Jeff Smulyan tells Emmis staffers "the news is encouraging", though his early-morning conference call with analysts cautioned that the rest of the year may not be like August, when the Beverage category zoomed 45%. Quarterly revenues at the two Chicago stations ("Loop" WLUP/97.9 and alternative "Q101" WKQX) and New York's rock WRXP (101.9) were hurt after Emmis announced they'd be sold to Merlin Media, and that impacted the radio division revenues. Excluding those stations, radio revenues gained about 4%, doing especially well in Los Angeles (with Power 106/KPWR) and Indianapolis. Emmis retains both preferred stock and an equity interest in Merlin, and the cash proceeds of the deal let Emmis pay down 38% of its debt and reduce its EBITDA leverage ratio to 6.1 times. Smulyan tells employees that "Emmis continues to be the epicenter of innovation in the radio industry", with the new HD Radio smartphone app, its leadership in the Broadcasters Traffic Consortium, the InCite social impact marketing operation, the new Loud Digital Network, and more. But the CEO admits that the stock price doesn't reflect that, and calls it "a widespread source of frustration." NASDAQ has given Emmis until February 2012 to get its stock price back above $1 a share.