To enhance the value of its common stock, rationalize its capital structure and reduce its leverage ratio, our client, Emmis Communications Corporation (Emmis), determined that it would be in the best interests of its shareholders to commence a program to provide Emmis with flexibility to amend the terms of its preferred stock. As part of this program, Emmis repurchased preferred stock in the open market, entered into total return swaps with certain preferred stockholders, and issued preferred stock as part of an employee retention plan. In September 2012, after Emmis had obtained two thirds of the preferred stock, Emmis’s shareholders and preferred stockholders voted to amend the rights of the preferred stock, thereby, among other things, cancelling all unpaid preferred stock dividends to date, changing the designation of the preferred stock from cumulative to non-cumulative, and allowing Emmis to pay common stock dividends and other distributions prior to paying unpaid preferred stock dividends. Plaintiffs retained an expert to assess damages sustained by Plaintiffs as a result of the amendments. Compass Lexecon’s President, Professor Daniel R. Fischel submitted a report and testified at deposition on behalf of Emmis criticizing the damages methodology of Plaintiffs’ expert. Specifically, Professor Fischel opined that Plaintiffs’ expert’s analysis of the value of the preferred stock with and without the rights was unscientific, fundamentally flawed, and unreliable. Professor Fischel also demonstrated that the damages analysis of Plaintiffs’ expert was contradicted by the market evidence. On February 28, 2014, Judge Sarah Evans Barker of the Southern District of Indiana granted our client, Emmis Communications Corporation, motion for summary judgment. On July 2, 2015, the United States Court of Appeals for the 7th Circuit affirmed the U.S. District Court’s decision. Professor Fischel was supported by a Compass Lexecon team led by Ralph Scholten in our Washington, D.C. office. The Compass Lexecon team worked closely with Rich Kempf and others of Taft Stettinius & Hollister LLP, who successfully represented Emmis.
- Antitrust & Competition: Mergers
- Entertainment & Media
- Daniel R. Fischel
- Ralph Scholten