METRO NETWORKS INC, 424B1, 1996-10-17

METRO NETWORKS INC
424B1, 1996-10-17
COMMUNICATIONS SERVICES, NEC

Previous: METRO NETWORKS INC, AW, 1996-10-17

Next: ALLIANCE REGENT SECTOR OPPORTUNITY FUND INC, N-1A EL/A, 1996-10-17

<PAGE>
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-6311
7,200,000 SHARES
METRO NETWORKS, INC.

[LOGO]

COMMON STOCK
(PAR VALUE $.001 PER SHARE)

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

Of the 7,200,000 shares of Common Stock offered hereby, 3,600,000 shares are
being sold by the Company and 3,600,000 shares are being sold by the Selling
Stockholder. The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholder. See "Principal and Selling Stockholders."

Prior to this offering, there has been no public market for the Common Stock
of the Company. For factors to be considered in determining the initial public
offering price, see "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 HEREOF FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "MTNT."

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

<TABLE>
<S> <C> <C> <C> <C>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) STOCKHOLDER
------------------ -------------------- -------------------- --------------------
Per Share........................... $16.00 $1.12 $14.88 $14.88
Total(3)............................ $115,200,000 $8,064,000 $53,568,000 $53,568,000
</TABLE>

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

(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $700,000 payable by the Company.

(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 1,050,000 shares of Common Stock at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such option is exercised in full, the total initial
public offering price, underwriting discount and proceeds to the Company
will be $132,000,000, $9,240,000 and $69,192,000, respectively. See
"Underwriting."

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

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York on or about
October 22, 1996, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.

CS FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

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

The date of this Prospectus is October 16, 1996.

<PAGE>
EDGAR DESCRIPTION

[A map of the United States is depicted with circles used to indicate each
of Metro Networks Markets which are Phoenix and Tucson, Arizona; Los Angeles,
Modesto, Oxnard, Sacramento, Riverside/San Bernadino, San Diego, San Francisco,
San Jose and Stockton, California; Denver, Colorado; Danbury, Hartford and New
Haven, Connecticut; Wilmington, Delaware; Daytona Beach, Jacksonville, Miami/Ft.
Lauderdale, Orlando, Tampa/St. Petersburg/Clearwater and West Palm Beach,
Florida; Altanta, Georgia; Chicago, Illinois; Indianapolis, Indiana; Louisville,
Kentucky; Baltimore, Maryland; Boston, Massachusetts; Detroit, Michigan;
Minneapolis/St. Paul, Minnestoa; Kanasas City and St. Louis, Missouri; Omaha,
Nebraska; Las Vegas, Nevada; Monmouth/Ocean counties, New Jersey; Albuquerque,
New Mexico; Buffalo, New York, Rochester and Nassau County, New York;
Charlotte/Gastonia, North Carolina; Cincinnati, Cleveland/Akron/ Columbus, Ohio;
Oklahoma City, Oklahoma; Portland, Oregon; Philadelphia and Pittsburgh,
Pennsylvania; Providence, Rhode Island; Memphis and Nashville, Tennessee;
Austin, Dallas/Ft. Worth, Houston/Galveston, San Antonio, Texas; Salt Lake City,
Utah; Richmond, Norfolk/Virginia Beach, Virginia; Seattle/Tacoma, Washington;
Washington D.C. and Milwaukee, Wisconsin.

Color photographs of the types of news and information services that the
Company's networks may provide to its affiliates will be presented. These
include: a blazing fire, traffic jams, sporting events, weather updates and
information on current events. Certain text from the overview section of the
prospectus will also be repeated here. The logos of the Company's various
information services will also be presented including: Metro Video News, Metro
Network News, Metro Networks, Metro Traffic Control and Metro Information
Services.]

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

The Company intends to furnish to its shareholders annual reports containing
audited financial statements and quarterly reports containing unaudited interim
financial information for the first three fiscal quarters of each fiscal year.
--------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND COMBINED FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN
THIS PROSPECTUS ASSUMES THAT THE OVER-ALLOTMENT OPTIONS GRANTED TO THE
UNDERWRITERS ARE NOT EXERCISED. IN ADDITION, UNLESS THE CONTEXT REQUIRES
OTHERWISE, REFERENCES TO THE COMPANY REFER TO METRO NETWORKS, INC., A DELAWARE
CORPORATION, AND ITS SUBSIDIARY AFTER THE REORGANIZATION (AS DEFINED HEREIN). A
GLOSSARY OF CERTAIN TERMS APPEARING HEREIN HAS BEEN INCLUDED IN THIS PROSPECTUS.
SEE "GLOSSARY."

THE COMPANY

OVERVIEW

The Company is the largest provider of traffic reporting services, according
to a March, 1994 market analysis prepared by the United States Department of
Transportation, and believes that it is a leading supplier of local news,
sports, weather and other information reporting services to the television and
radio broadcast industries. The Company's information reports, which are
customized to meet the specific needs of each of the Company's individual radio
and television station affiliates, are presently being broadcast by
approximately 1,275 radio station affiliates and 110 television station
affiliates. The Company provides local broadcast information reports in 47 of
the 50 largest MSA markets in the United States. In exchange for the Company's
information reports, radio and television station affiliates provide commercial
airtime inventory to the Company. The packaging and sale of this commercial
airtime inventory accounts for substantially all of the Company's revenues. See
"-- Advertising Sales and Marketing," "Business" and "Glossary."

Because the Company has numerous radio station affiliates in each of its
markets (averaging 21 affiliates per market), the Company believes that its
broadcasts of local traffic information enable advertisers to reach more people,
more often, in a higher impact manner than can be achieved using other
advertising media. The Company's information reports are broadcast daily in 60
MSA markets and are heard by more than 100 million people (age 12 and over).
Such reports and the Company's commercial messages are listened to by an average
of 88% of the population (age 12 and over) in its markets. The Company's large
network of affiliates offers advertisers the opportunity to reach a broad-based
local, regional or national audience, through a single purchase of commercial
airtime inventory. See "Business."

The Company offers advertisers three different networks on which to
broadcast their advertisements: the network of radio stations (the "Radio
Traffic Services Network") which broadcasts the Company's traffic information
reports (the "Radio Traffic Services"); the network of radio stations (the
"Expanded Radio Services Network") which broadcasts an array of customized local
news, sports, weather and other programming services (the "Expanded Radio
Services"); and the network of television stations (the "MetroTV Network") which
broadcasts the Company's television traffic services and video news services
(the "Television Traffic Services" and "Video News Services" and collectively,
the "MetroTV Services"). The Company believes that the Expanded Radio Services
Network and the MetroTV Network, both of which are currently being developed,
will become separate broad-based networks through which the Company will be able
to acquire, package and sell additional commercial airtime inventory. See
"Business -- Operating Strategy" and " -- Advertising Sales and Marketing."

Since its founding in 1978, the Company has demonstrated growth in revenues
and EBITDA (I.E., earnings before other expense (income), interest expense,
taxes, depreciation and amortization). For the six months ended June 30, 1996,
the Company had revenues of $50.1 million, EBITDA of $11.5 million and adjusted
EBITDA (I.E., EBITDA plus predecessor shareholder costs) of $12.2 million. For
the year ended December 31, 1995, the Company had pro forma revenues of $78.1
million, pro forma EBITDA of $10.0 million and pro forma adjusted EBITDA of
$12.1 million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Selected Financial and Operating Data."

3
<PAGE>
OPERATING STRATEGY

The Company's strategy is to realize operating efficiencies by (i) expanding
geographically; (ii) increasing the number of affiliates using the Radio Traffic
Services within existing markets; (iii) developing the Expanded Radio Services;
(iv) developing the MetroTV Services; and (v) continuing to strengthen
marketing, sales and inventory management operations.

-EXPAND GEOGRAPHICALLY. The Company, which currently operates in 60 MSA
markets in the United States, including 54 of the largest 75 MSA markets,
believes that the economic model for its local information services
business is viable in each of the largest 75 MSA markets. Since July 1994,
the Company has entered 16 new markets and the Company intends to expand
into the remaining 21 of the largest 75 MSA markets over the next three
years through strategic acquisitions and start-ups. The Company has
recently entered into a purchase agreement to acquire all of the assets of
Airborne Traffic Network, Inc. ("ATN") and a letter of intent to acquire
the assets of Wisconsin Information Systems, Inc. ("WIS") (collectively,
the "Pending Acquisitions"). The Company is always examining acquisition
and expansion opportunities. See

"-- Recent Developments."

-INCREASE THE NUMBER OF AFFILIATES USING THE RADIO TRAFFIC SERVICES WITHIN
EXISTING MARKETS. The Company believes there are substantial opportunities
for continued growth in the Radio Traffic Services Network. As of June 30,
1996, the Company provided its Radio Traffic Services to approximately
1,230 radio station affiliates, an increase from approximately 900 radio
station affiliates as of December 31, 1994. The Company believes that
opportunities are available to increase its market penetration by
establishing affiliate relationships with additional radio stations
nationwide. Its current Radio Traffic Services Network represents 48.7% of
the approximately 2,524 radio stations in the 60 MSA markets in which the
Company operates.

-DEVELOP THE EXPANDED RADIO SERVICES. Having established a substantial
market presence in the Radio Traffic Services, the Company began during
1994 to leverage this business by offering the Expanded Radio Services to
its network of radio station affiliates. As of June 30, 1996, the Company
provided the Expanded Radio Services to more than 200 radio station
affiliates in 28 MSA markets, an increase from 92 radio station affiliates
in 17 MSA markets as of December 31, 1994. The Company intends to expand
these services to all of its markets by the end of 1997.

-DEVELOP THE METROTV SERVICES. The Company has provided Television Traffic
Services to the MetroTV Network for over ten years. As of June 30, 1996,
this network consisted of 110 television stations in 47 DMA markets, an
increase from 71 television stations in 33 DMA markets as of December 31,
1994. In connection with its core Radio Traffic Services business, the
Company developed an extensive array of video surveillance and broadcast
equipment, including jet helicopters, broadcast quality remote and
omni-directional aircraft-mounted camera systems, mobile units,
computer-generated graphic displays and broadcasting technology. In 1995,
the Company began to use this infrastructure to offer the Video News
Services to its network of television station affiliates, and is currently
providing these services to 16 of its television station affiliates in 12
of its 47 DMA markets. The MetroTV Services include full service, 24 hours
per day/7 days per week video coverage from camera crews in the Company's
aircraft and mobile ground units covering breaking news stories. The
Company intends to expand the Video News Services into the 25 largest DMA
markets in the United States over the next three years.

-CONTINUE TO STRENGTHEN MARKETING, SALES AND INVENTORY MANAGEMENT
OPERATIONS. Over the past year, the Company has invested in, and continues
to initiate and implement, new operating strategies and systems to increase
revenues and EBITDA. In order to increase the percentage of the Company's
commercial airtime inventory sold, the Company has (i) increased its sales
force from approximately 70 sales representatives as of December 31, 1994
to approximately 136 sales representatives as of June 30, 1996; (ii)
developed a corporate marketing department to support the efforts of its
sales representatives by providing extensive training, research,
sales/marketing materials and analysis; (iii) hired additional general
managers and sales managers to better

4
<PAGE>
manage the activities of its sales representatives and enhance its
affiliate relations; (iv) fully automated its commercial airtime inventory
management system to improve inventory control and pricing; and (v) reduced
the level of reciprocal arrangements (the exchange of commercial airtime
for goods and services) to focus sales representatives on cash revenue
business.

PROGRAMMING

Every aspect of the Company's information reports (including the length of
report, content of report, specific geographic coverage area, time of broadcast,
number of reports aired per day, broadcaster's style, etc.) is customized to
meet each individual affiliate's requirements. The Company typically works
closely with the program directors, news directors, and general managers of its
affiliates to ensure that the Company's services meet its affiliates' quality
standards. The Company and its affiliates jointly select the on-air broadcasters
to ensure that each broadcaster's style is appropriate for the station's format.
The Company's broadcasters often become integral "personalities" on such
affiliates' stations as a result of their significant on-air presence and
interaction with the stations' on-air personnel. In order to realize operating
efficiencies, the Company endeavors to utilize its professional broadcasters on
multiple affiliate stations within a particular market. Generally, each of the
Company's broadcasters delivers reports to between two and four of the Company's
affiliates.

The Company does not require its affiliates to identify the Company as the
supplier of its information reports. This provides the Company's affiliates with
a high degree of customization and flexibility, as each affiliate has the right
to present the information reports provided by the Company as if the affiliate
had generated such reports with its own resources. For example, multiple
affiliates in a single market may suggest that the Company's infrastructure,
including its airplanes, helicopters and broadcasters, are those of the
affiliate. See "Business -- Programming".

INFRASTRUCTURE

The Company believes that its extensive fleet of aircraft and other
information-gathering technology and broadcast equipment have allowed the
Company to provide high quality programming, enabling it to retain and expand
its affiliate base. In the aggregate, the Company utilizes approximately 69
fixed-wing aircraft, 17 helicopters, 30 mobile units, 7 airborne camera systems,
16 fixed-position camera systems, 50 broadcast studios and 1,177 broadcasters
and producers. The Company also maintains a staff of computer programmers and
graphics experts to supply customized graphics and other visual programming
elements to television stations. In addition, the Company's operating centers
and broadcast studios have sophisticated computer technology, video and
broadcast equipment and cellular and wireless technology which enable the
Company's broadcasters to deliver accurate and timely reports to its affiliates.
The infrastructure and resources dedicated to a specific market by the Company
are determined by the size of the market, the number of affiliates the Company
serves in the market and the type of services being provided. See "Business --
Infrastructure."

ADVERTISING SALES AND MARKETING

The Company's primary source of revenue is the packaging and sale to
advertisers of commercial airtime inventory provided to the Company by its
affiliates in exchange for its information reports. The Company's standard radio
affiliate contract, which is generally for a term of one year or longer,
typically requires that for each report provided by the Company, the radio
station provide the Company with an opening announcement and a ten second
commercial message (or "sponsorship") to be broadcast as part of the report. The
Company packages its radio commercial airtime inventory for sale to advertisers
on a market-wide, regional or national basis and then broadcasts these
sponsorship advertisements among its entire network of affiliates within a
particular market on a fair and equal rotation (i.e., each advertiser receives
its pro rata share of advertisements on each of the Company's affiliates in the
relevant market). The Company believes that its radio sponsorships, which are
typically sold in multiple "sponsorship" packages (generally 125, 250 or 500
sponsorships broadcast over four week periods in each market), provide
advertisers with an effective and efficient medium to reach a high percentage of
the population in its markets. The Company's 500 sponsorship package (which the
Company believes is the most frequently purchased package) reaches an average of
approximately 70% of the population

5
<PAGE>
(age 12 and over) in the Company's MSA markets. The Company's advertisers have
the ability to target individual markets and customize their commercial messages
by station format. Because most of the sponsorships are read live, advertisers
can change their messages on short notice. The Company believes that its radio
advertising networks have a high degree of impact because the commercial
messages are imbedded in the affiliates' programming and are generally delivered
live by the Company's broadcasters during peak drive periods. The Company
provides its MetroTV Services to television stations in exchange for thirty
second commercial airtime inventory. The amount and day-part placement of the
commercial airtime inventory that the Company receives from television stations
varies by market and by the type of service provided by the Company.

In each of the markets in which it conducts operations, the Company
maintains an advertising sales office as part of its operations center. The
Company's advertising sales force is able to sell available commercial airtime
inventory in any and all of the Company's markets in addition to selling such
inventory in each local market. The Company believes this affords its sales
representatives an advantage over certain of their competitors. The Company's
advertising sales force is comprised of approximately 136 sales representatives.
Although the Company typically has two or three sales representatives in an
individual market, the number of sales representatives ranges from one to eight
depending on the size of the market and the number of potential regional and
national advertising clients headquartered in the market. Specialized programs
and marketing campaigns, which support nationwide sales and other special forms
of advertising, are managed from the Company's headquarters in Houston, Texas.

As the Company's business has developed, the Company has sold increasing
amounts of its commercial airtime inventory to regional/national advertisers.
For the year ended December 31, 1994, approximately 25% of the Company's
advertising revenue was attributable to regional/national advertisers, with the
balance attributable to local advertisers. For the six months ended June 30,
1996, sales to regional/national advertisers accounted for approximately 50% of
total advertising revenues. See "Business -- Advertising and Sales".

RECENT DEVELOPMENTS

Since July 1994, through strategic acquisitions and new start-ups, the
Company has expanded into 16 new markets, comprised of 14 new markets as a
result of strategic acquisitions and two new markets as a result of new
start-ups. In this period, the Company has made six strategic acquisitions
(which accounted for new markets including Salt Lake City, Utah; Phoenix and
Tucson, Arizona; Las Vegas, Nevada; St. Louis, Missouri; Milwaukee, Wisconsin;
Nashville and Memphis, Tennessee; Louisville, Kentucky; Charlotte, North
Carolina; Providence, Rhode Island; Hartford, Danbury and New Haven,
Connecticut) and made an additional strategic acquisition to expand its
operations in Atlanta, Georgia. The aggregate purchase price for these
acquisitions was approximately $20 million. On a pro forma basis, the operations
acquired by the Company in this period generated revenues of approximately $15
million and EBITDA of approximately $3 million for the year ended December 31,
1995. See "Business -- Acquisitions".

-SALT LAKE CITY ACQUISITION. On January 3, 1996, the Company acquired
Aeromedia, Inc. ("Aeromedia"). As of June 30, 1996, the Company (through
Aeromedia) provided traffic services to 22 radio station and two television
station affiliates in Salt Lake City, Utah, the thirty-fifth largest MSA
market.

-NEW ENGLAND ACQUISITION. On January 4, 1996, the Company acquired a group
of companies (the "Traffic Net Group"). As of June 30, 1996, the Company
(through the Traffic Net Group) provided local traffic information services
to approximately 70 radio station and three television station affiliates
in and around the Hartford, Connecticut area (the forty-first largest MSA
market), and Providence, Rhode Island (the thirty-first largest MSA
market). In addition, one of the companies in the Traffic Net Group
provides weather reporting services to approximately 46 radio station
affiliates in Boston, Massachusetts (the tenth largest MSA market), and
throughout New England. See "Business -- Acquisitions."

6
<PAGE>

-KANSAS CITY AND OMAHA LETTER OF INTENT. In September 1996, the Company
signed an agreement to acquire all the assets of ATN for approximately $1.5
million. As of June 30, 1996 ATN provided traffic services to 16 radio
station affiliates in Kansas City, Missouri and Omaha, Nebraska. Such
acquisition is expected to close in January 1997.

-OKLAHOMA CITY, ALBUQUERQUE, OMAHA AND MILWAUKEE LETTER OF INTENT. On July
24, 1996, the Company entered into a letter of intent to acquire all the
assets of WIS for approximately $650,000. As of June 30, 1996 WIS provided
traffic services to eight radio station affiliates and one television
station affiliate in Oklahoma City, 12 radio station affiliates and one
television affiliate in Albuquerque, eight radio station affiliates in
Omaha and one television station affiliate in Milwaukee.

REORGANIZATION

From 1978 until the closing of the offering, the business of the Company
will have been operated through Metro Traffic Control, Inc., a Maryland
corporation; Metro Networks, Ltd., a Texas limited partnership, Metro Video
News, Inc., a Texas corporation; Metro Reciprocal, Inc., a Texas corporation and
their subsidiaries (collectively, the "Predecessor Companies"). Until the
closing of this offering, all of the equity interests in the Predecessor
Companies will be owned by David I. Saperstein, the Chairman and Chief Executive
Officer of the Company, and certain trusts (the "Trusts") created for the
benefit of Mr. Saperstein's children (collectively, the "Saperstein Family").

The principal executive offices of Metro Networks, Inc. are located at 2800
Post Oak Boulevard, Suite 4000, Houston, Texas 77056. The telephone number at
that location is (713) 407-6000.

7
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 3,600,000 shares

Common Stock offered by the Selling
Stockholder................................. 3,600,000 shares

Common Stock outstanding after the
offering.................................... 15,500,357 shares(1)

Proposed Nasdaq National Market Symbol....... MTNT

Use of Proceeds.............................. To reduce bank indebtedness, to fund growth
through pending and potential acquisitions
and entry into new markets and for working
capital purposes. See "Use of Proceeds."

Risk Factors................................. See "Risk Factors" for a discussion of
certain considerations relevant to an
investment in the Common Stock.
</TABLE>

- ------------------------
(1) Does not include 1,000,000 shares of Common Stock reserved for issuance upon
the exercise of stock options to be granted to employees under the Company's
1996 Incentive Stock Option Plan (the "1996 Plan"). See "Management --
Executive Compensation." Does not include 2,549,750 shares of Series A
Convertible Preferred Stock. See "Business -- Reorganization", "Description
of Capital Stock" and "Certain Transactions."

8
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OTHER OPERATING DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
--------------------------------------------- JUNE 30,
PRO FORMA ----------------------------
1993 1994 1995 1995(1) 1995 1996
--------- --------- ---------- ----------- ----------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Advertising revenues................. $ 47,905 $ 60,048 $ 72,433 $ 78,102 $ 30,623 $ 50,077
Broadcasting costs................... 27,384 32,239 41,286 43,243 19,816 24,173
Marketing expense.................... 8,848 11,355 14,504 15,980 6,821 10,101
General and administrative expense... 6,994 5,939 7,193 8,869 4,055 4,350
Depreciation and amortization
expense............................. 1,814 1,302 3,981 5,920 1,694 2,936
--------- --------- ---------- ----------- ----------- ---------------
Total operating costs................ 45,040 50,835 66,964 74,012 32,386 41,560
Income (loss) from operations........ 2,865 9,213 5,469 4,090 (1,763) 8,517
Other expense (income)............. 238 (164) (137) (123) (93) (66)
Interest expense................... 145 293 1,260 1,838 421 934
--------- --------- ---------- ----------- ----------- ---------------
Income (loss) before tax provision... 2,482 9,084 4,346 2,375 (2,091) 7,649
Income tax provision............... 1,066 2,179 1,036 808 229 573
Income (loss) from continuing
operations.......................... 1,416 6,905 3,310 1,567 (2,320) 7,076
--------- --------- ---------- ----------- ----------- ---------------
Discontinued operations............ (561) -- -- -- -- --
--------- --------- ---------- ----------- ----------- ---------------
Net income (loss).................... $ 855 $ 6,905 $ 3,310 $ 1,567 $ (2,320) $ 7,076
--------- --------- ---------- ----------- ----------- ---------------
--------- --------- ---------- ----------- ----------- ---------------
Pro forma net income................. $ 2,803 $ 4,933
---------- ---------------
---------- ---------------
Pro forma net income per share(2).... $ .23 $ .41
---------- ---------------
---------- ---------------
Pro forma weighted average shares
outstanding(2)...................... 12,251,997 11,962,153
---------- ---------------
---------- ---------------
CASH FLOWS DATA:
Net cash provided by (used in)
operating activities.............. $ (912) $ 1,253 $ 2,106 $ 3,392 $ 3,298 $ 3,771
Net cash used in investing
activities........................ (1,218) (2,387) (11,908) (12,102) (10,442) (6,353)
Net cash provided by financing
activities........................ $ 1,963 $ 3,625 $ 9,175 $ 9,352 $ 5,824 $ 2,999

AT DECEMBER 31, AT JUNE 30, 1996
-------------------------------- ----------------------------
1993 1994 1995 AS ADJUSTED(3)
--------- --------- ---------- ---------------
ACTUAL
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................... $ 1,862 $ 7,414 $ 7,900 $ 6,843 $ 35,745
Total assets......................... 16,492 27,502 42,437 56,750 80,317
Total debt........................... 2,183 6,650 22,624 31,147 1,847
Common stockholder's equity/partners'
capital............................. $ 4,153 $ 9,401 $ 4,478 $ 5,343 $ 58,211
<CAPTION>

YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
--------------------------------------------- JUNE 30,
PRO FORMA ----------------------------
1993 1994 1995 1995(1) 1995 1996
--------- --------- ---------- ----------- ----------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (4)........................... $ 4,679 $ 10,515 $ 9,450 $ 10,010 $ (69) $ 11,453
Predecessor shareholder costs (5).... 2,022 1,734 1,392 2,138 625 726
--------- --------- ---------- ----------- ----------- ---------------
Adjusted EBITDA (6).................. 6,701 12,249 10,842 12,148 556 12,179
Capital expenditures................. $ 891 $ 2,712 $ 2,746 $ 2,746 $ 1,236 $ 2,134
Affiliates:
Radio............................ 754 914 1,152 1,244 1,125 1,284
Television....................... 59 71 91 96 82 110
Markets:
Radio............................ 38 46 54 59 52 60
Television....................... 29 33 38 41 38 47
</TABLE>

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

(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions (as defined herein), 1996
Acquisitions (as defined herein) and Pending Acquisitions were consummated
as of

9
<PAGE>
January 1, 1995. In addition, such data give effect to the anticipated
Reorganization. The unaudited pro forma financial data give effect to the
1995 Acquisitions, 1996 Acquisitions and Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions, and -- Reorganization" and "Pro Forma Financial
Data."

(2) Pro forma weighted average shares outstanding and pro forma net income per
common share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for all periods presented, adjusted for
excess distributions and assuming the Predecessor Companies were taxed at
rates expected to apply subsequent to the Reorganization. Metro Networks,
Inc. has not declared or paid any dividends on its Common Stock. However,
the Predeccesor Companies have made cash distributions to their
shareholders from time to time. See "Business -- Reorganization."

(3) Adjusted to give effect to the sale of 3,600,000 shares of Common Stock
offered by the Company, after deducting the estimated offering expenses and
underwriting discount. See "Use of Proceeds."

(4) EBITDA is earnings before other expense (income), interest expense, taxes,
depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all of the
Company's cash needs. EBITDA should not be considered in isolation or as a
substitute for net income, cash from operating activities or other measures
of liquidity determined in accordance with generally accepted accounting
principles.

(5) Predecessor shareholder costs consist of the expenses incurred by the
Predecessor Companies on behalf of their shareholders, which expenses will
not be incurred by the Company after the closing of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."

(6) Adjusted EBITDA is EBITDA plus predecessor shareholder costs. The Company
believes that Adjusted EBITDA is useful to prospective investors as a
measure of the Company's historical financial performance.

10
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING
THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY.

INFORMATION SERVICES COMPETITION

The success of the Company's business is largely dependent on the Company's
ability to maintain and acquire affiliate contracts with radio and television
stations. The Company faces intense competition for such affiliates from other
providers of information reporting services in many of its markets.
Additionally, the Company faces competition from individual radio stations and
groups of radio stations that provide their own information services. As a
result of the passage of the Telecommunications Act of 1996 (the "Telecom Act"),
the Company may face additional competition from consolidated groups of radio
stations that choose to provide their own information services. Certain of the
Company's current and potential competitors may offer alternative types of
information services and may have substantially greater financial, technical,
marketing and other resources than the Company. There can be no assurance that
the Company's business will not be adversely affected by current or increased
competition for the provision of information services in the markets in which it
operates. See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations -- Liquidity and Capital Resources."

DEPENDENCE ON ADVERTISING REVENUES

The success of the Company's business is closely linked to the performance
of the advertising industry. A significant decline in national and regional
advertising would have a material adverse effect on the Company's revenues.
There can be no assurance that such a decline will not occur, or that the
Company's business will not be materially adversely affected thereby. See
"Business."

COMPETITION FOR ADVERTISING SALES

The Company's business is dependent, in part, on its ability to sell the
commercial airtime inventory obtained from its affiliates in exchange for the
Company's provision of information reporting services. The business of selling
broadcast advertising time is highly competitive. The Company positions its
advertising so as not to compete with the advertising of its local radio and
television station affiliates. The Company competes for advertising dollars with
other media such as newspapers and magazines, outdoor advertising, network radio
and network television advertising, transit advertising, direct response
advertising, yellow page directories and point of sale advertising. There can be
no assurance that the Company will not be adversely affected by such competition
in the future. See "Business -- Competition."

LIMITED OPERATING HISTORY IN NEW BUSINESSES

The Company introduced its Expanded Radio Services to radio stations in 1994
and its Video News Services to television stations in 1995. Accordingly,
although the Company has provided its Radio Traffic Services and Television
Traffic Services for many years, the Company has a limited history of providing
its Expanded Radio Services and Video News Services. The success of the
Company's Radio Traffic Services may not be indicative of the results of its
efforts to provide the Expanded Radio Services and Video News Services. The
successful operation of the Expanded Radio Services Network and MetroTV Network
will require a certain level of continued capital expenditures and operating
expenditures which the Company is committed to undertaking. There can be no
assurance that the Company will be able to develop such businesses as
successfully as it has its Radio Traffic Services business. See "Business."

ACQUISITIONS AND NEW MARKETS

The Company's continued growth and expansion is dependent, in part, on its
ability to establish affiliate relations in new markets by acquiring existing
operations or developing new operations. There can be no assurance that the
Company will be able to identify and acquire operations or establish operations
in new markets or that it will be able to finance such acquisitions or expansion
in the future.

11
<PAGE>
There can be no assurance that the Company will be able to integrate
successfully any acquired business or realize any operating efficiencies
therefrom. The Company's past operating history may not be indicative of its
ability to integrate new markets and acquisitions. See "Business --
Acquisitions."

INCREASING CAPITAL REQUIREMENTS

The Company's expansion into new markets and continued growth of its
Expanded Radio Services Network and MetroTV Network will require significant
additional capital expenditures. There can be no assurance that the Company will
be able to secure financing for such expenditures when needed or on terms
acceptable to the Company. Moreover, the Company's day-to-day operations require
the use of sophisticated equipment and technology. The maintenance and
replacement of such equipment requires significant expenditures. There can be no
assurance that the Company will be able to continue to finance the maintenance
and replacement of such equipment.

DEPENDENCE ON KEY PERSONNEL

The Company's continued success is dependent to a significant degree upon
the efforts of its current executive officers. The loss or unavailability of any
such executive officer could have an adverse effect on the Company. The Company
has entered into employment agreements with Messrs. David I. Saperstein, the
Company's Founder, Chairman and Chief Executive Officer, Charles I. Bortnick,
the Company's President, Shane E. Coppola, the Company's Executive Vice
President, Curtis H. Coleman, the Company's Senior Vice President and Chief
Financial Officer and Gary L. Worobow, the Company's Senior Vice President,
General Counsel and Secretary; however, there can be no assurance that these
individuals will continue to provide services to the Company. At present the
Company does not maintain key man life insurance policies for any of these
individuals. Moreover, the continued success and viability of the Company is
dependent to a significant extent upon its ability to attract and retain
qualified personnel in all areas of its business, especially management
positions. In the event the Company is unable to attract and retain qualified
personnel, its business may be adversely affected. See "Management."

FEDERAL REGULATION OF BROADCASTING

The ownership, operation and sale of stations are subject to the
jurisdiction of the Federal Communications Commission (the "FCC"), which acts
under authority granted by the Communications Act of 1934, as amended, (the
"Communications Act"). Among other things, the FCC adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operations and sale of radio and television stations, and has the power to
impose penalties for violations of its rules or the Communications Act. Such
regulation may adversely affect the Company's business. On February 8, 1996,
President Clinton signed the Telecom Act. The Telecom Act, among other measures,
directs the FCC to eliminate national radio ownership limits and increase local
radio ownership limits. Certain of these measures have been adopted by the FCC.
Other provisions of the Telecom Act will be acted upon by the FCC through
rulemaking proceedings, presently scheduled for completion by the end of 1996.
These measures could lead to greater industry consolidation. The effects of the
Telecom Act on the broadcasting industry and thus on the Company's businesses
are uncertain, and there can be no assurance that the Telecom Act will not
negatively impact the Company's operations in the future.

RESTRICTIONS IMPOSED BY LENDERS

The Credit Agreement among NationsBank of Texas, N.A. ("NationsBank"), Metro
Traffic Control, Inc. and Metro Networks, Ltd., dated October 21, 1994, as
amended (the "Credit Agreement") prohibits the Company and its subsidiaries
from, among other things, (i) incurring certain additional indebtedness, (ii)
incurring certain liens, (iii) disposing of the assets of the Company through
merger, consolidation or sale, (iv) making certain acquisitions without the
consent of the lenders, (v) achieving certain leverage ratios and (vi) paying
dividends. Although these restrictions to date have not restricted the Company's
ability to operate or to make strategic acquisitions, there can be no assurance
that such restrictions will not have a material adverse effect on the Company's
operations in the future. The Company has obtained a commitment letter to enter
into a credit agreement (the "New Line of Credit") with NationsBank upon
completion of this offering; such New Line of Credit will replace the Credit

12
<PAGE>

Agreement. The Company anticipates that the New Line of Credit will be secured
by the granting of a lien by the Company and its subsidiary on all of their
respective assets and the pledge of the Company's equity interest in its
subsidiary in favor of NationsBank. See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations -- Liquidity and Capital
Resources."

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this offering, the Saperstein Family will beneficially
own 53.5% of the Company's outstanding Common Stock (50.2% if the underwriters'
overallotment option is exercised in full). In addition, the Saperstein Family
will own all of the outstanding Series A Convertible Preferred Stock; such
preferred stock will be pledged to the Company pursuant to the Stock Loan and
Pledge Agreement. As a result of the ownership by the Saperstein Family of such
shares, the Saperstein Family will be able to vote 60.1% (56.8% if the
Underwriters' overallotment option is exercised in full) of the issued and
outstanding voting stock of the Company and the Saperstein Family will continue
to have the ability to elect or remove any or all of the Company's Directors and
to control substantially all corporate activities involving the Company,
including tender offers, mergers, proxy contests or other purchases of Common
Stock that could give the stockholders of the Company the opportunity to realize
a premium over the then prevailing market price for their shares of Common
Stock. See "Business -- Reorganization," "Certain Transactions" and "Principal
and Selling Stockholders."

POTENTIAL CONFLICTS OF INTERESTS

All of the shares of Common Stock being offerred for sale by David I.
Saperstein were borrowed from the Trusts (as hereinafter defined) and the
Company. Mr. Saperstein will pledge an equivalent number of shares of Series A
Convertible Preferred Stock as security for the loan from the Company and an
equivalent number of shares of Common Stock as security for the loans from the
Trusts. Mr. Saperstein will retain the ability to vote each of the shares
pledged to secure such loans. Such arrangement will allow Mr. Saperstein to
maintain a majority voting interest in the Company while benefiting
substantially from his participation in the offering as a selling stockholder.
In addition, prior to the closing of the offering, the Company has entered into
several arrangements with or on behalf of Mr. Saperstein or his affiliates which
were not on an arms-length basis. Upon the closing of the offering, these
arrangements will terminate, except as indicated herein, and the Company will
enter into transactions with related parties only on an arms-length basis. See
"Business -- Reorganization" and "Certain Transactions."

ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Certificate of Incorporation and Bylaws
contain provisions that could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock. The Company's Amended and Restated Certificate of Incorporation provides
that up to 10,000,000 shares of Preferred Stock may be issued by the Company
from time to time in one or more series. The Board of Directors may authorize
and issue Preferred Stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. See "--
Control by Existing Stockholders" and "Description of Capital Stock -- Preferred
Stock."

DILUTION

Purchasers of Common Stock in this offering will experience immediate
dilution of $13.54 per share in the net tangible book value per share of Common
Stock from the initial public offering price and may incur additional
substantial dilution upon the exercise of outstanding stock options. See
"Dilution."

INTANGIBLE ASSETS

Of the Company's total assets at June 30, 1996, approximately $16.4 million,
or 29.0%, represented purchased broadcast contracts and other intangibles
associated with recent acquisitions. It is possible that no cash would be
recoverable from the voluntary or involuntary sale of the intangible assets of
the Company, including its goodwill. However, the Company believes that its
affiliation contracts and

13
<PAGE>
operating systems constitute assets having substantial value, although there can
be no assurance that such value or any substantial part thereof would actually
be realized upon a voluntary or involuntary sale. See "Business -- Affiliates."

SHARES ELIGIBLE FOR FUTURE SALE; NO PRIOR TRADING MARKET

Sales of a substantial number of shares of the Company's Common Stock could
have the effect of depressing the prevailing market price of its Common Stock.
Upon completion of this offering, the Company will have 15,500,357 outstanding
shares of Common Stock. Of these shares, the 7,200,000 shares sold in this
offering, (8,250,000 if the over-allotment option is exercised in full) will be
freely transferable without restriction or further registration under the
Securities Act of 1993 (the "Securities Act") unless purchased by "affiliates"
of the Company as that term is defined in Rule 144 of the Securities Act (an
"Affiliate"), which Shares purchased by Affiliates will be subject to the resale
limitations of Rule 144 adopted under the Securities Act. The remaining
8,300,357 shares outstanding upon completion of this offering and held by
existing shareholders will be "Restricted Securities" as that term is defined
under Rule 144 (the "Restricted Shares"). The Company intends to file one or
more registration statements on Form S-8 under the Securities Act to register
shares of Common Stock subject to stock options which will permit resale of such
shares, subject to the Rule 144 volume limitations applicable to affiliates,
vesting restrictions with the Company and lock-up agreements between the option
holders and the Company and the Underwriters. See "Shares Eligible for Future
Sale" and "Description of Capital Stock."

ABSENCE OF PUBLIC MARKET

There is currently no public market for the Common Stock. Although
application will be made to approve the Common Stock for quotation and trading
on the Nasdaq National Market, there can be no assurance that an active public
market in the Common Stock will develop or that the initial public offering
price thereof will correspond to the price at which the Common Stock will trade
in the public market subsequent to this offering. The initial public offering
price for the Common Stock will be determined by negotiations among the Company
and the representatives of the Underwriters based on the factors described under
"Underwriting."

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the offering are estimated to be
approximately $52.9 million ($68.5 million if the Underwriters' over-allotment
option is exercised in full), after deductions for the underwriting discount and
the estimated offering expenses. The Company will not receive any proceeds from
the sale of shares of Common Stock by the Selling Stockholder.

The Company intends to use approximately $30 million of the proceeds to
repay existing indebtedness under the Credit Agreement and the balance of the
proceeds, including any proceeds from the Underwriters' exercise of the
over-allotment option, to fund its growth, including additional strategic
acquisitions or development of businesses complementary to the operations of the
Company including broadcast traffic reporting services and news, sports, weather
and other programming and information services. In addition, the Company will
use the proceeds to fund the continued expansion of its networks, its
development of new products and services, including capital expenditures for the
expansion of its networks and for working capital purposes. The Company has
entered into a letter of intent to acquire the assets of WIS and an agreement to
purchase the assets of ATN, and intends to finance these acquisitions with
available cash, including the proceeds to the Company from this offering. The
Company continually reviews potential acquisitions and has engaged in
discussions concerning certain acquisitions (some of which are currently
on-going); however, the Company currently has no other commitments,
arrangements, or understandings with respect to any such acquisition. The
Company does not intend to distribute any portion of its proceeds from this
offering to former shareholders of the Predecessor Companies. See "Certain
Transactions."

The Company's indebtedness outstanding under the Credit Agreement has a
final maturity of June 30, 2000 and bears interest at a variable rate
(approximately 6.94% at June 30, 1996). In fiscal 1995, interest on borrowings
under the Credit Agreement ranged from 6.80% to 7.55%. The Company has obtained
a commitment letter to enter into the New Line of Credit upon completion of this
offering. See "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." Following the repayment of outstanding indebtedness under the Credit
Agreement, approximately $30 million principal amount will be available
thereunder for borrowing.

Pending the application of the net proceeds for the purposes described
above, the Company will invest the net proceeds from the sale of the Common
Stock offered hereby in short-term interest-bearing marketable securities. See
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

The Company intends to retain all of its earnings to finance the development
and expansion of its business and therefore does not intend to pay any cash
dividends on the Common Stock for the foreseeable future. The Credit Agreement
prohibits the payment of cash dividends and the Company anticipates that the New
Line of Credit will restrict the payment of dividends in certain situations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

15
<PAGE>
CAPITALIZATION

The following table sets forth the combined capitalization of the Company at
June 30, 1996 and as adjusted to reflect the sale of shares of Common Stock
offered hereby after deducting the estimated underwriting discount and estimated
offering expenses payable by the Company and the application of the net proceeds
as described under "Use of Proceeds" and the Reorganization. This table should
be read in conjunction with the Company's Combined Financial Statements and the
Notes thereto included elsewhere in this Prospectus. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-----------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Cash and cash equivalents............................................................... $ 3,466 $ 27,033
--------- ------------
--------- ------------
SHORT-TERM DEBT:
Current portion of long-term debt..................................................... $ 6,475 $ 1,140
Notes payable......................................................................... 707 707
--------- ------------
Total short-term debt............................................................... 7,182 1,847
--------- ------------
--------- ------------
LONG-TERM DEBT:
Bank debt............................................................................. 23,966 --

STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.001 per share, 10,000,000 shares authorized; 2,549,750
shares of Series A Convertible Preferred Stock issued and outstanding as adjusted.... -- 3
Common Stock, par value $.001 per share, 25,000,000 shares authorized; 15,500,357
shares issued and outstanding as adjusted............................................ 3 16
Additional paid-in capital............................................................ 4,024 57,451
Partners' capital..................................................................... 575 --
Retained earnings..................................................................... 741 741
--------- ------------
Total stockholder's equity/partners' equity........................................... 5,343 58,211
--------- ------------
Total capitalization................................................................ $ 29,309 $ 58,211
--------- ------------
--------- ------------
</TABLE>

16
<PAGE>
DILUTION

The net tangible book value of the Company available to common stockholders
at June 30, 1996 was $(14.7) million, or $(1.57) per share of Common Stock. Net
tangible book value per share available to common stockholders is equal to the
Company's total tangible assets less total liabilities and the amount of the
preferred stockholder's liquidation preference, divided by the total number of
outstanding shares of Common Stock after giving effect to the Reorganization.
After giving effect to the sale of 3,600,000 shares of Common Stock offered by
the Company hereby (after deduction of the underwriting discount and estimated
expenses of this offering), and the application of the estimated proceeds to be
received by the Company therefrom, the pro forma net tangible book value
available to common stockholders at June 30, 1996 would have been $38.2 million,
or $2.46 per share. This represents an immediate increase in net tangible book
value of $4.03 per share to existing stockholders and an immediate dilution of
$13.54 per share to new investors. The following table illustrates this per
share dilution with respect to a new investor's purchase of a share of Common
Stock at June 30, 1996:

<TABLE>
<S> <C> <C>
Initial public offering price.................................... $ 16.00
Net tangible book value per share before this offering........... $ (1.57)
Increase in net tangible book value per share attributable to new
investors....................................................... $ 4.03
Pro forma net tangible book value per share after this
offering........................................................ $ 2.46
Dilution in net tangible book value per share to new investors... $ 13.54
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock (and shares of Series A Convertible
Preferred Stock which is convertible into shares of Common Stock) outstanding,
the total consideration paid, and the average price per share paid by current
stockholders and by new investors who purchase Common Stock pursuant to this
offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- ------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------- ----------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).......................... 11,900,357 77.0% $ 5,343,374 8.5% $ .45
New investors..................................... 3,600,000 23.0 57,600,000 91.5 $ 16.00
------------- ----- -------------- ---------
Total......................................... 15,500,357 100.0% $ 62,943,374 100.0%
------------- ----- -------------- ---------
------------- ----- -------------- ---------
</TABLE>

- ------------------------
(1) Sales by the Selling Stockholder in this offering will reduce the number of
shares of Common Stock held by the current stockholders to 8,300,357 shares,
or 53.5% of the total number of shares of Common Stock to be outstanding
after this offering, and will increase the number of shares held by new
investors after this offering to 7,200,000 shares, or 46.5% of the total
number of shares of Common Stock outstanding after this offering.

The foregoing table and calculations should be read in conjunction with
"Business -- Reorganization" and "Certain Transactions".

The foregoing tables do not assume exercise of any outstanding options. Upon
the effective date of this offering, there will be outstanding options to
purchase approximately 500,000 shares of Common Stock under the 1996 Plan. The
exercise price of such options will be the price at which Common Stock is
offered to the public pursuant hereto. To the extent that any options are
exercised in the future, there may be further dilution to new investors. See
"Business," "Management -- 1996 Incentive Stock Option Plan and -- Board of
Directors."

17
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA

The following selected financial and operating data should be read in
conjunction with the Predecessor Companies' historical combined financial
statements and related notes thereto and with Management's Discussion and
Analysis of Financial Condition and Results of Operations included elsewhere
herein. The statement of operations data set forth below with respect to the
years ended December 31, 1993, 1994 and 1995 are derived from the audited
financial statements included elsewhere in the Prospectus. The selected
financial data for the years ended December 31, 1991 and 1992 and the six months
ended June 30, 1995 and 1996 are unaudited and reflect all normal recurring
adjustments that in the opinion of management of the Company are necessary for a
fair presentation of the results of such periods. The unaudited results of
operations for the six months ended June 30, 1996 are not necessarily
indications of results expected for the year ended December 31, 1996. The
unaudited pro forma financial information for 1995 presents the results of
operations of the Company as if the 1995 Acquisitions, 1996 Acquisitions,
Pending Acquisitions and the Reorganization had been completed at the beginning
of 1995. The unaudited pro forma financial data presented are not necessarily
indicative of the Company's financial results of operations that might have
occurred had such transactions and the Reorganization been completed at the
beginning of the period and do not purport to indicate the Company's results of
operations for any future periods.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
------------------------------------------------------------------- JUNE 30,
PRO FORMA ---------------------
1991 1992 1993 1994 1995 1995(1) 1995 1996
--------- --------- --------- --------- ---------- ----------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Advertising revenues........ $ 39,092 $ 41,957 $ 47,905 $ 60,048 $ 72,433 $ 78,102 $ 30,623 $ 50,077
Broadcasting costs.......... 20,672 26,760 27,384 32,239 41,286 43,243 19,816 24,173
Marketing expense........... 8,278 8,393 8,848 11,355 14,504 15,980 6,821 10,101
General and administrative
expense.................... 3,845 4,522 6,994 5,939 7,193 8,869 4,055 4,350
Depreciation and
amortization expense....... 1,564 1,841 1,814 1,302 3,981 5,920 1,694 2,936
--------- --------- --------- --------- ---------- ----------- --------- ----------
Total operating costs....... 34,359 41,516 45,040 50,835 66,964 74,012 32,386 41,560
Income (loss) from
operations................. 4,733 441 2,865 9,213 5,469 4,090 (1,763) 8,517
Other expense (income).... 63 (60) 238 (164) (137) (123) (93) (66)
Interest expense.......... 43 97 145 293 1,260 1,838 421 934
--------- --------- --------- --------- ---------- ----------- --------- ----------
Income before tax
provision.................. 4,627 404 2,482 9,084 4,346 2,375 (2,091) 7,649
Income tax provision...... 1,241 2,649 1,066 2,179 1,036 808 229 573
--------- --------- --------- --------- ---------- ----------- --------- ----------
Income (loss) from
continuing operations...... 3,386 (2,245) 1,416 6,905 3,310 1,567 (2,320) 7,076
--------- --------- --------- --------- ---------- ----------- --------- ----------
Discontinued operations... -- (563) (561) -- -- -- -- --
--------- --------- --------- --------- ---------- ----------- --------- ----------
Net income (loss)........... $ 3,386 $ (2,808) $ 855 $ 6,905 $ 3,310 $ 1,567 $ (2,320) $ 7,076
--------- --------- --------- --------- ---------- ----------- --------- ----------
--------- --------- --------- --------- ---------- ----------- --------- ----------
Pro forma net income........ $ 2,803 $ 4,933
---------- ----------
---------- ----------
Pro forma income per common
share (2).................. $ .23 $ .41
---------- ----------
---------- ----------
Pro forma weighted average
shares outstanding (2)..... 12,251,997 11,962,153
---------- ----------
---------- ----------
CASH FLOWS DATA:
Net Cash Provided by (used
in) Operating
Activities............... $ 5,006 $ (33) $ (912) $ 1,253 $ 2,106 $ 3,392 $ 3,298 $ 3,771
Net Cash Used in Investing
Activities............... (4,880) (5) (1,218) (2,387) (11,908) (12,102) (10,442) (6,353)
Net Cash Provided by (used
in) Financing
Activities............... $ 1,480 $ (907) $ 1,963 $ 3,625 $ 9,175 $ 9,352 $ 5,824 $ 2,999
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 1,468 $ (254) $ 1,862 $ 7,414 $ 7,900 $ (1,137) $ 6,843
Total assets................................ 21,458 22,426 16,492 27,502 42,437 35,796 56,750
Total debt.................................. 274 597 2,183 6,650 22,624 18,746 31,147
Common stockholder's equity/partners'
capital.................................... $ 6,798 $ 5,168 $ 4,153 $ 9,401 $ 4,478 $ (346) $ 5,343
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------ JUNE 30,
PRO FORMA --------------------
1991 1992 1993 1994 1995 1995(1) 1995 1996
--------- --------- --------- --------- --------- ----------- --------- ---------
(IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (3)..................... $ 6,297 $ 2,282 $ 4,679 $ 10,515 $ 9,450 $ 10,010 $ (69) $ 11,453
Predecessor shareholder
costs (4)..................... 597 1,091 2,022 1,734 1,392 2,138 625 726
--------- --------- --------- --------- --------- ----------- --------- ---------
Adjusted EBITDA (5)............ 6,894 3,373 6,701 12,249 10,842 12,148 556 12,179
Capital expenditures........... $ 1,299 $ 1,063 $ 891 $ 2,712 $ 2,746 $ 2,746 $ 1,236 $ 2,134
</TABLE>

- ------------------------
* See discussions of acquisitions in "Business -- Acquisitions" and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations."

(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions, 1996 Acquisitions and
Pending Acquisitions were consummated as of January 1, 1995. In addition
such data give effect to the anticipated Reorganization. The unaudited pro
forma financial data give effect to the Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions" and " -- Reorganization" and "Pro Forma
Financial Data."

(2) Pro forma weighted average shares outstanding and pro forma net income per
common share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for all periods presented, adjusted for
excess distributions and assuming the Predecessor Companies were taxed at
rates expected to apply subsequent to the Reorganization. Metro Networks,
Inc. has not declared or paid any dividends on its Common Stock. However,
the Predecessor Companies have made cash distributions to their
shareholders from time to time. See "Business -- Reorganization."

(3) EBITDA is earnings before other expense (income), interest expense, taxes,
depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all of the
Company's cash needs. EBITDA should not be considered in isolation or as a
substitute for net income, cash from operating activities or other measures
of liquidity determined in accordance with generally accepted accounting
principles.

(4) Predecessor shareholder costs consist of the expenses incurred by the
Predecessor Companies on behalf of their shareholders, which expenses will
not be incurred by the Company after the closing of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(5) Adjusted EBITDA consists of EBITDA plus predecessor shareholder costs. The
Company believes that adjusted EBITDA is useful to prospective investors as
a measure of the Company's historical financial performance.

19
<PAGE>
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company, which was founded in 1978, is the largest provider of traffic
reporting services and a leading supplier of local news, sports, weather and
other information reporting services to the television and radio broadcast
industries in the United States. The Company provides customized information
reports to affiliated radio and television stations in exchange for commercial
airtime inventory. The Company generates revenues by packaging such commercial
airtime inventory and selling it on a local, regional or national basis. While
the majority of the Company's revenues are currently generated from sales of
advertising on its Radio Traffic Services Network, the Company is experiencing
increased revenues from its Expanded Radio Services Network and its MetroTV
Network. The Company's expenses are primarily comprised of three categories: (i)
operations, which includes all the expenses related to gathering, producing, and
broadcasting information reports; (ii) marketing, which includes sales
commissions, salaries and benefits for sales personnel; and (iii) general and
administrative expenses, which includes corporate overhead. Most of the
Company's expenses are associated with its Radio Traffic Services. However,
during 1994, 1995 and the six months ended June 30, 1996, the Company incurred
additional expenses attributable to the development and operation of its
Expanded Radio Services (including operating expenses incurred prior to the
generation of significant revenue from the Expanded Radio Services), and during
1995 and the six months ended June 30, 1996, the Company incurred similar
additional expenses associated with the development of its MetroTV Services.

Metro Networks, Inc. was incorporated in May 1996, as a holding company.
Subsequent to the Reorganization, Metro Networks, Inc. expects to conduct
substantially all of its operations through Metro Traffic Control, Inc., its
wholly owned subsidiary. To date, there have been no financial transactions or
operations carried out by Metro Networks, Inc.

The Company has experienced 18 years of growth in revenues. The Company has
also experienced increases in EBITDA, which has grown in each of the last 18
years with the exception of 1992 and 1995. In 1995, EBITDA and adjusted EBITDA
results reflect the impact of approximately $3.1 million of expenses (with
minimal incremental revenues) associated with the development and operation of
the Company's Expanded Radio Services and MetroTV Services, which the Company
introduced in 1994 and 1995, respectively. The Company has grown through
acquisitions, new market expansion, internally generated growth, and by offering
new products and services to its affiliate stations and advertising clients.
EBITDA consists of earnings before other expense (income), interest expense,
taxes, depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not necessarily
indicate that cash flows are sufficient to fund all of the Company's cash needs.
EBITDA should not be considered in isolation or as a substitute for net income,
cash from operating activities or other measures of liquidity determined in
accordance with generally accepted accounting principles.

In the analysis set forth below, the Company discusses its adjusted EBITDA.
"Adjusted EBITDA" consists of EBITDA plus predecessor shareholder costs.
"Predecessor shareholder costs" consist of expenses incurred by the Predecessor
Companies on behalf of their shareholders which will not be incurred by the
Company after its initial public offering. Such predecessor shareholder costs
include the portion of David I. Saperstein's current salary which exceeds that
which Mr. Saperstein will receive after the offering, certain costs incurred by
the Company in connection with the lease of certain real property, costs related
to reciprocal transactions entered into by the Company for the sole benefit of
Mr. Saperstein, certain costs related to the operation of Pro Journey Travel,
Inc., (a company owned by Mr. Saperstein) and certain costs related to the
personal use of the services of certain of the Company's employees by Mr.
Saperstein, which costs are not expected to be incurred after the completion of
this

20
<PAGE>
offering. See "Certain Transactions." The Company believes that EBITDA is a
measure of financial performance widely used in the media and broadcast
industries and that adjusted EBITDA is useful to prospective investors as a
measure of the Company's historical financial performance.

In certain circumstances, the Company engages in reciprocal arrangements
with advertisers whereby the Company exchanges a portion of its unsold
commercial airtime inventory for goods and services. The Company believes that
reciprocal arrangements are common in the broadcasting industry. The Company's
reciprocal arrangements are recorded based on their estimated fair market value
and generally have had a net neutral effect on EBITDA; the net impact of
reciprocal arrangements in 1994 and 1995 on EBITDA was $0.6 million and ($0.1)
million, respectively. In recent years, however, the Company has reduced the
number of reciprocal arrangements in which it engages in order to better focus
its efforts on cash revenue generation and reduce the administrative costs
associated with reciprocal arrangements. In 1993, revenues from reciprocal
arrangements accounted for 16.8% of total revenues and declined to 13.3% in 1994
and 11.6% in 1995. During the six months ended June 30, 1996, revenues from
reciprocal arrangements decreased to 9.5% of total revenues. The Company expects
revenues from reciprocal arrangements to be approximately 10% or less of total
revenues in 1996.

The Company's advertising revenues vary moderately over the calendar year
with the first quarter generally reflecting the lowest revenues and the fourth
quarter the highest revenues for the year. Expenses, other than broadcasting
costs, are generally spread evenly over the year, resulting in some seasonality
in the Company's EBITDA.

INCOME TAXES

The combined financial statements are derived from the combined financial
statements of Metro Traffic Control, Inc., Metro Reciprocal, Inc., Metro
Networks, Ltd. and Metro Video News, Inc. and their subsidiaries. Metro
Reciprocal, Inc., Metro Video News, Inc. and Metro Traffic Control, Inc. have
elected to be taxed under the S Corporation provisions of the Internal Revenue
Code. Metro Networks, Ltd. is a partnership for federal income tax purposes.
These entities are, therefore, not subject to federal income taxes on their
taxable income and accordingly no provision for federal income taxes in respect
of these entities is made in the combined financial statements. Metro Networks,
Ltd., however, owns one hundred percent (100%) of the outstanding stock of one
subsidiary corporation, which in turn owns one hundred percent (100%) of the
outstanding stock of six (6) subsidiaries which collectively file a consolidated
federal income tax return and are subject to United States federal, state and
local income tax. The income taxes payable by these corporations have been
reflected in the combined financial statements. The income tax expense included
in the combined Predecessor Companies' financial statements presently reflects
the varying levels of income of the taxable and nontaxable entities included in
the combined financial statements rather than the aggregate levels of income of
the combined companies. After consummation of the Reorganization, Metro Traffic
Control, Inc., a wholly-owned subsidiary of the Company will be subject to
United States federal, state and local income taxes. In addition, any
differential between the book and tax basis in the underlying net assets which
is not presently reflected as a deferred tax asset or liability will be recorded
with a corresponding increase or decrease in income tax expense. As of June 30,
1996, the recognition of this differential would have resulted in an estimated
tax expense of approximately $352,000 had the Reorganization been effective on
that date.

21
<PAGE>
RESULTS OF OPERATIONS

The following table provides a summary of the Company's statement of
operations on an actual and percentage of revenues basis for the periods
indicated:

SUMMARY COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
-------------------------------------------------------------------------------------- JUNE 30,
PRO FORMA --------------------
1993 1994 1995 1995(1) 1995
-------------------- -------------------- -------------------- -------------------- --------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising
revenues........... $ 47,905 100.0% $ 60,048 100.0% $ 72,433 100.0% $ 78,102 100.0% $ 30,623 100.0%
Broadcasting
costs.............. 27,384 57.2 32,239 53.7 41,286 57.0 43,243 55.4 19,816 64.7
Marketing expense... 8,848 18.5 11,355 18.9 14,504 20.0 15,980 20.5 6,821 22.3
General and
administrative
expense............ 6,994 14.6 5,939 9.9 7,193 9.9 8,869 11.4 4,055 13.2
Depreciation and
amortization
expense............ 1,814 3.8 1,302 2.2 3,981 5.5 5,920 7.6 1,694 5.5
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total operating
costs............ 45,040 94.0 50,835 84.7 66,964 92.5 74,012 94.8 32,386 105.8
Income (loss) from
operations......... 2,865 6.0 9,213 15.3 5,469 7.6 4,090 5.2 (1,763) (5.8)
Other expenses
(income) (2)..... 238 0.5 (164) (0.3) (137) (0.2) (123) (0.2) (93) (0.4)
Interest
expense.......... 145 0.3 293 0.5 1,260 1.7 1,838 2.4 421 1.4
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income before income
tax provision...... 2,482 5.2 9,084 15.1 4,346 6.0 2,375 3.0 (2,091) (6.8)
Income tax
provision........ 1,066 2.2 2,179 3.6 1,036 1.4 808 1.0 229 0.7
Discontinued
operations....... (561) (1.2) -- * -- * -- * -- *
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)... $ 855 1.8% $ 6,905 11.5% $ 3,310 4.6% $ 1,567 2.0% $ (2,320) (7.6)%
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

1996
--------------------

<S> <C> <C>
Advertising
revenues........... $ 50,077 100.0%
Broadcasting
costs.............. 24,173 48.3
Marketing expense... 10,101 20.2
General and
administrative
expense............ 4,350 8.7
Depreciation and
amortization
expense............ 2,936 5.9
--------- ---------
Total operating
costs............ 41,560 83.0
Income (loss) from
operations......... 8,517 17.0
Other expenses
(income) (2)..... (66) (0.1)
Interest
expense.......... 934 1.9
--------- ---------
Income before income
tax provision...... 7,649 15.3
Income tax
provision........ 573 1.1
Discontinued
operations....... -- *
--------- ---------
Net income (loss)... $ 7,076 14.1%
--------- ---------
--------- ---------
</TABLE>

- ------------------------------
(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions, 1996 Acquisitions and
Pending Acquisitions were consummated as of January 1, 1995. The unaudited
pro forma financial data give effect to the Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions."

(2) Includes loss (gain) on disposition of property, loss (gain) on investment
in partnership and interest income.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

REVENUES. Revenues increased by $19.5 million, or approximately 63.5%, to
$50.1 million for the six months ended June 30, 1996 (the "June 1996 Period")
from $30.6 million for the six months ended June 30, 1995 (the "June 1995
Period"), primarily due to increased sales of commercial air time inventory. The
1995 Acquisitions and 1996 Acquisitions contributed $8.1 million of revenue to
the June 1996 Period as compared to $2.4 million to the June 1995 Period, as a
result of the timing of the acquisitions. "Same market" (i.e., excluding markets
that the Company did not own and operate during the June 1995 Period) revenues
increased by $14.9 million, or 48.7%, to $45.5 million in the June 1996 Period
from $30.6 million in the June 1995 Period. The increase in "same market"
revenues was primarily attributable to an increase in the portion of commercial
airtime inventory sold ("sell-through rate"), which increased from approximately
64% in the June 1995 Period to approximately 71% in the June 1996 Period. The
increase in the sell-through rate resulted from the Company's continued efforts
to strengthen its sales, marketing, and inventory management operations. The
increased sell-through rate created opportunities for the Company to increase
prices on its sales of commercial airtime inventory,

22
<PAGE>
which increased by approximately 8.0% from the June 1995 Period to the June 1996
Period. Revenues from reciprocal arrangements were $4.8 million in the June 1996
Period, an increase of $2.3 million from $2.5 million in the June 1995 Period.
As a percentage of total revenues, revenues from reciprocal arrangements
increased marginally to 9.5% in the June 1996 Period from 8.0% in the June 1995
Period but were consistent with the Company's expectation that such revenues
will comprise 10% or less of the Company's total revenues for the full year
1996.

BROADCASTING COSTS. Broadcasting costs increased by $4.4 million, or
approximately 22.0%, to $24.2 million in the June 1996 Period from $19.8 million
in the June 1995 Period. This increase was primarily attributable to increased
operating costs associated with new market operations acquired in the 1995
Acquisitions and 1996 Acquisitions, which accounted for approximately $1.5
million of the increase. Additionally, the Company's continued development of
its Expanded Radio Services, development of its MetroTV Services, and
commencement of its operations in Cincinnati, Ohio accounted for approximately
$0.6 million, $0.6 million, and $0.1 million, respectively, of the increase.
Excluding the increases discussed above, the Company's broadcasting costs
increased by approximately $1.5 million, or 7.6%, to $21.3 million in the June
1996 Period from $19.8 million in the June 1995 Period. As a percentage of
revenues, broadcasting costs declined to 48.3% for the June 1996 Period from
64.7% for the June 1995 Period due to the relatively fixed nature of certain of
the Company's broadcasting costs. Broadcasting costs attributable to reciprocal
arrangements decreased from approximately $2.9 million in the June 1995 Period
to $2.7 million in the June 1996 Period.

MARKETING EXPENSE. Marketing expense increased by $3.3 million to $10.1
million in the June 1996 Period from $6.8 million in the June 1995 Period. This
increase resulted from increased sales commissions associated with the increased
revenues generated in the June 1996 Period. The 1995 Acquisitions and 1996
Acquisitions accounted for $0.9 million of this increase. Because a portion of
the Company's marketing expense is relatively fixed, marketing expense as a
percentage of revenues decreased to 20.2% in the June 1996 Period as compared to
22.3% in the June 1995 Period. On a same market basis, marketing expense
increased by $2.4 million to $9.2 million in the June 1996 Period from $6.8
million in the June 1995 Period. As a percentage of revenues, on a same market
basis, marketing expense decreased to 20.2% in the June 1996 Period from 22.3%
in the June 1995 Period. Marketing expense related to reciprocal arrangements
decreased by approximately $0.6 million from $1.2 million in the June 1995
Period to $0.6 million in the June 1996 Period.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased by $0.3 million, or approximately 7.3%, to $4.4 million in the June
1996 Period from $4.1 million in the June 1995 Period. This increase was
primarily due to increased salaries and related overhead costs attributable to
the Company's continued growth. General and administrative expense related to
reciprocal arrangements decreased by approximately $0.9 million from $1.1
million in the June 1995 Period to $0.2 million in the June 1996 Period.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $1.2 million to $2.9 million in the June 1996 Period from $1.7
million in the June 1995 Period, primarily as a result of the Company's
increased asset base following the 1995 Acquisitions and 1996 Acquisitions.
These acquisitions accounted for $0.8 million of this increase. Depreciation and
amortization expense attributable to reciprocal arrangements decreased by
approximately $0.1 million from $0.5 million in the June 1995 Period to $0.4
million in the June 1996 Period.

OTHER EXPENSES (INCOME). Other expenses (income) were $(0.1) million in
both the June 1996 Period and the June 1995 Period.

INTEREST EXPENSE. Interest expense increased by $0.5 million to $0.9
million in the June 1996 Period from $0.4 million in the June 1995 Period. The
increase was attributable to the incurrence of indebtedness in connection with
the 1995 Acquisitions and 1996 Acquisitions.

NET INCOME. As a result of the factors discussed above, net income
increased to $7.1 million in the June 1996 Period from a loss of $2.3 million in
the June 1995 Period.

23
<PAGE>
EBITDA AND ADJUSTED EBITDA. EBITDA increased by approximately $11.6 million
to $11.5 million in the June 1996 Period from a $0.1 million loss in the June
1995 Period. In addition, EBITDA as a percentage of revenues ("operating
margin") improved to 22.9% in the June 1996 Period. The increases in EBITDA and
operating margin were primarily attributable to the relatively fixed nature of
certain of the Company's broadcasting costs. Because broadcasting costs and
general and administrative expense, which typically account for approximately
69-76% of the Company's operating expenses, tend not to increase proportionately
with revenues, increases in the Company's revenues typically result in increases
in operating margin and EBITDA. On a same market basis, EBITDA increased by
approximately $10.0 million to $10.5 million in the June 1996 Period. Adjusted
EBITDA (I.E., EBITDA plus predecessor shareholder costs) increased by
approximately $11.6 million to $12.2 million in the June 1996 Period. Adjusted
EBITDA as a percentage of revenues increased to 24.3% in the June 1996 Period
from 1.8% in the June 1995 Period.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.

REVENUES. Revenues increased by $12.4 million, or approximately 20.6%, to
$72.4 million in 1995 from $60.0 million in 1994. This increase was primarily
due to revenues generated by the operations acquired in connection with the 1995
Acquisitions and increased sales of commercial airtime inventory on the Radio
Traffic Services Network. The 1995 Acquisitions generated revenues of
approximately $7.1 million in 1995. Excluding these revenues, same market
revenues increased $5.3 million in 1995, or 8.8%. The Company's sell-through
rate increased to 72.0% in 1995 from 69.0% in 1994. The Company's average
commercial airtime inventory prices increased by approximately 1.0% in 1995 over
1994 prices. Including the 1995 Acquisitions, 1996 Acquisitions and Pending
Acquisitions, pro forma revenues increased 30.1% to $78.1 million in 1995 from
$60.0 million in 1994. Revenues from reciprocal arrangements as a percentage of
total revenues declined to 11.6% in 1995 from 13.3% in 1994.

BROADCASTING COSTS. Broadcasting costs increased by $9.0 million, or 28.1%,
to $41.3 million in 1995 from $32.2 million in 1994. This increase was
attributable to the addition of 16 markets to the Company's operations
(including personnel costs and costs related to the facilities required to
support the Company's operations in its new markets), continued development of
the Expanded Radio Services and the development and operation of the MetroTV
Services. The 1995 Acquisitions accounted for $2.8 million, or 4.2%, of the
total cost of operations in 1995. Primarily as a result of an increase in
operating costs associated with the development and operation of the Expanded
Radio Services and the Video News Services from $1.4 million in 1994 to $3.1
million in 1995, broadcasting costs as a percentage of revenues increased from
53.7% in 1994 to 57.0% in 1995. Broadcasting costs associated with reciprocal
arrangements increased by $0.6 million to $5.0 million in 1995, from $4.4
million in 1994.

MARKETING EXPENSE. Marketing expense increased by $3.1 million, or
approximately 27.7%, to $14.5 million in 1995 from $11.4 million in 1994. This
increase resulted from increased sales commissions associated with the increased
revenues generated in 1995. As a percentage of revenues, marketing expense was
20.0% in 1995 and 18.9% in 1994. This increase in percentage terms resulted
primarily from the addition of sales representatives, sales managers and
managerial staff in connection with the Company's efforts to improve the
sell-through rate and higher marketing costs associated with the 1995
Acquisitions. Specifically, the 1995 Acquisitions accounted for $1.5 million of
total marketing expense in 1995. Marketing expense associated with reciprocal
arrangements increased by $0.8 million to $2.6 million in 1995, from $1.8
million in 1994.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased by $1.3 million, or approximately 21.1%, to $7.2 million in 1995 from
$5.9 million in 1994. This increase was primarily attributable to costs
associated with the acquisition and operation of the 1995 Acquisitions and the
development and expansion of the Expanded Radio Services and the MetroTV
Services. General and administrative expense associated with reciprocal
arrangements decreased by $0.3 million to $0.9 million in 1995, from $1.2
million in 1994.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $4.0 million in 1995 from $1.3 million in 1994. This increase
resulted primarily from the increases in the Company's

24
<PAGE>
asset base resulting from the 1995 Acquisitions and the 1994 Acquisitions (as
defined herein). The 1995 Acquisitions accounted for $1.9 million of the total
depreciation and amortization costs in 1995. Depreciation and amortization
expense associated with reciprocal arrangements increased to $1.0 million in
1995 from $0.4 million in 1994.

OTHER EXPENSES (INCOME). Other expenses (income) increased to $(0.1)
million in 1995 from $(0.2) million in 1994.

INTEREST EXPENSE. Interest expense increased to $1.3 million in 1995 from
$0.3 million in 1994. This increase resulted primarily from increases in
indebtedness incurred in connection with the 1995 Acquisitions.

NET INCOME. As a result of the factors discussed above, net income
decreased by $3.6 million to $3.3 million in 1995 from $6.9 million in 1994.

EBITDA AND ADJUSTED EBITDA. EBITDA decreased by $1.0 million, or
approximately 9.5%, to $9.5 million in 1995 from approximately $10.5 million in
1994. This decrease was attributable to increases in broadcasting costs,
marketing expense and general and administrative expense as discussed above.
EBITDA as a percentage of revenues decreased to 13.0% in 1995 from 17.5% in
1994. Adjusted EBITDA decreased by $1.4 million to $10.8 million in 1995 from
$12.2 million in 1994. Adjusted EBITDA as a percentage of revenues decreased to
15.0% in 1995 from 20.4% in 1994. If the 1995 Acquisitions, 1996 Acquisitions
and Pending Acquisitions had occurred as of January 1, 1995, pro forma adjusted
EBITDA would have been $12.1 million in 1995.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

REVENUES. Revenues increased by $12.1 million, or approximately 25.3%, to
$60.0 million in 1994 from $47.9 million in 1993, primarily due to increased
sales of commercial airtime inventory in existing markets. The sell-through rate
increased to approximately 69.0% in 1994 from approximately 65.0% in 1993. In
addition, the Company's average commercial airtime inventory prices increased by
approximately 6.0% in 1994 over 1993 prices. In 1994, the operations acquired in
the 1994 Acquisitions generated revenues of approximately $0.6 million. Revenues
from reciprocal arrangements as a percentage of total revenues declined to 13.3%
in 1994 from 16.8% in 1993.

BROADCASTING COSTS. Broadcasting costs increased by $4.9 million, or
approximately 17.7%, to $32.2 million in 1994 from $27.4 million in 1993. Such
increase was attributable to the 1994 Acquisitions, start-ups in new markets and
costs of $1.4 million related to the development of the Expanded Radio Services.
Broadcasting costs as a percentage of revenues decreased to 53.7% in 1994 from
57.2% in 1993, primarily as a result of strong revenue growth. Such costs
generally do not increase proportionately with revenues. Broadcasting costs
associated with reciprocal arrangements increased by $0.8 million to $4.4
million in 1994, from $3.6 million in 1993.

MARKETING EXPENSE. Marketing expense increased by $2.5 million, or
approximately 28.3%, to $11.4 million in 1994 from $8.8 million in 1993. This
increase was attributable to increased sales commissions associated with revenue
increases in 1994. Marketing expense as a percentage of revenues remained
relatively constant at 18.9% in 1994 and 18.5% in 1993. Marketing expense
associated with reciprocal arrangements increased by $0.1 million to $1.8
million in 1994, from $1.7 million in 1993.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
decreased $1.1 million, or approximately 15.1%, to $5.9 million in 1994 from
$7.0 million in 1993. This decrease was primarily due to a decrease in
predecessor shareholder costs, specifically a decrease in the salary paid to Mr.
Saperstein. General and administrative expense associated with reciprocal
arrangements decreased by $0.9 million to $1.2 million in 1994, from $2.1
million in 1993.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased by $0.5 million, or 28.2%, to $1.3 million in 1994 from $1.8 million
in 1993, as a result of certain intangible assets associated with prior
acquisitions becoming fully amortized. Depreciation and amortization expense
associated with reciprocal arrangements decreased by $0.4 million in 1994 from
$1.1 million in 1993.

25
<PAGE>
OTHER EXPENSES (INCOME). Other expenses (income) decreased to $(0.2)
million in 1994 from $0.2 million in 1993. This decreases was primarily
attributable to a $0.3 million loss on disposition of property in 1993.

INTEREST EXPENSE. Interest expense increased by $0.2 million, to $0.3
million in 1994 from $0.1 million in 1993. This increase was primarily due to an
increase in indebtedness related to the 1994 Acquisitions.

NET INCOME. As a result of the factors discussed above, net income
increased by $6.0 million to $6.9 million in 1994 from $0.9 million in 1993.

DISCONTINUED OPERATIONS. In 1992 the Company acquired Houston Metropolitan,
Ltd., a magazine concern in Houston, Texas, for notes payable and reciprocal
merchandise totaling $0.4 million. In 1993 the Company incurred a loss from
operations of $0.3 million (net of tax benefit of $0.2 million) and a loss on
disposal of $0.2 million (net of tax benefit of $0.1 million).

EBITDA AND ADJUSTED EBITDA. EBITDA increased by $5.8 million, or 124.7%, to
$10.5 million in 1994 from $4.7 million in 1993. This increase was due to an
increase in revenues and was partially offset by increases in broadcasting
costs, marketing expense and general and administrative expense. EBITDA as a
percentage of revenues increased to 17.5% in 1994 from 9.8% in 1993. Adjusted
EBITDA increased by $5.5 million to $12.2 million in 1994 from $6.7 million in
1993. Adjusted EBITDA as a percentage of revenues increased to 20.4% in 1994
from 14.0% in 1993.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has financed its operations with cash generated by
operations and funds provided pursuant to the Credit Agreement. The Company has
used cash provided by operating activities to fund capital expenditures,
operations and distributions to its stockholders.

Net cash provided by operating activities increased by approximately $0.5
million, to $3.8 million in the June 1996 Period from $3.3 million in the June
1995 Period as a result of increases in net earnings before depreciation and
amortization and an increase in accrued liabilities. This increase was partially
offset by an increase in accounts receivable, an increase in cash used by net
reciprocal arrangements, and a decrease in deferred revenues. Net cash used in
investing activities decreased by $4.1 million, to $6.3 million in the June 1996
Period from $10.4 million in the June 1995 Period, due to a decrease in
acquisition costs. This decrease was partially offset by an increase in the
acquisition costs of property and equipment. Net cash provided by financing
activities decreased by $2.8 million, to $3.0 million in the June 1996 Period
from $5.8 million in the June 1995 Period as a result of (i) the reduction in
the rate of growth of long term debt and (ii) an increase in shareholder's
distributions. Such decrease in net cash provided by financing activities was
partially offset by an increase in disbursement float.

Net cash provided by operating activities increased by $0.8 million to $2.1
million in 1995 from $1.3 million in 1994. This increase was primarily
attributable to an increase in income taxes payable and a decrease in cash used
by reciprocal arrangements. These factors were partially offset by a decrease in
net earnings before depreciation and amortization and deferred revenue and a
decrease in the rate of growth of accounts receivable. Net cash used in
investing activities was $2.4 million in 1994 and $11.9 million in 1995. Cash
used in investing activities related primarily to (i) in 1994, the 1994
Acquisitions and advances to a stockholder of the Company (primarily for the
payment of income taxes payable by the shareholders in respect of S Corporation
income) and (ii) in 1995, the 1995 Acquisitions and acquisitions of information
gathering and broadcasting equipment. Net cash provided by financing activities
in 1994 and 1995 was $3.6 million and $9.2 million, respectively. Cash provided
by financing activities was comprised primarily of proceeds from funds provided
pursuant to the Credit Agreement. As of June 30, 1996, the Company had
short-term debt of $7.2 million and long-term debt of $24.0 million. Short-term
debt consisted of current maturities of borrowings under the Credit Agreement,
current portions of long-term debt and current portions of capitalized lease
obligations. Long-term debt consisted of the long-term portion of the Credit
Agreement and the long-term portion of the notes relating to certain
acquisitions.

26
<PAGE>
Net cash provided by operating activities increased to $1.3 million in 1994
from $(0.9) million in 1993 due to the increases in net earnings and deferred
revenues. The increase in net earnings and deferred revenues was partially
offset by an increase in accounts receivable and cash used by net reciprocal
arrangements and a decrease in income taxes payable. Net cash used in investing
activities increased to $2.4 million in 1994 from $1.2 million in 1993 as a
result of an increase in advances on receivables from stockholders. This
increase was partially offset by an increase in proceeds from the sale of
property and equipment. Net cash provided by financing activities increased to
$3.6 million in 1994 from $2.0 million in 1993 due to an increase in long term
debt. This increase was partially offset by distributions to shareholders.

Accounts receivable increased $4.0 million in 1995 primarily as a result of
an increase in sales to $72.4 million in 1995 from $60.0 million in 1994. Income
taxes payable decreased $1.8 million in 1994 primarily due to the fact that the
largest of the Predecessor Companies elected to be treated as an S corporation
for tax purposes effective July 1, 1994. A major customer's declaration of
bankruptcy caused 1994 bad debt expense to be significantly higher than in 1995.
Since 1994, the Company's bad debt expense has been relatively constant. Net
reciprocal activities decreased by $1.8 million in 1995 primarily due to the
Company's decision to decrease its reciprocal arrangements and concentrate on
generation of cash revenues.

THE CREDIT AGREEMENT AND NOTES PAYABLE

The maximum aggregate permitted borrowings (the "Line of Credit") under the
Credit Agreement is $30.0 million. The Line of Credit bears interest at a
variable rate determined by the lender's prime rate or LIBOR and the Company's
total leverage; the interest rate ranges from 50 to 100 basis points over the
prime rate or 100 to 200 basis points over LIBOR. The Line of Credit has a
commitment fee of 0.375% per annum on the daily average unborrowed balance of
the Line of Credit. The Line of Credit currently is secured by a pledge of the
equity interests in each of the Predecessor Companies. The Credit Agreement
provides for various restrictions on the Company which preclude the Company,
without first obtaining the lender's consent, from taking certain actions,
including incurring additional indebtedness, purchasing the assets of any entity
other than in the ordinary course of business, merging or consolidating with any
other entity, altering its existing capital structure and paying certain
dividends. As of June 30, 1996, the Company had $29.3 million outstanding under
the Line of Credit. The Company intends to repay the balance outstanding under
the Line of Credit with a portion of the net proceeds of this offering.

The Company has obtained a commitment letter to enter into the New Line of
Credit, which will replace the Line of Credit, with its lender upon the closing
of this offering. The New Line of Credit is expected to provide for maximum
aggregate permitted borrowings of $30.0 million. The New Line of Credit is
expected to expire September 30, 2003, and to begin amortizing in December 1998.
The New Line of Credit is expected to bear interest at a variable rate indexed
to the lender's prime rate or LIBOR and the Company's total leverage. The New
Line of Credit is expected to have a commitment fee based on the daily average
unborrowed balance of the New Line of Credit. Upon the closing, the Company
anticipates that the New Line of Credit will be secured by the granting of a
lien by the Company and its subsidiary on all of their respective assets and a
pledge of the Company's equity interest in its subsidiary in favor of the
lender. The New Line of Credit is expected to provide for various restrictions
on the Company which would preclude the Company, without first obtaining the
lender's consent, from taking certain actions, including incurring additional
indebtedness, purchasing the assets of any entity other than in the ordinary
course of business, merging or consolidating with any other entity, altering its
existing capital structure and paying certain dividends.

The Company issued non-interest bearing notes in connection with the
acquisitions in 1995 of the stock of Skyview Broadcasting Networks, Inc. and
Airborne Broadcast Consultants and the acquisition in 1995 of the assets of
Airborne Broadcasting Systems, Inc. and the 1994 acquisition of Charlotte
Traffic

27
<PAGE>
Patrol, Inc. which had principal amounts of $0.2 million, $0.1 million, $0.1
million and $0.7 million, respectively, outstanding as of June 30, 1996. The
Company has guaranteed a $0.7 million letter of credit related to the Charlotte
acquisition as of June 30, 1996. See "Business -- Acquisitions."

CAPITAL EXPENDITURES

Capital expenditures were $2.7 million in both 1994 and 1995. Historically,
the Company's capital expenditures have related principally to increasing the
Company's information gathering capabilities, broadcasting capacity and
technology base. The Company anticipates that capital expenditures in 1996 will
be approximately $7.0 million. This $7.0 million is expected to include between
$4.0 million and $5.0 million for expenditures associated with expanding the
Company's information gathering and broadcasting capabilities, including
significant expenditures on video broadcasting and surveillance.

The Company believes its existing sources of liquidity, cash provided by
operations, the Credit Agreement and the proceeds of this offering will satisfy
the Company's anticipated working capital and capital expenditure requirements
for the foreseeable future.

EFFECTS OF INFLATION

The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on the Company's results of
operations.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based on employee compensation
plans including, stock purchase plans, stock options, restricted stock and stock
appreciation rights. The Company has elected to continue accounting for stock
based on compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. Management does not believe that the
implementation of SFAS 123 will have a material effect on its financial
statements.

28
<PAGE>
BUSINESS

OVERVIEW

The Company is the largest provider of traffic reporting services, according
to a March, 1994 market analysis prepared by the United States Department of
Transportation, and believes that it is a leading supplier of local news,
sports, weather and other information reporting services to the television and
radio broadcast industries. The Company's information reports, which are
customized to meet the specific needs of each of the Company's individual radio
and television station affiliates, are presently being broadcast by
approximately 1,275 radio stations affiliates and 110 television station
affiliates. The Company provides local broadcast information reports in 47 of
the 50 largest MSA markets in the United States. In exchange for the Company's
information reports, radio and television station affiliates provide commercial
airtime inventory to the Company. The packaging and sale of this commercial
airtime inventory accounts for substantially all of the Company's revenues.

The Company offers advertisers three different networks on which to
broadcast their advertisements: the Radio Traffic Services Network which
broadcasts the Radio Traffic Services, the Expanded Radio Services Network which
broadcasts the Expanded Radio Services and the MetroTV Network which broadcasts
the MetroTV Services. The Company believes that the Expanded Radio Services
Network and the MetroTV Network, both of which are currently being developed,
will become separate broad-based networks through which the Company will be able
to acquire, package and sell additional commercial airtime inventory. See
"--Operating Strategy" and "-- Advertising Sales and Marketing."

Since its founding in 1978, the Company has demonstrated growth in net
revenues and EBITDA. For the six months ended June 30, 1996, the Company had
revenues of $50.1 million, EBITDA of $11.5 million and adjusted EBITDA of $12.2
million. For the year ended December 31, 1995, the Company had pro forma
revenues of $78.1 million, pro forma EBITDA of $10.0 million and pro forma
adjusted EBITDA of $12.1 million.

OPERATING STRATEGY

The Company's strategy is to realize operating efficiencies by (i) expanding
geographically; (ii) increasing the number of affiliates using the Radio Traffic
Services within existing markets; (iii) developing the Expanded Radio Services;
(iv) developing the MetroTV Services; and (v) continuing to strengthen its
marketing, sales and inventory management operations.

EXPAND GEOGRAPHICALLY. The Company, which currently operates in 60 MSA
markets in the United States, including 54 of the largest 75 MSA markets in the
United States, believes that the economic model for its local information
services business is viable in each of the largest 75 markets. Since July 1994,
the Company has entered 16 new markets, including six strategic acquisitions
accounting for an additional 14 markets and start-ups in two new markets
throughout the United States. Additionally, the Company intends to expand into
the remaining 21 markets over the next three years through strategic
acquisitions and start-ups. Strategic acquisitions afford the Company the
opportunity to realize economies of scale and cost savings as existing
operations are acquired and duplicative functions eliminated.

INCREASE THE NUMBER OF AFFILIATES USING THE RADIO TRAFFIC SERVICES WITHIN
EXISTING MARKETS. The Company believes that there are substantial opportunities
for continued growth in its Radio Traffic

29
<PAGE>
Services Network. As of June 30, 1996, the Company provided the Radio Traffic
Services to approximately 1,230 radio station affiliates, an increase from
approximately 900 radio station affiliates as of December 31, 1994. The Company
believes that opportunities are available to increase its market penetration by
establishing affiliate relationships with additional radio stations. Its current
Radio Traffic Services Network represents 48.7% of the approximately 2,524 radio
stations in the 60 MSA markets in which the Company operates. Once the Company
establishes a presence in a market by providing its services to at least one
affiliate, it can leverage its investment in information gathering technology,
such as aircraft and fixed-position cameras, by providing traffic services to
multiple affiliates, at minimal additional costs.

DEVELOP THE EXPANDED RADIO SERVICES. Having established a substantial
market presence in the Radio Traffic Services, the Company began during 1994 to
leverage this business by offering the Expanded Radio Services to its network of
radio station affiliates. As of June 30, 1996, the Company provided the Expanded
Radio Services to more than 200 radio station affiliates in 28 MSA markets, an
increase from 92 radio station affiliates in 17 MSA markets as of December 31,
1994. The Company believes it can provide customized information reports of a
superior quality, at a lower cost than an individual station can provide on its
own. Moreover, the Company believes that consolidation in the radio industry may
increase the demand for the Expanded Radio Services Network because radio
station owners are likely to continue to increase their out-sourcing of various
programming elements in order to minimize operating costs. The Company plans to
focus on increasing the number of radio stations broadcasting the Expanded Radio
Services within its current markets, and to expand these services to all of its
markets by the end of 1997.

DEVELOP THE METROTV SERVICES. The Company has provided its Television
Traffic Services to the MetroTV Network for over ten years. As of June 30, 1996,
this network consisted of 110 television stations in 47 DMA markets, an increase
from 71 television stations in 33 DMA markets as of December 31, 1994. In
connection with its core Radio Traffic Services business, the Company developed
an extensive infrastructure of video surveillance and broadcast equipment,
including jet helicopters, broadcast quality remote and omni-directional
aircraft-mounted camera systems, mobile units, computer generated graphic
displays and broadcasting technology. In 1995, the Company began to use this
infrastructure to offer the Video News Services to its network of television
station affiliates; the Company currently provides this service to 16 of its
television station affiliates in 12 of its 47 DMA markets. The Company's MetroTV
Services include full service, 24 hours per day/7 days per week video coverage
from camera crews in the Company's aircraft and in the Company's mobile ground
units covering news stories. In addition, the Company's strategically located
fixed-position ground-based camera systems offer affiliates coverage of crucial
traffic arteries and news stories, and are capable of providing panoramic views
of the cities in which such cameras are located. The Company intends to expand
the Video News Services into the 25 largest DMA markets in the United States
over the next three years.

CONTINUE TO STRENGTHEN MARKETING, SALES AND INVENTORY MANAGEMENT
OPERATIONS. Over the past year, the Company has invested in, and continues to
initiate and implement, new operating strategies and systems to increase
revenues and EBITDA in its operations. In order to increase the percentage of
the Company's commercial airtime inventory sold, the Company has (i) increased
its sales force from approximately 70 sales representatives as of December 31,
1994 to approximately 136 sales representatives as of June 30, 1996; (ii)
developed a corporate marketing department to support the efforts of its sales
representatives by providing extensive training, research, sales/marketing
materials and analysis; (iii) hired additional general managers and sales
managers to better manage the activities of its sales representatives and
enhance its affiliate relations; (iv) fully automated its commercial airtime
inventory management system to improve inventory control and pricing; and (v)
reduced the level of reciprocal arrangements to focus sales representatives on
cash revenue business. These enhancements have allowed the Company to increase
advertising rates in each of 1994 and 1995. In addition, the Company estimates
that it sold approximately 69% in 1994 and 72% in 1995, respectively, of its
Radio Traffic

30
<PAGE>
Services Network and Expanded Radio Services Network commercial airtime
inventory. For the six months ended June 30, 1996, the Company estimates that it
sold approximately 71% of its existing radio network commercial airtime
inventory.

PROGRAMMING

RADIO PROGRAMMING SERVICES

The Company has been supplying radio stations with customized Radio Traffic
Services since its inception in 1978. The Company is now the largest supplier of
the Radio Traffic Services in the United States. The Company has offered its
Expanded Radio Services since 1994 and is now a leading supplier of such
services, with over 200 affiliates in 28 markets. The Company intends to have a
general news reporting presence in all of its 60 markets by the end of 1997.

The Company gathers traffic and other data utilizing the Company's
information-gathering infrastructure, which includes aircraft (jet helicopters
and airplanes), broadcast quality remote camera systems positioned both at
strategically located ground positions and on aircraft, mobile units and
cellular systems, and by accessing various government based traffic tracking
systems. The Company also gathers information through various services including
Reuters America Inc., Turner Program Services, Inc., WeatherBank, Inc., Weather
Services Corporation, City News Service of Los Angeles, Sports Final Radio Net,
Inc. and Bay City News, Inc. The information is then processed, written into
broadcast copy and entered into the Company's computer systems by the Company's
local writers and producers. The Company's professional broadcasters then read
the customized reports on the air.

The Company's information-gathering infrastructure and the flexibility
created by its ability to provide services 24 hours per day/7 days per week to
its affiliates enable the Company to respond to changing conditions and enable
the Company's affiliates to provide their listeners with accurate up-to-
the-minute information. For example, responding to numerous radio station
requests during the Long Island fires in 1995, the Company's New York operations
center substantially increased the number of reports regarding this subject
provided to affiliates. Rapid response in similar circumstances, such as in
connection with the 1994 Los Angeles earthquake, is routinely achieved by the
Company whenever weather or other events impact either traffic or other
conditions of interest to the listeners or viewers of the Company's affiliates.
See "-- Infrastructure."

As a result of its extensive network of operations and broadcasters, the
Company often reports important news stories and provides its affiliates with
live coverage of these stories. The Company is able to customize and personalize
its reports of breaking stories using its individual affiliates' call letters
from the scene of news events. For example, during the TWA Flight 800 crisis,
the Company provided live

31
<PAGE>
customized reports from New York to its affiliates all over the country. The
Company believes that it is the only radio network news organization that has
local studio operations that cover 60 markets and that is able to provide such
customized reports to these markets.

In addition, the Company is currently test marketing a regional news wire
service (non-customized text and audio) in five markets. If the test is
successful, the Company plans to launch its news wire service in various regions
beginning in 1997. The Company could eventually offer this service in small and
medium-sized markets without opening any local operations centers as this would
be a non-customized service and distributed via satellite, thereby generating
additional commercial airtime inventory for the Expanded Radio Services.

TELEVISION PROGRAMMING SERVICES

The Company has been supplying its Television Traffic Services to television
stations for over ten years and is currently providing such services to 110
television stations in 47 markets. Originally, the Company provided television
stations with audio reports of traffic information and simple graphics; as the
Company developed its Television Traffic Services, it provided more
sophisticated graphics displays to the MetroTV Network. In 1995, the Company
began to expand and enhance the information services that it provides to
television stations. The Company is now providing its Video News Services to
approximately 16 television stations in 12 markets. As with its radio
programming services, with its MetroTV services the Company supplies customized
information reports which are delivered on air by its professional broadcasters
to its television station affiliates. In addition, the Company supplies
customized graphics and other visual programming elements to its television
station affiliates.

The Company began utilizing live studio cameras in order to enable its
traffic reporters to provide its Video News Services on television from the
Company's local broadcast studios. In addition, the Company began in 1995 to
provide its Video News Services from its aircraft and ground based camera
systems. The Company provides its Television Traffic Services and Video News
Services to television stations owned by some of the largest television groups
in the nation, including A.H. Belo Corporation, Cox Communications, Inc., ABC
Inc., a subsidiary of The Walt Disney Company, Ellis Communications, Inc., Fox
Television Stations, Inc., a subsidiary of The News Corporation Limited,
National Broadcasting Company, Inc., a subsidiary of General Electric Company,
The Washington Post Co. and CBS, Inc., a subsidiary of Westinghouse Electric
Company.

The Video News Services include: (i) full-service, 24 hours per day/7 days
per week video coverage from the Company's camera crews, using broadcast quality
camera equipment and news vehicles; (ii) live video news feeds from the
Company's aircraft; and (iii) live video coverage from strategically located
ground based camera systems. Currently, the Company is providing all of such
Video News Services to four affiliates in Houston, Texas, where the Company has
tested the product for the past fifteen months, and plans to expand it into the
25 largest DMA markets in the country over the next three years. The capital and
operating expenditures needed to expand the Company's Video News Services have
been and will continue to be significant relative to the capital expenditures
required by the Company to operate its radio information services business.

METRO INFORMATION SERVICES

The Company initiated its Metro Information Services ("MIS") division to
develop non-broadcast traffic information business. MIS develops innovative
techniques of gathering local traffic and transportation information as well as
new methods of distributing such information to the public. The Company believes
that in order to remain competitive and to continue to provide an information
product of the highest quality to its affiliates, it is necessary to invest in
and participate in the development of new technology. The Company is currently
working with numerous public and private entities across the United States to
improve dissemination of traffic and transportation information. The Company is
a large supplier of information to the wireless telephone industry, providing
customized traffic information, direction services, and other local information
to cellular subscribers via the Company's STAR JAM (TM) and STAR FIND (TM)
services. Also, the Company plans to offer traffic information services via the

32
<PAGE>
Internet, other wireless communications, in-vehicle systems and other potential
delivery mechanisms. The Company believes that it is well-positioned, as a
leading supplier of local traffic and other information, to benefit from the
evolution of future distribution systems.

The Company has participated in several United States Department of
Transportation ("USDOT") funded "Intelligent Transportation Systems" projects
including: (i) The Atlanta Showcase, a federally funded technology demonstration
project which took place during the Summer Olympics in 1996 and involved the
delivery of traffic and mobility information and (ii) TravInfo Traveler
Information Center, a field operational test being conducted in the San
Francisco Bay Area to implement a region-wide, open-access, multi-model advanced
traveler information service.

INFRASTRUCTURE

The Company's geographically dispersed operations have historically been
organized into several regions. Formerly, a regional General Manager would
typically have overall management responsibility for sales and operations in
such General Manager's region, which would be comprised of four to six markets,
depending on the size of the markets. However, the Company believes that as it
continues to grow its Expanded Radio Services and Video News Services, a General
Manager focused exclusively on one market or a smaller number of markets will be
able to more effectively implement and maintain affiliate relationships and
maximize the percentage of available advertising inventory sold. Accordingly,
the Company presently intends to reorganize its management to place a single
General Manager in each of its 10 largest markets and to assign a General
Manager in its remaining markets to a small number of markets, generally one to
three.

In each of its markets, the Company employs a Director of Operations who is
responsible for all aspects of the Company's day-to-day operations. Each
Director of Operations is responsible for supervising all of the broadcasters,
airborne reporters, producers, editors, and writers in such Director's operation
center. Moreover, the Director of Operations is responsible for maintaining
day-to-day relations with affiliates and pursuing relationships with
unaffiliated stations. In addition, the Company employs eight Regional Directors
of Operations who supervise the Directors of Operation and who report to the
Company's General Managers.

The Company believes that its extensive fleet of aircraft and other
information-gathering technology and broadcast equipment have allowed the
Company to provide high quality programming, enabling it to retain and expand
its affiliate base. In the aggregate, the Company utilizes approximately 69
fixed-wing aircraft, 17 helicopters, 30 mobile units, 7 airborne camera systems,
16 fixed-position camera systems, 50 broadcast studios and 1,177 broadcasters
and producers. The Company also maintains a staff of computer programmers and
graphics experts to supply customized graphics and other visual programming
elements to television stations. In addition, the Company's operating centers
and broadcast stations has sophisticated computer technology, video and
broadcast equipment and cellular and wireless technology which enables the
Company's broadcasters to deliver accurate reports to its affiliates. The
infrastructure and resources dedicated to a specific market by the Company are
determined by the size of the market, the number of affiliates the Company
serves in the market and the type of services being provided.

For example, in the New York City metropolitan area, the Company currently
utilizes two jet helicopters with mounted omni-directional cameras, four
airplanes, and fixed-position cameras positioned strategically to deliver
up-to-the-minute live reports. Traffic conditions are relayed via two way radio
to the producers in the Company's New York broadcast studio who transcribe the
report, enter it into the computer system and produce the broadcast copy which
is then delivered on-air to the Company's New York radio and television
affiliates by its broadcasters. The Company recently installed cameras on its
helicopters and on certain buildings, including the Empire State Building,
enabling the Company to provide its television station affiliates with live
video of breaking news and traffic conditions. The Company believes that its
investment in its New York City-area infrastructure has been a significant
factor in the increase in its number of radio station and television station
affiliates in its New York City, Nassau/

33
<PAGE>
Suffolk Counties (Long Island) and Monmouth/Ocean Counties, NJ markets from 24
as of December 31, 1994 to 31 as of June 30, 1996. The following diagram depicts
the infrastructure supporting the Company's New York City metropolitan area
operation:

[ART]

In 1995, the Company established an electronic communications network in its
headquarters in Houston, Texas. The Company began expanding this network to
include its marketing and operations offices throughout the country in 1996. The
Company has created this Intranet for internal management as well as Internet
access. The Company believes that by networking each of its regional offices to
the corporate office, access to certain sales, marketing, scheduling and
accounting information will be more effectively updated, maintained and
disseminated to the Company's employees. The Company believes this will result
in an improvement in sales and marketing efficiency, and will also be beneficial
to general managers in tracking and maintaining commercial airtime inventory and
rate controls and affiliate information for their respective markets. The
Company has invested in this infrastructure, with ten markets currently on the
network, and plans to add its remaining markets to this network by 1997.

34
<PAGE>
ADVERTISING SALES AND MARKETING

The Company packages its radio commercial airtime inventory on a network
basis, covering all affiliates in relevant markets. This packaged inventory
typically appeals to advertisers seeking a broader demographic reach than that
delivered by individual radio stations, which generally deliver an audience with
narrow, specific demographic characteristics. Because the Company sells its
commercial airtime inventory on a network basis rather than station by station,
the Company does not compete for advertising dollars with its local radio
station affiliates. The Company believes that this corporate policy is a key
factor in maintaining its affiliate relationships.

Currently, the Company's television commercial airtime inventory is sold by
members of its general advertising sales force. The Company is developing a
separate sales force to sell its television commercial airtime inventory.
Currently, the Company packages its television commercial airtime inventory on a
local, regional and national network basis. However, advertisers on the MetroTV
Network have the ability to select specific markets and television stations for
their advertisements. This enables advertisers to customize advertising packages
to their individual requirements.

In each of the markets in which it conducts operations, the Company
maintains an advertising sales office as part of its operations center. The
Company's advertising sales force is able to sell available commercial airtime
inventory in any and all of the Company's markets in addition to selling such
inventory in each local market, which the Company believes affords its sales
representatives an advantage over certain of their competitors. For example, an
airline advertiser can purchase airtime inventory in multiple markets from the
Company's local sales representative in the city in which the airline is
headquartered. The Company's advertising sales force is comprised of
approximately 136 sales representatives. Although the Company typically has two
or three sales representatives in an individual market, the number of sales
representatives in an individual market ranges from one to eight depending on
the size of the market and the number of potential national and regional
advertising clients headquartered in the market. Specialized programs and
marketing campaigns, which support nationwide sales and other special forms of
advertising, are managed from the Company's headquarters in Houston, Texas.

Due to the number of the Company's markets, its reach within its markets and
the range of services it provides, the Company has a large number of advertising
clients in a diverse group of industries. For the year ended December 31, 1995,
no single advertiser represented more than 6% of the Company's total revenues
and the Company's top ten advertisers, as a group, represented only 21% of the
Company's total revenues.

As the following table indicates, for the year ended December 31, 1995,
advertising sales to the ten largest industry groups which are purchasers of the
Company's commercial airtime inventory accounted for approximately 58% of the
Company's total sales and no single industry group accounted for more than 8% of
the Company's total sales.

<TABLE>
<CAPTION>
% OF TOTAL SALES FOR
TWELVE MONTHS
ADVERTISER INDUSTRY ENDED 12/31/95
- --------------------------------------------------------------------- ---------------------
<S> <C>
Consumer Goods....................................................... 8%
Retail (Home Improvement)............................................ 7%
Supermarkets......................................................... 6%
Automotive (Retail).................................................. 6%
Automotive........................................................... 6%
Other Retail......................................................... 6%
Cellular............................................................. 5%
Newspapers........................................................... 5%
Oil & Gasoline....................................................... 5%
Lotteries............................................................ 4%
---
Total.............................................................. 58%
---
---
</TABLE>

35
<PAGE>
Due to the relatively long lead-time required to educate advertising
agencies on the merits of the Company's advertising packages, the Company has
historically targeted its advertising sales efforts directly to advertisers.
Many advertisers, however, have directed their advertising agencies to place
advertising with the Company and, as a result, such agencies have themselves
begun to direct more advertisers to the Company. Due to the growing strength of
the Company's advertising agency relationships, advertising sales booked through
advertising agencies grew to approximately 75% of the Company's total revenues
in 1995, an increase from 63% in 1992. The Company does not have significant
sales concentration among its agency-placed advertising, with advertising
inventory sold through an estimated 400 agencies during 1995.

THE RADIO TRAFFIC SERVICES NETWORK AND THE EXPANDED RADIO SERVICES NETWORK

The Company's typical radio advertisement on the Radio Traffic Services
Network and the Expanded Radio Services Network consists of an opening
announcement and a ten second commercial message presented immediately prior to,
in the middle of, or immediately following a regularly scheduled information
report. Because the Company has numerous radio station affiliates in each of its
markets (averaging 21 affiliates per market), the Company believes that its
traffic broadcasts reach more people, more often, in a higher impact manner than
can be achieved using any other advertising medium. The Company combines its
commercial airtime inventory into multiple "sponsorship" packages (generally
125, 250 or 500 sponsorships broadcast over a four week period in each market)
which it then sells as an information sponsorship package to radio advertisers.
These Company sponsorship packages are run on a fair and equal rotation (i.e.,
each advertiser receives its pro rata share of advertisements sold by the
Company for broadcast on each of the Company's affiliates in the relevant market
or markets) throughout the Traffic Services Network on a local, regional or
national basis, primarily during prime morning and afternoon drive periods. The
Company does not allow an advertiser to select individual stations from the
Radio Traffic Services Network or Expanded Radio Services Network on which to
run its advertising campaign. The Company's 500 sponsorship package (which the
Company believes is its most frequently purchased package), reaches an average
of approximately 70% of the population (age 12 and over) in the Company's MSA
markets. In addition, the Company's large network of affiliates allows the
Company to offer advertisers the opportunity to purchase advertising in multiple
markets nationwide through a single purchase from the Company.

As the Company has developed and expanded the Expanded Radio Services
Network, it has primarily packaged and sold its commercial sponsorships of the
Expanded Radio Services in conjunction with its existing traffic report
sponsorships. Because the Expanded Radio Services Network is not fully mature,
the Company has not yet maximized the marketing of commercial airtime inventory
on the Expanded Radio Services Network as a separate product line. Accordingly,
the Company has only generated minimal revenues from the sale of advertisements
on the Expanded Radio Services Network. As the Company develops the Expanded
Radio Services Network in individual markets, it intends to package and sell
advertisements as a separate product. During the first quarter of 1996, the
Company began to package and sell separate Expanded Radio Services Network
sponsorship packages in five markets (Boston, Washington, Houston, Phoenix, and
Los Angeles). The Company intends to introduce the Expanded Radio Services
Network sponsorships in additional markets as it further develops the Expanded
Radio Services Network throughout 1996 and 1997.

As the Company's business has developed, it has sold increasing amounts of
its advertising to regional/national advertisers. For the year ended December
31, 1994, approximately 25% of the Company's radio advertising revenue was
attributable to regional/national advertisers, with the balance attributable to
local advertisers, and for the six months ended June 30, 1996, sales to
regional/national advertisers accounted for approximately 50% of sales of total
commercial airtime inventory.

The Company believes that the positioning of advertisements within or
adjacent to its information reports appeals to advertisers because the
advertisers' messages are broadcast along with regularly scheduled programming
during peak morning and afternoon drive times when a majority of the radio
audience is listening. Radio advertisements broadcast during these times
typically generate premium

36
<PAGE>
rates. Moreover, surveys commissioned by the Company demonstrate that because
the Company's customized information reports are related to topics of
significant interest to listeners, listeners often seek out the Company's
information reports. Since advertisers' messages are imbedded in the Company's
information reports, such messages have a high degree of impact on listeners and
generally will not be "pre-empted" (i.e., moved by the radio station to another
time slot). Most of the Company's advertisements are read live by the Company's
on-air broadcasters, providing the Company's advertisers with the added benefit
of an implied endorsement for their product.

THE METROTV SERVICES

The Company provides its MetroTV Services to television stations in exchange
for thirty-second commercial airtime inventory. The amount and day-part
placement of the commercial airtime inventory that the Company receives from
television stations varies by market and by the type of service provided by the
Company. As the Company has provided more enhanced MetroTV Services, it has been
able to acquire more commercial airtime inventory with better day-part
placement. The Company, in turn, packages this commercial airtime inventory and
sells it to advertisers on a local, regional and national basis. The Company
believes that it offers advertisers significant benefits because, unlike
traditional television networks, the MetroTV Network often delivers more than
one station in a market and advertisers have the ability to select specific
television stations and markets. Therefore, the Company can customize
advertising packages for individual advertisers based on each advertiser's
requirements.

Historically, revenues from sales of television commercial airtime inventory
have been an insignificant part of the Company's total revenues. In order to
significantly increase the Company's revenues from sales of television
commercial airtime inventory, in early 1996 the Company: (i) formed a separate
television advertising sales staff; (ii) began seeking an increased amount of
higher value fixed position commercial airtime inventory from television
stations in exchange for providing enhanced Video News Services; and (iii)
pre-sold a significant amount of commercial airtime inventory to a large
national advertiser. As the Company continues to expand all aspects of its
Television Traffic Services and Video News Services, the Company believes that
revenues from television advertising sales will continue to increase.

AFFILIATES

The Company's large network of affiliates allows the Company to offer
advertisers the opportunity to reach a broad-based, local, regional or national
audience through a single purchase of commercial airtime from the Company. The
Company has demonstrated consistent affiliate growth; for example, the number of
radio station affiliates has grown 40.5% from 914 as of December 31, 1994 to
1,284 as of June 30, 1996, and the number of the Company's television station
affiliates has increased 54.9% from 71 to 110 over the same period. In addition,
the Company's relationships with numerous radio station and television station
affiliates within a certain market create economies of scale which allow the
Company to utilize a wide array of professional broadcasters,
information-gathering equipment and technology and extended hour operations less
expensively than if it had an affiliate relationship with only one individual
station or group in a particular market.

The number of the Company's radio station affiliates in an individual market
varies from 55 in the Los Angeles, California market to two in the Cincinnati,
Ohio market (which was a 1996 start-up) and currently averages 21 affiliates per
market. The Company's primary goal when entering a market is to enter into
affiliate relationships with every radio station and television station in the
market, thereby maximizing the percentage of listeners (i.e., the number of
people in the radio audience who have heard a report in a particular market) of
the Company's networks within each of its markets; such maximization is an
integral part of the Company's sales and marketing strategy. With the exception
of Cincinnati, Ohio, the Company's reports and sponsorships are heard by a low
of 43.7% in Nashville, Tennessee to a high of 100% of the radio listening
audience in six markets. On average the Company's reports and sponsorships are
heard by over 88% of the population (age 12 and over) in its markets.

37
<PAGE>
The following chart presents, in order of MSA population (age 12 and over),
the Company's current number of radio station affiliates in each of its MSAs,
the MSA's population and the Company's audience reached in the relevant MSA.
<TABLE>
<CAPTION>
# OF RADIO
STATION MSA
MSA(1) AFFILIATES POPULATION(1) % LISTENERS(2)
- -------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
New York, NY 28 14,114,700 83.5
Monmouth/Ocean, NJ 884,300 48.9
Los Angeles, CA 55 9,687,300 80.6
Riverside/San
Bernardino, CA 1,343,200 89.3
Oxnard, CA 362,000 68.9
Chicago, IL 33 6,895,700 81.8
San Francisco/ 28 5,367,400 78.6
Oakland, CA
Philadelphia, PA 35 4,067,000 95.3
Detroit, MI 26 3,652,100 91.3
Dallas/Ft. Worth, TX 30 3,570,000 84.0
Washington, DC 34 3,512,500 98.6
Houston/Galveston, 35 3,348,800 99.7
TX
Boston, MA 32 3,236,600 84.4
Miami/Ft. 32 2,936,100 96.9
Lauderdale/
Hollywood, FL
Atlanta, GA 41 2,843,500 80.3
Seattle/Tacoma, WA 24 2,698,900 100.0
Nassau/Suffolk (Long 3 2,253,200 64.5
Island), NY
San Diego, CA 21 2,212,900 75.3
Minneapolis/St. 30 2,202,400 98.4
Paul, MN
St. Louis, MO 27 2,083,800 95.6
Baltimore, MD 23 2,056,700 81.9
Pittsburgh, PA 25 2,036,900 84.1
Phoenix, AZ 38 1,997,400 99.8
Tampa/St. 30 1,885,200 100.0
Petersburg/
Clearwater, FL
Cleveland, OH 25 1,759,300 100.0
Denver/Boulder, CO 37 1,733,500 98.2
Portland, OR 21 1,598,900 83.0
Cincinnati, OH 2 1,556,300 6.0
Kansas City, MO 20 1,349,300 60.3
Milwaukee/Racine, WI 23 1,339,700 98.3

<CAPTION>
# OF RADIO
STATION MSA
MSA(1) AFFILIATES POPULATION(1) % LISTENERS(2)
- -------------------- ----------- ------------- ---------------
<S> <C> <C> <C>

Sacramento, CA 38 1,337,200 99.2
Stockton, CA 420,400 67.4
Modesto, CA 330,400 67.2
San Jose, CA 9 1,317,700 47.3
Providence/Warwick/ 24 1,263,700 96.9
Pawtucket, RI
Columbus, OH 13 1,223,900 60.4
Norfolk/Virginia 29 1,210,900 100.0
Beach/Newport News,
VA
San Antonio, TX 24 1,183,200 96.0
Salt Lake City/ 24 1,158,600 99.6
Ogden/Provo, UT
Indianapolis, IN 19 1,108,500 91.6
Charlotte/Gastonia/ 21 1,077,400 87.9
Rock Hill, NC
Orlando, FL 27 1,017,100 100.0
Buffalo/Niagara 15 991,600 98.5
Falls, NY
Hartford, CT 40 962,700 91.2
New Haven, CT 389,300 57.3
Danbury, CT 164,300 83.6
Memphis, TN 12 931,800 69.4
Nashville, TN 25 911,900 43.7
Rochester, NY 15 900,700 85.2
West Palm Beach/ 20 850,200 79.0
Boca Raton, FL
Las Vegas, NV 23 847,700 99.8
Louisville, KY 24 845,900 88.9
Oklahoma City, OK(3) 8 836,200 70.5
Jacksonville, FL(4) 21 823,900 98.7
Austin, TX 18 821,600 95.9
Richmond, VA 22 775,000 100.0
Tucson, AZ 12 628,100 94.1
Albuquerque, NM(3) 12 537,700 78.1
Wilmington, DE 2 506,900 67.4
Daytona Beach, FL 5 390,300 46.5

TOTAL (5) 1,260 117,606,500(6) 88.0%
</TABLE>

- ------------------------
(1) Listed in The Arbitron Radio Metro and Television Market Population
Estimates in 1995-1996.*

(2) Percentage of the MSA population which hears the Company's information
reports, calculated using Arbitron Winter 1996 Radio Market Reports* and
Strata Marketing, Inc. Statistical Analysis.

(3) The Company has a license agreement with WIS to provide national sales,
marketing and operational support in exchange for certain amounts of
commercial airtime inventory in Oklahoma City, OK, and Albuquerque, NM. The
Company packages and sells such commercial airtime on a regional and
national basis to its advertisers. The Company has entered into a letter of
intent with WIS to acquire the assets of WIS in Oklahoma City and
Albuquerque.

(4) Pursuant to a Joint Marketing Agreement, the Company receives advertising
inventory in Jacksonville, Florida. The Company packages and sells such
commercial airtime on a regional and national basis to its advertisers.

(5) Does not include 24 affiliates of the Company's New England Weather Bureau,
which are located in various MSA markets throughout New England. The
Company has a total of approximately 1,284 radio station affiliates,
including the New England Weather Bureau.

(6) Arbitron includes the population of Nassau/Suffolk (2,253,200) and Monmouth
(490,700) counties in the New York MSA. Therefore, these populations are
not duplicated in the total population figure.

38
<PAGE>
The following chart presents, in order of market population (age 12 and
over), the Company's current number of television affiliates in each market and
the DMA's population.
<TABLE>
<CAPTION>
# OF TELEVISION
STATION DMA
DMA(1) AFFILIATES POPULATION(1)
- --------------------------- --------------- -------------
<S> <C> <C>
New York, NY 2 15,922,200
Los Angeles, CA 2 12,447,700
Chicago, IL 2 7,153,300
Philadelphia, PA 2 6,046,200
San Francisco/Oakland/ San 4 5,304,500
Jose CA
Boston, MA 3 4,850,800
Washington, DC 4 4,323,100
Dallas/Ft. Worth, TX 2 4,033,000
Detroit, MI 2 3,899,200
Houston, TX 7 3,610,800
Atlanta, GA 4 3,557,400
Seattle/Tacoma, WA 2 3,199,100
Cleveland/Akron, OH 4 3,193,200
Minneapolis/St. Paul, MN 2 3,100,200
Miami/Ft. Lauderdale, FL 3 3,009,000
Tampa/St. Petersburg/ 3 2,901,800
Sarasota, FL
Phoenix, AZ 4 2,584,000
Sacramento/Stockton/ 4 2,561,700
Modesto, CA
Pittsburgh, PA 1 2,498,400
Denver, CO 1 2,437,800
St. Louis, MO 4 2,433,600
Baltimore, MD 2 2,214,500
Orlando/Daytona Beach/ 2 2,176,500
Melbourne, FL
Portland, OR 1 2,053,500
Hartford/New Haven, CT 3 2,050,700

<CAPTION>
# OF TELEVISION
STATION DMA
DMA(1) AFFILIATES POPULATION(1)
- --------------------------- --------------- -------------
<S> <C> <C>
Indianapolis, IN 2 2,033,200
Charlotte, NC 1 1,780,700
Nashville, TN 1 1,695,100
Kansas City, MO 3 1,682,200
Columbus, OH 1 1,609,200
Salt Lake City, UT 2 1,602,600
San Antonio, TX 2 1,514,400
Norfolk/Portsmouth/ Newport 3 1,411,000
News, VA
Buffalo, NY 2 1,400,800
Memphis, TN 2 1,366,800
Oklahoma City, OK(2) 1 1,271,500
Albuquerque/Santa Fe, NM(2) 1 1,266,300
Providence/New Bedford, RI 1 1,263,700
West Palm Beach/Ft. Pierce, 2 1,206,900
FL
Louisville, KY 2 1,199,600
Richmond/Petersburg, VA 2 1,109,700
Austin, TX 1 894,200
Las Vegas, NV 2 869,800
Rochester, NY 2 812,500
Tucson, AZ 1 747,300
Springfield/Holyoke, MA 1 554,100
Monterey/Salinas, CA 1 511,900
Total Affiliates 106
Cable News Channels(3) 4

TOTAL 110 135,365,700
</TABLE>

- ------------------------
(1) Listed in The Arbitron Radio Metro and Television Market Population
Estimates in 1995-1996.*

(2) The Company has a license agreement with WIS to provide national sales,
marketing and operational support in exchange for certain amounts of
commercial airtime inventory in Oklahoma City, OK, and Albuquerque, NM. The
Company packages and sells such commercial airtime on a regional and
national basis to its advertisers. The Company has entered into a letter of
intent with WIS to acquire the assets of WIS in Oklahoma City and
Albuquerque.

(3) Cable news channel affiliates in New York, NY(2), Washington, DC(1), and
Rochester, NY(1).

The Company provides its Television Traffic Services to four cable
television affiliates. The Company believes that opportunities exist to increase
the number of cable news channel affiliates receiving the Television Traffic
Services and Video News Services, and it intends to continue to market its
services to those stations.

ACQUISITIONS

Since July 1994, the Company has expanded into 14 markets through six
strategic acquisitions, and made an additional acquisition to expand its
operations in Atlanta, Georgia, for a total consideration of approximately $20
million.

The Company is in various stages of pursuing additional strategic
acquisitions. The Company has entered into an agreement to acquire the assets of
ATN, a provider of traffic services to 16 radio station affiliates in Kansas
City, Missouri and Omaha, Nebraska; such transaction is expected to close in
January 1997. Additionally, the Company has entered into a letter of intent to
acquire the assets of the WIS, a provider of traffic services to eight radio
station affiliates and one television station affiliate in Oklahoma City,
Oklahoma, 12 radio station affiliates and one television station affiliate in
Alberquerque, New Mexico, eight radio station affiliates in Omaha, Nebraska and
one television station affiliate in Milwaukee, Wisconsin. The Company is
currently in discussions with several other entities that, if acquired, would
result in new or expanded coverage of approximately eight to ten markets by the
Company. The Company, however, does not have any commitments, arrangements, or
understandings

39
<PAGE>
with respect to any such acquisitions. Further, there can be no assurance that
the Company will be able to effect any such transaction or that any such
transactions, if consummated, will prove to be beneficial to the Company.

The Company generally consolidates the operations of acquired companies or
assets into its existing operations so that duplicative costs can be eliminated,
resulting in margin improvements for the consolidated operations. In addition,
as a result of the Company's significant sales force and existing advertising
relationships, the Company is generally able to increase revenues by selling
advertising in the acquired market to the Company's existing regional and
national sponsors. Moreover, as the Company continues to add new markets and to
increase its presence in existing markets, it has been able to offer advertisers
increased market penetration and to generate incremental revenues from existing
advertising clients.

The following acquisitions have been completed in 1996 (the "1996
Acquisitions"):

SALT LAKE CITY ACQUISITION. On January 3, 1996, the Company acquired (the
"Salt Lake City Acquisition") all of the tangible and intangible assets of
Aeromedia, Inc. ("Aeromedia"). As of June 30, 1996, the Company, (through
Aeromedia), provided Radio Traffic Services to a network of 22 radio stations
and two television stations in Salt Lake City, Utah, which is the thirty-fifth
largest MSA market.

NEW ENGLAND ACQUISITION. On January 4, 1996, the Company acquired (the "New
England Acquisition") all of the stock of Traffic Net Inc., a Rhode Island
corporation, Traffic Net of Connecticut, Inc., a Connecticut corporation, and
The Weather Bureau, Inc., a Massachusetts corporation (collectively, the
"Traffic Net Group"). As of June 30, 1996, the Company (through the Traffic Net
Group) provided local traffic information services to approximately 60 radio
station and four television station affiliates in and around the Hartford,
Connecticut area (the forty-first largest MSA market), and Providence, Rhode
Island (the thirty-first largest MSA market). In addition, The Weather Bureau,
Inc. (d/b/a The New England Weather Bureau) provides weather reporting services
to approximately 46 radio station affiliates in Boston, Massachusetts (the tenth
largest MSA market), and throughout New England.

The following acquisitions were completed in 1995 (the "1995 Acquisitions"):

THE ARIZONA ACQUISITION. On March 9, 1995, the Company acquired (the
"Arizona Acquisition") all of the stock of Skyview Broadcasting Networks, Inc.,
an Arizona corporation ("SBN"). As of June 30, 1996, the Company (through SBN)
provided services to 50 radio and five television stations in Phoenix and
Tucson, Arizona, the twentieth and sixty-second largest MSAs, respectively.

THE LAS VEGAS ACQUISITION. On March 9, 1995, the Company acquired (the "Las
Vegas Acquisition") all of the stock of Airborne Broadcast Consultants, a Nevada
corporation ("Airborne"), which was under common ownership with SBN. As of June
30, 1996, the Company (through Airborne) provided traffic programming services
to 23 radio and two television stations in Las Vegas, Nevada, the forty-eighth
largest MSA market.

THE TENNESSEE/KENTUCKY ACQUISITION. On March 9, 1995, the Company acquired
(the "Tennessee/ Kentucky Acquisition") substantially all of the tangible and
intangible assets and certain liabilities of Airborne Broadcasting Systems,
Inc., a Tennessee corporation ("ABS", which was also under common ownership with
SBN (ABS, SBN and Airborne are collectively referred to as the "Skyview
Group")). As of June 30, 1996, the Company provided traffic information reports
to a network of 61 radio station affiliates serving the greater Nashville and
Memphis, Tennessee markets and the Louisville, Kentucky market. The MSA market
rank of these MSA markets is forty-fourth, forty-third and forty-ninth,
respectively.

THE ATLANTA ACQUISITION. On March 24, 1995, the Company acquired (the
"Atlanta Acquisition") all of the stock of TrafficScan, Incorporated, a Georgia
corporation ("TSI"). As of June 30, 1996, the Company (through TSI) provided
traffic information services to 23 radio station affiliates and one television
station affiliate in the greater Atlanta region. Atlanta is the twelfth largest
MSA market.

The following acquisitions were completed in 1994 (the "1994 Acquisitions"):

40
<PAGE>
THE WISCONSIN ACQUISITION. On July 1, 1994, the Company acquired (the
"Wisconsin Acquisition") certain of the tangible and intangible assets of
Wisconsin Information Systems, Inc. d/b/a The Milwaukee Traffic Network, an Ohio
corporation ("Wisconsin"). As of June 30, 1996, the Company provided traffic
information reports to 23 radio station affiliates in Milwaukee, Wisconsin, the
twenty-eighth largest MSA market.

THE ST. LOUIS ACQUISITION. On July 19, 1994, the Company acquired (the "St.
Louis Acquisition") substantially all of the tangible and intangible assets of
Hildebrand Communications, Inc. ("Hildebrand"). As of June 30, 1996, the Company
provided traffic information reports to 27 radio station affiliates and four
television station affiliates in St. Louis, Missouri, the seventeenth largest
MSA market.

THE CHARLOTTE ACQUISITION. On October 24, 1994, the Company acquired (the
"Charlotte Acquisition") substantially all of the tangible and intangible assets
of Charlotte Traffic Patrol, Inc., a North Carolina corporation ("CTP"). As of
June 30, 1996, the Company provided traffic reports to 21 radio station
affiliates and one television station affiliate in the metropolitan area of
Charlotte, North Carolina, the thirty-seventh largest MSA market.

RADIO AND TELEVISION INDUSTRY

Total radio and television advertising revenues increased 4.2% to $39.4
billion during 1995, according to industry sources. Total radio advertising
revenues were $11.5 billion while television advertising revenues were
approximately $27.9 billion in 1995, the highest levels in each respective
industry's history.

The growth in total radio and television advertising revenues tends to be
fairly stable and has generally grown at a faster rate than the Gross National
Product ("GNP"). With the exception of 1991, when total radio and television
advertising revenues fell by approximately 3.4% compared to the prior year,
advertising revenues have risen in each of the past 15 years more rapidly than
either inflation or the GNP.

The United States radio market is comprised of approximately 11,528
commercially licensed stations which primarily serve local markets. The United
States television market is comprised of approximately 1,103 commercially
licensed stations which also serve primarily local markets.

According to the Radio Advertising Bureau's Radio Marketing Guide and Fact
Book for Advertisers (1993-1994), each week, radio reaches approximately 96% of
all Americans over the age of 12. More than one-half of all radio listening is
done outside the home, in contrast to other advertising mediums, and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and 12 minutes per day listening to radio. The highest
portion of radio listenership occurs during the morning, particularly between
the time a listener wakes up and the time the listener reaches work. This
"morning drive time" period reaches more than 85% of people over 12 years of
age. According to the Television Advertising Bureau, television reaches
approximately 98% of all American households each week. The average household
spends approximately seven hours and sixteen minutes per day watching
television.

INTERNATIONAL

The Company's international presence has been limited to its participation
in licensing agreements in the United Kingdom and France. Pursuant to these
license agreements, the Company provides its licensees the right to use its
name, computer technology, training and sales expertise in exchange for
commercial airtime inventory. Revenues from such licensing agreements are not
material and the Company has no immediate intention to pursue opportunities
internationally, although it may choose to do so in the future if resources and
opportunities are available.

COMPETITION

The Company faces various sources of competition in the provision of its
information reporting services. Single market operators and groups of radio
stations providing their own information reports comprise the Company's primary
competition. Although the Company is significantly larger than the

41
<PAGE>
next largest provider of traffic and local information services, there are
several multi-market operators providing local radio and television programming
services in various markets. The Company believes that the next largest provider
of traffic and local information services (which operates under the names
"Shadow Traffic" and "Express Traffic") currently has a presence in
approximately 14 of the 50 largest MSA markets in the United States, as compared
to the Company's operations in 47 of the 50 largest MSA markets.

The Company also faces competition in the sale of its commercial airtime
inventory. The Company positions its advertising so as not to compete with the
advertising of its local radio and television affiliates. However, the Company
competes for advertising dollars with other media such as newspapers and
magazines, outdoor advertising, network radio and network television
advertising, transit advertising, direct response advertising, yellow page
directories and point-of-sale advertising.

EMPLOYEES

The Company employed approximately 924 full-time and 499 part-time persons
as of June 30, 1996, none of whom was covered by a collective bargaining
arrangement. Of these employees, approximately 1,177 were engaged in
broadcasting and operations; 136 in sales and marketing; and 110 in general and
administrative activities. Approximately 16% of the Company's employees are
located in the Company's Houston, Texas headquarters. The Company considers its
relationship with its employees to be satisfactory.

PROPERTIES

The Company's headquarters facility, which includes its principal
administrative, sales, marketing, management information systems and product
development offices and its local operations center, is located in approximately
30,844 square feet of subleased space in Houston, Texas. The sublease on this
facility terminates in March 2004.

The Company leases additional operation centers/broadcast studios and
marketing and administrative offices across the United States consisting of
approximately 97,654 square feet in the aggregate, pursuant to the terms of
various lease agreements. In addition, the Company leases approximately 25,031
square feet of space in Houston, Texas, which formerly was used as the Company's
headquarters and Houston operations center; the Company is attempting to
sublease this space. The Company believes that its existing facilities are
adequate to meet current requirements and that suitable additional space in
close proximity to its existing headquarters will be available as needed to
accommodate growth of its operations and additional sales and support offices
through the foreseeable future.

For the year ended December 31, 1995, the Company incurred $2.7 million in
facilities rental expense.

TRADEMARKS

The Company has registered "Metro Traffic Control", "Metro Networks" and
certain other marks which are relevant to its business. The Company does not
believe that its operations are materially dependent on these trademarks.

LEGAL PROCEEDINGS

The Company is subject to certain litigation arising in the ordinary course
of business. Management believes that the resolution of such matters will not
have a material adverse effect on the Company's financial position or results of
operations.

REORGANIZATION

From 1978 through the closing of this offering, the business of the Company
will have been operated through the Predecessor Companies. Until the closing of
this offering, all of the equity interests in the Predecessor Companies will be
owned by the Saperstein Family. Immediately prior to the closing of this
offering, the Saperstein Family will establish the Company as a holding company
and consolidate

42
<PAGE>
the issued and outstanding equity interests in the Predecessor Companies, by
exchanging such interests for 9,350,607 shares of Metro Networks Inc.'s Common
Stock and 2,549,750 shares of Metro Networks Inc.'s Series A Convertible
Preferred Stock.

Prior to the Reorganization, the Company intends to enter into an agreement
with Mr. Saperstein pursuant to which Mr. Saperstein will be distributed certain
goods and the rights to certain services which the Company holds for his
benefit. See "Certain Transactions." As of the date of the closing of this
offering, Metro Networks, Ltd. will distribute certain of its assets, other than
MTC GP stock, to Metro Traffic Control, Inc. in partial redemption of Metro
Traffic Control, Inc.'s interest in Metro Networks, Ltd.; thereafter Metro
Networks, Ltd. will be liquidated. In addition, as of the date of the closing of
this offering Metro Video News, Inc., Metro Reciprocal, Inc., MTC GP, Inc.,
Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants,
TrafficScan, Incorporated, Traffic Net Inc., The Weather Bureau, Inc. and
Traffic Net of Connecticut, Inc. will be merged into Metro Traffic Control, Inc.
pursuant to a transaction in which the shareholders of each corporation will
receive shares of Metro Traffic Control, Inc. stock. Metro Traffic Control, Inc.
will become a wholly-owned subsidiary of the Company as a result of a reverse
subsidiary merger of Metro Networks Acquisition, Inc. and Metro Traffic Control,
Inc., with Metro Traffic Control, Inc. being the surviving entity. The reverse
subsidiary merger is intended to qualify as a tax-free reorganization under
Section 368(a)(2) of the Internal Revenue Code of 1986, as amended.

43
<PAGE>
MANAGEMENT

The following table sets forth certain information regarding the directors
and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE TITLE
- --------------------------------- ----------- --------------------------------------------------------------------
<S> <C> <C>
David I. Saperstein 55 Chairman of the Board of Directors and Chief Executive Officer
Charles I. Bortnick 42 President and Director
Shane E. Coppola 30 Executive Vice President and Director
Curtis H. Coleman 46 Senior Vice President, Chief Financial Officer and Director
Gary L. Worobow 31 Senior Vice President, General Counsel, Secretary and Director
James A. Arcara 61 Director
</TABLE>

DAVID I. SAPERSTEIN founded the Company in 1978. Since 1978, Mr. Saperstein
has been the Chief Executive Officer and a Director of the Company. Mr.
Saperstein served as President of the Company from 1978 through June 1996. Mr.
Saperstein serves on the Boards of Directors for the Business Arts Fund, the
Houston Symphony and the Toxoplasmosis Research Institute of the Michael Reese
Hospital in Chicago. Mr. Saperstein serves on the Board of Trustees for the
local chapter of the United Way and is a member of the Dean's Advisory Council
for Touro College of Law in New York. Prior to 1978, Mr. Saperstein owned and
operated several Ford automobile dealerships in Baltimore, Maryland.

CHARLES I. BORTNICK has been President and a Director of the Company since
June 1996. From April 1994 to May 1996, Mr. Bortnick served as Executive Vice
President/General Manager of the Company. Mr. Bortnick joined the Company in
March 1993 as Vice President/General Manager-Midwest Region based in Chicago.
Prior to joining the Company, Mr. Bortnick had 17 years of experience in the
radio broadcasting industry. From November 1987 through March 1993, Mr. Bortnick
served as Vice President/General Manager for Malrite Communications at its
WMMS-FM/WHK-AM radio station in Cleveland, Ohio and its KKHT-FM radio station in
Houston, Texas. From September 1984 to October 1987, Mr. Bortnick served as Vice
President/General Manager for TK Communications at its WSHE-FM/WSRF-AM radio
stations in Miami/Ft. Lauderdale.

SHANE E. COPPOLA has served as Executive Vice President and a Director of
the Company since June 1996. From April 1992 through May 1996, Mr. Coppola was
Vice President -- Corporate Development of the Company. From August 1989 through
March 1992, Mr. Coppola was a member of the Communications Finance Group at The
Toronto-Dominion Bank. Mr. Coppola earned a Masters of Business Administration
from the William E. Simon School of Business Administration in 1989 and a
Bachelor of Arts from the University of Rochester in 1988. Mr. Coppola is the
son-in-law of Mr. Saperstein.

CURTIS H. COLEMAN has served as Chief Financial Officer of the Company since
September 1995, as a Senior Vice President and a Director of the Company since
June 1996. Mr. Coleman served as Vice President-Treasurer and Vice
President-Controller of the Company from March 1990 through September 1995.
Prior to joining the Company, Mr. Coleman served in various financial and
accounting positions with Energy Service Company, Inc., Crutcher Resources
Corporation and Arthur Young & Company. Mr. Coleman is a certified public
accountant.

GARY L. WOROBOW has served as General Counsel and Secretary of the Company
since May 1995, as a Senior Vice President and a Director of the Company since
June 1996. From August 1991 until joining the Company, Mr. Worobow was an
attorney with the New York law firm of Stursberg & Veith. Mr. Worobow earned a
Juris Doctorate from Fordham Law School in 1991, a Masters of Business
Administration from the William E. Simon School of Business Administration in
1989 and a Bachelor of Arts from the University of Rochester in 1987.

JAMES A. ARCARA will become a Director of the Company upon consummation of
the offering. Mr. Arcara is Chairman of Radio Enterprises Incorporated, a
company that he founded in 1996 to acquire

44
<PAGE>
and operate radio stations. Mr. Arcara served as President of Capital Cities/ABC
Radio, a division of Capital Cities/ABC, Inc., from 1986 until April 1996. From
1980 until 1986, prior to the merger of Capital Cities Communications, Inc. with
ABC, Inc., Mr. Arcara served as Executive Vice President for Capital Cities
Radio. Mr. Arcara is a past President of the Radio Advertising Bureau and a past
Director of the National Association of Broadcasters. From 1970 until 1980, Mr.
Arcara served as Vice President/ General Manager for WPAT-AM/FM radio in
Clifton, New Jersey. From 1967 until 1970, Mr. Arcara served as Vice
President/General Manager for WPRO-AM radio in Providence, Rhode Island. From
1961 until 1967, Mr. Arcara served as General Sales Manager for WKBW-AM radio in
Buffalo, New York.

BOARD OF DIRECTORS

The Company intends to name an additional outside director to the Board of
Directors upon consummation of the offering.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Arcara and Coppola and the additional outside director will comprise
the Company's Compensation Committee. Prior to the offering, the Company did not
have a Compensation Committee and compensation decisions were made primarily by
Mr. Saperstein.

AUDIT COMMITTEE

The outside directors will serve as the Company's Audit Committee. The
committee will meet periodically with management, the Company's internal audit
staff, and representatives of the Company's independent auditors to assure that
appropriate audits of the Company's affairs are being conducted. In carrying out
these responsibilities, the committee will review the scope of internal and
external audit activities and the results of the annual audit. The committee is
also responsible for recommending a public accounting firm to serve as
independent auditors each year. Both the independent auditors and the internal
auditors will have direct access to the Audit Committee to discuss the results
of their examinations, the adequacy of internal accounting controls, and the
integrity of financial reporting.

NON-EMPLOYEE DIRECTOR COMPENSATION

Each member of the Board of Directors who is not an officer or an owner, or
the representative of an owner, of more than 5% of the outstanding Common Stock
of the Company receives compensation of $1,000 per meeting for serving on the
Board of Directors. The Company also reimburses Directors for any expenses
incurred in attending meetings of the Board of Directors and the committees
thereof. Upon their election to the Board of Directors or the closing of this
offering (whichever is later), each non-employee Board member will be granted
options to purchase 10,000 shares of the Company's Common Stock. Such options
will be exercisable at the fair market value of the common stock at the date of
grant. These options will become vested and exercisable for up to 33% of the
total optioned shares upon the first anniversary of the grant of the options and
for an additional 33% of the total optioned shares upon each succeeding
anniversary until the option is fully exercisable at the end of the third year.

EXECUTIVE COMPENSATION

The following table sets forth certain information for the fiscal years
indicated concerning the cash and non-cash compensation earned by or awarded to
the Chief Executive Officer of the Company and each of the other three most
highly compensated executive officers of the Company whose combined salary and
bonus exceeded $100,000 in such periods (the "Named Executive Officers").

45
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------
NAME AND OTHER ANNUAL STOCK
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) ALL OTHER
- --------------------------------------- --------- ----------- ----------- ------------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David I. Saperstein.................... 1995 960,000 -- 58,982(1)
23,081(2) -- --
Charles I. Bortnick.................... 1995 256,290(3) 58,303 -- -- --
Shane E. Coppola....................... 1995 247,917 -- -- -- --
Curtis H. Coleman...................... 1995 131,042(3) -- -- -- --
</TABLE>

- ------------------------------
(1) Expenses related to automobiles.

(2) Non-taxable shareholder distribution.

(3) Includes the Company's contributions under the 401(k) Plan.

1996 INCENTIVE STOCK OPTION PLAN

The Company's Board of Directors has adopted the 1996 Incentive Stock Option
Plan (the "1996 Plan") for the Company's officers and employees. The Board of
Directors has discretionary authority, subject to certain restrictions, to
administer the 1996 Plan, including but not limited to determining the
individuals to whom, the times at which, and the exercise price for which
options will be granted. The total number of shares reserved for issuance under
the 1996 Plan is 1,000,000, of which approximately 500,000 will be issued upon
the effective date of this offering. The exercise price of options granted under
the 1996 Plan may not be less than 100% of the fair market value (or not less
than 110% of the fair market value as to any individual who, at the time the
option is granted, owned more than 10% of the total combined voting power of all
classes of stock of the Company) of the Common Stock on the date such option was
granted. Options granted under the 1996 Plan are not transferable by the
optionholders except by will or by the laws of descent and distribution. Options
granted under the 1996 Plan typically become vested and exercisable for up to
33 1/3% of the total optioned shares upon the first anniversary of the grant of
the option and for an additional 33 1/3% of the total optioned shares upon each
succeeding anniversary until the option is fully exercisable at the end of the
third year. Generally, the unexercised portion of any option automatically
terminates upon the earlier of (i) termination of the optionee's employment with
the Company, (ii) the expiration of 90 days from the date his employment with
the Company terminates for any reason other than cause, death, or disability
(iii) the expiration of one year after the optionee's death or (iv) the
expiration of the option. Upon the sale, merger or liquidation of the Company,
outstanding options may be exercised immediately prior to the consummation of
such a transaction, whether or not vested as of such date of consummation.

EMPLOYEE STOCK PURCHASE PLAN

A total of 1,500,000 shares of the Company's Common Stock have been reserved
for issuance under the Company's 1996 Employee Stock Purchase Plan (the
"Purchase Plan"). None of such shares have been issued. The Purchase Plan
permits an eligible employee of the Company to purchase common stock at a
discount through payroll deductions not to exceed 10% of the compensation
received by such employee during such pay period ("Employee Purchases"). An
employee's right to purchase shares under the Purchase Plan will be granted at
the beginning of each six month period based on payroll deductions made in the
prior six month period. All purchases will be made automatically at the end of
each six month period. Employee Purchases cannot exceed $25,000 in any plan
year. The price at which the Common Stock is purchased under the Purchase Plan
as set by the Board of Directors is the lesser of 95% of the fair market value
of the Common Stock at the time an employee's right to purchase the stock is
granted, or the fair market value of the Common Stock on the date of purchase.

46
<PAGE>
DEFINED BENEFIT AND DEFINED CONTRIBUTION PLAN

Effective in April 1995, the Company established a profit sharing plan under
Section 401(k) of the Internal Revenue Code (the "401(k) Plan") for all eligible
employees. Under the 401(k) Plan, all eligible employees are permitted to defer
compensation up to a maximum of 10% of their income. The 401(k) Plan provides
for a matching contribution by the Company equal to 25% of the amount
contributed by the employee, up to 6% of the employee's total compensation.
These contributions amounted to $195,000 in 1995. The employee's contribution is
immediately vested and 20% of the Company's matching contribution vests every
year after the second year of the employee's participation in the plan.
Accordingly, the matching contribution is fully vested six years after such
contribution.

EMPLOYMENT AGREEMENTS

As discussed more particularly below, the Company intends to enter into
employment agreements with each of the Named Executive Officers and with Gary L.
Worobow, the Company's Senior Vice President, Secretary and General Counsel
("Mr. Worobow", and collectively with the Named Executive Officers, the
"Executive Officers"). Such employment agreements prohibit each of the Executive
Officers from competing with the Company for a period of one year after
termination of employment.

Mr. Saperstein will be a party to an employment agreement with the Company
pursuant to which he will serve as Chief Executive Officer of the Company. Under
the terms of Mr. Saperstein's employment agreement, he will be entitled to
receive an annual base salary of $350,000. Such base salary will increase by 5%
during each year term of the employment agreement. The employment agreement will
provide that Mr. Saperstein may receive a bonus of up to $150,000 per annum at
the discretion of the Board of Directors or the Compensation Committee. The
bonus potential will increase by 5% during each year of the term of the
employment agreement. Pursuant to the employment agreement, Mr. Saperstein will
be granted stock options under the 1996 Plan to purchase up to 100,000 shares of
the Company's Common Stock at an exercise price equal to 110% of the initial
public offering price. Subsequent grants of options to Mr. Saperstein during the
term of the employment agreement will be at the discretion of the Board of
Directors or the Compensation Committee. Mr. Saperstein's employment agreement
will be effective as of the closing of this offering, and will have a two year
term subject to automatic renewal at the end of the second year for an
additional period of one year, unless the Company gives written notice at least
90 days prior to the end of such second year of its election to terminate such
employment agreement at the end of such second year (hereinafter, a
"Non-Renewal"). Mr. Saperstein currently receives a base salary of $960,000.

Mr. Bortnick is a party to an employment agreement with the Company pursuant
to which he serves as President of the Company. Under the terms of Mr.
Bortnick's employment agreement he is entitled to receive an annual base salary
of $275,000. Such base salary will increase by 5% upon each anniversary of the
closing during the term of the employment agreement. The agreement provides that
Mr. Bortnick may receive a bonus of up to $100,000 per annum at the discretion
of the Board of Directors or the Compensation Committee. The bonus potential
increases by 5% during each year of the term of the employment agreement.
Pursuant to the employment agreement, Mr. Bortnick will be granted stock options
under the 1996 Plan to purchase up to 75,000 shares of the Company's Common
Stock at an exercise price equal to the initial public offering price.
Subsequent grants during the term of the employment agreement will be at the
discretion of the Board of Directors or the Compensation Committee. Mr.
Bortnick's employment agreement has a two year term from the closing date of the
offering with an automatic renewal provision of one year, subject to
Non-Renewal. Mr. Bortnick currently receives a base salary of $275,000. Mr.
Bortnick's agreement also provides that upon the termination of such agreement
by the Company or Mr. Bortnick under certain circumstances, Mr. Bortnick will
continue to receive the salary provided for under his employment agreement for
three months following termination of employment. Additionally, upon a change of
control (as defined in the employment agreement) of the Company, if Mr.
Bortnick's employment does not continue for a minimum of one year, he would be
entitled to receive two (2) times his then current base salary.

47
<PAGE>
Mr. Coppola will be a party to an employment agreement with the Company
pursuant to which he will serve as Executive Vice President of the Company.
Under the terms of Mr. Coppola's employment agreement he will be entitled to
receive an annual base salary of $200,000. Such base salary will be increased by
5% during each year of the term of the employment agreement. The employment
agreement provides that Mr. Coppola may receive a bonus of up to $100,000 per
annum at the discretion of the Board of Directors or the Compensation Committee.
The bonus potential will increase by 5% during each year of the term of the
employment agreement. Pursuant to the employment agreement, Mr. Coppola will be
granted stock options under the 1996 Plan to purchase up to 75,000 shares of the
Company's Common Stock at an exercise price equal to the initial public offering
price. Subsequent grants during the term of the employment agreement will be at
the discretion of the Board of Directors or the Compensation Committee. Mr.
Coppola's employment agreement will be effective as of the closing of this
offering, and will have a two year term with an automatic renewal provision of
one year, subject to Non-Renewal. Mr. Coppola currently receives a base salary
of $410,000.

Mr. Coleman will be a party to an employment agreement with the Company
pursuant to which he will serve as Senior Vice President and Chief Financial
Officer of the Company. Under the terms of Mr. Coleman's employment agreement he
will be entitled to receive an annual base salary of $150,000. Such base salary
will increase by 5% during each year of the term of the employment agreement.
The employment agreement provides that Mr. Coleman may receive a bonus of up to
$50,000 per annum at the discretion of the Board of Directors or the
Compensation Committee. The bonus potential will increase by 5% during each year
of the term of the employment agreement. Pursuant to the employment agreement,
Mr. Coleman will be granted stock options under the 1996 Plan to purchase up to
55,000 shares of the Company's Common Stock at an exercise price equal to the
initial public offering price. Subsequent grants during the term of the
employment agreement will be at the discretion of the Board of Directors or the
Compensation Committee. Mr. Coleman's employment agreement will be effective as
of the closing of this offering, and will have a two year term with an automatic
renewal provision of one year, subject to Non-Renewal. Mr. Coleman currently
receives a base salary of $150,000.

Mr. Worobow will be a party to an employment agreement with the Company
pursuant to which he will serve as Senior Vice President, General Counsel and
Secretary of the Company. Under the terms of Mr. Worobow's employment agreement
he will be entitled to receive an annual base salary of $117,500. Such base
salary will increase by 5% during each year of the term of the employment
agreement. The employment agreement provides that Mr. Worobow may receive a
bonus of up to $37,500 per annum at the discretion of the Board of Directors or
the Compensation Committee. The bonus potential will increase by 5% during each
year of the term of the employment agreement. Pursuant to the employment
agreement, Mr. Worobow will be granted stock options under the 1996 Plan to
purchase up to 45,000 shares of the Company's Common Stock at an exercise price
equal to the initial public offering price. Subsequent grants during the term of
the employment agreement will be at the discretion of the Board of Directors or
the Compensation Committee. Mr. Worobow's employment agreement will be effective
as of the closing of this offering, and will have a two year term with an
automatic renewal provision of one year, subject to Non-Renewal. Mr. Worobow
currently receives a base salary of $105,000.

INDEMNIFICATION MATTERS

The Company's Amended and Restated Certificate of Incorporation and Bylaws
require the Company to indemnify each officer, director or employee in respect
of claims made by reason of his or her status with the Company, including
stockholder derivative suits, provided he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company and, with respect to any criminal act or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Expenses
incurred in the defense of any such action may be paid by the Company in advance
of final disposition upon receipt of an undertaking from the officer, director
or employee to repay the advances if there is an ultimate determination that he
or she is not entitled to be indemnified.

48
<PAGE>
CERTAIN TRANSACTIONS

The Company has entered into several arrangements with or on behalf of
parties related to the Company. Upon the closing of this offering these
arrangements will terminate, except as indicated below, and the Company will
enter into transactions with related parties only on an arm's-length basis.

The Company has leased certain real property in Vail, Colorado and in
Malibu, California from Five S Properties, Ltd., a limited partnership of which
a company owned by Mr. Saperstein is the general partner ("Five S"). Such
properties were used for affiliate relations and for other Company business-
related purposes. The annual lease payments on these properties are $60,000 and
$240,000, respectively. The amounts of such lease payments were determined by
the Company based on its estimate of the value of the leased properties but
without reference to outside sources of valuation. Because the Company has not
made full-time use of these properties, such leases will be terminated as of the
closing of this offering, and the Company has no intention to enter into similar
leases.

The Company has entered into certain reciprocal arrangements with unrelated
third parties as a result of which the Company will receive goods and services
for the benefit of Mr. Saperstein. The reciprocal arrangements obligate the
Company to provide commercial airtime, provide other goods and services, and
make cash disbursements to such third parties in exchange for the goods and
services received by the Company. The dollar values of such arrangements have
typically been calculated based upon the Company's estimate of the fair market
value of the commercial airtime inventory involved and the Company believes that
its estimates have been made on a basis similar to the basis on which estimates
are made by others in the broadcast industry. As of June 30, 1996, the Company
was obligated to provide approximately $3.5 million of commercial airtime, goods
and services and cash under these reciprocal arrangements. Immediately prior to
the offering, the Company intends to enter into an agreement with Mr. Saperstein
pursuant to which Mr. Saperstein will be distributed the goods and services the
Company holds for Mr. Saperstein's benefit. The Company also will distribute to
Mr. Saperstein all of its rights to the goods and rights to services that are
the subject of existing reciprocal arrangements but which have not yet been
delivered to the Company. The value of such goods and services is expected to be
approximately $3.0 million. Following the offering, the Company does not intend
to enter into reciprocal arrangements for the benefit of Mr. Saperstein.

The Company has entered into certain transactions with Pro Journey Travel,
Inc., a company owned by Mr. Saperstein ("Pro Journey"). The Company has
guaranteed annual lease payments for Pro Journey, in the amount of $60,000 per
annum; such obligation shall continue through December 31, 1996. Additionally,
the Company has (i) posted a bond of $20,000 with the Airline Reservations
Clearinghouse on behalf of Pro Journey and (ii) provided coverage for Pro
Journey under the Company's liability insurance policies. The premiums which
would have been paid by Pro Journey to obtain such coverage had a value in 1995
equal to approximately $2,548. In addition, the employees of Pro Journey
participate in the Company's insurance plans; the premiums which would have been
paid by Pro Journey to obtain coverage under similar insurance plans had a value
in 1995 equal to approximately $6,539. The Company purchases the majority of its
travel tickets through Pro Journey, on terms which the Company believes are no
less favorable than those available from third parties. As of June 30, 1996, Pro
Journey owed the Company approximately $52,000. Upon the closing of this
offering and the Reorganization, the Company will forgive this receivable. After
December 31, 1996, the Company will cease all transactions and arrangements with
Pro Journey.

Mr. Saperstein has personally utilized the services of several of the
Company's employees. The total compensation paid to such employees was $180,995
in 1995. Except for two individuals who will provide security and transportation
services to Mr. Saperstein, these persons will cease to be employees of the
Company as of the closing of this offering. The individuals who will remain in
the Company's employ will be paid combined annual compensation of approximately
$75,000.

Through a separate company, Mr. Saperstein holds an equity interest in Posh
International, Inc. ("Posh"), a car care products company. In exchange for such
interest, the Company provided Posh with commercial airtime inventory valued at
$566,000 during the twelve months ended December 31, 1995

49
<PAGE>
and $363,000 during the year ended December 31, 1994. The Company has agreed to
sell commercial airtime inventory valued at $1.1 million to Posh at a discount
through December 31, 1996, subject to availability and prepayment. As of the
date of this Prospectus, Posh has not purchased any such inventory from the
Company.

Upon the closing of this offering, the Company and Mr. Saperstein will enter
into an agreement pursuant to which Mr. Saperstein may seek reimbursement from
the Company for any income tax obligation attributable to any period prior to
the Reorganization. Alternatively, in the event that the status of any of Metro
Video News, Inc., Metro Reciprocal, Inc., or Metro Traffic Control, Inc. as a
subchapter S corporation is not respected, the Company may seek reimbursement
from Mr. Saperstein, but only to the extent that Mr. Saperstein receives a tax
refund attributable to amounts he previously included in income in his capacity
as a shareholder of such corporations. The Company does not anticipate that the
subchapter S status of Metro Video News, Inc., Metro Reciprocal, Inc., or Metro
Traffic Control, Inc., will be successfully challenged.

Immediately prior to the closing of this offering, the Company will enter
into a Stock Loan and Pledge Agreement with Mr. Saperstein pursuant to which the
Company will loan Mr. Saperstein 2,549,750 shares of Common Stock. The loan will
be for a term of ten years, although the Company will have the right to require
the return of the loaned Common Stock (the "Loaned Stock") from Mr. Saperstein
prior to that time upon three days notice. As security for the loan, Mr.
Saperstein will pledge a number of shares of Series A Convertible Preferred
Stock of the Company which when converted into common stock will be equal to the
number of shares of Loaned Stock. Mr. Saperstein will be obligated to pay to the
Company an annual fee over the term of the loan of 0.1% of the average fair
market value of the Loaned Stock during the five day period immediately
following the date of the Stock Loan and Pledge Agreement. One-half of this fee
will be payable annually, and the remaining one-half of this fee will be payable
upon the termination of the loan if such termination occurs pursuant to an Event
of Default (as defined in the Stock Loan and Pledge Agreement) or at the end of
the ten year term of the Stock Loan and Pledge Agreement. The Company will
forfeit this portion of the fee if it calls the loan prior to the end of the ten
year term. In addition, Mr. Saperstein will pay an upfront transaction fee of
$2,550 to the Company and will be obligated to repay to the Company any
dividends that are paid by the Company on the Loaned Stock. The Series A
Convertible Preferred Stock will not pay any dividends.

50
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by (i) the Selling
Stockholder, (ii) each person known to the Company to be the beneficial owner of
5% or more thereof, (iii) each director of the Company, (iv) each Executive
Officer and (v) all executive officers and directors as a group, as of September
19, 1996, and as adjusted to reflect the sale of the Common Stock offered
hereby. Each of the named persons has sole voting and investment power with
respect to all shares of Common Stock owned by such person. See "Management."

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THIS OFFERING AFTER THIS OFFERING
---------------------------- SHARES BEING --------------------------
NAME AND ADDRESS SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
- --------------------------------------- ------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
David I. Saperstein.................... 8,300,357(1) 88.8% 3,600,000 8,300,357 (2) 53.5%
Charles I. Bortnick.................... -- -- -- --(3) *
Shane E. Coppola....................... 210,050(4) 2.2% -- 210,050 (5) 1.4%
Curtis H. Coleman...................... -- -- -- --(6) *
Gary L. Worobow........................ -- -- -- --(7) *
All executive officers and directors as
a group (5 persons)................... 8,510,407 91.0% 3,600,000 8,510,407 54.9%
</TABLE>

- ------------------------------
* Less than 1%.

(1) Does not include shares held by the Trusts (as defined below), beneficial
ownership of which Mr. Saperstein disclaims. In addition, the number of
shares beneficially owned does not include 2,549,750 shares of Series A
Convertible Preferred Stock owned by Mr. Saperstein and pledged to the
Company in connection with the stock loan under the Stock Loan and Pledge
Agreement. See "Certain Transactions." Such shares have not been included
because they can only be converted into Common Stock upon repayment of such
stock loan; repayment may be achieved either through the acquisition of
shares of Common Stock in the open market and delivery of such shares to
the Company or the delivery of shares of Series A Convertible Preferred
Stock. Mr. Saperstein will retain the voting rights to all pledged shares
of Series A Convertible Preferred Stock. See "Description of Capital Stock"
and "Certain Transactions."

(2) Does not include stock options to purchase 100,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(3) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(4) Includes 210,050 shares beneficially owned through the Michelle Joy Coppola
Trust. Mrs. Coppola, the beneficiary of the trust, is Mr. Coppola's wife.
These shares have been loaned to the Selling Stockholder in connection with
this offering. See below.

(5) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(6) Does not include stock options to purchase 55,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(7) Does not include stock options to purchase 45,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

All of the shares of Common Stock being offered for sale by David I.
Saperstein were borrowed from the Michelle Joy Coppola 1994 Trust, the Jennifer
Beth Saperstein 1994 Trust, the Jonathan Alexander Saperstein 1994 Trust, the
Alexis Daniella Saperstein 1994 Trust, and the Stefanie Nicole Saperstein 1994
Trust (collectively, the "Trusts") and the Company. Mr. Saperstein will be
obligated to repay these loans by delivering a number of shares of Common Stock
equal to the number of borrowed shares. Mr. Saperstein will pledge an equivalent
number of shares of Series A Convertible Preferred Stock as security for the
loans from the Company. See "Management" and "Certain Transactions."

51
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 25,000,000 shares of Common Stock, par
value $0.001 per share (the "Common Stock"), 10,000,000 shares of preferred
stock, par value $0.001 per share. At September 19, 1996, assuming the
Reorganization had occurred as of such date there would have been 9,350,607
shares of Common Stock and 2,549,750 shares of Series A Convertible Preferred
Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Stockholders casting a plurality of votes of the stockholders entitled
to vote in an election of directors may elect all of the directors standing for
election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefore, subject to any preferential dividend rights of
Preferred Stock that may be issued at such future time or times. Upon the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company that may be
available after the payment of all debts and other liabilities and subject to
the prior rights of Preferred Stock that may be issued and outstanding at such
time. Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares of
Common Stock offered in this offering, when issued and paid for, will be fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.

As of September 19, 1996, assuming the Reorganization had occurred as of
such date there were 9,350,607 shares of Common Stock outstanding held only by
or for the benefit of members of the Saperstein Family.

PREFERRED STOCK

Preferred Stock may be issued from time to time by the Company's Board of
Directors, without stockholder approval, in one or more classes or series.
Subject to the provisions of the Amended and Restated Certificate of
Incorporation and the limitations prescribed by law, the Board of Directors is
expressly authorized to adopt resolutions to issue the shares of Preferred
Stock, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of Preferred Stock, in each case without any further action or vote by
the stockholders.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock at a premium or may otherwise adversely
affect the market price of the Common Stock.

SERIES A CONVERTIBLE PREFERRED STOCK

The Company has created a series of Preferred Stock designated as Series A
Convertible Preferred Stock (the "Series A Convertible Preferred Stock"). Such
series consists of 7,500,000 shares. Holders of Series A Convertible Preferred
Stock are entitled to one vote for each share held on all matters submitted to a
vote of stockholders and do not have cumulative voting rights. Shares of the
Series A Convertible

52
<PAGE>

Preferred Stock will not be entitled to receive dividends. Upon the liquidation,
dissolution or winding-up of the Company, the holders of the Series A
Convertible Preferred Stock are entitled to a liquidation preference over the
then outstanding Common Stock and any other then outstanding Preferred Stock of
other classes with respect to the assets of the Company in an amount per share
of Series A Covertible Preferred Stock equal to 10% of the fair market value of
a share of the issued and outstanding Common Stock to be determined at the
closing of the initial public offering. Each share of Series A Convertible
Preferred Stock is convertible with no premium into one share of Common Stock
(subject to adjustment for stock splits, stock dividends, reverse stock splits,
recapitalization and similar events) at the option of the holder, but may not be
converted while the stock loan is outstanding.

The Series A Convertible Preferred Stock will be, when issued and paid for,
fully paid and nonassessable.

CERTAIN PROVISIONS OF DELAWARE LAW

Upon consummation of this offering, the Company will be subject to the
provisions of Section 203 of the Delaware General Corporation Law ("Section
203"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person or an affiliate, or associate of such person, who is an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder unless (i) prior to such date either the transaction
which resulted in the person becoming an interested stockholder, or the business
combination, is approved by the board of directors, (ii) upon consummation of
the transaction which resulted in such person becoming an interested
stockholder, the interested stockholder owned 85% or more of the outstanding
voting stock of the corporation (excluding shares owned by persons who are both
officers and directors of the corporation, and shares held by certain employee
stock ownership plans) or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is (i) the owner of 15% or
more of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder. Mr. Saperstein will not be
subject to the restrictions of Section 203 because he was an interested
stockholder at the time of the Reorganization.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until 12
months after the date it is adopted. The Company intends to adopt an amendment
to its Certificate of Incorporation to exempt itself from coverage of Section
203.

CERTAIN CHARTER AND BYLAW PROVISIONS

REMOVAL OF DIRECTORS; STAGGERED BOARD OF DIRECTORS

Pursuant to Article 10 of the Company's Amended and Restated Certificate of
Incorporation, a director may be removed only for cause and only by the holders
of a majority of the outstanding shares of all classes of capital stock of the
Company entitled to vote in the election of directors. In addition, pursuant to
Article 3 of the Company's Bylaws the Company's Board of Directors is divided
into three classes, each elected for staggered terms of three years, which,
effectively, prevents a change in a majority of the directors of the Company
from being effected at a single annual meeting of stockholders. While the
principal purpose of such articles is to provide continuity on the Board of
Directors, the provisions could have the effect of discouraging a third party
from attempting to change the management and policies of the Company by
effecting a change in the majority of the Board of Directors through a proxy
contest.

53
<PAGE>
These provisions of the Company's Bylaws may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting of
stockholders, unless a special meeting is called by the Chief Executive Officer
or the Board of Directors. These provisions also would prevent the holders of a
majority of the voting power of the Company from using the written consent
procedure to take stockholder action without giving all the stockholders of the
Company entitled to vote on a particular matter the opportunity to participate
in determining such proposed action. Additionally, a stockholder could not force
consideration of a proposal by stockholders over the opposition of the Board of
Directors of the Company by calling a special meeting of stockholders prior to
the time the Board believes such consideration to be appropriate.

ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS

The Company's Bylaws establish an advance notice procedure for the
nomination of candidates for election as directors and the presentation of
certain other matters before an annual meeting of stockholders of the Company,
other than by or at the direction of the Board of Directors or the chairman of
the meeting. For such nominations or other business to be considered properly
brought by a stockholder before an annual meeting of stockholders of the
Company, such stockholder must have given timely prior written notice to the
Secretary of the Company of his or her intent to bring such nominations or
business before the meeting. To be timely, such notice must be received by the
Secretary at least 90 days prior to the date on which, in the immediately
preceding calendar year, the annual meeting of stockholders of the Company for
such year was held (provided that if the date of the annual meeting is changed
by more than 30 days from such anniversary date, such stockholder's notice must
be received by the Secretary no later than 10 days after notice or prior public
disclosure of the meeting is first given or made to stockholders).

A stockholder notice must contain a brief description of the nomination or
business to be brought before the meeting, the name and address of the
stockholder making the notice and of any person to be nominated, a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at the meeting and intends to appear at the meeting to
bring such nominations or business before the meeting; a description of all
arrangements or understandings between the stockholder and each nominee (in the
case of a nomination) or of any material interest of the stockholder in the
business matter (in the case of other business); such other information
regarding the nominee or matter of business to be proposed as would be required
to be included in a proxy statement soliciting proxies for the election of such
nominee or approval of such other business; and, in the case of a nomination of
the nominee.

The purpose of these procedures is to provide an orderly procedure for
conducting annual meetings of stockholders and to afford the Board of Directors
a meaningful opportunity to consider the qualifications of the proposed nominees
and to inform themselves, and where appropriate to inform stockholders, in
advance of the meeting of any business proposed to be conducted at the meeting.
Although the Company's Bylaws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors or
any other business proposed by a stockholder to be conducted at any annual
meeting, the Bylaws may have the effect of precluding a nomination or the
consideration of certain business at a particular annual meeting if the proper
procedures are not followed. These procedures may also discourage or deter a
third party from conducting a solicitation of proxies to elect its own slate of
directors or from attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders.

INDEMNIFICATION OF DIRECTORS AND OFFICERS; LIMITATION OF MONETARY LIABILITY

Section 145 of the Delaware General Corporation Law permits the Company to
indemnify an officer, director or employee in respect of claims made by reason
of his or her status with the Company, including stockholder derivative suits,
provided he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interest of the Company and, with
respect to any criminal act or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. Expenses incurred in the defense of any such
action may be paid by the Company in advance of final disposition upon receipt
of an undertaking from the officer, director or employee to repay the advances
if

54
<PAGE>
there is an ultimate determination that he or she is not entitled to be
indemnified. Article 8 of the Company's Amended and Restated Certificate of
Incorporation provides such indemnification to the full extent permitted by law.
The Company intends to purchase directors' and officers' liability coverage to
insure its indemnification of the Company's directors and officers.

Article 6 of the Company's Certificate of Incorporation exonerates the
Company's directors from personal liability to the Company or its stockholders
for monetary damages for breach of the fiduciary duty of care as a director,
provided that Article 6 does not eliminate or limit liability for any breach of
the directors' duty of loyalty for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, for any improper
declaration of dividend or for any transaction from which the director derived
an improper personal benefit. Article 6 does not eliminate a stockholder's right
to seek non-monetary, equitable remedies, such as an injunction or recision to
redress an action taken by the directors. However, as a practical matter,
equitable remedies may not be available in all situations, and there may be
instances in which no effective remedy is available.

The discussions of the Common Stock and Preferred Stock here and elsewhere
in this Prospectus are qualified in their entirety by reference to (i) the
Amended and Restated Certificate of Incorporation of the Company, as amended,
and the Bylaws of the Company, copies of which have been filed as exhibits to
the Registration Statement of which this Prospectus is a part, and (ii) the
applicable provisions of Delaware law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of this offering, there will be 15,500,357 shares of
Common Stock outstanding. Of these shares, the 7,200,000 shares sold in this
offering will be freely tradeable without restriction (except as to "Affiliates"
of the Company (as defined under the Securities Act)) or registration under the
Securities Act of 1933. The remaining 8,300,357 shares will be "Restricted
Securities" as defined in Rule 144 under the Securities Act ("Rule 144"). All of
such shares, without consideration of the contractual restrictions described
below, would be available for resale in the public market pursuant to Rule 144
(see below).

Restricted Securities may be sold in the public market only if registered or
if they qualify for an exemption from registration under Rules 144, 144(k) or
701 promulgated under the Securities Act, which rules are summarized below. As a
result of the contractual restrictions described below, and the provisions of
Rule 144 and 701, additional shares will be available for sale in the public
market as follows: (i) no shares will be available for immediate sale in the
public market on the date of the Prospectus, (ii) no shares will be issuable
upon the exercise of stock options granted under the 1996 Plan that will vest
and, if exercised, will become eligible for sale without lock-up restrictions on
various dates prior to 180 days following the date of this Prospectus and (iii)
8,300,357 shares will be eligible for sale, subject to volume and manner of sale
restrictions, upon expiration of lock-up agreements 180 days after the date of
this Prospectus.

Rule 701 under the Securities Act provides that, beginning ninety (90) days
after the date of this Prospectus, shares of Common Stock acquired upon the
exercise of outstanding options may be resold by persons other than Affiliates
subject only to the manner of sale provisions of Rule 144 (d), and by Affiliates
subject to all provisions of Rule 144 except the two-year minimum holding
period.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of
Common Stock for at least two years, including an "Affiliate" as that term is
defined under the Securities Act, is entitled to sell a number of shares that
does not exceed the greater of 1% of the then outstanding shares of Common Stock
or the average weekly trading volume of the Common Stock on all exchanges and/or
reported through the automated

55
<PAGE>
quotation system of a registered securities association during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person (or persons whose shares
are aggregated) who is not deemed to have been an Affiliate of the Company at
any time during the 90 days preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least three years, would be entitled to sell
such shares under Rule 144(k) without regard to the limitations described above.

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Paul, Hastings, Janofsky & Walker, New York, New York
and for the Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The combined financial statements of Metro Traffic Control, Inc., Metro
Reciprocal, Inc., Metro Networks, Ltd. and Metro Video News, Inc. as of December
31, 1994 and 1995, and for each of the years in the three-year period ended
December 31, 1995 and the combined financial statements of Airborne Broadcast
Consultants, Skyview Broadcasting Networks, Inc. and Airborne Broadcasting
Systems, Inc. for the year ended December 31, 1994, included herein have been
included herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the Securities Act,
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the shares of Common Stock offered hereby, reference is hereby made
to such Registration Statement, and the exhibits and schedules thereto, copies
of which may be inspected without charge at the public reference facilities
maintained by the Commission at Judiciary Plaza Building, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
copies of all or any part thereof may be obtained from each office upon payment
of the fees prescribed by the Commission. The summaries in this Prospectus of
additional information included in the Registration Statement or any exhibit
thereto are qualified in their entirety by reference to such information or
exhibit.

56
<PAGE>
GLOSSARY

AFFILIATES. The radio and television stations to which the Company provides
information services in exchange for commercial airtime inventory. The Company
typically is the exclusive provider to an affiliate of the specific information
services contracted for by such affiliate, but such affiliate may also receive
other information from other service providers. With the exception of its
contractual relationships, the Company does not have financial interests in its
affiliates.

DMA. Designated Market Area, as listed on The Arbitron Radio Metro and
Television Market Population Estimates 1995-1996.

EXPANDED RADIO SERVICES. The Company's news, sports, weather and other
information reports provided to radio station affiliates.

EXPANDED RADIO SERVICES NETWORK. The network of radio station affiliates to
which the Company provides its Expanded Radio Services.

GAAP. Generally accepted accounting principles.

% LISTENERS. Percentage of an MSA population which hears the Company's
information reports over a 4-week period calculated using data from the Arbitron
Winter 1996 Radio Market Reports* and Strata Marketing, Inc. statistical
analysis.

METROTV NETWORK. The network of broadcast television station affiliates and
cable news channel affiliates to which the Company provides its Television
Traffic Services and Video News Services.

MSA. Metro Survey Area, as listed in The Arbitron Radio Metro and Television
Market Population Estimates 1995-1996.*

RADIO TRAFFIC SERVICES. The Company's core traffic information reports
provided to radio station affiliates.

RADIO TRAFFIC SERVICES NETWORK. The network of radio station affiliates to
which the Company provides its Radio Traffic Services.

RECIPROCAL ARRANGEMENTS. Arrangements in which the Company exchanges certain
commercial advertising inventory for goods and services.

ROS. Thirty second and sixty second commercial advertising that the
Company's affiliate radio and television stations broadcast for the Company
based on availabilities in such affiliates's schedules. Generally, ROS time
provided to the Company is broadcast between 6:00 a.m. and 11:00 p.m., Monday-
Sunday.

SPONSORSHIP. An opening announcement and ten second commercial message
broadcast during, immediately before or immediately after one of the Company's
information reports on either the Radio Traffic Services Network or the Expanded
Radio Services Network.

TELEVISION TRAFFIC SERVICES. The Company's traffic information reports
provided to television station affiliates.

VIDEO NEWS SERVICES. The Company's video news (other than traffic)
information products provided to television station affiliates.

- ------------------------
* Copyright 1996 by The Arbitron Company. All Rights Reserved. The information
provided herein regarding Arbitron's audience listening estimates is based on
Arbitron's copyrighted and proprietary data and estimates concerning the
applicable stations' average quarter hour persons share, Monday- Sunday,
6am-Midnight, from the applicable Winter 1996 Radio Market Reports for the
demographic, day-part and metro areas listed herein and from The Arbitron Radio
Metro Television Market Population Estimates 1995-1996.

57
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------

<S> <C>
The Combined Financial Statements of Metro Traffic Control, Inc., Metro Reciprocal, Inc., Metro
Networks, Ltd., and Metro Video News, Inc.:

Independent Auditors' Report........................................................................ F-3

Combined Balance Sheets............................................................................. F-4

Combined Statements of Operations................................................................... F-6

Combined Statements of Stockholder's Equity/Partners' Capital....................................... F-7

Combined Statements of Cash Flows................................................................... F-8

Notes to Combined Financial Statements.............................................................. F-10

Financial statements of business acquired:

The Combined Financial Statements of Skyview Broadcasting Networks, Inc., Airborne Broadcasting
Consultants and Airborne Broadcasting Systems, Inc.:

Independent Auditors' Report........................................................................ F-22

Combined Statement of Operations.................................................................... F-23

Combined Statement of Cash Flows.................................................................... F-24

Notes to Combined Financial Statements.............................................................. F-25

Pro Forma Condensed Financial Data:................................................................... F-27

Pro Forma Condensed Balance Sheet as of June 30, 1996............................................... F-28

Pro Forma Condensed Statement of Operations for the six months ended June 30, 1996.................. F-29

Pro Forma Condensed Statement of Operations for the year ended December 31, 1995.................... F-30

Notes to Condensed Pro Forma Financial Statements................................................... F-31
</TABLE>

F-1
<PAGE>
(This page has been left blank intentionally.)

F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT

Boards of Directors and Partners
Metro Traffic Control, Inc.
Metro Reciprocal, Inc.
Metro Networks, Ltd.
Metro Video News, Inc.:

We have audited the accompanying combined balance sheets of Metro Traffic
Control, Inc., Metro Reciprocal, Inc., Metro Networks, Ltd., and Metro Video
News, Inc. (collectively, the "Companies") as of December 31, 1995 and 1994, and
the related combined statements of operations, stockholder's equity/ partners'
capital and cash flows for each of the years in the three-year period ended
December 31, 1995. These financial statements are the responsibility of the
Companies' 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 audits 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 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Companies as of December 31, 1995 and 1994, and the combined results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Houston, Texas
June 13, 1996

F-3
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30, 1996
ASSETS 1994 1995 (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 3,676,357 $ 3,049,946 $ 3,466,200
Accounts receivable, net...................................... 8,636,230 12,662,716 19,840,971
Prepaid expenses and other current assets..................... 226,129 357,473 902,088
Reciprocal receivables, net................................... 5,002,719 4,561,786 5,744,712
Merchandise and scrip inventory............................... 422,851 399,606 384,292
Reciprocal prepaid expenses and other current assets.......... 838,249 679,199 804,155
-------------- -------------- --------------
Total current assets........................................ 18,802,535 21,710,726 31,142,418
Receivables from related parties................................ 288,669 1,075,030 1,685,792
Note receivable from stockholder................................ 1,706,641 -- --
Property and equipment:
Operating equipment........................................... 5,627,122 7,887,769 8,941,683
Transportation equipment...................................... 136,876 709,323 824,692
Leasehold improvements........................................ 476,190 615,380 667,709
-------------- -------------- --------------
6,240,188 9,212,472 10,434,084
-------------- -------------- --------------
Less: accumulated depreciation 3,046,307 4,234,972 4,961,155
-------------- -------------- --------------
3,193,881 4,977,500 5,472,929
Purchased broadcast contracts and other intangibles, net of
accumulated amortization of $4,103,863 in 1995 and $3,437,712
in 1994........................................................ 3,107,634 13,749,644 16,435,009
Other assets.................................................... 402,244 923,714 2,013,864
-------------- -------------- --------------
$ 27,501,604 $ 42,436,614 $ 56,750,012
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-4
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ 1996
LIABILITIES 1994 1995 (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Current liabilities:
Disbursement float............................................ $ 1,511,672 $ 1,800,433 $ 2,323,713
Accounts payable.............................................. 1,465,253 1,808,274 2,432,529
Accrued liabilities........................................... 1,146,228 1,707,085 4,002,984
Accrued payroll liabilities................................... 863,831 996,695 1,212,899
Notes payable................................................. 120,148 84,280 706,904
Current portion of long-term debt............................. 82,610 662,257 6,474,873
Deferred revenues............................................. 1,340,017 727,947 1,113,564
Income tax payable............................................ 68,868 302,000 162,228
Accrued reciprocal liabilities................................ 2,350,367 2,316,975 2,743,473
Reciprocal and airtime obligations............................ 2,439,990 3,404,296 3,126,047
-------------- -------------- --------------
Total current liabilities................................. 11,388,984 13,810,242 24,299,214
-------------- -------------- --------------
Long-term debt.................................................. 6,447,245 21,877,156 23,965,534
Deferred income tax............................................. -- 2,083,842 2,941,787
Other liabilities............................................... 264,189 187,146 200,103
-------------- -------------- --------------
Total liabilities......................................... 18,100,418 37,958,386 51,406,638
-------------- -------------- --------------

STOCKHOLDER'S EQUITY/PARTNERS' CAPITAL
<S> <C> <C> <C>
Common stock.................................................... 3,015 3,015 3,015
Additional paid-in capital...................................... 1,023,811 4,023,811 4,023,811
Partners' capital............................................... 1,235,484 650,908 575,394
Retained earnings (deficit)..................................... 7,138,876 (199,506) 741,154
-------------- -------------- --------------
Total stockholder's equity/partners' capital.............. 9,401,186 4,478,228 5,343,374
-------------- -------------- --------------
$ 27,501,604 $ 42,436,614 $ 56,750,012
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-5
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE YEAR ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
---------------------------------------------- ------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Advertising revenues.................. $ 47,904,876 $ 60,048,350 $ 72,432,951 $ 30,623,017 $ 50,077,032
Broadcasting costs.................... 27,384,125 32,239,358 41,285,973 19,816,422 24,172,646
Marketing expense..................... 8,848,207 11,354,698 14,503,640 6,820,696 10,101,411
General and administrative expense.... 6,993,305 5,938,488 7,194,011 4,054,886 4,350,708
Depreciation and amortization......... 1,814,257 1,302,434 3,980,525 1,694,080 2,936,082
-------------- -------------- -------------- -------------- --------------
Total operating costs................. 45,039,894 50,834,978 66,964,149 32,386,084 41,560,847
-------------- -------------- -------------- -------------- --------------
Income (loss) from operations......... 2,864,982 9,213,372 5,468,802 (1,763,067) 8,516,185
-------------- -------------- -------------- -------------- --------------
Other (income) expense:
Interest income..................... (59,929) (165,551) (165,079) (125,559) (53,734)
Interest expense.................... 145,064 293,010 1,260,185 420,518 933,895
Other............................... 297,354 1,785 27,967 32,895 (12,600)
-------------- -------------- -------------- -------------- --------------
382,489 129,244 1,123,073 327,854 867,561
-------------- -------------- -------------- -------------- --------------
Income (loss) from continuing
operations before income tax......... 2,482,493 9,084,128 4,345,729 (2,090,921) 7,648,624
Income tax expense.................... 1,066,448 2,179,143 1,036,352 229,087 572,855
-------------- -------------- -------------- -------------- --------------
Income (loss) from continuing
operations........................... 1,416,045 6,904,985 3,309,377 (2,320,008) 7,075,769
Discontinued operations:
Loss from operations (net of tax
benefit of $166,600)............... 323,435 -- -- -- --
Loss on disposal (net of tax benefit
of $122,200)....................... 237,363 -- -- -- --
-------------- -------------- -------------- -------------- --------------
Net income (loss)................. $ 855,247 $ 6,904,985 $ 3,309,377 $ (2,320,008) $ 7,075,769
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Pro forma income data (unaudited):
Income from continuing operations as
reported before tax................ $ 4,345,729 $ 7,648,624
Proforma federal and state income
tax................................ (1,542,734) (2,715,262)
-------------- --------------
Pro forma net income................ $ 2,802,995 $ 4,933,362
-------------- --------------
-------------- --------------
Pro forma net income per share...... $ .23 $ .41
-------------- --------------
-------------- --------------
Weighted average shares
outstanding........................ 11,900,357 11,900,357
Plus shares attributable to excess
distributions...................... 351,640 61,796
-------------- --------------
Pro forma weighted average shares
outstanding........................ 12,251,997 11,962,153
-------------- --------------
-------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-6
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY/PARTNERS' CAPITAL

For the years ended December 31, 1995, 1994, 1993 and
for the six month period ended June 30, 1996

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN PARTNERS' EARNINGS
STOCK CAPITAL CAPITAL (DEFICIT) TOTAL
----------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992......... $ 2,995 $ 21,831 $ -- $ 5,143,183 $ 5,168,009
Distribution......................... -- -- -- (1,871,296) (1,871,296)
Capital contributed.................. 10 990 -- -- 1,000
Net income........................... -- -- -- 855,247 855,247
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1993......... 3,005 22,821 -- 4,127,134 4,152,960
Distribution......................... -- -- -- (3,857,759) (3,857,759)
Stock issuance....................... 10 990 -- -- 1,000
Capital contributed.................. -- 1,000,000 1,200,000 -- 2,200,000
Net income........................... -- -- 35,484 6,869,501 6,904,985
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1994......... 3,015 1,023,811 1,235,484 7,138,876 9,401,186
Distribution......................... -- -- -- (11,232,335) (11,232,335)
Capital contributed.................. -- 3,000,000 -- -- 3,000,000
Net income (loss).................... -- -- (584,576) 3,893,953 3,309,377
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1995......... 3,015 4,023,811 650,908 (199,506) 4,478,228
Distribution - unaudited............. -- -- -- (6,210,623) (6,210,623)
Net income (loss) - unaudited........ -- -- (75,514) 7,151,283 7,075,769
----------- ------------- ------------- --------------- ---------------
Balance at June 30, 1996 -
unaudited........................... $ 3,015 $ 4,023,811 $ 575,394 $ 741,154 $ 5,343,374
----------- ------------- ------------- --------------- ---------------
----------- ------------- ------------- --------------- ---------------
</TABLE>

See accompanying notes to combined financial statements.

F-7
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
------------------------------------------------ --------------------------------
1993 1994 1995 1995 1996
-------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net (loss) earnings............... $ 855,247 $ 6,904,985 $ 3,309,377 $ (2,320,008) $ 7,075,769
Adjustments to reconcile net
earnings to cash provided by (used
in) operating activities:
Depreciation and amortization... 1,814,257 1,302,434 3,980,525 1,694,080 2,936,082
(Gain) loss on disposition of
property and equipment......... 297,353 (98,215) 1,607 5,995 --
Loss on discontinued
operations..................... 849,598 -- -- -- --
Loss on investment.............. -- 100,000 26,900 26,900 --
Amortization of discount on note
payable -- -- 27,580 27,945 44,150
Provision for doubtful
receivables.................... 681,810 802,230 443,169 257,763 438,725
Deferred federal income tax..... (66,599) 366,599 -- -- (367,727)
Decrease (increase) in, net of
acquisition of businesses
Accounts receivable, net........ (1,697,853) (4,178,646) (3,496,445) 638,148 (7,063,998)
Prepaid expenses and other
current assets................. (580,491) (8,822) (124,344) (438,681) (544,614)
Other assets.................... 27,554 (116,606) (286,221) (44,506) (207,270)
(Decrease) increase in, net of
acquisition of businesses
Accounts payable................ (207,313) 365,984 (521,669) (703,315) 516,295
Accrued liabilities............. (120,861) 37,852 506,101 1,006,296 2,295,899
Accrued payroll liabilities..... 39,480 152,979 132,864 18,953 216,204
Deferred revenues............... (414,408) 725,347 (612,070) 1,817,026 385,617
Income tax payable.............. (124,015) (1,810,851) 220,328 (388,620) (139,772)
Other liabilities............... (77,043) (77,043) (77,043) (38,522) 12,956
Net reciprocal arrangements......... (2,188,772) (3,214,830) (1,424,927) 1,738,403 (1,827,737)
-------------- --------------- --------------- --------------- ---------------
Net cash provided by (used in)
operating activities............ (912,056) 1,253,397 2,105,732 3,297,857 3,770,579
-------------- --------------- --------------- --------------- ---------------
Cash flows from investing
activities:
Acquisitions of companies......... -- (585,432) (9,218,718) (9,218,718) (3,864,807)
Advances on receivables to related
parties........................... (1,004,150) (316,993) (786,361) (402,270) (680,703)
Payments on receivables from
related parties................... -- -- -- -- 150,000
Advances on receivable from
stockholders...................... 25,300 (1,693,043) (84,227) (84,227) --
Proceeds from sale of property and
equipment......................... 31,150 1,043,601 224,957 15,503 --
Acquisitions of property and
equipment......................... (270,400) (835,050) (2,043,245) (751,990) (1,957,823)
-------------- --------------- --------------- --------------- ---------------
Net cash used in investing
activities.................... $ (1,218,100) $ (2,386,917) $ (11,907,594) $ (10,441,702) $ (6,353,333)
-------------- --------------- --------------- --------------- ---------------
</TABLE>

See accompanying notes to combined financial statements.

F-8
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF CASH FLOWS, CONTINUED

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE YEAR ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
--------------------------------------------- ------------------------------
1993 1994 1995 1995 1996
------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Increase (decrease) in disbursements
float................................. $ 376,085 $ 451,249 $ 288,761 $ (324,049) $ 523,280
Financing costs....................... -- (229,885) (314,601) -- --
Proceeds from long-term debt.......... 1,981,564 8,008,536 16,890,155 11,890,107 8,948,351
Principal payments on long-term
debt.................................. (395,931) (4,441,471) (2,057,748) (935,925) (468,883)
Distributions......................... -- (2,364,225) (8,631,116) (4,805,980) (6,003,740)
Issuance of stock..................... 1,000 1,000 -- -- --
Capital contributions................. -- 2,200,000 3,000,000 -- --
------------- -------------- -------------- -------------- --------------
Net cash provided by financing
activities............................. 1,962,718 3,625,204 9,175,451 5,824,153 2,999,008
------------- -------------- -------------- -------------- --------------
Net (decrease) increase in cash and cash
equivalents............................ (167,438) 2,491,684 (626,411) (1,319,692) 416,254
Cash and cash equivalents at beginning
of year................................ 1,352,111 1,184,673 3,676,357 3,676,357 3,049,946
------------- -------------- -------------- -------------- --------------
Cash and cash equivalents at end of
year................................... $ 1,184,673 $ 3,676,357 $ 3,049,946 $ 2,356,665 $ 3,466,200
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Supplemental disclosures of cash flow
information:
Cash paid during the year for
interest.............................. $ 154,064 $ 261,000 $ 1,246,000 $ 420,518 $ 959,265
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Cash paid during the year for income
taxes................................. $ 1,115,387 $ 4,325,000 $ 923,000 $ 604,903 $ 686,054
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Supplemental noncash investing and
financing activities:
Stockholder distributions by:
Reduction of stockholder note
receivable............................ -- 560,165 1,790,868 1,790,868 --
Transfer of property.................. 1,871,296 933,369 966,518 830,179 206,883
------------- -------------- -------------- -------------- --------------
$ 1,871,296 $ 1,493,534 $ 2,757,386 $ 2,621,047 $ 206,941
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Property and equipment acquired
through reciprocal activities......... $ 620,868 $ 1,877,372 $ 702,970 $ 484,060 $ 176,610
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Reciprocal activities related to
business acquisitions................. $ -- $ 2,000,000 $ 1,500,000 $ 1,500,000 $ --
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-9
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The combined financial statements consist of Metro Traffic Control, Inc.
("MTC"), Metro Reciprocal, Inc. ("MRI"), Metro Networks, Ltd. ("MNW") (a limited
liability partnership) and Metro Video News, Inc. ("MVN") and their subsidiaries
(collectively, the "Company"). These entities are all controlled by the same
shareholder. All intercompany accounts and transactions have been eliminated in
combination.

The Company provides traffic reporting services, local news, sports, weather
and other information reporting services to the television and radio broadcast
industries. In exchange for the Company's information reports, television and
radio station broadcast affiliates provide commercial airtime to the Company.
The packaging and sale of this commercial airtime accounts for substantially all
of the Company's revenue. The Companies' information reports are broadcast by
broadcast affiliates throughout the United states and in over 50 of the largest
metropolitan areas.

REVENUE RECOGNITION

The Company provides programming to radio and television stations in
exchange for commercial airtime. The airtime is subsequently sold to advertisers
for either cash or other goods and services. Revenue is recognized at the time
commercials are broadcasted, and accounts receivable are recorded at that time.
If cash, merchandise or services are received prior to the broadcast of the
commercial, deferred revenue is recorded.

Revenue from the Company's exchange of advertising time for goods and
services is recorded at the estimated fair market value of goods or services
received or to be received. The value of goods and services is charged to
expense when used.

Operations are charged with a provision for doubtful accounts based on
collection experience and a current review of the collectibility of accounts.
Accounts deemed uncollectible are applied against the allowance for doubtful
accounts.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. The
disbursement float liability represents uncleared checks related to zero balance
accounts. The Company records these amounts as liabilities.

MERCHANDISE AND SCRIP INVENTORY

Merchandise and scrip inventory consists of miscellaneous merchandise and
airline tickets, lodging, meals and other goods received by the Company in
exchange for advertising time, and are valued at the fair market value of goods
received. The components of the merchandise and scrip inventory are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Merchandise inventory........................ $ 319,784 $ 156,496 $ 152,752
Scrip inventory.............................. 103,067 243,110 231,540
----------- ----------- -----------
$ 422,851 $ 399,606 $ 384,292
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

F-10
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The cost of ordinary maintenance
is charged to operations, while renewals and replacements are capitalized.
Depreciation is computed based on the straight-line method over the following
estimated useful lives:

<TABLE>
<S> <C>
Operating equipment 3 - 10 years
Transportation equipment 3 years
Leasehold improvements 10 years
</TABLE>

Depreciation expense for the years ended December 31, 1995, 1994 and 1993
was $1,249,702, $882,577 and $746,919, respectively. Other expense for the year
ended December 31, 1993 of $297,354 consists of loss on disposal of certain
fixed assets.

INTANGIBLE ASSETS

Intangible assets include goodwill, purchased broadcast contracts,
non-compete agreements, trademarks and licenses. Intangible assets are amortized
on a straight-line basis over the estimated eventual term of the customer's
contract or the estimated useful life of the asset for periods ranging from
three to five years. The Company adopted FAS 121 (Accounting for Impairment Of
Long-Lived Assets And For Long-Lived Assets To Be Disposed Of) effective January
1, 1996. This standard requires that long-lived assets and certain identifiable
intangibles held and used by the Company be reviewed for impairment whenever
events or changes in events indicate that the carrying amount of the asset
cannot be recoverable. The adoption of FAS 121 did not materially affect the
Company's combined results of operations or financial position.

FEDERAL AND STATE INCOME TAX

The Companies file separate federal and state tax returns. Therefore, the
Companies record the income tax expense (recovery) based on their separate
returns.

MRI and MVN have elected to be taxed under S Corporation provisions of the
Internal Revenue Code. Effective July 1, 1994, MTC elected to be taxed under S
Corporation provisions of the Internal Revenue Code. Under these provisions,
MRI, MVN and MTC are not liable for federal income taxes. Instead, the
stockholders are liable for individual federal income taxes on their taxable
income. Accordingly, losses are not available to the Company to offset income.
MNW is a partnership for federal income tax purposes and accordingly, the
partners are liable for federal income taxes on their respective income.

MNW owns corporations which are taxed under the C corporation provisions of
the Internal Revenue Code. Taxes related to income from the entities taxed under
the C corporation provisions are reported under the liability method;
accordingly, deferred tax assets and liabilities are determined based on
differences between financial and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws.

ACCRUED RECIPROCAL LIABILITIES

Accrued reciprocal liabilities represent goods and services owed to radio
stations in exchange for airtime received from these radio stations.

PRO FORMA EARNINGS PER SHARE

Weighted average shares outstanding, net income per share and pro forma net
income per share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for

F-11
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the periods presented. In addition, an adjustment has been made to reflect the
distributions which exceeded capital contributions and net income in accordance
with the rules of the Securities and Exchange Commission.

RECIPROCAL AND AIRTIME OBLIGATIONS

Reciprocal and airtime obligations represent broadcast obligations incurred
as part of the purchase price for acquisitions. Such obligations are recorded at
the fair market value of the airtime when the acquisition was made.

USE OF 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 and
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.

UNAUDITED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

In the opinion of management, the unaudited interim financial statements for
the six months ended June 30, 1995 and 1996, presented herein, include all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair presentation of the Company's financial position, results of operations,
shareholder's equity and cash flows for the interim period. The combined results
of operations and cash flows for the six months ended June 30, 1996 and 1995 are
not necessarily indicative of the results which would be expected for a full
year.

PRO FORMA FINANCIAL DATA (UNAUDITED)

Pro forma income taxes are set forth herein because certain of the combined
companies operate as subchapter S corporations. Pro forma income taxes reflect
federal income taxes that would have been incurred had all the combined
companies been subject to such taxes. Such amounts have been deducted from net
earnings in the accompanying statement of operations pursuant to the rules and
regulations of the Securities and Exchange Commission.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of related party receivables, note receivable from
shareholder and long-term debt are not materially different from carrying value
for financial statement purposes.

NOTE 2 -- ACQUISITIONS

The Company made the following acquisitions, each of which has been
accounted for as a purchase.

On October 26, 1994, the Company acquired substantially all of the business
assets and assumed certain liabilities of Charlotte Traffic Patrol, Inc.
("CTP"), a North Carolina corporation. CTP is engaged in the business of
providing vehicular traffic condition reports through the broadcast media in the
metropolitan area of Charlotte, North Carolina and certain surrounding areas.
The purchase price of $3.5 million consisted of a $600,000 cash payment at
closing and notes payable of $900,000. The notes payable are secured by a
stand-by letter of credit issued by a commercial bank. As part of the
consideration for the purchase of the assets, the Company agreed to provide CTP
with advertising radio spots in

F-12
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
the Charlotte area each calendar month during the five-year period beginning the
date of closing and ending October 31, 1999. The Company also assumed CTP's
obligations under its existing office lease and CTP's affiliate contracts.

On July 19, 1994, the Company acquired substantially all of the tangible and
intangible assets, contracts, distributor relationships, advertiser and
affiliate lists of Hildebrand Communications, Inc. ("Hildebrand"), and assumed
certain liabilities in exchange for cash consideration of $100,000. The excess
of the aggregate purchase price over the fair market value of the net assets
acquired of $15,000 was recognized as the value of the non-compete agreement
executed by the seller and is being amortized over a five-year period.

On July 1, 1994, the Company acquired certain of the tangible and intangible
assets, contracts, distributor relationships, advertiser and affiliate lists of
Wisconsin Information Systems, Inc. d/b/a The Milwaukee Traffic Network
("Wisconsin"), and assumed certain liabilities in exchange for cash
consideration of $79,000. MTC also agreed to provide the seller with a
performance fee for the initial twenty-four months of MTC's ownership equal to
15% of net operating revenue, as defined. The excess of the aggregate purchase
price over the fair market value of the net assets acquired of $15,000 was
recognized as the value of the non-compete agreement executed by the seller and
is being amortized over a five-year period.

On March 24, 1995, the Company acquired 100% of the stock of TrafficScan,
Incorporated ("TSI"). TSI is in the business of providing traffic information
services to the broadcast media in the greater Atlanta geographic region. The
consideration for the stock of TSI included cash of approximately $4 million and
trade credits of approximately $1.5 million. Approximately $5.1 million of the
purchase price was allocated to the value of purchased broadcast contracts,
non-compete agreements and goodwill and is being amortized on a straight-line
basis over five years.

On March 9, 1995, the Company acquired all of the outstanding shares of
Skyview Broadcasting Networks, Inc. ("SBN"), an Arizona corporation. The
consideration for the stock of SBN included cash of $2.28 million and
non-interest bearing notes payable of approximately $463,000. The purchase price
was allocated to the net assets based upon their estimated fair market values.
The excess of the purchase price over the estimated fair value of the net assets
acquired was approximately $2.5 million. The excess purchase price was allocated
to the value of purchased broadcast contracts, non-compete agreements and
goodwill and is being amortized on a straight-line basis over five years.

On March 9, 1995, the Company also acquired 100% of the shares of Airborne
Broadcast Consultants, Inc. ("Airborne"), a Nevada corporation. The Company
acquired the stock for cash consideration of $1.14 million and noninterest
bearing notes payable of approximately $232,000. The purchase price was
allocated to the net assets of the acquired company based upon their estimated
fair value. The excess purchase price of approximately $1.3 million was
allocated to the value of purchased broadcast contracts, non-compete agreements
and goodwill and is being amortized on a straight-line basis over five years.
The consideration represented by the notes payable for the SBN and Airborne
stock purchases are payable in the amounts of approximately $347,000 each to the
two previous owners in twenty-three equal installments of approximately $15,000,
with a final payment in the twenty-fourth month. These notes payable are
noninterest bearing and are discounted at an interest rate of 8%.

On March 9, 1995, the Company acquired substantially all of the tangible and
intangible business assets and acquired certain liabilities of Airborne
Broadcasting Systems, Inc. ("ABS"), a Tennessee corporation. ABS operates a
network of broadcast affiliates serving the greater Nashville and Memphis,

F-13
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
Tennessee markets and the Louisville, Kentucky market. Through these affiliates,
ABS provides traffic, news and weather information in exchange for advertising
availabilities. The purchase price of approximately $2.1 million consisted of
cash consideration of $1,780,000 and noninterest bearing notes payable of
approximately $358,000, less note discount at 8%. The purchase price was
allocated to the net assets based upon their estimated fair market values. The
excess purchase price of approximately $2.1 million was allocated to the value
of purchased broadcast contracts, non-compete agreements and goodwill and is
being amortized over a five-year period.

Subsequent to December 31, 1995, the Company made the following asset and
stock acquisitions. These acquisitions were accounted for on the purchase method
of accounting. Accordingly, the purchase price was allocated to the net assets
based upon their fair market values. The excess purchase price was allocated to
the value of purchased affiliate contracts, non-compete agreements and goodwill
and will be amortized over five years.

On January 3, 1996, the Company acquired substantially all of the tangible
and intangible business assets and certain liabilities of Aeromedia, Inc.
("Aeromedia"), a Utah corporation. Aeromedia operates a network of broadcast
affiliates serving the Salt Lake City metropolitan area in exchange for
advertising availabilities and other compensation. As consideration for the
asset purchase, the Company paid $200,000 at closing and agreed to pay
additional contingent consideration in a final payment based upon net sales of
Aeromedia for the calendar year 1996. The final payment, based upon net sales as
defined in the Asset Purchase Agreement, ranges from zero for net sales less
than $500,000 up to $250,000 for net sales greater than $600,000.

On January 4, 1996, the Company acquired the stock of Traffic Net Inc.
("TNI"), a Rhode Island corporation, Traffic Net of Connecticut, Inc. ("TNCI"),
a Connecticut corporation, and The Weather Bureau, Inc. ("TWB"), a Massachusetts
corporation (collectively, the "Traffic Net Group"). In exchange for 100% of the
outstanding shares of the Traffic Net Group, the Company paid cash consideration
of approximately $2.9 million, net of $100,000 in deferred purchase price
related to certain contingent liabilities, as described in the TNI Stock
Purchase Agreement. As additional consideration, the Company paid cash of
approximately $410,000 to acquire existing trade receivables, net of an escrow
reserve of approximately $137,000 for potentially uncollectible trade account.

F-14
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
The following is a summary of the acquisitions:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Assets acquired:
Accounts receivable............................................. $ 126,831 $ 994,803 $ 553,982
Fixed Assets.................................................... 226,911 513,670 72,870
Other assets.................................................... 30,000 17,180 70,889
Purchased broadcast contracts and other intangibles............. 5,053,258 13,187,162 4,827,149
------------- ------------- -------------
5,437,000 14,712,815 5,524,890
Liabilities assumed:
Notes payable................................................... 601,839 730,452 --
Other liabilities............................................... 3,156,161 3,752,838 1,804,498
------------- ------------- -------------
3,758,000 4,483,290 1,804,498
Less: Notes payable issued........................................ 900,000 1,052,913 --
------------- ------------- -------------
Cash paid......................................................... $ 779,000 $ 9,176,612 $ 3,720,392
------------- ------------- -------------
</TABLE>

The following unaudited pro forma information represents the combined
results of operations of the Company as if (i) the TSI, SBN, Airborne and ABS
acquisitions had been combined with the Company as of January 1, 1995 and 1994
and (ii) the CTP, Hildebrand and Wisconsin acquisitions had been combined with
the Company as of January 1, 1994.

<TABLE>
<CAPTION>
DECEMBER 31,
(000'S)
(UNAUDITED)
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Advertising Revenues................................................... $ 66,804 $ 73,377
Net Income............................................................. 7,505 2,854
</TABLE>

The pro forma information is not necessarily indicative of operating results
that would have occurred if each major acquisition had been consummated as of
January 1 of each respective period, nor is it necessarily indicative of future
operating results. The actual results of operations of an acquired company are
included in the Company's combined financial statements only from the date of
acquisition.

NOTE 3 -- ALLOWANCE FOR DOUBTFUL ACCOUNTS

The activity in the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO WRITE-OFFS
BEGINNING OF COSTS AND NET BALANCE AT THE
PERIOD EXPENSES OF RECOVERIES END OF PERIOD
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Year ended December 31, 1993...................... $ 633,740 $ 681,810 $ (623,638) $ 691,912
Year ended December 31, 1994...................... 691,912 802,230 (1,000,299) 493,843
Year ended December 31, 1995...................... 493,843 443,169 (626,750) 310,262
</TABLE>

F-15
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 4 -- ACCRUED LIABILITIES

The following are the components of accrued liabilities as of the respective
dates:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Trade Payables........................ $ 492,094 $ 786,436 $ 1,655,404
Commission............................ 249,589 534,860 1,429,489
Other................................. 404,545 385,789 918,091
------------- ------------- -------------
$ 1,146,228 $ 1,707,085 $ 4,002,984
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

NOTE 5 -- RECIPROCAL REVENUES AND EXPENSES

The following is a summary of reciprocal revenues and expenses for the
respective periods:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Reciprocal Revenues......... $ 8,069,946 $ 7,983,076 $ 8,375,372 $ 2,452,322 $ 4,777,340
Reciprocal Expenses......... 8,428,187 7,755,871 9,464,790 5,608,033 3,930,548
</TABLE>

NOTE 6 -- PURCHASED BROADCAST CONTRACTS AND OTHER INTANGIBLES

Purchased broadcast contracts and other intangibles is comprised of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Non-compete agreements........................................... $ 1,646,391 $ 2,935,649 $ 3,473,571
Purchased broadcast contracts.................................... 4,856,777 12,403,544 15,470,099
Goodwill, trademarks and licenses................................ 42,178 2,514,314 3,740,985
-------------- -------------- --------------
6,545,346 17,853,507 22,684,655
Less: accumulated amortization................................... 3,437,712 4,103,863 6,249,646
-------------- -------------- --------------
$ 3,107,634 $ 13,749,644 $ 16,435,009
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

Amortization expense for the years ended December 31, 1995, 1994 and 1993
was $2,669,151, $408,362 and $1,067,338, respectively.

F-16
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 7 -- NOTES PAYABLE AND LONG-TERM DEBT
Short term notes payable consists of various notes with an original maturity
of less than one year. Long-term debt consists of:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995 JUNE 30, 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Notes payable related to $30,000,000 revolving credit agreement
at variable rates (weighted average of 7.57% at December 31,
1995).......................................................... $ 5,847,423 $ 21,121,000 $ 29,301,000
Various acquisition notes payable, discounted at 8%, due 1996
through 1999................................................... 682,432 1,224,083 933,005
Unsecured note payable to bank at prime (8.75% at December 31,
1995), due 1996 through 2000................................... -- 132,750 119,250
Various notes payable at fixed rates of 7% to 9.50%, due 1996
through 2000................................................... -- 61,580 87,152
-------------- -------------- --------------
6,529,855 22,539,413 30,440,407
Less: Current portion 82,610 662,257 6,474,873
-------------- -------------- --------------
$ 6,447,245 $ 21,877,156 $ 23,965,534
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

The following is a schedule of future maturities of long-term debt as of
December 31, 1995:

In October, 1994, the Company entered into a credit agreement, as
subsequently amended, with a commercial bank that allows borrowings up to
$30,000,000 under notes payable indexed to the bank's prime rate or the London
Interbank Offered Rate (LIBOR). The credit agreement, as amended, provides for
scheduled commitment reductions, which ranges between 5% and 10% of the original
commitment, beginning June 30, 1996 through June 30, 2000, at which time the
commitment matures. The credit agreement also contains, among other provisions,
requirements for maintaining defined levels of debt service coverage, fixed
charges coverage and maximum levels of leverage indebtedness, executive
compensation and other restrictions. The credit facility is secured by a pledge
of the stock or other equity interests of each of the combined Companies. A
commitment fee of .375% per year is charged on the daily unused balance.

The Company issued noninterest bearing notes payable, discounted at 8% per
annum, in connection with the stock acquisitions of SBN and Airborne in 1995,
and the asset acquisitions of ABS in 1995 and CTP in 1994. The Company has
guaranteed $732,000 letters-of-credit related to its acquisition of the assets
of CTP as of December 31, 1995.

F-17
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 8 -- INCOME TAXES
Income tax expense from continuing operations is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Current, federal.................................................... $ 1,022,307 $ 1,265,662 $ 722,254
Current, state...................................................... 110,740 546,882 314,098
Deferred, non-current federal....................................... (66,559) 366,599 --
------------- ------------- -------------
$ 1,066,448 $ 2,179,143 $ 1,036,352
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The difference between the effective tax rate of income tax expense and the
amount which would be determined by applying the statutory U.S. income tax rates
to income from continuing operations before income tax expense is explained
below according to the tax implications of various items of income or expense:

<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Provision for income tax expense at U.S. statutory rates............ $ 844,048 $ 3,088,604 $ 1,477,548
Increase (decrease) in tax provision resulting from:
Nontaxable S-Corporation and partnership (earnings) losses........ 10,410 (1,645,277) (666,838)
State income taxes, net of federal tax benefit.................... 73,088 351,042 204,164
Deferred federal income tax reversal due to change in tax
status........................................................... -- 321,599 --
Other............................................................. 138,902 63,175 21,478
------------- ------------- -------------
$ 1,066,448 $ 2,179,143 $ 1,036,352
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes related to the C corporations
included in the combined group. As of December 31, 1995, this amount primarily
relates to the differential in book and tax basis of the intangibles as a result
of the recent acquisitions.

MTC is subject to IRC 1374 tax on pre-election built-in gains on property
held prior to election as an S corporation for a ten-year period following the
election. Recognition of the built-in gain and the accompanying tax liability is
contingent upon assets owned at the time of the S election being sold in the
future at amounts exceeding their tax basis and their fair market values at
election date.

The book basis exceeds the tax basis in the underlying assets of the
entities included in the combined group which have elected to be taxed under the
S corporation provisions of the Internal Revenue Code by approximately
$1,035,000.

F-18
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 9 -- COMMITMENTS AND CONTINGENCIES
The Company leases certain of its office facilities and equipment over
periods ranging from one to ten years. Rent expense for the years ended December
31, 1995, 1994 and 1993, was $2,701,000, $2,256,000 and $636,000, respectively.
Future rentals for operating leases at December 31, 1995, are as follows:

<TABLE>
<S> <C>
1996.................................................. $ 1,329,000
1997.................................................. 1,104,000
1998.................................................. 780,000
1999.................................................. 474,000
2000.................................................. 401,000
Thereafter............................................ 1,266,000
-----------
$ 5,354,000
-----------
-----------
</TABLE>

Additionally, the Company is obligated to provide advertising in exchange
for leasing certain office facilities and equipment over periods ranging from
one to ten years. Future rentals for operating leases at December 31, 1995,
based on the fair market value of the lease are as follows:

<TABLE>
<S> <C>
1996.................................................. $ 1,297,000
1997.................................................. 1,030,000
1998.................................................. 593,000
1999.................................................. 524,000
2000.................................................. 399,000
Thereafter............................................ 642,000
-----------
$ 4,485,000
-----------
-----------
</TABLE>

The Company is subject to other litigation arising in the ordinary course of
business. Management believes that the resolution of such matters will not have
a material adverse effect on the Company's financial position or results of
operations.

NOTE 10 -- PROFIT SHARING PLAN
Effective April, 1995, the Company established a profit sharing plan under
Section 401(k) of the Internal Revenue Code for all eligible employees. All
eligible employees are permitted to defer compensation up to a maximum of 10% of
their income. The plan provides for a matching contribution by the Company,
which amounted to $195,000 in 1995.

F-19
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 11 -- COMMON STOCK AND PARTNERS' CAPITAL
Common stock is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
METRO TRAFFIC CONTROL, INC.
Common stock - stated value $2.50, 2,600 shares authorized, 1,198 shares issued and
outstanding............................................................................... $ 2,995 $ 2,995
METRO RECIPROCAL, INC.
Common stock - $.01 par value, 1,000,000 shares authorized, 1,000 issued and outstanding... 10 10
METRO VIDEO NEWS, INC.
Common stock - $.01 par value, 1,000,000 shares authorized, 1,000 shares issued and
outstanding............................................................................... 10 10
--------- ---------
$ 3,015 $ 3,015
--------- ---------
--------- ---------
</TABLE>

Partners' capital account represents the partners capital of MNW.

NOTE 12 -- RELATED PARTY TRANSACTIONS
The Company leases certain real property in Vail, Colorado and in Malibu,
California from a partnership owned by the controlling shareholder. The annual
lease payments on these properties are $60,000 and $240,000, respectively.

The Company has entered into certain reciprocal arrangements with unrelated
third parties as a result of which the Company will receive goods and services
for the benefit of the controlling shareholder. The reciprocal arrangements
obligate the Company to provide commercial airtime, provide other goods and
services, and make cash disbursements to such third parties in exchange for the
goods and services received by the Company. As of June 30, 1996, the Company was
obligated to provide approximately $3.5 million (unaudited) of commercial
airtime, goods and services under these reciprocal arrangements. The Company
intends to enter into an agreement with the controlling shareholder pursuant to
which the controlling shareholder will be distributed the goods and services the
Company holds for the controlling shareholder's benefit. The Company also will
distribute to the controlling shareholder all of its rights to the goods and
services that are the subject of existing reciprocal arrangements but which have
not yet been delivered to the Company. The value of such goods and services is
expected to be approximately $3.0 million (unaudited). The Company does not
intend to enter into future reciprocal arrangements for the benefit of the
controlling shareholder.

The Company has entered into certain transactions with a company owned by
the stockholder. The Company has guaranteed the annual lease payments for such
company in the amount of $60,000; such obligations shall continue through
December 31, 1996. Additionally, the Company has posted a bond of $20,000 with
the Airline Reservations Clearinghouse for the company. The Company purchases
the majority of its travel tickets through the company.

The stockholder and members of his family have personally utilized the
services of several of the Company's employees. The total compensation paid to
such employees was $180,995 in 1995.

At December 31, 1994, the Company had a demand note receivable from the
stockholder totaling $1,706,641, bearing interest at the prime rate plus 1% for
cash advances made to the controlling stockholder. In addition, at December 31,
1995 and 1994, the Company had outstanding receivables

F-20
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 12 -- RELATED PARTY TRANSACTIONS (CONTINUED)
from affiliated entities totaling $1,075,030 and $288,669, respectively, bearing
interest at the prime rate plus 1%. For the years ended December 31, 1995, 1994
and 1993, the Company had recorded $131,797, $105,641 and $52,822, respectively,
in interest income related to the above receivables.

The Company paid $300,000 and $100,000 in rent expense to an entity related
by common control for the years ended December 31, 1995 and 1994, respectively.
Additionally, the Company is obligated under lease agreements for future minimum
lease payments of $300,000 in 1996 and $135,000 in 1997. These amounts have been
included in Note 7.

NOTE 13 -- DISCONTINUED OPERATIONS
In June 1993, the Company approved a plan to discontinue the Company's
magazine publishing business, and disposed of the business in August 1993.

NOTE 14 -- EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT - REORGANIZATION
(UNAUDITED)
From 1978 through June 1996, the business of the Company was operated
through Metro Traffic Control, Inc. and the other combined companies. All of the
equity interests in these companies were controlled by a single shareholder. In
conjunction with an anticipated offering of equity securities, a new entity was
formed. It is expected that the single shareholder will contribute or cause to
be contributed all of the issued and outstanding equity interests in the
Predecessor Companies to this newly formed entity in exchange for common stock.
Subsequent to the Reorganization, Metro Traffic Control, Inc. will be a
wholly-owned subsidiary of the Company and the other Predecessor Companies will
have been merged into Metro Traffic Control, Inc.

As the equity interests are held under common control and will be
contributed by the resulting shareholder of the Company, the underlying assets
will be recorded at their historical costs, similar to pooling of interest
accounting.

Upon the Reorganization, the resulting entity will be liable for income
taxes, at which time the entity will be required to record a deferred tax
liability for the differential between the book and tax basis of the underlying
assets. Accordingly, this differential will result in an increase in income tax
expense at the time of reorganization of approximately $352,000.

F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT

Boards of Directors
Skyview Broadcasting Networks, Inc.
Airborne Broadcast Consultants

Airborne Broadcasting Systems, Inc.:

We have audited the accompanying combined statements of operations and cash
flows of Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants and
Airborne Broadcasting Systems, Inc. (collectively, the "Company") for the year
ended December 31, 1994. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the combined statements of operations and cash flows referred to
above present fairly, in all material respects, the combined results of their
operations and their cash flows for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Houston, Texas
August 21, 1996

F-22
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS

AIRBORNE BROADCASTING SYSTEMS, INC.

COMBINED STATEMENT OF OPERATIONS

For the year ended December 31, 1994

<TABLE>
<CAPTION>
<S> <C>
Advertising revenues............................................................................... $ 5,152,767
Broadcasting costs................................................................................. 1,423,355
Marketing expense.................................................................................. 221,813
General and administrative expenses................................................................ 3,117,608
Depreciation....................................................................................... 48,374
-------------
Total operating costs.............................................................................. 4,811,150
Income from operations............................................................................. 341,617
Interest expense................................................................................... 21,867
-------------
Income before income tax........................................................................... 319,750
Income tax expense................................................................................. 108,707
-------------
Net income......................................................................................... $ 211,043
-------------
-------------
</TABLE>

See accompanying notes to combined financial statements.

F-23
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS

AIRBORNE BROADCASTING SYSTEMS, INC.

COMBINED STATEMENT OF CASH FLOWS

For the year ended December 31, 1994

<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income.......................................................................................... $ 211,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation.................................................................................... 48,374
Decrease (increase) in:
Accounts receivable........................................................................... (253,864)
Due from stockholders......................................................................... 46,000
Other assets.................................................................................. (18,806)
Increase (decrease) in:
Accounts payable and accrued liabilities...................................................... 8,837
Income taxes payable.......................................................................... 138,749
Other Liabilities............................................................................. (2,423)
------------
Net cash provided by operating activities..................................................... 177,886
Net cash used in investing activities:
Purchase of property and equipment................................................................ (85,533)
Cash flows from financing activities:
Payments on notes payable......................................................................... (61,588)
Distributions to stockholders..................................................................... (26,670)
------------
Net cash used in financing activities......................................................... (88,258)
------------
Net increase in cash and cash equivalents........................................................... 4,095
Cash and cash equivalents at beginning of year...................................................... 60,924
------------
Cash and cash equivalents at end of year............................................................ $ 65,019
------------
------------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.......................................................... $ 35,267
------------
------------
Cash paid during the year for taxes............................................................. $ 2,145
------------
------------
</TABLE>

See accompanying notes to combined financial statements.

F-24
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS

AIRBORNE BROADCASTING SYSTEMS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION AND GENERAL

The combined financial statements include the operations of Skyview
Broadcasting Networks, Inc., Airborne Broadcast Consultants, and Airborne
Broadcasting Systems, Inc. (collectively, the "Company"). The Company has
operations in Tuscon, Phoenix, Las Vegas, Memphis, Nashville and Louisville.
These entities are all controlled by the same shareholder. All intercompany
accounts and transactions have been eliminated in combination.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

The Company provides programming to radio and television stations in
exchange for commercial airtime. The airtime is subsequently sold to advertisers
for either cash or other goods and services. Revenue is recognized at the time
commercials are broadcasted. If cash, merchandise or services are received prior
to the broadcast of the commercial, deferred revenue is recorded.

USE OF ESTIMATES

INCOME TAXES

The Companies are taxed under the C corporation provisions of the Internal
Revenue Code. Taxes related to income from the entities taxed under the C
corporation provisions are reported under the asset and liability method;
accordingly, deferred tax assets and liabilities are determined based on
differences between financial and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws.

F-25
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS

AIRBORNE BROADCASTING SYSTEMS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income tax expense is comprised of the following:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
-------------------
<S> <C>
Current, federal......................................................... $ 23,121
Deferred, non-current federal............................................ 85,586
----------
$ 108,707
----------
----------
</TABLE>

NOTE 2 -- ACQUISITION
On March 8, 1995, the Company was acquired by Metro Networks, Ltd. for a
total purchase price of approximately $6.3 million, which consisted of cash
consideration of approximately $5.2 million and notes receivable of
approximately $1.1 million.

F-26
<PAGE>
PRO FORMA CONDENSED FINANCIAL DATA
(UNAUDITED)

During 1995, the Company completed the acquisitions of all of the
outstanding common stock of each of TrafficScan, Incorporated, Skyview
Broadcasting Networks, Inc., and Airborne Broadcast Consultants and
substantially all of the assets and certain liabilities of Airborne Broadcasting
Systems, Inc. During January 1996, the Company completed the acquisitions of
substantially all of the assets and certain liabilities of Aeromedia, Inc. and
all of the outstanding common stock of Traffic Net Inc, Traffic Net of
Connecticut, Inc. and The Weather Bureau, Inc. These acquisitions are reflected
in the balance sheet and statement of operations of the Predecessor Companies'
(as defined below) combined historical financial statements as of and for the
six months ended June 30, 1996. Also in 1996, the Company signed letters of
intent to acquire the assets of Airborne Traffic Network, Inc. and Wisconsin
Information Systems, Inc. (collectively, the "Pending Acquisitions"). Provided
herein are the audited combined financial statements of Skyview Broadcasting
Networks, Inc., Airborne Broadcast Consultants and Airborne Broadcasting
Systems, Inc. for the year ended December 31, 1994. The audited financial
statements of TrafficScan, Incorporated, Aeromedia, Inc., Traffic Net Inn,
Traffic Net of Connecticut, Inc. and The Weather Bureau, Inc. have not been
included herein because the acquisitions are not significant.

In May 1996, the Company was incorporated in Delaware. Immediately prior to
the closing of this offering, the issued and outstanding equity interests in the
Predecessor Companies will be exchanged for the shares of the Company's Common
Stock in order to consolidate the entities. As the equity interests in the
entities are held under common control and will be contributed by the resulting
shareholder of the Company, the underlying assets will be recorded at their
historical costs, similar to pooling of interest accounting.

The accompanying unaudited pro forma balance sheet of the Company combines
the historical combined balance sheet of the Company and the balance sheets of
the Pending Acquisitions as if these acquisitions had occurred on June 30, 1996.
Additionally, the unaudited pro forma balance sheet reflects the effects of the
pending reorganization (the "Reorganization") as if the Reorganization occurred
on June 30, 1996. The accompanying unaudited pro forma statements of operations
of the Company combine the historical combined statement of operations of the
Predecessor Companies, the acquisitions consummated in 1995, 1996, and the
Pending Acquisitions and the effects of the Reorganization as if such
acquisitions and Reorganization had occurred on January 1, 1995.

The unaudited pro forma financial statements do not purport to represent
what the Company's results of operations would have been had the acquisitions
and Reorganization occurred on the dates indicated or for any future period or
date. The pro forma adjustments give effect to available information and
assumptions that management believes are reasonable. The pro forma financial
statements should be read in conjunction with the Predecessor Companies'
historical combined financial statements and the financial statements of certain
acquired companies and the notes thereto included elsewhere herein.

F-27
<PAGE>
METRO NETWORKS, INC.
PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR ACQUISITION REORGANIZATION
COMBINED PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY
HISTORICAL ACQUISITIONS ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA
------------- ------------ ------------- ----------- -------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total current assets.... $31,142,418 $ 562,765 $ -- $31,705,183 $ -- $ 31,705,183
Receivables from related
parties................ 1,685,792 -- -- 1,685,792 -- 1,685,792
Operating equipment..... 8,941,683 122,880 -- 9,064,563 -- 9,064,563
Transportation
equipment.............. 824,692 -- -- 824,692 -- 824,692
Leasehold improvements.. 667,709 -- -- 667,709 -- 667,709
------------- ------------ ------------- ----------- ----------- --------------
10,434,084 122,880 -- 10,556,964 -- 10,556,964
Less accumulated
depreciation........... (4,961,155) (40,592) (5,001,747) (5,001,747)
------------- ------------ ------------- ----------- ----------- --------------
5,472,929 82,288 -- 5,555,217 -- 5,555,217
Purchase broadcast
contracts and other
intangibles 16,435,009 -- 1,832,543(B) 18,267,552 -- 18,267,552
Other assets............ 2,013,864 12,760 -- 2,026,624 -- 2,026,624
------------- ------------ ------------- ----------- ----------- --------------
Total assets.......... 56,750,012 657,813 1,832,543 59,240,368 -- 59,240,368
------------- ------------ ------------- ----------- ----------- --------------
------------- ------------ ------------- ----------- ----------- --------------
Total current
liabilities............ 24,299,214 340,356 151,500(C) 24,791,070 -- 24,791,070
Long-term debt.......... 23,965,534 12,253 1,986,247(C) 25,964,034 -- 25,964,034
Deferred income tax..... 2,941,787 -- -- 2,941,787 351,659(E) 3,293,446
Other liabilities....... 200,103 -- -- 200,103 3,500,000(J) 3,700,103
------------- ------------ ------------- ----------- ----------- --------------
Total liabilities..... 51,406,638 352,609 2,137,747 53,896,994 3,851,659 57,748,653
Preferred Stock......... -- -- -- -- 2,549(D) 2,549
Common stock 3,015 12,000 (12,000 (A) 3,015 6,335(D) 9,350
Additional paid-in
capital................ 4,023,811 82,500 (82,500 (A) 4,023,811 566,510(D) 4,590,321
Partners' capital....... 575,394 -- -- 575,394 (575,394)(D) --
Retained earnings
(deficit) 741,154 210,704 (210,704 (A) 741,154 (3,851,659)(D),(E),(J) (3,110,505)
------------- ------------ ------------- ----------- ----------- --------------
Total stockholder's
equity (deficit)..... 5,343,374 305,204 (305,204) 5,343,374 (3,851,659) 1,491,715
------------- ------------ ------------- ----------- ----------- --------------
Total liabilities and
stockholders'
equity............... $56,750,012 $ 657,813 $ 1,832,543 $59,240,368 $ -- $ 59,240,368
------------- ------------ ------------- ----------- ----------- --------------
------------- ------------ ------------- ----------- ----------- --------------
</TABLE>

F-28
<PAGE>
METRO NETWORKS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR ACQUISITIONS REORGANIZATION
COMBINED PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY
HISTORICAL ACQUISITIONS ADJUSTMENTS COMBINED REORGANIZATION PRO FORMA
------------- ------------ ------------- ----------- ---------------- --------------

<S> <C> <C> <C> <C> <C> <C>
Advertising revenues.... $50,077,032 $1,117,802 $ -- $51,194,834 $ -- $ 51,194,834
Broadcasting costs...... 24,172,646 369,762 -- 24,542,408 -- 24,542,408
Marketing expense....... 10,101,411 244,918 -- 10,346,329 -- 10,346,329
General and
administrative
expense................ 4,350,708 347,409 -- 4,698,117 -- 4,698,117
Depreciation and
amortization........... 2,936,082 12,025 192,032(K) 3,140,139 -- 3,140,139
------------- ------------ ------------- ----------- ---------------- --------------
Total operating costs... 41,560,847 974,114 192,032 42,726,993 -- 42,726,993

Income (loss) from
operations............. 8,516,185 143,688 (192,032) 8,467,841 -- 8,467,841

Other (income) expense:
Other income.......... (66,334) -- -- (66,334) -- (66,334)
Interest expense...... 933,895 3,747 104,076(L) 1,041,718 -- 1,041,718
------------- ------------ ------------- ----------- ---------------- --------------
867,561 3,747 104,076 975,384 -- 975,384

Income (loss) before
income tax............. 7,648,624 139,941 (296,108) 7,492,457 -- 7,492,457

Income tax expense
(benefit).............. 572,855 -- (53,097 (M) 519,758 2,027,677(N) 2,547,435
------------- ------------ ------------- ----------- ---------------- --------------

Income (loss)........... $ 7,075,769 $ 139,941 $ (243,011) $ 6,972,699 $ (2,027,677) $ 4,945,002
------------- ------------ ------------- ----------- ---------------- --------------
------------- ------------ ------------- ----------- ---------------- --------------
Pro forma net income per
share.................. $ .41
--------------
--------------
Pro forma weighted
average shares
outstanding............ 11,962,153
--------------
--------------
</TABLE>

F-29
<PAGE>
METRO NETWORKS, INC.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR TWO MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
COMBINED FEBRUARY 28, 1995 MARCH 31, 1995 DECEMBER 31, 1995
HISTORICAL SKYVIEW TRAFFICSCAN AEROMEDIA
------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C> <C>
Advertising revenues............... $ 72,432,951 $ 515,587 $ 428,075 $ 395,868

Broadcasting costs................. 41,285,973 242,038 152,582 138,434
Marketing expense.................. 14,503,640 104,990 100,759 83,972
General and administrative
expense........................... 7,194,011 236,992 118,183 111,631
Depreciation and amortization...... 3,980,525 4,540 9,000 8,732
------------- ------------------- -------------------- -------------------
Total operating costs 66,964,149 588,560 380,524 342,769

Income (loss) from operations...... 5,468,802 (72,973) 47,551 53,099

Other (income) expense:
Interest income.................. (165,079) -- -- --
Interest expense................. 1,260,185 -- -- --
Other............................ 27,967 2,262 876 9,350
------------- ------------------- -------------------- -------------------
1,123,073 2,262 876 9,350
Income (loss) before income tax.... 4,345,729 (75,235) 46,675 43,749
Income tax expense (benefit)....... 1,036,352 -- -- --
------------- ------------------- -------------------- -------------------

Income (loss)...................... $ 3,309,377 $ (75,235) $ 46,675 $ 43,749
------------- ------------------- -------------------- -------------------
------------- ------------------- -------------------- -------------------
Pro forma income per share.........
Pro forma weighted average shares
outstanding.......................

<CAPTION>
YEAR ENDED ACQUISITION REORGANIZATION
DECEMBER 31, 1995 PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY

TRAFFIC NET ACQUISITIONS ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA

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

<S> <C> <C> <C> <C> <C> <C>
Advertising revenues............... $ 2,256,769 $2,073,107 $ -- $78,102,357 $ -- $ 78,102,357

Broadcasting costs................. 422,124 1,001,758 -- 43,242,909 -- 43,242,909

Marketing expense.................. 987,167 199,070 -- 15,979,598 -- 15,979,598

General and administrative
expense........................... 767,235 440,961 -- 8,869,013 -- 8,869,013

Depreciation and amortization...... 7,320 18,290 1,891,403(F) 5,919,810 -- 5,919.810

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

Total operating costs 2,183,846 1,660,079 1,891,403 74,011,330 -- 74,011,330

Income (loss) from operations...... 72,923 413,028 (1,891,403) 4,091,027 -- 4,091,027

Other (income) expense:
Interest income.................. -- 873 (164,206) -- (164,206)

Interest expense................. -- 6,849 571,195(G) 1,838,229 -- 1,838,229

Other............................ -- 819 41,274 -- 41,274

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

-- 8,541 571,195 1,715,297 -- 1,715,297

Income (loss) before income tax.... 72,923 404,487 (2,462,598) 2,375,730 -- 2,375,730

Income tax expense (benefit)....... -- -- (416,160)(H) 620,192 187,566(I) 807,75
8
------------------- ------------ -------------- ----------- --------------- --------------

Income (loss)...................... $ 72,923 $ 404,487 $ (2,046,438) $ 1,755,538 $ (187,566) $ 1,567,972

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

Pro forma income per share......... $ .13

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

Pro forma weighted average shares
outstanding....................... 12,251,997

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

</TABLE>

F-30
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

ACQUISITIONS

During 1995 and 1996, the Company made the following Acquisitions:

<TABLE>
<CAPTION>
COMPANY DATE
- ---------------------------------------------------- ----------------------------------------------------
<S> <C>
TrafficScan, Incorporated March 24, 1995
Skyview Broadcasting Networks, Inc. March 9, 1995
Airborne Broadcast Consultants March 9, 1995
Airborne Broadcasting Systems, Inc. March 9, 1995
Aeromedia, Inc. January 3, 1996
Traffic Net Inc. January 4, 1996
Traffic Net of Connecticut, Inc. January 4, 1996
The Weather Bureau, Inc. January 4, 1996
</TABLE>

See footnote 2 to the combined financial statements.

On June 20, 1996, the Company entered into a letter of intent to acquire the
assets of Airborne Traffic Network, Inc. ("ATN") for approximately $1.5 million.
As of June 30, 1996 ATN provided traffic services to 16 radio stations in Kansas
City, Missouri and Omaha, Nebraska. In September 1996, the Company entered into
an agreement to acquire the assets of ATN; such transaction is expected to close
in January 1997. On July 24, 1996, the Company signed a letter of intent to
purchase substantially all of the assets of Wisconsin Information Systems, Inc.
for $650,000. All of the Pending Acquisitions will be accounted for as purchases
and are assumed to be financed under credit facilities with similar terms as
prior acquisitions.

REORGANIZATION

From 1978 until the closing of the offering, the business of the Company
will have been operated through the Predecessor Companies. Until the closing of
this offering, all of the equity interests in the Predecessor Companies will be
owned by the Saperstein Family.

In May 1996, Metro Networks, Inc. was incorporated in Delaware. Immediately
prior to the closing of this offering, the Saperstein Family will establish
Metro Networks, Inc. as a holding company in order to consolidate the issued and
outstanding equity interests in the Predecessor Companies, in exchange for
shares of the Company's Common Stock. As of the date of the closing of this
offering, Metro Networks, Ltd. will distribute certain of its assets, other than
MTC GP stock, to Metro Traffic Control, Inc. in partial redemption of Metro
Traffic Control, Inc.'s interest in Metro Networks, Ltd.; thereafter Metro
Networks, Ltd. will be liquidated. In addition, as of the date of the closing of
this offering, Metro Video News, Inc., Metro Reciprocal, Inc., MTC GP, Inc.,
Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants,
TrafficScan, Incorporated, Traffic Net Inc., The Weather Bureau, Inc. and
Traffic Net of Connecticut, Inc. will be merged into Metro Traffic Control, Inc.
pursuant to a transaction in which the shareholders of each corporation will
receive shares of Metro Traffic Control, Inc. stock. Metro Traffic Control, Inc.
will become a wholly-owned subsidiary of the Company as a result of a reverse
subsidiary merger of Metro Networks Acquisition, Inc. and Metro Traffic Control
Inc. with Metro Traffic Control, Inc. being the surviving entity. The reverse
subsidiary merger will qualify as a tax-free reorganization under Section
368(a)(2) of the Internal Revenue Code of 1986, as amended. Metro Networks, Inc.
expects to conduct substantially all of its operations through Metro Traffic
Control, Inc.

The unaudited pro forma combined statement of operations was prepared to
reflect the transactions as though each of the 1995 Acquisitions, 1996
Acquisitions and Pending Acquisitions had been

F-31
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

completed and the Reorganization effected at the beginning of the period
presented. The unaudited pro forma combined balance sheet as of June 30, 1996
was prepared as though the Pending Acquisitions and the Reorganization had
occurred on June 30, 1996.

The accompanying pro forma combined balance sheet as of June 30, 1996
reflects the following adjustments:

(A)A pro forma adjustment is made to reflect the fair value of those assets
and liabilities that were acquired as a result of the Pending
Acquisitions.

(B)A pro forma adjustment is made to purchase broadcast contracts and other
intangibles equal to the excess of the applicable purchase price over the
fair values assigned to specific assets less liabilities assumed.

(C)A pro forma entry is made to (i) reverse the $12,253 of long-term debt of
the Pending Acquisitions that will not be assumed by the Company and (ii)
record the additional current and long-term portion of debt to finance the
Pending Acquisitions.

(D)A pro forma adjustment is made to reflect the issuance of 9,350,607 of
Common Stock, 2,549,750 of Preferred Stock and the conversion of
partnerships and subchapter S corporations into C corporations.

(E)A pro forma adjustment is made to reflect the deferred taxes related to
the conversion of partnerships and subchapter S corporations to C
corporations. This adjustment has not been reflected in the pro forma statement
of operations, however, at conversion the amount will be charged to operations.

The accompanying pro forma statements of operations for the year ended
December 31, 1995 have been prepared by combining the historical results of the
Company with the 1995 and 1996 Acquisitions and the Pending Acquisitions and the
Reorganization and reflect the following adjustments:

(F)Pro forma adjustments are made to the statement of operations to reflect
additional depreciation and amortization expense on the fair value of the
assets acquired as if the acquisitions had occurred at January 1, 1995. Pro
forma depreciation is computed by the straight-line method over the remaining
estimated useful lives of the assets. The purchased broadcast contracts and
other intangibles are amortized on a straight-line method over a five-year term.

(G)Pro forma adjustments are made to the statement of operations to reflect
(i) the reversal of interest expense of $6,849 on debt not assumed by the
Company and (ii) the increase in interest expense due to the additional
borrowings to finance the 1995 Acquisitions and 1996 Acquisitions and the
Pending Acquisitions. Interest expense on the 1995 Acquisitions and 1996
Acquisitions is based on the actual interest rate under the Company's credit
facilities at the date of acquisition for the completed acquisitions. Interest
expense on the Pending Acquisitions is based on estimated terms available to the
Company at June 30, 1996 for such acquisitions. In addition, interest is
provided on the maximum deferred payments related to the pending acquisition of
ATN.

(H)A pro forma adjustment is made to reflect the effect upon the income tax
provision as if the 1995 Acquisitions, and 1996 Acquisitions and Pending
Acquisitions had occurred at January 1, 1995.

(I)A pro forma adjustment is made to reflect the effect upon the income tax
provision and deferred income taxes payable in connection with the
Reorganization to account for the conversion of partnerships and subchapter S
corporations to C corporations.

F-32
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(J)A pro forma adjustment is made to reflect the Company's obligation that
results from entering into an agreement with the controlling shareholder
pursuant to which the controlling shareholder will be provided certain goods and
services in the future that are the subject of existing reciprocal arrangements
but which have not yet been earned by or delivered to the Company.

The accompanying pro forma statements of operations for the six months ended
June 30, 1996 have been prepared by combining the historical results of the
Company with the 1996 Acquisitions and the Pending Acquisitions and the
Reorganization and reflect the following adjustments:

(K)Pro forma adjustments are made to the statement of operations to reflect
additional depreciation and amortization expense on the fair value of the
assets acquired as if the acquisitions had occurred at January 1, 1995. Pro
forma depreciation is computed by the straight-line method over the remaining
estimated useful lives of the assets. The purchase broadcast contracts and other
intangibles are amortized on a straight-line method over a five-year term.

(L)Pro forma adjustments are made to the statement of operations to reflect
interest expense on the Pending Acquisitions based on estimated terms
available to the Company at June 30, 1996 for such acquisitions. In addition,
interest is provided on the maximum deferred payments related to the pending
acquisition of ATN.

(M)A pro forma adjustment is made to reflect the effect upon the income tax
provision as if the Pending Acquisitions had occurred at January 1, 1995.

(N)A pro forma adjustment is made to reflect the effect upon the income tax
provision and deferred income taxes payable in connection with the
Reorganization to account for the conversion of partnerships and subchapter S
corporations to C corporations.

F-33
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholder have agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co., CS First Boston Corporation and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as representatives, has severally agreed to purchase from
the Company and the Selling Stockholder, the respective number of shares of
Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------- ---------------
<S> <C>
Goldman, Sachs & Co...................................................... 1,720,000
CS First Boston Corporation.............................................. 1,720,000
Donaldson, Lufkin & Jenrette Securities Corporation...................... 1,720,000
Advest, Inc.............................................................. 120,000
Robert W. Baird & Co. Incorporated....................................... 120,000
Bear, Stearns & Co. Inc.................................................. 200,000
Alex. Brown & Sons
Incorporated.......................................................... 200,000
A. G. Edwards & Sons, Inc................................................ 200,000
Furman Selz LLC.......................................................... 120,000
Edward D. Jones & Co., L.P............................................... 120,000
Lehman Brothers Inc...................................................... 200,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................... 200,000
Principal Financial
Securities, Inc......................................................... 120,000
Rauscher Pierce Refsnes, Inc............................................. 120,000
Smith Barney Inc......................................................... 200,000
Southcoast Capital Corporation........................................... 120,000
---------------
Total............................................................ 7,200,000
---------------
---------------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The Underwriters propose to offer the shares in part directly to the public
at the public offering price set forth on the cover page of this Prospectus and
in part to certain securities dealers at such a price less a concession of $.66
per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $.10 per share to certain brokers and dealers. After
the shares of Common Stock are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 1,050,000
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 7,200,000 shares of Common
Stock offered.

The Company, the Seller Stockholder and the Trusts have agreed that, during
the period beginning from the date of this Prospectus and continuing to and
including the date 180 days after the date of the Prospectus, they will not
offer, sell, contract to sell or otherwise dispose of any securities of the
Company (other than pursuant to employee stock option plans existing, or on the
conversion or exchange of

U-1
<PAGE>
convertible or exchangeable securities outstanding, on the date of this
Prospectus) which are substantially similar to the shares of Common Stock or
which are convertible or exchangeable into securities which are substantially
similar to the shares of Common stock without the prior written consent of the
representatives, except for the shares of Common Stock offered in connection
with the offering.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Common Stock offered by them.

Prior to this offering, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company, the Selling
Stockholder and the representatives. Among the factors to be considered in
determining the initial public offering price of the Common stock, in addition
to prevailing market conditions, will be the Company's historical performance,
estimates of the business potential and earnings prospects of the Company, an
assessment of the Company's management and the consideration of the above
factors in relation to market valuation of companies in related businesses.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "MTNT".

The Company and the Selling Stockholder have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

U-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
Use of Proceeds................................ 15
Dividend Policy................................ 15
Capitalization................................. 16
Dilution....................................... 17
Selected Financial and Operating Data.......... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 20
Business....................................... 29
Management..................................... 44
Certain Transactions........................... 49
Principal and Selling Stockholders............. 51
Description of Capital Stock................... 52
Shares Eligible For Future Sale................ 55
Validity of Common Stock....................... 56
Experts........................................ 56
Additional Information......................... 56
Glossary....................................... 57
Index to Financial Statements.................. F-1
Underwriting................................... U-1
</TABLE>

THROUGH AND INCLUDING NOVEMBER 10, 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

7,200,000 SHARES

METRO NETWORKS, INC.

COMMON STOCK
(PAR VALUE $.001 PER SHARE)

[LOGO]

GOLDMAN, SACHS & CO.
CS FIRST BOSTON

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

REPRESENTATIVES OF THE UNDERWRITERS

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