on an annual basis and in connection with
a renewal application.

Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full seven-year) renewal terms or, for particularly
egregious violations, the denial of a license renewal application or the
revocation of a license.

Recent Developments and Proposed Changes. The Telecom Act authorizes
local telephone companies to offer video and audio programming to their
customers over their phone lines under certain circumstances.

The FCC has initiated a proceeding looking toward a broad review of
its ownership attribution rules and its cross-interest policy. Possible
changes include (i) raising the benchmarks for attributing ownership to both
active and passive investors in a corporate licensee, (ii) restricting the
availability of the attribution exemption for minority shareholders in
corporations having a "single majority shareholder," (iii) limiting the
attribution exemption for holders of nonvoting stock who possess other rights
giving them potential influence over a licensee, and (iv) extension of the
cross-interest policy to situations where a creditor or other holder of a
nonattributable interest holds, through contractual or other relationships, the
ability to influence the operations of a licensee.

The Congress and the FCC have under consideration, and may in the
future consider and adopt, new laws, regulations and policies regarding a wide
variety of matters that could, directly or indirectly, affect the operation,
ownership and profitability of the Company's radio broadcast stations, result
in the loss of audience share and advertising revenues for the Company's radio
broadcast stations and affect the ability of the Company to acquire additional
radio broadcast stations or finance such acquisitions. Such matters include:
proposals to impose spectrum use or other fees on FCC licensees; the FCC's
equal employment opportunity rules and other matters relating to minority and
female involvement in the broadcasting industry; proposals to change rules
relating to political broadcasting, including the reinstatement of the
so-called "fairness doctrine"; technical and frequency allocation matters; AM
stereo broadcasting; proposals to permit expanded use of FM translator
stations; proposals to restrict or prohibit the advertising of beer, wine and
other alcoholic beverages on radio; changes in the FCC's cross-interest,
multiple ownership and cross-ownership policies; proposals to reimpose holding
periods for licenses; changes to broadcast technical requirements; proposals to
tighten safety guidelines relating to radio frequency radiation exposure;
proposals to limit the tax deductibility of advertising expenses by
advertisers; and proposals to auction the right to use the radio broadcast
spectrum to the highest bidder, instead of granting FCC licenses and subsequent
license renewals without such bidding.





-11-
12
The FCC is currently considering whether to authorize the use of a new
technology, digital audio broadcasting ("DAB"), to deliver audio programming.
DAB may provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats with compact disc quality sound to local
and national audiences. The FCC has allocated spectrum space for satellite
delivered DAB, but has not yet adopted rules that would govern such a service.
It is not known at this time whether this technology also may be used in the
future by existing radio broadcast stations either on existing or alternate
broadcasting frequencies.

The Company cannot predict whether any proposed changes will be
adopted nor can it predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.

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

ITEM 2. PROPERTIES.

The following table sets forth information with respect to the
Company's offices and studios and its broadcast tower locations. Management
believes that the Company's properties are in good condition and are suitable
for the Company's operations.



EXPIRATION
YEAR PLACED OWNED OR DATE
PROPERTY IN SERVICE LEASED OF LEASE
- -------- ---------- ------ ---------

WENS-FM/WNAP-FM/Corporate Headquarters/ 1990 Leased February 2000(1)
Indianapolis Monthly/Duncan's American Radio
950 North Meridian Street
Indianapolis, Indiana
WENS-FM Tower 1985 Owned --
WNAP-FM Tower 1981 Owned --

KSHE-FM 1986 Leased August 1996
700 St. Louis Union Station
St. Louis, Missouri
KSHE-FM Tower 1984 Leased May 2000(1)

KPWR-FM 1988 Leased February 1998(2)
2600 West Olive
Burbank, California
KPWR-FM Tower 1993 Leased March 2003(3)

WQHT-FM 1988 Leased November 1999(2)(5)
1372 Broadway
New York, New York
WQHT-FM Tower 1988 Leased April 1996(4)

WKQX-FM 1988 Leased July 1999
Merchandise Mart Plaza
Chicago, Illinois
WKQX-FM Tower 1988 Leased September 1999(2)






-12-
13



Atlanta Magazine Office 1993 Leased July 1997
1360 Peachtree Street
Atlanta, Georgia

WIBC-AM 1983 Leased November 1998(1)
9292 North Meridian Street
Indianapolis, Indiana
WIBC-AM Tower 1966 Owned --

WRKS-FM 1989 Leased April 1996(5)
1440 Broadway
New York, New York
WRKS-FM Tower 1984 Leased November 2005
- --------------

(1) The lease provides for two renewal options of five years each following the
expiration date.

(2) The lease provides for one renewal option of five years following the
expiration date.

(3) The lease provides for one renewal option of ten years following the
expiration date. The Company also owns a tower site which it placed in
service in 1984 and currently uses as a back-up facility and on which it
leases space to other broadcasters.

(4) The lease has expired but the landlord has indicated that the lease will be
renewed.

(5) A new lease at a different location has been signed and will include
both WQHT-FM and WRKS-FM. This lease is scheduled for occupancy
in August 1996 and expires in June 2012.

ITEM 3. LEGAL PROCEEDINGS.

The Company currently and from time to time is involved in litigation
incidental to the conduct of its business, but the Company is not a party to
any lawsuit or proceeding which, in the opinion of management, is likely to
have a material adverse effect on the Company.

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

No matters were submitted to shareholders during the Company's fourth
quarter.


PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

The Company's Class A Common Stock is traded in the over-the-counter
market and is quoted on the National Association of Securities Dealers Automated
Quotation (NASDAQ) National Market System under the symbol EMMS.




Share price information for prior years follows:

Quarter Ended High Low

May 1994 15.75 11.00

August 1994 15.25 12.50

November 1994 16.75 14.25

February 1995 17.75 13.50

May 1995 22.25 16.375

August 1995 31.75 21.25

November 1995 35.00 25.25

February 1996 40.25 26.75


At 5/1/96, there were approximately 194 record holders of the Class A Common
Stock, and there was one holder of the Company's Class B Common Stock.

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

ITEM 6. SELECTED FINANCIAL DATA.




(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED FEBRUARY 28 (29),
- ------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996


OPERATING DATA:
Net broadcasting revenues $ 76,256 $ 49,724 $ 50,311 $ 66,815 $ 99,830
Broadcasting operating
expenses 56,024 34,431 29,368 38,794 53,948
Publication and other
revenue, net of operating
expenses 854 954 657 593 896
International business
development expenses -- -- -- 313 1,264
Corporate expenses 4,409 2,867 2,766 3,700 4,419
Depreciation and
amortization 6,086 3,561 2,812 3,827 5,677
Noncash compensation (350) 1,517 1,724 600 3,667
- ------------------------------------------------------------------------------------------
Operating income 10,941 8,302 14,298 20,174 31,751
Interest expense 28,705 19,334 13,588 7,849 13,540
Gain on disposition of
radio stations 8,007 40,007 -- -- --
Other income (expense), net 128 (1,761) (367) (170) (303)
- ------------------------------------------------------------------------------------------
Income (loss) before
income taxes and
extraordinary item (9,629) 27,214 343 12,155 17,908
Income (loss) before
extraordinary item (9,629) 25,114 (957) 7,627 10,308
Net income (loss) (9,629) 25,114 (4,365) 7,627 10,308
Net income (loss) available
to common shareholders (9,955) 24,388 (5,853) 7,627 10,308
Net income per common and
common equivalent share $ .92
Weighted average shares
outstanding 11,208,862
- ------------------------------------------------------------------------------------------
OTHER DATA:
Broadcast cash flow 20,232 15,293 20,943 28,021 45,882
Operating cash flow 16,677 13,380 18,836 24,601 41,095
Capital expenditures 500 549 659 1,081 1,396
Number of radio stations
owned at end of period 7 5 5 8 8

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) FEBRUARY 28 (29),
- ------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
- ------------------------------------------------------------------------------------------

BALANCE SHEET DATA:
Cash $ 4,354 $ 3,142 $ 1,607 $ 3,205 $ 1,218
Working capital 3,566 (39,723) 6,210 10,088 14,761
Net intangible assets 65,714 31,556 30,751 139,729 135,830
Total assets 101,870 67,588 57,849 183,441 176,566
Total debt 161,805 98,177 92,345 152,322 124,257
Redeemable preferred stock 4,789 5,515 11,250 -- --
Shareholders' equity (deficit) (80,208) (54,303) (54,229) (2,661) 13,884
- ------------------------------------------------------------------------------------------



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.


GENERAL

The performance of a radio group, such as Emmis, is customarily measured by the
ability of its stations to generate Broadcast Cash Flow. Although Broadcast
Cash Flow is not a measure of performance calculated in accordance with
generally accepted accounting principles, and should be viewed as a supplement
to and not as a substitute for the Company's results of operations presented on
the basis of generally accepted accounting principles, the Company believes
that Broadcast Cash Flow is useful because it is generally recognized by the
radio broadcasting industry as a measure of performance and is used by analysts
who report on the performance of broadcasting companies. The main components of
Broadcast Cash Flow are advertising revenues net of agency commissions and
operating expenses. The primary source of advertising revenues is the sale of
advertising time to local and national advertisers. The most significant
operating expenses are employee salaries and commissions, costs associated with
programming, advertising and promotion, and station general and administrative
costs.

The Company's revenues are affected primarily by the advertising rates its
radio stations charge. These rates are in large part based on the stations'
ability to attract audiences in demographic groups targeted by their
advertisers, as measured principally on a quarterly basis by Arbitron Radio
Market Reports. Because audience ratings in a station's local market are
critical to the station's financial success, the Company's strategy is to use
market research and advertising and promotion to attract and retain listeners
in each station's chosen demographic target group.

In addition to the sale of advertising time for cash, radio stations typically
exchange advertising time for goods or services which can be used by the
station in its business operations. The Company generally confines the use of
such trade transactions to promotional items or services for which the Company
would otherwise have paid cash. In addition, it is the Company's general policy
not to pre-empt advertising spots paid for in cash with advertising spots paid
for in trade.

RECENT EVENTS

On June 9, 1994, the Company completed its acquisition of substantially all of
the assets of radio stations WIBC-AM and WNAP-FM (formerly WKLR-FM) for
approximately $26.6 million. The acquisition was financed through additional
borrowings under the Company's existing Credit Facility.

On July 7, 1994, the Company invested approximately $2.5 million for a 24.5%
interest in TalkRadio UK Limited (TRUK). Subsequently, the Company invested an
additional $1.0 million to support the operations of TRUK. TRUK owns and
operates the first and only talk radio network covering the entire United
Kingdom. In conjunction with this investment, the Company organized Emmis
International Corporation as a wholly owned subsidiary for the purpose of
identifying, investigating and developing international broadcast investment or
other international business opportunities. Emmis reported losses from the
operations of TRUK since inception of approximately $3.5 million ($3.1 million
for the year ended February 29, 1996). On November 7, 1995, the Company sold
its 24.5% interest in TRUK for approximately $3.0 million and recorded a gain
on sale of approximately $2.7 million.

On December 1, 1994, the Company acquired all of the outstanding capital stock
and working capital of Summit Broadcasting Holding Company (including $4.5
million of net working capital) for approximately $72.5 million in cash.
Summit Broadcasting Holding Company owned all the outstanding capital stock of
Summit-New York Broadcasting Corporation which, in turn, owns and operates
WRKS-FM in New York City (WRKS-FM together with WIBC-AM and WNAP-FM, are
hereafter referred to as the Acquired Stations). The Company amended its Credit
Facility to add an $80 million revolver/term loan facility which was utilized
to finance this purchase.

RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 29, 1996 COMPARED TO YEAR ENDED FEBRUARY 28, 1995. Net
broadcasting revenues for the year ended February 29, 1996, were $99.8 million
compared to $66.8 million for the same period of the prior year, an increase of
$33.0 million or 49.4%. This increase is due to increases in net broadcasting
revenues at the Company's broadcasting properties as well as the Indianapolis
and New York acquisitions.

Total broadcasting operating expenses for the year ended February 29, 1996,
were $53.9 million compared to $38.8 million for the same period of the prior
year, an increase of $15.1 million or 39.1%. This increase is principally due
to the addition of the Acquired Stations.

Publication and other revenues net of operating expenses for the year ended
February 29, 1996, were $0.9 million compared to $0.6 million for same period
of the prior year, an increase of $0.3 million or 51.1%. This increase is
principally a result of an increase in revenue net of operating expenses from
Atlanta magazine and Indianapolis Monthly magazine.

Corporate expenses for the year ended February 29, 1996, were $4.4 million
compared to $3.7 million for the same period of the prior year, an increase of
$0.7 million or 19.4%. This increase is primarily due to increased
compensation, increased professional fees and costs associated with the legal
requirements of and transacting business as a public company.

International business development expenses reflect costs associated with Emmis
International Corporation. The purpose of this wholly owned subsidiary is to
identify, investigate and develop international broadcast investments or other
international business opportunities. Such expenses were $1.3 million for the
fiscal year ended February 29, 1996, compared to $0.3 million for the same
period of the prior year, an increase of $1.0 million. This increase is due to
the formation of Emmis International Corporation during the quarter ended
February 28, 1995. These expenses consist primarily of salaries, travel and
various administrative costs.

Depreciation and amortization expense for the year ended February 29, 1996, was
$5.7 million compared to $3.8 million for the same period of the prior year, an
increase of $1.9 million or 48.3%. This increase is due to the addition of the
Acquired Stations.

Noncash compensation expense for the year ended February 29, 1996, was $3.7
million compared to $0.6 million for the same period of the prior year, an
increase of $3.1 million. Noncash compensation includes compensation expense
associated with stock options granted, restricted common stock issued under
employment agreements and common stock contributed to the Company's Profit
Sharing Plan. This increase is due primarily to an increase in compensation
expense related to options granted and restricted common stock issued to
employees of the Company and a larger contribution to the Profit Sharing Plan.

Interest expense for the fiscal year ended February 29, 1996, was $13.5 million
compared to $7.8 million for the same period of the prior year, an increase of
$5.7 million. This increase is principally due to the Indianapolis and New York
acquisitions and higher interest rates than experienced in the prior year under
the Company's credit facility.

Accounts receivable at February 29, 1996, were $19.2 million compared to $16.8
million at February 28, 1995, an increase of $2.4 million or 13.9%. This
increase in accounts receivable is due primarily to increases in net
broadcasting revenues.

YEAR ENDED FEBRUARY 28, 1995 COMPARED TO YEAR ENDED FEBRUARY 28, 1994. Net
broadcasting revenues for the year ended February 28, 1995, were $66.8 million
compared to $50.3 million for the same period of the prior year, an increase of
$16.5 million or 32.8%. This increase is a result of increased net broadcasting
revenues at the five radio stations the Company owned and operated during the
entire fiscal year, augmented by the incremental revenue from the Acquired
Stations.

Total broadcasting operating expenses for the year ended February 28, 1995,
were $38.8 million compared to $29.4 million for the same period of the prior
year, an increase of $9.4 million or 32.1%. This increase is principally due to
the addition of the Acquired Stations.

Publication and other revenues net of operating expenses for the year ended
February 28, 1995, were $0.6 million compared to $0.7 million for the same
period of the prior year, a decrease of $0.1 million or 9.7%. This decrease is
principally a result of a decrease in revenue net of operating expenses from
Atlanta magazine offset partially by an increase of revenues net of operating
expenses from Indianapolis Monthly magazine.

Corporate expenses for the year ended February 28, 1995, were $3.7 million
compared to $2.8 million for the same period of the prior year, an increase of
$0.9 million or 33.8%. This increase is primarily due to additional costs
associated with the legal requirements of and transacting business as a public
company.

International business development expenses reflect costs associated with Emmis
International Corporation. The purpose of this new wholly owned subsidiary is
to identify, investigate and develop international broadcast investments or
other international business opportunities. Such expenses were $0.3 million for
the fiscal year ended February 28, 1995. These expenses consisted primarily of
salaries, travel and various administrative costs.

Depreciation and amortization expense for the year ended February 28,
1995, was $3.8 million compared to $2.8 million for the same period of the
prior year, an increase of $1.0 million or 36.1%. This increase is due to the
addition of the Acquired Stations.

Noncash compensation expense for the year ended February 28, 1995, was $0.6
million compared to $1.7 million for the same period of the prior year, a
decrease of $1.1 million or 65.2%. Noncash compensation includes compensation
expense associated with stock options granted and common stock contributed to
the Company's Profit Sharing Plan. This decrease is due primarily to a decrease
in compensation expense related to options granted to employees of the Company
partially offset by a larger contribution to the Profit Sharing Plan.

Interest expense for the fiscal year ended February 28, 1995, was $7.8 million
compared to $13.6 million for the same period of the prior year, a decrease of
$5.7 million or 42.2%. This decrease is principally due to proceeds of the
initial public offering being used to reduce outstanding indebtedness at the
beginning of the fiscal year ended February 28, 1995, and the reduced cost of
borrowing achieved through the current credit facility, offset partially by
slightly higher interest rates during the second half of the fiscal year.

Accounts receivable at February 28, 1995, was $16.8 million compared to $9.2
million at February 28, 1994, an increase of $7.6 million or 82.0%. This
increase in accounts receivable is due primarily to the addition of the
Acquired Stations and to increases in net broadcasting revenues at the stations
owned for the entire fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

On December 20, 1993, the Company entered into a $100 million Credit Facility
comprised of a $40 million revolver/term loan and a $60 million reducing
revolving credit facility. On December 21, 1993, $93 million was borrowed under
the facility and used, in combination with available cash, to retire the senior
secured loans which then existed in the amount of $37.6 million plus accrued
interest and to redeem the senior subordinated notes at their $50 million
aggregate principal amount plus accrued interest and a $4 million premium. In
connection with the redemption of the senior subordinated notes, the Company
recognized an extraordinary loss of $3.4 million.

During the fiscal year ended February 28, 1995 this Credit Facility was amended
to add an $80 million revolver/term loan facility, a portion of the proceeds of
which were used to acquire the stock of the corporation which owns and operates
WRKS-FM in New York City. In connection with this amendment, the $40 million
revolver/term loan was converted to a term loan and the quarterly commitment
reduction schedule of the $60 million reducing revolving credit facility was
revised. In the fiscal year ended February 29, 1996, the Company made
voluntary payments of $28.0 million under its Credit Facility. As of February
29, 1996, the Company had $50.0 million available for borrowing under the
Credit Facility. A full discussion of the Company's long-term debt is contained
in footnote 5 to the Company's audited consolidated financial statements.

On March 2, 1994, Emmis received approximately $40.4 million of proceeds from
its initial public offering of 2.8 million shares of Class A Common Stock. The
Company used approximately $9.2 million of the proceeds to redeem its Series B
Preferred Stock and associated detachable warrants. The remaining proceeds were
used principally to reduce amounts outstanding under the Credit Facility. A
complete discussion of the Company's initial public offering and related
transactions is contained in footnote 2 to the audited consolidated financial
statements contained herein.

In the fiscal years ended February 29, 1996, and February 28, 1995 and 1994,
the Company had capital expenditures of $1.4 million, $1.1 million and $0.7
million, respectively. The Company's capital expenditures consist primarily of
broadcasting equipment purchases and tower upgrades. For the fiscal year ending
February 28, 1997, the Company anticipates that capital expenditures for its
broadcasting properties will be higher than historic levels. This increase will
result from leasehold improvements to office and studio facilities in
connection with the move of its New York broadcast properties to a new
location.

The Company expects that cash flow from operating activities will be sufficient
to fund all debt service, working capital and capital expenditure requirements.
As part of its business strategy, the Company frequently evaluates potential
acquisitions of radio stations. In connection with future acquisition
opportunities, the Company may incur additional debt or issue additional equity
or debt securities depending on market conditions and other factors.
`
INFLATION

The impact of inflation on the Company's 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 the Company's operating results.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES:

We have audited the accompanying consolidated balance sheets of EMMIS
BROADCASTING CORPORATION (an Indiana corporation) and Subsidiaries as of
February 29, 1996 and February 28, 1995, and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for each of the three years in the period ended February 29, 1996. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Emmis Broadcasting Corporation
and Subsidiaries as of February 29, 1996 and February 28, 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended February 29, 1996 in conformity with generally accepted accounting
principles.




ARTHUR ANDERSEN LLP
-------------------
ARTHUR ANDERSEN LLP

Indianapolis, Indiana,
March 28, 1996.



Consolidated Balance Sheets





(Dollars in thousnds, except per share data) February 28 (29),
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1996
- -----------------------------------------------------------------------------------------------------------------------------------


ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 3,205 $ 1,218
Accounts receivable, net of allowance for doubtful
accounts of $620 and $799 at February 28, 1995
and February 29, 1996, respectively 16,831 19,172
Prepaid expenses 1,522 1,283
Current income tax receivable -- 1,501
Other 1,559 1,048
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets 23,117 24,222
- ------------------------------------------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT:
Land and buildings 1,571 1,009
Leasehold improvements 1,646 1,391
Broadcasting equipment 12,980 13,252
Furniture and fixtures 5,584 6,108
Construction in progress 141 515
- ------------------------------------------------------------------------------------------------------------------------------------
21,922 22,275

Less-Accumulated depreciation and amortization 14,611 15,204
- ------------------------------------------------------------------------------------------------------------------------------------
Total property and equipment, net 7,311 7,071
- ------------------------------------------------------------------------------------------------------------------------------------

INTANGIBLE ASSETS:
FCC licenses 125,985 126,116
Trademarks and organization costs 2,167 1,400
Excess of cost over fair value of net assets
of purchased businesses 20,371 20,371
Other intangibles 2,633 2,633
- ------------------------------------------------------------------------------------------------------------------------------------
151,156 150,520

Less-Accumulated amortization 11,427 14,690
- ------------------------------------------------------------------------------------------------------------------------------------
Total intangible assets, net 139,729 135,830
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Deferred debt issuance costs and cost of interest
rate cap agreements, net of accumulated
amortization of $812 and $2,554 at February 28,
1995 and February 29, 1996, respectively 4,239 2,555
Investments 7,357 5,113
Deposits and other 1,688 1,775
- ------------------------------------------------------------------------------------------------------------------------------------

Total other assets, net 13,284 9,443
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $183,441 $176,566
- ------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes







(Dollars in thousands, except per share data) February 28 (29),
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1996
- -----------------------------------------------------------------------------------------------------------------------------------


LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,675 $ 77
Accounts payable 3,441 2,872
Accrued salaries and commissions 2,730 3,560
Accrued interest 1,592 320
Deferred revenue 1,547 1,198
Other 1,044 1,434
- ------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 13,029 9,461

LONG-TERM DEBT, NET OF CURRENT MATURITIES 149,647 124,180

OTHER NONCURRENT LIABILITIES 616 1,361

DEFERRED INCOME TAXES 22,810 27,680
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 186,102 162,682
- ------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 9)
SHAREHOLDERS' EQUITY (DEFICIT):
Class A Common Stock, $.01 par value; authorized
34,000,000 shares; issued and outstanding 7,997,692
shares and 8,264,940 shares at February 28, 1995
and February 29, 1996, respectively 80 83
Class B Common Stock, $.01 par value; authorized
6,000,000 shares; issued and outstanding
2,655,122 shares and 2,606,332 shares at
February 28, 1995 and February 29, 1996, respectively 27 26
Additional paid-in capital 59,552 65,852
Accumulated deficit (62,385) (52,077)
Cumulative translation adjustments 65 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity (deficit) (2,661) 13,884
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity (deficit) $183,441 $176,566
- ------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes



Consolidated Statements of Operations





(Dollars in thousands, except per share data) Year Ended February 28 (29),
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------------


GROSS BROADCASTING REVENUES $59,251 $78,811 $117,562

LESS-AGENCY COMMISSIONS 8,940 11,996 17,732
- ------------------------------------------------------------------------------------------------------------------------------------

NET BROADCASTING REVENUES 50,311 66,815 99,830
Broadcasting operating expenses 29,368 38,794 53,948
Publication and other revenue, net of operating expenses 657 593 896
International business development expenses -- 313 1,264
Corporate expenses 2,765 3,700 4,419
Depreciation and amortization 2,812 3,827 5,677
Noncash compensation 1,725 600 3,667
- ------------------------------------------------------------------------------------------------------------------------------------

OPERATING INCOME 14,298 20,174 31,751
- ------------------------------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
Interest expense (13,588) (7,849) (13,540)
Equity in loss of unconsolidated affiliate -- (348) (3,111)
Gain on sale of investment in TalkRadio U.K. -- -- 2,729
Other income (expense), net (367) 178 79
- ------------------------------------------------------------------------------------------------------------------------------------

Total other income (expense) (13,955) (8,019) (13,843)
- ------------------------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 343 12,155 17,908

PROVISIONS FOR INCOME TAXES 1,300 4,528 7,600
- ------------------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (957) 7,627 10,308

EXTRAORDINARY ITEM - loss on early extinguishment
of debt, net of income tax benefit of $2,300 (3,408) -- --
- ------------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) (4,365) (7,627) 10,308
Preferred stock dividends and discount accretion (1,488) -- --
- ------------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(5,853) $7,627 $10,308
- ------------------------------------------------------------------------------------------------------------------------------------

Net income per common and common equivalent share $ .70 $ .92
- ------------------------------------------------------------------------------------------------------------------------------------

Net income per common share assuming full dilution $ .70 $ .91
- ------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes




Consolidated Statements of Changes in Shareholders' Equity (Deficit)





(Dollars in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
Common Stock Common Stock
------------------------------
Total
Additional Cumulative Shareholders'
Shares Shares Paid-in Accumulated Translation Equity
Outstanding Amount Outstanding Amount Capital Deficit Adjustments (Deficit)
- ----------------------------------------------------------------------------------------------------------------------------------

BALANCE, FEBRUARY 28, 1993 2,854,950 $28 3,969,500 $ 40 $ 9,788 $ (64,159) $ -- $(54,303)
Issuance of warrants -- -- -- -- 5,753 -- -- 5,753
Series A Preferred Stock dividend -- -- -- -- -- (991) -- (991)
Series B Preferred Stock dividend -- -- -- -- -- (302) -- (302)
Series B Preferred Stock discount
accretion -- -- -- -- -- (195) -- (195)
Compensation related to granting
of stock options -- -- -- -- 1,426 -- -- 1,426
Issuance of Class A Common
Stock in exchange for
Class B Common Stock 400,000 4 (400,000) (4) -- -- -- --
Exercise of stock options 111,341 1 -- -- (1) -- -- --
Issuance of Class A Common
Stock to profit sharing plan 18,750 1 -- -- 299 -- -- 300
Costs incurred for initial
public offering -- -- -- -- (1,552) -- -- (1,552)
Net loss -- -- -- -- -- (4,365) -- (4,365)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 28, 1994 3,385,041 34 3,569,500 36 15,713 (70,012) -- (54,229)
Conversion of Series A
Preferred Stock 765,963 8 -- -- 6,498 -- -- 6,506
Initial public offering, net of
costs incurred of $214 2,800,000 28 -- -- 40,120 -- -- 40,148
Redemption and retirement of
Series B Preferred Stock and
associated detachable warrants -- -- -- -- (4,467) -- -- (4,467)
Issuance of Class A Common Stock
in exchange for Class B
Common Stock 914,378 9 (914,378) (9) -- -- -- --
Issuance of Class A Common Stock
in exchange for Emmis Publishing
Corporation common stock 45,624 -- -- -- 582 -- -- 582
Exercise of stock options and
related income tax benefits 52,311 1 -- -- 506 -- -- 507
Compensation related to granting
of stock options -- -- -- -- 50 -- -- 50
Issuance of Class A Common
Stock to profit sharing plan 34,375 -- -- -- 550 -- -- 550
Translation adjustments -- -- -- -- -- -- 65 65
Net income -- -- -- -- -- 7,627 -- 7,627
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 28, 1995 7,997,692 80 2,655,122 27 59,552 (62,385) 65 (2,661)
Issuance of Class A Common
Stock in exchange for Class B
Common Stock 48,790 1 (48,790) (1) -- -- -- --
Exercise of stock options and
related income tax benefits 198,850 2 -- -- 2,633 -- -- 2,635
Compensation related to granting
of stock and stock options -- -- -- -- 2,917 -- -- 2,917
Issuance of Class A Common
Stock to profit sharing plan 19,608 -- -- -- 750 -- -- 750
Translation adjustments -- -- -- -- -- -- (65) (65)
Net income -- -- -- -- -- 10,308 -- 10,308
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 29, 1996 8,264,940 $83 2,606,332 $ 26 $65,852 $ (52,077) $ -- $ 13,884
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes




Consolidated Statements of Cash Flows





(DOLLARS IN THOUSANDS) Year ended February 28 (29),
- -----------------------------------------------------------------------------------------------------------------------
1994 1995 1996
- -----------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES:
Net income (loss) $ (4,365) $ 7,627 $ 10,308
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities-
Extraordinary loss on early extinguishment
of debt before income tax benefit 5,708 -- --
Depreciation and amortization of property and
equipment 1,506 1,556 1,636
Amortization of debt issuance costs and cost of
interest rate cap agreements, net of
accelerated amortization included in
extraordinary loss on early extinguishment
of debt in 1994 3,263 660 1,742
Amortization of intangible assets 1,306 2,271 4,041
Provision (credit) for deferred income taxes (1,060) 4,253 4,870
Gain on sale of TalkRadio U.K. -- -- (2,729)
Compensation related to stock and stock options
granted 1,425 50 2,917
Contribution to profit sharing plan paid with
common stock 300 550 750
Equity in loss of unconsolidated affiliate -- 348 3,111
(Increase) decrease in certain current assets
(net of dispositions and acquisitions)-
Accounts receivable (1,916) (3,745) (2,341)
Prepaid expenses and other current
assets 184 (298) (751)
Increase (decrease) in certain current
liabilities (net of dispositions and
acquisitions)-
Accounts payable 841 46 (569)
Accrued salaries and commissions (163) 1,066 830
Accrued interest (5,355) 1,479 (1,272)
Deferred revenue (427) 290 (349)
Other current liabilities (3,826) 139 390
(Increase) decrease in deposits and
other assets (913) 31 (108)
Increase (decrease) in other noncurrent
liabilities (685) (843) 745
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating
activities (4,177) 15,480 23,221
- -----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Acquisition of WIBC-AM and WNAP-FM -- (26,576) --
Costs incurred for WRKS-FM Acquisition -- (72,536) (131)
Investment in and advances to TalkRadio U.K. -- (2,489) (980)
Acquisition of Atlanta magazine (150) -- --
Purchases of property and equipment (659) (1,081) (1,396)
Net proceeds from disposition of radio stations 11,205 -- --
Net proceeds from disposition of investment
in TalkRadio U.K. -- -- 2,729
Acquisition of intangible asset (28) -- --
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing
activities 10,368 (102,682) 222
- -----------------------------------------------------------------------------------------------------------------------






(Dollars in thousands) Year Ended February 28 (29),
- ----------------------------------------------------------------------------------------------------------------
1994 1995 1996
- ----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from initial public offering -- 40,362 --
Costs incurred for initial public offering (1,552) (214) --
Proceeds from exercise of stock options
and related income tax benefits -- 267 2,635
Redemption and retirement of Series B
Preferred Stock and associated
detachable warrants -- (9,211) --
Proceeds from issuance of Series B Preferred Stock
and associated detachable warrants 10,000 -- --
Proceeds of long-term debt 183,000 100,000 29,518
Payments of long-term debt (188,895) (40,079) (57,583)
Payment of loan fees (6,279) (1,533) --
Purchase of interest rate cap agreements -- (792) --
Premium on early extinguishment of debt (4,000) -- --
- ----------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (7,726) 88,800 (25,430)
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,535) 1,598 (1,987)

CASH AND CASH EQUIVALENTS:
Beginning of year 3,142 1,607 3,205
- ----------------------------------------------------------------------------------------------------------------
End of year $ 1,607 $ 3,205 $ 1,218
- ----------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest $ 15,569 5,710 $13,112
Income taxes 929 264 2,931
Noncash investing and financing transactions -
Fair value of assets acquired by incurring debt 63 50 17
Dividend on preferred stock paid with preferred
stock 1,293 -- --

ACQUISITION OF ATLANTA MAGAZINE:
Fair value of assets acquired $ 706
Cash paid (150)
- ----------------------------------------------------------------------------------------------------------------
Liabilities assumed $ 556
- ----------------------------------------------------------------------------------------------------------------
ACQUISITION OF WIBC-AM AND WNAP-FM:
Fair value of assets acquired $26,873
Cash Paid 26,576
- ----------------------------------------------------------------------------------------------------------------
Liabilities assumed $ 297
- ----------------------------------------------------------------------------------------------------------------
ACQUISITION OF WRKS-FM:
Fair value of assets acquired $91,940
Cash paid 72,536
- ----------------------------------------------------------------------------------------------------------------
Liabilities assumed $19,404
- ----------------------------------------------------------------------------------------------------------------
See accompanying notes






NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. ORGANIZATION

Emmis Broadcasting Corporation owns and operates FM radio stations in Los
Angeles, New York City (2 stations), Chicago, St. Louis and Indianapolis (2
stations) and an AM radio station in Indianapolis. Emmis Broadcasting
Corporation also publishes Indianapolis Monthly magazine, Atlanta magazine and
Duncan's American Radio, a leading statistical publication for the radio
industry, and engages in certain businesses ancillary to its radio businesses,
such as advertising, program consulting and broadcast tower leasing.

b. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Emmis
Broadcasting Corporation and its wholly owned subsidiaries. Unless the content
otherwise requires, references to Emmis or the Company in these financial
statements mean Emmis Broadcasting Corporation and its Subsidiaries. All
significant intercompany balances and transactions have been eliminated.

c. REVENUE RECOGNITION

Broadcasting revenue is recognized as advertisements are aired. Publication
revenue is recognized in the month of issue.


d. PUBLICATION AND OTHER REVENUE, NET OF OPERATING EXPENSES

Publication revenue of $5,893,000, $8,037,000 and $9,924,000 for the years
ended February 1994, 1995 and 1996, respectively, is reflected net of operating
expenses in the consolidated statements of operations. Other revenues of
$614,000, $828,000 and $703,000 for the years ended February 1994, 1995 and
1996, respectively, are also reflected net of operating expenses in the
consolidated statements of operations.

e. INTERNATIONAL BUSINESS DEVELOPMENT EXPENSES

International business development expenses includes the cost of the Company's
efforts to identify, investigate and develop international broadcast
investments or other international business opportunities.

f. NONCASH COMPENSATION

Noncash compensation includes compensation expense associated with stock
options granted, restricted common stock issued under employment agreements and
common stock contributed to the Company's Profit Sharing Plan.

g. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation and amortization are
generally computed by the straight-line method over the estimated useful lives
of the related assets which are 31.5 years for buildings, not more than 32
years for leasehold improvements, 5 to 7 years for broadcasting equipment and 7
years for furniture and fixtures. Maintenance, repairs and minor renewals are
expensed; improvements are capitalized.

h. INTANGIBLE ASSETS

Intangible assets are recorded at cost. FCC licenses, trademarks and the excess
of cost over fair value of net assets of purchased businesses are being
amortized using the straight-line method over 40 years. Other intangibles are
amortized using the straight-line method over varying periods, not in excess of
10 years.

On a continuing basis, the Company reviews the financial statement carrying
value of these assets for impairment. Specifically, this process includes a
comparison of the carrying amounts of the operating units to their estimated
fair values, an analysis of estimated future operating cash flows and an
evaluation as to whether an operating unit might be sold in the near future. If
this process were to result in the conclusion that the carrying value of an
intangible asset would not be recovered, a writedown of the operating unit's
assets would be recorded through a charge to operations.

i. INVESTMENTS

Emmis has a 50% ownership interest in a partnership in which the sole asset is
land on which a transmission tower is located. The other owner has voting
control of the partnership. This investment is reflected at cost of $5,113,000,
which approximates the equity method of accounting.

On July 7, 1994, the Company invested approximately $2.5 million for a 24.5%
interest in TalkRadio U.K. Limited (TRUK). Subsequently, the Company invested
an additional $1.0 million to support the operations of TRUK. This investment
was accounted for utilizing the equity method of accounting. Emmis reported
losses from the operations of TRUK since inception of approximately $3.5
million ($3.1 million for the year ended February 29, 1996) which is included
in equity in loss of unconsolidated affiliate in the consolidated statements of
operations. On November 7, 1995, Emmis sold its 24.5% interest in TRUK for
approximately $3.0 million and recorded a gain on sale of approximately $2.7
million.


j. DEPOSITS AND OTHER ASSETS

Deposits and other assets includes amounts due from officers of $1,205,000 at
February 28, 1995 and February 29, 1996. Officer loans bear interest at the
Company's borrowing rate (6.5625% at February 29, 1996).

k. DEFERRED REVENUE AND BARTER TRANSACTIONS

Deferred revenue includes deferred magazine subscription revenue and deferred
barter revenue. Barter transactions are recorded at the estimated fair value of
the product or service received. Broadcast revenue from barter transactions is
rec-



14
ognized when commercials are broadcast. The appropriate expense or asset is
recognized when merchandise or services are used or received.

l. INCOME TAXES

Income taxes are provided based on the liability method of accounting pursuant
to Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting
for Income Taxes." The liability method measures the expected tax impact of
future taxable income or deductions resulting from differences in the tax and
financial reporting bases of assets and liabilities reflected in the
consolidated balance sheets and the expected tax impact of carryforwards for
tax purposes.

m. FOREIGN CURRENCY TRANSLATION

The functional currency of TRUK is the pound sterling. The Company's investment
in and advances to TRUK has been translated from the pound sterling to the U.S.
dollar using current exchange rates in effect at the balance sheet date and for
the Company's equity in the loss of TRUK using an average exchange rate for the
period. The applicable gains or losses, net of deferred income taxes, resulting
from the translation of the Company's investment in and advances to TRUK is
shown as cumulative translation adjustments in shareholders' equity (deficit).

n. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

Net income per common and common equivalent share are computed by dividing net
income by the weighted average number of common shares outstanding during the
year (10,831,695 shares for the year ended February 28, 1995 and 11,208,862 for
the year ended February 29, 1996). Weighted average common shares outstanding
assumes the exercise of stock options when the effect is dilutive.

Fully diluted earnings per common share assumes additional dilution related to
stock options due to the use of the market price of common stock at the end of
the year, when higher than the average price for the year. The weighted average
common shares assuming full dilution are 10,834,645 shares for the year ended
February 28, 1995 and 11,305,553 for the year ended February 29, 1996.

Historical earnings per share for the year ended February 28, 1994 is not
presented herein since this data is no longer considered meaningful or relevant
due to the initial public offering discussed in Note 2.

o. CASH EQUIVALENTS

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

p. STOCK SPLITS

On February 14, 1994, Emmis' Board of Directors declared a 5 for 1 stock split
to all common shareholders of record as of the date Emmis' Amended and Restated
Articles of Incorporation were filed, which was March 1, 1994. All share and
per share amounts reflect the stock split.

q. ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

r. ACCOUNTING PRONOUNCEMENTS

In March 1995, Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," was issued. The statement must be adopted by the Company in
the first quarter of fiscal 1997. Under provisions of the statement,
impairments, measured using fair market value, are recognized whenever events
or changes in circumstances indicate that the carrying amount of long-lived
assets may not be recoverable and the future undiscounted cash flows
attributable to the asset are less than its carrying value. The statement is
not expected to have a material impact on the Company's results of operations
or financial position.

In October 1995, SFAS No. 123, "Stock Based Compensation," was issued. This
statement will require the Company to choose between two different methods of
accounting for stock options. The statement defines a fair-value-based method
of accounting for stock options but allows an entity to continue to measure
compensation cost for stock options using the accounting prescribed by APB
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." Use of the
APB 25 accounting method results in no compensation cost being recognized if
options are granted at an exercise price at the current market value of the
stock. The Company will continue to use the method prescribed under APB 25 but
will be required by SFAS 123 to make pro forma disclosures of net income and
earnings per share as if the fair value method had been applied in its
financial statements for the year ended February 28, 1997.

2. INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS

Concurrent with the closing on March 1, 1994 of the initial public offering of
its Class A Common Stock discussed below, Emmis amended its Articles of
Incorporation to create two new separate classes of common stock, Class A
Common Stock and Class B Common Stock, and authorized 34,000,000 shares of
Class A Common Stock, par value $.01 per share, and 6,000,000 shares of Class B
Common Stock, par value $.01 per share. The rights of these two classes are
essentially identical except that each share of Class B Common Stock has 10
votes in respect to substantially all matters. All current shares of common
stock



15
were converted into shares of Class A Common Stock with the exception of those
shares owned by the principal shareholder (Jeffrey H. Smulyan), which were
converted into shares of Class B Common Stock. All shares of Class B Common
Stock convert to Class A Common Stock upon sale or other transfer to a party
unaffiliated with the principal shareholder. The financial statements presented
reflect the establishment of the two classes of stock.

Also, on March 1, 1994, Emmis converted all outstanding shares of its Series A
Preferred Stock plus accrued dividends into 765,963 shares of Class A Common
Stock.

On March 2, 1994, Emmis received approximately $40.4 million of proceeds (net
of $3.0 million of underwriters' fees) from its initial public offering of
2,800,000 shares of Class A Common Stock. Emmis utilized approximately $9.2
million of the proceeds to redeem the Series B Preferred Stock, which had a
carrying value of $4.7 million, and the associated detachable warrants, which
had a carrying value of $5.8 million, and recognized the $1.3 million
difference as an increase to additional paid-in capital. Also on March 2, 1994,
the Company utilized approximately $30.0 million of the proceeds to repay
amounts outstanding under the Credit Facility discussed in Note 5.

The above transactions are considered in the pro forma condensed consolidated
statements of operations for the year ended February 28, 1994, discussed in
Note 7.

3. PREFERRED STOCK

Emmis has authorized 10,000,000 shares of preferred stock which may be issued
with such designations, preferences, limitations and relative rights as Emmis'
Board of Directors may authorize. As of February 28, 1995 and February 29, 1996,
no shares of preferred stock are issued and outstanding.

Emmis had authorized 100 shares of nonvoting Series A Convertible Exchangeable
Redeemable Preferred Stock (the "Series A Preferred Stock"). On October 7,
1991, Emmis issued 44.63 shares of Series A Preferred Stock, which were stated
at the mandatory redemption value of $100,000 per share. Dividends, which were
paid in shares of Series A Preferred Stock, were cumulative and accrued at an
annual rate of 14.625% per share. As discussed in Note 2, on March 1, 1994 all
shares outstanding of Series A Preferred Stock plus accrued dividends were
converted into 765,963 shares of Class A Common Stock.

Emmis had authorized 200 shares of nonvoting Series B Preferred Stock (the
"Series B Preferred Stock"). On May 28, 1993, Emmis issued 100 shares of the
Series B Preferred Stock. The Series B Preferred Stock was recorded at fair
value which was $42,460 per share. The difference between the fair value of
$42,460 per share at issuance and the mandatory redemption value of $100,000
per share was being accreted by periodic charges to accumulated deficit over
the eight-year life of the Series B Preferred Stock issue. Dividends, which
were paid in shares of Series B Preferred Stock, were cumulative and accrued at
an annual rate of 4% per share. As discussed in Note 2, on March 2, 1994, Emmis
exercised an option to repurchase the Series B Preferred Stock and associated
detachable warrants (Note 4) for approximately $9.2 million.

4. WARRANTS

In connection with the issuance of the Series B Preferred Stock, Emmis issued
detachable warrants to acquire 1,172,875 shares of common stock of Emmis. The
warrants were exercisable at no additional cost to the holder. The expiration
date of the warrants was May 28, 2001. As discussed in Notes 2 and 3, on March
2, 1994 Emmis repurchased these warrants.

5. LONG-TERM DEBT

Long-term debt was comprised of the following at February 28, 1995 and February
29, 1996:



(IN THOUSANDS) 1995 1996
- ----------------------------------------------------------------------------------------------------------------
Credit Facility:

Term loan $ 40,000 $ 40,000
Reducing revolving credit facility 43,000 15,000
Revolver/term loan 69,000 69,000
Other 322 257
- ----------------------------------------------------------------------------------------------------------------

Total debt 152,322 124,257
Less- Current maturities 2,675 77
- ----------------------------------------------------------------------------------------------------------------
$149,647 $124,180
- ----------------------------------------------------------------------------------------------------------------


On December 20, 1993, Emmis entered into a $100 million Credit Facility
comprised of a $40 million revolver/term loan and a $60 million reducing
revolving credit facility. On December 21, 1993, Emmis borrowed approximately
$93 million under the Credit Facility and used the loan proceeds, in
combination with available cash, to retire substantially all outstanding
indebtedness totaling $87.6 million plus accrued interest and a $4 million
premium. In connection with this transaction, Emmis recognized an extraordinary
loss of $3.4 million.

During the year ended February 28, 1995, the Credit Facility was amended to add
an $80 million revolver/term loan facility, the proceeds of which were used to
acquire the stock of Summit Broadcasting Holding Company (Note 6). In
connection with this amendment the $40 million revolver/term loan was converted
to a term loan and the quarterly commitment reduction schedule of the $60
million reducing revolving credit facility was revised.

All outstanding amounts under the Credit Facility bear interest, at the option
of Emmis, at a rate equal to LIBOR (5.3125% at February 29, 1996) or an
alternate base rate (as defined in the Credit Facility) plus a margin. The
margin over LIBOR or the alternate base rate varies from time to time,
depending upon Emmis' ratio of debt to cash flow as defined in the agreement.
The interest rate on borrowings outstanding under the Credit Facility at
February 29, 1996 was 6.5625%. As required by the Credit Facility, Emmis has
entered into interest rate cap agreements. The notional amounts of these
agreements total $76,000,000. The agreements, which expire at various dates
ranging from April 1997 to December 1997, establish various ceilings, ranging
from 7% to 10%, on the one month LIBOR interest rate. The cost of these
agreements are being amortized over the lives of the agreements.

Amortization of the outstanding principal amount under the $40 million term
loan is payable in quarterly installments beginning May 31, 1997 and ending
November 30, 2001. The aggregate amount of the $60 million reducing revolving
credit facility reduces in quarterly installments which began May 31, 1995 and
ends May 31, 2001. Amortization of the outstanding principal amount under the
$80 million revolver/term loan is payable in quarterly installments beginning
May 31, 1998 and ending

16
November 30, 2001. The respective annual amortization and reduction schedules
as of February 29, 1996, assuming the entire $180 million Credit Facility was
outstanding prior to the scheduled amortization payments are as follows:



SCHEDULED AMORTIZATION/REDUCTION OF CREDIT FACILITY AVAILABILITY
(IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------

REDUCING
REVOLVING
CREDIT REVOLVER/
YEAR ENDED TERM LOAN FACILITY TERM LOAN
FEBRUARY 28(29) AMORTIZATION REDUCTION AMORTIZATION TOTAL
- ----------------------------------------------------------------------------------------------------------------

1997 $ -- $11,200 $ -- $ 11,200
1998 2,800 13,000 -- 15,800
1999 6,000 10,000 8,800 24,800
2000 8,000 10,800 16,000 34,800
2001 12,000 6,750 24,000 42,750
2002 11,200 2,250 31,200 44,650
- ----------------------------------------------------------------------------------------------------------------
Total $40,000 $54,000 $80,000 $174,000
- ----------------------------------------------------------------------------------------------------------------


In addition to scheduled amortization/reduction of Credit Facility
availability, within 60 days after the end of each fiscal year, the term loan
and revolver/term loan are permanently reduced on a pro rata basis by 50% of
the Company's excess cash flow. Excess cash flow is generally defined as
operating cash flow reduced by cash taxes, capital expenditures, required debt
service, increases in working capital (net of cash or cash equivalents) and $6
million. Any such prepayment/reduction is applied in inverse order of maturity
to the scheduled amortization payments/reduction described above. Current
maturities of long-term debt as of February 28, 1995 includes the required
excess cash flow payment for the year ended February 28, 1995. During fiscal
1996, the Credit Facility was amended to eliminate the excess cash flow
payment/reduction for fiscal 1996 and to eliminate the $6 million allowance
from the excess cash flow calculation for subsequent years. The net proceeds of
any sale of certain assets must also be used to permanently reduce borrowings
under the Credit Facility. If the ratio of debt to cash flow (as defined in the
Credit Facility) is less than 5.5 to 1, the Company will be permitted to
reborrow the amount of the net proceeds within nine months solely for the
purpose of funding an acquisition.

The Credit Facility contains various financial and operational covenants and
other restrictions with which Emmis must comply, including, among others,
limitations on capital expenditures, additional indebtedness, engaging in
businesses other than radio broadcasting and publishing, paying cash dividends
and redeeming or repurchasing capital stock of Emmis, as well as restrictions
on the use of borrowings and requirements to maintain certain financial ratios.
The Credit Facility also prohibits Emmis, under certain circumstances, from
making acquisitions without the prior consent of the lenders and will provide
that an event of default will occur if Jeffrey H. Smulyan ceases to maintain
(i) a significant equity investment in Emmis (as specified in the Credit
Facility), (ii) the ability to elect a majority of Emmis' directors or (iii)
control of a majority of shareholder voting power. Substantially all of Emmis'
assets, including the stock of Emmis' subsidiaries, are pledged to secure the
Credit Facility.

6. ACQUISITIONS

On December 1, 1994, Emmis acquired all of the outstanding capital stock of
Summit Broadcasting Holding Company (which included working capital of $4.5
million) for approximately $72.5 million in cash. Summit Broadcasting Holding
Company owns all the outstanding capital stock of Summit-New York Broadcasting
Corporation. Summit-New York Broadcasting Corporation owns and operates radio
station WRKS-FM in New York City. The Company's $80 million revolver/term loan
facility was utilized to finance the acquisition. The acquisition was accounted
for as a purchase and, accordingly, the results of WRKS-FM have been included
in the consolidated statements of operations since the acquisition date. The
operations of WRKS-FM are reflected in the pro forma condensed consolidated
statements of operations presented in Note 7.

On June 13, 1994, the Company acquired the remaining 20% of Emmis Publishing
Corporation previously not owned by the Company, by exchanging 45,624 shares of
Emmis Class A common stock, valued at $12.75 per share, for 20 shares of Emmis
Publishing Corporation common stock. This acquisition was accounted for as a
purchase. The total purchase price of $581,700 was allocated to intangible
assets.

On June 9, 1994, Emmis completed its acquisition of substantially all of the
assets of radio stations WIBC-AM and WNAP- FM (formerly WKLR-FM) in
Indianapolis from Horizon Broadcasting Corporation for approximately $26.6
million in cash. Emmis financed the acquisition through additional borrowings
under its existing Credit Facility. The acquisition was accounted for as a
purchase and, accordingly, the results of WIBC-AM and WNAP-FM have been
included in the consolidated statements of operations since the acquisition
date. The operations of WIBC-AM and WNAP-FM are reflected in the pro forma
condensed consolidated statements of operations presented in Note 7.

Effective August 1, 1993, Emmis purchased certain assets of Atlanta magazine
for $150,000 in cash and the assumption of an unearned subscription liability
of $483,000 and a lease commitment. The acquisition was accounted for as a
purchase and, accordingly, the results of Atlanta magazine have been included
in the consolidated statements of operations since the acquisition date. The
operations of Atlanta magazine are reflected in the pro forma condensed
consolidated statements of operations presented in Note 7.

7. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Pro forma condensed consolidated statements of operations are presented below
for the years ended February 28, 1994 and 1995 assuming the initial public
offering and related transactions discussed in Note 2, the acquisitions of
WNAP-FM, WIBC-AM, WRKS-FM and the Atlanta magazine discussed in Note 6, and the
use of borrowings under the $100 million Credit Facility to retire preexisting
indebtedness discussed in Note 5, all had occurred on the first day of the
respective year.

Pro forma depreciation of property and equipment and amortization expense
related to the intangibles resulting from the allocation of the purchase price
for the acquisitions referred to above and interest expense related to
additional borrowings associated with the acquisitions have been included in
the pro forma statements presented below.


17


YEAR ENDED FEBRUARY 28 (29),
- -------------------------------------------------------------------------------------------------------------


PRO FORMA
(UNAUDITED) HISTORICAL
- -------------------------------------------------------------------------------------------------------------

1994 1995 1996
- -------------------------------------------------------------------------------------------------------------

(IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------------------------------------
GROSS BROADCASTING REVENUES $ 87,405 $ 96,002 $ 117,562

LESS AGENCY COMMISSIONS 12,883 14,551 17,732
- -------------------------------------------------------------------------------------------------------------
NET BROADCASTING REVENUES 74,522 81,451 99,830

Broadcasting operating expenses 46,112 48,321 53,948

Publication and other revenue,
net of operating expenses (119) 593 896

International business development expenses -- 313 1,264

Corporate expenses 2,765 3,700 4,419

Depreciation and amortization 6,221 5,801 5,677

Noncash compensation 1,725 600 3,667
- -------------------------------------------------------------------------------------------------------------
Operating Income 17,580 23,309 31,751
- -------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest expense $ (10,652) $ (12,502) $ (13,540)
Equity in loss of unconsolidated affiliate -- (348) (3,111)
Gain on sale of investment
in TalkRadio U.K. -- -- 2,729
Other income (expense), net (613) 164 79
- -------------------------------------------------------------------------------------------------------------
Total other income (expense) (11,265) (12,686) (13,843)
- -------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 6,315 10,623 17,908
PROVISION FOR INCOME TAXES 3,900 4,086 7,600
- -------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,415 $ 6,537 $ 10,308
- -------------------------------------------------------------------------------------------------------------
Net income per common and
common equivalent share $ .23 $ .60 $ .92
- -------------------------------------------------------------------------------------------------------------
Weighted average common
shares outstanding 10,706,722 10,831,695 11,208,862
- -------------------------------------------------------------------------------------------------------------


The pro forma condensed consolidated statements of operations presented above
do not purport to be indicative of the results that actually would have been
obtained if the indicated transactions had been effective at the beginning of
the years presented, and is not intended to be a projection of future results
or trends.

8. EMPLOYEE BENEFIT PLANS

a. 1986 STOCK INCENTIVE PLAN, 1989 STOCK APPRECIATION RIGHTS PLAN,
AND 1992 NONQUALIFIED STOCK OPTION PLAN

These stock plans provide for incentive stock options, nonqualified stock
options and stock appreciation rights. The options and stock appreciation
rights are generally exercisable six months after the date of grant and expire
not more than 10 years from the date the options or rights are granted. Stock
appreciation rights provide for the issuance of stock or the payment of cash
equal to the appreciation in market value of the allocated shares from the date
of grant to the date of exercise. When rights are issued with options, exercise
of either the option or the right results in the surrender of the other. As of
February 28, 1995 and February 29, 1996, there were no stock appreciation
rights outstanding nor were there any stock appreciation rights issued with
options outstanding.

b. 1994 EQUITY INCENTIVE PLAN

Effective March 1, 1994, the shareholders of Emmis approved the 1994 Equity
Incentive Plan (the Plan). Under the Plan, awards equivalent to 1,000,000
shares of common stock may be granted. The awards, which have certain
restrictions, may be for incentive stock options, nonqualified stock options,
shares of restricted stock, stock appreciation rights, performance units or
limited stock appreciation rights. Under this plan, all awards are granted with
an exercise price equal to the fair market value of the stock except for shares
of restricted stock which may be granted with an exercise price at amounts
greater than or equal to the par value of the underlying stock. No more than
500,000 shares of Class B Common Stock are available for grant and issuance
under the Plan. As of February 28, 1995 and February 29, 1996, the only awards
outstanding under this plan are for stock options. The stock options under this
Plan are generally exercisable one year after the date of grant and expire not
more than 10 years from the date of grant. The exercise price of these options
are at the fair market value of the stock on the grant date.

c. 1995 EQUITY INCENTIVE PLAN

Effective March 1, 1995, the shareholders of Emmis approved the 1995 Equity
Incentive Plan (the Plan). Under the Plan, awards equivalent to 650,000 shares
of common stock may be granted pursuant to employment agreements discussed in
Note 9.

d. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

Effective June 29, 1995, Emmis implemented a Non-Employee Director Stock Option
Plan. Under this plan, each non-employee director, as of January 24, 1995, was
granted an option to acquire 5,000 shares of the Company's Class A Com-

18
mon Stock. Thereafter, upon election or appointment of any non-employee
director or upon a continuing director becoming a non-employee director, such
individual will also become eligible to receive a comparable option. In
addition, an equivalent option will be automatically granted on an annual basis
to each non-employee director. Under this plan, up to 125,000 shares of Class A
Common Stock are available for grant and issuance.

Compensation expense reflected in noncash compensation in the consolidated
statements of operations under the above plans and under employment agreements
discussed in Note 9 was $1,425,000, $50,000 and $2,917,000 for the years ended
February 1994, 1995 and 1996, respectively. Information with respect to options
is presented below. At February 29, 1996, there were 1,816,012 awards available
for grant and 517,900 options exercisable under the plans and employment
agreements.



EXERCISE
PRICE RANGE
PER SHARE OPTIONS

- -----------------------------------------------------------------------------------------------------------

OPTIONS OUTSTANDING AT
February 28, 1994 $ 3.75-$10.00 383,000
Options granted $13.25-$15.50 284,250
Options lapsed $ 3.75-$15.13 (9,000)
Options exercised $3.75 (71,250)
- -----------------------------------------------------------------------------------------------------------
OPTIONS OUTSTANDING AT
February 28, 1995 $ 3.75-$15.50 587,000
Options granted $15.50-$28.88 505,738
Options lapsed -- --
Options exercised $ 3.75-$15.13 (198,850)
- -----------------------------------------------------------------------------------------------------------
OPTIONS OUTSTANDING AT
February 29, 1996 $ 3.75-$28.88 893,888
- -----------------------------------------------------------------------------------------------------------


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

e. PROFIT SHARING PLAN

In December 1986, Emmis adopted a profit sharing plan that covers all nonunion
employees with one year of service. Contributions to the plan are at the
discretion of the Emmis Board of Directors. Contributions to the plan can be
made in the form of newly issued Emmis common stock or cash. Historically, all
contributions to the plan have been in the form of Emmis common stock.
Contributions reflected in noncash compensation in the consolidated statements
of operations were $300,000, $550,000 and $750,000 for the years ended February
1994, 1995 and 1996.

f. 401(K) RETIREMENT SAVINGS PLAN

Emmis sponsors a Section 401(k) retirement savings plan which covers
substantially all nonunion employees age 18 years and older who have at least
one year of service. Employees may make pre-tax contributions to the plan up to
10% of their compensation, not to exceed the annual limit prescribed by the
Internal Revenue Service. Emmis may make discretionary matching contributions
to the plan. Effective March 1, 1995, Emmis began to match 100% of employee
contributions up to $1,000, 50% of the match to be in cash and 50% in the form
of shares of the Company's Class A Common Stock. Beginning March 1, 1996, the
Company's match limit increased to $2,000. Emmis' contributions to the plan
totaled $65,000, $58,000 and $129,000 for the years ended February 1994, 1995
and 1996, respectively.

g. 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 labor union. Amounts charged
to expense related to the multi-employer plan were approximately $151,000,
$169,000 and $276,000 for the years ended February 1994, 1995 and 1996,
respectively.

h. EMPLOYEE STOCK PURCHASE PLAN

Effective March 1, 1995, the Company implemented an employee stock purchase
plan which permits employees to purchase, via payroll deduction, shares of the
Company's Class A Common Stock, up to an amount not to exceed 10% of an
employee's annual gross pay.

9. COMMITMENTS AND CONTINGENCIES

Emmis leases certain office space, tower space, equipment and automobiles under
operating leases expiring at various dates through May 2013. Some of the lease
agreements contain renewal options and annual rental escalation clauses
(generally tied to the Consumer Price Index or increases in the lessor's
operating costs), as well as provisions for payment of utilities and
maintenance costs.

Rent expense for the year ended February 1996 includes a loss recognized in
connection with a remaining lease obligation related to leased property no
longer used for operating purposes. The future minimum rental payments
(exclusive of future escalation costs and amounts reflected as a liability in
the accompanying consolidated balance sheet related to leased property no
longer used for operating purposes, net of probable sublease income) required by
noncancellable operating leases which have remaining terms in excess of one
year as of February 29, 1996, are as follows:



PAYABLE IN YEAR PAYMENTS
ENDING FEBRUARY (IN THOUSANDS)
- ------------------------------------------------------------

1997 $ 2,019
1998 2,193
1999 1,787
2000 1,433
2001 1,237
Thereafter 8,203
- ------------------------------------------------------------
$16,872
- ------------------------------------------------------------




19
Rent expense totaled $2,379,000, $2,840,000 and $4,437,000 for the years ended
February 1994, 1995 and 1996, respectively.

Emmis has entered into agreements to broadcast certain syndicated programs and
sporting events. Future payments related to these broadcast rights are
summarized as follows: Year ended February 1997 - $1,300,000; 1998 -
$1,100,000; and 1999 -$200,000. Expense related to these broadcast rights
totaled $-0-, $135,000 and $1,260,000 for the years ended February 1994, 1995
and 1996.

Emmis currently and from time to time is involved in litigation incidental to
the conduct of its business, but Emmis is not currently a party to any lawsuit
or proceeding which, in the opinion of management, is likely to have a material
adverse effect on the financial position or results of operations of Emmis.

Effective March 1, 1994, Emmis entered into an employment agreement with its
Chief Executive Officer that continues through February 28, 1999 and provides
for an annual base salary as specified in the agreement and an annual bonus. In
addition, for each year Emmis meets specified financial targets, the Chief
Executive Officer will be granted an option to acquire 100,000 shares of Class
B Common Stock. The options will have a five-year term and an exercise price of
$15.50 per share. The Chief Executive Officer was granted an option to acquire
100,000 shares of Class B Common Stock in accordance with the terms of this
agreement for the years ended February 1995 and 1996. Upon the termination or
disability of the Chief Executive Officer, specified levels of compensation may
continue for five years from the date of termination or disability. Upon the
death of the Chief Executive Officer, lump sum payments are payable to his
estate.

Effective March 1, 1995, Emmis entered into employment agreements with two
other executive officers of the Company that continue through February 28, 1998
and provide for an annual base salary and certain bonuses as specified in the
agreements. Subject to certain conditions, each executive officer will receive
12,000 shares of the Company's Class A Common Stock for each year of the
employment agreements. In addition, subject to certain conditions, each
executive officer will be granted an option to acquire 25,000 shares of Class A
Common Stock during each year of the employment agreements. The options become
exercisable at the end of the term of the employment agreements and have an
exercise price of $15.50 per share.

Effective March 1, 1995, Emmis entered into employment agreements with certain
station managers that continue through February 28, 1997 and provide for an
annual base salary and certain bonuses as specified in the agreements. Subject
to certain conditions, each station manager will receive a prescribed number of
shares, not to exceed 1,000 shares, of the Company's Class A Common Stock
during each year of the employment agreements.

10. INCOME TAXES

The provision for income taxes for the years ended February 1994, 1995 and
1996,consisted of the following:



(IN THOUSANDS) 1994 1995 1996
- ----------------------------------------------------------------------------------------------------------------------------------

CURRENT:

Federal, attributable to U.S. alternative minimum tax $ -- $ 200 $2,081
State 60 75 649
- -----------------------------------------------------------------------------------------------------------------------------------
60 275 2,730
- -----------------------------------------------------------------------------------------------------------------------------------
DEFERRED:
Federal 1,060 3,696 4,572
State 180 557 298
- -----------------------------------------------------------------------------------------------------------------------------------
1,240 4,253 4,870
- -----------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes $1,300 $4,528 $7,600
- -----------------------------------------------------------------------------------------------------------------------------------

The provision for income taxes for the years ended February 1994, 1995 and 1996, differs from that computed at the
Federal statutory corporate tax rate as follows:


(IN THOUSANDS) 1994 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Computed income taxes at 35%
in 1994, 1995 and 1996 $ 120 $4,254 $6,268
State income tax 180 632 616
Warrant termination fee not deductible for tax 200 -- --
Other 800 (358) 716
- -----------------------------------------------------------------------------------------------------------------------------------
$1,300 $4,528 $7,600

- -----------------------------------------------------------------------------------------------------------------------------------


In connection with the extraordinary loss on the early extinguishment of debt,
Emmis recognized an income tax benefit of $2.3 million which is reflected as a
reduction to the extraordinary loss in the consolidated statement of operations
for the year ended February 28, 1994.

20
THE components of deferred tax assets and deferred tax liabilities at February
28, 1995 and February 29, 1996, are as follows:




(IN THOUSANDS) 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------------

DEFERRED TAX ASSETS:
Regular net operating loss carryforwards $ 5,800 $ --
Capital loss carryforwards 2,500 3,400
Alternative minimum tax credit 800 900
Other 1,600 2,900
Valuation allowance (2,500) (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 8,200 3,800
- -----------------------------------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:

Intangible assets (29,600) (29,900)
Other (1,410) (1,580)
- -----------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (31,010) (31,480)
- -----------------------------------------------------------------------------------------------------------------------------------
Net deferred tax asset (liability) $(22,810) $(27,680)

- -----------------------------------------------------------------------------------------------------------------------------------


A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for 100% of the capital loss carryforwards available as of
February 28, 1995 and February 29, 1996, since these loss carryforwards can
only be utilized to offset future capital gains and expire in 1999.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments of Emmis are estimated below based on
the methods and assumptions discussed therein.

a. CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, AND ACCOUNTS PAYABLE

The carrying amounts approximate fair value because of the short maturity of
these instruments.

b. LONG-TERM DEBT

Based upon borrowing rates currently available to the Company for debt with
similar terms and the same remaining maturities, the fair value of long-term
debt approximated the carrying value at February 29, 1996.

c. INTEREST RATE CAP AGREEMENTS

The unamortized cost of interest rate cap agreements included in the February
29, 1996 consolidated balance sheet totals $374,000. The fair value of interest
rate cap agreements of $19,000 is estimated from quotes obtained from brokers.

12. RELATED PARTY TRANSACTIONS

Two officers of Emmis are partners in a law firm which provides legal services
to Emmis. Legal fees billed by this law firm were approximately $625,000,
$706,000 and $188,000 for the years ended February 1994, 1995 and 1996,
respectively.

Affiliates of Morgan Stanley Group, Inc. are shareholders of Emmis. No fees
were paid to Morgan Stanley Group, Inc. and affiliates for the years ended
February 1994, 1995 and 1996; however, an affiliate of Morgan Stanley Group,
Inc. served as an underwriter in connection with the initial public offering
addressed in Note 2.

13. RECLASSIFICATIONS

Certain reclassifications have been made to the February 28, 1994 and 1995
financial statements to be consistent with the February 29, 1996 presentation.

14. QUARTERLY FINANCIAL DATA (UNAUDITED)



QUARTER ENDED
- -----------------------------------------------------------------------------------------------------------------------------------
Full
(IN THOUSANDS, EXCEPT PER SHARE DATA) May 31 Aug. 31 Nov. 30 Feb. 28(29) Year


- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED FEBRUARY 28, 1995:
Net broadcasting revenues $13,743 $18,212 $17,580 $17,280 $66,815
Operating income 4,766 7,352 6,414 1,642 20,174
Net income (loss) 2,664 3,338 2,891 (1,266) 7,627
Net income per common and common
equivalent share $ 0.25 $ 0.31 $ 0.27 $ (0.12) $ 0.70
Net income per common share
assuming full dilution $ 0.25 $ 0.31 $ 0.27 $ (0.12) $ 0.70
YEAR ENDED FEBRUARY 29, 1996:
Net broadcasting revenues $25,357 $27,976 $26,589 $19,908 $99,830
Operating income 8,113 11,736 9,206 2,696 31,751
Net income (loss) 1,737 4,212 4,484 (125) 10,308
Net income per common and common
equivalent share $ 0.16 $ 0.38 $ 0.40 $ (0.01) $ 0.92
Net income per common share
assuming full dilution $ 0.16 $ 0.38 $ 0.40 $ (0.01) $ 0.91
- -----------------------------------------------------------------------------------------------------------------------------------


21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this item with respect to directors of the
Company is incorporated by reference from the section entitled "Proposal No. 1:
Election of Directors" on pages 3-4 of the Company's 1996 Proxy Statement and
the section entitled "Compliance with Section 16(a) of the Securities Exchange
Act of 1934" on page 8 of the Company's 1996 Proxy Statement.

Listed below is certain information about the executive officers and
certain other significant employees of the Company or its affiliates and who
are not directors.


AGE AT YEAR FIRST
FEBRUARY 29, ELECTED
NAME POSITION 1996 OFFICER(1)
- ---- -------- ---- ----------

Norman H. Gurwitz Executive, Vice President, 48 1987
Secretary and
Corporate Counsel

Howard L. Schrott Executive Vice President, Treasurer 41 1991
and Chief Financial Officer

John R. Beck, Jr. Vice President and 44 1984
General Manager-KSHE

Richard F. Cummings Executive Vice 44 1984
President-
Programming

Margaret Dugan Vice President 33 1995

Ronald E. Elberger Vice President, 50 1987
Assistant Secretary
and General Counsel

Judith Ellis Vice President and 47 1989
General Manager - WQHT
and WRKS

Charles Hillier Vice President and 45 1988
General Manager-WKQX

James R. Riggs Senior Vice President 59 1983
Special Projects

Thomas Severino Vice President and General
Manager-WIBC 44 1994

Deborah J. Smulyan Vice President 40 1995






-14-
22


Christine S. Woodward Vice President and 42 1985
General Manager-WENS,
and WNAP
- --------------
(1) Includes service with predecessor corporations.



Set forth below is the principal occupation for the last five years
of each executive officer or significant policy-making employee of the Company
or its affiliates who is not also a director.

RICHARD F. CUMMINGS was the Program Director of WENS from 1981 to
March 1984, when he became the National Program Director and a Vice President
of the Company. His title was changed to Executive Vice President--Programming
in 1988. At present, Mr. Cummings also serves as day-to-day program director
of KPWR-FM in Los Angeles.

HOWARD L. SCHROTT became Vice President, Chief Financial Officer and
Treasurer of the Company in 1991. He became an Executive Vice President in
1995. Prior to joining the Company, Mr. Schrott was a Vice President in the
Communications Lending Group at First Union National Bank, Charlotte, North
Carolina. From 1984 to 1989 Mr. Schrott served as Chief Operating and
Executive Officer for a group of radio stations. Mr. Schrott also spent two
years practicing law in Washington, D.C. and Indianapolis, Indiana, where he
concentrated in matters before the FCC and general business matters relating to
broadcasting and media.

NORMAN H. GURWITZ was elected Corporate Counsel for the Company in
1987 and a Vice President in 1988. He was elected Secretary of the Company in
1989 and became an Executive Vice President in 1995. Prior to 1987, he was a
partner in the Indianapolis law firm of Scott & Gurwitz.

JOHN R. BECK, JR. became a Vice President of the Company and General
Manager of KSHE in March 1984. From 1982 to 1984, he was Vice President and
General Manager of KKCI-AM/FM in Kansas City, Missouri, and from 1980 to 1982,
he was Manager of the Detroit office of CBS-FM National Sales.

MARGARET DUGAN joined the Company as Vice President in 1995.
Previously, she served as a project consultant for ABC Radio Partners,
International and United Press International.

RONALD E. ELBERGER was elected General Counsel for the Company in
1987 and a Vice President in 1988. He was named an Assistant Secretary in
1989. Mr. Elberger is a partner in the Indianapolis law firm of Bose McKinney
& Evans.

JUDITH ELLIS has been Vice President and General Manager of WQHT
since 1989, and General Manager of WRKS since 1994. Before her promotion to
that position, from 1984 to 1989, she served as station manager and general
sales manager at the station. Prior to that she worked in various sales
capacities at WKTU-FM, WNEW-FM and WXLO-FM, all in New York.

CHARLES HILLIER has been Vice President and General Manager of WKQX
in Chicago since 1988. Prior to that time, he was a principal of Hillier,
Newmark, Wechsler & Howard, a national radio advertising "rep" firm.

JAMES R. RIGGS became the Company's Vice President of Administration
and Director of Research in 1983. From 1972 to 1983 Mr. Riggs was a professor
of political science at Indiana Central University. In 1987, his title was
changed to Research Division President, and he now serves as Senior Vice
President for Special Projects.

THOMAS SEVERINO was elected Vice President and General Manager of
WIBC in 1994. Prior to that time he was General Manager of NewsTalk WCKY in
Cincinnati, Ohio.

DEBORAH J. SMULYAN joined the Company as Vice President in 1995.
From 1989-1995 she served as Executive Director of the Democratic Leadership
Counsel.





-15-
23
CHRISTINE S. WOODWARD joined the Company as Sales Manager at WENS in
1983 and was named General Manager of WENS in 1984 and a Vice President of the
Company in 1985. In 1994 Ms. Woodward was also named General Manager of WNAP.
From 1982 to 1983 she was station manager of WVEZ-FM in Louisville, Kentucky.
Prior to that time she was general sales manager for WQLR in Kalamazoo,
Michigan.


ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is incorporated by reference
from the section entitled "Executive Compensation" on pages 4-8 of the
Company's 1996 Proxy Statement.

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

The information required by this item is incorporated by reference
from the section entitled "Voting Securities and Beneficial Owners" on pages
1-2 of the Company's 1996 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference
from the section entitled "Certain Transactions" on page 4 of the Company's
1996 Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

Financial Statements

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

Financial Statement Schedules

The following financial statement schedule is filed as a part of this
report:

Report of Independent Public Accountants on Financial Statement Schedule

Schedule II Valuation and Qualifying Accounts and Reserves for the fiscal
years in the three year period ended February 29, 1996.

All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or related notes.

Exhibits

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

3.1 Amended and Restated Articles of Incorporation of Emmis Broadcasting
Corporation, incorporated by reference from Exhibit 3.3 to the
Registration Statement, as amended (the "Registration Statement") of
the Company on Form S-1, file no. 33-73218.*
3.2 Amended and Restated Bylaws of Emmis Broadcasting Corporation,
incorporated by reference from Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1995 (the
"1995 10-K").*
3.3 Form of stock certificate for Class A Common Stock, incorporated by
reference from Exhibit 3.5 to the Registration Statement.*
10.1 Emmis Broadcasting Corporation 1986 Stock Incentive Plan, as amended,





-16-
24
incorporated by reference from Exhibit 10.1 to the Registration
Statement.*
10.2 The 1989 Emmis Broadcasting Corporation Stock Appreciation Rights
Plan, incorporated by reference from Exhibit 10.2 to the Registration
Statement.*
10.3 Emmis Broadcasting Corporation 1992 Stock Option Plan, incorporated by
reference from Exhibit 10.3 to the Registration Statement.*
10.4 Emmis Broadcasting Corporation Profit Sharing Plan, incorporated by
reference from Exhibit 10.4 to the Registration Statement.*
10.5 Emmis Broadcasting Corporation 1994 Equity Incentive Plan,
incorporated by reference from Exhibit 10.5 to the Registration
Statement.*
10.6 Stock Purchase Agreement dated December 16, 1991, by and between
Infinity Broadcasting Corporation and KPWR, Inc., incorporated by
reference from Exhibit 10.11 to the Registration Statement.*
10.7 Stock Purchase Agreement dated December 23, 1992, by and between Emmis
Broadcasting Corporation and Greater Media, Inc., incorporated by
reference from Exhibit 10.12 to the Registration Statement.*
10.8 Revolving Credit and Term Loan Agreement, incorporated by reference
from Exhibit 10.15 to the Registration Statement.*
10.9 Form of Employment Agreement with Jeffrey H. Smulyan, incorporated by
reference from Exhibit 10.13 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1994 (the "1994 10-K").*
10.10 Form of Registration Rights Agreement between Emmis Broadcasting
Corporation and Morgan Stanley Group Inc., incorporated by reference
from Exhibit 10.17 to the Registration Statement.*
10.11 Stock Purchase Agreement dated as of June 15, 1994 by and between
Emmis Broadcasting Corporation and Summit Communications Group, Inc.
(with exhibits omitted which the Company agrees to file supplementally
upon request), incorporated by reference from Exhibit 10.17 to the
Company's Report on Form 10-Q for the quarter ended May 31, 1994.*
10.12 The Emmis Broadcasting Corporation 1995 Non-Employee Director Stock
Option Plan incorporated by reference from Exhibit 10.15 of the 1995
10-K.*
10.13 The Emmis Broadcasting Corporation 1995 Equity Incentive Plan
incorporated by reference from Exhibit 10.16 of the 1995 10-K.*
10.14 Employment Agreement with Doyle L. Rose, incorporated by reference
from Exhibit 10.2 to the Company's Report on Form 10-Q for the quarter
ended May 31 1995 (the "May 1995 10-Q").*
10.15 Employment Agreement with Richard F. Cummings, incorporated by
reference from Exhibit 10.3 to the May 1995 10-Q."*
10.16 First, Second and Third Amendments to Revolving Credit and Term Loan
Agreement, incorporated by reference from Exhibit 10.12 to the
Company's Report on Form 10-Q for the quarter ended November 30,
1994.*
10.17 Fourth Amendment to Revolving Credit and Term Loan Agreement, dated as
of April 4, 1995, incorporated by reference from Exhibit 10.1 to the
May 1995 10-Q.*
11 Schedules re: Calculation of per share and pro forma per share net
income (loss).
21 Subsidiaries of the Company.
23 Consent of Accountants.
24 Powers of Attorney.
27 Financial Data Schedule (EDGAR-filed version only)
99 Proxy Statement.*

___________________
* Previously Submitted





-17-
25
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 BROADCASTING CORPORATION


Date: May 28, 1996 By: /s/Jeffrey H. Smulyan
- --------------------------------- -------------------------
Jeffrey H. Smulyan
Chairman of the Board

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



SIGNATURE TITLE
---------- -----

Date: May 28, 1996 /s/Jeffrey H. Smulyan President, Chairman of the Board and
-------------------------------------- Director (Principal Executive Officer)
Jeffrey H. Smulyan

Date: May 28, 1996 /s/Howard L. Schrott Executive Vice President, Treasurer
-------------------------------------- and Chief Financial Officer (Principal
Howard L. Schrott

Date: May 28, 1996 /s/Susan B. Bayh* Director
--------------------------------------
Susan B. Bayh

Date: May 28, 1996 /s/Gary L. Kaseff* Director
--------------------------------------
Gary L. Kaseff

Date: May 28, 1996 /s/Richard A. Leventhal* Director
--------------------------------------
Richard A. Leventhal

Date: May 28, 1996 /s/Doyle L. Rose* Radio Division President and Director
--------------------------------------
Doyle L. Rose

Date: May 28, 1996 /s/Samuel W. Smulyan* Director
--------------------------------------
Samuel W. Smulyan

Date: May 28, 1996 /s/Lawrence B. Sorrel* Director
--------------------------------------
Lawrence B. Sorrel





*By: /s/Norman H. Gurwitz
-------------------------
Norman H. Gurwitz
Attorney-in-Fact





-18-
26
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE


To the Board of Directors and Shareholders of
Emmis Broadcasting Corporation and Subsidiaries:


We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements of EMMIS BROADCASTING
CORPORATION AND SUBSIDIARIES included in Item 8, in this Form 10-K, and have
issued our report thereon dated March 28, 1996. Our audit was made for the
purpose of forming an opinion on the basic consolidated financial
statements taken as a whole. The schedule listed in Item 14 is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.




ARTHUR ANDERSEN LLP



Indianapolis, Indiana,
March 28, 1996.
27
EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE FISCAL YEARS IN THE THREE YEAR PERIOD ENDED FEBRUARY 29, 1996

(DOLLARS IN THOUSANDS)



BALANCE AT BALANCE
BEGINNING AT END
CLASSIFICATION OF YEAR PROVISION WRITE-OFFS OTHER OF YEAR
- -------------- ---------- --------- ---------- ----- --------

ALLOWANCE FOR DOUBTFUL ACCOUNTS,
Year ended February 28, 1994 $324 $545 ($537) $ 0 $332
Year ended February 28, 1995 332 493 (450) 245 (1) 620
Year ended February 29, 1996 620 834 (655) 0 799

VALUATION ALLOWANCE,
Year ended February 28, 1994 $2,400 $100 $0 $0 $2,500
Year ended February 28, 1995 2,500 0 0 0 2,500
Year ended February 29, 1996 2,500 900 0 0 3,400



(1) Represents additions to the allowance for doubtful accounts
associated with the acquisition of certain radio stations.