SALEM COMMUNICATIONS CORP /DE/, 10-K, 2000-03-30

SALEM COMMUNICATIONS CORP /DE/
10-K, 2000-03-30
RADIO BROADCASTING STATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________________ TO _______________

COMMISSION FILE NUMBER 333-41733

SALEM COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

DELAWARE 77-0121400
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CALIFORNIA 93012
- ---------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-0400

Securities registered pursuant to
Section 12(b) of the Act: None

Securities registered pursuant
to Section 12(g) of the Act: Class A common stock, $0.01 par value

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

Aggregate market value of voting common stock held by non-affiliates of
the registrant based upon the average bid and asked price of its Class A common
stock, on March 23, 2000, on the Nasdaq National Market System was approximately
$119,950,933.

As of March 23, 2000 there were 17,902,392 shares of Class A common
stock and 5,553,696 shares of Class B common stock of Salem Communications
Corporation outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement to be filed with the
Securities and Exchange Commission in connection with the Annual Meeting of
Stockholders to be held May 24, 2000 are incorporated by reference in Part III
hereof.

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<PAGE> 2

TABLE OF CONTENTS

PART I
Page
----
Item 1. Business..........................................................3

Item 2. Properties........................................................10

Item 3. Legal Proceedings.................................................11

Item 4. Submission of Matters to a Vote of Security Holders...............11

PART II

Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters...............................................12

Item 6. Selected Consolidated Financial Information.......................13

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................15

Item 7A Quantitative and Qualitative Disclosures About Market Risk........25

Item 8. Financial Statements and Supplementary Data.......................25

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..........................................25

PART III

Item 10. Directors and Executive Officers of the Registrant................26

Item 11. Executive Compensation............................................26

Item 12. Security Ownership of Certain Beneficial Owners and Management....27

Item 13. Certain Relationships and Related Transactions....................27

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...27

Signatures........................................................32

Financial Statements..............................................F-1

Schedule II -- Valuation and Qualifying Accounts..................S-1

Index to Exhibits.................................................E-1

2
<PAGE> 3

PART I

ITEM 1. BUSINESS.

From time to time, in both written reports (such as this report) and
oral statements, Salem Communications Corporation ("Salem" or the "company")
makes "forward-looking statements" within the meaning of Federal and state
securities laws. Disclosures that use words such as the company "believes,"
"anticipates," "expects," "may" or "plans" and similar expressions are intended
to identify forward-looking statements, as defined under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements reflect the
company's current expectations and are based upon data available to the company
at the time of the statements. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
expectations; the risks and uncertainties, include but are not limited to,
Salem's ability to successfully integrate acquisitions into its organization,
competition in the radio broadcast industry and from new media technologies, and
adverse economic conditions, as well as other risks and uncertainties detailed
from time to time in Salem's periodic reports on Forms 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission. Forward-looking statements made in
this report speak as of the date hereof. The company undertakes no obligation to
update or revise any forward-looking statements made in this report. Any such
forward-looking statements, whether made in this report or elsewhere, should be
considered in context with the various disclosures made by Salem about its
business. These projections or forward-looking statements fall under the safe
harbors of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act").

All metropolitan statistical area ("MSA") rank information used in this
report is from the Fall 1999 Radio Market Survey Schedule & Population Rankings
published by The Arbitron Company, excluding the Commonwealth of Puerto Rico.
According to the Radio Market Survey, the population estimates used were based
upon 1990 U.S. Bureau Census estimates updated and projected to January, 2000 by
Market Statistics, based on the data from Sales & Marketing Management's 1998
Survey of Buying Power. Information regarding the number of radio stations in
the United States featuring religious talk and music formats, the number of
stations featuring religious formats and the size of the listening audience for
religious programming have been obtained from the 1999 Broadcasting & Cable
Yearbook, The M Street Journal (November 18, 1998) and Religion & Media
Quarterly (July 1997).

GENERAL

We are the largest U.S. radio broadcasting company, measured by number
of stations and audience coverage, providing programming targeted at audiences
interested in religious and family issues. Our core business, developed over the
last 25 years, is the ownership and operation of radio stations in large
metropolitan markets. After completing our pending transactions, we will own or
operate 70 radio stations, including 52 stations which broadcast to 21 of the
top 25 markets. We also operate Salem Radio Network(R), a national radio network
offering syndicated talk, news and music programming to over 1,300 affiliated
radio stations, after completing our pending transactions.

<PAGE> 4

Our primary strategy has been, and will continue to be, to acquire and
operate radio stations in large metropolitan markets. Traditionally, we have
programmed acquired stations with our primary format, talk programming with
religious and family themes. This format generally features nationally
syndicated and local programs produced by organizations that purchase block
program time on our radio stations. We have expanded our acquisition strategy in
recent years by acquiring additional radio stations in markets in which we
already have a presence. We program these radio stations to feature news/talk
and music formats. Salem Radio Network(R) supports our strategy by enabling us
to offer a variety of program content on newly acquired radio stations in both
new and existing markets.

Our founders, our current CEO and chairman, are career radio
broadcasters who have owned and operated radio stations for the last 25 years.
As Salem has grown, we have recruited managers with strong radio backgrounds and
a commitment to our format. Our senior managers have an average of 25 years of
industry experience and 10 years with Salem. Our management has a track record
of successfully identifying, acquiring and operating new radio stations.

We continue to seek new ways to expand and integrate our distribution
and content capabilities. We have acquired magazine, Internet and software
businesses that direct their content to persons with interests that are similar
to those of our primary radio audience. We will continue to opportunistically
pursue acquisitions of new media and other businesses that serve our audience.
We plan to use these businesses, together with our radio stations and network,
to attract and retain a larger audience and customer base.

Salem Communications Corporation was formed in 1986, as a California
corporation, in connection with a combination of most of the radio station
holdings of Edward G. Atsinger III and Stuart W. Epperson. Initially, Messrs.
Atsinger and Epperson each owned fifty-percent of Salem Communications
Corporation-California. New Inspiration Broadcasting Company, Inc., the licensee
of KKLA-FM, Los Angeles, and Golden Gate Broadcasting Company, Inc., the
licensee of KFAX-AM, San Francisco, were owned by the principal shareholders and
Mr. Epperson's wife, Nancy A. Epperson. New Inspiration and Golden Gate were
both "S corporations," as that term is defined in the Internal Revenue Code of
1986, as amended. In August 1997, Salem Communications Corporation-California,
New Inspiration and Golden Gate effected a reorganization pursuant to which New
Inspiration and Golden Gate became wholly-owned subsidiaries of Salem
Communications Corporation-California. The S corporation status of each of New
Inspiration and Golden Gate was terminated in the reorganization. In 1999 the
company was reincorporated in Delaware.

DEVELOPMENT OF THE BUSINESS

In 1999, we completed the purchase of the following radio stations:

PURCHASE
DATE MARKET STATION MSA RANK(1) PRICE
---- ----------------- ------- ----------- -------------
April Seattle-Tacoma,WA KKOL-AM 13 $1,750,000(2)
July Phoenix,AZ KPXQ-AM(3) 15 $5,000,000
September Louisville,KY WLSY-FM 52 $5,000,000(4)
WRVI-FM

In 1999, we completed the purchase of the following other media
businesses:

PURCHASE
DATE ENTITY PRICE
------- -------------------------------- -----------
January OnePlace $ 6,150,000
January CCM Communications, Inc. 1,886,000
March Christian Research Report 300,000
August AudioCentral 1,000,000
October Gospel Media Network, Inc. 475,000
November Involved Christian Radio Network 3,000,000
-----------
$12,811,000
===========

- ------------
(1) "MSA" means metropolitan statistical area.

(2) Acquired from Sonsinger, Inc., a corporation owned by Messrs. Atsinger and
Epperson.

(3) KPXQ-AM formerly had been known as KCTK-AM, KGME-AM and KFDJ-AM.

(4) Combined purchase price for WLSY-FM and WRVI-FM.

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RADIO STATIONS

After completing our pending transactions, we will own and operate 70
radio stations in 32 markets. The following table sets forth information about
each of Salem's stations in order of market size:

MSA STATION
MARKET(1) RANK(2) CALL LETTERS YEAR ACQUIRED
- --------- ------- ------------ -------------
New York, NY(3).................. 1 WMCA-AM 1989
WWDJ-AM 1994
Los Angeles, CA.................. 2 KKLA-FM 1985
KIEV-AM 1998
KLTX-AM 1986
KEZY-AM (4)
KXMX-FM (4)
Chicago, IL...................... 3 WYLL-FM 1990
San Francisco, CA................ 4 KFAX-AM 1984
KJQI-FM 2000
Philadelphia, PA................. 5 WFIL-AM 1993
WZZD-AM 1994
Dallas-Ft. Worth, TX............. 6 KWRD-FM 1996
KSKY-AM (5)
KDGE-FM (4)
Boston, MA....................... 8 WEZE-AM 1997
Washington, D.C.................. 9 WAVA-FM 1992
WABS-AM 2000
Houston-Galveston, TX............ 10 KKHT-FM 1995
KENR-AM 1995
KTEK-AM 1998
Atlanta, GA...................... 11 WNIV-AM 2000
WLTA-AM 2000
WGKA-AM (6)
Seattle-Tacoma, WA............... 13 KGNW-AM 1985
KLFE-AM 1994
KKOL-AM 1999
KAZJ-AM 1999
KKMO-AM 1998
San Diego, CA.................... 14 KPRZ-AM 1986
KCBQ-AM (7)
Phoenix, AZ...................... 15 KCTK-AM 1996
KPXQ-AM 1999
Minneapolis-St. Paul, MN......... 16 KKMS-AM 1996
KYCR-AM 1998
Baltimore, MD.................... 19 WITH-AM(8) 1997
Pittsburgh, PA................... 21 WORD-FM 1993
WPIT-AM 1993
Denver-Boulder, CO............... 22 KRKS-FM 1993
KRKS-AM 1994
KBJD-AM 1999
KNUS-AM 1996
KALC-FM (4)

<PAGE> 6

MSA STATION
MARKET(1) RANK(2) CALL LETTERS YEAR ACQUIRED
- --------- ------- ------------ -------------
Cleveland, OH.................... 23 WHK-AM 1997
WCCD-AM 1997
WRMR-AM (4)
WKNR-AM (4)
Portland, OR..................... 24 KPDQ-FM 1986
KPDQ-AM 1986
Cincinnati, OH................... 25 WTSJ-AM 1997
WBOB-AM (4)
WYGY-FM (4)
Riverside-San Bernardino, CA..... 27 KLTH-AM(9) 1986
Sacramento, CA................... 28 KFIA-AM 1995
KTKZ-AM 1997
San Antonio, TX.................. 31 KSLR-AM 1994
Columbus, OH..................... 33 WRFD-AM 1982
Nashville, TN.................... 42 WBOZ-FM (10)
WVRY-FM (10)
Louisville, KY................... 52 WLSY-FM 1999
WRVI-FM 1999
Honolulu, HI..................... 59 KAIM-AM 2000
KAIM-FM 2000
KGU-AM 2000
KHNR-AM 2000
Akron, OH........................ 67 WHLO-AM 1997
Colorado Springs, CO............. 93 KGFT-FM 1996
KBIQ-FM 1996
KPRZ-FM 1996(5)
Oxnard, CA....................... 107 KDAR-FM 1974
Canton, OH....................... 122 WHK-FM(11) 1997

- ------------------
(1) Actual city of license may differ from metropolitan market served.

(2) "MSA" means metropolitan statistical area. We have obtained all Metro
Survey rank information used in this report from the Fall 1999 Radio
Market Survey Schedule & Population Rankings published by The Arbitron
Company, excluding the Commonwealth of Puerto Rico. According to the Radio
Market Survey, the population estimates used were based upon 1990 U.S.
Bureau Census estimates updated and projected to January 1, 2000 by Market
Statistics, based on the data from Sales & Marketing Management's 1998
Survey of Buyer Power.

(3) This market includes the Nassau-Suffolk, NY Metro market which
independently has a MSA rank of 17.

(4) A contract to acquire KEZY-AM, KXMX-FM, KDGE-FM, KALC-FM, WRMR-AM,
WKNR-AM, WBOB-AM and WYGY-FM for $185.6 million has been signed and
regulatory approval of the acquisition is pending.

(5) A contract to exchange Salem's station KPRZ-AM and $7.5 million for
KSKY-AM has been signed and FCC approval of the transaction is pending.

(6) A contract to acquire WGKA-AM for $8.0 million has been signed. The FCC
has approved the acquisition.

(7) The company operates KCBQ-AM under a local marketing agreement. The
company has an option to purchase this station.

(8) WITH-AM is simulcast with WAVA-FM, Washington, D.C.

(9) KLTH-AM is simulcast with KLTX-AM, Los Angeles.

(10) A contract to acquire 100% of the stock of Reach Satellite Network, Inc.,
licensee of radio stations WBOZ-FM and WVRY-FM, for $3.1 million has been
signed. The FCC has approved the acquisition.

(11) WHK-FM is simulcast with WHK-AM, Cleveland.

<PAGE> 7

PROGRAM REVENUE. For the year ended December 31, 1999, we derived 32.9%
and 16.6% of our gross revenue, or $31.3 million and $15.8 million,
respectively, from the sale of nationally syndicated and local block program
time. We derive nationally syndicated program revenue from a programming
customer base consisting primarily of geographically diverse, well-established
non-profit religious and educational organizations that purchase time on
stations in a large number of markets in the United States. Nationally
syndicated program producers typically purchase 13, 26 or 52 minute blocks on a
Monday through Friday basis and may offer supplemental programming for weekend
release. We obtain local program revenue from community organizations and
churches that typically purchase time primarily for weekend release and from
local speakers who purchase daily releases. We have been successful in assisting
quality local programs to expand into national syndication.

ADVERTISING REVENUE. For the year ended December 31, 1999, we derived
31.2% of our gross revenue, or $29.7 million from the sale of local spot
advertising and 6.1% of our gross revenue, or $5.9 million from the sale of
national spot advertising.

OPERATIONS. Each of the radio markets in which we have a presence has a
general manager who is responsible for day-to-day operations, local spot
advertising sales and, where applicable, local program sales for all of our
stations in the market. We pay our general managers a base salary plus a
percentage of the respective station's net operating income. For each station we
also have a staff of full and part-time engineering, programming and sales
personnel. We pay our sales staff on a commission basis.

We have decentralized our operations in response to the rapid growth we
have experienced in recent years. Our operations vice presidents, some of whom
are also station general managers, oversee several markets on a regional basis.
Our operations vice presidents are experienced radio broadcasters with expertise
in sales, programming and production. We will continue to rely on this strategy
of decentralization and encourage operations vice presidents to apply innovative
techniques to the operations they oversee which, if successful, can be
implemented in our other stations.

Our corporate headquarters personnel oversee the placement and rate
negotiation for all nationally syndicated programs. Centralized oversight of
this component of company revenue is necessary because our key program customers
purchase time in many of our markets. Corporate headquarters personnel also are
responsible for centralized reporting and financial functions, benefits
administration, engineering oversight and other support functions designed to
provide resources to local management.

We believe that the listening audiences for our radio stations
formatted with our primary format, which provide the financial support for
program producers purchasing time on these stations, are responsive to affinity
advertisers that promote products targeted to audiences interested in religious
and family issues and are receptive to direct response appeals such as those
offered through infomercials. All of

<PAGE> 8

such stations have affinity advertising customers in their respective markets.
Local church groups and many community organizations such as rescue missions and
family crisis support services can often effectively reach their natural
constituencies by advertising on religious format stations. Advertising is also
purchased by local and nationally affiliated religious bookstores, publishers
specializing in inspirational and religious literature and other businesses that
desire to specifically target audiences interested in religious and family
issues. Our stations generate spot advertising revenue from general market
advertisers, including automobile dealers, Internet companies and grocery store
chains.

SALEM RADIO NETWORK(R)

In 1993, we established Salem Radio Network(R) in connection with our
acquisition of certain assets of the former CBN Radio Network. Establishment of
Salem Radio Network(R) was a part of our overall business strategy to develop a
national network of affiliated radio stations anchored by our owned and operated
radio stations in major markets. Salem Radio Network(R) which is headquartered
in Dallas, develops, produces and syndicates a broad range of programming
specifically targeted to religious and family issues talk and music stations as
well as general market news/talk stations. Currently, we have rights to eight
full-time satellite channels and all Salem Radio Network(R) product is delivered
to affiliates via satellite.

After completing our pending transactions, Salem Radio Network(R) will
have more than 1,300 affiliate stations, including our owned and operated
stations, that broadcast one or more of the offered programming options. These
programming options feature talk shows, news and music. Network operations also
include commission revenue of Salem Radio Representatives from unaffiliated
customers and an allocation of operating expenses estimated to relate to such
commissions. Salem Radio Representatives, a wholly owned subsidiary of Salem,
sells all national commercial advertising placed on Salem Radio Network's
commercial affiliate radio stations. Salem Radio Network's gross revenue for the
year ended December 31, 1999 was $2.4 million. Salem Radio Network(R) incurred a
net operating loss of $0.8 million for the year ended December 31, 1999.

SALEM RADIO REPRESENTATIVES. We established Salem Radio Representatives
in 1992 as a sales representation company specializing in placing national
advertising on religious format radio stations. Salem Radio Network(R) has an
exclusive relationship with Salem Radio Representatives for the sale of
available Salem Radio Network(R) spot advertising. Salem Radio Representatives
receives a commission on all Salem Radio Network(R) sales. Salem Radio
Representatives also contracts with individual radio stations to sell air time
to national advertisers desiring to include selected company stations in
national buys covering multiple markets.

OTHER MEDIA

INTERNET. In January 1999, we purchased the assets of OnePlace, LLC for
$6.2 million. OnePlace provides Christian supply catalogs in print and online,
church management software and support, and Internet c-commerce and web site
development services.

8
<PAGE> 9
PUBLISHING. In January 1999, we purchased CCM Communications, Inc.
for $1.9 million. CCM, based in Nashville, Tennessee, has published
magazines since 1978 which follow the contemporary Christian music industry.
CCM's flagship publication, CCM Magazine(R), is a monthly music magazine
offering interviews with artists, issue-oriented features, album reviews and
concert schedules. Through CCM's trade publications, we are uniquely positioned
to track contemporary Christian music audience trends.

SATELLITE RADIO. In August 1998 we expanded our reach by entering into
an exclusive agreement with XM Satellite Radio, Inc. to develop, produce, supply
and market religious and family issues audio programming which will be
distributed by a subscriber-based satellite digital audio radio service. XM
Satellite Radio, Inc. is one of two FCC licensees for this service (which is
expected to commence in the year 2001) and it will have the capability of
providing up to 100 channels of audio programming. We have agreed to provide
religious and family issues talk programming on one channel and youth and adult
religious music programming on two additional channels.

COMPETITION

RADIO. The radio broadcasting industry, including the religious and
family issues format segment of this industry, is a highly competitive business.
The financial success of each of our radio stations that features the religious
and family issues format is dependent, to a significant degree, upon its ability
to generate revenue from the sale of block program time to national and local
religious and educational organizations. We compete for this program revenue
with a number of different commercial and noncommercial radio station licensees.
While no group owner in the United States specializing in the religious format
approaches Salem in size of potential listening audience and presence in major
markets, religious format stations exist and enjoy varying degrees of prominence
and success in all markets.

We also compete for revenue in the spot advertising market with other
commercial religious format and general format radio station licensees. We
compete in the spot advertising market with other media as well, including
broadcast television, cable television, newspapers, magazines, direct mail and
billboard advertising.

Competition may also come from new media technologies and services that
are being developed or introduced. These include delivery of audio programming
by cable television and satellite systems, digital audio radio services, the
Internet, personal communications services and the authorization by the FCC of a
new service of low powered, limited coverage FM radio stations. Digital audio
broadcasting may deliver multiformat digital radio services by satellite to
national and regional audiences. The quality of programming delivered by digital
audio broadcasting would be equivalent to compact disc.

The delivery of live and stored audio programming through the Internet
has also created new competition. In addition, the anticipated commencement of
satellite delivered digital audio radio services, which are intended to deliver
multiple audio programming formats to local and national audiences, may create
additional competition. We have attempted to address these existing and
potential competitive threats through our Internet acquisition and through our
exclusive arrangement to provide religious and family issues talk and music
formats on one of the two FCC licensees of satellite digital audio radio
services.

<PAGE> 10

NETWORK. Salem Radio Network(R) competes with other commercial radio
networks that offer news and talk programming to religious and general format
stations and two noncommercial networks that offer religious music formats.
Salem Radio Network(R) also competes with other radio networks for the services
of talk show personalities.

OTHER MEDIA. Our magazines compete for readers and advertisers with
other publications that follow the religious music industry and publications
that address issues of interest to church leadership. Our Internet business
competes with other companies that deliver on-line audio programming and with
web sites that offer content and e-commerce capabilities, such as Amazon.com,
whose product offerings include religious books and music.

EMPLOYEES

At March 1, 2000, Salem employed 665 full-time and 320 part-time
employees. None of Salem's employees are covered by collective bargaining
agreements, and we consider our relations with our employees to be good.

ITEM 2. PROPERTIES.

The types of properties required to support our radio stations include
offices, studios and tower and antenna sites. A station's studios are generally
housed with its office in a downtown or business district. We generally select
our tower and antenna sites to provide maximum market coverage. Our network
operations are supported by offices and studios from which its programming
originates or is relayed from a remote point of origination. The operations of
our other media businesses are supported by office facilities.

Our radio stations' studios and offices, our network's operations, the
operations of our other media businesses and our corporate headquarters are
located in leased facilities. Our network leases satellite transponders used for
delivery of its programming. We either own or lease our radio station tower and
antenna sites. We do not anticipate difficulties in renewing those leases that
expire within the next several years or in obtaining other lease arrangements,
if necessary.

We lease certain property from the principal stockholders or trusts and
partnerships created for the benefit of the principal stockholders and their
families. See "Certain Relationships and Related Transactions." All such leases
have cost of living adjustments. Based upon our management's assessment and
analysis of local market conditions for comparable properties, we believe such
leases do not have terms that vary materially from those that would have been
available from unaffiliated parties.

No one property is material to our overall operations. We believe that
our properties are in good condition and suitable for our operations; however,
we continually evaluate opportunities to upgrade our properties. We own
substantially all of our equipment, consisting principally of transmitting
antennae, transmitters, studio equipment and general office equipment.

<PAGE> 11

ITEM 3. LEGAL PROCEEDINGS.

We are involved in various routine legal proceedings incident to the
ordinary course of our business. We believe that the outcome of all pending
legal proceedings in the aggregate will not have a material adverse effect on
our consolidated financial condition or our results of operations.

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

On May 25, 1999, at a special telephonic meeting, the security holders
of the company gave their unanimous consent to re-elect as directors of the
company Edward G. Atsinger III, Stuart W. Epperson, Eric H. Halvorson, Richard
A. Riddle, Roland S. Hinz, and to elect two new directors, Joseph S. Schuchert
and Donald P. Hodel, as well as to adopt and approve the company's 1999 stock
incentive plan.

On April 16, 1999, at a special telephonic meeting, the security
holders of the company gave their unanimous consent to the adoption of an
amended and restated certificate of incorporation as of March 31, 1999, its
further amendment by an amended and restated certificate of incorporation filed
with the Delaware Secretary of State on May 19, 1999 and the initial public
offering of Class A common stock.

No other matters have been submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the period covered by
this report.

<PAGE> 12

PART II

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

The Company's Class A common stock is traded on the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ-NMS") under the symbol SALM. At March 23, 2000, the
Company had approximately 25 shareholders of record (not including the number of
persons or entities holding stock in nominee or street name through various
brokerage firms) and 17,902,392 outstanding shares of Class A common stock and
5,553,696 outstanding shares of Class B common stock. The following table sets
forth for the fiscal quarters indicates the range of high and low bid
information per share of the Class A common stock of the Company as reported on
the NASDAQ-NMS since July 1, 1999, the date the Company's Class A common stock
first became publicly traded.

1999
-------------------------------
4TH QUARTER 3RD QUARTER
----------- -----------
High.................... 30 31 1/8
Low..................... 16 1/8 21 3/8

There is no established public trading market for the Company's Class B
common stock.

DIVIDEND POLICY

No cash dividends were declared for any class of common equity in the
last two fiscal years. The company intends to retain future earnings for use in
its business and does not anticipate declaring or paying any dividends on shares
of the company's Class A or Class B common stock in the foreseeable future.
Further, the company's board of directors will make any determinations to
declare and pay dividends in light of the company's earnings, financial
position, capital requirements, agreements for our outstanding debt and such
other factors as the board of directors deems relevant.

The company's sole source of cash from which to make dividend payments
will be dividends paid to the company or payments made to the company by its
subsidiaries. The ability of the subsidiaries to make such payments may be
restricted by applicable state laws or terms of agreements to which they are or
may become a party.

<PAGE> 13

ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION.

Salem's selected historical statement of operations and balance sheet
data presented below as of and for the years ended December 31, 1995, 1996,
1997, 1998 and 1999 are derived from the audited consolidated financial
statements of Salem. The consolidated financial statements as of December 31,
1998 and 1999 and for each of the years in the three-year period ended December
31, 1999, and the independent auditors' report thereon, are included elsewhere
in this report. Salem's financial results are not comparable from period to
period because of our acquisition and disposition of radio stations and our
acquisition of other media businesses. The selected consolidated financial
information below should be read in conjunction with, and is qualified by
reference to, our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this report.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
(EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net broadcasting revenue ................ $ 48,168 $ 59,010 $ 67,912 $ 77,891 $ 87,122
Other media revenue ..................... -- -- -- -- 6,424
---------- ---------- ---------- ---------- ----------
Total revenue ........................... 48,168 59,010 67,912 77,891 93,546

Operating expenses:
Broadcasting operating expenses ....... 27,527 33,463 39,626 42,526 46,291
Other media operating expenses ........ -- -- -- -- 9,985
Corporate expenses .................... 3,799 4,663 6,210 7,395 8,507
Stock and related cash grant........... -- -- -- -- 2,550
Tax reimbursements to S corporation
shareholders(1) ...................... 2,057 2,038 1,780 -- --
Depreciation and amortization ......... 7,884 8,394 12,803 14,058 18,233
---------- ---------- ---------- ---------- ----------
Total operating expenses ................ 41,267 48,558 60,419 63,979 85,566
---------- ---------- ---------- ---------- ----------
Net operating income .................. 6,901 10,452 7,493 13,912 7,980

Other income (expense):
Interest income ....................... 319 523 230 291 1,005
Gain (loss) on disposal of assets ..... (7) 16,064 4,285 236 (219)
Interest expense ...................... (6,646) (7,361) (12,706) (15,941) (14,219)
Other expense ......................... (255) (270) (389) (422) (633)
---------- ---------- ---------- ---------- ----------
Total other income (expense) ............ (6,589) 8,956 (8,580) (15,836) (14,066)
Income (loss) before income taxes
and extraordinary item ................ 312 19,408 (1,087) (1,924) (6,086)
Provision (benefit) for income taxes .... (204) 6,655 106 (343) (1,611)
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary item . 516 12,753 (1,193) (1,581) (4,475)
Extraordinary loss(2) ................... (394) -- (1,185) -- (3,570)
---------- ---------- ---------- ---------- ----------
Net income (loss) ....................... $ 122 $ 12,753 $ (2,378) $ (1,581) $ (8,045)
========== ========== ========== ========== ==========
Pro forma net income (loss)(1) .......... $ 1,024 $ 12,838 $ (770)
========== ========== ==========
Basic and diluted income (loss) per
share before extraordinary item ........ $ 0.03 $ 0.77 $ (0.07) $ (0.09) $ (0.22)
========== ========== ========== ========== ==========
Basic and diluted net income (loss)
per share(3) ........................... $ 0.01 $ 0.77 $ (0.14) $ (0.09) $ (0.40)
========== ========== ========== ========== ==========
Pro forma basic and diluted income
(loss) per share before extraordinary
item ................................... $ 0.09 $ 0.77 $ 0.02
========== ========== ==========
Pro forma basic and diluted net income
(loss) per share ....................... $ 0.06 $ 0.77 $ (0.05)
========== ========== ==========
Basic and diluted weighted average
shares outstanding(3) .................. 16,661,088 16,661,088 16,661,088 16,661,088 20,066,006
========== ========== ========== ========== ==========
Other Data:
Broadcast cash flow(4) .................. $ 20,641 $ 25,547 $ 28,286 $ 35,365 $ 40,831
Broadcast cash flow margin(5) ........... 42.9% 43.3% 41.7% 45.4% 46.9%
EBITDA(4) ............................... $ 16,842 $ 20,884 $ 22,076 $ 27,970 $ 28,763
After-tax cash flow(4) .................. 9,306 11,594 10,647 12,335 15,809
Cash flows related to:
Operating activities .................. $ 7,681 $ 10,495 $ 7,314 $ 11,015 $ 8,204
Investing activities .................. (27,681) (18,923) (26,326) (31,762) (35,159)
Financing activities .................. 19,227 9,383 18,695 21,019 59,162
</TABLE>

<PAGE> 14

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents .................. $ 1,007 $ 1,962 $ 1,645 $ 1,917 $ 34,124
Total assets ............................... 104,817 159,185 184,813 207,750 264,364
Long-term debt, less current portion ....... 81,020 121,790 154,500 178,610 100,087
Stockholders' equity ....................... 13,282 20,354 10,682 9,101 142,839
</TABLE>

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

(1) Tax reimbursements to S corporation shareholders represent the income tax
liabilities of our principal stockholders created by the income of New
Inspiration and Golden Gate, which were both S corporations prior to our
August 1997 reorganization. Pro forma net income (loss) excludes tax
reimbursements to S corporation shareholders and includes a pro forma tax
provision at an estimated combined federal and state income tax rate of 40%
as if the reorganization had occurred at the beginning of each period
presented. In August 1997, New Inspiration and Golden Gate became
wholly-owned subsidiaries of Salem. From this date, pretax income of New
Inspiration and Golden Gate is included in our computation of the income tax
provision included in our consolidated statements of operations. See notes 1
and 7 to our consolidated financial statements.

The following table reflects the pro forma adjustments to historical net
income for the periods prior to and including our August 1997
reorganization:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Pro Forma Information:
Income (loss) before income taxes and extraordinary item
as reported above ........................................... $ 312 $19,408 $(1,087)
Add back tax reimbursements to S corporation shareholders .... 2,057 2,038 1,780
------ ------- -------
Pro forma income (loss) before income taxes and
extraordinary item .......................................... 2,369 21,446 693
Pro forma provision (benefit) for income taxes ............... 951 8,608 278
------ ------- -------
Pro forma income (loss) before extraordinary item ............ 1,418 12,838 415
Extraordinary loss ........................................... (394) -- (1,185)
------ ------- -------
Pro forma net income (loss) .................................. $1,024 $12,838 $ (770)
====== ======= =======
</TABLE>

(2) The extraordinary loss in each of 1995, 1997 and 1999 relates to the
write-off of deferred financing costs and termination fees related to the
repayment of long-term debt. See note 5 to our consolidated financial
statements.

(3) See note 1 to our consolidated financial statements.

(4) We define broadcast cash flow as net operating income, excluding other media
revenue and other media operating expenses, before depreciation and
amortization and corporate expenses. We define EBITDA as net operating
income before depreciation and amortization. We define after-tax cash flow
as income (loss) before extraordinary item minus gain (loss) on disposal of
assets (net of income tax) plus depreciation and amortization. EBITDA and
after-tax cash flow for the year ended December 31, 1999 excludes a $2.6
million charge ($1.9 million, net of income tax) for a one-time stock grant
concurrent with our initial public offering. For periods prior to 1998,
broadcast cash flow and EBITDA are calculated using net operating income
before tax reimbursements to S corporation shareholders. For periods prior
to 1998, after-tax cash flow excludes reimbursements to S corporation
shareholders and includes a pro forma tax provision at an estimated combined
federal and state income tax rate of 40% as if the reorganization had
occurred at the beginning of each period presented.

Although broadcast cash flow, EBITDA and after-tax cash flow are not
measures of performance calculated in accordance with generally accepted
accounting principles, we believe that they are useful because they are
measures widely used in the radio broadcast industry to evaluate a radio
company's operating performance. However, you should not consider broadcast
cash flow, EBITDA and after-tax cash flow in isolation or as substitutes
for net income, cash flows from operating activities and other statement of
operations or cash flows data prepared in accordance with generally
accepted accounting principles as a measure of liquidity or profitability.
These measures are not necessarily comparable to similarly titled measures
employed by other companies.

(5) Broadcast cash flow margin is broadcast cash flow as a percentage of net
broadcasting revenue.

<PAGE> 15

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

GENERAL

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this report. Our
consolidated financial statements are not directly comparable from period to
period because of our acquisition and disposition of radio stations and our
acquisition of other media businesses. See note 2 to our consolidated financial
statements.

Historically, the principal sources of our revenue have been:

- the sale of block program time, both to national and local program
producers,

- the sale of advertising time on our radio stations, both to national
and local advertisers, and

- the sale of advertising time on our national radio network.

In 1999, we expanded our sources of revenue and product offerings with
the acquisition of other media businesses.

The following table shows gross broadcasting revenue, the percentage of
gross broadcasting revenue for each broadcasting revenue source and net
broadcasting revenue.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1997 1998 1999
---------------- ---------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Block program time:
National.................. $27,664 37.0% $29,506 34.5% $31,317 32.9%
Local..................... 11,392 15.2 13,389 15.7 15,816 16.6
------- ----- ------- ----- ------- -----
39,056 52.2 42,895 50.2 47,133 49.5
Advertising:
National.................. 3,621 4.8 4,458 5.2 5,855 6.1
Local..................... 21,143 28.3 26,106 30.6 29,686 31.2
------- ----- ------- ----- ------- -----
24,764 33.1 30,564 35.8 35,541 37.3
Infomercials................ 3,819 5.1 4,121 4.8 3,764 4.0
Salem Radio Network......... 6,186 8.3 6,053 7.1 6,983 7.3
Other....................... 1,005 1.3 1,778 2.1 1,856 1.9
------- ----- ------- ----- ------- -----
Gross broadcasting revenue.. 74,830 100.0% 85,411 100.0% 95,277 100.0%
===== ===== =====
Less agency commissions..... 6,918 7,520 8,155
------- ------- -------
Net broadcasting revenue.... $67,912 $77,891 $87,122
======= ======= =======
</TABLE>

Our broadcasting revenue is affected primarily by the program rates our
radio stations charge and by the advertising rates our radio stations and
network charge. The rates for block program time are based upon our stations'
ability to attract audiences that will support the program producers through
contributions and purchases of their products. Advertising rates are based upon
the demand for advertising time, which in turn is based on our stations' and
network's ability to produce results for its advertisers. Historically we have
not subscribed to traditional audience measuring services. Instead, we have
marketed ourselves to advertisers based upon the responsiveness of our audience.
See "Business - Radio Stations." Each of our radio stations and our network have
a general pre-determined level of time that they make available for block
programs and/or advertising, which may vary at different times of the day.

In recent years, we have begun to place greater emphasis on the
development of local advertising in all of our markets. We encourage general
managers and sales managers to increase advertising revenue. We can create
additional advertising revenue in a variety of ways, such as removing block
programming that generates marginal audience response, adjusting the start time
of programs to add advertising in more desirable time slots and increasing
advertising rates.

As is typical in the radio broadcasting industry, our second and fourth
quarter advertising revenue generally exceeds our first and third quarter
advertising revenue. Quarterly revenue from the sale of block program time does
not tend to vary, however, since program rates are generally set annually.

Our cash flow is affected by a transition period experienced by radio
stations we have acquired when, due to the nature of the radio station, our
plans for the market and other circumstances, we find it beneficial or advisable
to change its format.

15
<PAGE> 16

This transition period is when we develop a radio station's customer and
listener base. During this period, a station will typically generate negative or
insignificant cash flow.

In the broadcasting industry, radio stations often utilize trade or
barter agreements to exchange advertising time for goods or services (such as
other media advertising, travel or lodging), in lieu of cash. In order to
preserve the sale of our advertising time for cash, we generally enter into
trade agreements only if the goods or services bartered to us will be used in
our business. We have minimized our use of trade agreements and have generally
sold most of our advertising time for cash. In 1999, we sold 92% of our
advertising time for cash. In addition, it is our general policy not to preempt
advertising paid for in cash with advertising paid for in trade.

The primary operating expenses incurred in the ownership and operation
of our radio stations include employee salaries and commissions, and facility
expenses (for example, rent and utilities). In addition to these expenses, our
network incurs programming costs and lease expenses for satellite communication
facilities. We also incur and will continue to incur significant depreciation,
amortization and interest expense as a result of completed and future
acquisitions of radio stations and existing and future borrowings.

OnePlace earns its revenue from the (1) sales of and advertising in
print and online catalogs, (2) sales of software and software support
contracts, (3) sales of products, services and banner advertising on the
Internet, and (4) sales of web site development services. CCM earns its revenue
by selling advertising in and subscriptions to its publications. The revenue and
related operating expenses of these businesses are reported as "other media" on
our condensed consolidated statements of operations.

Our consolidated statements of operations for periods prior to 1998
have included an operating expense called "tax reimbursements to S corporation
shareholders." These amounts represent the income tax liabilities of our
principal stockholders created by the income of New Inspiration and Golden Gate,
which were both S corporations prior to our August 1997 reorganization. We
consider the nature of this operating expense to be essentially equivalent to an
income tax provision. In August 1997, New Inspiration and Golden Gate became
wholly-owned subsidiaries of Salem. From this date, pretax income of New
Inspiration and Golden Gate is included in our consolidated income tax return
and in our computation of the income tax provision included in our consolidated
statements of operations.

The performance of a radio broadcasting company, such as Salem, is
customarily measured by the ability of its stations to generate broadcast cash
flow and EBITDA. We define broadcast cash flow as net operating income,
excluding other media revenue and other media operating expenses, before
depreciation and amortization and corporate expenses. We define EBITDA as net
operating income before depreciation and amortization. We define after-tax cash
flow as income (loss) before extraordinary item minus gain (loss) on disposal
of assets (net of income tax) plus depreciation and amortization. EBITDA and
after-tax cash flow for the year ended December 31, 1999 excludes a $2.6 million
charge ($1.9 million, net of income tax) for a one-time stock grant concurrent
with our initial public offering on June 30, 1999. For periods prior to 1998,
broadcast cash flow and EBITDA are calculated using net operating income before
tax reimbursements to S corporation shareholders. For periods prior to 1998,
after-tax cash flow is calculated as if New Inspiration and Golden Gate were C
corporations for each of these periods. This means that after-tax cash flow
excludes tax reimbursements to S corporation shareholders and includes a pro
forma tax provision at an estimated combined federal and state income tax rate
of 40% as if the reorganization had occurred at the beginning of each period
presented.

Although broadcast cash flow, EBITDA and after-tax cash flow are not
measures of performance calculated in accordance with generally accepted
accounting principles, and should be viewed as a supplement to and not a
substitute for our results of operations presented on the basis of generally
accepted accounting principles, we believe that broadcast cash flow, EBITDA and
after-tax cash flow are useful because they are generally recognized by the
radio broadcasting industry as measures of performance and are used by analysts
who report on the performance of broadcast companies. These measures are not
necessarily comparable to similarly titled measures employed by other companies.

<PAGE> 17

In the following discussion of our results of operations, we compare
our results between periods on an as reported basis (that is, the results of
operations of all radio stations and network formats owned or operated at any
time during either period) and on a "same station" basis. We include in our same
station comparisons the results of operations of radio stations and network
formats that:

- we own or operate for all of both periods;

- we acquire or begin to operate at any time after the beginning of the
first relevant comparison period if the station or network format (i)
is in a market in which we already own or operate a radio station or
network format and (ii) is integrated with the existing station or
network format for our internal financial reporting purposes; or

- we sell or cease to operate at any time after the beginning of the
first relevant comparison period if the station or network format (i)
was integrated with another station or network format in a market for
our internal financial reporting purposes prior to the sale or
cessation of operations and (ii) we continue to own or operate the
other station or network format following the sale or cessation of
operations.

We include in our same station comparisons the results of operations of our
integrated stations and network formats from the date that we acquire or begin
to operate them or through the date that we sell or cease to operate them, as
the case may be.

RESULTS OF OPERATIONS.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET BROADCASTING REVENUE. Net broadcasting revenue increased $9.2
million or 11.8% to $87.1 million in 1999 from $77.9 million in 1998. The
inclusion of revenue from the acquisitions of radio stations and revenue
generated from local marketing agreements entered into during 1999 and 1998,
partially offset by the loss of revenue from radio stations sold in 1998,
provided $1.9 million of the increase. On a same station basis, net revenue
improved $7.3 million or 9.6% to $83.1 million in 1999 from $75.8 million in
1998. Included in the same station comparison are the results of two stations
that we began to own or operate in 1999 for a total purchase price of $1.8
million, and three stations that we acquired in 1998 for a total purchase price
of $3.1 million. The improvement was primarily due to an increase in revenue at
the radio stations we acquired in 1997 that previously operated with formats
other than their current format, an increase in program rates and an increase in
advertising time and improved selling efforts at both the national and local
level. Revenue from advertising as a percentage of our gross revenue increased
to 37.3% in 1999 from 35.8% in 1998. Revenue from block program time as a
percentage of our gross revenue decreased to 49.5% in 1999 from 50.2% in 1998.
This change in our revenue mix is primarily due to our continued efforts to
develop more local advertising sales in all of our markets.

OTHER MEDIA REVENUE. Other media revenue was $6.4 million for the year
ended December 31, 1999 and was generated from businesses acquired in 1999.

BROADCASTING OPERATING EXPENSES. Broadcasting operating expenses
increased $3.8 million or 8.9% to $46.3 million in 1999 from $42.5 million in
1998. The inclusion of expenses from the acquisitions of radio stations and
expenses incurred for local marketing agreements entered into during 1999 and
1998, partially offset by the exclusion of operating expenses from radio
stations sold in 1998, accounted for $1.4 million of the increase. On a same
station basis, broadcasting operating expenses

17
<PAGE> 18

increased $2.4 million or 5.8% to $43.9 million in 1999 from $41.5 million in
1998, primarily due to incremental selling and production expenses incurred to
produce the increased revenue in the period. The difference between 1999 and
1998 broadcasting operating expenses was increased by a one-time credit of
$453,000 that we recorded in 1998. The credit related to music licensing fees
and represented the proceeds of a settlement between us and the two largest
performance rights organizations.

OTHER MEDIA OPERATING EXPENSES. Other media operating expenses were
$10.0 million for the year ended December 31, 1999 and were incurred in the
businesses acquired in 1999.

BROADCAST CASH FLOW. Broadcast cash flow increased $5.4 million or
15.3% to $40.8 million in 1999 from $35.4 million in 1998. As a percentage of
net broadcasting revenue, broadcast cash flow increased to 46.8% in 1999 from
45.4% in 1998. The increase is primarily attributable to the improved
performance of radio stations acquired in 1997 and 1998 that previously operated
with formats other than their current format, offset by a one-time credit for
music licensing fees in 1998. Acquired and reformatted radio stations typically
produce low margins during the first few years following conversion. Broadcast
cash flow margins improve as we implement scheduled program rate increases and
increase advertising revenue on our stations. On a same station basis, broadcast
cash flow improved $4.9 million or 14.3% to $39.2 million in 1999 from $34.3
million in 1998.

CORPORATE EXPENSES. Corporate expenses increased $1.1 million or 14.9%
to $8.5 million in 1999 from $7.4 million in 1998, primarily due to an increase
in bonuses of $300,000 in 1999 as compared to 1998, an increase in executive
officer compensation of $340,000 as compared to 1998, public reporting costs of
$200,000 and additional personnel and overhead costs associated with radio
station and other media acquisitions in 1999.

EBITDA. EBITDA increased $800,000 or 2.9% to $28.8 million in 1999 from
$28.0 million in 1998. As a percentage of total revenue, EBITDA decreased to
30.8% in 1999 from 35.9% in 1998. EBITDA was negatively impacted by the results
of operations of our other media businesses acquired during 1999, which
generated a net loss before depreciation and amortization of $3.6 million during
the year. EBITDA excluding the other media businesses increased $4.3 million or
15.4% to $32.3 million in 1999 from $28.0 million in 1998. As a percentage of
net broadcasting revenue, EBITDA excluding the other media businesses increased
to 37.1% in 1999 from 35.9% in 1998. The increase is primarily attributable to
the improved performance of radio stations acquired in 1997 and 1998 that
previously operated with formats other than their current format.

DEPRECIATION AND AMORTIZATION. Depreciation expense increased $2.3
million or 53.5% to $6.6 million in 1999 from $4.3 million in 1998. Amortization
expense increased $1.8 million or 18.4% to $11.6 million in 1999 from $9.8
million in 1998. The increases were primarily due to radio station and other
media acquisitions consummated during 1999 and 1998.

OTHER INCOME (EXPENSE). Interest income increased $700,000 to $1.0
million in 1999 from $300,000 in 1998. The increase is primarily due to the
interest earned on the investment of the net proceeds received on our initial
public offering in July 1999. Interest expense decreased $1.7 million or 10.7%
to $14.2 million in 1999 from $15.9 million in 1998. The decrease is primarily
due to interest expense associated with $50 million in principal amount of the
senior subordinated notes repurchased in July 1999 partially offset by interest
expense associated with additional borrowings to fund acquisitions consummated
during 1998 and the first and second quarters of 1999. Other expense increased
$211,000 to $633,000 in 1999 from $422,000 in 1998 primarily due to increased
bank commitment fees.

<PAGE> 19

PROVISION (BENEFIT) FOR INCOME TAXES. Provision (benefit) for income
taxes as a percentage of income (loss) before income taxes and extraordinary
item (that is, the effective tax rate) was (26.5)% for 1999 and (17.8%) for
1998. The effective tax rate in 1999 and 1998 differs from the federal statutory
income tax rate of 34.0% primarily due to the effect of state income taxes
and certain expenses that are not deductible for tax purposes.

NET INCOME (LOSS). We recognized a net loss of $8.0 million in 1999,
compared to a net loss of $1.6 million in 1998. Included in the net loss for
1999 is a $3.6 million extraordinary loss, net of income tax benefit, resulting
from the premium paid on the repurchase of $50 million principal amount of our
senior subordinated notes, the related write-off of a portion of the unamortized
bond issue costs, and the write-off of deferred financing costs related to our
credit facility. Additionally, we incurred a $1.9 million charge, net of income
tax, related to a one-time stock grant concurrent with our initial public
offering on June 30, 1999.

AFTER-TAX CASH FLOW. After-tax cash flow increased $3.5 million or
28.5% to $15.8 million in 1999 from $12.3 million in 1998. This increase was
offset by negative after-tax cash flow of our other media businesses in 1999.
After-tax cash flow excluding other media losses (net of income tax) increased
$5.6 million or 45.5% to $17.9 million from $12.3 million in 1998. The increase
is primarily due to an increase in broadcast cash flow and a decrease in
interest expense.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

NET BROADCASTING REVENUE. Net broadcasting revenue increased $10.0
million or 14.7% to $77.9 million in 1998 from $67.9 million in 1997. The
inclusion of revenue from the acquisitions of radio stations and revenue
generated from local marketing agreements entered into during 1998 and 1997
provided $1.5 million of the increase. On a same station basis, net broadcasting
revenue improved $8.5 million or 12.7% to $75.3 million in 1998 from $66.8
million in 1997. Included in this same station comparison are the results of
three stations that we acquired in 1998 for a total purchase price of $3.1
million, four stations that we acquired or began to operate in 1997 for a total
purchase price of $4.9 million and one station that we sold in 1997 for $5.0
million. The improvement was primarily due to an increase in revenue at the
radio stations we acquired in 1996 that previously operated with formats other
than their current format, an increase in program rates and an increase in
advertising time and improved selling efforts at both the national and local
level. Revenue from advertising as a percentage of our gross broadcasting
revenue increased from 33.1% in 1997 to 35.8% in 1998. Revenue from block
program time as a percentage of our gross revenue decreased from 52.2% in 1997
to 50.2% in 1998. This change in our revenue mix is primarily due to our efforts
to develop more local advertising sales in all of our markets.

BROADCASTING OPERATING EXPENSES. Broadcasting operating expenses
increased $2.9 million or 7.3% to $42.5 million in 1998 from $39.6 million in
1997. The inclusion of expenses from the acquisitions of radio stations and
expenses incurred for local marketing agreements entered into during 1998 and
1997 accounted for $400,000 of the increase. On a same station basis,
broadcasting operating expenses increased $2.5 million or 6.4% to $41.3 million
in 1998 from $38.8 million in 1997, primarily due to incremental selling and
production expenses incurred to produce the increased revenue in the period.
This increase was offset in part by a one-time credit of $453,000 that we
recorded in 1998. The credit related to music licensing fees and represented the
proceeds of a settlement between us and the two largest performance rights
organizations.

BROADCAST CASH FLOW. Broadcast cash flow increased $7.1 million or
25.1% to $35.4 million in 1998 from $28.3 million in 1997. As a percentage of
net broadcasting revenue, broadcast cash flow increased to 45.4% in 1998 from
41.7% in 1997. The increase is primarily attributable to the improved
performance of radio stations acquired in 1996 and 1997 that previously operated
with formats other than their current format and the one-time credit for music
licensing fees. Acquired and reformatted radio stations typically produce low
margins during the first few years following conversion. Broadcast cash flow
margins improve as we implement scheduled program rate increases and increase
advertising revenue on our stations. On a same station basis, broadcast cash
flow improved $6.0 million or 21.4% to $34.0 million in 1998 from $28.0 million
in 1997.

<PAGE> 20

CORPORATE EXPENSES. Corporate expenses increased $1.2 million or 19.4%
to $7.4 million in 1998 from $6.2 million in 1997, primarily due to bonuses
totaling $538,000 paid to our president and to our chairman of the board in 1998
and additional personnel and overhead costs associated with radio station
acquisitions in 1998.

EBITDA. EBITDA increased $5.9 million or 26.7% to $28.0 million in 1998
from $22.1 million in 1997. As a percentage of total revenue, EBITDA increased
to 35.9% in 1998 from 32.5% in 1997. The increase is primarily attributable to
the improved performance of radio stations acquired in 1996 and 1997 that
previously operated with formats other than a religious and family issues format
and the one-time credit for music licensing fees.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $1.3 million or 10.2% to $14.1 million in 1998 from $12.8 million in
1997, primarily due to radio station acquisitions consummated during 1998 and
1997.

OTHER INCOME (EXPENSE). Interest income was essentially unchanged for
1998 compared to 1997. Gain on disposal of assets decreased $4.1 million from
$4.3 million in 1997 to $236,000 in 1998. The gain in 1997 was primarily due to
the sale of WPZE-AM, Boston. Interest expense increased $3.2 million or 25.2% to
$15.9 million in 1998 from $12.7 million in 1997, primarily due to interest
expense associated with additional borrowings to fund acquisitions consummated
during 1998 and 1997. Other expense was essentially unchanged for 1998 compared
to 1997.

<PAGE> 21
PROVISION (BENEFIT) FOR INCOME TAXES. Provision (benefit) for income
taxes as a percentage of income (loss) before income taxes and extraordinary
item (that is, the effective tax rate) was (17.8)% for 1998 and 9.8% for 1997.
The effective tax rate in 1998 differs from the federal statutory income tax
rate of 34.0% primarily because of the effect of state income taxes and certain
expenses that are not deductible for tax purposes. The effective tax rate in
1997 differs from the federal statutory income tax rate of 34.0% primarily
because of the effect of state income taxes and the establishment of a deferred
tax liability of $609,000 resulting from our August 1997 reorganization. These
effects were offset by the inclusion of income from New Inspiration and Golden
Gate, which were S corporations (and therefore not subject to federal income
taxes) prior to the reorganization.

NET LOSS. We recognized a net loss of $1.6 million in 1998, compared to
a net loss of $2.4 million in 1997. Included in the net loss for 1997 is a $1.2
million extraordinary loss for the write-off of deferred financing costs and
termination fees related to the repayment of our prior credit facility which we
repaid in full upon issuance of our senior subordinated notes in September 1997.

AFTER-TAX CASH FLOW. After-tax cash flow increased $1.7 million or
16.0% to $12.3 million in 1998 from $10.6 million in 1997. The increase is
primarily attributable to improved net operating income.

21
<PAGE> 22

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed acquisitions of radio stations through
borrowings, including borrowings under bank credit facilities and, to a lesser
extent, from operating cash flow and selected asset dispositions. We received
net proceeds of $140.1 million from our initial public offering in July 1999,
which was used to pay a portion of our senior subordinated notes and amounts
outstanding under our credit facility. We have historically funded, and will
continue to fund, expenditures for operations, administrative expenses, capital
expenditures and debt service required by our credit facility and senior
subordinated notes from operating cash flow. At December 31, 1999 we had $34.1
million of cash and cash equivalents and positive working capital of $42.0
million.

We will fund future acquisitions from cash on hand, borrowings under
our credit facility and operating cash flow; the aggregate purchase price for
all pending acquisitions exceeds the maximum amount that we may currently borrow
under our credit facility. We are evaluating alternatives to fund these
acquisitions including amending our credit facility to allow a greater debt to
cash flow ratio, selling some of our existing radio stations, and obtaining
bridge financing. We believe that cash on hand, cash flow from operations,
borrowings under our credit facility, proceeds from the sale of some of our
existing radio stations and anticipated bridge financing will be sufficient to
permit us to meet our financial obligations, fund our pending acquisitions and
fund operations for at least the next twelve months.

At December 31, 1999, we had no amounts outstanding under our credit
facility. In July 1999, we paid amounts outstanding of $39.8 million with a
portion of the net proceeds of the offering. We amended our credit facility
principally to increase our borrowing capacity from $75 million to $150 million,
to lower the borrowing rates and to modify current financial ratio tests to
provide us with additional borrowing flexibility. The amended credit facility
matures on June 30, 2006. Aggregate commitments under the amended credit
facility begin to decrease commencing March 31, 2001.

Amounts outstanding under our credit facility bear interest at a base
rate, at our option, of the bank's prime rate or LIBOR, plus a spread. For
purposes of determining the interest rate under our credit facility, the prime
rate spread ranges from 0% to 1%, and the LIBOR spread ranges from 0.875% to
2.25%.

The maximum amount that we may borrow under our credit facility is
limited by our debt to cash flow ratio, adjusted for recent radio station
acquisitions (the "Adjusted Debt to Cash Flow Ratio"). The maximum Adjusted Debt
to Cash Flow Ratio allowed under our credit facility is 6.00 to 1 through
December 31, 2000. Thereafter, the maximum ratio will decline periodically until
January 1, 2004, at which point it will remain at 4.00 to 1 through June 2006.
The Adjusted Debt to Cash Flow Ratio at December 31, 1999 was 2.48 to 1,
resulting in a borrowing availability of approximately $131.4 million.

Our credit facility contains additional restrictive covenants customary
for credit facilities of the size, type and purpose contemplated which, with
specified exceptions, limits our ability to enter into affiliate transactions,
pay dividends, consolidate, merge or effect certain asset sales, make specified
investments, acquisitions and loans and change the nature of our business. The
credit facility also requires us to satisfy specified financial covenants, which
covenants require the maintenance of specified financial ratios and compliance
with certain financial tests, including ratios for maximum leverage as
described, minimum interest coverage (not less than 1.75 to 1), minimum debt
service coverage (a static ratio of not less than 1.1 to 1) and minimum fixed
charge coverage (a static ratio of not less than 1.1 to 1). The credit facility
is guaranteed by all of our subsidiaries and is secured by pledges of all of
our and our subsidiaries' assets and all of the capital stock of our
subsidiaries.

22
<PAGE> 23
In September 1997, we issued $150 million principal amount of 9 1/2%
senior subordinated notes due 2007. In July 1999, we repurchased $50 million in
principal amount of the senior subordinated notes with a portion of the net
proceeds of the offering. After giving effect to this repurchase, we are
required to pay $9.5 million per year in interest on the senior subordinated
notes. The indenture for the senior subordinated notes contains restrictive
covenants that, among others, limit the incurrence of debt by us and our
subsidiaries, the payment of dividends, the use of proceeds of specified asset
sales and transactions with affiliates. The senior subordinated notes are
guaranteed by all of our subsidiaries.

As a result of the repurchase of our senior subordinated notes in July
1999, we recorded a non-cash charge of $1.5 million for the write-off of
unamortized bond issue costs. This was in addition to the $3.9 million premium
paid in connection with this repurchase.

Net cash provided by operating activities decreased to $8.2 million
for the year ended December 31, 1999, compared to $11.0 million in 1998,
primarily due to a decrease in accounts payable and accrued interest and an
increase in prepaid expenses of other media businesses during the year ended
December 31, 1998.

Net cash used in investing activities increased to $35.2 million for
the year ended December 31, 1999, compared to $31.8 million in 1998 primarily
due to acquisitions (cash used of $23.9 million to purchase three radio
stations and other media businesses in 1999 compared to cash used of $33.7
million to purchase four radio stations in 1998). Net cash used in investing
activities increased to $31.8 million in 1998, compared to $26.3 million in
1997, primarily due to radio station acquisitions (cash used of $33.7 million
to purchase four stations in 1998 compared to cash used of $19.4 million to
purchase eight stations in 1997).

Net cash provided by financing activities increased to $59.2 million
for the year ended December 31, 1999 compared to net cash provided by financing
activities of $21.0 million in 1998. The increase was primarily due to the net
proceeds of our initial public offering offset by the application of the net
proceeds to pay off $39.8 million owing under our prior credit facility and the
repurchase of $50 million in principal amount of our senior subordinated notes
in July 1999.

In 1999, we purchased radio stations KKOL-AM, Seattle, Washington,
KCTK-AM, Phoenix, Arizona, WLSY-FM and WRVI-FM, Louisville, Kentucky, in
separate transactions for a total of $11.8 million. In 1999, we also purchased
OnePlace, CCM, Christian Research Report, AudioCentral, Gospel Media Network,
Inc. and Involved Christian Radio Network, in separate transactions for a total
of $12.8 million. We paid for these purchases primarily with a portion of the
net proceeds of the offering.

Subsequent to December 31, 1999, we used a portion of the net proceeds
of the offering to purchase the assets (principally intangibles) of the
following radio stations:

PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
- ---------------- ------- ------------- -----------
January 4, 2000....... WNIV-AM and
WLTA-AM Atlanta, GA $ 8,000,000
January 10, 2000...... WABS-AM Washington, D.C. 4,100,000
January 25, 2000...... KJQI-FM San Francisco, CA 8,000,000
February 15, 2000..... KAIM-AM/FM Honolulu, HI 1,800,000
February 17, 2000..... KHNR-AM and
KGU-AM Honolulu, HI 1,700,000
-----------
$23,600,000
===========

In November 1999, we agreed to purchase radio station WGKA-AM, Atlanta,
Georgia for $8.0 million. We anticipate this purchase will close in April 2000.

In December 1999, we agreed to purchase all of the outstanding shares
of stock of Reach Satellite Network, Inc. (RSN), for $3.1 million. RSN owns
and operates Solid Gospel, a radio broadcasting network that produces and
distributes music programming to its own radio stations WBOZ-FM and WVRY-FM,
Nashville, Tennessee, and to independent radio station affiliates. RSN also
owns and operates SolidGospel.com, a web site on the Internet. We anticipate
this purchase will close in April 2000.

On January 18, 2000, we purchased real property in Dallas, Texas, for
$885,000.

23
<PAGE> 24

In January 2000, we agreed to exchange our radio station KPRZ-FM,
Colorado Springs, Colorado, plus $7.5 million for radio stations KSKY-AM,
Dallas, Texas. We anticipate this exchange will occur in May 2000.

On February 25, 2000, we purchased the KIEV-AM property in Los Angeles,
California, for $2.8 million. This amount was included in current portion of
long-term debt at December 31, 1999.

In March 2000, we agreed to purchase the following radio stations for
$185.6 million: KDGE-FM, Dallas, Texas, KALC-FM, Denver, Colorado, KXMX-FM and
KEZY-AM, Los Angeles, California, WYGY-FM and WBOB-AM, Cincinnati, Ohio, and
WRMR-AM and WKNR-AM, Cleveland, Ohio. We anticipate this purchase will close in
the third quarter of 2000. In connection with this agreement we deposited a $25
million irrevocable letter of credit with an escrow agent. Under the agreement
we are subject to a liquidated damages provision. If we fail to consummate the
purchase or otherwise terminate the agreement we are required to pay the seller
$21.4 million in addition to the $25 million letter of credit, which would be
disbursed to the seller.

IMPACT OF YEAR 2000

In prior years, the company discussed the nature and progress of its
plans to become Year 2000 ready. In late 1999, the company completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the company experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believes those systems successfully responded to the Year 2000 date change.
The company is not aware of any material problems resulting from Year 2000
issues, either with its products, its internal systems, or the products and
services of third parties. The company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the Year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.

<PAGE> 25

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DERIVATIVE INSTRUMENTS. The company does not invest, and during the
year ended December 31, 1999 did not invest, in market risk sensitive
instruments.

MARKET RISK. Our market risk exposure with respect to financial
instruments is to changes in LIBOR and in the "prime rate" in the United
States. As of December 31, 1999, we may borrow $131.4 million under our credit
facility. Amounts outstanding under the credit facility bear interest at a base
rate, at our option, of the bank's prime rate or LIBOR, plus a spread. For
purposes of determining the interest rate under our credit facility, the prime
rate spread ranges from 0% to 1%, and the LIBOR spread ranges from 0.875% to
2.25%. There were no amounts outstanding under our credit facility as of
December 31, 1999.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements and supplementary data required by this item
are set forth at the end of this Annual Report on Form 10-K beginning on page
F-1.

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

None.

<PAGE> 26

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Incorporated herein by this reference is the information set forth in
the sections entitled "DIRECTORS AND EXECUTIVE OFFICERS - Directors" and
"--Executive Officers" and SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE contained in the company's Proxy Statement for its 2000 Annual
Meeting of Stockholders (the "2000 Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by this reference is the information set forth in
the sections entitled "COMPENSATION AND OTHER INFORMATION" and "COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION" contained in the 2000 Proxy
Statement.

<PAGE> 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Incorporated herein by this reference is the information set forth in
the sections entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and
"SECURITY OWNERSHIP OF MANAGEMENT" contained in the 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Incorporated herein by this reference is the information set forth in
the section entitled "RELATED PARTY TRANSACTIONS" contained in the 2000 Proxy
Statement.

PART IV

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

(a) 1. Financial Statements.

The financial statements required to be filed hereunder are set forth
at the end of this Report beginning on page F-1.

2. Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
<S> <C>
3.01* Amended and Restated Certificate of Incorporation of Salem
Communications Corporation, a Delaware corporation.

3.02* Bylaws of Salem Communications Corporation, a Delaware
Corporation.

4.01+ Indenture between Salem Communications Corporation, a
California corporation, certain named guarantors and The
Bank of New York, as Trustee, dated as of September 25,
1997, relating to the 9 1/2% Series A and Series B Senior
Subordinated Notes due 2007.

4.02+ Form of 9 1/2% Senior Subordinated Note (filed as part of
Exhibit 4.01).

4.03+ Form of Note Guarantee (filed as part of Exhibit 4.01).

4.04+ Credit Agreement, dated as of September 25, 1997, among
Salem, the several Lenders from time to time parties
thereto, and The Bank of New York, as administrative agent
for the Lenders (incorporated by reference to Exhibit 4.07
of the previously filed Registration Statement on Form S-4).

4.05+ Borrower Security Agreement, dated as of September 25, 1997,
by and between Salem and The Bank of New York, as
Administrative Agent of the Lenders (incorporated by
reference to Exhibit 4.07 of the previously filed
Registration Statement on Form S-4).

4.06+ Subsidiary Guaranty and Security Agreement dated as of
September 25, 1997, by and between Salem, certain named
guarantors, and The Bank of New York, as Administrative
Agent (incorporated by reference to Exhibit 4.09 of the
previously filed Registration Statement on Form S-4).

4.07++ Amendment No. 1 and Consent No. 1, dated as of August 5,
1998, to the Credit Agreement, dated as of September 25,
1997, by and among Salem, The Bank of New York, as
Administrative Agent for the Lenders, Bank of America NT&SA,
as documentation agent, and the several Lenders
(incorporated by reference to Exhibit 10.02 of previously
filed Current Report on Form 8-K).

4.08* Amendment No. 2 and Consent No. 2, dated as of January 22,
1999, to the Credit Agreement, dated as of September 25,
1997, by and among Salem, The Bank of New York, as
Administrative Agent for the Lenders, Bank of America NT&SA,
as documentation agent, and the Lenders.

4.09* Specimen of Class A common stock certificate.

4.10* Supplemental Indenture No. 1, dated as of March 31, 1999, to
the Indenture, dated as of September 25, 1997, by and among
Salem Communications Corporation, a California corporation,
Salem Communications Corporation, a Delaware corporation,
The Bank of New York, as Trustee, and the Guarantors named
therein.

4.11* Consent No. 3, dated as of March 31, 1999, to the Credit
Agreement, dated as of September 25, 1997, by and among
Salem, The Bank of New York, as Administrative Agent for the
Lenders, Bank of America NT&SA, as Documentation Agent, and
the Lenders named therein.
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
----------- -----------------------
<S> <C>
4.12* Assumption Agreement, dated as of March 31, 1999, by and
between Salem Communications Corporation, a Delaware
corporation, and The Bank of New York, as Administrative
Agent.

4.13* Amendment No. 1 to the Grant of Security Interest
(Servicemarks) by Salem to The Bank of New York, as
Administrative Agent, under the Borrower Security Agreement,
dated as of September 25, 1997, with the Administrative
Agent.

4.14* Amendment No. 3 and Consent No. 4, dated as of April 23,
1999, under the Credit Agreement, dated as of September 25,
1997, by and among Salem, The Bank of New York, as
Administrative Agent for the Lenders, Bank of America NT&SA,
as Documentation Agent, and the Lenders party thereto.

4.15* First Amended and Restated Credit Agreement by and among
Salem, The Bank of New York, as Administrative Agent for the
Lenders, Bank of America NT&SA, as Documentation Agent, and
the Lenders named therein.

4.16 Amendment No. 1 to First Amended and Restated Credit
Agreement, by and among Salem, The Bank of New York, as
Administrative Agent for the Lenders, Bank of America, N.A.,
as Documentation Agent and the Lenders party thereto.

4.17 Amendment No. 2 to First Amended and Restated Credit
Agreement, by and among Salem, The Bank of New York, as
Administrative Agent for the Lenders, Bank of America, N.A.,
as Documentation Agent and the Lenders party thereto.

10.01* Amended and Restated Employment Agreement, dated as of May
19, 1999, between Salem and Edward G. Atsinger III.

10.02* Amended and Restated Employment Agreement, dated as of May
19, 1999, between Salem and Stuart W. Epperson.

10.03.01+ Employment Contract, dated November 7, 1991, between Salem
and Eric H. Halvorson.

10.03.02+ First Amendment to Employment Contract, dated April 22,
1996, between Salem and Eric H. Halvorson.

10.03.03+ Second Amendment to Employment Contract, dated July 8, 1997,
between Salem and Eric H. Halvorson.

10.03.04+ Deferred Compensation Agreement, dated November 7, 1991,
between Salem and Eric H. Halvorson.

10.03.05* Third Amendment to Employment Agreement, entered into May
26, 1999, between Salem and Eric Halvorson.

10.05.01+ Antenna/tower lease between Caron Broadcasting, Inc.
(WHLO-AM/Akron, Ohio) and Messrs. Atsinger and Epperson
expiring 2007.

10.05.02+ Antenna/tower/studio lease between Caron Broadcasting, Inc.
(WTSJ-AM/ Cincinnati, Ohio) and Messrs. Atsinger and
Epperson expiring 2007.

10.05.03+ Antenna/tower lease between Caron Broadcasting, Inc.
(WHK-FM/Canton, Ohio) and Messrs. Atsinger and Epperson
expiring 2007.

10.05.04+ Antenna/tower/studio lease between Common Ground
Broadcasting, Inc. (KKMS-AM/Eagan, Minnesota) and Messrs.
Atsinger and Epperson expiring in 2006.

10.05.05+ Antenna/tower lease between Common Ground Broadcasting, Inc.
(WHK-AM/ Cleveland, Ohio) and Messrs. Atsinger and Epperson
expiring 2008.

10.05.06+ Antenna/tower lease (KFAX-FM/Hayward, California) and Salem
Broadcasting Company, a partnership consisting of Messrs.
Atsinger and Epperson, expiring in 2003.

10.05.07+ Antenna/tower/studio lease between Inland Radio, Inc.
(KKLA-AM/San Bernardino, California) and Messrs. Atsinger
and Epperson expiring 2002.
</TABLE>

28
<PAGE> 29
<TABLE>
<CAPTION>

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
----------- -----------------------
<S> <C>
10.05.08+ Antenna/tower lease between Inspiration Media, Inc.
(KGNW-AM/Seattle, Washington) and Messrs. Atsinger and
Epperson expiring in 2002.

10.05.09+ Antenna/tower lease between Inspiration Media, Inc.
(KLFE-AM/Seattle, Washington) and The Atsinger Family Trust
and Stuart W. Epperson Revocable Living Trust expiring in
2004.

10.05.11.01+ Antenna/tower/studio lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/WFIL-AM/Philadelphia,
Pennsylvania) and Messrs. Atsinger and Epperson, as assigned
from WEAZ-FM Radio, Inc., expiring 2004.

10.05.11.02+ Antenna/tower/studio lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/WFIL-AM/Philadelphia,
Pennsylvania) and The Atsinger Family Trust and Stuart W.
Epperson Revocable Living Trust expiring 2004.

10.05.12+ Antenna/tower lease between Radio 1210, Inc.
(KPRZ-AM/Olivenhain, California) and The Atsinger Family
Trust expiring in 2002.

10.05.13 Antenna/tower lease between Salem Media of Texas, Inc. and
Atsinger Family Trust/Epperson Family Limited Partnership
(KSLR-AM/San Antonio, Texas).

10.05.14+ Antenna/turner/studio leases between Salem Media Corporation
(KLTX-AM/Long Beach and Paramount, California) and Messrs.
Atsinger and Epperson expiring in 2002.

10.05.15+ Antenna/tower lease between Salem Media of Colorado, Inc.
(KNUS-AM/Denver-Boulder, Colorado) and Messrs. Atsinger and
Epperson expiring 2006.

10.05.16 Atenna/tower lease between Salem Media of Colorado, Inc. and
Atsinger Family Trust/Epperson Family Limited Partnership
(KRKS-AM/KBJD-AM/Denver, Colorado).

10.05.17.01+ Studio Lease between Salem Media of Oregon, Inc.
(KPDQ-AM/FM/Portland, Oregon) and Edward G. Atsinger III,
Mona J. Atsinger, Stuart W. Epperson, and Nancy K. Epperson
expiring 2002.

10.05.17.02+ Antenna/tower lease between Salem Media of Oregon, Inc.
(KPDQ-AM/FM/Raleigh Hills, Oregon and Messrs. Atsinger and
Epperson expiring 2002.

10.05.18+ Antenna/tower lease between Salem Media of Pennsylvania,
Inc. (WORD-FM/WPIT-AM/Pittsburgh, Pennsylvania) and The
Atsinger Family Trust and Stuart W. Epperson Revocable
Living Trust expiring 2003.

10.05.19+ Antenna/tower lease between Salem Media of Texas, Inc.
(KSLR-AM/San Antonio, Texas) and Epperson-Atsinger 1983
Family Trust expiring 2007.

10.05.20+ Antenna/tower lease between South Texas Broadcasting, Inc.
(KENR-AM/Houston-Galveston, Texas) and Atsinger Family
Trust and Stuart W. Epperson Revocable Living Trust expiring
2005.

10.05.21+ Antenna/tower lease between Vista Broadcasting, Inc.
(KFIA-AM/Sacramento, California) and The Atsinger Family
Trust and Stuart W. Epperson Revocable Living Trust expiring
2006.

10.05.22++ Antenna/tower lease between South Texas Broadcasting, Inc.
(KKHT-FM/Houston-Galveston, Texas) and Sonsinger
Broadcasting Company of Houston, LP expiring 2008.

10.05.23++ Antenna/tower lease between Inspiration Media of Texas, Inc.
(KTEK-AM/Alvin, Texas) and the Atsinger Family Trust and The
Stuart W. Epperson Revocable Living Trust expiring 2009.

10.06.05+ Asset Purchase Agreement dated as of September 30, 1996 by
and between Infinity Broadcasting Corporation of Dallas and
Inspiration Media of Texas, Inc. (KEWS, Arlington, Texas;
KDFX, Dallas, Texas).
</TABLE>

29
<PAGE> 30
10.06.07+ Asset Purchase Agreement dated June 2, 1997 by and between
New England Continental Media, Inc. and Hibernia
Communications, Inc. (WPZE-AM, Boston, Massachusetts).

10.06.08+ Option to Purchase dated as of August 18, 1997 by and
between Sonsinger, Inc. and Inspiration Media, Inc.
(KKOL-AM, Seattle, Washington).

10.06.09++ Asset Purchase Agreement dated as of April 13, 1998 by and
between New Inspiration Broadcasting Company and First
Scientific Equity Devices Trust (KIEV-AM, Glendale,
California) (incorporated by reference to Exhibit 2.01 of
the previously filed Current Report on Form 8-K).

10.06.10* Asset Purchase Agreement dated as of April 1, 1999 by and
between Inspiration Media, Inc. and Sonsinger, Inc.
(KKOL-AM, Seattle, Washington).

10.07.01+ Tower Purchase Agreement dated August 22, 1997 by and
between Salem and Sonsinger Broadcasting Company of Houston,
L.P.

10.07.02+ Amendment to the Tower Purchase Agreement dated November 10,
1997 by and between Salem and Sonsinger Broadcasting Company
of Houston, L.P.

10.07.03+ Promissory Note dated November 11, 1997 made by Sonsinger
Broadcasting Company of Houston, L.P. payable to Salem.

10.07.04+ Promissory Note dated December 24, 1997 made by Salem
payable to Edward G. Atsinger III.

10.07.05+ Promissory Note dated December 24, 1997 made by Salem
payable to Stuart W. Epperson.

10.08.01 Local Marketing Agreement dated August 13, 1999 between
Concord Media Group, Inc. and Radio 1210, Inc.

10.08.02 Asset Purchase Agreement dated as of August 18, 1999, by
and between Salem Media of Georgia, Inc. and Genesis
Communications, Inc. (WNIV-FM, Atlanta, Georgia and WLTA-FM,
Alpharetta, Georgia.

10.08.03 Asset Purchase Agreement dated as of November 29, 1999, by
and among JW Broadcasting, Inc., Salem Media of Georgia,
Inc. and Salem Communications Corporation (WGKA-AM, Atlanta,
Georgia.

10.09.01+ Evidence of Key man life insurance policy no. 2256440M
insuring Edward G. Atsinger III in the face amount of
$5,000,000.

10.09.02+ Evidence of Key man life insurance policy no. 2257474H
insuring Edward G. Atsinger III in the face amount of
$5,000,000.

10.09.03+ Evidence of Key man life insurance policy no. 2257476B
insuring Stuart W. Epperson in the face amount of
$5,000,000.

10.10* 1999 Stock Incentive Plan.

21.01 Subsidiaries of Salem.

27.01 Financial Data Schedule.

- ---------------
+ Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Registration Statement on Form S-4 (No. 333-41733), as
amended, as declared effective by the Securities and Exchange Commission on
February 9, 1998.

++ Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on September 4, 1998.

++ Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 31, 1999.

** Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on April 14, 1999.

* Incorporated by reference to the exhibit of the same number to the Company's
Registration Statement on Form S-1 (No. 333-76649) as amended, as declared,
effective by the Securities and Exchange Commission on June 30, 1999.

30
<PAGE> 31

(b) Reports on Form 8-K.

On April 14, 1999, the company filed a Current Report on Form 8-K,
reporting Item 5, in connection with the reincorporation of the company in
Delaware.

<PAGE> 32

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

SALEM COMMUNICATIONS CORPORATION

March 30, 2000 By: /s/ Edward G. Atsinger III
------------------------------------------
Edward G. Atsinger III
President and Chief Executive Officer

March 30, 2000 By: /s/ Dirk Gastaldo
------------------------------------------
Dirk Gastaldo
Vice President and Chief Financial Officer

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

Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Edward G. Atsinger III President and Chief Executive Officer March 30, 2000
- ------------------------------- (Principal Executive Officer)
Edward G. Atsinger III

/s/ Dirk Gastaldo Vice President and Chief Financial Officer March 30, 2000
- ------------------------------- (Principal Financial Officer)
Dirk Gastaldo

/s/ Eileen E. Hill Vice President, Financial Planning March 30, 2000
- ------------------------------- and Analysis
Eileen E. Hill (Principal Accounting Officer)

/s/ Edward G. Atsinger III Director March 30, 2000
- -------------------------------
Edward G. Atsinger III

/s/ Stuart W. Epperson Director March 30, 2000
- -------------------------------
Stuart W. Epperson

/s/ Eric H. Halvorson Director March 30, 2000
- -------------------------------
Eric H. Halvorson

/s/ Richard A. Riddle Director March 30, 2000
- -------------------------------
Richard A. Riddle

/s/ Roland S. Hinz Director March 30, 2000
- -------------------------------
Roland S. Hinz

/s/ Donald P. Hodel Director March 30, 2000
- -------------------------------
Donald P. Hodel

/s/ Joseph S. Schuchert Director March 30, 2000
- -------------------------------
Joseph S. Schuchert
</TABLE>

<PAGE> 33

INDEX TO FINANCIAL STATEMENTS

PAGE
----
Report of Ernst & Young LLP, Independent Auditors F-2

Consolidated Balance Sheets as of December 31, 1998 and 1999 F-3

Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999 F-4

Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1998 and 1999 F-5

Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999 F-6

Notes to Consolidated Financial Statements F-7

F-1
<PAGE> 34

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
of Salem Communications Corporation

We have audited the accompanying consolidated balance sheets of Salem
Communications Corporation as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1999. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Salem
Communications Corporation at December 31, 1998 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

ERNST & YOUNG LLP

Woodland Hills, California
March 15, 2000

F-2
<PAGE> 35

SALEM COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
-------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 1,917 $ 34,124
Accounts receivable (less allowance for doubtful accounts
of $862 in 1998 and $1,753 in 1999) .......................... 14,289 17,481
Other receivables ............................................... 67 645
Prepaid expenses ................................................ 658 1,628
Due from stockholders ........................................... -- 905
Deferred income taxes ........................................... 2,443 732
-------- ---------
Total current assets .............................................. 19,374 55,515
Property, plant, equipment and software, net ...................... 40,749 50,665

Intangible assets:
Broadcast licenses .............................................. 167,870 177,487
Noncompetition agreements ....................................... 14,593 14,625
Customer lists and contracts .................................... 4,094 4,097
Favorable and assigned leases ................................... 1,800 1,800
Goodwill ........................................................ 6,689 15,177
Other intangible assets ......................................... 2,567 4,799
-------- ---------
197,613 217,985
Less accumulated amortization ................................... 55,837 67,465
-------- ---------
Intangible assets, net ............................................ 141,776 150,520
Bond issue costs .................................................. 4,657 2,750
Other assets ...................................................... 1,194 4,914
-------- ---------
Total assets ...................................................... $207,750 $ 264,364
======== =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable ................................................ $ 1,676 $ 2,600
Accrued expenses ................................................ 489 1,256
Accrued compensation and related ................................ 1,613 2,047
Accrued interest ................................................ 3,968 2,546
Deferred subscription revenue ................................... -- 1,670
Income taxes .................................................... 89 148
Current portion of long-term debt and capital
lease obligations ............................................. -- 3,248
-------- ---------
Total current liabilities ......................................... 7,835 13,515
Long-term debt, less current portion .............................. 178,610 100,087
Deferred income taxes ............................................. 11,581 7,232
Other liabilities ................................................. 623 691

Stockholders' equity:
Class A common stock, $.01 par value; authorized 80,000,000
shares; issued and outstanding 11,107,392 shares and
17,902,392 shares at December 31, 1998 and 1999, respectively.. 111 179
Class B common stock, $.01 par value; authorized 20,000,000
shares; issued and outstanding 5,553,696 shares ............... 56 56
Additional paid-in capital ...................................... 5,665 147,380
Retained earnings (deficit) ..................................... 3,269 (4,776)
-------- ---------
Total stockholders' equity ........................................ 9,101 142,839
-------- ---------
Total liabilities and stockholders' equity ........................ $207,750 $ 264,364
======== =========
</TABLE>

See accompanying notes.

F-3
<PAGE> 36

SALEM COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Gross broadcasting revenue .......................... $ 74,830 $ 85,411 $ 95,277
Less agency commissions ............................. 6,918 7,520 8,155
------------ ------------ ------------
Net broadcasting revenue ............................ 67,912 77,891 87,122
Other media revenue ................................. -- -- 6,424
------------ ------------ ------------
Total revenue ....................................... 67,912 77,891 93,546

Operating expenses:
Broadcasting operating expenses ................... 39,626 42,526 46,291
Other media operating expenses .................... -- -- 9,985
Corporate expenses ................................ 6,210 7,395 8,507
Stock and related cash grant ...................... -- -- 2,550
Tax reimbursements to S corporation shareholders... 1,780 -- --
Depreciation (including $1,817 in 1999 for other
media businesses) ............................... 3,988 4,305 6,599
Amortization (including $420 in 1999 for other
media businesses) ............................... 8,815 9,753 11,634
------------ ------------ ------------
Total operating expenses .......................... 60,419 63,979 85,566
------------ ------------ ------------
Net operating income ................................ 7,493 13,912 7,980

Other income (expense):
Interest income ................................... 230 291 1,005
Gain (loss) on disposal of assets ................. 4,285 236 (219)
Interest expense .................................. (12,706) (15,941) (14,219)
Other expense ..................................... (389) (422) (633)
------------ ------------ ------------
Loss before income taxes and extraordinary item ..... (1,087) (1,924) (6,086)
Provision (benefit) for income taxes ................ 106 (343) (1,611)
------------ ------------ ------------
Loss before extraordinary item ...................... (1,193) (1,581) (4,475)
Extraordinary loss on early extinguishment of
debt (net of income tax benefit of $659 in 1997
and $1,986 in 1999)................................ (1,185) -- (3,570)
------------ ------------ ------------
Net loss ............................................ $ (2,378) $ (1,581) $ (8,045)
============ ============ ============
Basic and diluted loss per share before
extraordinary item ................................ $ (0.07) $ (0.09) $ (0.22)
Extraordinary loss per share ........................ (0.07) -- (0.18)
------------ ------------ ------------
Basic and diluted net loss per share ................ $ (0.14) $ (0.09) $ (0.40)
============ ============ ============
Basic and diluted weighted average shares outstanding 16,661,088 16,661,088 20,066,006
============ ============ ============

Pro forma information for 1997 (unaudited):
Loss before income taxes and extraordinary item as
reported above .................................... $ (1,087)
Add back tax reimbursements to S Corporation
shareholders ...................................... 1,780
------------
Pro forma income before income taxes and
extraordinary item ................................ 693
Pro forma provision for income taxes ................ 278
------------
Pro forma income before extraordinary Item .......... 415
Extraordinary loss .................................. (1,185)
------------
Pro forma net loss .................................. $ (770)
============

Proforma basic and diluted income per share before
extraordinary item ................................ $ 0.02
Extraordinary loss per share ........................ (0.07)
------------
Basic and diluted net loss per share ................ $ (0.05)
============
Basic and diluted weighted average shares outstanding 16,661,088
============
</TABLE>

See accompanying notes.

F-4
<PAGE> 37

SALEM COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)

<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL RETAINED
-------------------- ------------------- PAID-IN EARNINGS/
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
---------- ------ --------- ------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity, January 1, 1997 . 11,107,392 $111 5,553,696 $56 $ 5,665 $ 14,702 $ 20,534
Net loss .............................. -- -- -- -- -- (2,378) (2,378)
Stockholder distributions ............. -- -- -- -- -- (7,474) (7,474)
---------- ---- --------- --- -------- -------- ---------
Stockholders' equity, December 31, 1997 11,107,392 111 5,553,696 56 5,665 4,850 10,682
Net loss .............................. -- -- -- -- -- (1,581) (1,581)
---------- ---- --------- --- -------- -------- ---------
Stockholders' equity, December 31, 1998 11,107,392 111 5,553,696 56 5,665 3,269 9,101
Stock grant ........................... 75,000 1 -- -- 1,687 -- 1,688
Issuance of Class A common stock ...... 6,720,000 67 -- -- 140,028 -- 140,095
Net loss .............................. -- -- -- -- -- (8,045) (8,045)
---------- ---- --------- --- -------- -------- ---------
Stockholders' equity, December 31, 1999 17,902,392 $179 5,553,696 $56 $147,380 $ (4,776) $ 142,839
========== ==== ========= === ======== ======== =========
</TABLE>

See accompanying notes.

F-5
<PAGE> 38
SALEM COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1998 1999
--------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................. $ (2,378) $ (1,581) $ (8,045)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ...................... 12,803 14,058 18,233
Amortization of bank loan fees ..................... 175 42 87
Amortization of bond issue costs ................... 126 531 443
Deferred income taxes .............................. (1,022) (730) (4,106)
(Gain) loss on sale of assets ...................... (4,285) (236) 219
Loss on early extinguishment of debt, before taxes.. 1,844 -- 5,556
Noncash stock grant ................................ -- -- 1,688

Changes in operating assets and liabilities:
Accounts receivable .............................. (1,572) (2,048) (2,573)
Prepaid expenses and other current assets ........ (473) (18) (1,747)
Accounts payable and accrued expenses ............ 1,844 1,035 (1,555)
Deferred subscription revenue .................... -- -- 384
Other liabilities ................................ 78 166 (439)
Income taxes ..................................... 174 (204) 59
--------- -------- ---------
Net cash provided by operating activities ............ 7,314 11,015 8,204

INVESTING ACTIVITIES
Capital expenditures ................................. (7,512) (6,865) (9,142)
Deposits on radio station acquisitions ............. (4,907) 4,907 (1,325)
Purchases of radio stations ........................ (19,436) (33,682) (11,837)
Purchases of other media businesses ................ -- -- (12,049)
Proceeds from disposal of property, plant and
equipment and intangible assets .................. 5,120 4,226 73

Expenditures for tower construction project
held for sale .................................... (9) (495) (410)
Proceeds from sale of tower construction project ... -- -- 914
Other assets ....................................... 418 147 (1,383)
--------- -------- ---------
Net cash used in investing activities ................ (26,326) (31,762) (35,159)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and notes
payable to stockholders .......................... 222,810 40,500 18,750
Net proceeds from issuance of common stock ......... -- -- 140,095
Payments of long-term debt and notes payable to
stockholders ..................................... (190,166) (19,200) (94,860)
Payments on capital lease obligations .............. -- -- (239)
Payments of bank loan fees ......................... (1,025) -- --
Payment of premium on senior subordinated notes .... -- -- (3,875)
Payments of costs related to bank credit facility .. (417) -- (709)
Payments of bond issue costs ....................... (5,033) (281) --
Distributions to shareholders ...................... (7,474) -- --
--------- -------- ---------
Net cash provided by financing activities ............ 18,695 21,019 59,162
--------- -------- ---------
Net (decrease) increase in cash and cash equivalents . (317) 272 32,207
Cash and cash equivalents at beginning of year ..... 1,962 1,645 1,917
--------- -------- ---------
Cash and cash equivalents at end of year ............. $ 1,645 $ 1,917 $ 34,124
========= ======== =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ......................................... $ 9,523 $ 14,965 $ 15,048
Income taxes ..................................... 295 591 450
</TABLE>

See accompanying notes.

F-6
<PAGE> 39

SALEM COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Reorganization

The accompanying consolidated financial statements of Salem
Communications Corporation (Salem or the Company) include the Company and its
wholly-owned subsidiaries. Prior to the reorganization described below (the
Reorganization) the financial statements had been presented on a combined basis
and included Salem, New Inspiration Broadcasting Company, Inc. (New
Inspiration), Golden Gate Broadcasting Company, Inc. (Golden Gate) and Beltway
Media Partners (Beltway), and all of these entities were under common control.
New Inspiration and Golden Gate were S corporations for income tax purposes.
Salem, New Inspiration and Golden Gate were the partners of Beltway. The
combined financial statements were entitled Salem Broadcasting Entities.
Pursuant to the Reorganization the financial statements have been renamed and
the disclosure of common stock information has been retroactively restated for
all periods presented as if the Reorganization had been completed as of the
beginning of the earliest period presented. All significant intercompany
balances and transactions have been eliminated.

The Company is a holding company with substantially no assets,
operations or cash flows other than its investments in subsidiaries. All of the
Company's subsidiaries are Guarantors of the 9 1/2% Senior Subordinated Notes
due 2007 (the Notes) discussed in Note 5. The Guarantors (i) are wholly owned
subsidiaries of the Company, (ii) comprise all the Company's direct and indirect
subsidiaries and (iii) have fully and unconditionally guaranteed on a joint and
several basis, the Notes. The Company has not presented separate financial
statements and other disclosures concerning the Guarantors because management
has determined that such information is not material to investors.

In August 1997, the Company, New Inspiration and Golden Gate effected
the Reorganization pursuant to which New Inspiration and Golden Gate became
wholly-owned subsidiaries of the Company, with Beltway remaining a partnership.
The Company accounted for the Reorganization as a combination of entities under
common control, which is a method similar to a pooling of interests. In October
1998, the Company, New Inspiration and Golden Gate contributed their partnership
interests in Beltway to Salem Media of Virginia, Inc. (SMV), thereby dissolving
Beltway. SMV is an indirectly wholly-owned subsidiary of the Company.

The S Corporation status of New Inspiration and Golden Gate was
terminated in the Reorganization. Prior to the Reorganization, New Inspiration
and Golden Gate distributed cash and promissory notes to their respective
shareholders in the aggregate amount of $8.5 million. Of such amount, $1.8
million, equal to the estimated federal and state income tax liability of the S
corporation shareholders on the earnings of New Inspiration and Golden Gate, was
paid by New Inspiration and Golden Gate in cash. The balance, $6.7 million
representing the balance of the net income of New Inspiration and Golden Gate
that had previously been taxed, but not distributed to the shareholders, was
paid in the form of promissory notes. In September 1997, the Company financed
the repayment of these promissory notes by an additional borrowing.

F-7

<PAGE> 40

Description of Business

Salem is a domestic U.S. radio broadcast company which has
traditionally provided talk and music programming targeted at audiences
interested in religious and family issues. Salem operated 54 and 45 radio
stations across the United States at December 31, 1999 and 1998, respectively.
The Company also owns and operates Salem Radio Network (SRN), SRN News Network
(SNN), Salem Music Network (SMN) and Salem Radio Representatives (SRR). SRN, SNN
and SMN are radio networks which produce and distribute talk, news and music
programming to radio stations in the U.S., including some of Salem's stations.
SRR sells commercial air time to national advertisers for Salem's
radio stations and networks, and for independent radio station affiliates.

Salem also owns and operates OnePlace, LLC (OnePlace) and CCM
Communications, Inc. (CCM). OnePlace provides Christian supply catalogs in print
and online, church management software and support, and Internet e-commerce and
web site development services. CCM publishes magazines that follow the Christian
music industry. The revenue and related operating expenses of these businesses
are reported as "other media" on the consolidated statements of operations.

The significant accounting policies of Salem are summarized below and
conform with generally accepted accounting principles and reflect practices
appropriate to the radio broadcasting industry.

Segments

The Company has adopted the provisions of Financial Accounting
Standards Board Statement of Financial Accounting Standards (SFAS) No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
Company identifies its operating segments based on business activities. The
Company's chief operating decision maker reviews financial information to manage
the business consistent with the manner presented in the consolidated financial
statements. As the Company acquires and integrates new businesses it evaluates,
based on the nature, size and integration and management strategies, whether it
has separate reportable segments. During the three years ended December 31,
1999, the Company had one reportable segment.

Revenue Recognition

Revenue from radio programs and commercial advertising is recognized
when broadcast. Salem's broadcasting customers principally include
not-for-profit charitable organizations and commercial advertisers.

Revenue from the sale of products and services from the Company's other
media businesses is recognized when the products are shipped and the services
are rendered. Revenue from the sale of advertising in CCM's publications is
recognized upon publication. Revenue from the sale of subscriptions to CCM's
publications is recognized over the life of the subscription.

Advertising by the radio stations exchanged for goods and services is
recorded as the advertising is broadcast and is valued at the estimated value of
goods or services received or to be received. The value of the goods and
services received in such barter transactions is charged to expense when used.
The estimated fair value of the barter advertising provided for the years ended
December 31, 1997, 1998 and 1999, was approximately $1,743,000, $2,510,000 and
$2,936,000, respectively. Barter expenses were approximately the same. Barter
advertising provided and barter expenses are included net in broadcasting
operating expenses.

Cash Equivalents

Salem considers all highly liquid debt instruments with a maturity of
three months or less when purchased to be cash equivalents. The recorded amount
for cash and cash equivalents approximates the fair market value.

F-8
<PAGE> 41

Property, Plant, Equipment and Software

Property, plant, equipment and software are recorded at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over estimated useful lives as follows:

Buildings.................................................. 40 years
Office furnishings and equipment........................... 5 - 10 years
Antennae, towers and transmitting equipment................ 20 years
Studio and production equipment............................ 10 years
Computer software.......................................... 3 - 5 years
Record and tape libraries.................................. 20 years
Automobiles................................................ 5 years
Leasehold improvements..................................... 15 years

The carrying value of property, plant, equipment and software is
evaluated periodically in relation to the operating performance and anticipated
future cash flows of the underlying radio stations and businesses for indicators
of impairment. When indicators of impairment are present and the undiscounted
cash flows estimated to be generated from these assets are less than the
carrying value of these assets an adjustment to reduce the carrying value (if
necessary) to the fair market value of the assets is recorded. No adjustments to
the carrying amounts of property, plant, equipment and software have been made
during the years ended December 31, 1997, 1998 and 1999.

Intangible Assets

Intangible assets acquired in conjunction with the acquisition of
various radio stations and other media businesses are being amortized over the
following estimated useful lives using the straight-line method:

Broadcast licenses...................................... 10 - 25 years
Noncompetition agreements............................... 3 - 5 years
Customer lists and contracts............................ 10- 15 years
Favorable and assigned leases........................... Life of the lease
Goodwill................................................ 15 - 40 years
Other................................................... 5 - 10 years

The carrying value of intangibles is evaluated periodically in relation
to the operating performance and anticipated future cash flows of the underlying
radio stations and businesses for indicators of impairment. When indicators of
impairment are present and the undiscounted cash flows estimated to be generated
from these assets are less than the carrying amounts of these assets, an
adjustment to reduce the carrying value (if necessary) to the fair market value
of these assets is recorded. No adjustments to the carrying amounts of
intangible assets have been made during the year ended December 31, 1997, 1998
and 1999.

Bond Issue Costs

Bond issue costs are being amortized over the term of the Notes as an
adjustment to interest expense.

Tax Reimbursements to S Corporation Shareholders

"Tax reimbursements to S Corporation shareholders" represents
additional salary payments made in the amount necessary to satisfy individual
federal and state income tax liabilities of the S Corporation shareholders on
the earnings of New Inspiration and Golden Gate prior to the Reorganization.

F-9
<PAGE> 42

Accounting For Stock Based Compensation

Employee stock options are accounted for under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," which
requires the recognition of expense when the option price is less than the fair
value of the stock at the date of grant.

The Company generally awards options for a fixed number of shares at an
option price equal to the fair value at the date of grant. The Company has
adopted the disclosure-only provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation."

Income Taxes

The Company accounts for income taxes in accordance with the liability
method of providing for deferred income taxes. Deferred income taxes arise from
temporary differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements.

Federal and state income taxes (except for 1.5% state franchise tax)
have not been provided through August 12, 1997 for New Inspiration and Golden
Gate because they were S Corporations and income tax attributes of S
Corporations are passed through to their shareholders.

Basic and Diluted Net Loss Per Share

Basic net loss per share has been computed using the weighted average
number of shares of common stock outstanding during the period. Diluted net loss
per share is computed using the weighted average number of shares of common
stock outstanding during the period plus the dilutive effects of stock options.

Options to purchase 304,500 shares of common stock with exercise prices
greater than the average market prices of common stock were outstanding at
December 31, 1999. These options were excluded from the respective computations
of diluted net loss per share because their effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Numerator:
Net loss .................... $(2,378,000) $(1,581,000) $(8,045,000)
Denominator:
Weighted average shares ..... 16,661,088 16,661,088 20,066,066
----------- ----------- -----------
Basic and diluted net loss
per share ................... $ (0.14) $ (0.09) $ (0.40)
=========== =========== ===========
</TABLE>

Concentrations of Business and Credit Risks

The majority of the Company's operations are conducted in several
locations across the country. The Company's credit risk is spread across a large
number of customers, none of which accounted for a significant volume of revenue
or outstanding receivables. The Company does not normally require collateral on
credit sales; however, credit histories are reviewed before extending
substantial credit to any customer. The Company establishes an allowance for
doubtful accounts based on customers' payment history and perceived credit
risks. Bad debts have been within management's expectations.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications were made to the prior year financial
statements to conform to the current year presentation.

F-10

<PAGE> 43

2. ACQUISITIONS AND DISPOSITIONS OF ASSETS

Pro forma information to present operating results as if the
acquisitions discussed below had occurred at the beginning of the year acquired
is not presented because the Company, generally, changes the programming format
of the radio stations such that the source and nature of revenue and operating
expenses are significantly different than they were prior to the acquisition
and, accordingly, historical and pro forma financial information has not been
considered meaningful by management. Pro forma and historical financial
information of radio stations acquired where the format was not changed and of
other media businesses acquired have not been significant to the consolidated
financial position or operating results of the Company.

The Company used the purchase method of accounting for all of the
acquisitions described below, and, accordingly, the operating results of the
acquired assets and businesses are included in the consolidated operating
results since the dates of acquisition.

During the year ended December 31, 1999, the Company purchased the assets
(principally intangibles) of the following radio stations:

PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
- ---------------- ------- ------------- --------------
(IN THOUSANDS)
April 30, 1999............ KKOL-AM Seattle, WA $ 1,750
July 23, 1999............. KCTK-AM Phoenix, AZ 5,000
September 13, 1999........ WLSY-FM Louisville, KY 2,500
September 13, 1999........ WRVI-FM Louisville, KY 2,500
-------
$11,750
=======

The purchase price has been allocated to the assets acquired as
follows:

AMOUNT
--------------
(IN THOUSANDS)
ASSET
-----

Property and equipment........................... $ 2,160
Broadcast licenses............................... 9,557
Goodwill and other intangibles................... 33
--------
$ 11,750
========

In addition to the stations above, in January 1999, the Company
purchased the assets of OnePlace for $6.2 million, and all the outstanding
shares of stock of CCM for $1.9 million. The purchases were financed primarily
by an additional borrowing.

On March 11, 1999, the Company acquired the assets of Christian
Research Report (CRR) for $300,000. The publications of CRR follow the
contemporary Christian music industry.

On August 25, 1999, the Company purchased the assets of the Internet
sites AudioCentral.com and ChristianBooks.com for $400,000 cash and $600,000
non-cash consideration.

F-11

<PAGE> 44

On October 19, 1999, the Company acquired the assets of Gospel Media
Network, Inc., relating to the audio and video streaming of content on the
GospelMedia.com Internet site, for $475,000.

On November 30, 1999, the Company acquired the assets of the Involved
Christian Radio Network, which provides streaming media on its Internet site,
ICRN.com, for $3.0 million.

The revenue and operating expenses of these businesses are reported as
"other media" on our consolidated statements of operations.

The table below summarizes the other media acquisitions during 1999:

PURCHASE
ACQUISITION DATE ENTITY PRICE
- ---------------- ------ --------------
(IN THOUSANDS)
January 29, 1999............ OnePlace $ 6,150
January 29, 1999............ CCM 1,886
March 11, 1999.............. Christian Research Report 300
August 25, 1999............. AudioCentral 1,000
October 19, 1999............ Gospel Media Network, Inc. 475
November 30, 1999........... Involved Christian Radio Network 3,000
-------
$12,811
=======

The purchase price has been allocated to the assets acquired and
liabilities assumed as follows:

AMOUNT
--------------
(IN THOUSANDS)
Assets

Accounts receivable and other current assets.. $ 1,453
Property, plant, equipment and software....... 5,764
Subscriber base and domain names.............. 2,246
Goodwill and other intangible assets.......... 8,790
Other assets.................................. 607
-------
18,860
Liabilities

Accounts payable and other current liabilities (3,437)
Other long-term liabilities.................... (2,612)
-------
(6,049)
-------
Purchase price................................. $12,811
=======

During the year ended December 31, 1998, the Company purchased the
assets (principally intangibles) of the following radio stations:

PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
---------------- ------- ------------- --------
(IN THOUSANDS)
August 21, 1998....... KKMO-AM Tacoma, WA $ 500
August 26, 1998....... KIEV-AM Los Angeles, CA 33,210
October 30, 1998...... KYCR-AM Minneapolis, MN 500
October 30, 1998...... KTEK-AM Houston, TX 2,061
-------
$36,271
=======

The purchase price has been allocated to the assets acquired as
follows:

AMOUNT
ASSET --------------
----- (IN THOUSANDS)

Property and equipment.............. $ 4,507
Broadcast licenses.................. 29,627
Goodwill and other intangibles...... 2,137
-------
$36,271
=======

F-12

<PAGE> 45
In 1998, the Company sold the assets (principally intangibles) of radio
stations KTSL-FM (Spokane, WA) for $1.3 million and KAVC-FM (Lancaster, CA) for
$1.6 million.

During the year ended December 31, 1997, the Company purchased the
assets (principally intangibles) of the following radio stations:

PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
---------------- ------- ------------- --------------
(IN THOUSANDS)
January 21, 1997...... WHK-AM Cleveland, OH $ 6,220
February 20, 1997..... WHK-FM Canton, OH 5,903
February 20, 1997..... WHLO-AM Akron, OH 1,995
February 28, 1997..... WEZE-AM Boston, MA 7,030
April 2, 1997......... KTKZ-AM Sacramento, CA 1,385
July 18, 1997......... WITH-AM Baltimore, MD 1,114
July 18, 1997......... WTSJ-AM Cincinnati, OH 1,114
October 24, 1997...... WCCD-AM Cleveland, OH 700
-------
$25,461
=======

The purchase price has been allocated to the assets acquired as
follows:

AMOUNT
--------------
(IN THOUSANDS)
ASSET
-----

Property and equipment....................... $ 3,634
Broadcast licenses and other intangibles..... 21,827
--------
$ 25,461
========

In November 1997, the Company sold the assets (principally intangibles)
of radio station WPZE-AM (Boston, MA) for $5 million. Proceeds from the sale
were initially being held by a qualified intermediary under a like-kind exchange
agreement to preserve the Company's ability to effect a tax-deferred exchange.
The Company did not effect a tax-deferred exchange and received the proceeds
from the sale in 1998.

3. DUE FROM STOCKHOLDERS

The amounts due from stockholders represent short-term advances made to
stockholders of the Company and repaid in January 2000.

4. PROPERTY, PLANT, EQUIPMENT AND SOFTWARE

Property, plant, equipment and software consisted of the following at
December 31:

DECEMBER 31,
-------------------
1998 1999
------- -------
(IN THOUSANDS)
Land........................................ $ 1,440 $ 1,974
Buildings................................... 1,417 1,742
Office furnishings and equipment............ 9,775 12,952
Antennae, towers and transmitting equipment. 25,665 32,672
Studio and production equipment............. 14,817 18,613
Computer software........................... -- 4,427
Record and tape libraries................... 511 527
Automobiles................................. 69 166
Leasehold improvements...................... 3,797 4,877
Construction-in-progress.................... 8,767 4,658
------- -------
66,258 82,608
Less accumulated depreciation............... 25,509 31,943
------- -------
$40,749 $50,665
======= =======

F-13
<PAGE> 46

5. LONG-TERM DEBT

Long-term debt consisted of the following at:

DECEMBER 31,
---------------------
1998 1999
-------- --------
(IN THOUSANDS)
Revolving line of credit with banks.......... $ 24,000 $ --
9 1/2% Senior Subordinated Notes due 2007.... 150,000 100,000
Obligation to acquire KIEV-AM property....... 2,810 2,810
Unsecured note payable to stockholder with
interest at 8 1/4%......................... 1,800 --

Capital leases acquired through OnePlace..... -- 344
Seller financed note to acquire GospelMedia.. -- 181
-------- --------
178,610 103,335
Less current portion......................... -- 3,248
-------- --------
$178,610 $100,087
======== ========

Since the revolving line of credit with banks carries a floating
interest rate, the carrying amount approximates its fair market value. The Notes
were issued in September 1997 at par. At December 31, 1999, their fair market
value was approximately $100.1 million.

Revolving Line of Credit with Banks

Salem has a credit agreement with six banks (the Credit Agreement) to
provide for borrowing capacity of up to $150 million under a revolving line of
credit. The maximum amount that the Company may borrow under the Credit
Agreement is limited by the Company's debt to cash flow ratio, adjusted for
recent radio station acquisitions as defined in the Credit Agreement (the
Adjusted Debt to Cash Flow Ratio). At December 31, 1999, the maximum Adjusted
Debt to Cash Flow Ratio allowed under the Credit Agreement was 6.00 to 1.00. At
December 31, 1999, the Adjusted Debt to Cash Flow Ratio was 2.48 to 1.00,
resulting in total borrowing availability of approximately $131.4 million. The
maximum Adjusted Debt to Cash Flow Ratio allowed under the Credit Agreement is
6.00 to 1 through December 31, 2000. Thereafter, the maximum ratio will decline
periodically until January 1, 2004, at which point it will remain at 4.00 to 1
through June 2006.

The note underlying the revolving line of credit bears interest at a
fluctuating base rate plus a spread that is determined by Salem's Adjusted Debt
to Cash Flow Ratio. At Salem's option, the base rate is either a bank's prime
rate or LIBOR. For purposes of determining the interest rate the prime rate
spread ranges from 0% to 1%, and the LIBOR spread ranges from .875% to 2.25%.
Interest is payable quarterly. Commencing March 31, 2001, and every quarter
thereafter, the commitment under the Credit Agreement reduces by increasing
amounts through June 30, 2006, when it expires.

F-14
<PAGE> 47

The Credit Agreement with the banks (a) provides for restrictions on
additional borrowings and leases; (b) prohibits Salem, without prior approval
from the banks, from paying dividends, liquidating, merging, consolidating or
selling its assets or business, and (c) requires Salem to maintain certain
financial ratios and other covenants. Salem has pledged all of its assets as
collateral under the Credit Agreement. Additionally, all the Company's stock
holdings in its subsidiaries are pledged as collateral.

In July 1999, the Company used a portion of the net proceeds of the
Offering to repay all amounts due under a previous revolving line of credit with
the banks, and to repurchase $50 million principal amount of the Notes. The
Company wrote off certain deferred financing costs (including bond issue costs
of $1.5 million) and paid a premium of $3.9 million on the Notes. The write-off
and premium of $3,570,000, net of a $1,986,000 income tax benefit, was recorded
as an extraordinary item in the accompanying statement of operations for the
year ended December 31, 1999.

In September 1997, in connection with the issuance of the Notes and the
Credit Agreement the Company repaid all amounts due under a previous revolving
line of credit with the banks. The Company wrote off certain deferred financing
costs and terminated all of its

F-15
<PAGE> 48

interest rate swap and cap agreements associated with the line of credit (see
Note 6). The write-off and termination fees of $1,185,000, net of a $659,000
income tax benefit, was recorded as an extraordinary item in the accompanying
statement of operations for the year ended December 31, 1997.

9 1/2% Senior Subordinated Notes due 2007

The Notes bear interest at 9 1/2% per annum, with interest payment
dates on April 1 and October 1, commencing April 1, 1998. Principal is due on
the maturity date, October 1, 2007. The Notes are redeemable at the option of
the Company, in whole or in part, at any time on or after October 1, 2002, at
the redemption prices specified in the indenture. The Notes are fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Guarantors (the Company's subsidiaries). The Notes are general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness, including the Company's obligations
under the Credit Agreement. The indenture limits the incurrence of additional
indebtedness by the Company, the payment of dividends, the use of proceeds of
certain asset sales, and contains certain other restrictive covenants affecting
the Company. In March 1998, the Company consummated an exchange offer for the
original notes (Original Notes) which were issued in September 1997. The
exchange offer commenced when the Company's registration statement under the
Securities Act of 1933 was declared effective. The Notes are identical in all
material respects to the Original Notes except that the Notes do not contain
terms with respect to transfer restrictions. The Notes are fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Guarantors. The Notes are in general freely transferable without
further registration under the Securities Act of 1933.

Other Debt

In August 1998, in connection with the Company's acquisition of
KIEV-AM, the Company agreed to lease the real property on which the station's
towers and transmitter are located for $10,000 per month. The Company also
agreed to purchase the property for $3 million in February 2000. The Company
recorded this transaction in a manner similar to a capital lease. The amount
recorded as a long-term obligation at December 31, 1998, represents the present
value of the future commitments under the lease and purchase contract,
discounted at 8.5%. The obligation is classified as current at December 31,
1999.

At December 31, 1998, the Company owed $1.8 million to one of its
stockholders. The entire amount was paid to the stockholder in April 1999.

F-16
<PAGE> 49

In connection with the acquisition of OnePlace in January 1999, the
Company acquired several capital leases related to various data processing
equipment. The obligation recorded at December 31, 1999 represents the present
value of future commitments under the lease agreements.

In connection with the acquisition of Gospel Media Network, Inc., the
Company incurred an obligation to make future payments to the seller. These
payments have been discounted to reflect the present value of the future
commitments.

Maturities of Long-Term Debt

Principal repayment requirements under all long-term debt agreements
outstanding at December 31, 1999, for each of the next five years and thereafter
are as follows:

2000............................... $ 3,189
2001............................... 146
2002............................... --
2003............................... --
2004............................... --
Thereafter......................... 100,000
--------
$103,335
========

6. INTEREST RATE CAP AND SWAP AGREEMENTS

In 1996 and 1997 Salem had entered into interest rate swap and cap
agreements to reduce the impact of changes in interest rates on its
floating-rate long-term debt. In September 1997, in connection with the issuance
of the Notes and the Credit Agreement the Company terminated all of its interest
rate swap and cap agreements for aggregate fees of $417,000. The Company wrote
off these costs (unamortized swap fee of $201,000 and the swap termination fee
of $417,000) in September 1997. This write-off, net of income tax benefit, was
included in the extraordinary loss in the accompanying statement of operations
for the year ended December 31, 1997 (see Note 5).

7. INCOME TAXES

As discussed in Note 1, prior to the Reorganization, New Inspiration
and Golden Gate were S Corporations for income tax purposes. Accordingly, any
federal and state income tax liability on net income of the S Corporations has
been the liability of shareholders of the S Corporations. The S Corporation
status of New Inspiration and Golden Gate was terminated in the Reorganization,
which was effective August 13, 1997, and the income of New Inspiration and
Golden Gate will thereafter be subject to federal and state income taxes. The
accompanying consolidated statements of operations include an unaudited pro
forma income tax adjustment, using an estimated combined effective tax rate of
approximately 40%, to reflect the estimated income tax expense of the Company as
if New Inspiration and Golden Gate had been subject to federal and state income
taxes for the periods presented. In connection with the Reorganization, which
resulted in the termination of the S Corporation status of New Inspiration and
Golden Gate, the Company recorded a deferred tax liability and provision of
approximately $609,000 in December 1997.

In connection with the 1999 acquisition of CCM the Company recorded a
net deferred tax liability of $1,468,000, which was recorded as an increase to
the deferred tax liability and is not reflected in the income tax benefit in
1999.

F-17
<PAGE> 50

The consolidated provision (benefit) for income taxes for Salem
consisted of the following at December 31:

<TABLE>
<CAPTION>
1997 1998 1999
-------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.............................. $ (149) $ -- $ --
State................................ 618 387 509
------- ----- ------
469 387 509
Deferred:
Federal.............................. (1,162) (467) (3,507)
State................................ 140 (263) (599)
-------- ----- -------
(1,022) (730) (4,106)
Current tax benefit reflected in net
extraordinary loss................... (659) -- (1,986)
------- ------ -------
Income tax provision (benefit)......... $ 106 $ (343) $(1,611)
======= ====== =======
</TABLE>

The consolidated deferred tax asset and liability consisted of the
following at December 31:

<TABLE>
<CAPTION>
1998 1999
------- ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Financial statement accruals not currently
deductible ............................. $ 665 $ 1,140
Net operating loss, AMT credit and other
carryforwards .......................... 2,367 4,846
State taxes ............................... 122 176
Other ..................................... -- 537
------- -------
Total deferred tax assets ................... 3,154 6,699
Valuation allowance for deferred tax assets . (95) (95)
------- -------
Net deferred tax assets ..................... 3,059 6,604

Deferred tax liabilities:
Excess of net book value of property,
plant, equipment and software for
financial reporting purposes over tax
basis ................................... 4,263 4,291
Excess of net book value of intangible
assets for financial reporting purposes
over tax basis .......................... 7,305 7,842
Other ..................................... 629 971
------- -------
Total deferred tax liabilities .............. 12,197 13,104
------- -------
Net deferred tax liabilities ................ $ 9,138 $ 6,500
======= =======
</TABLE>

A reconciliation of the statutory federal income tax rate to the
effective tax rate, as a percentage of income before income taxes, is as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1998 1999
---- ---- -----
<S> <C> <C> <C>
Statutory federal income tax rate...................... (34)% (34)% (34)%
State income taxes, net................................ 49 4 1
Nondeductible expenses................................. 5 7 7
Exclusion of income taxes of S corporations and the
Partnership.......................................... (76) -- --
Change in taxable entity (S corporation to
C corporation)....................................... 56 -- --
Other, net............................................. 10 5 --
--- --- ---
10% (18)% (26)%
=== === ===
</TABLE>

The S Corporations had book income before income taxes of $2,400,000 in
1997. This amount includes the S Corporations' 85% ownership interest in
Beltway.

F-18

<PAGE> 51

At December 31, 1999, the Company has net operating loss carryforwards
for federal income tax purposes of approximately $13,500,000 which expire in
years 2010 through 2019 and for state income tax purposes of approximately
$10,900,000 which expire in years 2000 through 2014. The Company has federal
alternative minimum tax credit carryforwards of approximately $147,000. For
financial reporting purposes, a valuation allowance of $95,000 has been provided
in 1999 and 1998 to offset a portion of the deferred tax assets related to the
state net operating loss carryforwards.

8. COMMITMENTS AND CONTINGENCIES

Salem leases various land, offices, studios and other equipment under
operating leases that expire over the next 10 years. The majority of these
leases are subject to escalation clauses and may be renewed for successive
periods ranging from one to five years on terms similar to current agreements
and except for specified increases in lease payments. Rental expense included in
operating expense under all lease agreements was $4,800,000, $4,800,000 and
$6,000,000 in 1997, 1998, and 1999, respectively.

Future minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1999, are as follows:

RELATED
PARTIES OTHER TOTAL
------- ------- -------
(IN THOUSANDS)
2000....................... $ 1,501 $ 4,827 $ 6,328
2001....................... 1,515 4,055 5,570
2002....................... 1,244 3,316 4,560
2003....................... 1,160 3,119 4,279
2004....................... 990 2,921 3,911
Thereafter................. 2,994 11,658 14,652
------- ------- -------
$ 9,404 $29,896 $39,300
======= ======= =======

The Company is involved in certain legal actions and claims arising in
the normal course of business. It is the opinion of management that such
litigation and claims will be resolved without material effect on the Company's
consolidated financial position, operations and cash flows.

The Company has a deferred compensation agreement with one of its
officers, which provides for retirement payments to the officer for a period of
ten consecutive years, if he remains employed by the Company until age 60. The
retirement payments are based on a formula defined in the agreement. The
estimated obligation under the deferred compensation agreement is being provided
for over the service period. At December 31, 1998 and 1999, a liability of
approximately $432,000 and $494,000 respectively, is included in other
liabilities in the accompanying balance sheet for the amounts earned under this
agreement.

9. STOCK OPTION PLAN

The 1999 Stock Incentive Plan (the Plan) allows the Company to grant
stock options to employees, directors, officers and advisors of the Company. A
maximum of 1,000,000 shares were authorized under the Plan. Options generally
vest over five years and have a maximum term of 10 years. The Plan provides that
vesting may be accelerated in certain corporate transactions of the Company. The
Plan provides that the Board of Directors, or a committee appointed by the
Board, has discretion, subject to certain limits, to modify the terms of
outstanding options. At December 31, 1999, the Company had 695,500 shares
available for future grants under its Plan.

A summary of stock option activity is as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTION PRICE WEIGHTED AVERAGE CONTRACTUAL LIFE
OPTIONS PER SHARE EXERCISE PRICE REMAINING IN YEARS
------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1998 -- -- -- --
Grants 304,500 $22.50 - $27.06 $22.65 9.5
------- --------------- ------ ---

Outstanding at December 31, 1999 304,500 $22.50 - $27.06 $22.65 9.5
======= =============== ====== ===
</TABLE>

F-19
<PAGE> 52
No options were exercisable as of December 31, 1999.

The Company has adopted the disclosure-only provisions of SFAS No.
123, "Accounting for Stock-Based Compensation." Accordingly, no compensation
cost has been recognized in the results of operations for the stock option
grants. Had compensation cost for the Company's stock option plans been
determined based on the fair value at the grant date, amortized over the vesting
period, for awards in 1999 consistent with the provisions of SFAS No. 123, the
Company's net income and basic earnings per share would have been reduced to the
pro forma amounts as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Net loss $(2,378) $(1,581) $(8,045)
Pro forma net loss (2,378) (1,581) (8,845)
Pro forma basic and diluted loss per share $ (0.14) $ (0.09) $ (0.44)
</TABLE>

Using the Black-Scholes valuation model, the per share weighted-average fair
value of stock options granted during the year ended December 31, 1999 was
$11.36. The pro forma effect on the Company's net loss and basic and diluted
loss per share for 1999 is not representative of the pro forma effect in future
years. The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants made in 1999: dividend yield of 0%; expected
volatility of 58.0%; risk-free interest rate of 5.8%; expected life of 4 years.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options. The assumptions used in option valuation models
are highly subjective, particularly the expected stock price volatility of the
underlying stock. Because changes in these subjective input assumptions can
materially affect the fair value estimate, in management's opinion the existing
models do not provide a reliable single measure of the fair value of its
employee stock options.

10. RELATED PARTY TRANSACTIONS

In December 1998, the Company borrowed $1.8 million from a stockholder
pursuant to a promissory note with a revolving principal amount of up to $2.5
million. The outstanding balance on the note as of December 31, 1998 was $1.8
million (see Note 5). The note was repaid in full and cancelled in April 1999.

In January 1998, the Company borrowed $1.5 million from another
stockholder pursuant to another promissory note with a revolving principal
amount of up to $2.5 million. The Company repaid all amounts outstanding in May
1998 and the note was cancelled.

A stockholder's trust owns real estate on which certain assets of two
radio stations are located. One of the stations, KAVC-FM, was sold during 1998.
Salem, in the ordinary course of its business, entered into two separate lease
agreements with this trust. Rental expense included in operating expense for
1997, 1998 and 1999 amounted to $57,000, $60,000 and $48,000, respectively.

Land and buildings occupied by various Salem radio stations are leased
from the stockholders of Salem. Rental expense under these leases included in
operating expense for 1997, 1998 and 1999 amounted to $1.0 million, $1.0 million
and $1.4 million, respectively.

In October 1997, the Company assigned its contract with a tower
construction company to build a broadcast tower in Houston to the principal
shareholders subject to the principal shareholders obtaining financing. The
principal shareholders obtained such financing on December 31, 1997 and
reimbursed the Company for its costs and expenses under the contract, which
amounted to approximately $3.7 million.

In June 1997, the Company entered into a local marketing agreement
(LMA) with a corporation, Sonsinger, Inc. (Sonsinger), owned by two of Salem's
stockholders for radio station KKOL-AM. The stockholders and the Company are
parties to an Option to Purchase Agreement whereunder the Company had been
granted an option to purchase KKOL-AM from the stockholders at any time on or
before December 31, 1999 at a price equal to the lower of the cost of the
station to the stockholders, $1.4 million, and its fair market value as
determined by an independent appraisal. The Company acquired KKOL-AM from
Sonsinger on April 30, 1999 for $1.4 million and associated real estate for
$400,000. Under the LMA, Salem programs KKOL-AM and sells all the airtime.
Salem retains all of the revenue and incurs all of the expenses related to the
operation of KKOL-AM and incurred approximately $64,000, $164,000 and $43,000 in
1997, 1998 and 1999, respectively in LMA fees to Sonsinger.

F-20
<PAGE> 53
From time to time, the Company rents an airplane and a helicopter from
a company which is owned by one of the principal stockholders. As approved by
the independent members of the Company's board of directors, the Company rents
these aircraft on an hourly basis at below-market rates and uses them for
general corporate needs. Total rental expense for these aircraft for 1997, 1998
and 1999 amounted to approximately $60,000, $69,000 and $156,000, respectively.

11. DEFINED CONTRIBUTION PLAN

In 1993, the Company established a 401(k) defined contribution plan
(the Plan), which covers all eligible employees (as defined in the Plan).
Participants are allowed to make nonforfeitable contributions up to 15% of their
annual salary, but may not exceed the annual maximum contribution limitations
established by the Internal Revenue Service. The Company currently matches 25%
of the amounts contributed by each participant but does not match participants'
contributions in excess of 6% of their compensation per pay period. Prior to
January 1, 1999, the Company matched 10% of the amounts contributed by each
participant but did not match participants' contributions in excess of 10% of
their compensation per pay period. The Company contributed and expensed $80,000,
$87,000 and $237,000 to the Plan in 1996, 1997 and 1999 respectively.

12. STOCKHOLDERS' EQUITY

On March 31, 1999, the Company changed its domicile from California to
Delaware (the Reincorporation). In conjunction with the Reincorporation, the
Company's capital structure was changed to authorize 80,000,000 shares of Class
A common stock, $0.01 par value, 20,000,000 shares of Class B common stock,
$0.01 par value, and 10,000,000 shares of preferred stock, $0.01 par value. In
the Reincorporation, the previously outstanding 5,553,696 shares of common stock
were converted into 11,107,392 shares of Class A common stock and 5,553,696
shares of Class B common stock.

In April 1999, the Company filed a registration statement for an
initial public offering (the Offering) of its Class A common stock with the
Securities and Exchange Commission. In connection with the Offering, the
Company's board of directors approved a 67-for-one stock dividend on the
Company's Class A and Class B common stock. All references in the accompanying
financial statements to Class A and Class B common stock and per share amounts
have been retroactively adjusted to give effect to the stock dividend.

Holders of Class A common stock are entitled to one vote per share and
holders of Class B common stock are entitled to ten votes per share, except for
specified related party transactions. Holders of Class A common stock and Class
B common stock vote together as a single class on all matters submitted to a
vote of stockholders, except that holders of Class A common stock vote
separately for two independent directors.

The Company established, in connection with the completion of the
Offering, the 1999 Stock Incentive Plan under which awards of stock options,
performance awards, restricted stock, stock appreciation rights, stock payments,
dividend equivalents, stock bonuses, stock sales, phantom stock and other
stock-based benefits may be granted (see Note 9).

On May 26, 1999, the Company awarded 75,000 shares of Class A common
stock to an officer of the Company. The Company also agreed to pay the
individual federal and state income tax liabilities associated with the stock
award. The Class A common stock award was valued based on the initial public
offering price and along with the compensation resulting from the payment of the
individual federal and state income taxes associated with the award was
recognized as compensation expense of $2.6 million during the year ended
December 31, 1999.

Upon the closing of the Company's initial public offering, the Company
issued 6,720,000 shares of the Company's Class A common stock at $22.50 per
share, generating gross offering proceeds of $151.2 million. After deducting a
$9.6 million underwriting discount and $1.5 million in other related expenses,
the net proceeds to Salem were $140.1 million.

In addition, two selling stockholders sold 2,940,000 shares of the
Company's Class A common stock (including 1,260,000 shares sold by the
stockholders as a result of the exercise by the managing underwriters of their
over-allotment option subsequent to the initial offering) to the underwriting
syndicate at the same price per share raising gross proceeds of $66.2 million.
After deducting a $4.2 million underwriting discount the net proceeds to the
selling stockholders were $62.0 million. Salem did not receive any monies from
the sale of shares of the Company's Class A common stock by these selling
stockholders.

F-21

<PAGE> 54

13. SUBSEQUENT EVENTS (Unaudited)

Subsequent to December 31, 1999, the Company purchased the assets
(principally intangibles) of the following radio stations:

PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
- ---------------- ------- ------------- --------------
(IN THOUSANDS)
January 4, 2000....... WNIV-AM
and WLTA-AM Atlanta, GA $ 8,000
January 10, 2000...... WABS-AM Washington, D.C. 4,100
January 25, 2000...... KJQI-FM San Francisco, CA 8,000
February 15, 2000..... KAIM-AM/FM Honolulu, HI 1,800
February 16, 2000..... KHNR-AM
and KGU-AM Honolulu, HI 1,700
-------
$23,600
=======

In November 1999, the Company agreed to purchase radio station WGKA-AM,
Atlanta, Georgia, for $8 million. The Company anticipates this purchase will
close in April 2000.

In December 1999, the Company agreed to purchase all of the outstanding
shares of stock of Reach Satellite Network, Inc. (RSN), for $3.1 million. RSN
owns and operates Solid Gospel, a radio broadcasting network that produces and
distributes music programming to its own radio stations WBOZ-FM and WVRY-FM,
Nashville, Tennessee, and to independent radio station affiliates. RSN also owns
and operates SolidGospel.com, a web site on the Internet. The Company
anticipates this purchase will close in April 2000.

On January 18, 2000, the Company purchased real property in Dallas,
Texas, for $885,000.

In January 2000, the Company agreed to exchange its radio station
KPRZ-FM, Colorado Springs, Colorado, plus $7.5 million, for radio station
KSKY-AM, Dallas, Texas. The Company anticipates this exchange will occur in May
2000.

On February 25, 2000, the Company purchased the KIEV-AM transmitter
site in Los Angeles, California, for $2.8 million. This amount was included in
current portion of long-term debt at December 31, 1999.

In March 2000, the Company agreed to purchase the following radio
stations for $185.6 million: KDGE-FM, Dallas, Texas, KALC-FM, Denver, Colorado,
KXMX-FM and KEZY-AM, Los Angeles, California, WYGY-FM and WBOB-AM, Cincinnati,
Ohio, and WRMR-AM and WKNR-AM, Cleveland, Ohio. The Company anticipates this
purchase will close in the third quarter of 2000. In connection with this
agreement the Company deposited a $25 million irrevocable letter of credit with
an escrow agent. Under the agreement Salem is subject to a liquidated damages
provision. If the Company fails to consummate the purchase or otherwise
terminates the agreement it is required to pay the seller $21.4 million in
addition to the $25 million letter of credit, which would be disbursed to the
seller.

14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):

<TABLE>
<CAPTION>
March 31 June 30 September 30 December 31
-------------------- -------------------- -------------------- ----------------------
1998 1999 1998 1999(1) 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- -------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue $ 17,702 $ 21,520 $ 18,702 $ 22,718 $19,232 $ 23,100 $ 22,255 $ 26,208
Net operating income 2,932 2,936 3,399 (89) 4,067 2,345 3,514 2,788
Net income (loss) before
extraordinary item (574) (1,308) (785) (3,516) 184 (138) (406) 487
Extraordinary loss -- -- -- -- -- (3,570) -- --
Net income (loss) $ (574) $ (1,308) $ (785) $ (3,516) $ 184 $ (3,708) $ (406) $ 487
Basic and diluted earnings
(loss) per share before
extraordinary item $ (0.03) $ (0.08) $ (0.05) $ (0.21) $ 0.01 $ (0.01) $ (0.02) $ 0.02
Extraordinary loss per share -- -- -- -- -- (0.15) -- --
Basic and diluted earnings
(loss) per share $ (0.03) $ (0.08) $ (0.05) $ (0.21) $ 0.01 $ (0.16) $ (0.02) $ 0.02
</TABLE>

- ----------------
(1) Includes a charge of $2.6 million ($1.9 million net of tax) related to stock
and related cash award made during the quarter.

F-22

<PAGE> 55

SALEM COMMUNICATIONS CORPORATION

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
------------------------- ---------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COST AND OTHER BAD DEBT END OF
Description PERIOD EXPENSES ACCOUNTS WRITE-OFFS PERIOD
- ----------- ------------ ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1997 .. $1,005 $1,283 $ -- $(1,039) $1,249
Allowance for doubtful accounts

Year Ended December 31, 1998 .. 1,249 2,087 -- (2,474) 862
Allowance for doubtful accounts

Year Ended December 31, 1999 .. 862 2,670 -- (1,779) 1,753
Allowance for doubtful accounts
</TABLE>

F-23

<PAGE> 56

SALEM COMMUNICATIONS CORPORATION

INDEX TO EXHIBITS

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
------- ----------- ------------

4.16 Amendment No. 1 to First Amended and Restated Credit Agreement, by
and among Salem, The Bank of New York, as Administrative Agent for
the Lenders, Bank of America, N.A., as Documentation Agent and the
Lenders party thereto.

4.17 Amendment No. 2 to First Amended and Restated Credit Agreement, by
and among Salem, The Bank of New York, as Administrative Agent for
the Lenders, Bank of America, N.A., as Documentation Agent and the
Lenders party thereto.

10.05.13 Antenna/tower lease between Salem Media of Texas, Inc. and
Atsinger Family Trust/Epperson Family Limited Partnership
(KSLR-AM/San Antonio, Texas).

10.05.16 Atenna/tower lease between Salem Media of Colorado, Inc. and
Atsinger Family Trust/Epperson Family Limited Partnership
(KRKS-AM/KBJD-AM/ Denver, Colorado).

10.08.01 Local Marketing Agreement dated August 13, 1999 between Concord
Group, Inc. and Radio 1210, Inc.

10.08.02 Asset Purchase Agreement dated as of August 18, 1999, by and
between Salem Media of Georgia, Inc. and Genesis Communications,
Inc. (WNIV-FM, Atlanta, Georgia and WLTA-FM, Alpharetta, Georgia.

10.08.03 Asset Purchase Agreement dated as of November 29, 1999, by and
among JW Broadcasting, Inc., Salem Media of Georgia, Inc. and
Salem Communications Corporation (WGKA-AM, Atlanta, Georgia).

21.01 Subsidiaries of Salem.

27.01 Financial Data Schedule.

++ Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on September 4, 1998.

++ Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 31, 1999.

** Incorporated by reference to the exhibit of the same number, unless otherwise
noted, of Salem's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on April 14, 1999.

<PAGE> 1
EXHIBIT 4.16

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

AMENDMENT NO. 1 (this "Amendment"), dated as of August 11, 1999, to the
First Amended and Restated Credit Agreement, dated as of June 30, 1999, by and
among SALEM COMMUNICATIONS CORPORATION, a Delaware corporation (the "Borrower"),
THE BANK OF NEW YORK, as administrative agent for the Lenders thereunder (in
such capacity, the "Administrative Agent"), BANK OF AMERICA, N. A. (f/k/a BANK
OF AMERICA NT&SA) as Documentation Agent, BANKBOSTON, N.A., FLEET BANK, N.A.,
and UNION BANK OF CALIFORNIA, N.A., as Co-Agents, and the Lenders party thereto
(the "Credit Agreement").

RECITALS

I. Except as otherwise provided herein, capitalized terms used herein
which are not defined herein shall have the meanings set forth in the Credit
Agreement.

II. The Borrower has requested that the Administrative Agent and the
Required Lenders amend the Credit Agreement upon the terms and conditions
contained herein, and the Administrative Agent and the Required Lenders are
willing to do so.

Accordingly, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, and pursuant to
Section 11.1 of the Credit Agreement, the Borrower, the Subsidiary Guarantors,
the Administrative Agent and each Lender signatory hereto agree as follows:

III. Section 8.5 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (l) thereof, (ii) replacing the
period at the end of clause (m) thereof with "; and", and (iii) adding a new
clause (n) to the end thereof as follows:

(n) other Investments, provided that (i) the aggregate amount of
all such other Investments shall not exceed in the aggregate $5,000,000 at any
time, and (ii) immediately before and after giving effect to each such
Investment no Default or Event of Default shall or would exist.

IV. Paragraph 1 of this Amendment shall not become effective until the
Administrative Agent shall have received counterparts of this Amendment duly
executed by the Borrower, the Subsidiary Guarantors, the Administrative Agent
and the Required Lenders.

V. In all other respects the Credit Agreement and other Loan Documents
shall remain in full force and effect.

<PAGE> 2

VI. In order to induce the Administrative Agent and the Lenders to
execute and deliver this Amendment, the Borrower and the Subsidiary Guarantors
each (a) certifies that, immediately before and after giving effect to this
Amendment, all representations and warranties contained in the Loan Documents to
which it is a party shall be true and correct in all respects with the same
effect as though such representations and warranties had been made on the date
hereof, except as the context otherwise requires or as otherwise permitted by
the Credit Agreement or this Amendment, (b) certifies that, immediately before
and after giving effect to this Amendment, no Default or Event of Default shall
exist under the Loan Documents, as amended, and (c) agrees to pay all of the
reasonable fees and disbursements of counsel to the Administrative Agent
incurred in connection with the preparation, negotiation and closing of this
Amendment.

VII. Each of the Borrower and the Subsidiary Guarantors (a) reaffirms
and admits the validity, enforceability and continuing effect of all Loan
Documents to which it is a party, and its obligations thereunder, and (b) agrees
and admits that as of the date hereof it has no valid defenses to or offsets
against any of its obligations to the Administrative Agent, the Documentation
Agent, the Issuing Bank or any of the Lenders under the Loan Documents to which
it is a party.

VIII. This Amendment may be executed in any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same document. It shall not be necessary in making proof
of this Amendment to produce or account for more than one counterpart signed by
the party to be charged.

IX. This Amendment shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, without regard to
principles of conflict of laws.

X. The parties have caused this Amendment to be duly executed as of the
date first written above.

SALEM COMMUNICATIONS CORPORATION

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 3

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

ATEP RADIO, INC.
BISON MEDIA, INC.
CARON BROADCASTING, INC.
CCM COMMUNICATIONS, INC.
COMMON GROUND BROADCASTING, INC.
GOLDEN GATE BROADCASTING COMPANY,
INC.
INLAND RADIO, INC.
INSPIRATION MEDIA OF TEXAS, INC.
INSPIRATION MEDIA, INC.
KINGDOM DIRECT, INC.
NEW ENGLAND CONTINENTAL MEDIA, INC.
NEW INSPIRATION BROADCASTING
COMPANY, INC.
OASIS RADIO, INC.
ONEPLACE, LTD.
PENNSYLVANIA MEDIA ASSOCIATES, INC.
RADIO 1210, INC
SALEM MEDIA CORPORATION
SALEM MEDIA OF CALIFORNIA, INC.
SALEM MEDIA OF COLORADO, INC.
SALEM MEDIA OF OHIO, INC.
SALEM MEDIA OF OREGON, INC.
SALEM MEDIA OF PENNSYLVANIA, INC.
SALEM MEDIA OF VIRGINIA, INC.
SALEM MEDIA OF TEXAS, INC.
SALEM MUSIC NETWORK, INC.
SALEM RADIO NETWORK INCORPORATED
SALEM RADIO REPRESENTATIVES, INC.
SOUTH TEXAS BROADCASTING, INC.
SRN NEWS NETWORK, INC.
VISTA BROADCASTING, INC.

By:
--------------------------------
Name: Eric H. Halvorson
Title: Vice President

<PAGE> 4

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

THE BANK OF NEW YORK,
in its individually capacity
and as Administrative Agent

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 5

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

BANK OF AMERICA, N.A. (f/k/a
BANK OF AMERICA NT & SA)
in it individual capacity and as
Documentation Agent

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 6

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

BANKBOSTON, N.A.,
in it individual capacity and as a
Co-Agent

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 7

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

FLEET BANK, N.A.,
in it individual capacity and as a
Co-Agent

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 8

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

UNION BANK OF CALIFORNIA, N.A.,
in it individual capacity and as a
Co-Agent

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 9

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

THE BANK OF NOVA SCOTIA

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 10

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 1

FIRST HAWAIIAN BANK

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 1
EXHIBIT 4.17

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

AMENDMENT NO. 2 (this "Amendment"), dated as of February 14, 2000, to
the First Amended and Restated Credit Agreement, dated as of June 30, 1999, by
and among SALEM COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Borrower"), THE BANK OF NEW YORK, as administrative agent for the Lenders
thereunder (in such capacity, the "Administrative Agent"), BANK OF AMERICA, N.
A. as Documentation Agent, BANKBOSTON, N.A., FLEET BANK, N.A., and UNION BANK OF
CALIFORNIA, N.A., as Co-Agents, and the Lenders party thereto, as amended by
Amendment No. 1, dated as of August 11, 1999 (the "Credit Agreement").

RECITALS

I. Except as otherwise provided herein, capitalized terms used herein
which are not defined herein shall have the meanings set forth in the Credit
Agreement.

II. The Borrower has requested that the Administrative Agent and the
Lenders amend the Credit Agreement upon the terms and conditions contained
herein, and the Administrative Agent and the Lenders are willing to do so.

III. The defined term "Letter of Credit Commitment" contained in
Section 1.1 of the Credit Agreement is hereby amended by replacing the amount
$15,000,000 with the amount $30,000,000.

IV. Paragraph 1 of this Amendment shall not become effective until the
Administrative Agent shall have received:

V. counterparts of this Amendment duly executed by the Borrower, the
Subsidiary Guarantors, the Administrative Agent and all of the Lenders; and

VI. a certificate, dated the date hereof, of the Secretary or an
Assistant Secretary of each Loan Party attaching a true and complete copy of the
resolutions of its Board of Directors or other authorizing documents and of all
documents evidencing all necessary corporate or other action (in form and
substance reasonably satisfactory to the Administrative Agent) taken by it to
authorize this Amendment and the transactions contemplated hereby.

<PAGE> 2

VII. In all other respects the Credit Agreement and other Loan
Documents shall remain in full force and effect.

VIII. In order to induce the Administrative Agent and the Lenders to
execute and deliver this Amendment, the Borrower and the Subsidiary Guarantors
each (a) certifies that, immediately before and after giving effect to this
Amendment, all representations and warranties contained in the Loan Documents to
which it is a party shall be true and correct in all respects with the same
effect as though such representations and warranties had been made on the date
hereof, except as the context otherwise requires or as otherwise permitted by
the Credit Agreement or this Amendment, (b) certifies that, immediately before
and after giving effect to this Amendment, no Default or Event of Default shall
exist under the Loan Documents, as amended, and (c) agrees to pay all of the
reasonable fees and disbursements of counsel to the Administrative Agent
incurred in connection with the preparation, negotiation and closing of this
Amendment.

IX. Each of the Borrower and the Subsidiary Guarantors (a) reaffirms
and admits the validity, enforceability and continuing effect of all Loan
Documents to which it is a party, and its obligations thereunder, and (b) agrees
and admits that as of the date hereof it has no valid defenses to or offsets
against any of its obligations to the Administrative Agent, the Documentation
Agent, the Issuing Bank or any of the Lenders under the Loan Documents to which
it is a party.

X. This Amendment may be executed in any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same document. It shall not be necessary in making proof
of this Amendment to produce or account for more than one counterpart signed by
the party to be charged.

XI. This Amendment shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, without regard to
principles of conflict of laws.

XII. The parties have caused this Amendment to be duly executed as of
the date first written above.

SALEM COMMUNICATIONS CORPORATION

By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------

<PAGE> 3

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

By:
------------------------------------
Name: Eric H. Halvorson
Title: Vice President

<PAGE> 4

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

THE BANK OF NEW YORK,
in its individual capacity
and as Administrative Agent

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 5

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

BANK OF AMERICA, N.A.
in its individual capacity and as
Documentation Agent

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 6

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

BANKBOSTON, N.A.,
in its individual capacity and as a
Co-Agent

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 7

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

FLEET BANK, N.A.,
in its individual capacity and as a
Co-Agent

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 8

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

UNION BANK OF CALIFORNIA, N.A.,
in its individual capacity and as a
Co-Agent

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 9

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

THE BANK OF NOVA SCOTIA

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 10

SALEM COMMUNICATIONS CORPORATION
AMENDMENT NO. 2

FIRST HAWAIIAN BANK

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE> 1

EXHIBIT 10.05.13

LAND LEASE AGREEMENT

This agreement is entered into on this 1st day of January, 2000 between, SALEM
MEDIA OF TEXAS, INC. (KSLR) ("Lessee"), and ATSINGER FAMILY TRUST/EPPERSON
FAMILY LIMITED PARTNERSHIP ("Lessor").

ARTICLE I

DEFINITIONS

The terms listed below when spelled with initial capital letters have the
following meanings in this agreement:

1.1 ADJUSTMENT DATE shall be the first anniversary of the commencement
date and every succeeding anniversary of the commencement date thereafter.

1.2 AGREEMENT means this Land Lease Agreement, including the schedules
and any other executed attachments and/or addenda all of which are made part of
this Agreement.

1.3 ANTENNA means the structure, supporting structures including
foundations and guy wires, cabling, ground systems and all other equipment
related to the tower system as set forth in Section 5.1 hereof.

1.4 ARTICLE or ARTICLES means one or more of the articles of this
Agreement.

1.5 COMMENCEMENT DATE means 12:01 AM on the date specified in this
Agreement as the Commencement Date of the Initial Term, as hereinafter defined.

1.6 EQUIPMENT BUILDING means the structure or area provided for the
Transmitters and associated broadcast transmission equipment as designated in
Section 5.2 for the limited purpose of constructing, installation, maintenance,
operation, repair or removal of the equipment. Notwithstanding anything in this
Agreement to the contrary, any item to be constructed or installed in the
Equipment Building pursuant to this Agreement shall be paid for, constructed and
maintained by Lessee.

1.7 EXPIRATION DATE means 11:59 PM on the date specified in this
Agreement as the date on which the Initial Term or any extended term of this
Agreement expires.

1.8 FACILITIES and FACILITY refer collectively or individually to any
and all Equipment, Cabling, Antenna and/or buildings or other structures
required to be constructed pursuant to Section 5.2 hereof, as the context may
indicate.

1.9 INITIAL TERM means the period from the Commencement Date to the
date set forth in Section 3.2.

1.10 LEASED LAND/LESSOR'S PROPERTY means the 50 acre parcel located
0.84 km west, Northwest of the Intersection of Interstate 10 and State Route
468.

1.11 MONTHLY RENT shall have the meaning as defined in Section 4.2(c)
hereof.

1.12 RENT means the consideration paid by Lessor to Lessee pursuant to
this Agreement.

1.13 SCHEDULE or SCHEDULES means one or more schedules attached to this
Agreement.

1.14 SECTION or SECTIONS means one or more of the sections of this
Agreement.

1.15 TOWER means within this document the same as Antenna.

<PAGE> 2

ARTICLE II

SCOPE OF THE AGREEMENT

2.1 LEASE. This Agreement sets forth the terms and conditions under
which Lessor agrees to lease land to the Lessee. Lessee agrees to use the Leased
Land and related rights only in accordance with the terms and conditions of this
Agreement; to comply with all applicable governmental regulations and
requirements of law pertaining to Lessee's activities in or around Lessor's
Property; to pay all fees, charges, costs and expenses in accordance with this
Agreement promptly when due; to keep the Facilities properly maintained; and to
comply in all respects with each of the obligations, duties, rules, conditions,
and requirements applicable to Lessee under this Agreement.

2.2 NO OTHER USE. Lessee will use the Leased Land solely for operating
the Antenna for its Commercial Broadcast Transmitter site, only for the purpose
and benefit of Salem Media of Texas Inc. and Lessee will not make any other use
of the Leased Land related rights provided under this Agreement. Lessee shall
not use Lessor's Property or any portion thereof, including the Equipment
Building, for purpose of maintaining the studios, offices or storage of Lessee.

2.3 NO OTHER RIGHTS. Only the Leased Land and related rights described
in this Agreement are provided under this Agreement. Lessor does not provide any
service or product under this Agreement.

ARTICLE III

TERM OF THE AGREEMENT; TERMINATION; RENEWALS

3.1 COMMENCEMENT DATE. The Commencement Date shall be January 1, 2000.

3.2 EXPIRATION DATE. The Expiration Date of this Agreement shall be the
day preceding the Tenth (10th) year anniversary of the Commencement Date, except
that if such date is not the last day of a calendar month, the Expiration Date
of this Agreement shall be the last day of the month in which the Tenth (10th)
anniversary of the Commencement Date falls. If the term has been extended, the
Expiration Date shall be the last day of the term as so extended.

3.3 TERMINATION BY LAW. Lessor shall have the right to terminate this
Agreement, upon notice to Lessee, and shut down and/or remove Lessee's Antenna
if:

(a) This Agreement is required to be terminated by ruling or regulation
of the Federal Communications Commission ("FCC") or the Federal
Aviation Administration ("FAA") or by any violation of the
Communications Act of 1934, as amended, arising out of Lessee's use of
Leased Land; or

(b) A final determination, not subject to appeal, of any local, state
or federal governmental body that Lessee's Facilities or the placement
and/or operation of Lessee's Facilities is in violation of any laws,
rules or regulations of any local state or federal agencies including,
without limitation, any land use provisions and/or any zoning and/or
planning code; or

(c) A final determination, not subject to appeal, that Lessee's
Facilities fail to meet in any material respect the requirements
imposed by law or the rules and regulations of local, state and federal
agencies and Lessee shall have failed to cure said matters within ten
(10) days of such final determination and written notice thereof.

<PAGE> 3

ARTICLE IV

FEES AND CHARGES; BILLING

4.1 PAYMENT OF RENT. Lessee agrees to pay rent to Lessor, without
notice or demand, from the Commencement Date through the Expiration Date
provided herein, at:

Atsinger Family Trust/Epperson Family Limited Partnership
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Accounting (805-987-0400)

or to such other person or place as Lessor may designate from time to time by
notice to Lessee.

4.2 RENT.

(a) Beginning with the Commencement Date, and continuing to the first
Adjustment Date, the base rent shall be the sum of $ 9,000.00 per
annum, payable in equal monthly installments of $750.00 in advance of
the first day of each month (and thereafter on each and every
Adjustment Date the monthly rent shall be computed according to Section
4.2(b); provided, however, that the installment of the base rent
payable for the first full month of the term shall be due and payable
on the full execution and delivery of this Agreement. If the
Commencement Date and/or Expiration Date occur on a day other than the
first day of a calendar month, rent shall be prorated for the month in
which the Commencement Date and/or Expiration Date occurs.

(b) During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the year in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers [Base Year 1982-84=100] ("CPI") as measured in February and
published by the United States Department of Labor, Bureau of Labor
Statistics; i.e., during the one (1) year period beginning with the
Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for February of the year such Adjustment Date falls
and the denominator of which shall be the CPI for February of the year
in which the Commencement Date falls. Notwithstanding the results of
the foregoing calculation, the annual base rent payable by Lessee
hereunder shall not in any event be less than 105% of the annual base
rent payable during the immediately preceding one (1) year period. In
the event that the Bureau of Labor Statistics shall change the base
period for the CPI, the new index number shall be substituted for the
old index number in making the above computation. In the event the
Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept
comparable statistics on the purchasing power of the consumer dollar as
published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen
by Lessor subject to reasonable consent of Lessee.

3
<PAGE> 4

4.3 ADITIONAL RENT. Lessee shall pay or reimburse Lessor within ten
(10) days after receipt of a statement from Lessor for all taxes, including
without limitation, real estate taxes, personal property taxes, ad valorem taxes
and special assessments, levied against Lessor which are attributable to Lessee,
or its assigns, as a result of the Facilities, buildings or structures placed or
operated on Lessor's Property by Lessee or services offered by Lessee on
Lessor's Property (but excluding any taxes attributable to Lessor's Property),
which statement shall include, at the request of Lessee, such documentation as
is reasonably necessary to substantiate said amounts. In addition, Lessee shall
pay or reimburse Lessor within ten (10) days after receipt of a statement for
any state or local tax of any kind (except income taxes) arising from or
attributable to this Agreement.

4.4 NO NOTICE. From and after the Commencement Date, Lessee will pay to
Lessor the Monthly Rent. Said installments are due and payable in advance,
without notice or demand. Although Lessor may, for its own convenience, issue
bills to Lessee, any failure of Lessor to issue a timely bill will not relieve
Lessee of its obligation to pay Monthly Rent without notice or demand.

4.5 NO SET-OFF. Except as otherwise provided in this Agreement, Lessee
will pay all Rent, fees, costs, and expenses without deduction or set-off of any
kind.

ARTICLE V

GRANT OF LAND LEASE USES

5.1 ANTENNA. Lessor, in consideration of the rents to be paid and the
covenants contained herein, hereby leases to Lessee the right to erect and
maintain a four-tower Antenna Array (hereafter referred to as Antenna) as
generally depicted on Exhibit 1 for the limited purpose of installing,
maintaining, operating, or repairing the Antenna in accordance with this
Agreement, and to pass through portions of the Lessor's Property designated by
Lessor for ingress to and egress from the Antenna Location. All site work for
the use on the Antenna shall be performed by Lessee and at the expense of
Lessee.

5.2 EQUIPMENT BUILDING. Lessor, in further consideration of the rents
to be paid and covenants contained herein, hereby grants to Lessee the rights to
build and/or use an Equipment Building as reasonably determined by Lessor, for
the limited purpose of installing, maintaining, operating, repairing, or
removing all necessary and required Equipment in accordance with this Agreement;
and to pass through portions of the Lessor's Property designated by Lessor for
ingress to and egress from the Equipment Building. All site work for the use of
the Equipment Building shall be performed by Lessee and at the expense of
Lessee. Notwithstanding anything in this Agreement to the contrary, in the event
Lessee is required by Lessor to construct a permanent building or other
permanent structure on Lessor's Property, at the expiration of the term of this
Agreement, the permanent building and other permanent structures shall, at the
sole election of Lessor, become the property of Lessor.

<PAGE> 5

ARTICLE VI

INSTALLATIONS OF FACILITIES

6.1 SPECIFICATIONS. Lessee shall prepare specifications for Lessee's
Facilities to be constructed and maintained on Lessor's property. All such
specifications shall be based upon information contained in the Schedules hereto
and engineering data furnished by Lessee and may include the requirement of
Lessee to provide, at Lessee's expense, the purchase and installation of such
equipment for protecting Lessor's property.

6.2 PRIOR APPROVAL. Prior to the initiation by Lessee of the delivery,
installation, replacement, modification or removal of Facilities, Lessee must
obtain the prior written approval of Lessor to Lessee's proposed scheduling of
work and Lessee's choice of vendors and contractors. Lessor, at its sole
discretion and election, may condition said approval on obtaining additional
information and/or requiring schedule changes and substitution of vendors and
contractors. Lessor's approval of any act or action of Lessee or Lessee's
Authorized Personnel pursuant to this Agreement shall not be considered an
endorsement, representation, or warranty regarding the viability of said
scheduling, and/or the ability of said vendor or contractor to perform the work
intended by Lessee. Lessee shall deliver, construct and install the Facilities
in strict conformity with the specifications, schedules, and choice of vendors
and contractors approved by Lessor.

6.3 DELIVERY & INSTALLATION OF FACILITIES. Lessee shall furnish,
construct and install all Facilities. Physical delivery of the Facilities to
Lessor's property and all installation work performed by Lessee shall be
performed in accordance with the specifications and approvals furnished pursuant
to this Article.

6.4 LESSEE'S RESPONSIBILITIES. Notwithstanding anything in this
Agreement to the contrary, Lessee has the sole responsibility for any product
liability claims, product warranty claims, delays and service outages of Lessee
that may result from defective Facilities, improper scheduling, improper
installation, or any other matter, irrespective of the cause.

ARTICLE VII

USE OF LEASED SPACE

7.1 FACILITIES. Lessee may bring the Facilities onto the Leased Land at
Lessee's own risk and expense. Equipment shall be confined to the Equipment
Building and the Antenna shall be confined to the Antenna Location.

<PAGE> 6

7.2 OTHER MATERIALS. In addition to the Facilities, Lessee may bring
onto the Leased Land, at Lessee's own risk and expense (a) any materials and
apparatus specially identified in written engineering specifications approved in
writing by Lessor, and (b) small tools and portable test equipment as needed to
perform Lessee's obligations under this Agreement. Lessee's rights under this
Section 7.2 are subject to the conditions that all such materials, apparatus,
tools, and test equipment will remain at all times in the care, custody, and
control of Lessee's Employees.

7.3 NEGATIVE COVENANTS. Lessee may not bring onto the Leased Land any
material, apparatus, facilities, tools, or equipment other than those identified
in this Agreement unless Lessee first obtains written permission from Lessor.
Without limiting the foregoing, Lessee is specifically informed that the
following are not permitted within the Leased Land: wet cell batteries,
explosives, flammable liquids or gases, alcohol, controlled substances, weapons,
toxic materials, hazardous waste, pollutants, contaminants, asbestos and
asbestos related products, polychlorinated biphenyl's (PCB's), petroleum, crude
oil or any fraction or distillate thereof, and any similar equipment and/or
materials. Lessee shall not use or permit Lessor's Property to be used by any
dangerous, toxic, noxious, offensive, or unlawful purposes.

ARTICLE VIII

RIGHT OF ENTRY

8.1 ACCESS. Lessee shall have reasonable access to the Leased Land;
provided access to the Leased Land shall be regulated pursuant to the rules and
regulations described in Section 23.5 and access to Antenna and Equipment
Building may be limited based upon the reasonable discretion of Lessor.

8.2 AUTHORIZED PERSONNEL. All persons, contractors and/or engineers
installing, maintaining, repairing, removing or otherwise working on the
Facilities shall be approved in advance by Lessor, which approval shall not be
unreasonably withheld. A list ("Authorized Entry List") of those persons,
contractors and/or engineers approved by Lessor shall be maintained by Lessor.
Prior to the Commencement Date, Lessee will submit to Lessor a proposed
"Authorized Entry List". Lessor may request additional information from Lessee
before granting its approval, which approval may not be unreasonably withheld.
Lessee will promptly give notice to Lessor, both orally and in writing, of the
name of any person who ceases to be one of Lessee's employees or agents or whom
Lessee wishes to remove from the "Authorized Entry List".

8.3 QUALIFIED PERSONNEL. Lessee represents and warrants that on the
date hereof and each and every date prior to the last act to be performed by
Lessee pursuant to this Agreement, including Section 9.2 hereof, Lessee's
Employees and any other person(s) installing, maintaining, repairing, removing
or otherwise working on the Facilities or otherwise on Lessor's Property at the
request or direction of Lessee shall be a technician qualified to perform said
duties and have been trained in compliance with then current OSHA, FCC and ANSI
standards, including such standards relating to radio frequency radiation.

ARTICLE IX

PROTECTION OF SERVICE AND PROPERTY

9.1 CONTINUITY OF USE. The continuity of the use of the land by Lessor
is of paramount importance. Lessee and Lessee's Employees will at all times
exercise the highest degree of care to prevent damages to the Lessor's Property
and to all other real and personal property of Lessor, its customers and other
tenants of Lessor's Property. Lessee and Lessee's Employees will perform any
work and use the Facilities in a manner that will protect all other persons,
structures, equipment, utilities, and/or work areas of any kind against injury,
damage or interruption of service. Lessee and Lessee's Employees will not use
any Facilities, equipment, tools or methods which, in the sole judgment of
Lessor, might endanger or interfere with the services of Lessor.

9.2 QUIET ENJOYMENT. Except as otherwise set forth in this Agreement,
Lessor shall not alter, make adjustments to, relocate or otherwise modify or
tamper with Lessee's Facilities.

<PAGE> 7

ARTICLE X

INSPECTION

10.1 WORK IN PROGRESS. Lessor, its employees and agents may inspect and
observe any work while in progress or after completion to ascertain whether the
work is in accordance with the specifications and requirements of this
Agreement. Lessor may require Lessee to correct any faulty work. However,
inspection or observation by Lessor or by its agents of work performed by Lessee
or Lessee's Employees will not relieve Lessee of full responsibility for the
proper performance of the work.

10.2 TIME. Lessor, its agent and its designees (including without
limitation building inspectors, fire marshals, and other officials) may inspect
the Leased Land and the Facilities at any time. At Lessee's request, Lessee's
Employees on the Authorized Entry List may accompany Lessor during such
inspections except when, in the sole judgment of Lessor, safety or service
considerations require otherwise.

ARTICLE XI

UTILITIES

11.1 LESSEE RESPONSIBILITY. Lessee shall be responsible, at Lessee's
sole cost, for obtaining, using and paying for all utility services to the
Leased Land for Lessee's use including, without limitation, electricity,
electricity for proper antenna operations including required FAA obstruction
lighting, elevator, platform tenants, electricity for the building common areas
both inside and outside, including general lighting and receptacles air
conditioning, heat, water, sewer, telephone, waste disposal and gas
(collectively referred to herein as "Utilities").

11.2 INTERRUPTION. Under no circumstances shall Lessor be liable for
any interruption or failure in the supply of any Utilities to the Leased Land,
nor shall Lessee have any right to an abatement in rent or offset to rent in the
event of any interruption or failure in the supply of any Utilities to the
Leased Land.

ARTICLE XII

OWNERSHIP OF FACILITIES

12.1 RISK OF LOSS. Except as otherwise provided in this Agreement, all
Facilities shall be owned by Lessee, and Lessee shall bear all risk of loss
and/or damage to the Facilities.

12.2 OWNERSHIP. Any and all Facilities on Lessor's Land, except utility
service and any building or structure installed by Lessee (which, at the
expiration of the term of this Agreement, shall, at the sole election and
discretion of Lessor, be the property of Lessor), shall remain the personal
property of Lessee notwithstanding the fact that it may be affixed or attached
to the realty or Lessor's Property, and shall, subject to all terms and
conditions of this Agreement, during the Agreement, any extension thereof or
upon the termination thereof belong to and be removable by Lessee. All other
machinery, equipment, buildings, structures and trade fixtures attached to
Lessor's Property, shall, upon termination of this agreement, be deemed fixtures
and, at the sole election of Lessor, become the property of Lessor.

ARTICLE XIII

MAINTENANCE AND REPAIR

13.1 FACILITIES. Lessee will, at its own risk and expense, maintain and
repair, including replacement if necessary (collectively referred to as
"Maintenance"), the Antenna, buildings, structures and any other items or things
placed on Lessor's Property by Lessee pursuant to this Agreement. All
Maintenance shall be performed in a manner suitable to Lessor so as not to
conflict with the use of Lessor's Property by Lessor, or any other tenant of
Lessor. All Maintenance shall be provided by qualified technicians, authorized
to enter Lessor's Property pursuant to Section 8.2.

<PAGE> 8
ARTICLE XIV

NO ALTERATIONS

14.1 Except as specifically set forth in this Agreement, Lessee may not
make any alterations, additions and/or improvements to any part of the Lessor's
Property, the Leased Land, the Antenna and Equipment without the prior written
consent of the Lessor, which consent shall be given in Lessor's sole discretion.

ARTICLE XV

REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS

15.1 LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and
warrants that:

(a) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
and validly authorized by all necessary actions on the part of Lessor
and shall not constitute a breach or violation under any agreement to
which Lessor is a party.

(b) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations
or requirement with respect to the Leased Land, and as of the date of
this Agreement, no notice of any kind relating thereto (which would
adversely affect the transactions contemplated by this Agreement) has
been issued by public authorities having jurisdiction over the Leased
Land.

(c) There is no action, suit or proceeding pending or, to Lessor's
knowledge, threatened against or affecting the Leased Land or any
portion thereof and Lessor has not received notice, written or
otherwise, of any litigation affecting or concerning the Leased Land
relating to or arising out of its ownership, management, use or
operation.

(d) Lessor's Property is and will remain in material compliance at all
times during the Term of this agreement with all federal, state,
county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining
thereto, including, without limitation, to the extent applicable, all
zoning laws and building codes, all environmental laws and all
regulations of the FAA and the FCC.

15.2 LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that:

(a) The Facilities and the operation thereof do not and will not result
in exposure of workers or the general public to levels of radio
frequency radiation in excess of the "Radio Frequency Protection
Guides" recommended in "American National Standard Safety Levels With
Respect to Human Exposure to Radio Frequency Electromagnetic Fields,
300 KHz to 100 GHz," issued by the American National Standards
Institute ("Acceptable Radio Frequency Radiation Standards").

(b) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
and validly authorized by all necessary actions on the part of Lessee
and shall not constitute a breach or violation under any agreement to
which Lessee is a party. This Agreement constitutes a valid and binding
agreement and obligation of Lessee, enforceable in accordance with its
terms.

(c) Lessee will conduct its activities on Lessor's Property in
compliance with all applicable laws, including, without limitation, all
OSHA, FCC, and FAA rules and regulations, environmental laws, and any
rule or law applicable to the construction or operation of Lessee's
Facilities.

(d) The Leased Land is and will remain in material compliance at all
times during the Term and any Extension Term with all federal, state,
county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining
thereto, including, without limitation, to the extent applicable, all
zoning laws and building codes and all regulations of the FAA and the
FCC.

(e) No agent, broker or other person, entity or firm acting on behalf
of or under the authority of Lessee or any affiliate of Lessee is or
will be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly, in connection with
the transactions contemplated by this Agreement.

<PAGE> 9

ARTICLE XVI

EVENTS OF DEFAULT

16.1 DEFAULT OF LESSEE. Any of the following events shall constitute an
"event of default" on the part of Lessee:

(a) The failure of Lessee to pay any amount due hereunder, and
continuation of such failure for more than five (5) days after Lessee's
receipt of written notice thereof from Lessor; provided however that
Lessor shall not be required to provide such written notice to Lessee
more than twice in any twelve (12) month period prior to declaring such
failure to pay an event of default;

(b) The failure of Lessee to comply with the provisions of Article IX
hereof; or

(c) The failure of Lessee to fulfill any other obligation hereunder or
the inaccuracy of any representation or warranty and the continuation
of such failure or inaccuracy for more than ten (10) days after notice
by Lessor, provided, however, that if the nature of Lessee's failure is
such that more than ten (10) days is required for its cure, then Lessee
shall not be deemed to be in default if Lessee has commenced such cure
within the ten (10) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently
prosecutes such cure to completion.

16.2 TERMINATION BY DEFAULT OF LESSEE. If an event of default on the
part of Lessee shall occur at any time, Lessor, at its election, may give Lessee
a notice of termination specifying a day not less than thirty (30) days
thereafter on which the term of this Agreement shall end. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Land to Lessor.
If the Agreement is terminated pursuant to this Section, Lessee shall remain
liable to Lessor for the payment of rent for the remainder of the lease term and
without prejudice to any other right or remedy which Lessor may have hereunder
or by law and which shall, at the sole election and discretion of Lessor, become
immediately due and payable. Notwithstanding the foregoing, Lessor shall attempt
to mitigate any damages it may suffer as a result of the default of this
Agreement by Lessee. Notwithstanding any waiver of any prior breach or event of
default hereunder, Lessor may re-enter the Leased Land either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased land by appropriate suit, action or proceeding and
remove its effects and hold the Leased Land as if this Agreement had not been
made. Notwithstanding anything in this Agreement to the contrary, and in
addition to any other remedies Lessor may have, if an event of default shall
occur, Lessor, at its election, may stop providing Utilities to Lessee's
Facilities and/or the Leased Land and Lessee specifically waives any and all
claims for damages against Lessor arising from a loss Utilities to the Leased
Land.

9
<PAGE> 10

ARTICLE XVII

INSURANCE

17.1 LESSEE'S INSURANCE. Lessee shall, at its sole expense, maintain
commercial public liability insurance against claims for personal injury, bodily
injury, wrongful death and property damage occurring on, in or about Lessor's
Property under policies and with companies reasonably acceptable to Lessor,
affording insurance protection to limits of not less than One Million Dollars
($1,000,000.00) for combined single limit with respect to any one occurrence and
Three Million Dollars ($3,000,000.00) in the aggregate for all occurrences
within each policy year. Lessee shall also maintain "all risk" or special form
policies of property insurance covering the Facilities and any improvements of
Lessee located on the Lessor's Property for the full replacement cost. Lessor,
its managing agent, all mortgagees, and such other parties as Lessor may
reasonably designate shall be named as additional insureds on each such policy
pertaining to Lessor's Property and shall be furnished with a certificate
thereof. Each such policy of insurance shall, to the extent obtainable at no
extra premium, provide: (a) that any claim shall be payable notwithstanding any
act, whether of commission or omission, negligent or otherwise, of Lessor, of
Lessee, of any other tenant or of any agent, employee, representative, visitor
or guest of any of them, which act might otherwise result in the forfeiture of
the insurance afforded by such policy, and (b) that Lessor shall not be liable
to the insurer by reason of any payment by the insurer to Lessor, or any such
other tenant. In addition, each such policy shall provide an agreement by the
insurer that the policy will not be canceled or modified to reduce coverage as
to risk, amount or named insured without at least fifteen (15) days' prior
written notice to Lessee, Lessor, mortgagees, and all other named insureds.

17.2 WAIVER. Neither Lessor, nor their representatives, agents, or
employees shall be liable to Lessee or to anyone claiming through Lessee or to
any insurance company (by way of subrogation or otherwise) insuring Lessee for
any business interruption or for any loss or damage to any building, structure
or other tangible property, or injury to or death of persons occurring on or
about Lessor's Property, or in any manner growing out of or connected with
Lessee's use or occupation of the Lessor's Property, or the use or occupation of
the Lessor's Property by Lessee's agents, employees, representatives, visitors
or guests even though such business interruption, loss, damage, injury or death
might have been occasioned by the negligence of Lessor or their agents or
employees, to the extent that such business interruption, loss, damage, injury
or death is or could be covered by an "all risk" or special form policy of
property insurance, regardless of whether such insurance policies are actually
carried. Each insurance policy carried by Lessee hereto shall contain a clause
incorporating such waiver of subrogation and a clause to the effect that the
foregoing waiver shall not affect the right of the insured party to recover
under such policy.

17.3 LESSEE'S OBLIGATION TO REIMBURSE. Should Lessee store or maintain
any materials or equipment, or do any acts which result in an increase in the
rate or premium of any insurance coverage required to be provided by Lessor
pursuant to this Agreement, Lessee shall immediately reimburse Lessor for the
full amount of any such increase or shall remove them if Lessor so requires.

<PAGE> 11

ARTICLE XVIII

INDEMNIFICATION

18.1 INDEMNIFICATION BY LESSEE. Lessee shall indemnify Lessor and its
agents, officers and employees and hold Lessor and its agents, officers and
employees harmless from and against all claims, actions, losses, damages,
liabilities and expense (including reasonable attorneys' fees) incurred by or
asserted against Lessor whether during or after the term of this Agreement,
including by reason of personal injury, loss of life, or damage to property,
caused by or resulting from, in whole or any material part: (i) any breach of
this Agreement by Lessee; (ii) Lessee's breach of any warranty contained in this
Agreement; (iii) any negligent or intentional act or omission of Lessee,
Lessee's Employees, agents, invitees or contractors, whether in, on, about or
with respect to the Leased Land or Lessor's Property; (iv) the use by Lessee of
any part of the Leased Land or Lessor's Property; (v) any work undertaken by or
at the request of Lessee on or about the Leased Land; (vi) any inspection,
observation or any action undertaken by Lessor pursuant to Article IX hereof;
(vii) the claim, existence or discovery of any hazardous substance on Lessor's
Property arising from Lessee's activities; (vii) any other activity undertaken
by or at the request of Lessee pursuant to or in connection with this Agreement;
or (ix) the presence of any individuals on the Leased Space or Lessor's Property
as a result of Lessee's request or this Agreement.

18.2 DEFENSE BY LESSEE. If Lessor so elects by notice to Lessee, Lessee
shall have the obligation of defending, at its sole cost and expense, by counsel
selected by Lessee and approved by Lessor (such approval not to be unreasonably
withheld), against any claim to which the foregoing indemnity may apply. Lessor
may assume, or require that such defense be assumed, by Lessor and counsel
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.

ARTICLE XIX

RECONSTRUCTION OF DAMAGED PREMISES

19.1 REPAIR. Except as otherwise provided in this Agreement, if
Lessee's Property, or any portion thereof, is partially or totally destroyed by
fire or other casualty so as to become partially or totally unusable, Lessee may
repair or reconstruct the damage on Lessor's Land to the extent and in the
manner required to meet the then current needs of Lessee.

19.2 RENT ABATEMENT. This Agreement will remain in full force and
effect pending repair or replacement of the damaged or destroyed premises, and
the obligation of Lessee to pay the Monthly Rent will not be abated during any
period due to damage to or destruction of the Lessee's Facilities (other than
fault of Lessor).

19.3 ELECTION NOT TO REPAIR. Notwithstanding anything to the contrary
in Sections 19.1 and 19.2 Lessee may, at its sole and absolute discretion, elect
not to repair or rebuild it's Facilities, or any portion thereof. Lessee will
promptly notify Lessor within forty-five (45) days of the event causing the
damage or destruction, if such option is elected.

<PAGE> 12

ARTICLE XX

FORCE MAJEURE

20.1 FORCE MAJEURE. Except for Lessee's obligation to pay Rent, and
except as set forth in Article XIX above, neither party shall be held liable for
any delay or failure in performance of any part of this Agreement from any cause
beyond its control and without its fault or negligence, such as acts of God,
acts of civil or military authority, government regulations, strikes, labor
disputes, embargoes, epidemics, war, terrorist acts, riots, insurrections, fire,
explosions, earthquakes, nuclear accidents, floods, power blackouts or brownouts
or surges, volcanic action, other major environmental disturbances, unusually
severe weather conditions, inability to secure products or services of other
persons or transportation facilities, or act or omissions of transportation
common carriers (collectively referred to as "Force Majeure Conditions").

20.2 TERMINATION BY FORCE MAJEURE. If any such Force Majeure Condition
occurs and is the proximate cause of a delay or failure in performance of any
part of a party's obligations under this Agreement for more than ninety (90)
days, the other party may, by written notice given to the party whose
performance was delayed or who failed to perform, terminate this Agreement or
that part of this Agreement that is affected by such delay or failure to perform

ARTICLE XXI

SAFETY

21.1 FACILITIES. Lessee is responsible for the safety of all
Facilities, buildings, structures and other materials brought by Lessee onto
Lessor's Land, and for the safety of all work performed by Lessee's Employees in
the delivery, provision, installation, operation, maintenance, repair and
removal of the Facilities, buildings, structures and any other material brought
by Lessee onto Lessor's Property. In discharging this responsibility, Lessee
shall comply (and shall cause Lessee's Employees to comply) with the
requirements of the Occupational Safety and Health Act of 1970, as amended; and
with any other federal, state, or local act or other requirements of law
affecting safety and health.

21.2 VIOLATIONS. Lessee shall be responsible for any violation by
Lessee or Lessee's Employees of any safety or health standard under this
Agreement. If any material furnished or any work performed by Lessee or Lessee's
Employees gives rise to a safety or health violation, Lessee will immediately
remedy such condition and will indemnify, defend, and hold Lessor it's
employees, agents, officers, representatives, affiliates, parent, subsidiaries
and their affiliated companies, and their employees, agents, officers and
representatives) harmless from any penalty, fine, or liability in connection
with such a violation.

ARTICLE XXII

PERMITS, LICENSES, APPROVALS

22.1 FCC PERMITS. Lessee will apply for and obtain, at its sole cost
and expense, FCC construction permits applicable to the installation of the
Facilities, and will meet all FCC license and other requirements and
restrictions. The FCC construction permit(s) must be approved before any
construction or installation activity begins. A completed copy of Lessee's FCC
application and License will be supplied to Lessor along with the executed
agreement.

22.2 FAA APPROVAL. Lessee will notify the FAA of any Tower
modifications and Antenna installations, that may be required by Lessee, and
will use reasonable efforts to obtain any FAA-required permits, license, or
approvals associated with Lessee's Facilities. Lessee will pay for all costs and
expenses it incurs in obtaining or attempting to obtain any permits, license, or
approvals.

22.3 OTHER PERMITS OR LICENSE. Lessee shall apply for and obtain, at
its sole cost and expense, any and all License, permits, variances or other
governmental approvals required to install, operate and maintain its Facilities
in the Leased Land; provided that Lessee shall not submit any such applications
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld.

12
<PAGE> 13

ARTICLE XXIII

MISCELLANEOUS PROVISIONS

23.1 SEVERABILITY. If any one or more of the provisions contained in
this Agreement is, for any reason, held to be unenforceable in any respect under
applicable state law or laws of the United States of America, such
unenforceability will not affect any other provision of this Agreement, but this
Agreement will then be construed in such a way as will achieve the intent of
such unenforceable provision or provisions to the extent permitted by law.

23.2 ASSIGNMENT BY LESSOR. Notwithstanding any of the provisions of
this Agreement, Lessor may assign, in whole or in part, Lessor's interest in
this Agreement. In the event Lessor assigns this Agreement to a successor owner
of the Leased Land, Lessor shall be and is hereby relieved of all liability
arising after the consummation of such assignment under any and all covenants
and obligations contained in or derived from this Agreement or arising out of
any act, occurrence or omission relating to the Leased Land occurring after the
consummation of such assignment, but only upon the condition that, as part of
such Assignment, Lessor will cause the Assignee to agree, in writing, to carry
out any and all of the covenants and obligations of Lessor under this Agreement
occurring after the consummation of Lessor's assignment of its interest in and
to this Agreement. In the event of an assignment of Lessor's interest in this
Agreement to a Lender, as hereinafter defined, or a designee of a Lender, (i)
the assignee shall have no obligation to Lessee hereunder other than, provided
Lessee is not in default hereof, the obligation of quiet enjoyment, (ii) all
amounts required to be paid to Lessor hereunder from Lessee shall be paid to the
assignee, and (iii) Lessee shall not assert against such assignee any claims,
defenses, setoffs or counterclaims that it might have had against Lessor.

23.3 ASSIGNMENT BY LESSEE. Lessee may not assign this Agreement without
the prior written consent of Lessor which consent shall not unreasonably be
withheld. Lessee may not sublet this Agreement, the Leased Land, or any portion
thereof without the prior written consent of Lessor, which consent shall be
given or withheld in Lessor's sole and absolute discretion. Under no
circumstance shall this Agreement be assigned by Lessee to any party which does
not agree in writing to be bound by all terms and conditions contained herein
and, notwithstanding Lessee's assignment of this Agreement, Lessee shall remain
liable for all obligations of Lessee pursuant to this Agreement until such time
as this Agreement is terminated.

23.4 CONDEMNATION. In the event Lessor's Property or any portion
thereof is taken pursuant to a condemnation proceeding or by eminent domain,
such that Lessor, or Lessee can no longer operate telecommunications equipment
on Lessor's property, this Agreement shall, at Lessor's sole and absolute
discretion, terminate without liability to either party and Lessee shall not be
entitled to any portion of any award arising out of such proceedings.

23.5 RULES AND REGULATIONS. From time to time, Lessor shall be entitled
to create and enforce rules and regulations governing the use of Lessor's
Property. Lessee agrees Lessee and Lessee's employees shall abide by said rules
and regulations. Lessor agrees that it shall not create or enforce any
unreasonable rules or regulations which would unduly prejudice Lessee's use of
the Leased Land, or which would prevent reasonable access to the Leased Land by
Lessee, as herein provided.

23.6 RESTORATION ON TERMINATION. Upon the termination of the Agreement
for any reason, Lessee will restore the Leased Land to its original condition,
normal wear and tear excepted, at Lessee's sole cost and expense. Any fixtures
including, without limitation, the Antenna, goods or other property of Lessee
not removed within ten (10) days after any quitting, vacating or abandonment of
the Leased Land, or upon Lessee's eviction therefrom, shall be considered
abandoned, and Lessor shall have the right, without notice to Lessee, to sell or
otherwise dispose of same without having to account to Lessee for any part of
the proceeds of sale.

<PAGE> 14

23.7 NOTICES. All notices, demands, and requests required or permitted
to be given hereunder shall be in writing and sent certified mail, return
receipt requested.

To Lessee: Salem Media of Texas, Inc
KSLR
9601 McAllister Freeway #1200
San Antonio, TX 78216

To Lessor Atsinger Family Trust/Epperson Family Limited Partnership
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Facsimile No: (805) 987-6072
Attn: Brian J. Counsil, Esq.

Either party hereto may change the place for notice to it by sending like
written notice to the other party hereto.

23.8 SUBORDINATION. Unless a Lender, as hereinafter defined, shall
otherwise elect as provided herein, Lessee's rights under this Agreement shall
be subject and subordinate to the operation and effect of any existing or future
Lien, as hereinafter defined, affecting Lessor's Land and to any extensions,
modifications or amendments of any such mortgage. Lessee's acknowledgment and
agreement of subordination provided for in this Section is self-operative and no
further instrument of subordination shall be required. However, within ten (10)
working days after request, Lessee shall execute a subordination,
non-disturbance and attornment agreement in form satisfactory to Lessor. If a
Lender shall so elect by notice to Lessee or by the recording of a unilateral
declaration of subordination, then this Agreement and Lessee's rights hereunder
shall be superior and prior in right to the Lien of which such Lender has the
benefit, with the same force and effect as if this Agreement had been executed,
delivered and recorded prior to the execution, delivery and recording of such
Lien, as the case may be, subject, nevertheless, to such conditions as may be
set forth in any such notice of declaration. The term "Lien" means any mortgage,
deed of trust or other security instrument constituting a lien upon all or any
portion of the Lessor's Land. The term "Lender" means a party having the benefit
of the Lien, whether as mortgagee, trustee, note holder or otherwise. Lessor
shall make a reasonable effort to obtain from any Lender an agreement that the
Lender shall not disturb Lessee's quiet possession in the event of foreclosure.
If any proceedings are brought for foreclosure, or in the event the exercise of
the power of sale under any mortgage or deed of trust made by the Lessor
encumbering the Leased Land, Lessee shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Lessor under this
Agreement.

<PAGE> 15

23.9 BINDING EFFECT. The provisions of this Agreement shall apply to,
bind and inure to the benefit of Lessor and Lessee, their respective successors,
legal representatives or assigns.

23.10 ENTIRE AGREEMENT/MODIFICATIONS. This Agreement contains the
entire understanding and agreement between the parties. No representative, agent
or employee of Lessor has been authorized to make any representations or
promises with reference to the within agreement or to vary, alter or modify the
terms hereof. No additions, changes or modifications shall be binding unless
reduced to writing and signed by the parties.

23.11 RESOLUTION OF CLAIMS AND DISPUTES. Regardless of the place of
execution, this Agreement shall be deemed to be a contract made in San Antonio,
Texas and shall be interpreted as a contract to be performed wholly in the State
of Texas. The law of the State of Texas shall be applied without regard to the
principles of conflicts of laws. Lessee expressly waives any presumption or
rule, if any, which requires this Agreement to be construed against Lessor. Any
claims or disputes arising out of this Agreement shall be resolved only by
mediation or, if mediation does not resolve the claim or dispute within ten (10)
days of notice demanding mediation, by arbitration in accordance with the Rules
for Commercial Arbitration of the American Arbitration Association and any award
therefrom shall be rendered by the arbitrators as a judgment in any trial court
having jurisdiction in the City of San Antonio, Texas, or of any other court
having competent jurisdiction.

23.12 WAIVER. Failure of any party to complain of any act or omission
on the part of any other party in breach or default of this Agreement, no matter
how long the same may continue, shall not be deemed to be a waiver by said party
of any of its rights hereunder. No waiver by any party at any time, express or
implied, of any breach of any provision of this Agreement shall be deemed a
waiver of a breach of any other provision of this Agreement or a consent to any
subsequent breach of the same or other provisions.

23.13 ESTOPPEL. Either party shall at any time, upon ten (10) days'
prior written request from the other party, execute, acknowledge and deliver to
the requesting party a statement in writing (a) certifying this Agreement to be
unmodified and in full force and effect (or, if modified, stating the nature of
such modification), and the date to which the rent and other charges have been
paid in advance, if any uncured defaults hereunder on the part of the requesting
party, or specifying such defaults if they are claimed.

23.14 REASONABLENESS. Except as specifically set forth herein to the
contrary, any approval, consent or permission required to be given hereunder by
any party shall not be unreasonably withheld, delayed or conditioned.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

LESSOR: LESSEE:

ATSINGER FAMILY TRUST SALEM MEDIA OF TEXAS, INC. KSLR

By: By:
-------------------------------- ----------------------------

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

EPPERSON FAMILY LIMITED PARTNERSHIP

By:
-------------------------------

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

<PAGE> 1

EXHIBIT 10.05.16

LAND LEASE AGREEMENT

This agreement is entered into on this 1st day of January, 2000 between, SALEM
MEDIA OF COLORADO, INC. (KRKS) ("Lessee"), and ATSINGER FAMILY TRUST/EPPERSON
FAMILY LIMITED PARTNERSHIP ("Lessor").

ARTICLE I

DEFINITIONS

The terms listed below when spelled with initial capital letters have the
following meanings in this agreement:

1.1 ADJUSTMENT DATE shall mean the first day of January following the
first anniversary of the Commencement Date and each subsequent first day of
January this Agreement remains in effect.

1.2 AGREEMENT means this Land Lease Agreement, including the schedules
and any other executed attachments and/or addenda all of which are made part of
this Agreement.

1.4 ARTICLE or ARTICLES means one or more of the articles of this
Agreement.

1.5 COMMENCEMENT DATE means 12:01 AM on the date specified in this
Agreement as the Commencement Date of the Initial Term, as hereinafter defined.

1.6 EQUIPMENT BUILDING means the structure or area provided for the
Transmitters and associated broadcast transmission equipment as designated in
Schedule 5.2 for the limited purpose of constructing, installation, maintenance,
operation, repair or removal of the equipment. Notwithstanding anything in this
Agreement to the contrary, any item to be constructed or installed in the
Equipment Building pursuant to this Agreement shall be paid for, constructed and
maintained by Lessee.

1.7 EXPIRATION DATE means 11:59 PM on the date specified in this
Agreement as the date on which the Initial Term or any extended term of this
Agreement expires.

1.9 INITIAL TERM means the period from the Commencement Date to the
date set forth in Section 3.2.

1.10 LEASED LAND/LESSOR'S PROPERTY means one quarter of section 11,
Township 3 South, Range 68 West of the 6th PM City of Commerce City, County of
Adams, State of Colorado (see Exhibit 1).

1.11 MONTHLY RENT shall have the meaning as defined in Section 4.2(c)
hereof.

1.12 RENT means the consideration paid by Lessor to Lessee pursuant to
this Agreement.

1.13 SCHEDULE or SCHEDULES means one or more schedules attached to this
Agreement.

1.14 SECTION or SECTIONS means one or more of the sections of this
Agreement.

1.15 TOWER means within this document the same as Antenna.

1
<PAGE> 2

ARTICLE II

SCOPE OF THE AGREEMENT

2.2 NO OTHER USE. Lessee will use the Leased Land solely for operating
the Antenna for its Commercial Broadcast Transmitter site, only for the purpose
and benefit of Salem Media of Colorado, Inc. and lessee will not make any other
use of the Leased Land related rights provided under this Agreement. Lessee
shall not use Lessor's Property or any portion thereof, including the Equipment
Building, for purpose of maintaining the studios, offices or storage of Lessee.

2.3 NO OTHER RIGHTS. Only the Leased Land and related rights described
in this Agreement are provided under this Agreement. Lessor does not provide any
service or product under this Agreement.

ARTICLE III

TERM OF THE AGREEMENT; TERMINATION; RENEWALS

3.1 COMMENCEMENT DATE. The Commencement Date shall be the date when
Lessee begins construction or when Lessee commences with any part of the
installation on Lessor's property.

3.3 TERMINATION BY LAW. Lessor shall have the right to terminate this
Agreement, upon notice to Lessee, and shut down and/or remove Lessee's Antenna,
if:

<PAGE> 3

ARTICLE IV

FEES AND CHARGES; BILLING

4.1 PAYMENT OF RENT. Lessee agrees to pay rent to Lessor, without
notice or demand, from the Commencement Date through the Expiration Date
provided herein, at:

Atsinger Family Trust/Epperson Family Limited Partnership
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Accounting (805-987-0400)

or to such other person or place as Lessor may designate from time to time by
notice to Lessee.

4.2 RENT.

(a) Beginning with the Commencement Date, and continuing to the first
Adjustment Date, the base rent shall be the sum of $60,000.00 per
annum, payable in equal monthly installments of $5000.00 in advance of
the first day of each month (and thereafter on each and every
Adjustment Date the monthly rent shall be computed according to Section
4.2(b); provided, however, that the installment of the base rent
payable for the first full month of the term shall be due and payable
on the full execution and delivery of this Agreement. If the
Commencement Date and/or Expiration Date occur on a day other than the
first day of a calendar month, rent shall be prorated for the month in
which the Commencement Date and/or Expiration Date occurs.

3
<PAGE> 4

4.3 ADDITIONAL RENT. Lessee shall pay or reimburse Lessor within ten
(10) days after receipt of a statement from Lessor for all taxes, including
without limitation, real estate taxes, personal property taxes, ad valorem taxes
and special assessments, levied against Lessor which are attributable to Lessee,
or its assigns, as a result of the Facilities, buildings or structures placed or
operated on Lessor's Property by Lessee or services offered by Lessee on
Lessor's Property (but excluding any taxes attributable to Lessor's Property),
which statement shall include, at the request of Lessee, such documentation as
is reasonably necessary to substantiate said amounts. In addition, Lessee shall
pay or reimburse Lessor within ten (10) days after receipt of a statement for
any state or local tax of any kind (except income taxes) arising from or
attributable to this Agreement.

4.5 NO SET-OFF. Except as otherwise provided in this Agreement, Lessee
will pay all Rent, fees, costs, and expenses without deduction or set-off of any
kind.

ARTICLE V

GRANT OF LAND LEASE USES

5.1 ANTENNA. Lessor, in consideration of the rents to be paid and the
covenants contained herein, hereby leases to Lessee the right to erect and
maintain a two-tower Antenna Array (hereafter referred to as Antenna) as
generally depicted on Exhibit 1 for the limited purpose of installing,
maintaining, operating, or repairing the Antenna in accordance with this
Agreement, and to pass through portions of the Lessor's Property designated by
Lessor for ingress to and egress from the Antenna Location. All site work for
the use on the Antenna shall be performed by Lessee and at the expense of
Lessee.

ARTICLE VI

INSTALLATIONS OF FACILITIES

<PAGE> 5
ARTICLE VII

USE OF LEASED SPACE

ARTICLE VIII

RIGHT OF ENTRY

ARTICLE IX

PROTECTION OF SERVICE AND PROPERTY

9.2 QUIET ENJOYMENT. Except as otherwise set forth in this Agreement,
Lessor shall not alter, make adjustments to, relocate or otherwise modify or
tamper with Lessee's Facilities.

<PAGE> 6
ARTICLE X

INSPECTION

ARTICLE XI

UTILITIES

ARTICLE XII

OWNERSHIP OF FACILITIES

12.1 RISK OF LOSS. Except as otherwise provided in this Agreement, all
Facilities shall be owned by Lessee, and Lessee shall bear all risk of loss
and/or damage to the Facilities.

ARTICLE XIII

MAINTENANCE AND REPAIR

<PAGE> 7

ARTICLE XIV

NO ALTERATIONS

ARTICLE XV

REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS

15.1 LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and
warrants that:

15.2 LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that:

7
<PAGE> 8

ARTICLE XVI

EVENTS OF DEFAULT

16.1 DEFAULT OF LESSEE. Any of the following events shall constitute an
"event of default" on the part of Lessee:

(b) The failure of Lessee to comply with the provisions of Article IX
hereof; or

ARTICLE XVII

INSURANCE

<PAGE> 9

ARTICLE XVIII

INDEMNIFICATION

9
<PAGE> 10

ARTICLE XIX

RECONSTRUCTION OF DAMAGED PREMISES

19.1 REPAIR. Except as otherwise provided in this Agreement, if
Lessee's Property, or any portion thereof, is partially or totally destroyed by
fire or other casualty so as to become partially or totally unusable, Lessee may
repair or reconstruct the damage on Lessor's Property to the extent and in the
manner required to meet the then current needs of Lessee.

ARTICLE XX

FORCE MAJEURE

ARTICLE XXI

SAFETY

<PAGE> 11

ARTICLE XXII

PERMITS, LICENSES, APPROVALS

ARTICLE XXIII

MISCELLANEOUS PROVISIONS

<PAGE> 12

23.6 RESTORATION ON TERMINATION. Upon the termination of the Agreement
for any reason, Lessee will restore the Leased Land to its original condition,
normal wear and tear excepted, at Lessee's sole cost and expense. Any fixtures
including, without limitation, all Antenna, Cabling and Equipment, goods or
other property of Lessee not removed within ten (10) days after any quitting,
vacating or abandonment of the Leased Land, or upon Lessee's eviction therefrom,
shall be considered abandoned, and Lessor shall have the right, without notice
to Lessee, to sell or otherwise dispose of same without having to account to
Lessee for any part of the proceeds of sale.

23.7 NOTICES. All notices, demands, and requests required or permitted
to be given hereunder shall be in writing and sent certified mail, return
receipt requested.

To Lessee: Salem Media of Colorado, Inc.
KRKS
3131 Sp/ Vaughn Way #601
Aurora CO, 80014

Either party hereto may change the place for notice to it by sending like
written notice to the other party hereto.

<PAGE> 13

and recorded prior to the execution, delivery and recording of such Lien, as the
case may be, subject, nevertheless, to such conditions as may be set forth in
any such notice of declaration. The term "Lien" means any mortgage, deed of
trust or other security instrument constituting a lien upon all or any portion
of the Lessor's Land. The term "Lender" means a party having the benefit of the
Lien, whether as mortgagee, trustee, note holder or otherwise. Lessor shall make
a reasonable effort to obtain from any Lender an agreement that the Lender shall
not disturb Lessee's quiet possession in the event of foreclosure. If any
proceedings are brought for foreclosure, or in the event the exercise of the
power of sale under any mortgage or deed of trust made by the Lessor encumbering
the Leased Land, Lessee shall attorn to the purchaser upon any such foreclosure
or sale and recognize such purchaser as the Lessor under this Agreement.

23.9 BINDING EFFECT. The provisions of this Agreement shall apply to,
bind and inure to the benefit of Lessor and Lessee, their respective successors,
legal representatives or assigns.

23.11 RESOLUTION OF CLAIMS AND DISPUTES. Regardless of the place of
execution, this Agreement shall be deemed to be a contract made in Aurora,
Colorado and shall be interpreted as a contract to be performed wholly in the
State of Colorado. The law of the State of Colorado shall be applied without
regard to the principles of conflicts of laws. Lessee expressly waives any
presumption or rule, if any, which requires this Agreement to be construed
against Lessor. Any claims or disputes arising out of this Agreement shall be
resolved only by mediation or, if mediation does not resolve the claim or
dispute within ten (10) days of notice demanding mediation, by arbitration in
accordance with the Rules for Commercial Arbitration of the American Arbitration
Association and any award therefrom shall be rendered by the arbitrators as a
judgment in any trial court having jurisdiction in the City of Aurora, Colorado,
or of any other court having competent jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

LESSOR: LESSEE:

ATSINGER FAMILY TRUST SALEM MEDIA OF COLORADO, INC. KRKS

By: By:
------------------------------- --------------------------------------

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

EPPERSON FAMILY LIMITED PARTNERSHIP

By:
-------------------------------

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

<PAGE> 1

EXHIBIT 10.08.01

+ + EXECUTION COPY + +

LOCAL PROGRAMMING AND MARKETING AGREEMENT
WITH
OPTION TO PURCHASE STATION

This Local Programming and Marketing Agreement with Option to Purchase
Station (the "Agreement"), dated as of August 13, 1999, is entered into by and
between CONCORD MEDIA GROUP, INC. ("Licensee"), and RADIO 1210, INC.
("Programmer").

WHEREAS, Licensee is the owner of certain assets relating to radio
station KCBQ(AM), San Diego, California (the "Station") and holds all of the
licenses and authorizations issued by the FCC for the operation of the Station;

WHEREAS, the Station's transmission facilities are located on real
property (the "Current Site") leased to Licensee pursuant to a lease agreement
expiring approximately on ___________, 200__, and Licensee has been informed
that the Station will not be able continue to use the Current Site following the
expiration of the lease;

WHEREAS, Programmer desires to purchase substantially all of the assets
of the Station, including, without limitation, the licenses and authorizations
issued by the FCC for the operation of the Station, and Seller is willing to
convey such assets to Buyer;

WHEREAS, Programmer does not want enter into any agreement to purchase
the Station unless and until it has secured an interest in real property ("New
Site") which can serve as an adequate replacement for the Current Site,
including any federal, state and local government approvals required for the New
Site,

WHEREAS, in accordance with procedures and policies approved by FCC,
the Programmer desires to avail itself of Station's broadcast time for the
presentation of a programming service, including the sale of program and
advertising time in contemplation of the potential sale of the Station to
Programmer;

WHEREAS, in accordance with procedures and policies approved by the
FCC, Licensee desires to provide to Programmer the Station's broadcast time for
the presentation of a programming service, including the sale of program and
advertising time in contemplation of the potential sale of the Station to
Programmer;

NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:

1. PURCHASE OF AIR TIME AND BROADCAST OF THE PROGRAMMING. Subject to
the provisions of Section 4 hereof, Licensee agrees to make the broadcasting
transmission facilities of the Station available to the Programmer and to
broadcast on the Station, or cause to be broadcast, the Programmer's programs
(the "Programming") for up to 24 hours a day, seven days a week, except for the
broadcast of Licensee's public service programming as provided in Section 10.1
of

<PAGE> 2

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this Agreement ("Licensee Programming"). The facilities and the transmitting
equipment of Licensee relating to the Station, including any equipment owned by
Licensee not currently in service, reasonably shall be made available to the
Programmer for its use during the term of this Agreement.

2. CONSIDERATION. The terms and conditions of payment ("Consideration")
to Licensee for the broadcasting of the Programming during the term of this
Agreement shall be as set forth in Schedule 2.

3. TERM.

3.1 COMMENCEMENT/TERMINATION DATE.

3.1.1. This Agreement shall commence and be effective at 12:01
a.m. Pacific time on SEPTEMBER 1, 1999 (the "Commencement Date").

3.1.2. Except as otherwise provided in this Agreement, the
term of this Agreement shall end at 11:59 p.m. Pacific time on the date
("Original Termination Date") being later to occur of:

(a) The earlier to occur of (i) nine (9) months from
the Commencement Date or (ii) sixty (60) days after Licensee's receipt of
written notice from Programmer; or

(b) In the event the Option Right, as set forth in
Section 21 hereof, is exercised, then the termination or consummation of the
transactions contemplated by the Asset Purchase Agreement described in Section
21 hereof.

3.1.3. Programmer shall have the right to extend the term of
this Agreement (including the provisions of Section 21 hereof) to a date
("Extended Termination Date") being six (6) months from its receipt of written
notice from Licensee if, prior to the Original Termination Date, Programmer
shall have (i) entered into an agreement to acquire a suitable New Site, (ii)
filed applications for approvals of any required federal, state and local
governmental authorities having jurisdiction over the New Site as may be
necessary for the New Site to serve as a transmitter site for the Station, and
(iii) taken all commercially reasonable steps necessary to prosecute such
filings with diligence to the end that such approvals may be obtained as soon as
practicable. As used in this Agreement, the term "Termination Date" shall mean
and refer to the later to occur of the Original Termination Date and the
Extended Termination Date.

3.2 TERMINATION BY FCC. In the event that either party
receives formal or constructive notice from the FCC that this Agreement or any
of its terms are contrary to the public interest or violative of any FCC
statute, regulation, rule or policy, either party shall have the right to
terminate this Agreement (except to the extent the provisions of Section 21
shall survive as provided therein) immediately by written notice to the other
party.

2
<PAGE> 3

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4. THE PROGRAMMING. The Programmer shall furnish programming to
Licensee for up to 24 hours a day, seven days a week, except for the broadcast
of Licensee's Programming. The nature of the program service to be provided by
the Programmer will be determined by Programmer subject to applicable FCC rules
and regulations and subject further to the requirement that Programming will
serve the public interest. Throughout the term of this Agreement Programmer
shall provide sufficient programming at least to meet the minimum operational
requirements for AM broadcast Stations as provided by Section 73.1740 of the
FCC's Rules and Regulations. 47 C.F.R. ss. 73.1740. At the date of this
Agreement, that minimum requires at least eight (8) hours of programming between
the hours of 6:00 a.m. and 6:00 p.m., local time; and at least four (4) hours of
programming between the hours of 6:00 p.m. and midnight.

4.1. LICENSEE'S PROGRAMMING. Licensee shall be entitled to
provide and broadcast four (4) hours per week of programming on the Station,
including public affairs programming to address the issues and problems of San
Diego, California, and the surrounding service area. Any programming broadcast
by Licensee pursuant to this Section, including public affairs programming,
shall be broadcast between 2:00 a.m. and 4:00 a.m. on Sunday, or between 12:00
a.m. and 4:00 a.m. on Monday. Nothing herein shall be interpreted or construed
to restrict to the hours set forth in this subsection the Licensee's general
authority over programming under this Agreement. In all such cases, Licensee
will use its best commercially reasonable efforts to give Programmer reasonable
advance notice of its intention to broadcast pursuant to this section and, in
the event of such broadcasts, Programmer shall receive a payment credit for any
programming which would have been supplied by it during the time of such
broadcasts by Licensee.

5. STATION FACILITIES.

5.1 OPERATION OF STATION. Throughout the term of this
Agreement, Licensee shall make the Station available to the Programmer as
provided in this Agreement, except for Licensee's Programming and downtime
occasioned by routine maintenance which will be performed between the hours of
12 midnight and 6:00 a.m. Except for maintenance work and other improvements to
the Station or the Station's equipment performed by or at the direction of
Programmer, any maintenance work affecting the operation of the Station at full
power, except such emergency maintenance as is required to maintain compliance
with the Station's license or FCC regulations, rules or policies, shall be
scheduled upon at least 48 hours prior notice with the agreement of the
Programmer, which agreement shall not be unreasonably delayed or withheld.

5.2 INTERRUPTION OF NORMAL OPERATIONS. Except for maintenance
work and other improvements to the Station or the Station's equipment performed
by or at the direction of Programmer, if the Station suffers loss or damage of
any nature to its transmission facilities which results in the interruption of
service or the inability of the Station to operate with its maximum authorized
facilities, Programmer shall immediately notify Licensee, and Licensee shall
undertake such repairs as reasonably necessary to restore the fulltime operation
of the Station with its maximum authorized facilities (i.e. as set forth on its
license) as quickly as reasonably practicable. Except as may be the direct
result of any act, omission or action of Programmer, if the Station is

3
<PAGE> 4

+ + EXECUTION COPY + +

incapable of operating with its maximum authorized facilities, Licensee shall
pay Programmer a prorated share of the Consideration proportionate to the amount
of time the Station was so impaired as follows: (a) if the effective radiated
power ("ERP") of the Station is 50% or less of the maximum ERP as set forth on
the Station's license, the Consideration will be abated (i) 100% for each
daytime daypart, or (ii) 50% for each nighttime daypart, or any portion thereof;
the Station so operates; and, (b) if the ERP of the Station is 90% to 51% of the
maximum ERP as set forth on the Station's license, the Consideration will be
abated (i) in proportion to the percentage loss in ERP, for each daytime
daypart, or (ii) one half of the percentage loss in ERP for each nighttime
daypart, or any portion thereof, the Station so operates; and, (c) if the ERP of
the Station is 91% or more of the maximum ERP as set forth on the Station's
license, the Consideration will not be abated. For the purposes of this
provision, the term "daytime daypart" shall mean between 7:00 AM and 7:00 PM,
local time, and the term "nighttime daypart" shall mean all other hours. If the
required repairs necessary to return the Station to operation with its full
authorized maximum facilities are not made within seven (7) days, the Programmer
may terminate this Agreement (except to the extent the obligation of Section 21
shall survive as provided therein) upon 10 days notice to Licensee, any other
provision of this Agreement notwithstanding; provided, however, in the event (x)
the required repairs cannot reasonably be completed with seven (7) days, (y)
Licensee has commenced the required repairs within seven (7) days, and (z)
Licensee is diligently proceeding to effectuate said required repairs,
Programmer may not terminate this Agreement pursuant to this Section 5.

6. HANDLING OF MAIL. The Programmer shall provide to Licensee the
original or a copy of any correspondence which it receives from a member of the
public relating to the Programming to enable Licensee to comply with FCC rules
and policies, including those regarding the maintenance of the public inspection
file (which shall at all times remain the responsibility of Licensee).

7. PROGRAMMING AND OPERATIONS STANDARDS. All programs supplied by the
Programmer shall be in good taste and shall meet in all material respects all
requirements of the Communications Act of 1934 and all applicable rules,
regulations and policies of the FCC and the policies of the Station described in
Schedule 7. All advertising spots and promotional material or announcements
shall comply with all applicable federal, state and local regulations and
Station policies. If, in the reasonable judgment of Licensee or the Station's
General Manager, any portion of the Programming presented by the Programmer does
not meet such standards, Licensee may suspend or cancel any such portion of the
Programming.

8. RESPONSIBILITY FOR EMPLOYEES AND RELATED EXPENSES.

8.1 PROGRAMMER EMPLOYEES. The Programmer shall furnish (or
cause to be furnished) the personnel and material for the production of the
Programming to be provided by this Agreement. The Programmer shall employ and be
responsible for the salaries, taxes, insurance and related costs and benefits
for all personnel used in the production of Programming (including sales people,
traffic personnel and programming staff). The Programmer shall not pay or
reimburse the

4
<PAGE> 5

+ + EXECUTION COPY + +

salaries or other costs associated with any employees of Station that Licensee
may be required to employ or may elect to employ on or after the date of
commencement of this Agreement.

8.2 LICENSEE EMPLOYEES. Licensee will provide and have
responsibility for the Station personnel necessary for compliance with the
requirements of Licensee as set forth by the FCC, and will be responsible for
the salaries, taxes, insurance and related costs for all such Station personnel.
The parties agree and acknowledge that Licensee's continued control of the
Station is an essential element of the continuing validity and legality of this
Agreement. Accordingly, the Manager of the Station shall be employed and paid by
Licensee, report solely to, and be accountable solely to, Licensee and shall
direct, subject to Licensee's exclusive oversight and control, the day-to-day
operations of the Station. Licensee shall employ and pay such other full-time
personnel, or equivalent thereof (not less than one), as Licensee determines may
be necessary to fulfill its obligations as a licensee under the Communications
Act and the rules and regulations of the FCC.

8.3 EMPLOYEE OVERSIGHT. Whenever on the Station's premises,
all personnel shall be subject to the supervision and the direction of the
Station's General Manager and/or the Station's Chief Operator.

9. ADVERTISING AND PROGRAMMING REVENUES. During the Programming it
delivers to the Station, the Programmer shall have full authority to sell for
its own account commercial spot advertising and block programming time on the
Station and to retain all revenues from the sale of such advertising and
programming. The parties agree that the Programmer shall have complete
discretion, reasonably exercised, to deal as it deems reasonably appropriate
with all advertising and programming accounts relating to advertising and
programming sold by it; provided, however, the Programmer shall deal with
political candidate and supporter advertising as required by law and provide
Licensee with requisite documentation for the Station's public file. Programmer
shall prepare and supply to Licensee a Political Advertising Disclosure
Statement setting forth the manner in which Programmer sells program and spot
time and informing political advertisers of their rights and obligations. The
Political Advertising Disclosure Statement shall be subject to the approval of
Licensee, which approval shall not unreasonably be withheld.

10. OPERATION OF THE STATION.

10.1 VERIFICATION OF LICENSEE'S CONTROL AND RIGHTS OF
LICENSEE. Notwithstanding anything to the contrary in this Agreement, Licensee
shall have full authority and power over the operation of the Station during the
period of this Agreement. Licensee shall provide and pay for Licensee's
employees, who shall report and be accountable solely to Licensee, shall be
responsible for the direction of the day-to-day operation of the Station, and
shall oversee the Station's studio and transmission equipment and facilities,
including the tower, antenna, transmitter and transmission line, and Station's
studio transmitter link. Licensee shall retain control over the policies,
programming and operations of the Station, including, without limitation, the
right to decide whether to reasonably accept or reject any programming or
advertisements which Licensee deems unsuitable or contrary to the public
interest; the right to preempt any programs in order to broadcast

5
<PAGE> 6

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a program deemed by Licensee to be of greater national, regional, or local
interest; and the right to take any other actions necessary for compliance with
the laws of the United States, the State of California, the rules, regulations,
and policies of the FCC (including the prohibition on unauthorized transfers of
control), and the rules, regulations and policies of other federal governmental
authorities, including the Federal Trade Commission and the Department of
Justice. Licensee agrees that it shall carry its own public service programming
at such times as the parties may agree based on the reasonable programming needs
of the Programmer. With respect to the operation of the Station, Licensee shall
at all times be solely responsible for meeting all of the FCC's requirements
with respect to the broadcast and nature of any public service programming, for
maintaining the political and public inspection files and the Station log, and
for the preparation of all programs/issues lists. Licensee verifies that it
shall maintain the ultimate control over the Station's facilities, including
control over the finances with respect to its operation of the Station, over the
personnel operating the Station, and over the programming to be broadcast by the
Station.

10.2. VERIFICATION BY PROGRAMMER AND OBLIGATIONS OF
PROGRAMMER. The Programmer will, during the term of this Agreement, provide
local news and public affairs programming relevant to the Station's community to
assist Licensee in satisfying its obligations to respond to the needs of its
community. Programmer will also forward to Licensee within twenty-four (24)
hours of receipt by Programmer, any correspondence from the FCC regarding the
Station or letter from a member of the general public addressing Station
programming or documentation which comes into its custody which is required to
be included in the Station's public file or which is reasonably requested by
Licensee. The Programmer shall furnish within the Programming on behalf of
Licensee all station identification announcements required by the FCC rules, and
shall, upon request by Licensee, provide monthly documentation with respect to
such of the Programmer's programs which are responsive to the public needs and
interests of the area served by the Station in order to assist Licensee in the
preparation of any required programming reports. Programmer also will provide
upon request other information to enable Licensee to prepare other records,
reports and logs required by the FCC or other local, state or federal
governmental agencies. Programmer shall cause the Station to transmit any
required tests or announcements of the Emergency Alert System at such times as
are required by FCC rule. Programmer shall maintain and deliver to Licensee
copies of all operating and programming information, including without
limitation EBS or EAS announcements and station operating logs, as necessary to
maintain the records required to be kept by the FCC's rules or policies.

11. STATION CALL LETTERS.

11.1. CALL SIGNS. So long as it is the licensee of the
Station, Licensee will retain all rights to the call letters KCBQ(AM) (the "Call
Letters"). Programmer is specifically authorized to use the Call Letters in
Programmer's Programming and, subject to the conditions and provisions of
Section 7.2, in any promotional material in any media used in connection with
the Programming. Licensee will not seek or acquiesce in a change of call letters
for the Station without Programmer's consent. Programmer shall submit to
Licensee any promotional material which will identify the Station by call
letters or frequency for approval by Licensee at least two (2)

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days prior to use of such promotional material by Programmer. Licensee shall
have the right to approve or reject such promotional material, such approval to
not be unreasonably withheld or delayed. All documentary materials used by
Programmer containing the call letters of the Station, including stationery,
bills, rate cards, etc., shall contain a notation that Licensee holds the
license for operation of the Station. Moreover, to avoid the potential for
public confusion regarding the ownership of the Station, the telephones at the
Station will be answered with the Station's call letters, rather than the name
of either Programmer or Licensee.

11.2. CALL SIGN PROMOTION AND/OR CHANGE. The call letters for
the Station shall not be changed without the prior written consent of Licensee.
Licensee will use its best efforts to assist Programmer in the promotion and use
of the call letters chosen by Programmer in connection with the broadcast of the
Programming on the Station. Except as provided in Section 21 hereof, during the
life of this Agreement, Programmer shall have no property right or interest in
the Call Letters. Should Licensee consent to a change of the call sign for the
Station, then Licensee shall have no property right or interest in such new call
letters and will release to Programmer any such call letters upon termination of
this Agreement. Licensee will provide to Programmer such reasonable assistance
as Programmer may request (at no cost or penalty to Licensee) to protect
Programmer's rights in such "new" call letters, and Licensee will not then
replace the call letters with any that are similar to any "new" call sign chosen
by Programmer. Subject to Licensee's prior consent to a call sign change,
Licensee, in good faith, will reasonably assist and cooperate with Programmer to
allow and effectuate (i) one or more changes of the call sign for the Station
requested by Programmer, or (ii) the filing of any application with the FCC
and/or the Federal Aviation Administration to modify or improve the authorized
facilities for the Station. During the term of this Agreement, Programmer shall
reimburse Licensee for any reasonable costs and expenses incurred by Licensee in
connection with any call sign change or facilities modification application that
is requested by Programmer. Programmer shall pay all costs and filing fees
associated with any change in Station call letters requested by Programmer.

12. SPECIAL EVENTS. Licensee shall have the right, in its reasonable
discretion, to preempt any of the broadcasts of the Programming referred to
herein, and to use part or all of the hours of operation of the Station for the
broadcast of events of special importance. In all such cases, Licensee will use
its best, commercially reasonable, efforts to give the Programmer reasonable
advance notice of its intention to preempt any regularly scheduled programming,
and, in the event of such preemption, the Programmer shall receive a payment
credit for any programming which would have been supplied by it during the time
of such broadcasts by Licensee.

13. RIGHT TO USE THE PROGRAMMING. The right to use the Programming
produced by the Programmer and to authorize its use in any manner and in any
media whatsoever shall be at all times be vested solely in the Programmer except
as authorized by this Agreement.

14. PAYOLA. The Programmer will provide to Licensee in advance of
broadcast any information known to the Programmer regarding any money or other
consideration which has been paid or accepted, or has been promised to be paid
or to be accepted, for the inclusion of any matter as a part of any programming
or commercial material to be supplied to Licensee by the

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Programmer for broadcast on the Station, unless the party making or accepting
such payment is identified in the program as having paid for or furnished such
consideration in accordance with FCC requirements. Should the Station determine
that an announcement is required by Section 317 of the Communications Act of
1934 and related FCC rules, the Programmer will insert that announcement in the
Programming. The Programmer will obtain from its employees responsible for the
Programming appropriate anti-payola/plugola affidavits. Commercial matters with
obvious sponsorship identification will not require disclosure beyond the
sponsorship identification contained in the commercial copy. The Programmer will
at all times comply, and seek to have its employees comply, in all material
respects with the requirements of Sections 317 and 507 of the Communications Act
of 1934, as amended, and the related rules and regulations of the FCC.

15. COMPLIANCE WITH LAW. The Programmer will comply in all material
respects with all laws and regulations applicable to the broadcast of
programming by the Station.

16. INDEMNIFICATION. Each party hereto shall indemnify and hold the
other, its officers, directors, stockholders, partners, affiliates and employees
harmless from and against any and all claims, damages, liability, forfeitures,
costs and expenses, including reasonable attorneys' fees, arising out of: (i)
any breach or non-performance by said party of any of its representations,
warranties, covenants or agreements set forth in this Agreement; (ii) any libel,
slander, illegal competition or trade practice, violation of rights of privacy,
and infringement of copyrights or other proprietary rights; and (iii) any
violations of the Communications Act of 1934 or FCC rules resulting from said
party's operation of the Station or its programming broadcast thereon.

17. EVENTS OF DEFAULT; CURE PERIODS AND REMEDIES.

17.1 EVENTS OF DEFAULT. The following shall constitute Events
of Default under this Agreement:

17.1.1 NON-PAYMENT. The Programmer's failure to pay the
Consideration within ten (10) days after written notice of a failure to pay said
amount when due.

17.1.2 DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION. The
default by either party in the performance of any material covenant, condition
or undertaking contained in this Agreement, and such default is not cured within
thirty (30) days after receipt of notice of default, or if either party shall
make a general assignment for the benefit of creditors, files or has filed
against it a petition for bankruptcy, for reorganization, or for the appointment
of a receiver, trustee or similar creditors' representative for the property or
assets of such party under any federal or state insolvency law, which, if filed
against such party, has not been dismissed or discharged within 30 days
thereafter.

17.1.3 BREACH OF REPRESENTATION. If any material
representation or warranty made by either party in this Agreement, or in any
certificate or document furnished by either party to the other pursuant to the
provisions of this Agreement, shall prove to have been false or misleading in
any material respect as of the time made or furnished, and such
misrepresentation

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or breach of warranty is not cured within thirty (30) days after receipt of
notice of misrepresentation or breach.

17.2 TERMINATION UPON DEFAULT. Upon the occurrence of an Event
of Default, the non-defaulting party may terminate this Agreement (except to the
extent the provisions of Section 21 shall survive as provided therein), provided
that it is not also in material default under this Agreement. If the Programmer
has defaulted in the performance of its obligations, all amounts accrued or
payable to Licensee up to the date of termination which have not been paid, less
any payment credits outstanding in favor of the Programmer, shall immediately
become due and payable, and Licensee shall be under no further obligation to
make available to the Programmer any broadcast time or broadcast transmission
facilities and Licensee shall not be required to return any portion of the
Consideration, provided that Licensee agrees, for a period of time not to exceed
ninety (90) days, to cooperate reasonably with the Programmer to discharge any
remaining obligations of the Programmer in the form of air time following the
effective date of termination. Licensee shall retain all revenue for
programming, spots, announcements, or features broadcast on the Station after
the termination of this Agreement pursuant to this Section 17.2. If Licensee has
defaulted in the performance of its obligations, Programmer shall be entitled to
cure the default of Licensee, at Licensee's sole cost for actual, reasonable
costs and expenses incurred by Programmer relating to the cure of Licensee's
default, and shall be entitled to deduct the cost of said cure from any
Consideration which is or may become due; provided, however, that in the event
Programmer shall elect to terminate this Agreement, all Consideration paid to
Licensee which relates to periods after termination shall immediately become due
and payable by Licensee to Programmer.

17.3 LIABILITIES UPON TERMINATION. The Programmer shall be
responsible for all of its liabilities, debts and obligations accrued from the
purchase of broadcast time and transmission facilities of the Station,
including, without limitation, indemnification pursuant to Section 16 hereof,
accounts payable, barter agreements and unaired advertisements, but not for
Licensee's federal, state, and local tax liabilities associated with
Programmer's payments to Licensee as provided for herein, or for any other
obligations or liabilities of Licensee or the Station unless specifically
assumed by the Programmer under this Agreement. Upon termination, the Programmer
shall return to Licensee any equipment or property of the Station used by the
Programmer, its employees or agents, in substantially the same condition as such
equipment existed on the date of this Agreement, ordinary wear and tear
excepted, provided that the Programmer shall have no liability to Licensee for
any property of Licensee which through ordinary use became obsolete or unusable,
and any equipment purchased by the Programmer, whether or not in replacement of
any obsolete or unusable equipment of Licensee, shall remain the property of the
Programmer. Provided Programmer is not in default hereof, in the event this
Agreement shall terminate as set forth in Section 3.2, Licensee shall pay
Programmer a prorated share of the Consideration that is paid in advance to
Licensee by Programmer.

18. OPTION TO TERMINATE. The Programmer shall have the right, at its
option, to terminate this Agreement (except to the extent the provisions of
Section 21 shall survive as provided therein) at any time if Licensee preempts
or substitutes other programming for that supplied by the Programmer during ten
percent or more of the total hours of operation of the

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Station in any seven consecutive days. The Programmer shall give Licensee five
(5) days advance written notice of such termination. Each party shall have the
right, at its option, to terminate this Agreement upon termination of the Asset
Purchase Agreement described in Section 21.

19. TERMINATION UPON ORDER OF JUDICIAL OR GOVERNMENTAL AUTHORITY.

19.1 CONDUCT OF THE PARTIES. If any court of competent
jurisdiction or any federal, state or local governmental authority designates a
hearing with respect to the continuation or renewal of any license or
authorization held by Licensee for the operation of the Station, advises any
party to this Agreement of its intention to investigate or to issue a challenge
to or a complaint concerning the activities permitted by this Agreement, or
orders the termination of this Agreement and/or the curtailment in any manner
material to the relationship between the parties to this Agreement of the
provision of programming by Programmer, each party shall have the option to seek
administrative or judicial appeal of or relief from such order(s) (in which
event the other party reasonably shall cooperate with the party seeking relief
from such order and each party shall be responsible for legal fees it has
incurred in such proceedings). Notwithstanding the foregoing:

19.1.1 OF LICENSEE. Subject to Section 16, Licensee
is responsible for all costs of defending the license of the Station to the
extent any court of competent jurisdiction or any federal, state or local
governmental authority designates a hearing with respect to the continuation or
renewal of any license or authorization held by Licensee for the operation of
the Station, advises any party to this Agreement of its intention to investigate
or to issue a challenge to or a complaint concerning the activities permitted by
this Agreement, or orders the termination of this Agreement and/or the
curtailment in any manner material to the relationship between the parties to
this Agreement of the provision of programming by Programmer, as a result of the
conduct or programming of Licensee, or its employees or agents (excluding
Programmer).

19.1.1 OF PROGRAMMER. Subject to Section 16,
Programmer is responsible for all costs of defending the license of the Station
to the extent any court of competent jurisdiction or any federal, state or local
governmental authority designates a hearing with respect to the continuation or
renewal of any license or authorization held by Licensee for the operation of
the Station, advises any party to this Agreement of its intention to investigate
or to issue a challenge to or a complaint concerning the activities permitted by
this Agreement, or orders the termination of this Agreement and/or the
curtailment in any manner material to the relationship between the parties to
this Agreement of the provision of programming by Programmer, as a result of the
conduct or programming of Programmer or its employees or agents (excluding
Licensee).

19.2 EXISTENCE OF THE LMA. If the FCC designates the renewal
application of the Station for a hearing as a consequence of the existence of
this Agreement per se or for any reason other than as a result of the conduct or
programming of Programmer, Licensee, subject to Section 16, shall be responsible
for its expenses incurred as a consequence of the FCC proceeding; provided,
however, that the Programmer shall cooperate and comply with any reasonable
request of Licensee to assemble and provide to the FCC information relating to
the Programmer's performance under this Agreement. Upon termination following
such governmental order(s),

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Licensee shall reasonably cooperate with the Programmer to the extent permitted
to enable the Programmer to fulfill advertising or other programming contracts
then outstanding. Licensee shall retain all revenue for programming, spots,
announcements, or features broadcast on the Station after the termination of
this Agreement pursuant to such governmental order(s).

20. REPRESENTATIONS AND WARRANTIES.

20.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each of Licensee
and the Programmer represents to the other that (a) it is, or as of the
Commencement Date will be, an entity legally qualified and in good standing in
all applicable jurisdictions and is or, as of the Commencement Date will be,
qualified to do business and in good standing with the State of California (b)
it is fully qualified, empowered, and able to enter into this Agreement, (c)
this Agreement has been approved by all necessary corporate and partnership
action and that this Agreement constitutes the valid and binding obligation of
such party, enforceable in accordance with the terms of this Agreement subject
only to applicable bankruptcy, reorganization, insolvency or similar laws
affecting creditors' rights generally; (d) the execution, delivery and
performance hereof does not constitute a breach or violation of any agreement,
contract or other obligation to which such party is subject or by which it is
bound, or does not constitute a default under or result in the creation of any
lien, charge or encumbrance upon any property or assets of Programmer or
Licensee, or violate any law, regulation, judgment or order binding upon
Programmer or Licensee; (e) no consent of any other party, and no consent,
license, approval or authorization of, or exemption by, or filing, restriction
or declaration with, any governmental authority, bureau, agency or regulatory
authority is required in connection with the execution, delivery, validity or
enforceability of this Agreement; and (f) No proceeding is pending against
Programmer or Licensee, or, to the knowledge of Programmer or Licensee,
threatened before any court or governmental agency to restrain or prohibit, or
to obtain damages, or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby. Programmer represents that
except for Gary Stevens & Co., it has not engaged a media broker in connection
with this Agreement; Licensee represents that it has not engaged a media broker
in connection with this Agreement and Programmer and Licensee each agrees to
indemnify the other and hold the other harmless against any claim any media
broker or finder based upon any agreement, arrangement, or understanding alleged
to have been made by Programmer or by Licensee, as the case may be.

20.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE.
Licensee makes the following additional representations, warranties and
covenants:

20.2.1 AUTHORIZATIONS. Licensee owns and holds all
licenses and other permits and authorizations necessary for the operation of the
Station as presently conducted (including licenses, permits and authorizations
issued by the FCC), and such licenses, permits and authorizations will be in
full force and effect for the entire term, unimpaired by any acts or omissions
of Licensee, its principals, employees or agents. There is not now pending or,
to Licensee's best knowledge, threatened, any action by the FCC or other party
to revoke, cancel, suspend, refuse to renew or modify adversely any of such
licenses, permits or authorizations, and,

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to Licensee's best knowledge, no event has occurred that allows or, after notice
or lapse of time or both, would allow, the revocation or termination of such
license, permits or authorizations or the imposition of any restriction thereon
of such a nature that may limit the operation of the Station as presently
conducted. Licensee has no reason to believe that any such license, permit or
authorization will not be renewed during the term of this Agreement in its
ordinary course. Licensee is not in violation of any statute, ordinance, rule,
regulation, order or decree of any federal, state, local or foreign governmental
agency, court or authority having jurisdiction over it or over any part of its
operations or assets, which default or violation would have an adverse effect on
Licensee or its assets or on its ability to perform this Agreement.

20.2.2 FILINGS. All material reports and applications
required to be filed with the FCC or any other governmental agency, department
or body in respect of the Station have been, and in the future will be, filed in
a timely manner and are and will be true and complete and accurately present the
information contained therein. All such reports and documents, to the extent
required to be kept in the public inspection files of the Station, are and will
be kept in such files. Upon request by Licensee, Programmer shall provide in a
timely manner any such information or documents in its possession which will
enable Licensee to prepare, file or maintain the records and reports required by
the FCC.

20.2.3 FACILITIES. Subject to the terms hereof, the
Station's facilities will be maintained at the expense of Licensee and will
comply and be operated, in all material respects, in accordance with the maximum
facilities permitted by the FCC authorizations for the Station and with good
engineering standards necessary to deliver a high quality technical signal to
the area served by the Station, and with all applicable laws and regulations
(including the requirements of the Communications Act of 1934 and the rules,
regulations, policies and procedures of the FCC promulgated thereunder). All
capital expenditures reasonably required to maintain the quality of the
Station's signal shall be made promptly at the expense of Licensee, subject to
prompt reimbursement by Programmer of such expenditures if they are undertaken
in furtherance of the improved or continued delivery of Programmer's Programming
over the Station and Programmer has consented to such reimbursement in advance,
which consent shall not be unreasonably withheld or delayed.

20.2.4 TITLE TO PROPERTIES. Licensee has, and will
throughout the term hereof maintain, good and marketable title to all of the
assets and properties including, without limitation, real property, used in the
operation of the Station, free and clear of any liens, claims or security
interests that would affect adversely Licensee's performance hereunder or the
business and operations of Programmer permitted hereby. Except in the ordinary
course of business of the Station consistent with past practices, Licensee will
not dispose of, transfer, assign or pledge any such asset, except with the prior
written consent of Programmer, if such action would affect adversely Licensee's
performance hereunder or the business and operations of Programmer permitted
hereby.

20.2.5 PAYMENT OF OBLIGATIONS. Licensee shall pay in
a timely fashion all of its debts, assessments and obligations, including
without limitation tax liabilities and payments

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attributable to the operations of the Station, as they come due from and after
the effective date of this Agreement, to the extent failure to do so will affect
Programmer's rights under this Agreement.

20.2.6 INSURANCE. Licensee will maintain in full
force and effect throughout the term of this Agreement insurance with
responsible and reputable insurance companies fire and extended coverage and
liability insurance and such other insurance as may be required by law or
consistent with past practice of the Station. Except as otherwise permitted by
the Purchase Agreement, any insurance proceeds received by Licensee in respect
of damaged property will be used to repair or replace such property so that the
operations of the Station conform with this Agreement.

20.3. PROGRAMMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

20.3.1 COMPLIANCE WITH 47 C.F.R. SEC.
73.3555(A)(2)(II). Programmer hereby verifies that this Agreement complies with
the FCC's restrictions on local and national multiple station ownership set out
in Section 73.3555(a)(1) and (e)(1) of the FCC Rules.

20.3.2 COMPLIANCE WITH APPLICABLE LAW. Programmer's
performance of its obligations under the Agreement and its furnishing of
Programming will be in compliance with, and will not violate, any applicable
laws or any applicable rules, regulations, or orders of the FCC or any other
governmental agency.

20.3.3 FCC QUALIFICATIONS. Programmer has no
knowledge after due inquiry of any facts concerning Programmer or any other
person with an attributable interest in Programmer (as such term is defined
under the Rules and Regulations of the FCC) which, under present law (including
the Communications Act of 1934, as amended ("the Act")) and the Rules and
Regulations of the FCC, would disqualify Programmer from being the holder of the
FCC Licenses, the owner of the Sale Assets or the operator of the Station upon
consummation of the transactions contemplated by this Agreement; or raise a
substantial and material question of fact (within the meaning of Section 309(e)
of the Act) respecting Programmer's qualifications.

20.3.4 COMPLIANCE WITH COPYRIGHT ACT. Programmer
represents and warrants that Programmer has full authority to broadcast its
programming on the Station and the Programmer shall not broadcast any material
in violation of any law, rule, regulation or the Copyright Act. Programmer
acknowledges that it is solely responsible for payment of any public performance
music license fees or royalties for music contained in the Programming, spots,
announcements, features or any other programming of Programmer including,
without limitation, fees payable to ASCAP, BMI and/or SESAC.

21. OPTION RIGHT FOR THE STATION.

21.1 OPTION RIGHT. At any time prior to the Termination Date,
and provided Programmer is not in default under this Agreement, Programmer shall
have the right (the "Option

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Right") to purchase the Station pursuant to the Asset Purchase Agreement
attached hereto as Exhibit "A" (the "Asset Purchase Agreement").

21.2 EXERCISE OF OPTION RIGHT. The Option Right may only be
exercised by the Programmer's delivery to the Licensee prior to the Termination
Date of written notice of exercise of the Option Right (in either case, the
"Exercise Notice"). The Exercise Notice shall state that the Option Right is
exercised without condition or qualification other than (i) the receipt of any
required approval of the FCC for the assignment of the Station's FCC licenses
pursuant hereto, and (ii) the satisfaction of all conditions set forth in the
Asset Purchase Agreement. Within five (5) business days following delivery of
the Exercise Notice, Licensee shall deliver the Asset Purchase Agreement duly
executed by Licensee to Programmer.

21.3 SURVIVAL OF OPTION RIGHT UPON TERMINATION OF PROGRAMMING
ARRANGEMENT. In the event Programmer's right to program the Station under this
Agreement is terminated for any reason other than the fault or default of
Programmer, Programmer may, within thirty (30) days following such termination,
give notice, pursuant to Section 21.2 hereof, of its intention to purchase the
assets of the Station on the terms and conditions set forth in the Asset
Purchase Agreement. In the event Programmer does not give such notice within
such thirty (30) day period, the Option Right shall terminate.

21.4 LICENSEE'S WARRANTIES. Licensee warrants and represents
to Programmer that:

(a) At Closing (as defined in the Asset Purchase
Agreement) Licensee will have, good, marketable and indefeasible title to and
full power of disposition over the Sale Assets (as defined in the Asset Purchase
Agreement), and the full right to sell and transfer to Programmer all of the
Sale Assets without the requirement of obtaining the consent or approval of any
other person, entity, agency or authority except the FCC.

(b) Except for any liens created by the recording of
this Agreement, the Sale Assets will be free of all liens, claims, debts or
other encumbrances at Closing.

21.5 LICENSEE'S COVENANTS. Licensee covenants that, commencing
on the Commencement Date hereof and continuing through the Termination Date, the
Station shall be operated in accordance with the covenants set forth in Section
5.1 of the Asset Purchase Agreement, which covenants are incorporated herein by
reference.

22. MODIFICATION AND WAIVER. No modification or waiver of any provision
of this Agreement shall be effective unless made in writing and signed by the
party adversely affected, and any such waiver and consent shall be effective
only in the specific instance and for the purpose for which such consent was
given.

23. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part of
Licensee or the Programmer in exercising any right or power under this Agreement
shall operate as a waiver

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thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the parties to this Agreement are
cumulative and are not exclusive of any right or remedies which either may
otherwise have.

24. CONSTRUCTION. This Agreement shall be construed in accordance with
the laws of the State of California. The obligations of the parties to this
Agreement are subject to all federal, state or local laws or regulations,
including those of the FCC, now or hereafter in force.

25. HEADINGS. The headings contained in this Agreement are included for
convenience only and shall not in any way alter the meaning of any provision.

26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither party may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party, except that Programmer may
assign its rights and obligations, or any of them, to an entity controlled by or
under common control with Programmer without the prior written consent of
Licensee.

27. COUNTERPART SIGNATURES. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original and be binding
on the parties to this Agreement.

28. NOTICES. Any notice required hereunder shall be in writing and
shall be sufficiently given if delivered by a nationally recognized overnight
delivery service or sent by registered or certified mail, first class postage
prepaid, or by telegram, facsimile or similar means of communication, addressed
as follows:

If to Licensee, to:

Concord Media Group, Inc.
11521 Infields Drive
Odessa, FL 33556
Attn: Mark Jorgensen
Telephone: (813) 926-9260
Facsimile: (813) 926-9001

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Copy to:

Mr. Lee Shubert, Esq.
Rosenman & Colin LLP
805 15th Street, N.W.
9th Floor
Washington, DC 20005-2202
Telephone: 202-216-4695
Facsimile: 202-216-4700

If to the Programmer, to:

c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 987-0400
Facsimile No.: (805) 384-4505
Attention: Jonathan L. Block, Esq.
Corporate Counsel

28.1. ALTERNATE ADDRESSEES. Notice, as provided by this
Section, may be given to any other person or party, as any party hereto may in
the future designate in writing, upon due notice to the other party(ies).

28.2. DATE OF NOTICE, ACTION. The date of delivery by hand, or
the postal receipt for deposit with the U.S. Mail or courier service specified
herein shall establish the date of such notification or communication. If any
notification, communication or action is required or permitted to be given or
taken within a certain period of time and the last date for doing so falls on a
Saturday, Sunday, a federal legal holiday or legal holiday by law in the State
of California, the last day for such notification, communication or action shall
be extended to the first date thereafter which is not a Saturday, Sunday or such
legal holiday.

29. EXPENSES; ATTORNEY'S FEES. In the event any action is filed with
respect to this Agreement, the prevailing party shall be reimbursed by the other
party for all its actual costs and expenses incurred in connection with the
action, including without limitation reasonable attorney's fees.

30. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to the
subject matter hereof.

31. SPECIFIC PERFORMANCE. Licensee acknowledges that the Station is of
a special, unique, and extraordinary character, and that any breach of this
Agreement by Licensee could not be compensated for by damages. Accordingly, if
Licensee shall breach its obligations under this Agreement, Programmer shall be
entitled, in addition to any of the remedies that it may have, to

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enforcement of this Agreement (subject to obtaining any required approval of the
FCC) by decree of specific performance or injunctive relief requiring Licensee
to fulfill its obligations under this Agreement. In any action by Programmer to
equitably enforce the provisions of this Agreement, Licensee shall waive the
defense that there is an adequate remedy at law or equity and agrees that
Programmer shall have the right to obtain specific performance of the terms of
this Agreement without being required to prove actual damages, post bond or
furnish other security.

32. BROKERAGE FEES. Any and all commissions, fees, costs, and expenses
and related amounts due Gary Stevens & Co. and any other broker, agent, finder
or other similarly situated party arising out of the transactions set forth in
this Agreement and the Asset Purchase Agreement, shall be paid and borne
exclusively by Programmer.

33. TIME OF THE ESSENCE. Time is of the essence with respect to all
rights and obligations of this Agreement.

34. RESOLUTION OF CLAIMS AND DISPUTES. Regardless of the place of
execution, this Agreement shall be deemed to be a contract made in San Diego,
California and shall be interpreted as a contract to be performed wholly in the
State of California. The law of the State of California shall be applied without
regard to the principles of conflicts of laws. Each party expressly waives any
presumption or rule, if any, which requires this Agreement and/or any other
Agreement to be construed against the drafting party. Any claims or disputes
arising out of or relating to this Agreement shall be resolved only by mediation
or, if mediation does not resolve the claim or dispute within ten (10) days of
notice demanding mediation, by arbitration in accordance with the Rules of
Procedure for Commercial Arbitration of the American Arbitration Association and
any award therefrom shall be rendered by the arbitrators as a judgment in any
trial court having jurisdiction in the city of San Diego, California, or of any
other court having competent jurisdiction.

35. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Licensee or Programmer in exercising any right or power hereunder shall operate
as a waiver thereof, nor any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, shall preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of Licensee and Programmer
herein provided are cumulative and are not exclusive of any rights or remedies
which they may otherwise have.

36. CONFIDENTIALITY. Subject to the requirements of applicable law,
Programmer and Licensee shall each keep confidential all information obtained by
it with respect to the other parties hereto in connection with this Agreement
and the negotiations preceding this Agreement, and will use such information
solely in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, no party will be required to keep confidential or
return any information which: (i) is known or available through other lawful
sources, not known to the disclosing party to be bound by a confidentiality
agreement with the disclosing party; (ii) is or becomes publicly known through
no fault of the receiving party or its agents; (iii) is

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required to be disclosed pursuant to a valid order of a judicial or governmental
authority (provided the disclosing party is given reasonable prior notice of the
order or request and the purpose of disclosure); or (iv) is developed by the
receiving party independently of the disclosure by the disclosing party.

37. EXPLICATION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, references to any gender include any other gender, the part
includes the whole, the term "including" is not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Article, section, subsection,
clause, exhibit and schedule references are to this Agreement, unless otherwise
specified. Any reference in or to this Agreement or any of the ancillary
agreements includes any and all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.

38. NO JOINT VENTURE. The parties agree that nothing herein shall
constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other intellectual property shall at all times remain
the property of the respective parties and, except as provided in Section 21,
that neither party shall obtain any ownership interest in the other party's
intellectual property by virtue of this Agreement.

39. COOPERATION. Each party will cooperate with the other with respect
to establishing and attaining the strategic and operational goals of the
Station.

40. DISPUTES; FINAL TERMINATION. In the event Programmer or Licensee in
good faith contests any basis for termination exercised pursuant to this
Agreement, the termination shall not become effective until the dispute is
arbitrated as provided herein. In the event the Licensee terminates the
Agreement for any reason other than non-payment of the Monthly Fee, the
Agreement shall continue in effect until the dispute is arbitrated, as provided
herein, only so long as Programmer continues to make payments as provided by
SECTION 1 of this Agreement. Any dispute concerning termination pursuant to this
Agreement shall be resolved by binding arbitration pursuant to the rules of the
American Arbitration Association. The prevailing party shall be entitled to
reimbursement from the non-prevailing party of all reasonable expenses actually
incurred to comply with this arbitration provision. The prevailing party shall
mean the party that is successful in obtaining substantially all the relief
sought. In the event of a dispute under this Agreement, Programmer shall satisfy
its payment obligations under SECTION 2 if payments during the dispute are made
by Programmer to a Dispute Escrow Agent who shall act as fiduciary to the
Programmer and Licensee. Unless otherwise hereafter provided, the Dispute Escrow
Agent shall be GARY STEVENS & CO. Should the Programmer be the party seeking
termination of this Agreement, and in the event the Programmer is declared to be
the prevailing party, then any payments made by Programmer, under SECTION 2 of
this Agreement, during the term the dispute is being arbitrated shall be
refunded by Licensee to Programmer by not later than the tenth (10th) day after
the decision of the arbitrator(s) is issued.

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41. CONSTRUCTION OF AGREEMENT. This Agreement is the product of
negotiation and preparation by, between and among Programmer and Licensee and
their respective attorneys. Accordingly, the parties hereto acknowledge and
agree that this Agreement shall not be deemed prepared or drafted by one party
or another, and shall be construed accordingly.

42. FURTHER ASSURANCES. After the Commencement Date, each of the
parties, upon the reasonable request of the other, will take such reasonable
actions or deliver or execute such further documents, materials, signatures, or
information as may be reasonably necessary to assure compliance with, or
effectuation of, the terms and conditions to this Agreement and the bona fide
good faith intentions of the parties hereto.

43. SCHEDULES AND EXHIBITS. All schedules, exhibits and riders attached
to this Agreement shall be deemed part of this Agreement and incorporated
herein, where applicable, as if full set forth herein.

44. ACCOUNTING PERIODS; ADJUSTMENTS AND PRORATIONS. For the purposes of
this Agreement, and except as otherwise provided herein, the allocation of
accounts receivable and accounts payable for the time preceding the Commencement
Date shall be made effective as of 12:01 AM, Pacific Time, on the Commencement
Date; to wit: all accounts payable and accounts receivable for the period prior
to the Commencement Date, shall be the responsibility of, and belong to
Licensee, and all accounts payable and accounts receivable for the period on or
after Commencement Date, through and including the Termination Date, shall be
the responsibility of Programmer. All taxes, accrued, rents, deposits, power and
utility charges, obligations under agreements, prepaid items and expenses and
similar items applicable to the Station shall be allocated among Programmer and
Licensee effective as of 12:01 AM on the Commencement Date and the Termination
Date. As of 12:01 AM Pacific Time on the Commencement Date, the expenses shall
be prorated in accordance with generally accepted accounting principles and
shall include, but not be limited to, the following: (i) If Licensee shall not
have paid through the Commencement Date, all utility charges such as telephone,
electricity and gas, Programmer shall be entitled to a credit therefor based
upon the last paid bills for similar charges; (ii) Licensee shall be entitled to
a credit for the unearned portion of insurance premiums on policies which
Programmer may elect to assume; (iii) Licensee shall prorate with Programmer for
accrued personal property, real estate and any other taxes based upon the last
ascertainable tax bill; and (iv) Programmer shall be allowed credit as to any
prepayment received by Licensee for services to be rendered by Programmer on or
after the Commencement Date. Licensee shall be allowed credit for services
rendered by it for which payment will be received by Programmer on or after the
Commencement Date. The Licensee's accountants and the Programmer's accountants
shall attempt in good faith to resolve any disputes to such adjustments. In the
event such accountants are unable to resolve any such disputes within thirty
(30) days after the realization by the parties of the existence of a dispute,
then such dispute shall be resolved by a third party accounting firm to be
selected, within ten (10) days of the realization of the dispute, by the
respective accountants for Programmer and Licensee (the fees of such third party
accounting firm shall be paid equally by the disputing parties), and any such
determination of the third party accounting firm shall be binding and conclusive
on the disputing parties.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

"LICENSEE" "PROGRAMMER "

CONCORD MEDIA GROUP, INC. RADIO 1210, INC.

By: /s/ Mark Jorgenson By: /s/ Eric H. Halvorson
---------------------------------- --------------------------------
Name: Mark Jorgenson Eric H. Halvorson
Title: President Executive Vice President

<PAGE> 1

EXHIBIT 10.08.02

ASSET PURCHASE AGREEMENT

WNIV - FM, ATLANTA, GEORGIA
WLTA - FM, ALPHARETTA, GEORGIA

This AGREEMENT (the "Agreement") is dated as of August 18, 1999, by and
between SALEM MEDIA OF GEORGIA, INC. ("Buyer") and GENESIS COMMUNICATIONS, INC.
("Seller").

RECITALS:

1. Seller owns and operates radio stations WNIV-FM, Atlanta, Georgia
("WNIV"), and WLTA-FM, Alpharetta, Georgia ("WLTA" and with WNIV, the
"Stations"), and holds the licenses and authorizations issued by the FCC for the
operation of the Stations.

2. Seller is willing to convey the Sale Assets to Buyer, and Buyer is
willing to acquire the Sale Assets.

3. The acquisition of the Stations is subject to prior approval of the
FCC.

NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:

ARTICLE 1

TERMINOLOGY

1.1 ACT. The Communications Act of 1934, as amended.

1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by
which Buyer's account is to be credited or charged, as reflected on the
Adjustment List.

1.3 ADJUSTMENT LIST. As provided in Section 2.7(b), an itemized list of
all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.

1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in
Section 2.3.

1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on
which federally chartered banks in the city of Atlanta, Georgia, are regularly
open for business.

<PAGE> 2

1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3(b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).

1.7 CASUALTY TERMINATION PERIOD. Such term shall have the meaning
defined in Article XII.

1.8 CLOSING. The closing with respect to the transactions contemplated
by this Agreement.

1.9 CLOSING DATE. The date determined as the Closing Date as provided
in Section 8.1.

1.10 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto,
and each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.

1.11 EARNEST MONEY. The amount of Four Hundred Thousand Dollars
($400,000).

1.12 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning defined
in Section 5.10.

1.13 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials
(as defined below).

1.14 ESCROW AGENT. Jorgenson Broadcast Brokerage.

1.15 ESCROW AGREEMENT. The Escrow Agreement in the form attached as
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.

1.16 EXCLUDED ASSETS. Such term shall have the meaning defined in
Section 2.2.

1.17 FCC. Federal Communications Commission.

<PAGE> 3

1.18 FCC LICENSES. The licenses, permits and authorizations of the FCC
for the operation of the Stations as listed on Schedule 3.8.

1.19 FCC ORDER. An order or decisions of the FCC granting its consent
to the assignments of the FCC Licenses to Buyer.

1.20 FINAL ACTION. An action of the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
sponte action of the FCC with comparable effect is pending and as to which the
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.

1.21 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, hazardous
substances, pollutants or contaminants, asbestos or asbestos-related products,
PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms
are defined in any applicable federal, state or local laws, ordinances, rules
and regulations, and including any other terms which are or maybe used in any
applicable environmental laws to define prohibited or regulated substances).

1.22 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or 9.4(a)
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.

1.23 INDEMNIFYING PARTY. The party to the Agreement (not the
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.

1.24 KNOWLEDGE. Means: (i) as to Buyer, the knowledge, after due
inquiry in their respective areas of responsibility of Edward G. Atsinger III,
President, and Eric H. Halvorson, Executive Vice President; and (ii) as to
Seller, the knowledge, after due inquiry in their respective areas of
responsibility, of Bruce Maduri, President of Genesis Communications, Inc. and
____________, General Manager of the Stations.

1.25 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.

<PAGE> 4

1.26 MATERIAL ADVERSE CONDITION OR MATERIAL ADVERSE EFFECT. A condition
which would materially restrict, limit, increase the cost or burden of or
otherwise adversely affect or impair the right of Buyer to the ownership, use,
control, enjoyment or operation of the Sale Assets or the Stations or the
proceeds therefrom; provided, however, that any condition which requires that
the Stations be operated in accordance with a condition similar to those
contained in the present FCC licenses issued for operation of the Stations shall
not be deemed a Material Adverse Condition.

1.27 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.

1.28 PERMITTED LIEN. Any statutory lien which secures a payment not yet
due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way, encroachment or similar
imperfection in the Seller's title to its assets or properties that,
individually and in the aggregate, are not material in character or amount and
do not and are not reasonably expected to materially impair the value or
materially interfere with the use of any asset or property of the Seller
material to the operation of its business as it has been and is now conducted;
provided said term shall not include any such lien which is discharged at or
before closing.

1.29 PURCHASE PRICE. The consideration to be paid by Buyer to Seller
for purchase of the Sale Assets in an amount equal to Eight Million Dollars
($8,000,000).

1.30 REAL PROPERTY. Such term shall have the meaning defined in Section
3.7.

1.31 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume
47 of the Code of Federal Regulations, as well as such other written policies of
the Commission, whether contained in the Code of Federal Regulations, or not,
that apply to the Stations.

1.32 SALE ASSETS. All of the tangible and intangible assets to be
transferred by Seller to Buyer as set forth in Section 2.1.

1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).

1.34 SUBSTANTIAL CASUALTY. Such term shall have the meaning defined in
Article XI.

1.35 STATION AGREEMENTS. The agreements, commitments, contracts, leases
and other items described in Section 2.1(d) which relate to the operation of the
Stations.

<PAGE> 5

1.36 SURVIVAL PERIOD. Such term shall have the meaning defined in
Section 9.1.

1.37 TANGIBLE PERSONAL PROPERTY. The personal property described in
Section 2.1(a).

ARTICLE II

PURCHASE AND SALE

2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer,
assign and convey to Buyer, and Buyer will purchase from Seller, free and clear
of all Liens, except Permitted Liens and other Liens expressly accepted by
Buyer, all of Seller's right, title and interest, legal and equitable, in and to
all tangible and intangible assets (except Excluded Assets) used and/or useful
in the operation of the Stations as they are or have been and/or are now being
operated, including, without limitation, the following:

(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
furniture, fixtures and other tangible personal property used and/or useful in
the operation of the stations as they have been and/or are now being operated,
including, without limitation, those items listed on Schedule 3.6, together with
such modifications, replacements, improvements and additional items, and subject
to such deletions therefrom, made or acquired between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement.

(b) REAL PROPERTY. All right, title and interest in and to the Real
Property and any other real estate or interests therein acquired by Seller
solely in connection with the Stations between the date hereof and the Closing
Date in accordance with the terms and provisions of this Agreement.

(c) LICENSES AND PERMITS. The FCC Licenses and all other assignable
or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Stations.

(d) STATION AGREEMENTS. All agreements which Seller is a party to
or bound by which are listed on Schedule 3.9 as agreements which Buyer is
electing to assume; any renewals, extensions, amendments or modifications of
those agreements being assumed which are made in the ordinary course of Seller's
operation of the Stations and in accordance with the terms and provisions of
this Agreement; and any additional such agreements, contracts, leases,
commitments or orders (and any renewals, extensions, amendments or modifications
thereof) made or entered into between the date hereof and

<PAGE> 6

the Closing Date in accordance with the terms and provisions of this Agreement
and which Buyer elects to assume in writing.

(e) RECORDS. True and complete copies of all of the books, records,
accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Stations
(other than corporate records), including, without limitation, the public
inspection files of the Stations.

(f) MISCELLANEOUS ASSETS. Any intangible assets, properties or
rights described on any schedule hereto or on Schedule 2.1(f), including the
call letters and any goodwill of the Stations.

2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to
the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):

(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Stations at the Closing Date.

(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.

(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
included as part of the Sale Assets).

(d) All contracts of insurance and claims against insurers.

(e) All employee benefit plans and the assets thereof and all
employment contracts.

(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.

(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.

<PAGE> 7

(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Stations, in which case Seller
shall deliver accurate copies thereof to Buyer.

(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.

(j) All property, real or personal, tangible or intangible,
disclosed on Schedule 3.5.

2.3 ASSUMPTION OF LIABILITIES.

(a) At the Closing, Buyer shall assume and agree to perform the
following liabilities and obligations of Seller (the "Assumed Obligations"):

(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.

(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.

(b) Except for the Assumed Obligations, Buyer shall not assume or
in any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.

2.4 EARNEST MONEY.

(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed by
the Escrow Agent to Buyer from time to time upon the request of Buyer.

(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.

<PAGE> 8

2.5 PAYMENT OF PURCHASE PRICE.

(a) The Purchase Price shall be paid by Buyer as follows:

(i) At the Closing, the Earnest Money shall, subject to
execution and delivery by Seller of the closing documents described in Section
8.2, become the property of Seller and shall, pursuant to the Escrow Agreement,
be disbursed to Seller by cashier's check or wire transfer of immediately
available funds.

(ii) The Purchase Price, less the amount of the Earnest Money
disbursed to Seller, shall be paid to Seller, at Closing by wire transfer of
immediately available funds.

(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.

2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and
Seller shall use their reasonable best efforts to agree on an allocation of the
Purchase Price. Buyer and Seller shall use such allocation for all reporting
purposes in connection with federal, state and local income and, to the extent
permitted under applicable law, franchise taxes. Buyer and Seller agree to
report such allocation to the Internal Revenue Service in the form required by
Treasury Regulation Section 1.1060-1T.

2.7 ADJUSTMENT OF PURCHASE PRICE.

(a) All operating income and operating expenses of the Stations
shall be adjusted and allocated between Seller and Buyer, and an adjustment in
the Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Stations on or before the Closing Date
shall be for the account of Seller, and all income and expenses attributable to
the operation of the Stations after the closing Date shall be for the account of
Buyer.

(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
in accordance with generally accepted accounting principles.

(c) For purposes of making the adjustments pursuant to this
Section, Buyer shall prepare and deliver the Adjustment List to Seller within
thirty (30) days following the Closing Date, or such earlier or later date as
shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set
forth the Adjustment Amount. If the Adjustment Amount is a credit to the account
of Buyer, unless disputed, Seller shall pay such amount to Buyer, and if the
Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such
amount to Seller. In the event Seller disagrees with the Adjustment Amount
determined by Buyer or with any other matter arising out of this subsection, and
Buyer

<PAGE> 9

and Seller cannot within sixty (60) days resolve the disagreement themselves,
the parties will refer the disagreement to a firm of independent certified
public accountants, mutually acceptable to Seller and Buyer, whose decision
shall be final and whose fees and expenses shall be allocated between and paid
by Seller and Buyer, respectively, to the extent that such party does not
prevail on the disputed matters decided by the accountants.

2.8 ACCOUNTS RECEIVABLE For a period of time (the "Collection Period")
from the Closing Date to a date being ninety (90) days from the Closing Date,
Buyer shall collect all of the accounts receivable of Seller ("Accounts
Receivable") relating to the Stations and existing as of the Closing Date.
During such period neither Seller nor its agents shall make any solicitation for
collection purposes nor institute litigation for the collection of any amounts
due thereunder, except for such Accounts Receivable which Buyer has consented to
Seller's collection thereof prior to the expiration of the Collection Period.
Any payment received by Buyer during the Collection Period from an account
debtor shall be applied to such specific outstanding invoices or in such other
manner as may be designated by such account debtor. In the absence of any such
designation, all payments received by Buyer shall be applied to the outstanding
amounts due from any such account debtor (including amounts arising from
Seller's operation of the Business prior to the Closing) in chronological order,
beginning with the oldest outstanding amounts based on the dates of the original
underlying invoices. Buyer shall use commercially reasonable efforts to collect
the Accounts Receivable during the Collection Period. After the expiration of
the Collection Period, Buyer shall have no right or obligation with respect to
such Accounts Receivable. Buyer agrees to remit to Seller any payment on any
Account Receivable which Buyer has received; provided, however, that nothing
contained in this Section 2.8 shall be construed to grant Seller any right with
respect to any accounts receivable accrued in connection with Buyer's operation
of the Stations on or after the Closing Date. Following the Collection Period,
Buyer shall make available to Seller, upon the reasonable request of Seller,
copies of all of its records relating to any uncollected Accounts Receivable.

2.9 EMPLOYEES. Buyer shall be free to hire such persons, whether or not
employees of Seller or the Stations, on such terms and conditions of employment
as Buyer shall determine in the exercise of its sole discretion, and nothing in
this Agreement shall establish any obligation or commitment on the part of Buyer
for any right or claim (legal or equitable) of any person other than the parties
hereto, including, without limitation, any employee of Seller or Buyer or any
beneficiary of such employee. Any claim, including any claim for benefits,
asserted by or on behalf of any person with respect to such person's employment
by Buyer shall be governed solely by applicable employment policies and employee
benefit plans. Seller has delivered to Buyer a true and complete list (including
names, titles, job descriptions, compensation, date of hire, and full vs.
part-time status) of all employees of the Stations as of the date such list is
delivered. In addition, Seller shall be liable for, and shall pay, all wages,
salaries, payroll taxes and employee benefits, including without limitation,
vacation pay or benefits, due, owing or accrued for all employees of the
Stations through the Closing. All claims

<PAGE> 10

incurred or liabilities asserted under Seller's employee benefit plans
(including any such claims resulting from Seller's termination of any employee
benefit plan) shall be the responsibility of Seller, and Buyer shall not have
any liability with respect to such claims or liabilities.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

3.1 ORGANIZATION AND GOOD STANDING. Genesis Communications, Inc. is a
corporation duly organized and validly existing under the laws of the state of
Georgia. Seller is authorized and in good standing in Georgia and each and every
other jurisdiction where Seller operates, owns property or conducts business.
Seller has all requisite power to own, convey, operate and lease its properties
and carry on its business as it is now being conducted and as the same will be
conducted until the Closing.

3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary action on the part of Seller. Seller has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

3.3 ABSENCE OF CONFLICTS. Assuming all the consents described in
Section 3.4 are obtained, the execution and delivery of, and the performance of
its obligations under, this Agreement and each of the other Documents by Seller,
and the consummation by Seller of the transactions contemplated hereby and
thereby:

(a) do not in any respect (with or without the giving of notice or
the passage of time or both) violate (or result in the creation of any Lien
other than a Permitted Lien on any of the Sale Assets under), any provision of
law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller in any manner which would constitute a Material Adverse
Condition.

<PAGE> 11

(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration,
where such conflict, breach, termination, default or right would have a material
adverse effect on the Sale Assets or the operation of the Stations, under
corporate organizational documents of Seller or pursuant to any lease,
agreement, commitment or other instrument which Seller is a party to, or bound
by, or by which any of the Sale Assets may be bound, or result in the creation
of any Lien, other than a Permitted Lien, upon any of the Sale Assets.

3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
required consent of the FCC or as set forth on Schedule 3.8 or Schedule 3.9, the
execution and delivery of, and the performance of its obligations under, this
Agreement and each of the other Documents by Seller, and the consummation by
Seller of the transactions contemplated hereby and thereby, do not require the
consent, waiver, approval, permit, license, clearance or authorization of, or
any declaration of filing with, any court or public agency or other authority,
or the consent of any person under any agreement, arrangement or commitment of a
nature which Seller is a party to or bound or by which the Sale Assets are bound
by or subject to, the failure of which to obtain would have a material adverse
effect on the Sale Assets or the operation of the Stations.

3.5 SALE ASSETS. Except as set forth on Schedule 3.5, the Sale Assets
include all assets, properties and rights of every type and description, real,
personal and mixed, tangible and intangible, as are used and/or useful by Seller
in the business of owning and operating the Stations, with the exception of the
Excluded Assets.

3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other
incidental items which in the aggregate are not of material value, the list of
Tangible Personal Property set forth on Schedule 3.6 is a complete and correct
list of all of the items of tangible personal property (other than Excluded
Assets) used and/or useful to a material extent in the operation of the Stations
in the manner in which they have been and are now operated. Except as set forth
on Schedule 3.6:

(a) Seller has good, marketable and valid title to all of the items
of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.

(b) The Tangible Personal Property has in all material respects
been maintained in accordance with industry practices and is in good condition
subject to ordinary wear and tear.

(c) The Tangible Personal Property complies in all material
respects with all applicable rules and regulations of the FCC and the terms of
the FCC Licenses.

<PAGE> 12

(d) Seller has no Knowledge of any defect or defects in the
condition or operation of any item of Tangible Personal Property which is
reasonably likely to have a material adverse effect on the operation of the
Stations.

3.7 REAL PROPERTY.

(a) The real property described on Schedule 3.7 constitutes a
complete and correct summary description in all material respects of all of the
interests in real estate (including any real property leased by Seller pursuant
to a lease described in Schedule 3.9) used to any extent in the operation of the
Stations in the manner in which they have been and are now operated. Said real
property, together with all improvements affixed thereto, is herein defined as
the "Real Property."

(b) Seller does not owe any money to any architect, contractor,
subcontractor or material man for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. Except as set forth
on Schedule 3.7, there is no work being done at or materials being supplied to
the Real Property as of the date hereof other than routine maintenance projects
having an aggregate cost through completion thereof of no more than Five
Thousand Dollars ($5,000).

(c) The present use of the Real Property is in compliance in all
material respects with all applicable zoning codes in effect as of the date
hereof, and Seller has not received any notices of uncorrected violations of the
applicable housing, building, safety or fire ordinances. The Real Property has
been maintained in accordance with industry practices and is in good condition,
subject to ordinary wear and tear. The Real Property has full and free access to
public roadways and is served by electricity and water in capacities adequate
for the present use of the Real Property and improvements thereon.

(d) Seller has good, marketable and valid title to all of the Real
Property free and clear of all Liens except Permitted Liens, and including the
right to transfer same. Seller has not made any agreement for the sale of, or
given any person an option to purchase, or a right of first refusal to purchase,
all or any part of the Real Property, and Seller has not subjected the Real
Property to any Liens (other than Permitted Liens), easements, rights, duties,
obligations, covenants, conditions, restrictions, limitations or agreements.
Except as provided in Schedule 3.7, Seller has not made any agreements to lease
all or any part of the Real Property or any improvements thereon.

(e) No portion of the Real Property or improvements thereon is the
subject of any condemnation or eminent domain proceeding presently instituted
or, to Seller's Knowledge, pending, and Seller has not received notice from any
condemning authority that such proceedings are threatened.

<PAGE> 13

3.8 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required for, or used in, the operation of
the Stations as now operated, and (ii) constitute all the licenses and
authorizations issued to Seller for or in connection with the current operation
of the Stations. Seller has no Knowledge of any condition imposed by the FCC as
part of any FCC License which is neither set forth on the face thereof as issued
by the FCC nor contained in the Rules and Regulations applicable generally to
stations of the type, nature, class or location of the Stations. Except as
disclosed on Schedule 3.8, the Stations are being operated at full authorized
power, in accordance with the terms and conditions of the FCC Licenses
applicable to it and in accordance with the Rules and Regulations. Except as set
forth on Schedule 3.8, no proceedings are pending or, to the Knowledge of the
Seller, are threatened which may result in the revocation, modification,
non-renewal or suspension of any of the FCC Licenses, the denial of any pending
applications, the issuance of any cease and desist order or the imposition of
any fines, forfeitures or other administrative actions by the FCC with respect
to the Stations or their operation, other than proceedings affecting the radio
broadcasting industry in general. Seller has complied in all material respects
with all requirements to file reports, applications and other documents with the
FCC with respect to the Stations, and all such reports, applications and
documents are complete and correct in all material respects. Seller has no
Knowledge of any matters (i) which could reasonably be expected to result in the
suspension or revocation of or the refusal to renew any of the FCC Licenses or
the imposition of any fines or forfeitures by the FCC, or (ii) against Seller
which could reasonably be expected to result in the FCC's refusal to grant
approval of the assignment to Buyer of the FCC Licenses or the imposition of any
Material Adverse Condition in connection with approval of such assignment. There
are not any unsatisfied or otherwise outstanding citations issued by the FCC
with respect to the Stations or their operation. Complete and accurate copies of
all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection
Files" of the Stations are in substantial and material compliance with Section
73.3526 of the Rules and Regulations.

3.9 STATION AGREEMENTS.

(a) Schedule 3.9 sets forth an accurate and complete list of all
material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Stations or their assets or properties are bound by, except (A)
employee benefit plans and employment contracts, (B) contracts for the sale of
time on the Stations, and (C) contracts which are cancelable by Seller or its
assignee without breach or penalty on not more than thirty (30) days' notice.
Complete and correct copies of all such agreements, contracts, arrangements or
commitments that are in writing, including all amendments, modifications and
supplements thereto, have been delivered to Buyer.

(b) Except as set forth in the Schedules, and with respect to all
Station Agreements being assumed by Buyer, (i) all Station Agreements are legal,
valid and

<PAGE> 14

enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general principles of
equity regardless of whether enforcement is sought in any proceeding at law or
in equity; (ii) neither Seller nor, to the Knowledge of Seller, any other party
thereto, is in material breach of or in material default under any material
Station Agreements; (iii) to the Knowledge of Seller, there has not occurred any
event which, after the giving of notice or the lapse of time or both, would
constitute a material default under, or result in the material breach of, any
Station Agreements which are, individually or in the aggregate, material to the
operation of the Stations; and (iv) Seller holds the right to enforce and
receive the benefits under all of the Station Agreements, free and clear of all
Liens (other than Permitted Liens) but subject to the terms and provision of
each such agreement.

(c) Schedule 3.9 indicates, for each Station Agreement listed
thereon which is being assumed by Buyer, whether consent or approval by any
party thereto is required thereunder for consummation of the transactions
contemplated hereby.

3.10 LITIGATION. There are no claims, investigations or administrative,
arbitration or other proceedings (collectively referred to herein as
"Litigation") pending or, to the Knowledge of Seller, threatened against Seller
which would, individually or in the aggregate if adversely determined, have a
material adverse effect on the Sale Assets or the operation of the Stations
(excluding any Litigation affecting the radio broadcasting industry generally),
or which would give any third party the right to enjoin the transactions
contemplated by this Agreement. To the Knowledge of Seller, there is no basis
for any such claim, investigation, action, suit or proceeding which would,
individually or in the aggregate if adversely determined, have a material
adverse effect on the Sale Assets or operation of the Stations (excluding any
Litigation affecting the radio broadcasting industry generally). There are no
existing or, to the Knowledge of Seller, pending orders, judgments or decrees of
any court or governmental agency affecting the Stations or any of the Sale
Assets (excluding any orders, judgments or decrees of any court or government
agency that affect the radio broadcasting industry generally). Notwithstanding
the disclosure of any Litigation of Seller to Buyer pursuant to this Section,
Buyer shall not assume any liability, damages, cost or expense of Seller
relating to or arising out of any Litigation.

3.11 LABOR MATTERS.

(a) Seller is not a party to any collective bargaining agreement,
and there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.

(b) With respect to Seller and the Stations:

(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the Knowledge of Seller, threatened against the Stations;

<PAGE> 15

(ii) There are neither pending nor, to the Knowledge of Seller
threatened, any suits, actions, administrative proceedings, union organizing
activities, arbitrations, grievances or other proceedings between Seller and any
employees of the Stations or any union representing such employees; and there
are no existing labor or employment or other controversies or grievances
involving employees of the Stations which have had or are reasonably likely to
have a material adverse effect on the operation of the Stations;

(iii) (A) Seller is in compliance in all material respects with
all laws, rules and regulations relating to the employment of labor and all
employment contractual obligations, including those relating to wages, hours,
collective bargaining, affirmative action, discrimination, sexual harassment,
wrongful discharge and the withholding and payment of taxes and contributions;
(B) Seller has withheld all amounts required by law or agreement to be withheld
from the wages or salaries of its employees; and (C) Seller is not liable to any
present or former employees or any governmental authority for damages, arrears
of wages or any tax or penalty for failure to comply with the foregoing;

(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.

3.12 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees of Seller in connection with their
employment by Seller. For purposes of the Agreement, "benefit plans" shall
include without limitation employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.

3.13 COMPLIANCE WITH LAW. The operation of the Stations complies in all
material respects with the applicable rules and regulations of the FCC.

3.14 ENVIRONMENTAL MATTERS; OSHA.

(a) Seller has obtained all environmental, health and safety
permits, the failure of which to obtain would have a material adverse effect on
either the operation of the Stations or the ownership of the Sale Assets and all
such permits are in full force and effect and Seller is in material compliance
with all terms and conditions of such permits.

<PAGE> 16

(b) There is no proceeding pending or threatened which may result
in the reversal, rescission, termination, modification or suspension of any
environmental or health or safety permits necessary for the operation of the
Stations or the ownership of the Sale Assets.

(c) With respect to the Stations and the Sale Assets, Seller is in
compliance in all material respects with the provisions of all Environmental
Laws.

(d) With respect to the Sale Assets, Seller has not, and to
Seller's Knowledge no other person or entity has, caused or permitted materials
to be generated, released, stored, treated, recycled, disposed of on, under, at
or in the Sale Assets or the Real Property, which materials, if known to be
present, would require clean up, removal or other remedial or responsive action
under Environmental Laws (other than normal office, cleaning and maintenance
supplies in reasonable quantities used and /or stored appropriately in buildings
or improvements). Seller has not caused the migration of any materials from the
Real Property onto or under any property adjacent to the Real Property which
materials, if known to be present, would require cleanup, removal or other
remedial or responsive action under Environmental Laws. To Seller's Knowledge,
there are no underground storage tanks and no polychlorinated biphenyls ("PCB")
or friable asbestos on, in or under the Sale Assets.

(e) To Seller's Knowledge, Seller is not subject to any judgment,
decree, order or citation with respect to the Stations or the Sale Assets
related to or arising out of Environmental Laws, and Seller has not received
notice that it has been named or listed as a potentially responsible party by
any person or governmental body or agency in any matter arising under
Environmental Laws, which matter reasonably relates to the Stations or the Sale
Assets.

(f) Seller has not discharged or disposed of any petroleum product
or solid waste on the Real Property or on the property adjacent to the Sale
Assets owned by third parties, which may form the basis for any present or
future claim based upon the Environmental Laws or any demand or action seeking
clean-up of any site, location, body of water, surface or subsurface, under any
Environmental Laws or otherwise, or which may subject the owner of the Sale
Assets to claims by third parties (except to the extent third party liability
can be established) for damages.

(g) No portion of the Sale Assets has ever been used by Seller,
nor any previous occupant of the Real Property, in material violation of
Environmental Laws or as a landfill, dump site or any other use which involves
the disposal or storage of Hazardous Materials on-site or in any manner which
may adversely affect the value of the Sale Assets.

<PAGE> 17

(h) With respect to the Sale Assets, no pesticides, herbicides,
fertilizers or other materials have been used, applied or disposed of by Seller
in violation of any Environmental Laws (other than normal office, cleaning and
maintenance supplies in reasonable quantities used and/or stored appropriately
in the buildings or improvements).

(i) With respect to the Stations or the Sale Assets, Seller has
disposed of all waste in material compliance with all Environmental Laws and
there is no existing condition that may form the basis of any present or future
material claim, demand or action seeking clean up of any facility, site,
location or body of water, surface or subsurface, for which the Buyer could be
liable or responsible solely as a result of the disposal of waste at such site
by a prior owner of the Sale Assets.

(j) Seller and the Sale Assets are in material compliance with all
OSHA Laws.

3.15 FILING OF TAX RETURNS. To the extent the failure to file or pay
would result in a Lien on the Sale Assets or have a material adverse effect on
Buyer or the Sale Assets, Seller has filed all Federal, State and local tax
returns which are required to be filed and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due.

3.16 ABSENCE OF INSOLVENCY. No insolvency proceedings of any character
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best Knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.

3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17,
no agent, broker, investment banker or other person or firm acting on behalf of
or under the authority of Seller or any affiliate of Seller is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, in connection with the transactions contemplated by this
Agreement.

3.18 INSURANCE. There is now in full force and effect with reputable
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.

3.19 TOWER COORDINATES. The current vertical elevation and geographical
coordinates of the Stations' towers ("the Tower Coordinates") have been
registered with the FAA and FCC, if required by law. The registration numbers,
if any, are set forth on Schedule 3.19 hereto. Seller further represents and
warrants that the Tower Coordinates comply with and correspond to the current
vertical elevation an geographical coordinates

<PAGE> 18

authorized by the FAA, FCC and any other governmental authority, including any
federal, state or local authority having jurisdiction over the Stations or said
towers.

3.20 FINANCIAL STATEMENTS.

(a) Attached hereto as SCHEDULE 3.20 are copies of the financial
statements of Seller (collectively the "Financial Statements") including (i)
Audited financial statements for the Stations as of __________; and (ii)
Unaudited monthly income statements for the Stations from _____________ to
_________.

(b) The Financial Statements have been prepared by management of
Seller in accordance with Seller's historical accounting practices during the
periods covered thereby and, in all material respects, present fairly and
accurately the financial condition of the Stations at the dates of said
statements and the results of operations of the Stations for the periods covered
thereby in conformity with GAAP. Except as set forth on SCHEDULE 3.20, as of
_________________ (the "Base Balance Sheet Date"), Seller had no material
liabilities or obligations of any kind with respect to the Stations, whether
accrued, contingent or otherwise, that are not disclosed and adequately reserved
for on the Base Balance Sheet, other than immaterial liabilities incurred in the
ordinary course of business which would not be reflected in the Base Balance
Sheet under GAAP, applied consistently.

3.21 BUSINESS SINCE THE BASE BALANCE SHEET DATE. Since the Base Balance
Sheet Date and except as set forth on SCHEDULE 3.21:

(a) There has been no (i) material adverse change in the Stations
or in the Sale Assets, operations or financial condition of the Stations and
(ii) event, circumstance or combination thereof, whether arising prior to or
after the Base Balance Sheet Date, that might reasonably be expected to result
in a Material Adverse Condition;

(b) The Stations have, in all material respects, been operated in
the ordinary course and in substantially the same manner as they were operated
before the date of the Base Balance Sheet Date;

(c) There has not been any material obligation or liability
(contingent or other) incurred by Seller with respect to the Stations, outside
the ordinary course;

(d) There has not been any change in the collection, payment and
accounting policies used by Seller at the Stations;

(e) Seller has not granted or agreed to grant any change in the
compensation of any employee of the Stations (including any increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any change in
the compensation payable or to become payable to any employee of the Stations,
except for those granted in the ordinary course of business consistent with past
practice.

<PAGE> 19

3.22 DISCLOSURES. No representation or warranty by Seller contained in
this Agreement nor any statement or certificate furnished or to be furnished by
or on behalf of Seller to Buyer contains or will contain any untrue statement of
material fact, or omits or will omit to state any material fact required to make
the statements contained herein and therein not misleading. There is no fact
(other than matters of a general economic nature which do not affect the
Stations uniquely) known to Seller that has not been disclosed by Seller to
Buyer that might reasonably be expected to be a Material Adverse Condition.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.

4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution
and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Buyer. Buyer has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Documents and to consummate the
transactions hereby and thereby contemplated. This Agreement and each of the
other Documents to be executed by Buyer have been, or at or prior to the Closing
will be, duly executed by Buyer. The Documents, when executed and delivered by
the parties hereto, will constitute the valid and legally binding agreement of
Buyer, enforceable against Buyer in accordance with their terms, except as may
be limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally, and except as may be limited by
general principles of equity (regardless of whether such enforceability is
sought in a proceeding in equity or at law).

4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:

<PAGE> 20

in any manner which would have a material adverse effect on the assets,
business, operation or financial condition or results of operations of Buyer;

(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.

4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transactions contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer.

4.5 QUALIFICATION.

(a) Buyer has no Knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Stations upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.

(b) Without limiting the foregoing Subsection (a), Buyer shall make
the affirmative certifications provided in Section III of FCC Form 314 at the
time of filing of such form with the FCC as contemplated by Section 5.2.

(c) Buyer will have available on the Closing Date sufficient funds
to enable it to consummate the transactions contemplated by this Agreement, and
Buyer acknowledges that the receipt of adequate financing by Buyer is not a
condition precedent to performance by Buyer of its obligations under this
Agreement.

4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, no
agent, broker, investment banker, or other person or firm acting on behalf of or
under the authority or Buyer or any affiliate of Buyer is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with transactions contemplated by this Agreement.

<PAGE> 21

4.7 LITIGATION. There is no Litigation pending or, to the Knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.

ARTICLE V

TRANSACTIONS PRIOR TO THE CLOSING DATE

5.1 CONDUCT OF THE STATIONS' BUSINESS PRIOR TO THE CLOSING DATE. Seller
covenants and agrees with Buyer that between the date hereof and the Closing
Date, unless the Buyer otherwise agrees in writing (which agreement shall not be
unreasonably withheld), Seller shall:

(a) Use reasonable efforts to operate the Stations in substantially
the same manner in which they are currently being operated;

(b) Use commercially reasonable efforts to maintain insurance upon
all of the tangible Sale Assets in such amounts and of such kind comparable to
that in effect on the date hereof with respect to such Sale Assets and with
respect to the operation of the Stations, with insurers of substantially the
same or better financial condition;

(c) Operate the Stations and otherwise conduct their business in
accordance with the terms or conditions of their FCC Licenses, the Rules and
Regulations, the Act and use reasonable efforts to conduct their business in
accordance with all other rules and regulations, statutes, ordinances and orders
of all governmental authorities having jurisdiction over any aspect of the
operation of the Stations, except where the failure to so operate the Stations
would not have a material adverse effect on the Sale Assets or the operation of
the Stations or on the ability of Seller to consummate the transactions
contemplated hereby;

(d) Maintain the books and records of the Stations in Seller's
customary manner on a basis consistent with prior years;

(e) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Stations;

(f) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Stations, and any
event or condition which, with notice or lapse of time or both, would constitute
a material default under such Station Agreements;

<PAGE> 22

(g) Not mortgage, pledge or subject to any Lien (except in the
ordinary course of business) any of the Sale Assets;

(h) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;

(i) Not amend or terminate any license, or any Station Agreement,
other than in the ordinary course of business;

(j) Not introduce any material change with respect to the operation
of the Stations including, without limitation, any material changes in the
broadcast hours of the Stations or any other material change in the Stations'
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;

(k) Notify Buyer of any material litigation pending or threatened
against the Stations or Seller or any material damage to or destruction of any
assets included or to be included in the Sale Assets;

5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
within ten (10) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable.
Buyer shall not knowingly take, and Seller covenants that Seller shall not
knowingly take, any action that party knows or has reason to know would
materially and adversely affect or materially delay issuance of the FCC Order or
materially and adversely affect or materially delay its becoming a Final Action
without a Material Adverse Condition, unless such action is requested or
required by the FCC, its staff or the Rules and Regulations. Should Buyer or
Seller become aware of any facts which could reasonably be expected to
materially and adversely affect or materially delay issuance of the FCC Order
without a Material Adverse Condition (including but not limited to, in the case
of Buyer, any facts which would reasonably be expected to disqualify Buyer from
controlling the Stations), such party shall promptly notify the other party
thereof in writing and both parties shall cooperate to take all steps necessary
or desirable to resolve the matter expeditiously and to obtain the FCC's
approval of matters pending before it.

5.3 OTHER CONSENTS. Seller shall use commercially reasonable efforts to
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.

<PAGE> 23

5.4 TAX RETURNS AND PAYMENTS. To the extent the failure to file any
return, estimate, or report or pay any taxes would result in a Lien on the Sale
Assets or have a material adverse effect on Buyer or the Sale Assets:

(a) All tax returns, estimates, and reports required to be filed by
Seller prior to the Closing Date or relating to periods prior to the Closing
Date will be timely filed with the appropriate governmental agencies unless
valid extensions therefor shall have been obtained.

(b) All taxes pertaining to ownership of the Sale Assets or
operation of the Stations prior to the Closing Date will be timely paid;
provided that Seller shall not be required to pay any such tax so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
Seller shall have set aside adequate reserves with respect to any such tax.

5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and
its representatives may make such reasonable investigation of the assets and
business of the Stations as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Stations, provided that (i) Buyer shall give Seller reasonable advance
notice of each date on which Buyer or any such other person or entity desires
such access, (ii) each person (other than an officer of Buyer) shall, if
requested by Seller, be accompanied by an officer or their representative of
Buyer approved by Seller, which approval shall not be unreasonably withheld,
(iii) the investigations at the offices of Seller shall be reasonable in number
and frequency, and (iv) all investigations shall be conducted in such a manner
as not to physically damage any property or constitute a disruption of the
operation of the Stations or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of the Stations as Buyer may reasonably request.

5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be

<PAGE> 24

necessary or appropriate in connection with the operation of the Stations by
Buyer. Each party shall use its reasonable efforts to prevent the violation of
any of the foregoing confidentiality provisions by its respective
representatives. Notwithstanding the foregoing, nothing contained herein shall
prohibit Buyer or Seller from:

(i) using such information, data and materials in connection with
any action or proceeding brought or any claim asserted by Buyer or Seller in
respect of any breach by the other of any representation, warranty or covenant
made in or pursuant to this Agreement;

(ii) supplying or filing such information, data or materials to or
with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein; or

(iii) disclosing any information to the SEC, FCC, FAA or any other
governmental authority provided that the disclosing party reasonably believes
such disclosure to be required.

In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances or required by
law, the parties shall consult with each other to determine the appropriate
timing, form and content of such release or announcement and thereafter may make
such release or announcement.

5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.

5.8 FCC REPORTS. Seller shall continue to file, on a current basis
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Stations. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.

5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
Seller shall obtain executed releases or payoff letters, in suitable form for
filing and otherwise in form and substance reasonably satisfactory to Buyer, of
any security interests granted in the Sale Assets and properties as security for
payment of loans and other obligations or judgments and of any other Liens on
the Sale Assets. At the closing, Seller shall transfer and convey to Buyer all
of the Sale Assets free and clear of all Liens except Permitted Liens.

<PAGE> 25

5.10 ENVIRONMENTAL ASSESSMENT. Within ten (10) business days after the
execution of this Agreement, Seller shall provide Buyer with the originals or
readable copies of any environmental assessments in Seller's possession or
control. Prior to Closing, Buyer shall obtain an assessment of the Real Property
by an environmental engineer selected by Buyer (the "Environmental Assessment").
Buyer shall commission and pay the cost of such Environmental Assessment and
shall provide a copy to Seller within ten (10) days of its receipt by Buyer. The
Environmental Assessment shall be subject to the confidentiality provisions of
Section 5.6. If, after appropriate inquiry into the previous ownership of and
uses of the Real Property consistent with good commercial or customary practice,
the engineer concludes, as set forth in the Environmental Assessment, that
environmental conditions exist on, under or affecting such properties that would
constitute a material violation or breach of Seller's representations and
warranties contained in Section 3.14 of this Agreement or cause the condition
contained in Section 6.9 to not be satisfied, then notwithstanding any other
provisions of this Agreement to the contrary, but subject to the following
sentence, Seller shall at its sole cost and expense (up to a maximum amount of
Fifty Thousand Dollars ($50,000)) remove, correct or remedy any condition or
conditions which constitute a violation or breach of Seller's representations
and warranties contained in Section 3.14 prior to the Closing Date and provide
to Buyer at Closing a certificate from an environmental abatement firm
reasonably acceptable to Buyer that such removal, correction or remedy has been
completed so that Seller's representations and warranties contained in Section
3.14 will be true as of the Closing Date and the condition contained in Section
6.9 will be satisfied as of the Closing Date. In the event the cost of removal,
correction or remedy of the environmental conditions exceeds Fifty Thousand
Dollars ($50,000), Buyer may elect to proceed with the Closing but shall not be
obligated to close under any circumstances which would require Buyer to assume
ownership of the Stations under conditions where there exist any uncured
violations of warranties, representations or covenants with respect to
environmental matters.

5.11 SURVEY. Within ten (10) business days after execution of this
Agreement, Seller shall provide Buyer with the originals or readable copies of
any surveys of the Real Property in Seller's possession or control. All costs
associated with updating such survey or preparing new surveys shall be paid by
Buyer.

ARTICLE VI

CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE

Buyer's obligation to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Buyer in writing:

<PAGE> 26

6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.

(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse,
individually or in the aggregate, to the Stations or the Sale Assets taken as a
whole.

(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse, individually or in the aggregate,
to the Stations, the Sale Assets or Seller's ability to consummate the
transaction contemplated hereby), the conditions specified in Section 6.2 are
satisfied as of the Closing Date.

6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.

6.3 FCC AND OTHER CONSENTS.

(a) The FCC Order shall have been issued by the FCC and shall have
become a Final Action without any Material Adverse Condition.

(b) Conditions which the FCC Order or any order, ruling or decree
of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Seller.

(c) All other material authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
shall have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have a material adverse effect on the operations of the
Stations.

6.4 ADVERSE PROCEEDINGS. Buyer shall not be subject to any ruling,
decree, order or injunction restraining, imposing material limitations on or
prohibiting (i) the consummation of the transactions contemplated hereby or (ii)
its participation in the operation, management, ownership or control of the
Stations; and no Litigation seeking to obtain any such ruling, decree, order or
injunction shall be pending or shall have been threatened in writing and have a
reasonable likelihood of success (excluding any such Litigation instituted or
initiated by Buyer or its affiliates). No governmental authority

<PAGE> 27

having jurisdiction shall have notified any party to this Agreement that
consummation of the transaction contemplated hereby would constitute a violation
of the laws of the United States or of any state or political subdivision or
that it intends to commence proceedings to restrain such consummation or to
force divestiture, unless such governmental authority shall have withdrawn such
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.

6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:

(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Stations in the manner in which the Stations are currently being
operated.

(b) To counsel's Knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Stations.

(c) No proceedings are pending or, to counsel's Knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Stations or their
operation, other than proceedings affecting the radio broadcasting industry in
general.

In rendering such opinion, counsel shall be entitled to rely upon
Seller's representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to any factual matters embodied in, or
forming a basis for any legal opinion expressed in, such opinion, counsel's
Knowledge is based solely on such inquiry.

6.6 OTHER CONSENTS. Seller shall have obtained in writing and provided
to Buyer on or before the Closing Date, without any condition materially adverse
to Buyer or the Stations, the consents or waivers to the transactions
contemplated by this Agreement required under those Station Agreements which
Buyer has elected to assume and identified as material on Schedule 3.9.

6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.

<PAGE> 28

6.8 NO CESSATION OF BROADCASTING; CASUALTY.

(a) Between the date hereof and the Closing Date, neither Station
shall have for a period of more than ten (10) days in the aggregate (i) ceased
broadcasting on its authorized frequencies, (ii) lost substantially all of its
normal broadcasting capability or (iii) have broadcast at a power level of 50%
or less of its FCC authorized level. Seller shall promptly notify Buyer of the
occurrence of any one or more of the foregoing events or conditions, and the
non-fulfillment of the condition precedent set forth in this Subsection caused
by the occurrence of the events specified in Seller's notice shall be deemed
waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.

(b) In addition, during the five (5) days immediately preceding the
Closing Date, the Stations shall have been operating continuously with
substantially all of their normal broadcasting capability except for cessation
or reductions for insignificant periods of time resulting from occurrences (such
as lightning strikes) over which Seller has no control. Seller or Buyer shall
have the right to delay Closing for a period not to exceed thirty (30) days if
Seller or Buyer reasonably determines that any action to restore the Stations
substantially all of their normal broadcasting capability can be completed
during such delay period.

6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained by
Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
violation of any Environmental Law at the Real Property which is not removed or
cured by Seller prior to Closing.

6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be in
fee simple, good and marketable and insurable at regular rates by a title
insurance company reasonably acceptable to Buyer and licensed in the state the
real property is located, pursuant to the standard stipulations and conditions
of an ALTA policy of owner's title insurance, or its reasonable equivalent,
prescribed by the applicable regulatory authorities for the state the real
property is located, free and clear of all liens and encumbrances except
Permitted Encumbrances, as hereinafter defined. For purposes hereof, "Permitted
Encumbrances" shall mean (i) easements, restrictions, and other similar matters
which will not adversely affect the use of the Real Property in the ordinary
course of business, including the business of operating the Stations; (ii) liens
for taxes not due and payable; (iii) mechanics, materialmen's, carriers',
warehousemen's, landlords' or other similar liens in the ordinary course of
business for sums not yet due; (iv) deposits or pledges to secure the
performance of bids, tenders, contracts (other than for borrowed money), leases,
statutory obligations, surety or appeal bonds or other deposits or pledges for
purposes of a like general nature made or given in the ordinary course of
business: and (v) liens or mortgages that will be released at Closing. All costs
associated with obtaining the standard ALTA policy of title insurance shall be
paid by Seller.

<PAGE> 29

ARTICLE VII

CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE

The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:

7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.

(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse, individually or in the
aggregate, to Seller.

(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse, individually or in the aggregate,
to Buyer's ability to consummate the transactions contemplated hereby), the
conditions specified in Section 7.2 are satisfied as of the Closing Date.

7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.

7.3. FCC AND OTHER CONSENTS.

(a) The FCC Order shall have been issued by the FCC and shall have
become effective under the rules of the FCC.

(c) All other material authorizations, consents, approvals and
clearances of all Federal, state and local governmental agencies required to
permit the consummation by Seller of the transactions contemplated by this
Agreement shall have been obtained; all statutory and regulatory requirements
for such consummation shall

<PAGE> 30

have been fulfilled; and no such authorizations, consents, approvals or
clearances shall contain any conditions that individually or in the aggregate
would have any material adverse effect on Seller.

7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling,
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby; and no
Litigation seeking to obtain any such ruling, decrees, order or injunction shall
be pending or shall have been threatened in writing and have a reasonable
likelihood of success (excluding such Litigation instituted or initiated by
Seller or its affiliates). No governmental authority having jurisdiction shall
have notified any party to this Agreement that consummation of the transactions
contemplated hereby would constitute a violation of the laws of the United
States or of any state or political subdivision or that it intends to commence
proceedings to restrain such consummation or to force divestiture, unless such
governmental authority shall have withdrawn such notice. No governmental
authority having jurisdiction shall have commenced any such proceeding.

7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall have
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.

ARTICLE VIII

CLOSING

8.1 TIME AND PLACE. The Closing shall take place at the offices of
Buyer's counsel in Atlanta, Georgia, or at such other place as the parties
agree, at 10:00 A.M. Eastern Time on the fifth business day following the date
(the "Closing Date") which is the later to occur of (i) the date on which of the
FCC Order without any Material Adverse condition has become effective, (ii) the
date as soon as practicable following satisfaction or waiver of the conditions
precedent hereunder and (iii) January 3, 2000.

8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
Seller shall deliver or cause to be delivered to Buyer the following:

(a) Certified resolutions of the Board of Directors of Seller and
its shareholders approving the execution and delivery of this Agreement and each
of the other documents and authorizing the consummation of the transactions
contemplated hereby and thereby.

(b) The certificate required by Section 6.1(b).

(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.

<PAGE> 31

(d) Executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).

(e) General warranty deeds and any other required instruments of
transfer and conveyance transferring to Buyer the Real Property, including
therewith the policy of title insurance described in Section 6.10 hereof.

(f) Executed mortgage satisfactions and any other documents
required by the title insurance company under Section 6.10 as a condition to
issuing the title insurance policy in the form required by Section 6.10.

(g) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to all Station Agreements being assumed by
Buyer.

(h) An instrument assigning to Buyer all right, title and interest
of Seller in the FCC Licenses, all pending applications relating to the Stations
before the FCC, and any remaining Sale Assets not otherwise conveyed.

(i) The items set forth in Section 2.1(e).

(j) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to the Station Assets described in Section
2.1(f).

(k) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.

(l) Such additional instruments, information and materials as Buyer
shall have reasonably requested, including without limitation, evidence that all
material consents and approvals required as a condition to Buyer's obligation to
close hereunder have been obtained.

8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following:

(a) Certified resolutions of the Board of Directors of Buyer and
Salem Communications Corporation approving the execution and delivery of this
Agreement and each of the other Documents and authorizing the consummation of
the transaction contemplated hereby and thereby.

(b) The Purchase Price as set forth in Section 2.5.

<PAGE> 32

(d) The certificate required under Section 7.1(b).

(e) Such additional instruments, information and materials as
Seller shall have reasonably requested.

ARTICLE IX

SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION

9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period. In the
event such a notice is so given, the right to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
For purposes of this agreement the "Survival Period" shall be twelve (12) months
except as follows:

(a) As to any representation and warranty (collectively "Surviving
Warranties") contained in Section 3.1, Section 3.2, Section 3.3, Section 3.4,
Section 3.6(a), Section 3.9(b)(iv), Section 3.11(b)(iv), Section 3.12, Section
3.15, Section 4.1, Section 4.2, Section 4.3 and Section 4.4, and any other
representation or warranty of Buyer of Seller as to (i) such party's
qualification and authority to consummate the transactions contemplated hereby,
(ii) title of the parties to any Station Asset or (iii) any tax obligation of
Seller, the Survival Period shall be indefinite; and,

(b) As to any representation and warranty relating to any Station
Agreement, the Survival Period shall be for the presently existing term of such
Station Agreement plus any applicable period of time under any applicable law
governing the bringing of claims under such Station Agreement.

9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights
to indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.

<PAGE> 33

9.3 INDEMNIFICATION BY SELLER.

(a) Subject to the provisions of Subsection (b) below and Section
10.2 below, Seller shall indemnify and hold harmless Buyer and any officer,
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses, including reasonable attorneys' fees,
(collectively referred to herein or "Losses") relating to or arising out of:

(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or

(ii) The ownership or operation by Seller of the Stations or
the Sale Assets on or prior to the Closing Date; or

(iii) All other liabilities and obligations of Seller other
than the Assumed Obligations;

(iv) All liabilities and obligations relating to Hazardous
Materials existing on the Real Property as of the Closing; or

(v) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.

(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Seller shall not be obligated until the aggregate amount of
Losses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be
entitled to indemnification of the entire amount in excess of Buyer's Threshold
Limitation, provided that any amounts owed by Seller to Buyer under Subsection
(a) (iv) above and Section 2.7 shall not be counted in determining whether
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation.

9.4 INDEMNIFICATION BY BUYER.

(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or

<PAGE> 34

(ii) The ownership or operation of the Stations after the
Closing Date; or

(iii) The Assumed Obligations and all other liabilities or
obligations of Buyer.

(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above unless and until the aggregate amount of such Losses
exceeds Seller's Threshold Limitation, in which case Seller shall then be
entitled to indemnification of the entire amount in excess of Seller's Threshold
Limitation, provided that any payment owed by Buyer to Seller under Section 2.7
shall not be counted in determining whether Seller's Threshold Limitation is
satisfied, and Seller shall have the right to recover any such payment without
regard to any such limitation.

9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
compromise, or defend such a claim without prejudice to any right it may have
hereunder.

ARTICLE X

TERMINATION; LIQUIDATED DAMAGES

10.1 TERMINATION. If Closing shall not have previously occurred, this
Agreement shall terminate upon the earliest of:

(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:

(i) Seller gives such termination notice and is not at such
time in material default hereunder, or Buyer gives such termination notice and
Buyer is not at such time in material default hereunder; and

<PAGE> 35

(ii) Either:

(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Seller), or of Seller
(if such termination notice is given by Buyer), are inaccurate in any respect
and, individually or in the aggregate, materially adverse to the party giving
such termination notice unless the inaccuracy has been induced by or is the
result of actions or omissions of the party giving such termination notice or
unless the accuracy of such representation or warranty is not a condition to
closing; or

(B) Any material obligation to be performed by Buyer (if
such termination notice is given by Seller) or by Seller (if such termination
notice is given by Buyer) is not timely performed unless the lack of timely
performance has been induced by or is the result of actions or omissions of the
party giving such termination notice; or

(C) Any material condition (other than those referred to
in foregoing Clauses (A) and (B)) to the obligation to close the transaction
contemplated herein of the party giving such termination notice has not been
timely satisfied, unless the failure of said condition to be satisfied was
induced by the party giving such termination notice with the intended result of
terminating the Agreement pursuant to this Clause (C); and

(iii) any such inaccuracy, failure to perform or
non-satisfaction of a condition neither has been cured nor satisfied within
twenty (20) days after written notice thereof from the party giving such
termination notice nor waived in writing by the party giving such termination
notice.

(b) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time after twelve (12) months following the date first written above,
provided that termination shall not occur (i) upon the giving of such
termination notice by Seller if Seller is at such time in material default
hereunder or (ii) upon the giving of such termination notice by Buyer if Buyer
is at such time in material default hereunder.

(c) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time following a determination by the FCC that the application for
consent to assignment of the FCC Licenses has been designated for hearing even
with diligent efforts; provided, however, only the party whose qualifications
are not in issue may terminate this Agreement under this provision and only if
such party has given the other sixty (60) days' prior written notice and the
requirement for such hearing has not been set aside within that period.

(d) The written election by Buyer under Article XI.

<PAGE> 36

10.2 OBLIGATIONS UPON TERMINATION.

(a) In the event this Agreement is terminated pursuant to Section
10.1(a)(ii)(A), or Section 10.1(a)(ii)(B) the aggregate liability of Buyer for
breach hereunder shall be limited as provided in Subsections (c) and (e), below
and the aggregate liability for Seller for breach hereunder shall be limited as
provided in Subsections (d) and (e), below. In the event this Agreement is
terminated for any other reason, neither party shall have any liability
hereunder.

(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b), (c) or (d) , or (ii) if such
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is entitled
to the return of the Earnest Money, Seller shall cooperate with Buyer in taking
such action as is required under the Escrow Agreement in order to effect such
return from the Escrow Agent.

(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Section 10.1(a)(ii)(A), or Section
10.1(a)(ii)(B), Buyer agrees that Buyer shall release to Seller upon such
termination, as liquidated damages and not as penalty, the Earnest Money
("Liquidated Damage Amount"). SELLER'S RECEIPT OF THE LIQUIDATED DAMAGE AMOUNT
SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND
SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER
IF CLOSING DOES NOT OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE
LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH
WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF
LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE
REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.

(d) Notwithstanding any provision of this Agreement to the
contrary, but subject to the provisions of the following sentence, if Seller
attempts to terminate this Agreement under circumstances where it is not
entitled to do so, or if Seller, by its own action, causes a material breach of
warranty or fails to satisfy a material condition (including without limitation
a refusal to consummate the transaction after Buyer has satisfied all conditions
to Seller's obligation to close and Buyer has demonstrated its willingness and
ability to close on the terms set forth in this Agreement and Buyer is not in
default hereunder) with the intent of creating a situation whereby Buyer elects
to terminate under Section 10.1(a) and Buyer does so elect to terminate, the
monetary damages, if any, to which Buyer shall be entitled shall be limited to
direct and actual damages (but in no event shall Seller be responsible for such
direct and actual damages in an amount over $250,000). If a circumstance
described in the preceding sentence should

<PAGE> 37

arise and if Buyer establishes that the action of Seller described therein was
taken intentionally in order to allow Seller to sell or enter into negotiations
to sell the Stations, or any of them, to another party, the damages to which
Buyer shall be entitled shall not be limited to direct and actual damages (but
in no event shall Seller be responsible for any damages greater than
$1,000,000).

(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent, and its reasonable
attorney fees expended to recover said amounts.

10.3 TERMINATION NOTICE. Each notice given by a party pursuant to
Section 10.1 to terminate this Agreement shall specify the Subsection (and
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
given.

ARTICLE XI

CASUALTY

Seller will bear the risk of any loss or damage to the Sale Assets
resulting from fire, theft or other casualty (except reasonable wear and tear)
at all times prior to the Closing. If any such loss or damage is sufficiently
substantial so as to cause the Stations, or either of them, to be off the air
for more than seven (7) consecutive days or fifteen (15) total days, whether or
not consecutive ("Substantial Casualty"), then Seller will immediately notify
Buyer in writing of that fact and Buyer, at any time within 15 business days
after receipt of such notice ("Casualty Termination Period"), may elect by
written notice to Seller to terminate this Agreement. If Buyer elects to so
terminate this Agreement, Buyer and Seller will stand fully released and
discharged of any and all obligations under this Agreement (provided Seller
shall remain liable for its obligations pursuant to Section 10.2(b)). If Buyer
does not elect to so terminate this Agreement within the Casualty Termination
Period, then, without waiving any of its rights hereunder, the Substantial
Casualty shall not serve as a basis to terminate this Agreement and there will
be no adjustment in the consideration payable to Seller on account of such loss
or damage. All insurance proceeds payable as a result of the occurrence of the
Substantial Casualty (to the extent not used to replace or restore such lost or
damaged property) will be delivered by Seller to Buyer, or the rights to such
proceeds will be assigned by Seller to Buyer if not yet paid over to Seller, and
Seller will pay to Buyer an amount equal to the difference between the amount of
such insurance proceeds and the full replacement cost of the damaged or lost
Sale Assets.

<PAGE> 38

ARTICLE XII

CONTROL OF STATIONS

Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Stations or conduct of
their business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.

ARTICLE XIII

MISCELLANEOUS

13.1 FURTHER ACTIONS. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.

13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period
of twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Stations pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.

13.3 PAYMENT OF EXPENSES.

(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
hereby shall be shared equally between Seller and Buyer.

(b) All transfer taxes and document stamps payable in connection
with consummation of the transactions contemplated hereby shall be paid by
Seller; all state or local sales or use taxes payable in connection with the
consummation of the transactions contemplated hereby shall be paid by Buyer.

(c) Except as otherwise expressly provided in this Agreement, each
of the parties shall bear its own expenses, including the fees of any attorneys
and accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.

13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Stations are of
a special, unique, and extraordinary character, and that any breach of this
Agreement by

<PAGE> 39

Seller could not be compensated for by damages. Accordingly, if Seller shall
breach its obligations under this Agreement, Buyer shall be entitled, in
addition to any of the remedies that it may have, to enforcement of this
Agreement (subject to obtaining any required approval of the FCC) by decree of
specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action to equitably enforce the
provisions of this Agreement, Seller shall waive the defense that there is an
adequate remedy at law or equity and agrees that Buyer shall have the right to
obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.

13.5 NOTICES. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:

(a) If to Seller, to:

Genesis Communications, Inc.
2970 Peachtree Road, NW, 8th Floor
Atlanta, GA 30305
Attention: Mr. Bruce Maduri

(b) If to Buyer, to:

c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Associate General Counsel

or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date mailed, and
(ii) if personally delivered or otherwise sent as provided above, on the date
received.

13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto and supersede any prior negotiations,
agreements, understandings or arrangements between the parties including,
without limitation, all letters of intent previously entered into by the parties
hereto.

<PAGE> 40

Agreement, express or implied, shall confer on any person other than the parties
hereto and their respective successors or assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the other
party, provided, however, that Buyer may, at its own expense, without Seller's
prior written consent, assign its rights and obligations hereunder, or any
portion thereof, to any entity controlled by or under common control with Buyer,
so long as (i) no delay results in the Closing Date (ii) no extra expense
results to Seller, and (iii) Buyer is not relieved of its obligation hereunder.

13.9 GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Georgia (without
giving effect to the choice of law provisions therein), including all matters of
construction, validity and performance.

13.10 BULK SALES. Seller shall, in accordance with Article IX,
indemnify and hold Buyer harmless from and against any and all claims made
against Buyer by reason of the Bulk Sales Act and similar laws of any state or
jurisdiction.

13.11 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
may be amended, waived, discharged or terminated except by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.

13.12 SEVERABILITY. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.

13.13 HEADINGS. The captions in this Agreement other than Article 1,
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.

13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

<PAGE> 41

13.15 REFERENCES. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.

13.16 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, each
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.

"SELLER" "BUYER"

GENESIS COMMUNICATIONS, INC. SALEM MEDIA OF GEORGIA, INC.

By: By:
-------------------------------- --------------------------------
Bruce Maduri Eric H. Halvorson
President Executive Vice President

<PAGE> 1
EXHIBIT 10.08.03

ASSET PURCHASE AGREEMENT
(WGKA-AM, ATLANTA, GEORGIA)

This AGREEMENT (this "Agreement") is dated as of November 29, 1999, by
and between JW BROADCASTING, INC., a Georgia corporation ("Seller") and SALEM
MEDIA OF GEORGIA, INC., a Delaware corporation ("Buyer"), and SALEM
COMMUNICATIONS CORPORATION, a Delaware corporation ("Parent").

RECITALS:

1. Seller owns and operates radio station WGKA-AM licensed to Atlanta,
Georgia (the "Station"), and holds the licenses and authorizations issued by the
FCC for the operation of the Station.

2. Buyer desires to acquire certain assets of the Station, including
the FCC Licenses (as hereinafter defined) and Seller is willing to convey such
assets to Buyer.

3. The acquisition of the Station is subject to prior approval of the
FCC.

4. Parent is willing to guarantee the obligations of Buyer hereunder.

NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:

ARTICLE 1

TERMINOLOGY

1.1 ACT. The Communications Act of 1934, as amended.

1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7, the amount by which
Buyer's account is to be credited or charged, as reflected on the Adjustment
List.

1.3 ADJUSTMENT LIST. As provided in Section 2.7, an itemized list of
all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.

1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in
Section 2.3.

1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on
which federally chartered banks in the city of Atlanta, Georgia, are regularly
open for business.

<PAGE> 2

1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be One
Hundred Thousand Dollars ($100,000).

1.7 CLOSING. The closing with respect to the transactions contemplated
by this Agreement.

1.8 CLOSING DATE. The date upon which the Closing shall occur as
provided in Section 8.1.

1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto,
and each other agreement, certificate, or instrument delivered pursuant to or in
connection with the Closing, including amendments thereto that are expressly
permitted under the terms of this Agreement, but excluding, in all cases,
documents, materials and things furnished to Buyer in connection with Buyer's
investigation of the Sale Assets and business of the Station.

1.10 EARNEST MONEY. The amount of Four Hundred Thousand Dollars
($400,000).

1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning set
forth in Section 5.10.

1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.

1.13 ESCROW AGENT. Sailor & Associates.

1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached as
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.

1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in
Section 2.2.

1.16 FCC. Federal Communications Commission.

1.17 FCC LICENSES. The licenses, permits and authorizations of the FCC
for the operation of the Station as listed on Schedule 3.8.

<PAGE> 3

1.18 FCC ORDER. An action, order or decision of the FCC granting its
consent to the assignment of the FCC Licenses to Buyer.

1.19 FINAL ACTION. An action of the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
sponte action of the FCC with comparable effect is pending and as to which the
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.

1.20 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, hazardous
substances, pollutants or contaminants, asbestos or asbestos-related products,
polychlorinated biphenyls ("PCBs"), petroleum, crude oil or any fraction or
distillate thereof in excess of legally-defined permissible limits (as such
terms are defined in any applicable federal, state or local laws, ordinances,
rules and regulations, and including any other terms which are or may be used in
any applicable environmental laws to define prohibited or regulated substances).

1.21 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or
Section 9.4(a) against which any claim or liability may be asserted by a third
party which would give rise to a claim for indemnification under the provisions
of this Agreement by such party.

1.22 INDEMNIFYING PARTY. The party to the Agreement (not the
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.

1.23 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any Sale Assets
or property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.

1.24 MATERIAL ADVERSE CONDITION. A condition which would materially
restrict, limit, increase the cost or burden of or otherwise materially
adversely affect or materially impair the right of Buyer to the ownership, use,
control, enjoyment or operation of any of the Sale Assets or the Station, taken
as a whole; provided, however, that any condition which requires that the
Station be operated in accordance with a condition similar to those contained in
the FCC Licenses as of the date hereof shall not be deemed a Material Adverse
Condition.

<PAGE> 4

1.25 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.

1.26 PARENT GUARANTEE shall mean the guarantee of the obligations of
Buyer hereunder by Parent in the form of Exhibit A attached hereto.

1.27 PERMITTED ENCUMBRANCES. For purposes hereof, "Permitted
Encumbrances" shall mean (i) easements, restrictions, and other similar matters
which will not materially adversely affect the use of the Real Property in the
ordinary course of business; (ii) liens for taxes not due and payable or, that
are being contested in good faith by appropriate proceedings; (iii) mechanics,
materialmen's, carriers', warehousemen's, landlords' or other similar liens in
the ordinary course of business for sums not yet due or which are being
contested in good faith by appropriate proceedings; (iv) deposits or pledges to
secure the performance of bids, tenders, contracts (other than for borrowed
money), leases, statutory obligations, surety or appeal bonds or other deposits
or pledges for purposes of a like general nature made or given in the ordinary
course of business: and (v) liens or mortgages that will be released at Closing;
(vi) zoning ordinances and regulations, including statutes and ordinances
relating to the liens of streets and to other municipal improvements, which
would not, individually or in the aggregate, result in a Material Adverse
Condition.

1.29 PURCHASE PRICE. The consideration to be paid by Buyer to Seller
for purchase of the Sale Assets in an amount equal to Eight Million Dollars
($8,000,000), as adjusted pursuant to Section 2.7.

1.30 REAL PROPERTY. Such term shall have the meaning defined in Section
3.7.

1.31 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume
47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.

1.32 SALE ASSETS. All of the tangible and intangible assets to be
transferred by Seller to Buyer as set forth in Section 2.1.

<PAGE> 5

1.34 STATION AGREEMENTS. The agreements, commitments, contracts, leases
and other items described in Section 2.1(d) which relate to operation of the
Station.

1.35 SURVIVAL Period. Such term shall have the meaning defined in
Section 9.1.

1.36 TANGIBLE PERSONAL PROPERTY. The personal property described in
Section 2.1(a).

1.37 TOWER COORDINATES. Such term shall have the meaning defined in
Section 3.15 hereof.

ARTICLE II

PURCHASE AND SALE

2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer,
assign and convey to Buyer, and Buyer will purchase from Seller, free and clear
of all Liens, except Permitted Liens and Liens that Buyer shall have
specifically waived in writing and accepted at Closing, all of Seller's right,
title and interest, legal and equitable, in and to the tangible and intangible
assets (except Excluded Assets) used or useful in the operation of the Station
as specifically set forth in the following:

(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
furniture, fixtures and other tangible personal property owned by Seller prior
to Closing and used in the operation of the Station (excluding, in all events,
the Excluded Assets), including, but not limited to the tangible personal
property listed on Schedule 3.6, together with such modifications, replacements,
improvements and additional items, and subject to such deletions therefrom, made
or acquired between the date hereof and the Closing Date in accordance with the
terms and provisions of this Agreement;

(b) REAL PROPERTY AND LEASES. Seller's interests in the Real
Property including, without limitation, all right, title and interest of Seller
in and to the Station's transmitting facilities;

(d) STATION AGREEMENTS. All agreements which are listed on Schedule
3.8 and any renewals, extensions, amendments or modifications of such agreements
that are made in the ordinary course of Seller's operation of the Station and in
accordance with the terms and provisions of this Agreement;

<PAGE> 6

(f) MISCELLANEOUS ASSETS. Intangible assets, properties or rights
of any kind or nature owned or used by Seller prior to the Closing in the
operation of the Station including, but not limited to, goodwill, call letters,
slogans and other intellectual property of the Station and listed on Schedule
2.1(f) hereto.

(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.

(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
included as part of the Sale Assets).

(d) All contracts of insurance and claims against insurers.

(e) All employee benefit plans and the assets thereof and all
employment contracts.

(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.

<PAGE> 7

(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver materially accurate copies thereof to Buyer.

(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.

(j) The list of approximately 5,000 listeners and containing such
listeners' names, addresses and other demographic information.

(k) All tangible personal property listed on Schedule 2.2, hereof.

2.3 ASSUMPTION OF LIABILITIES.

(a) At the Closing, Buyer shall assume and agree to perform,
without duplication of Seller's performance, the following liabilities and
obligations of Seller (the "Assumed Obligations"):

(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.

(ii) Liabilities and obligations arising under the Station
Agreements, if any, but only to the extent such liabilities and obligations
relate to any period of time after the Closing.

2.4 EARNEST MONEY.

(a) Within five (5) days of the execution of this Agreement, Buyer
shall deposit with Escrow Agent under the Escrow Agreement, in immediately
available funds, the Earnest Money. The Escrow Agent shall hold the Earnest
Money under the terms of the Escrow Agreement in trust for the benefit of the
parties hereto. Interest and other earnings on the Earnest Money shall be
distributed by the Escrow Agent to Buyer from time to time upon the request of
Buyer.

<PAGE> 8

2.5 PAYMENTS.

(a) The Purchase Price shall be paid by Buyer as follows:

(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed
to Seller by cashier's check or wire transfer of immediately available funds.

(ii) At the Closing the Purchase Price, less the amount of the
Earnest Money disbursed to Seller, shall be paid to Seller at Closing by wire
transfer of immediately available funds.

(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.

2.6 ALLOCATION OF THE PURCHASE PRICE. Schedule 2.6 sets forth an
allocation of the Purchase Price. Buyer and Seller shall use, and Parent shall
cause Buyer to use, such allocation for all reporting purposes in connection
with federal, state and local income and, to the extent permitted under
applicable law, franchise taxes. Buyer and Seller agree, and Parent shall cause
Buyer to agree, to report such allocation to the Internal Revenue Service in the
form required by Treasury Regulation Section 1.1060-1T.

2.7 ADJUSTMENT OF PURCHASE PRICE.

(a) All operating income and operating expenses of the Station
shall be adjusted and allocated between Seller and Buyer, and an adjustment in
the Purchase Price shall be made as provided herein, to the extent necessary to
reflect the principle that all such income and expenses attributable to the
operation of the Station on or before the Closing Date shall be for the account
of Seller, and all income and expenses attributable to the operation of the
Station after the closing Date shall be for the account of Buyer.

(c) For purposes of making the adjustments pursuant to this Section
2.7, Buyer shall prepare and deliver the Adjustment List to Seller within thirty
(30) days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the Adjustment Amount is a credit to the account of Buyer,
Seller shall pay such amount to Buyer within five (5) Business Days following
presentation of the Adjustment List to Seller, and if the Adjustment Amount is a
charge to the account of Buyer, Buyer shall pay such amount to Seller within
five (5) Business Days following presentation of the Adjustment List to Seller.
In the event Seller disagrees with the Adjustment Amount determined by Buyer or
with any other matter arising out of this subsection, and Buyer

<PAGE> 9

and Seller cannot within thirty (30) days resolve the disagreement themselves,
the parties will refer the disagreement to a Big Six accounting firm other than
one that regularly represents either party, whose decision shall be final and
whose fees and expenses shall be allocated between and paid by Seller and Buyer,
respectively, to the extent that such party does not prevail on the disputed
matters decided by the accountants.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Notwithstanding anything to the contrary in this Agreement, Seller
makes no representation or warranty other than as set forth in this Article III.
Seller hereby represents and warrants to Buyer as follows:

3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly
existing and in good standing under the laws of the State of Georgia and
authorized to conduct business in the State of Georgia. Seller has all requisite
power to own, operate and lease its properties and carry on its business as it
is now being conducted and as the same will be conducted until the Closing.

3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Seller's execution
and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Seller. Seller has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. The
Documents, when executed and delivered by the parties hereto, will constitute
legal and valid obligations of Seller enforceable against it in accordance with
their terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights or
remedies generally, and except as may be limited by general principles of equity
(regardless of whether enforceability is sought in a proceeding in equity or at
law).

3.3 ABSENCE OF CONFLICTS. Except with respect to the matters listed in
Schedule 3.4 hereof, the execution and delivery of, and the performance of its
obligations under, this Agreement and each of the other Documents by Seller, and
the consummation of the transactions contemplated hereby and thereby:

(a) do not, to Seller's actual knowledge, in any material respect
(with or without the giving of notice or the passage of time or both) violate
(or result in the creation of any Lien other than a Permitted Lien on any of the
Sale Assets under), any provision of law, rule or regulation or any order,
judgment, injunction, decree or ruling applicable to Seller;

<PAGE> 10

(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the Articles of Incorporation or Bylaws of Seller or pursuant to any
lease, agreement, commitment or other instrument which Seller is a party to, or
bound by, or by which any of the Sale Assets may be bound, or result in the
creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets.

3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for
such consents as are required by the FCC and as are disclosed on Schedule 3.4,
to Seller's actual knowledge, the execution and delivery of, and the performance
of its obligations under, this Agreement and each of the other Documents by
Seller, and the consummation by Seller of the transactions contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration of filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of a nature to which Seller is a party or
by which it is bound or by which the Sale Assets are bound or to which they are
subject to, the failure of which to obtain would result in a Material Adverse
Condition.

3.5 TANGIBLE PERSONAL PROPERTY. Except for supplies and other
incidental items which in the aggregate are not of material value and studio
equipment, to Seller's actual knowledge, the list of Tangible Personal Property
set forth on Schedule 3.5 is a complete and correct list of all of the items of
tangible personal property used to a material extent in the operation of the
Station in the manner in which it is now operated, except for the Excluded
Assets.

(a) Seller has good, marketable and valid title to all of the items
of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.

(b) On the Closing Date, the Tangible Personal Property will be in
at least as good a condition as of the date hereof, reasonable wear and tear
excepted, and will be in a condition to be operated in accordance with the FCC
Licenses in all material respects.

3.6 REAL PROPERTY.

(a) The real property described on Schedule 3.6 constitutes a
complete and correct summary description in all material respects of all of the
interests including all leases, in real estate, used to any extent in the
operation of the Station in the manner in which it has been and is now operated.
Said real property, together with all improvements affixed thereto, is herein
defined as the "Real Property."

<PAGE> 11

(c) To Seller's actual knowledge, Seller has not received any
notices of uncorrected violations of the applicable housing, building, safety or
fire ordinances. To Seller's actual knowledge, the Real Property is served by
electricity and water in capacities adequate for the present use of the Real
Property and improvements thereon.

(d) Seller has not made any other agreement for the sale or lease
of, or given any other person an option to purchase or lease or a right of first
refusal to purchase or lease, all or any part of the Real Property, and Seller
has not subjected the Real Property to any liens (other than Permitted Liens),
easements, rights, duties, obligations, covenants, conditions, restrictions,
limitations or agreements not of record.

3.7 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
Schedule 3.7, and except as set forth therein, the FCC Licenses (i) are valid,
in good standing and in full force and effect, and (ii) constitute all the
current licenses and authorizations issued by the FCC to Seller for or in
connection with the current operation of the Station. To Seller's actual
knowledge, there is no condition imposed by the FCC as part of any FCC License
which is neither set forth on the face thereof as issued by the FCC nor
contained in the Rules and Regulations applicable generally to stations of the
type, nature, class or location of the Station. No proceedings are pending or,
to the knowledge of the Seller, are threatened which may result in the
revocation, modification, non-renewal or suspension of any of the FCC Licenses,
the denial of any pending applications, the issuance of any cease and desist
order or the imposition of any fines, forfeitures or other administrative
actions by the FCC with respect to the Station or its operation, other than
proceedings affecting the radio broadcasting industry in general. Seller has no
actual knowledge of any matters (i) which could reasonably be expected to result
in the suspension or revocation of or the refusal to renew any of the FCC
Licenses or the imposition of any fines or forfeitures by the FCC, or (ii)
against Seller which could reasonably be expected to result in the FCC's refusal
to grant approval of the assignment to Buyer of the FCC Licenses or the
imposition of any Material Adverse Condition in connection with approval of such
assignment.

3.8 STATION AGREEMENTS.

(a) Schedule 3.8 sets forth an accurate and complete list of all
material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Station or its assets or properties are bound by, except (A) employee
benefit plans and employment contracts, (B) contracts for the sale of time on
the Station, and (C) contracts which are cancelable by Seller or its assignee
without breach or penalty on not more than sixty (60) days' notice.

(b) To the actual knowledge of Seller, except as set forth in the
Schedules, (i) the Station Agreements are, in all material respects, valid and
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency,

<PAGE> 12

reorganization, moratorium and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of equity
regardless of whether enforcement is sought in any proceeding at law or in
equity; (ii) neither Seller nor any party thereto is in material breach of or in
material default under any Station Agreements; (iii) there has not occurred any
event which, after the giving of notice or the lapse of time or both, would
constitute a material default under, or result in the material breach of, any
Station Agreements which, individually or in the aggregate, would result in a
Material Adverse Condition.

(c) Schedule 3.8 indicates, for each Station Agreement listed
thereon which is being assumed by Buyer, whether consent or approval by any
party thereto is required thereunder for consummation of the transactions
contemplated hereby.

3.9 LITIGATION. There are no claims, investigations or administrative,
arbitration or other proceedings pending or, to the actual knowledge of Seller,
threatened against Seller which would, individually or in the aggregate if
adversely determined, result in a Material Adverse Condition, or which would
give any third party the right to enjoin the transactions contemplated by this
Agreement and Seller has no actual knowledge of any bases for any such claim or
action. There are no existing or pending orders, judgments or decrees of any
court or governmental agency affecting Seller, the Station or any of the Sale
Assets which would result in a Material Adverse Condition.

3.10 LABOR MATTERS. Seller is not a party to any collective bargaining
agreement, and there is no collective bargaining agreement that determines the
terms and conditions of employment of any employees of Seller.

3.11 COMPLIANCE WITH LAW. To Seller's actual knowledge, the operation
of the Station complies in all material respects with the applicable rules and
regulations of the FCC and all federal, state, local or other laws, statutes,
ordinances, regulations, and any applicable order, writ, injunction or decree of
any court, commission, board, agency or other instrumentality.

3.12 ENVIRONMENTAL MATTERS; OSHA. Except as disclosed on the 1997 Phase
I environmental report relating to the Real Property, a true and complete copy
of which has previously been provided to Buyer:

(a) Seller has not, and to Seller's actual knowledge, no other
person or entity has caused or permitted materials to be generated, released,
stored, treated, recycled, disposed of on, under or at such parcels, which
materials, if known to be present, would require clean up, removal or other
remedial or responsive action under Environmental Laws (other than normal
office, cleaning and maintenance supplies in reasonable quantities used and /or
stored appropriately in the buildings or improvements on the Real Property). To
Seller's actual knowledge, there are no underground storage tanks and no PCBs or
friable asbestos in or on the Sale Assets or the Real Property.

<PAGE> 13

(b) Seller is not subject to any judgment, decree, order or
citation with respect to the Sale Assets related to or arising out of
Environmental Laws, and Seller has not received notice that it has been named or
listed as a potentially responsible party by any person or governmental body or
agency in any matter, under Environmental Laws.

3.13 FILING OF TAX RETURNS. Seller has filed all federal, state and
local tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due, other
than such returns, taxes and assessments, the failure to file or pay would not,
individually or in the aggregate, have a material adverse effect on Buyer.

3.14 BROKER'S OR FINDER'S FEES. Except for as set forth on Schedule
3.14, no agent, broker, investment banker or other person or firm acting on
behalf of or under the authority of Seller or any affiliate of Seller is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, in connection with the transactions contemplated by
this Agreement.

3.15 INSURANCE. There is now in full force and effect with reputable
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer and Parent, jointly and severally, represent and warrant to
Seller as follows:

4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer is authorized to conduct business in the State of Georgia.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Parent and Buyer has all
requisite corporate power to own, operate and lease its properties and carry on
its business as it is now being conducted and as the same will be conducted
following the Closing.

4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Each of Parent's and
Buyer's execution and delivery of, and the performance of its obligations under,
this Agreement and each of the other Documents, and the consummation by each of
Parent and Buyer of the transactions contemplated hereby and thereby, have been
duly authorized and approved by all necessary corporate action on the part of
each of Parent and Buyer. Each of Parent and Buyer has the power and authority
to execute, deliver and perform its obligations under this Agreement and each of
the other Documents and to consummate the transactions hereby and thereby
contemplated. This Agreement and each of the other Documents have been, or at or
prior to the Closing will be, duly executed by Buyer. This Agreement and each of
the other Documents to be executed by Each of Parent and Buyer have been, or at
or prior to the Closing will be, duly executed by Buyer.

<PAGE> 14

The Documents, when executed and delivered by the parties hereto, will
constitute the valid and legally binding agreement of each of Parent and Buyer,
enforceable against each of Parent and Buyer in accordance with their terms,
except as may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights or remedies generally, and except
as may be limited by general principles of equity (regardless of whether such
enforceability is sought in a proceeding in equity or at law).

4.3 ABSENCE OF CONFLICTS. Each of Parent's and Buyer's execution and
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents and the consummation by each of Parent and Buyer of
the transaction contemplated hereby and thereby:

(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of either
Parent or Buyer under) any provision of law, rule or regulation or any order,
judgment, injunction, decree or ruling applicable to either Parent or Buyer in
any manner which would have a material adverse effect on the assets, business,
operation or financial condition or results of operations of either Parent or
Buyer;

(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which each of Parent or Buyer is a party to,
bound by, or by which any of its assets or properties may be bound.

4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
required consent of the FCC, each of Parent's and Buyer's execution and delivery
of, and the performance of its obligations under, this Agreement and each of the
other Documents and the consummation by each of Parent and Buyer of the
transaction contemplated hereby and thereby, do not require the consent, waiver,
approval, permit, license, clearance or authorization of, or any declaration or
filing with, any court or public agency or other authority, or the consent of
any person under any agreement, arrangement or commitment of any nature to which
either Parent or Buyer is a party or by which it is bound, the failure of which
to obtain would have a material adverse effect on the assets, business,
operation or financial condition or results of operations of either Parent or
Buyer.

4.5 QUALIFICATION.

(a) Neither Parent nor Buyer has no knowledge after due inquiry of
any facts concerning Parent or Buyer or any other person with an attributable
interest in either Parent or Buyer (as such term is defined under the Rules and
Regulations) which, under present law (including the Act) and the Rules and
Regulations, would (i) disqualify either Parent or Buyer from being the holder
of the FCC Licenses, the owner of the Sale

<PAGE> 15

Assets or the operator of the Station upon consummation of the transactions
contemplated by this Agreement, or (ii) raise a substantial and material
question of fact (within the meaning of Section 309(e) of the Act) respecting
either Parent or Buyer's qualifications.

(b) Without limiting the foregoing Subsection (a), Buyer shall make
, and Parent shall cause Buyer to so make the affirmative certifications
provided in Section III of FCC Form 314, or as may be required on any form
required by the FCC to obtain its consent to this transaction, at the time of
filing of such form with the FCC as contemplated by Section 5.2.

4.6 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker, or
other person or firm acting on behalf of or under the authority of Parent or
Buyer or any affiliate of Buyer is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or indirectly, in
connection with transactions contemplated by this Agreement.

4.7 LITIGATION. There are no legal, administrative, arbitration or
other proceedings or governmental investigations pending or, to the knowledge of
either Parent or Buyer, threatened against Parent or Buyer that would give any
third party the right to enjoin the transactions contemplated by this Agreement.

ARTICLE V

TRANSACTIONS PRIOR TO THE CLOSING DATE

5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE. Seller
covenants and agrees with Buyer that between the date hereof and the Closing
Date, unless the Buyer otherwise agrees in writing (which agreement shall not be
unreasonably withheld or delayed), Seller shall:

(a) Use reasonable commercial efforts to maintain insurance upon
all of the tangible Sale Assets in such amounts and of such kind comparable to
that in effect on the date hereof with respect to such Sale Assets and with
respect to the operation of the Station, with insurers of substantially the same
or better financial condition;

(b) Operate the Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of its FCC
Licenses, the Rules and Regulations, the Act and all other rules and
regulations, statutes, ordinances and orders of all governmental authorities
having jurisdiction over any aspect of the operation of the Station, except
where the failure to so operate the Station would not result in a Material
Adverse Condition or have a material and adverse effect on the ability of Seller
to consummate the transactions contemplated hereby;

(c) Comply in all material respects with all Station Agreements
which are material, individually or in the aggregate, to the operation of the
Station;

<PAGE> 16

(d) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;

(e) Not mortgage, pledge or subject to any Lien other than a
Permitted Lien (except in the ordinary course of business) any of the Sale
Assets;

(f) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;

(g) Not amend or terminate any Station Agreement, other than in the
ordinary course of business;

(h) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;

(i) Notify Buyer of any material litigation pending or threatened
against Station or any material damage to or destruction of any assets included
or to be included in the Sale Assets of which Seller receives actual knowledge.

5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
within ten (10) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable;
provided, however, that in the event the application for assignment of the FCC
Licenses has been designated for hearing, either Buyer or Seller may elect to
terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly
take, and Seller covenants that Seller shall not knowingly take, any action that
party knows or has reason to know would materially and adversely affect or
materially delay issuance of the FCC Order or materially and adversely affect or
materially delay its becoming a Final Action without a Material Adverse
Condition, unless such action is requested or required by the FCC, its staff or
the Rules and Regulations. Should Buyer or Seller become aware of any facts
which could reasonably be expected to materially and adversely affect or
materially delay issuance of the FCC Order without a Material Adverse Condition
(including but not limited to, in the case of Buyer, any facts which would
reasonably be expected to disqualify Buyer from controlling the Station), such
party shall promptly notify the other party thereof in writing and both parties
shall cooperate to take all steps necessary or desirable to resolve the matter
expeditiously and to obtain the FCC's approval of matters pending before it.

<PAGE> 17

5.3 OTHER CONSENTS. Seller shall use its reasonable best efforts to
obtain the consent or waivers to the transactions contemplated by this Agreement
required under the Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.

5.4 TAX RETURNS AND PAYMENTS. All taxes pertaining to ownership of the
Sale Assets or operation of the Station prior to the Closing Date will be timely
paid; provided that Seller shall not be required to pay any such tax so long as
the validity thereof shall be contested in good faith by appropriate proceedings
and Seller shall have set aside adequate reserves with respect to any such tax.

5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and
its representatives may make such reasonable investigation of the assets and
business of the Station as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of Seller and the Station as Buyer may reasonably request.

<PAGE> 18

confidentiality provisions by its respective representatives. Notwithstanding
the foregoing, nothing contained herein shall prohibit Buyer or Seller from:

(i) using such information, data and materials in connection
with any action or proceeding brought or any claim asserted by Buyer or Seller
in respect of any breach by the other of any representation, warranty or
covenant made in or pursuant to this Agreement; or

(ii) supplying or filing such information, data or materials to
or with the FCC or SEC or any other valid governmental or court authority to the
extent required by law or reasonably necessary to obtain any consent, waiver,
amendment, modification, approval, authorization, permit or license which may be
necessary to effectuate this Agreement, and to consummate the transaction
contemplated herein.

In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.

5.8 FCC REPORTS. Seller shall continue to file, on a current basis
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.

5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the Closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.

5.10 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days
after execution of this Agreement, Buyer may obtain a Phase I ("the Phase I")
environmental assessment of the Sale Assets by an environmental engineer
selected by Buyer. Within fourteen (14) days after Buyer's receipt of the Phase
I, if the Phase I indicates environmental conditions may exist on, under or
affect such properties that may constitute a violation or breach of Seller's
representations and warranties contained in Section 3.12 of this Agreement (an
"Environmental Defect"), then Buyer shall be entitled to obtain a Phase II ("the
Phase II") environmental assessment of the Real Property, or any portion
thereof. (The Phase I and the Phase II, if obtained, shall be referred to herein

<PAGE> 19

as the "Environmental Assessment"). Buyer shall commission and pay the cost of
such Environmental Assessment and shall provide a copy to Seller. The
Environmental Assessment shall be subject to the confidentiality provisions of
Section 5.6. If after appropriate inquiry into the previous ownership of and
uses of the Real Property consistent with good commercial or customary practice,
the engineer concludes that environmental conditions exist on, under or
affecting such properties that would constitute an Environmental Defect, then
Buyer may elect to proceed with the Closing but shall not be obligated to close
under any circumstances which would require Buyer to assume ownership of the
Station under conditions where there exist any uncured violations of warranties,
representations or covenants with respect to environmental matters. If Buyer
elects to close with knowledge of an Environmental Defect, then Seller shall
have no obligation to indemnify Buyer with respect thereto or pursuant to
Article IX hereof following the Closing.

5.11 APPLICATIONS. Seller recognizes that Buyer's intended use of the
Station is subject to prior approval by federal, state and local authorities to
improve the current facilities of the Station and hereby permits Buyer to file
any application(s) in the name of Buyer to make changes in the Station's
facilities; provided that such application(s) shall be contingent on Closing
occurring. Seller will provide Buyer with a separate written statement of the
foregoing, should Buyer request such a separate written statement. Buyer shall
be responsible for all fees, permits, engineering, and filings and related costs
necessary for any and all of the application(s) contemplated by this Section.
Buyer shall indemnify and hold harmless Seller and any officer, director, agent,
employee and affiliate thereof with respect to any and all demands, claims,
actions, suits, proceedings, assessments, judgments, costs, losses, damages,
liabilities and expenses (including reasonable attorneys' fees) relating to or
arising out of any application, documents, filings or fees executed by Seller
pursuant to this Section.

<PAGE> 20

ARTICLE VI

CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE

6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.

(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole.

(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date.

6.3 FCC AND OTHER CONSENTS.

(a) The FCC Order shall have been issued by the FCC and shall have
become a Final Action without any Material Adverse Condition.

(b) Seller shall have satisfied all material conditions which the
FCC Order or any order, ruling or decree of any judicial or administrative body
relating thereto or in connection therewith specifies and requires to be
satisfied by Seller prior to transfer of the FCC Licenses to Buyer.

(c) All other material authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
including, without limitation, the assignment of any FCC Authorization requested
by Buyer, shall have been obtained; all material statutory and regulatory
requirements for such consummation shall have been fulfilled; and no such
authorizations, consents, approvals or clearances shall contain any conditions
that individually or in the aggregate would result in a Material Adverse
Condition.

<PAGE> 21

6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall
be subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending. No governmental authority having jurisdiction shall have notified any
party to this Agreement that consummation of the transaction contemplated hereby
would constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.

6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
Seller's FCC counsel a letter, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:

(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
standing and in full force and effect and include all material licenses, permits
and authorizations which are necessary under the Rules and Regulations for
Seller to operate the Station in the manner in which the Station is currently
being operated.

(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.

(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC which would materially adversely affect the
continued operation of the Station, other than proceedings affecting the radio
broadcasting industry in general.

Counsel shall be entitled to rely upon Seller's representations and
warranties in this Agreement and to limit its inquiry to its files and such FCC
files and records as are available to it as of 10:00 o'clock A.M. Eastern time
the business day immediately preceding the Closing Date. Counsel may state that,
as to any factual matters embodied in, or forming a basis for any legal opinion
expressed in, such opinion, counsel's knowledge is based solely on such inquiry.

21
<PAGE> 22

6.6 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.

6.7 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained by
Buyer pursuant to Section 5.10 hereof shall not have disclosed an Environmental
Defect that is not removed, remedied or cured by Seller prior to the Closing.

ARTICLE VII

CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE

7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.

(a) The representations and warranties of Parent and Buyer
contained in this Agreement shall be complete and correct in all material
respects on the date hereof and at the Closing Date with the same effect as
though made at such time except for changes that are not materially adverse to
Seller.

(b) Buyer and Parent, respectively, shall have delivered to Seller
on the Closing Date a certificate that (i) the condition specified in Section
7.1(a) is satisfied as of the Closing Date, and (ii) except as set forth in such
certificate (none of which exceptions shall be materially adverse to Buyer's
ability to consummate the transaction contemplated hereby), the conditions
specified in Section 7.2 are satisfied as of the Closing Date.

7.2 PERFORMANCE OF AGREEMENTS. Buyer and Parent shall have performed in
all material respects all of its covenants, agreements and obligations required
by this Agreement and each of the other Documents to be performed or complied
with by it prior to or upon the Closing Date.

7.3. FCC AND OTHER CONSENTS.

(a) The FCC Order shall have been issued by the FCC and shall have
become effective under the rules of the FCC, without any condition materially
adverse to Seller.

(b) Conditions which the FCC Order or any order, ruling or decree
of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied by Buyer prior to transfer of
the FCC Licenses to Buyer shall have been satisfied by Buyer.

<PAGE> 23

(c) All other authorizations, consents, approvals and clearances of
all federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.

7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling,
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.

7.6 DELIVERY OF PARENT GUARANTEE. Parent shall have delivered the
Parent Guarantee, dated as of the Closing Date, to Seller.

ARTICLE VIII

CLOSING

8.1 TIME AND PLACE. Unless otherwise agreed to in advance by the
parties, Closing shall take place in person or via facsimile at the offices of
Buyer's counsel in Camarillo, California, or at such other place as the parties
agree, at 10:00 A.M. Pacific Time on the date (the "Closing Date") that is the
later of (i) the fifth Business Day after the Applicable Date or (ii) the date
as soon as practicable following satisfaction or waiver of the conditions
precedent hereunder. The "Applicable Date" shall be the date on which issuance
of the FCC Order without any Material Adverse Condition or condition materially
adverse to Seller has become effective.

8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
Seller shall deliver or cause to be delivered to Buyer the following:

(a) Certified resolutions of Seller's Board of Directors and
Shareholders approving the execution and delivery of this Agreement and each of
the other Documents and authorizing the consummation of the transactions
contemplated hereby and thereby.

<PAGE> 24

(b) The certificate required by Section 6.1(b).

(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.

(e) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to all Station Agreements, including leases
for the Real Property, being assumed by Buyer.

(f) An instrument assigning to Buyer all right, title and interest
of Seller in the FCC Licenses, all pending applications relating to the Station
before the FCC, and any remaining Sale Assets not otherwise conveyed.

(g) An instrument assigning to Buyer all rights, title and interest
of Seller to the assets described in Section 2.1(f) hereof.

(h) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.

(i) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained.

8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following:

(a) Certified resolutions of Buyer's Board of Directors approving
the execution and delivery of this Agreement and each of the other Documents and
authorizing the consummation of the transaction contemplated hereby and thereby.

(b) The Purchase Price as set forth in Section 2.5.

(d) The certificate required under Section 7.1(b).

(e) The agreement ("Internet Agreement") by Buyer, or its
affiliates, to provide technical assistance, without cost, to establish and
operate a radio station that streams audio content over the Internet, in the
form set forth in Exhibit B attached hereto.

<PAGE> 25
(f) The agreement by Buyer, to allow Mr. Joseph Weber to produce
and broadcast on the Station, without cost, up to one (1) hour of programming
each week for one (1) year between the hours of 10:00 a.m. and 3:00 p.m. on
Saturday, in substantially the form set forth in Exhibit C attached hereto.

(g) Such additional information and materials as Seller shall have
reasonably requested.

ARTICLE IX

SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION

9.3 INDEMNIFICATION BY SELLER.

(a) Subject to the provisions of Subsection (b) below and Section
10.2 below, Seller shall indemnify and hold harmless Buyer and any officer,
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:

(i) Any breach or non-performance by Seller of any of its
representations or warranties set forth in this Agreement; or

<PAGE> 26

(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date; or

(iii) All other liabilities and obligations of Seller other
than the Assumed Obligations; or

(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.

(b) Except for any amounts owed by Seller to Buyer under Section
9.3(a) (iv), and Section 2.7, if Closing occurs, Seller shall not be obligated
to indemnify Buyer pursuant to Section 9.3(a) hereof until the aggregate amount
of such claims, liabilities, damages, losses, costs and expenses exceeds Buyer's
Threshold Limitation, in which case Buyer shall then be entitled to
indemnification of the excess of the Buyer's Threshold Limitation.

9.4 INDEMNIFICATION BY BUYER.

(a) Subject to the provisions of Subsection (b) below and Section
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:

(i) Any breach or non-performance by Buyer of any of its
representations or warranties set forth in this Agreement or any other Document;
or

(ii) The ownership or operation of the Station after the
Closing Date; or

(iii) The Assumed Obligations and all other liabilities or
obligations of Buyer.

(b) Except for any amounts owed by Buyer to Seller under Section
2.7, if Closing occurs, Buyer shall not be obligated until the aggregate amount
of such claims, liabilities, damages, losses, costs and expenses exceeds
Seller's Threshold Limitation, in which case Seller shall then be entitled to
indemnification of excess of the Seller's Threshold Limitation.

<PAGE> 27

keep the Indemnified Party advised of all developments in the defense thereof
and any related litigation, and the Indemnified Party shall be entitled at all
times to participate in the defense thereof at its own expense. If the
Indemnifying Party fails to notify the Indemnified Party of its election to
defend or contest its obligation to indemnify under this Article IX, the
Indemnified Party may pay, compromise, or defend such a claim without prejudice
to any right it may have hereunder.

ARTICLE X

TERMINATION; LIQUIDATED DAMAGES

10.1 TERMINATION. If Closing shall not have previously occurred, this
Agreement shall terminate upon the earliest of:

(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:

(i) Seller gives such termination notice and is not at such
time in material default hereunder, or Buyer gives such termination notice and
Buyer is not at such time in material default hereunder; and

(ii) Either:

(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Seller), or of Seller
(if such termination notice is given by Buyer), are inaccurate in any material
respect and would, in the case of Buyer, result in a Material Adverse Condition,
or, in the case of Seller, would be materially adverse to Seller unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice; or

(B) Any material obligation to be performed by Buyer (if
such termination notice is given by Seller) or by Seller (if such termination
notice is given by Buyer) is not timely performed in any material respect unless
the lack of timely performance has been induced by or is the result of actions
or omissions of the party giving such termination notice; or

(C) Any condition (other than those referred to in
foregoing Clauses (A) and (B)) to the obligation to close the transaction
contemplated herein of the party giving such termination notice has not been
timely satisfied; and any such inaccuracy, failure to perform or
non-satisfaction of a condition neither has been cured nor satisfied within
twenty (20) days after written notice thereof from the party giving such
termination notice nor waived in writing by the party giving such termination
notice.

(b) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time after twelve (12) months from the date this Agreement is executed;
provided that

<PAGE> 28

termination shall not occur upon the giving of such termination notice by Seller
if Seller is at such time in material default hereunder or upon the giving of
such termination notice by Buyer if Buyer is at such time in material default
hereunder.

(c) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time following a determination by the FCC that the application for
consent to assignment of the FCC Licenses has been designated for hearing;
provided that the party which is the subject of the hearing (or whose alleged
actions or omissions resulted in the designation for hearing) may not elect to
terminate under this subsection (c).

(d) The written election by Buyer under Section 5.10 or Article XI.

10.2 OBLIGATIONS UPON TERMINATION.

(a) In the event this Agreement is terminated pursuant to Section
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
shall be limited as provided in Subsections (c) and (e), below and the aggregate
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
any other reason, neither party shall have any liability hereunder.

(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b) (c) or (d) , or (ii) if such
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is entitled
to the return of the Earnest Money, Seller shall cooperate with Buyer in taking
such action as is required under the Escrow Agreement in order to effect such
return from the Escrow Agent.

(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
agrees that Seller shall be entitled to receive upon such termination, as
liquidated damages and not as a penalty, the Earnest Money ("Liquidated Damages
Amount"). SELLER'S RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE
PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S
SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE
AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY
BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE
INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND
THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.

<PAGE> 29

(d) Notwithstanding any provision of this Agreement to the
contrary, but subject to the provisions of the following sentences, if this
Agreement is terminated by Buyer's giving of written notice to Seller pursuant
to Section 10.1(a) (ii) (A) or (B), Buyer shall not be entitled to damages or
indemnification from Seller. Subject to the following sentence, if Seller
attempts to terminate this Agreement under circumstances where it is not
entitled to do so, or if Seller, by its own action, causes a breach of warranty
or fails to satisfy a condition (including without limitation a refusal to
consummate the transaction after Buyer has satisfied all conditions to Seller's
obligation to close and Buyer has demonstrated its willingness and ability to
close on the terms set forth in this Agreement and Buyer is not in default
hereunder) with the intent of creating a situation whereby Buyer elects to
terminate under Section 10.1(a) (ii) (A) or (B) and Buyer does so elect to
terminate, the monetary damages, if any, to which Buyer shall be entitled shall
be limited to direct and actual damages and shall in no event exceed the
Liquidated Damages Amount in the aggregate. If a circumstance described in the
preceding sentence should arise and if Buyer establishes that the action of
Seller described therein was taken intentionally in order to allow Seller to
sell or enter into negotiations to sell the Station to another party, the
damages to which Buyer shall be entitled shall not be limited to direct and
actual damages.

<PAGE> 30

ARTICLE XI

CASUALTY

Upon the occurrence of any casualty loss, damage or destruction
material to the operation of the Station prior to the Closing, Seller shall
promptly give Buyer written notice setting forth in detail the extent of such
loss, damage or destruction and the cause thereof if known. Seller shall use its
reasonable efforts to promptly commence and thereafter to diligently proceed to
repair or replace any such lost, damaged or destroyed property. In the event
that such repair or replacement is not fully completed prior to the Closing
Date, Buyer may elect to postpone the Closing until Seller's repairs have been
fully completed or to consummate the transactions contemplated hereby on the
Closing Date, in which event Seller shall assign to Buyer the portion of the
insurance proceeds (less all reasonable costs and expenses, including without
limitation attorney's fees, expenses and court costs incurred by Seller to
collect such amounts), if any, not previously expended by Seller to repair or
replace the damaged or destroyed property (such assignment of proceeds to take
place regardless of whether the parties close on the scheduled or deferred
Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged
condition. In the event the loss, damage or destruction causes or will cause the
Station to be off the air for more than seven (7) consecutive days or fifteen
(15) total days, whether or not consecutive, then Buyer may elect either (i) to
consummate the transactions contemplated hereby on the Closing Date, in which
event Seller shall assign to Buyer the portion of the insurance proceeds (less
all reasonable costs and expenses, including without limitation attorney's fees,
expenses and court costs, incurred by Seller to collect such amounts), if any,
not previously expended by Seller to repair or replace the damaged or destroyed
property, and Buyer shall accept the damaged Sale Assets in their damaged
condition, or (ii) to terminate this Agreement.

ARTICLE XII

CONTROL OF STATION

Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Station or conduct of its
business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.

ARTICLE XIII

MISCELLANEOUS

<PAGE> 31

13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period
of twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Station pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.

13.3 PAYMENT OF EXPENSES.

(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2 or consummation of the transactions contemplated
hereby shall be shared equally between Seller and Buyer.

(b) All state or local sales or use, stamp or transfer, grant and
other similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be paid by the party primarily liable under applicable
law to pay such tax.

13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.

<PAGE> 32

(a) If to Seller, to:

Mr. Joseph Weber, President
JW Broadcasting, Inc.
3406 Old Plantation Road
Atlanta, GA 30327

With a copy to:

Rogers & Hardin, LLP
2700 International Tower
229 Peachtree Street NE
Atlanta, GA 30303
Attention: Michael Rosenzweig, Esq.
Telephone: (404) 420-2609
Facsimile: (404) 525-2224

(b) if to Buyer, to:

c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Associate General Counsel
Telephone: (805) 987-0400 ext. 106
Facsimile No.: (805) 384-4505

or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.

13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.

13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and their respective successors or
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

<PAGE> 33

13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the other
party.

13.9 GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Georgia, including all
matters of construction, validity and performance.

13.10 BULK SALES. Buyer hereby waives compliance by Seller with the
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.

13.11 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.

13.12 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or entity or any circumstance, is invalid or
unenforceable in any jurisdiction, (i) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as may be valid and
enforceable, the extent and purpose of such invalid and unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

13.13 HEADINGS. Except as provided in Article I, the captions in this
Agreement are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.

13.15 REFERENCES. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.

<PAGE> 34

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.

"SELLER" "BUYER "

JW BROADCASTING, INC. SALEM MEDIA OF GEORGIA, INC.

By: By:
------------------------------- --------------------------------
Name: Joseph Weber Eric H. Halvorson
Title: President Executive Vice President

"PARENT"

SALEM COMMUNICATIONS CORPORATION

By:
--------------------------------
Eric H. Halvorson
Executive Vice President

<PAGE> 1

EXHIBIT 21.01

SUBSIDIARIES OF SALEM COMMUNICATIONS CORPORATION,
A DELAWARE CORPORATION

ATEP Radio, Inc.
Bison Media, Inc.
Caron Broadcasting, Inc.
CCM Communications, Inc.
Common Ground Broadcasting, Inc.
Golden Gate Broadcasting Company, Inc.
Inland Radio, Inc.
Inspiration Media, Inc.
Inspiration Media of Texas, Inc.
Kingdom Direct, Inc.
New England Continental Media, Inc.
New Inspiration Broadcasting Company, Inc.
Oasis Radio, Inc.
OnePlace, Ltd.
Pennsylvania Media Associates, Inc.
Radio 1210, Inc.
Salem Media of California, Inc.
Salem Media of Colorado, Inc.
Salem Media Corporation
Salem Media of Georgia, Inc.
Salem Media of Hawaii, Inc.
Salem Media of Kentucky, Inc.
Salem Media of Ohio, Inc.
Salem Media of Oregon, Inc.
Salem Media of Pennsylvania, Inc.
Salem Media of Texas, Inc.
Salem Media of Virginia, Inc.
Salem Music Network, Inc.
Salem Radio Network Incorporated
Salem Radio Properties, Inc.
Salem Radio Representatives, Inc.
South Texas Broadcasting, Inc.
SRN News Network, Inc.
Vista Broadcasting, Inc.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 34,124
<SECURITIES> 0
<RECEIVABLES> 19,879
<ALLOWANCES> 1,753
<INVENTORY> 0
<CURRENT-ASSETS> 55,515
<PP&E> 82,608
<DEPRECIATION> 31,943
<TOTAL-ASSETS> 264,364
<CURRENT-LIABILITIES> 13,515
<BONDS> 100,000
0
0
<COMMON> 147,615
<OTHER-SE> (4,776)
<TOTAL-LIABILITY-AND-EQUITY> 246,364
<SALES> 0
<TOTAL-REVENUES> 101,701
<CGS> 0
<TOTAL-COSTS> 91,050
<OTHER-EXPENSES> 633
<LOSS-PROVISION> 2,671
<INTEREST-EXPENSE> 14,219
<INCOME-PRETAX> (6,086)
<INCOME-TAX> (1,611)
<INCOME-CONTINUING> (4,475)
<DISCONTINUED> 0
<EXTRAORDINARY> (3,570)
<CHANGES> 0
<NET-INCOME> (8,045)
<EPS-BASIC> 0
<EPS-DILUTED> (0.40)

</TABLE>