In Douglas Rushkoff’s book -“Get Back in The Box” he argues that once a company goes public it’s really not in the “widget making” business anymore- it enters into the shareholder appeasement business. It turns it’s focus AWAY from it’s core competency – and towards a completely OTHER kind of activity.

From Inside Radio today –

Emmis shareholder Noonday Asset Management is back for more – it wants a second Dutch auction.
The Farallon Capital subsidiary holds nearly 10% of Emmis’ stock and thought it might cash out from Jeff Smulyan’s sweetened buyout offer – but that never came. Now Noonday says in a 13D filing that it wants the board to consider mounting a second Dutch Auction – essentially letting the market dictate the terms of a share buyback (but still remaining public).
Here are the numbers for a possible Dutch
auction for Emmis.

Emmis did one of those last Summer and set the price at $19.25 a share after sellers indicated their preferred price and amount. But things have changed and last month Jeff Smulyan withdrew his go-private offer of $15.25 – and then watched the price of “EMMS” dribble down close to $11. Now Noonday goes to the board to force the issue. Actually – Merrill Lynch analyst Laraine Mancini says Smulyan might be open to another sweeping buyback. She says “a Dutch tender at today’s stock price is likely a good opportunity for management to buy shares at a depressed level.” She’s keeping a “buy” rating on Emmis – which was up in today’s trading.

Does this sound like “broadcasting”? Does it sound like Jeff Smulyan is focused on the product Emmis is IN BUSINESS to create?

No. He’s busy with shareholder appeasement.

Actually – it’s worse.

SHAREHOLDER implies a share HOLDER – an investor with a long term HOLDING. In the Emmis case above it’s about a big institutional investor looking for an exit OUT of the stock.

This is the huge point made by Mark Cuban that I referenced in my “Stock Buyback” post.

I know this activity isn’t limited to radio companies – but radio is the industry I’m employed in and the “everyone does it” rationale shouldn’t excuse it.


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