FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
A Delaware Corporation Employer Identification
No. 31-0978313
50 East RiverCenter Blvd. 12th Floor Telephone (606) 655-2267
Covington, Kentucky 41011
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Common Stock Purchase Warrants expiring September 18, 2001
Common Stock Purchase Warrants expiring February 27, 2002
Other securities for which reports are submitted pursuant to
Section 15(d) of the Act: 9 3/4% Senior Subordinated Notes due 2006
10 1/8% Senior Subordinated Notes due 2006
Liquid Yield Option Notes due 2011
Indicate by check mark whether the Registrant, Jacor
Communications, Inc., (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 twelve months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
Indicate by check mark if 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
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.
The aggregate market value of the voting stock held by
nonaffiliates of Registrant as of February 28, 1997 was
$632,466,454.
The number of common shares outstanding as of February 28,
1997 was 34,834,780.
There are 91 pages in this document.
The index of exhibits appears on page 74.
Documents incorporated by Reference:
Portions of Registrant's definitive Proxy Statement to be
filed during April 1997 in connection with the Annual
Meeting of Shareholders presently scheduled to be held on
May 28, 1997 are incorporated by reference into Part III of
this Form 10-K.
JACOR COMMUNICATIONS, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
Page
Part I
Item 1 Business 3
Item 2 Properties 34
Item 3 Legal Proceedings 34
Item 4 Submission of Matters to a Vote of
Security Holders *
Part II
Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters 35
Item 6 Selected Financial Data 36
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 38
Item 8 Financial Statements and Supplementary Data 46
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure *
Part III
Item 10 Directors and Executive Officers of the
Registrant 46
Item 11 Executive Compensation 46
Item 12 Security Ownership of Certain Beneficial
Owners and Management 46
Item 13 Certain Relationships and Related
Transactions 46
Part IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 71
* The response to this Item is "none".
Item 1. BUSINESS
Jacor Communications, Inc. ("Jacor" or the "Company") is a
holding company engaged primarily in the radio broadcasting
business. As of February 28, 1997, Jacor entities owned
and/or operated 95 radio stations located across the United
States in 21 broadcast areas: Los Angeles, Atlanta, Denver,
San Diego, St. Louis, Cincinnati, Tampa, Portland, OR,
Columbus, OH, Kansas City, MO, Jacksonville, Toledo,
Lexington, Boise, Venice/Englewood, FL, Salt Lake City, Las
Vegas, Louisville, Rochester, Charleston, SC, and Casper and
one television station located in the Cincinnati broadcast
area. Jacor also has joint sales agreements to sell
advertising time for one station in Cincinnati, one station
in Denver, one station in Salt Lake City and one station in
Louisville. Jacor further provides programming for and sells
air time to two stations in Baja California, Mexico pursuant
to an exclusive sales agency agreement.
Jacor also has entered into agreements to acquire an
additional 27 radio stations, which will expand its presence
in Rochester, Lexington and Portland, and allow Jacor to
enter the Des Moines, Cedar Rapids, Lima,
Sarasota/Bradenton, Santa Barbara and Fort Collins/Greeley
broadcast areas.
Recently Completed Acquisitions and Dispositions.
In February 1996, Jacor entered into an agreement to acquire
Citicasters Inc. ("Citicasters") now known as Jacor
Communications Company ("JCC"), through a merger of a wholly
owned Jacor subsidiary with and into Citicasters.
Citicasters owned 19 radio stations, located in Atlanta,
Phoenix, Tampa, Portland, Kansas City, Cincinnati,
Sacramento, Columbus and two television stations, one
located in Tampa and one in Cincinnati. The Citicasters
merger enhanced Jacor's existing station portfolios in
Atlanta, Tampa and Cincinnati and created new multiple radio
station platforms in Phoenix, Portland, Kansas City,
Sacramento and Columbus. Jacor consummated the Citicasters
merger in September 1996 for an approximate aggregate value
of $801.2 million, which included the purchase of all
outstanding shares of Citicasters common stock, the
assumption of Citicasters outstanding indebtedness and the
issuance of warrants to purchase an aggregate of 4,400,000
shares of Jacor Common Stock at an exercise price of $28.00
per full share (the "Citicasters Warrants"). In order to
complete the Citicasters merger, Jacor agreed with the
Antitrust Division to divest WKRQ-FM in Cincinnati no later
than February 1997 (See "Pending Transactions" below).
Also, in February 1996, Jacor entered into an agreement to
acquire Noble Broadcast Group, Inc. ("Noble"), which owned
ten radio stations serving Denver, St. Louis and Toledo, and
the right to provide programming to and sell the air time
for one AM and one FM station located in Baja California,
Mexico. The Noble acquisition enhanced Jacor's existing
portfolio in Denver where it now owns eight stations, in
addition to creating new multiple station platforms in St.
Louis and Toledo. Jacor consummated the Noble acquisition in
July 1996 for an aggregate consideration of approximately
$160 million in cash.
In February 1996, Jacor sold the business and certain
operating assets of radio stations WMYU-FM and WWST-FM in
Knoxville. Jacor received approximately $6.5 million in cash
for this sale, generating a gain of approximately
$2.5 million. In March 1996, Jacor entered into an agreement
for the sale of the assets of WBRD-AM in Tampa for
approximately $0.5 million in cash. The sale of WBRD-AM was
completed in June 1996.
In March 1996, Jacor entered into an agreement to acquire
the FCC licenses of WCTQ-FM and WAMR-AM in Venice, Florida
and to purchase certain real estate and transmission
facilities necessary to operate the stations. In June 1996,
Jacor consummated this acquisition for a purchase price of
approximately $4.4 million.
In June 1996, Jacor entered into an agreement to acquire the
FCC licenses of WLAP-AM,WMXL-FM and WWYC-FM servicing
Lexington, Kentucky and to purchase real estate and
transmission facilities necessary to operate the stations.
In August 1996, Jacor consummated this acquisition for a
purchase price of approximately $14 million.
Also, in June 1996, Jacor agreed to finance the purchase by
Critical Mass Media, Inc. ("CMM") of a 40% interest in a
newly formed limited liability company that agreed to
purchase for approximately $0.5 million the assets of Duncan
American Radio, Inc. CMM is a marketing research and radio
consulting business which is owned by a limited partnership
of which Jacor is the 5% general partner and a corporation
wholly owned by Randy Michaels, the Chief Executive Officer
of Jacor, is the 95% limited partner. This transaction was
completed by Jacor in June 1996.
In August 1996, Jacor entered into agreements with
Sarasota-Charlotte Broadcasting Corporation to acquire
certain assets, a construction permit and related real
estate for unconstructed radio station WEDD-FM in Englewood,
Florida for an aggregate of $0.8 million. Jacor completed
this transaction in February 1997.
In September 1996, Jacor entered into a binding agreement
with a subsidiary of Gannett Co., Inc. ("Gannett") to effect
an exchange of Jacor's Tampa television station, WTSP-TV,
acquired by Jacor in the Citicasters merger, for six of
Gannett's radio stations (the "Gannett Exchange"). The
stations Jacor acquired are KIIS-FM and KIIS-AM in Los
Angeles, KSDO-AM and KKBH-FM in San Diego and WUSA-FM and
WDAE-AM in Tampa-St. Petersburg. The Company has renamed
WUSA-FM to WAKS-FM, as Gannett retained the WUSA-FM call
letters. The Gannett Exchange enhanced Jacor's existing
station portfolios in San Diego and Tampa and created a new
multiple radio station platform in the Los Angeles broadcast
area. In connection with the closing of the Gannett
Exchange, Jacor and Gannett agreed that they will value the
exchanged assets at $170.0 million for tax purposes. Jacor
believes that this transaction constituted a tax-free
like-kind exchange.
In October 1996, the Company entered into a definitive
merger agreement to acquire Regent Communications, Inc.
("Regent") through a merger of Regent with and into the
Company. Regent owned, operated or represented 19 radio
stations located in Kansas City, Salt Lake City, Las Vegas,
Louisville and Charleston. During February 1997, the
Company consummated the Regent merger for the approximate
aggregate value of $185 million, which included (i) the
issuance of approximately 3.55 million shares of Jacor
common stock valued at $105.9 million, (ii) the issuance of
warrants to acquire 500,000 shares of the Company's common
stock at $40 per share valued at $5 million and (iii) the
assumption of approximately $6 million of debt and other
liabilities and $68 million in cash.
In October 1996, Jacor entered into a binding agreement with
Clear Channel Radio, Inc. ("Clear Channel") to purchase
KTWO-AM, KMGW-FM and the Wyoming Radio Network in Casper,
Wyoming for a purchase price of $1.9 million. In December
1996, Jacor and Clear Channel consummated the transaction.
Also, in October 1996, Jacor entered into a binding
agreement with Colfax Communications, Inc. ("Colfax") to
acquire KIDO-AM and KLTB-FM in Boise, Idaho and KARO-FM in
Caldwell, Idaho for a purchase price of $11.0 million. Jacor
and Colfax consummated the transaction in January 1997.
Also in October 1996, the Company entered into a binding
agreement with Palmer Broadcasting Limited Partnership
whereby the Company would acquire the FCC licenses and
assets of WHO-AM and KLYF-FM in Des Moines and WMT-AM and
WMT-FM in Cedar Rapids for a purchase price of $52.5 million
in cash. The Company consummated this transaction in March
1997.
Pending Transactions.
In May 1996, the Company entered into an agreement with
Enterprise Media of Toledo, L.P. to acquire the FCC licenses
of WIOT-FM and WCWA-AM in Toledo, Ohio and to purchase real
estate and transmission facilities necessary to operate the
stations. The purchase price for the assets is $13.0
million which amount has been placed in escrow pending the
closing of the transaction.
In July 1996, Jacor entered into an agreement with New Wave
Communications, L.P. and New Wave Broadcasting, Inc.
(collectively "New Wave") to acquire the FCC licenses of
WSPB-AM, WSRZ-FM and WYNF-FM in Sarasota, Florida and to
purchase leasehold interests in real estate and transmission
facilities necessary to operate the stations (the "New Wave
Transaction"). The purchase price for the assets is
$12.5 million, subject to a maximum purchase price of $15.0
million based upon the timing of the closing.
In October 1996, Jacor also entered into binding agreements
with Par Broadcasting Company, Inc. and Par Broadcasting
Company (collectively, "Par") to purchase four radio
stations in San Diego,
KOGO-AM, KCBQ-AM, KIOZ-FM and KKLQ-FM, for $72.0 million in
cash (the "Par Transaction") and with Entertainment
Communications, Inc. ("Entercom") to sell two radio stations
in Sacramento, KSEG-FM and KRXQ-FM, for $45.0 million in
cash (the "Entercom Transaction"). Although these
transactions are not directly contingent upon each other,
Jacor anticipates that these transactions will occur in a
manner that permits the transactions to be treated as a
tax-free like-kind exchange. Jacor received early
termination of the HSR Act waiting period with respect to
the Par Transaction on January 28, 1997. The HSR Act waiting
period with respect to the Entercom Transaction expired on
December 1, 1996, and the FCC staff granted its initial
approval of the Entercom Transaction on January 7, 1997.
Jacor has entered into a time brokerage agreement with
Entercom such that Entercom commenced the activities
contemplated by the time brokerage agreement with regard to
the Sacramento stations on January 1, 1997. Par has entered
into a time brokerage agreement with Jacor such that Jacor
may commence the activities contemplated by the time
brokerage agreement with regard to the San Diego stations
prior to the consummation of the Par Transaction.
In October 1996, Jacor entered into a binding agreement with
Nationwide Communications, Inc. ("Nationwide") whereby Jacor
will exchange the assets of its two radio stations in
Phoenix, KSLX-AM and KSLX-FM, for the assets of Nationwide's
two radio stations in San Diego, KGB-FM and KPOP-AM (the
"Nationwide Exchange"). The assets to be exchanged are
valued by Jacor and Nationwide at approximately
$45.0 million. Jacor anticipates that this transaction will
constitute a tax-free like-kind exchange. Jacor has entered
into a time brokerage agreement with Nationwide such that
prior to the consummation of the Nationwide Exchange
Nationwide may commence the activities contemplated by the
time brokerage agreement with regard to the Phoenix
stations, and Jacor may commence the activities contemplated
by the time brokerage agreement with regard to the San Diego
stations. The FCC staff granted its initial approval of the
Nationwide Exchange on December 23, 1996. A timely filed
Petition for Expedited Limited Reconsideration was filed at
the FCC concerning the transaction by Compass Radio of San
Diego, Inc., the licensee of KXST-FM, Oceanside, California.
Such filing stays the occurrence of a final order. Jacor
received early termination of the HSR Act waiting period
with respect to the Nationwide Exchange on January 23, 1997.
Jacor has also entered into a letter of intent to sell
KCBQ-AM in San Diego, upon its acquisition from Par, to JS
Communications, Inc. An FCC application for the assignments
of KCBQ-AM to JS Communications, Inc. was filed in February
1997. No binding agreement has yet been entered into with JS
Communications, Inc. Together, the Par Transaction, the
Nationwide Exchange and the contemplated sale of KCBQ-AM
will enhance Jacor's existing radio station portfolio in San
Diego, where Jacor will then own eight stations.
In November 1996, Jacor entered into a binding agreement
with Stanford Capital Communications, Inc. ("Stanford") to
acquire the FCC licenses and operating assets of radio
stations WKQQ-FM in Lexington, Kentucky and WXZZ-FM and
WTKT-AM in Georgetown, Kentucky (the "Stanford
Transaction"). The purchase price for the assets is $24.0
million in cash, of which $1.2 million has been placed in
escrow pending the closing of the transaction. In addition,
Jacor was assigned an option to purchase certain real estate
for $0.1 million in cash. The Stanford Transaction is
contingent upon the successful closing of Stanford's
agreement to purchase WKQQ-FM, WXZZ-FM and WTKT-AM from
Village Communications, Inc. ("Village"). Stanford has
assigned to Jacor its rights under a time brokerage
agreement with Village such that Jacor will commence the
activities contemplated by the time brokerage agreement upon
the expiration or termination of the applicable waiting
period under the HSR Act. FCC applications were filed in
December 1996.
In December 1996, Jacor entered into four separate binding
agreements with unaffiliated parties whereby Jacor will
acquire the FCC licenses and assets of a total of six radio
stations. Jacor will acquire (i) WAZU-FM (formerly WAHC-FM),
licensed to Circleville, Ohio, and WHQK-FM (formerly
WAKS-FM), licensed to Marysville, Ohio, from Tel Lease,
Inc.; (ii) KGLL-FM in Greeley, Colorado from Duchossois
Communications Company of Colorado, Inc. (the "Duchossois
Transaction"); (iii) KCOL-AM and KPAW-FM in Fort Collins,
Colorado from University Broadcasting Company, L.P. (the
"University Transaction"); and (iv) WJCM-AM in Sebring,
Florida from Rumbuat Management, Inc. Jacor intends to
relocate WJCM-AM. The aggregate purchase price for the six
radio stations is approximately $15.7 million, of which
approximately $4 million has been placed in escrow pending
the closing of the transactions. The closing of each of the
Duchossois Transaction and the University Transaction is
contingent upon the closing of the other of such two
transactions. An objection was filed at the FCC concerning
the University Transaction. The FCC will make a
determination on the objection prior to or contemporaneously
with its action on the assignment application for the
University Transaction. Jacor has entered into a time
brokerage agreement with Tel Lease, Inc. such that Jacor
commenced the activities contemplated by the time brokerage
agreement with regard to WAZU-FM and WHQK-FM on December 7,
1996. FCC applications for these transactions were filed in
December 1996 and January 1997, respectively.
Also in December 1996, Jacor entered into a binding
agreement with American Radio Systems Corporation and
American Radio Systems License Corp. (together, "ARS")
whereby Jacor will exchange the assets of WKRQ-FM, licensed
to Cincinnati, for the assets of WVOR-FM, WHAM-AM and
WHTK-AM, licensed to Rochester, New York, and an option to
purchase WNVE-FM, licensed to South Bristol, New York, from
The Great Lakes Wireless Talking Machine, LLP ("Great
Lakes") (the "ARS Transaction"). Jacor anticipates that the
transfer of assets will constitute a tax-free like-kind
exchange. FCC applications were filed with respect to this
exchange in January 1997. The antitrust division has
consented to closing this transaction and we anticipate it
will close during the second quarter of 1997.
In January 1997, Jacor entered into three separate binding
agreements with entities affiliated with James E. Champlin
whereby Jacor will acquire the FCC licenses and assets of
four radio stations. Jacor will acquire (i) WLKT-FM,
licensed to Lexington, Kentucky; (ii) WLRS-FM, licensed to
Louisville, Kentucky and (iii) WMCC-FM and WLOC-AM, licensed
to Munfordville, Kentucky. The aggregate purchase price for
the four radio stations is $10.5 million. FCC applications
were filed in January 1997. Also in January 1997, Jacor
entered into a binding agreement to acquire (i) WIMA-AM and
WIMT-FM, licensed in Lima, Ohio; (ii) WBUK-FM, licensed to
Ft. Shawnee, Ohio; and (iii) the construction permit for
WLVZ-FM, licensed to St. Marys, Ohio, from Lima Broadcasting
Co. for an aggregate purchase price of $6.5 million. Jacor
also exercised the option acquired in the ARS Transaction to
purchase WNVE-FM, licensed to South Bristol, New York, and
entered into a binding agreement to acquire WNVE-FM from
Great Lakes for $5.5 million. An FCC application for the
WNVE-FM assignment was filed in January 1997.
In February 1997, the Company entered into an agreement to
purchase the assets of WMAX-FM, licensed to Irondequoit, New
York, WMHX-FM, licensed to Canandaigua, New York and WRCD-FM
licensed to Honeoye Falls, New York for $7.0 million from
Auburn Cablevision, Inc.
In March 1997, the Company entered into an agreement to
purchase the assets of KOTK-AM, Portland for $8.3 million
from EXCL Communications, Inc.
In March 1997, the Company entered into an agreement to
purchase the assets of KQSB-AM and KTYD-FM in Santa Barbara,
California and KSBL-FM in Carpinteria, California for $15
million.
All of the Pending Transactions are subject to various
conditions, including approval by the FCC.
Business Strategy
Jacor's strategic objective is to be a leading radio
broadcaster in each of its broadcast areas. Jacor intends to
acquire individual radio stations or radio groups that
strengthen its strategic position and that maximize the
operating performance of its broadcast properties.
Specifically, Jacor's business strategy centers upon:
Revenue Leadership. Jacor strives to maximize the audience
ratings in each of its broadcast areas in order to capture
the largest share of the radio advertising revenue and
attract advertising away from other media in that broadcast
area. Jacor focuses on those locations where it believes it
has the potential to be a leading radio group. By operating
multiple radio stations in its broadcast areas, Jacor is
able to operate its stations at lower costs, supply more
diverse programming and provide advertisers with the
greatest access to targeted demographic groups.
Acquisition and Development of Broadcast Properties.
Jacor's acquisition strategy focuses on acquiring both
developed, cash flow producing stations and underdeveloped
"stick" properties (i.e., stations with insignificant
ratings and little or no positive broadcast cash flow) that
complement its existing portfolio and strengthen its overall
strategic position. Jacor has been able to improve the
ratings of "stick" properties with increased marketing and
focused programming that complements its existing radio
station formats. Additionally, Jacor increases the revenues
and cash flow of "stick" properties by encouraging
advertisers to buy advertising in a package with its more
established stations. Jacor may enter new locations through
acquisitions of radio groups that have multiple station
ownership in their respective broadcast areas. Jacor may
also seek to acquire individual stations in new locations
that it believes are fragmented and where a revenue-leading
position can be created through additional acquisitions.
Jacor may exit locations it views as having limited
strategic appeal by selling or exchanging existing stations
for stations in other locations where Jacor operates, or for
stations in new locations.
Additionally, Jacor may enter new locations situated near
Jacor's core broadcast areas. Jacor believes that it will be
able to leverage the costs associated with the delivery of
high quality, high cost programming of topical interest
throughout these geographical regions, which programming
would not otherwise be economically viable in such smaller
broadcast areas. Utilizing this strategy, Jacor has recently
entered into agreements or closed transactions to acquire
radio stations in Venice/Englewood, Florida; Louisville,
Kentucky; Lexington, Kentucky; Sarasota/Bradenton, Florida;
Casper, Wyoming; Fort Collins/Greeley, Colorado and Lima,
Ohio.
Diverse Format Expertise. Jacor management has developed
programming expertise over a broad range of radio formats.
This management expertise enables Jacor to specifically
tailor the programming of each station in a broadcast area
in order to maximize Jacor's overall strategic position.
Jacor utilizes sophisticated research techniques to identify
opportunities within each broadcast area and programs its
stations to provide complete coverage of a demographic or
format type. This strategy allows Jacor to deliver highly
effective access to a target demographic and to capture a
higher percentage of advertising revenues.
Distinct Station Personalities. Jacor engages in a number
of creative programming and promotional efforts designed to
create listener loyalty and station brand awareness. Through
these efforts, management seeks to cultivate a distinct
personality for each station based upon the unique
characteristics of each broadcast area. Jacor hires dynamic
on-air personalities for key morning and afternoon "drive
times" and provides comprehensive news, traffic and weather
reports to create active listening by the audience. This
commitment to "foreground" or "high impact" programming has
successfully generated significant audience share.
One of the methods Jacor utilizes to develop the personality
of its AM radio stations is by broadcasting professional
sporting events and related programming. Currently, Jacor
has the broadcast rights for the Cincinnati Reds, Colorado
Rockies, Denver Broncos, Los Angeles Kings, Portland Trail
Blazers, San Diego Chargers and Tampa Bay Devil Rays.
During 1997, Jacor entered into an agreement to broadcast
the Los Angeles Dodgers on KIIS-AM beginning in 1998.
Sports broadcasting serves as a key "magnet" for attracting
audiences to a station and then introducing them to other
programming features, such as local and national news,
entertaining talk, and weather and traffic reports.
Strong AM Stations. Jacor is an industry leader in
successfully operating AM stations. While many radio groups
primarily utilize network or simulcast programming on their
AM stations, Jacor also develops unique programming for its
AM stations to build strong listener loyalty and awareness.
Utilizing this operating focus and expertise, Jacor has
developed its AM stations in Denver and Cincinnati into the
revenue and ratings leaders among both AM and FM stations in
their respective broadcast areas. Jacor's targeted AM
programming adds to Jacor's ability to increase its revenues
and results in more complete coverage of the listener base.
Although the cost structure of a large-scale AM station
generally results in lower operating margins than typical
music-based FM stations, the majority of Jacor's AM stations
generate substantial levels of broadcast cash flow.
Historically, most other radio broadcast companies have not
focused on their AM operations to the same extent as Jacor.
Accordingly, most of the AM stations to be acquired
meaningfully underperform Jacor's AM stations, and
management believes such stations have the potential to
generate significant incremental cash flow.
Powerful Broadcast Signals. A station's ability to maintain
a leadership position depends in part upon the strength of
its broadcasting delivery system. A powerful broadcast
signal enhances delivery range and clarity, thereby
influencing listener preference and loyalty. Many of Jacor's
stations' broadcasting signals are among the strongest in
their respective broadcast areas, reinforcing its leadership
position. Jacor opportunistically upgrades the power and
quality of the signals of stations it acquires. Following
the consummation of the Pending Transactions, Jacor expects
that relatively inexpensive technical upgrades in certain
broadcast areas will provide for significantly greater
signal presence.
Radio Station Overview
The following table and the accompanying footnotes set forth
certain information regarding the 123 radio stations that
will be owned and/or operated by Jacor upon completion of
the Pending Transactions.
<TABLE>
<CAPTION>
Target
1995 Combined Demographic
Broadcast Pending Radio Revenue Target Share %/
Area/Station Acquisition (P) Rank Format Demographic Rank
<S> <C> <C> <C> <C> <C>
Los Angeles 5
KIIS-FM Contemporary Adults 18-34 4.5/6
Hit Radio
KIIS-AM Contemporary Adults 18-34 -
Hit Radio
Atlanta 1
WPCH-FM Adult Women 25-54 9.2/3
Contemporary
WGST-AM/FM(1) News Talk Men 25-54 5.0/8
WKLS-FM Album- Men 18-34 13.0/1
Oriented Rock
Denver (2) 1
KOA-AM News Talk Men 25-54 10.9/2
KRFX-FM Classic Rock Men 25-54 12.4/1
KBPI-FM Rock Men 18-34 13.4/2
Alternative
KTLK-AM Talk Adults 35-64 2.4/13
KHIH-FM Jazz Adults 25-54 4.9/8
KHOW-AM Talk Adults 25-54 2.2/13
KBCO-AM Talk Adults 25-54 -
KBCO-FM Album Adults 25-54 5.7/7
Oriented Rock
San Diego (3)(4)(8) 1
KHTS-FM Rhythmic Hits Adults 18-34 2.5/11
KSDO-AM News Talk Men 25-54 4.5/8
KKBH-FM Adult Women 25-54 2.8/9
Contemporary
KOGO-AM P Talk Adults 1.4/22
KKLQ-FM P Contemporary Adults 18-34 4.0/7
Hit Radio
KIOZ-FM P Album Men 18-34 7.9/3
Oriented Rock
KGB-FM P Classic Rock Men 25-54 5.9/1
KPOP-AM P Nostalgia Adults 35-64 1.5/20
St. Louis 5
KMJM-FM Urban Adult Adults 25-54 5.3/6
Contemporary
KATZ-FM Black Oldies Adults 25-54 2.1/16
KATZ-AM Urban Talk Adults 35-64 1.6/19
Cincinnati (2)(4) 1
WLW-AM News Talk Men 25-54 13.5/2
WEBN-FM Album Men 18-34 28.2/1
Oriented Rock
WOFX-FM Classic Rock Men 25-54 5.7/5
WCKY-AM Talk Adults 35-64 6.8/4
WWNK-FM Adult Women 25-54 5.8/5
Contemporary
WAQZ-FM Alternative Adults 18-34 4.0/9
WSAI-AM Nostalgia Adults 35-64 2.8/13
Tampa 1
WFLA-AM News Talk Adults 35-64 6.6/5
WFLZ-FM Contemporary Adults 18-34 15.2/1
Hit Radio
WDUV-FM Beautiful/EZ Adults 35+ 9.4/1
WXTB-FM Album Men 18-34 19.2/1
Oriented Rock
WTBT-FM Classic Rock Men 18-34 5.3/6
WAKS-FM (5) Hot Adult Women 18-34 10.3/2
Contemporary
WDAE-AM Hot Adult Women 18-34 -
Contemporary
Portland 1
KEX-AM News Talk Adults 35-64 5.3/6
KKCW-FM Adult Women 25-54 12.1/1
Contemporary
KKRZ-FM Contemporary Women 18-34 14.6/1
Hit Radio
KOTK-AM P Talk Adults 35-64 2.2/13
Columbus 1
WTVN-AM Adult Talk/ Adults 35/64 8.3/3
Contemporary
WLVQ-FM Album Men 18-34 13.0/2
Oriented Rock
WZAZ-FM Alternative Adults 18-34 -
WLOH-AM Nostalgic Adults 35-64 -
WHQK-FM P Country Adults 25-54 -
WAZU-FM P Rock Men 18-34 -
WHOK-FM Country Adults 25-54 3.2/10
Kansas City 1
WDAF-AM Country Adults 7.7/3
KYYS-FM Album Men 18-34 11.4/3
Oriented Rock
KMXV-FM Contemporary Adults 18-34 9.1/4
Hit Radio
KUDL-FM Adult Women 25-54 8.9/1
Contemporary
Salt Lake City (2) 1
KALL-AM Talk Adults 35-64 5.5/5
KODJ-FM Oldies Women 25-54 10.9/2
KKAT-FM Country Adults 25-54 4.8/7
KURR-FM New Rock Men 18-34 5.5/5
KZHT-FM Contemporary Women 18-34 5.3/8
Las Vegas 1
KFMS-FM Country Adults 25-54 6.2/4
KWNR-FM Country Adults 25-54 7.5/1
KBGO-FM Oldies Women 25-54 4.6/8
KSNE-FM Adult Women 25-54 10.8/1
Contemporary
Louisville (2) 2
WDJX-FM Contemporary Adults 18-34 11.6/2
Hit Radio
WFIA-AM Religion Adults 25-54 -
WVEZ-FM Adult Women 25-54 7.7/2
Contemporary
WSFR-FM Classic Rock Men 25-54 6.4/4
WLRS-FM P Adult Women 25-54 4.4/11
Contemporary
Jacksonville 2
WJBT-FM Urban Adults 18-34 10.5/3
WQIK-FM Country Adults 25-54 9.5/2
WSOL-FM Adult Urban Adults 25-54 5.6/8
WZAZ-FM Urban Talk Adults 35-64 2.9/12
WJGR-AM Talk Adults 25-54 0.9/18
Rochester 2
WVOR-FM P Adult Adults 25-54 9.1/4
Contemporary
WHAM-AM P News Talk Adults 25-54 8.7/3
WHTK-AM P Talk Adults 35-64 1.2/14T
WNVE-FM P New Rock Men 18-34 -
WMAX-FM P Alternative Adults 18-34 4.1/9
WMHX-FM P Alternative Adults 18-34 -
WRCD-FM P New Adult Adults 25-54 .9/15
Contemporary
Des Moines 1
WHO-AM News Talk Men 25-54 17.7/1
KLYF-FM Adult Women 25-54 11.5/2
Contemporary
Toledo 1
WSPD-AM News Talk Adult 35-64 7.4/5
WVKS-FM Contemporary Adults 18-34 17.4/1
Hit Radio
WRVF-FM Adult Women 25-54 12.2/3
WIOT-FM P Album Men 18-34 21.5/1
Oriented Rock
WCWA-AM P Nostalgia Adults 35-64 2.5/10
Lexington 1
WMXL-FM Hot Adult Women 18-34 13.9/3
WWYC-FM Country Adults 7.9/4
WLAP-AM Sports Men 25-54 2.5/10
WKQQ-FM P Album Men 18-34 24.5/1
Oriented Rock
WXZZ-FM P Rock Men 18-34 11.8/2T
Alternative
WTKT-AM P Rhythm and Adults 35-64 2.6/11
Blues
WLKT-FM P Contemporary Adults 18-34 -
Hit Radio
Charleston, S.C. 2
WEZL-FM Country Adults 25-54 9.0/1
WXLY-FM Oldies Women 25-54 8.7/1
Boise (6) 2
KIDO-AM News Talk Adults 25-54 8.1/2
KARO-FM Clasic Rock Men 25-54 4.8/7
KLTB-FM Oldies Adults 25-54 5.8/6
Cedar Rapids (6) 1
WMT-AM Full Service Adults 35-64 11.3/4
WMT-FM Adult Women 25-54 17.7/3
Contemporary
Sarasota/Bradenton (6) 1
WSRZ-FM P Oldies Women 25-64 7.1/2
WYNF-FM P Classic Rock Men 25-54 11.1/1
WSPB-AM P Business News Men 35-64 -
Casper (6) 3
KTWO-AM Full Service/ Adults 35-64 14.6/3
Country
KMGW-FM Adult Women 25-54 12.0/2
Contemporary
Fort Collins/Greely (7) N/A
KCOL-AM P News Talk Adults 35-64 -
KPAW-FM P Oldies/Adult Adults 25-54 -
Contemporary
KGLL-FM P Country Adults 25-54 -
Lima, Ohio (6) 1
WIMA-AM P News Talk Adults 35-64 7.4/3
WIMT-FM P Country Adults 25-54 19.8/1
WBUK-FM P Oldies Adults 25-54 10.3/3(T)
WLVZ-FM (9) P - - -
Venice/Englewood (7)(8) N/A
WAMR-AM Talk Adults 25-54 -
WCTQ-FM Country Adults 25-54 -
WEDD-FM (9) - - -
Santa Barbara
KTYD-FM P 2 Rock Adults 18-34 4.9/6
KQSB-AM P Talk Adults 35-64 3.4/9
KSBL-FM P Adult Adults 25-54 10.2/1
Contemporary
</TABLE>
___________
[FN]
(1) Jacor provides programming and sells air time for the
FM station pursuant to a TBA.
(2) Excludes stations WAZU-AM in Cincinnati, KTCL-FM in
Denver, WSJW-FM in Louisville and KBKK-FM in Salt Lake
City for which Jacor sells advertising time pursuant to
JSAs.
(3) Excludes XTRA-FM and XTRA-AM, stations Jacor provides
programming to and sells air time for under an
exclusive sales agency agreement.
(4) Excludes KCBQ-AM in San Diego and WKRQ-FM in Cincinnati
which the Company will divest (see "Pending
Transactions").
(5) WAKS-FM was formerly known as WUKS-FM and WUSA-FM.
Jacor acquired the licenses and operating assets of
WUSA-FM in the Gannett Exchange while Gannett retained
the call letters.
(6) Share and rank information is derived from the Spring
1996 Arbitron.
(7) The Fort Collins/Greeley, Co. and Venice/Englewood, Fl.
broadcast areas do not have Arbitron ranks.
(8) Jacor also owns or has the right to purchase two
insignificant stations in Munfordville, Ky. and one
each in Sebring, Fl. and Morro Bay, Ca.
(9) WEDD-FM and WLVZ-FM are unconstructed stations and, as
such, are not yet operating.
All rankings by revenue or billings that are contained in
the above table are based on 1995 information contained in
Duncan's Radio Market Guide (1996 ed.), Duncan's American
Radio (Small Market Edition 1996), Duncan's American Radio
(Spring 1996). Duncan's Radio Group Directory (1996-1997
ed.) and/or Broadcast Investment Analyst: Radio '96 Market
Report. All information concerning ratings and audience
listening information is derived from the Spring 1996
Arbitron Metro Area Ratings Survey (the "Spring 1996
Arbitron") and the Summer 1996 Arbitron Metro Area Ratings
Survey (the "Summer 1996 Arbitron"). A Jacor affiliate owns
a 40% interest in a limited liability company that purchased
the assets formerly owned by Duncan American Radio, Inc.
Television
Jacor owns a television station in the Cincinnati broadcast
area where it currently owns and operates multiple radio
stations. By operating a television station in the broadcast
area where Jacor has a significant radio presence, Jacor
expects to realize significant operating efficiencies
including shared news departments and reduction of
administrative overhead. Jacor currently operates this
television station under a temporary waiver of an FCC
rule that restricts ownership of television and radio
stations in the same market. This waiver will continue until
at least six months after the FCC completes a pending
rulemaking proceeding in which it is considering whether to
substantially liberalize this rule.
The following table sets forth certain information
regarding the Cincinnati television station and the
broadcast area in which it operates:
<TABLE>
<CAPTION>
National TV
Broadcast Households Adults Cable
Broadcast Area in DMA(1) TV Aged Subscriber Network
Area/Station Rank(1) (000s) Households 25-54 VHF UHF % Affiliation
Commercial
Stations in
Broadcast
Station Rank (1) Area
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cincinnati/WKRC 29 793 3 1T 3 2 61 CBS
</TABLE>
___________
[FN]
(1) Rankings for Designated Market Area ("DMA"), 6:00 a.m. to
2:00 a.m., Sunday-Saturday for "TV Households" and "Adults
aged 25-54." "T" designates tied. This market information is
from Nielsen.
Advertising
Radio stations generate the majority of their revenue from the
sale of advertising time to local and national spot advertisers
and national network advertisers. Radio serves primarily as a
medium for local advertising. The growth in total radio
advertising revenue tends to be fairly stable and has generally
grown at a rate faster than the Gross National Product ("GNP").
Advertising revenue has risen more rapidly during the past 10
years than either inflation or the GNP. Total advertising revenue
in 1996 of $11.3 billion, as reported by the Radio Advertising
Bureau, was its highest level in the industry's history.
During the year ended December 31, 1996, approximately 80% of
Jacor's broadcast revenue (adjusted to include the effect of
Jacor's acquisitions), would have been generated from the sale of
local advertising and approximately 20% from the sale of national
advertising. Jacor believes that radio is one of the most
efficient, cost-effective means for advertisers to reach specific
demographic groups. The advertising rates charged by Jacor's
radio stations are based primarily on (i) the station's ability
to attract an audience in the demographic groups targeted by its
advertisers (as measured principally by quarterly Arbitron rating
surveys that quantify the number of listeners tuned to the
station at various times), (ii) the number of stations in the
market that compete for the same demographic group, (iii) the
supply of and demand for radio advertising time and (iv) the
supply and pricing of alternative advertising media.
Jacor emphasizes an aggressive local sales effort because local
advertising represents a large majority of Jacor's revenues.
Jacor's local advertisers include automotive, retail, financial
institutions and services and health care. Each station's local
sales staff solicits advertising, either directly from the local
advertiser or through an advertising agency for the local
advertisers. Jacor pays a higher commission rate to the sales
staff for generating direct sales because Jacor believes that
through a strong relationship directly with the advertiser, it
can better understand the advertiser's business needs and more
effectively design an advertising campaign to help the advertiser
sell its product. Jacor employs personnel in each market to
produce commercials for the advertisers. National advertising
sales for most of Jacor's stations are made by Jacor's national
sales managers in conjunction with the efforts of an independent
advertising representative who specializes in national sales and
is compensated on a commission-only basis.
Jacor believes that sports broadcasting, absent unusual
circumstances, is a stable source of advertising revenues. There
is less competition for the sports listener, since only one radio
station can offer a particular game. In addition, due to the
higher degree of audience predictability, sports advertisers tend
to sign contracts which are generally longer term and more stable
than Jacor's other advertisers. Jacor's sales staffs are
particularly skilled in sales of sports advertising.
According to the Radio Advertising Bureau Radio Marketing Guide
and Fact Book for Advertisers, 1995-1996, each day, radio reaches
approximately 76.5% of all Americans over the age of 12. More
than one-half of all radio listening is done outside the home, in
contrast to other advertising mediums, and three out of four
adults are reached by car radio each week. The average listener
spends approximately three hours and 20 minutes per day listening
to radio. The highest portion of radio listenership occurs during
the morning, particularly between the time a listener wakes up
and the time the listener reaches work. This "morning drive time"
period reaches more than 85% of people over 12 years of age and,
as a result, radio advertising sold during this period achieves
premium advertising rates.
Jacor believes operating multiple stations in a market gives it
significant opportunities in competing for advertising dollars.
Each multiple station platform better positions Jacor to access a
significant share of a given demographic segment making Jacor
stations more attractive to advertisers seeking to reach that
segment of the population.
Competition; Changes in the Broadcasting Industry
The radio broadcasting industry is a highly competitive business.
The success of each of Jacor's stations will depend significantly
upon its audience ratings and its share of the overall
advertising revenue within its market. Jacor's stations will
compete for listeners and advertising revenue directly with other
radio stations as well as many other advertising media within
their respective markets. Radio stations compete for listeners
primarily on the basis of program content and by hiring
high-profile talent that appeals to a particular demographic
group. By building in each of its markets a strong listener base
comprised of a specific demographic group, Jacor will be able to
attract advertisers seeking to reach those listeners.
In addition to management experience, factors which are material
to competitive position include the station's rank among radio
stations in its market, transmitter power, assigned frequency,
audience characteristics, local program acceptance and the number
and characteristics of other stations in the market area, and
other advertising media in that market. Jacor attempts to improve
its competitive position with promotional campaigns aimed at the
demographic groups targeted by its stations and by sales efforts
designed to attract advertisers. Recent changes in the FCC's
policies and rules permit increased joint ownership and joint
operation of local radio stations. Those stations taking
advantage of these joint arrangements may in certain
circumstances have lower operational costs and may be able to
offer advertisers more attractive rates and services.
Jacor's audience ratings and competitive position will be subject
to change, and any adverse change in a particular market could
have a material adverse effect on the revenue of Jacor's stations
in that market. Although Jacor believes that each of its stations
will be able to compete effectively in the market, there can be
no assurance that any one of its stations will be able to
maintain or increase its current audience ratings and advertising
revenue.
Although the radio broadcasting industry is highly competitive,
some legal restrictions on entry exist. The operation of a radio
broadcast station requires a license from the FCC and the number
of radio stations that can operate in a given market is limited
by the availability of the FM and AM radio frequencies that the
FCC will license in that market.
Jacor's stations also compete directly for advertising revenues
with other media, including broadcast television, cable
television, newspapers, magazines, direct mail, coupons and
billboard advertising. In addition, the radio broadcasting
industry is subject to competition from new media technologies
that are being developed or introduced, such as the delivery of
audio programming by cable television systems and the Internet
and by digital audio broadcasting. The radio broadcasting
industry historically has grown despite the introduction of new
technologies for the delivery of entertainment and information,
such as television broadcasting, cable television, audio tapes
and compact disks. Greater population and greater availability of
radios, particularly car and portable radios, have contributed to
this growth. There can be no assurance, however, that the
development or introduction in the future of any new media
technology will not have an adverse effect on the radio
broadcasting industry. Jacor also competes with other radio
station groups to purchase additional stations.
The FCC has allocated spectrum for a new technology, satellite
digital audio radio services ("DARS"), to deliver audio
programming. The FCC has proposed, but not yet adopted licensing
and operating rules for DARS, so that the allocated spectrum is
not yet available for service. Jacor cannot predict when and in
what form such rules will be adopted. The FCC granted a waiver in
September 1995 to permit one potential DARS operator to commence
construction of a DARS satellite system, with the express notice
that the FCC might not license such operator to provide DARS, nor
would such waiver prejudge the ongoing rule making proceeding.
DARS may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats to
local and/or national audiences. Digital technology also may be
used in the future by terrestrial radio broadcast stations either
on existing or alternate broadcasting frequencies, and the FCC
has stated that it will consider making changes to its rules to
permit AM and FM radio stations to offer digital sound following
industry analysis of technical standards. In addition, the FCC
has authorized an additional 100 kHz of band width for the AM
band and will soon allocate frequencies in this new band to
certain existing AM station licensees that applied for migration
prior to the FCC's cut-off date. At the end of a transition
period, those licensees will be required to return to the FCC
either the license for their existing AM band station or the
license for the expanded AM band station. None of the stations to
be affiliated with the Company have sought authorizations for
operations on the expanded AM band, because such signals operate
at a lower power and have less coverage and thereby are not
consistent with Jacor's strategic objectives.
Television stations compete for audiences and advertising
revenues with radio and other television stations and
multichannel video delivery systems in their market areas and
with other advertising media such as newspapers, magazines,
outdoor advertising and direct mail. Competition for sales of
television advertising time is based primarily on the anticipated
and actually delivered size and demographic characteristics of
audiences as determined by various services, price, the time of
day when the advertising is to be broadcast, competition from
other television stations, including affiliates of other
television broadcast networks, cable television systems and other
media and general economic conditions. Competition for audiences
is based primarily on the selection of programming, the
acceptance of which is dependent on the reaction of the viewing
public, which is often difficult to predict. Additional elements
that are material to the competitive position of television
stations include management experience, authorized power and
assigned frequency. The broadcasting industry is continuously
faced with technical changes and innovations, the popularity of
competing entertainment and communications media, changes in
labor conditions, and governmental restrictions or actions of
Federal regulatory bodies, including the FCC, any of which could
possibly have a material effect on a television station's
operations and profits. There are sources of video service other
than conventional television stations, the most common being
cable television, which can increase competition for a
broadcasting television station by bringing into its market
distant broadcasting signals not otherwise available to the
station's audience, serving as a distribution system for national
satellite-delivered programming and other non-broadcast
programming originated on a cable system and selling advertising
time to local advertisers. Other principal sources of competition
include home video exhibition, direct-to-home broadcast satellite
television ("DBS") entertainment services and multichannel
multipoint distribution services ("MMDS").
Moreover, technology advances and regulatory changes affecting
programming delivery through fiber optic telephone lines and
video compression could lower entry barriers for new video
channels and encourage the development of increasingly
specialized "niche" programming. The Telecom Act permits
telephone companies to provide video distribution services via
radio communication, on a common carrier basis, as "cable
systems" or as "open video systems", each pursuant to different
regulatory schemes. Jacor is unable to predict the effect that
technological and regulatory changes will have on the broadcast
television industry and on the future profitability and value of
a particular broadcast television station.
Recent acquisitions of, or investments in, cable multiple-system
operators ("MSOs") by local exchange carriers ("LECs") by
Regional Bell Operating Companies ("RBOCs") in the United States,
market tests by both LECs and cable MSOs in various states, and
major infrastructure upgrades announced by both LECs and cable
MSOs, presage major expansion of wired communications networks
and consequently their capacities to deliver video programming.
The Telecom Act repealed the "telephone company/cable television
cross-ownership prohibition," thereby enabling LECs, including
the RBOCs, to provide cable television service in their telephone
service areas. LECs may not, however, acquire more than a 10
percent ownership interest in, or enter into joint ventures with,
cable systems in their telephone service areas. The Telecom Act
also gives LECs the option to provide video programming services
over an open video system, or ("OVS"), in which programming on no
more than one-third of the system's channels may be selected by
the LEC or its affiliates. The OVS model may be attractive to
LECs because it is not subject to many of the regulatory
requirements applicable to traditional cable systems, such as the
requirement to obtain a local cable television franchise. In
addition, a number of LECs have announced their intention to
provide video programming services over MMDS "wireless cable"
systems.
In addition, the FCC authorizes DBS services throughout the
United States. Currently, two FCC permittees, DirecTv and United
States Satellite Broadcasting, provide subscription DBS services
via high power communications satellites and small dish
receivers, and other companies provide direct-to-home video
service using lower powered satellites and larger receivers.
Additional companies are expected to commence direct-to-home
operations in the near future. DBS and MMDS, as well as other new
technologies, will further increase competition in the delivery
of video programming.
Jacor cannot predict what other matters might be considered in
the future, nor can it judge in advance what impact, if any, the
implementation of any of these proposals or changes might have on
its business.
Federal Regulation of Broadcasting
The ownership, operation and sale of stations are subject to the
jurisdiction of the FCC, which acts under authority granted by
the Communications Act. Among other things, the FCC assigns
frequency bands for broadcasting; determines the particular
frequencies, locations and power of stations; issues, renews,
revokes and modifies station licenses; determines whether to
approve changes in ownership or control of station licenses;
regulates equipment used by stations; adopts and implements
regulations and policies that directly or indirectly affect the
ownership, operation and employment practices of stations; and
has the power to impose penalties for violations of its rules or
the Communications Act. On February 8, 1996, the President signed
the Telecom Act. The Telecom Act, among other measures, directs
the FCC to (a) eliminate the national radio ownership limits;
(b) increase the local radio ownership limits as specified in the
Telecom Act; (c) issue broadcast licenses for periods of eight
years; (d) eliminate the opportunity for the filing of competing
applications against broadcast renewal applications; and
(e) modify the rules governing in-market radio-television
ownership. Certain of these measures have been adopted by the
FCC. Other provisions of the Telecom Act will be acted upon by
the FCC through rule-making proceedings.
Radio stations in the United States operate either by Amplitude
Modulation (AM), conducted on 107 different frequencies located
between 540 and 1600 kilohertz (kHz) (plus 10 frequencies between
1610-1710 kHz on the newly expanded AM band) in the low frequency
band of the electromagnetic spectrum, or by Frequency Modulation
(FM), conducted on approximately 100 different frequencies
located between 88 and 108 megahertz (MHZ) at the very high
frequency band of the electromagnetic spectrum.
Television stations in the United States operate as either Very
High Frequency (VHF) stations (channels 2 through 13) or Ultra
High Frequency (UHF) stations (channels 14 through 69). UHF
stations in many cases have a weaker signal and therefore do not
achieve the same coverage as VHF stations.
License Grants and Renewals. The Communications Act provides
that a broadcast station license may be granted to an applicant
if the grant would serve the public interest, convenience and
necessity, subject to certain limitations referred to below. In
making licensing determinations, the FCC considers the legal,
technical, financial and other qualifications of the applicant,
including compliance with the Communications Act's limitations on
alien ownership, compliance with various rules limiting common
ownership of broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding
"attributable" interests in the licensee. Broadcast station
licenses are granted for specific periods of time and, upon
application, are renewable for additional terms. The Telecom Act
amends the Communications Act to provide that broadcast station
licenses be granted, and thereafter renewed, for a term not to
exceed eight years, if the FCC finds that the public interest,
convenience, and necessity would be served. The FCC has not yet
implemented the change in license terms provided in the Telecom
Act.
Generally, the FCC renews licenses without a hearing. The Telecom
Act amends the Communications Act to require the FCC to grant an
application for renewal of a broadcast station license if:
(1) the station has served the public interest, convenience and
necessity; (2) there have been no serious violations by the
licensee of the Communications Act or the rules and regulations
of the FCC; and (3) there have been no other violations by the
licensee of the Communications Act or the rules and regulations
of the FCC which, taken together, would constitute a pattern of
abuse. Pursuant to the Telecom Act, competing applications
against broadcast renewal applications will no longer be
entertained. The Telecom Act provides that if the FCC, after
notice and an opportunity for a hearing, decides that the
requirements for renewal have not been met and that no mitigating
factors warrant lesser sanctions, it may deny a renewal
application. Only thereafter may the FCC accept applications by
third parties to operate on the frequency of the former licensee.
The Communications Act continues to authorize the filing of
petitions to deny against license renewal applications during
particular periods of time following the filing of renewal
applications. Petitions to deny can be used by interested
parties, including members of the public, to raise issues
concerning the qualifications of the renewal applicant.
License renewals (expiring in 2003) were granted in 1996 for
Jacor's Florida, Georgia, Iowa, South Carolina, Indiana, and
certain of its Kentucky and Ohio radio stations. Presently
pending are renewal applications for six of Jacor's Ohio radio
stations, two St. Louis radio stations and four Kansas City radio
stations. The six Ohio radio stations are subject to a petition
challenging the renewal of their licenses and those of certain
other broadcasters for alleged failure to comply with equal
employment opportunity policies. Jacor has responded to that
petition and anticipates obtaining license renewals for full
terms for these Ohio stations. The applications for WFIA-AM and
WDJX-FM, Louisville, are the subject of a petition to deny filed
by a former employee against whom a non-compete provision was
enforced. Renewal applications are presently pending for WCWA-AM
and WIOT-FM, Toledo (also subject to a petition to deny on EEO
grounds). Renewal applications will be filed in 1997 for the
remainder of Jacor's station licenses that are currently due to
expire in 1997 and for other stations to be acquired. Jacor does
not anticipate any material difficulty in obtaining license
renewals for full terms in the future.
When the FCC considers a proposed transfer of control of an FCC
licensee that holds multiple FCC licenses, some of which licenses
are subject to pending renewal applications, the FCC's past
policy has been either to defer action on the transfer
application until the pending renewals have been granted or to
grant the transfer application conditioned on the transfer not
being consummated until the renewals have been granted. The FCC
has recently modified that policy to provide that so long as
there are no unresolved issues pertaining to the qualifications
of the transferor or the transferee and so long as the transferee
is willing to substitute itself as the renewal applicant, the FCC
will grant a transfer application for a licensee holding multiple
licenses and permit consummation of the transfer notwithstanding
the pendency of renewal applications for one or several of the
licensee's stations. To date, the FCC has not extended this
policy to transactions where all the stations being sold are
subject to renewal applications, such as involving
WCWA-AM/WIOT-FM and the Palmer stations, and it is not expected
that the FCC will allow the assignment of these stations to Jacor
until the renewals for these stations are issued.
License Assignments and Transfers of Control. The Communications
Act prohibits the assignment of a license or the transfer of
control of a corporation holding such a license without the prior
approval of the FCC. Applications to the FCC for such assignments
or transfers are subject to petitions to deny by interested
parties and must satisfy requirements similar to those for
renewal and new station applicants.
Ownership Rules. Rules of the FCC limit the number and location
of broadcast stations in which one licensee (or any party with a
control position or attributable ownership interest therein) may
have an attributable interest. The FCC, pursuant to the Telecom
Act, eliminated the "national radio ownership rule."
Consequently, there now is no limit imposed by the FCC to the
number of radio stations one party may own nationally.
The "local radio ownership rule" limits the number of stations in
a radio market in which any one individual or entity may have a
control position or attributable ownership interest. Pursuant to
the Telecom Act, the FCC revised its rules to increase the local
radio ownership limits as follows: (a) in markets with 45 or more
commercial radio stations, a party may own up to eight commercial
radio stations, no more than five of which are in the same
service (AM or FM); (b) in markets with 30-44 commercial radio
stations, a party may own up to seven commercial radio stations,
no more than four of which are in the same service; (c) in
markets with 15-29 commercial radio stations, a party may own up
to six commercial radio stations, no more than four of which are
in the same service; and (d) in markets with 14 or fewer
commercial radio stations, a party may own up to five commercial
radio stations, no more than three of which are in the same
service, provided that no party may own more than 50% of the
commercial stations in the market. In addition, the FCC has a
"cross interest" policy that may prohibit a party with an
attributable interest in one station in a market from also
holding either a "meaningful" non-attributable equity interest
(e.g., non-voting stock, voting stock, limited partnership
interests) or key
management position in another station in the same market, or
which may prohibit local stations from combining to build or
acquire another local station. The FCC is presently evaluating
its cross-interest policy as well as policies governing
attributable ownership interests. Jacor cannot predict whether
the FCC will adopt any changes in these policies or, if so, what
the new policies will be.
Under the current rules, an individual or other entity owning or
having voting control of 5% or more of a corporation's voting
stock is considered to have an attributable interest in the
corporation and its stations, except that banks holding such
stock in their trust accounts, investment companies, and certain
other passive interests are not considered to have an
attributable interest unless they own or have voting control over
10% or more of such stock. The FCC is currently evaluating
whether to raise the foregoing benchmarks to 10% and 20%,
respectively. An officer or director of a corporation or any
general partner of a partnership also is deemed to hold an
attributable interest in the media license. Jacor cannot predict
whether the FCC will adopt these or any other proposals.
Under current FCC rules, shareholders of the Company with 5% or
more of the outstanding votes (except for qualified institutional
investors, for which the 10% benchmark is applicable), if any,
are considered to hold attributable interests in the Company.
Such holders of attributable interests must comply with or obtain
waivers of the FCC's multiple and cross ownership limits. Other
than Zell/Chilmark Fund L.P. (the holder of approximately 38.3%
of Jacor's Common Stock), no individuals or entity has reported
to the SEC that it has acquired 5% or more of the outstanding
stock of Jacor; however certain qualified investors need not
submit such a report until 45 days after the end of the calendar
year. In the event that Jacor learns of a new attributable
shareholder and if such shareholder holds interests that exceed
the FCC limits on media ownership, Jacor has the corporate power
to redeem stock of its shareholder to the extent necessary to be
in compliance with FCC and Communications Act requirements,
including limits on media ownership by attributable parties and
alien ownership.
The rules also generally prohibit the acquisition of an ownership
or control position in a television station and one or more radio
stations serving the same market (termed the "one-to-a-market"
rule). Current FCC policy looks favorably upon waiver requests
relating to television and AM/FM radio combinations in the top 25
television markets where at least 30 separately owned broadcast
stations will remain after the combination. One-to-a-market
waiver requests in other markets, as well as those in the top 25
television markets that involve the combination of a television
station and more than one same service (AM or FM) radio station,
presently are evaluated by the FCC pursuant to a fact-based,
five-part, case-by-case review. The FCC also has an established
policy for granting waivers that involve "failed" stations. The
FCC currently is considering changes to its one-to-a-market
waiver standards in a pending rule-making proceeding. The FCC
also plans to review and possibly modify its current prohibitions
relating to ownership or control positions in a daily newspaper
and a broadcast station in the same market. In conjunction with
Jacor's acquisition of the Citicasters stations, the FCC granted
Jacor's request for waivers of the one-to-a-market rule to permit
common ownership of radio stations and a television station in
each of Cincinnati and Tampa-St. Petersburg, subject to the
outcome in the pending rule-making proceeding. The FCC
waiver directed that should divestiture be required as a result
of that rule-making proceeding, Jacor will be required to file an
application for FCC consent to sell the necessary stations within
six months from the release of the FCC order in the rule-making
proceeding. The Company disposed of WTSP-TV, St. Petersburg in
December 1996. The sale of that station rendered moot the
one-to-a-market waiver granted Jacor for radio and television
ownership in Tampa-St. Petersburg. There can be no assurance that
the FCC will adopt a revised one-to-a-market policy in its
rule-making proceeding that would permit the Company to continue
to own WKRC-TV, Cincinnati, along with all of its current
Cincinnati-area radio stations. If divestitures are required,
there can be no assurance that Jacor would be able to obtain full
value for such stations or that such sales would not have a
material adverse impact upon Jacor's business, financial
condition or results of operations. In such event, Jacor's
intention would be to seek reconsideration and/or appellate court
review of the FCC's decision.
Holders of non-voting stock generally will not be attributed an
interest in the issuing entity, and holders of debt and
instruments such as warrants, convertible debentures, options, or
other non-voting interests with rights of conversion to voting
interests generally will not be attributed such an interest
unless and until such conversion is effected. The FCC is
currently considering whether it should attribute non-voting
stock, or perhaps non-voting stock interests when combined with
other rights, such as voting shares or contractual relationships,
along with its review of its other attribution policies. Jacor
cannot predict whether the FCC will adopt these or other changes
in its attribution policies.
Under the Communications Act, broadcast licenses may not be
granted, transferred or assigned to any corporation of which more
than one-fifth of the capital stock is owned of record or voted
by non-U.S. citizens or foreign governments or their
representatives (collectively, "Aliens"). In addition, the
Communications Act provides that no broadcast license may be held
by any corporation of which more than one-fourth of the capital
stock is owned of record or voted by Aliens, without an FCC
public interest finding. The FCC has issued interpretations of
existing law under which these restrictions in modified form
apply to other forms of business organizations, including general
and limited partnerships. The FCC also prohibits a licensee from
continuing to control broadcast licenses if the licensee
otherwise falls under Alien influence or control in a manner
determined by the FCC to be in violation of the Communications
Act or contrary to the public interest. No officers, directors or
significant shareholders of Jacor are known by Jacor to be
Aliens.
Regulation of Broadcast Operations. In order to retain licenses,
broadcasters are obligated, under the Communications Act, to
serve the "public interest." Since the late 1970s, the FCC
gradually has relaxed or eliminated many of the more formalized
regulatory procedures and requirements developed to promote the
broadcast of certain types of programming responsive to the
problems, needs, and interests of a station's community of
license.
The regulatory changes have provided broadcast stations with
increased flexibility to design their program formats and have
provided relief from some record keeping and FCC filing
requirements. However, licensees continue to be required to
present programming that is responsive to significant community
issues and to maintain certain records demonstrating such
responsiveness. Complaints from listeners concerning a station's
programming have been considered by the FCC when evaluating
licensee renewal applications and at other times.
Stations still are required to follow various rules promulgated
under the Communications Act that regulate political broadcasts,
political advertisements, sponsorship identifications, technical
operations and other matters. "Equal Opportunity" and affirmative
action requirements also exist. Failure to observe these or other
rules can result in the imposition of monetary forfeitures or in
the grant of a "short" (less than full term) license term or
license revocation. The Telecom Act states that the FCC may deny,
after a hearing, the renewal of a broadcast license for serious
violations of the Communications Act or the FCC's rules or where
there have been other violations which together constitute a
pattern of abuse.
The FCC has adopted rules regarding human exposure to levels of
radio frequency ("RF") radiation. These rules require applicants
for new broadcast stations, renewals of broadcast licenses or
modification of existing licenses to inform the FCC at the time
of filing such applications whether a new or existing broadcast
facility would expose people to RF radiation in excess of certain
guidelines.
Agreements With Other Broadcasters. Over the past several years
a significant number of broadcast licensees, including certain of
Jacor's subsidiaries, have entered into cooperative agreements
with other stations in their market. These agreements may take
varying forms, subject to compliance with the requirements of the
FCC's rules and policies and other laws. One typical example is a
TBA or LMA between two separately owned stations serving a common
service area, whereby the licensee of one station programs
substantial portions of the broadcast day on the other licensee's
station, subject to ultimate editorial and other controls being
exercised by the latter licensee, and sells advertising time
during such program segments for its own account. Another is a
JSA pursuant to which a licensee sells advertising time on both
its own station or stations and on another separately owned
station.
The FCC has held that LMAs do not per se constitute a transfer of
control and are not contrary to the Communications Act provided
that the licensee of the station maintains complete
responsibility for and control over operations of its broadcast
station (including, specifically, control over station finances,
personnel and programming) and complies with applicable FCC rules
and with antitrust laws. At present, the FCC is considering
whether it should treat as attributable multiple business
arrangements among local stations, such as joint sales
accompanied by debt financing. Jacor cannot predict whether the
FCC would require the termination or restructuring of Jacor's
JSAs or other arrangements in the future.
Under certain circumstances, the FCC will consider a radio
station brokering time on another radio station serving the same
market to have an attributable ownership interest in the brokered
station for purposes of the FCC's radio multiple ownership rules.
In particular, a radio station is not permitted to enter into a
LMA giving it the right to program more than 15% of the broadcast
time, on a weekly basis, of another local radio station which it
could not own under the FCC's local radio ownership rules.
The FCC's rules also prohibit a radio licensee from simulcasting
more than 25% of its programming on another radio station in the
same broadcast service (i.e., AM-AM or FM-FM) whether it owns
both stations or operates both through a LMA where both stations
serve substantially the same geographic area.
Legislation and Regulation of Television Operations. Television
stations are regulated by the FCC pursuant to provisions of the
Communications Act and the FCC rules that are in many instances
the same or similar to those applicable to radio stations.
Besides technical differences between television and radio,
principal variances in regulation relate to limits on national
and local ownership, LMAs and simulcasts, children's programming
requirements, advanced television service, signal carriage rights
on cable systems, license terms, "V-chip" technology and
network/affiliate relations.
The current FCC rules prohibit combined local ownership or
control of television stations with overlapping "Grade B" service
contours (unless established waiver standards are met). An FCC
rule-making proceeding is in process to determine whether to
retain, modify or eliminate these local television ownership
rules. The current FCC rules permit an entity to have an
attributable interest in an unlimited number of television
stations so long as such stations do not reach in the aggregate
more than 35% of the national television audience. Additionally,
the rules prohibit (with certain qualifications) the holder of an
attributable interest in a television station from also having an
attributable interest in a radio station, daily newspaper or
cable television system serving a community located within the
relevant coverage area of that television station. As noted
above, the radio/television one-to-a-market rule is under review
and the FCC also plans to review and possibly modify its current
broadcast/daily newspaper restriction. Pursuant to the Telecom
Act, the FCC eliminated the restriction of network ownership of
cable systems. The FCC will monitor the response to this change
to determine if additional rule changes are necessary to ensure
nondiscriminatory carriage and channel positioning of
nonaffiliated broadcast stations by network-owned cable systems.
Presently, LMAs between television stations are not treated as
attributable interests and there is no restriction on same-market
television simulcasts. The FCC is considering in a pending
rule-making proceeding whether to treat television LMAs similar
to radio LMAs for multiple ownership rule purposes. Jacor's
television station is not a participant in any LMAs.
On August 8, 1996, the FCC amended its rules implementing the
Children's Television Act of 1990 (the "CTA") to establish for
broadcast television renewal applications filed after August 31,
1997, a "processing guideline" of at least three hours per week
of educational and informational programming for children. A
television station will receive FCC staff-level approval of the
portion of its license renewal application pertaining to the CTA
if it satisfied the processing guideline by broadcasting at least
three weekly hours of "Core Programming," which is defined as
education and informational programming that, among other things,
(a) has serving the educational and informational needs of
children "as a significant purpose," (b) has a specified
educational and informational objective and a specified target
child audience, (c) is regularly scheduled, weekly programming,
(d) is at least 30 minute in length, and (e) airs between
7:00 a.m. and 10:00 p.m. Alternatively, a station may qualify for
staff-level approval even if it broadcasts "somewhat less" than
three hours per week of Core Programing by demonstrating that it
has aired a weekly package of different types of educational and
informational programming that is at least equivalent to three
hours of Core Programming. A licensee that does not meet the
processing guideline under either of these alternatives will be
referred by the FCC's staff to the Commissioners of the FCC, who
will evaluate the licensee's compliance with CTA on the basis of
both its programming and its other efforts related to children's
educational and informational programming. A television station
ultimately found not to have complied with the CTA could face
sanctions including monetary fines and the possible non-renewal
of its broadcast license.
The FCC is conducting a rule-making proceeding to devise a table
of channel allotments in connection with the introduction of
"advanced" or "high definition" television service ("DTV"). The
FCC has preliminarily decided to allot a second broadcast channel
to each full-power commercial television station for DTV
operation. According to this preliminary decision, stations would
be permitted to phase in their DTV operations over a period of
several years following adoption of a final table of allotments,
after which they would be required to surrender their non-DTV
channel. The FCC has proposed allotting all full-service
television stations a second broadcast channel for digital
operation that substantially replicates the service areas of
their existing stations. Under this proposal, most stations,
including Jacor's station, would receive a digital channel
assignment in the "core spectrum" between channels 7 and 51. This
proposal is open for public comment. During the past year,
Congress has considered proposals that would require incumbent
broadcasters to bid at auctions for the additional spectrum
required to effect a transition to DTV, or alternatively, would
assign additional DTV spectrum to incumbent broadcasters and
require the early surrender of their non-DTV channel for sale by
public auction. It is not possible to predict if, or when, any of
these proposals will be adopted or the effect, if any, adoption
of such proposals would have on Jacor's television station.
FCC regulations implementing the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act")
require each television broadcaster to elect, at three-year
intervals beginning June 17, 1993, either to (a) require carriage
of its signal by cable systems in the station's market
("must-carry") or (b) negotiate the terms on which such broadcast
station would permit transmission of its signal by the cable
systems within its market ("retransmission consent"). In a 2-1
decision issued on December 13, 1995, a special three-judge panel
of the U.S. District Court for the District of Columbia upheld
the constitutionality of the must-carry provisions. The District
Court's decision has been appealed to the U.S. Supreme Court,
which will hear the appeal during its 1996-1997 term, with a
decision expected in the second calendar quarter of 1997. In the
meantime, the FCC's must-carry regulations implementing the Cable
Act remain in effect. Jacor cannot predict the outcome of the
Supreme Court review of the case.
Until the passage of the Telecom Act, television licenses were
granted and renewed for a maximum of five years. The Telecom Act
amends the Communications Act to provide that broadcast station
licenses be granted, and thereafter renewed, for a term not to
exceed eight years, if the FCC finds that the public interest,
convenience, and necessity would be served. The FCC has not yet
implemented the change in license terms provided in the Telecom
Act. The Telecom Act also requires the broadcast and cable
industries to develop and transmit an encrypted rating that would
permit the blocking of violent or indecent video programming and
allow telephone companies to operate cable television systems in
their own service areas.
Jacor's Cincinnati television station is a CBS-network affiliate
and a VHF station. The FCC currently is reviewing certain of its
rules governing the relationship between broadcast television
networks and their affiliated stations. The FCC is conducting a
rule-making proceeding to examine its rules prohibiting broadcast
television networks from representing their affiliated stations
for the sale of non-network advertising time and from influencing
or controlling the rates set by their affiliates for the sale of
such time. Separately, the FCC is conducting a rule-making
proceeding to consider the relaxation or elimination of its rules
prohibiting broadcast networks from (a) restricting their
affiliates' right to reject network programming; (b) reserving an
option to use specified amounts of their affiliates' broadcast
time; and (c) forbidding their affiliates from broadcasting the
programming of another network; and to consider the relaxation of
its rule prohibiting network-affiliated stations from preventing
other stations from broadcasting the programming of their
network.
Proposed Changes. The FCC has not yet implemented formally
certain of the changes to its rules necessitated by the Telecom
Act. Moreover, the Congress and the FCC have under consideration,
and may in the future consider and adopt, new laws, regulations
and policies regarding a wide variety of matters that could,
directly or indirectly, (i) affect the operation, ownership and
profitability of Jacor and its broadcast stations, (ii) result in
the loss of audience share and advertising revenues of Jacor's
radio broadcast stations, (iii) affect the ability of Jacor to
acquire additional broadcast stations or finance such
acquisitions, (iv) affect current cooperative agreements and/or
financing arrangements with other radio broadcast licensees, or
(v) affect Jacor's competitive position in relationship to other
advertising media in its markets. Such matters include, for
example, changes to the license authorization and renewal
process; proposals to revise the FCC's equal employment
opportunity rules and other matters relating to minority and
female involvement in broadcasting; proposals to alter the
benchmarks or thresholds for attributing ownership interest in
broadcast media; proposals to change rules or policies relating
to political broadcasting; changes to technical and frequency
allocation matters, including those relative to the
implementation of digital audio broadcasting on both a satellite
and terrestrial basis; proposals to restrict or prohibit the
advertising of beer, wine and other alcoholic beverages on radio;
changes in the FCC's cross-interest, multiple ownership, alien
ownership and cross-ownership policies; proposals to allow
greater telephone company participation in the delivery of audio
and video programming; proposals to limit the tax deductibility
of advertising expenses by advertisers; potential auctions for
DTV or non-DTV television spectrum; the implementation of
"V-chip" technology; and changes to children's television
programming requirements, signal carriage rights on cable systems
and network affiliate relations.
Although Jacor believes the foregoing discussion is sufficient to
provide the reader with a general understanding of all material
aspects of FCC regulations that affect Jacor, it does not purport
to be a complete summary of all provisions of the Communications
Act or FCC rules and policies. Reference is made to the
Communications Act, FCC rules and the public notices and rulings
of the FCC for further information.
Antitrust Considerations. Certain acquisitions by Jacor of
broadcasting companies, radio station groups or individual radio
stations will be subject to review by the Antitrust Division and
the FTC pursuant to the provisions of the HSR Act. Generally,
acquisitions involving assets valued at $15.0 million or more,
and certain acquisitions of voting securities, come within the
purview of the HSR Act. Although it is likely that many proposed
acquisitions will not require the parties to the transaction to
comply with the HSR Act, or if such compliance is required, will
result in rapid clearance by the antitrust agencies, in certain
instances, the antitrust agencies may choose to investigate the
proposed acquisition, particularly if it appears that such
acquisition will result in substantial concentration within a
specific market. Any decision by an antitrust agency to challenge
a proposed acquisition could affect the ability of Jacor to
consummate the proposed acquisition, or to consummate the
acquisition on the proposed terms.
The Antitrust Division and the FTC determine between themselves
which agency is to take a closer look at a proposed transaction.
The Antitrust Division or the FTC, as the case may be, may then
issue a formal request for additional information ("the Second
Request"). Under the HSR Act, if a Second Request is issued, the
waiting period then would be extended and would expire at
11:59 p.m., on the twentieth calendar day after the date of
substantial compliance by both parties with such Second Request.
Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court
order or with the consent of the parties. In practice, complying
with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with
a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning
possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
Subsequent to the passage of the Telecom Act, the radio broadcast
industry has been subject to an increased amount of scrutiny by
the Antitrust Division. Such scrutiny caused Jacor to experience
delays in closing both its merger with Citicasters Inc. (now
known as JCC) (the "Citicasters Merger") and its acquisition of
Noble Broadcast Group, Inc. (the "Noble Acquisition") and to
incur increased transaction costs. Jacor could experience
similar delays and increased costs in connection with future
transactions.
The Antitrust Division or the FTC could also compel changes in
the proposed terms of acquisitions. This is evidenced by Jacor's
agreement with the Antitrust Division in connection with the
Citicasters Merger pursuant to which Jacor agreed to divest WKRQ-
FM in Cincinnati by February 1997 and to inform the Antitrust
Division of certain transactions in Cincinnati that would not
otherwise be reportable under the HSR Act. Antitrust Division
scrutiny also resulted in Jacor terminating its agreement to
finance the acquisition of WGRR-FM in Cincinnati by Tsunami
Communications, Inc., the entity with whom Jacor has a joint
sales agreement ("JSA") for a Denver radio station. Subsequent
to such termination, Jacor received from the Antitrust Division a
civil investigative demand relating to the proposed transaction.
In November 1996, the Antitrust Division suspended Jacor's
obligation to respond to this civil investigative demand.
In addition, Jacor has received an industry-wide civil
investigative demand relating to JSAs pursuant to which the
Antitrust Division is examining the antitrust implications of
such arrangements. Jacor antiticpates that the Antitrust
Division's determinations of the permissibility of JSAs will
depend on the specific characteristics of the markets, stations
and relationships being reviewed. Jacor believes that its
existing JSAs are appropriate under applicable antitrust laws and
that its JSAs are not material to its business as such
arrangements only account for approximately 1.0% of Jacor's net
revenues.
Although Jacor does not believe that antitrust considerations
will adversely affect Jacor's ability to successfully implement
its business strategy, the effects of the Antitrust Division's
heightened level of scrutiny on the radio broadcast industry and
on Jacor are uncertain. There can be no assurance that these
concerns will not negatively impact Jacor.
Energy and Environmental Matters
Jacor's source of energy used in its broadcasting operations is
electricity. No limitations have been placed on the availability
of electrical power, and management believes its energy sources
are adequate. Management believes that Jacor is currently in
material compliance with all statutory and administrative
requirements as related to environmental quality and pollution
control.
Employees
As of December 31, 1996, Jacor employed approximately 3,500
persons, 2,500 on a full-time and 1,000 on a part-time basis.
Each Jacor station has its own complement of employees which
generally include a general manager, sales manager, operations
manager, business manager, advertising sales staff, on-air
personalities and clerical personnel.
Item 2. Property Holdings
Jacor leases approximately 16,244 square feet for its corporate
offices in Covington, Kentucky under a lease expiring in 2008
with a five-year renewal option. Jacor also owns and leases
space for the office and studio facilities at its radio station
locations throughout the United States. The same is true for
Jacor's tower sites and antennae.
Expansion of Jacor's operations generally comes from the
acquisition of stations and their facilities and ordinarily does
not create a need for additional space at existing locations,
although the emergence of LMAs and JSAs with other stations in
Jacor's existing markets could create such a need. Any future
need for additional office and studio space at existing locations
will be satisfied by the construction of additions to the Jacor-
owned facilities and, in the case of leased facilities, the lease
of additional space or the relocation of the office and studio.
Jacor's office and studio facilities are all located in downtown
or suburban office buildings and are capable of being relocated
to any suitable office facility in the station market area.
Similarly, although many of Jacor's tower sites are strategically
located, all are capable of being relocated to suitable sites in
their particular station market areas.
Jacor owns substantially all of its equipment, consisting
principally of transmitting antennae, transmitters, studio
equipment and general office equipment. The towers, antennae and
other transmission equipment used by Jacor's stations are in
generally good condition. In management's opinion, the quality
of the signals range from good to excellent, and Jacor is
committed to maintaining and updating its equipment and
transmission facilities in order to achieve the best possible
signal in the market area.
Although Jacor believes its properties are generally adequate for
its operations, opportunities to upgrade facilities are
continuously reviewed.
Item 3. Legal Proceedings
From time to time, Jacor becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of
Jacor's management, there are no material legal proceedings
pending against Jacor.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock trades on the Nasdaq National Market
tier of the Nasdaq Stock Market under the symbol "JCOR". The
following table presents the high and low sale prices for the
Company's common stock for each quarter of 1995 and 1996 as
reported on The Nasdaq National Market.
Price Range of
Common Stock
High Low
1995
1st Quarter........................... $14.50 $12.00
2nd Quarter........................... 17.00 13.00
3rd Quarter........................... 19.25 15.00
4th Quarter........................... 17.50 15.00
1996 High Low
1st Quarter........................... $22.25 $16.00
2nd Quarter........................... 31.25 19.50
3rd Quarter........................... 35.00 24.75
4th Quarter........................... 36.38 23.75
At February 28, 1997, there were 1,529 record holders of common
stock including shares held in nominee name and the last reported
sale price on the Nasdaq National Market was $29.44 per share.
The Company has neither declared nor paid any dividends on its
common stock to date. The Company's existing agreements with its
lenders restrict the payment of dividends. It is the Company's
present policy to retain all earnings for the requirements of the
business.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 6. Selected Financial Data
The following table (in thousands except for per share data) sets
forth certain data for the periods indicated and should be read
in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations":
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Statement of
Operations Data (a):
Net broadcast
revenue $223,761 $118,891 $107,010 $ 89,932 $ 70,506
Operating income (loss) 39,360 18,617 13,483 6,625 (3,201)
Income (loss) before
extraordinary loss 8,071 10,965 7,852 1,438 (23,701)
Net income (loss) (b) 5,105 10,965 7,852 1,438 (23,701)
Per share data:
Before extraordinary
loss $ .30 $ .52 $ .37 $ .10 $ (61.50)
Extraordinary loss (0.11) - - - -
Other Financial
Data (c):
Broadcast cash flow $ 72,696 $ 31,601 $ 26,542 $ 20,412 $ 14,724
Balance Sheet Data (d):
Total assets $1,704,942 $208,839 $173,579 $159,909 $122,000
Long-term debt 670,000 45,500 - - 140,542
5 1/2% Liquid Yield
Option Notes 118,682 - - - -
Shareholders' equity
(deficit) 486,936 139,073 148,794 140,413 (50,840)
</TABLE>
[FN]
(a) The comparability of the information reflected in this
selected financial data is affected by the acquisition and
disposition of certain properties. For information related
to acquisitions and dispositions in 1995 and 1996 see Note 2
of Notes to Consolidated Financial Statements.
Additionally, on January 11, 1993, the Company completed a
recapitalization plan which substantially modified the
Company's debt and capital structure (such recapitalization
was accounted for as if it had been completed January 1,
1993), and completed a refinancing in March 1993.
(b) Net income for the year ended December 31, 1996 includes, as
an extraordinary item, a $3.0 million loss, net of income tax
benefit, for the early retirement of debt.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 6. Selected Financial Data, Continued
(c) "Broadcast cash flow" means operating income before
reduction in
carrying value of assets, depreciation and amortization and
corporate general and administrative expenses. The
Company's management believes that broadcast cash flow is
helpful in understanding cash flow generated from its
broadcasting in comparing operating performance of the
Company's broadcast stations to other broadcast stations.
Broadcast cash flow is also a key factor in the Company's
assessment of station performance. Broadcast cash flow
should not be considered an alternative to net income as an
indicator of the Company's overall performance.
(d) Pro forma amounts as of December 31, 1992, to give effect to
the January
11, 1993 recapitalization plan that substantially modified
the Company's debt and capital structure:
Total assets $142,085
Long-term debt 64,178
Shareholders' equity 50,890
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
GENERAL
The following discussion should be read in conjunction with the
financial statements beginning on page 46.
In the following analysis, management discusses station operating
income excluding depreciation and amortization. Station
operating income excluding depreciation and amortization should
not be considered in isolation from, or as a substitute for,
operating income, net income or cash flow and other consolidated
income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of the
Company's profitability or liquidity. Although this measure of
performance is not calculated in accordance with generally
accepted accounting principles, it is widely used in the
broadcasting industry as a measure of a company's operating
performance because it assists in comparing station performance
on a consistent basis across companies without regard to
depreciation and amortization, which can vary significantly
depending on accounting methods (particularly where acquisitions
are involved) or non-operating factors such as historical cost
bases. Station operating income excluding depreciation and
amortization also excludes the effect of corporate general and
administrative expenses, which generally do not relate directly
to station performance.
General economic conditions have an impact on the Company's
business and financial results. From time to time the markets in
which the Company operates experience weak economic conditions
that may negatively affect revenue of the Company. However,
management believes that this impact is somewhat softened by the
Company's diverse geographical presence.
The financial results of the Company's business are seasonal.
Revenues are generally higher in the second, third and fourth
calendar quarters than in the first quarter.
The performance of a broadcasting station group, such as the
Company, is customarily measured by its ability to generate
broadcast cash flow. The primary source of the Company's revenue
is the sale of broadcasting time on its stations for advertising.
The Company's significant operating expenses are employee
salaries, sports broadcasting rights fees, programming expenses,
advertising and promotion expenses, rental of premises for
studios and transmitting equipment and music license royalty
fees. The Company works closely with local station management to
implement cost control measures.
The Company's revenue is affected primarily by the advertising
rates the Company's stations are able to charge. These rates
are, in large part, based on a station's ability to attract
audiences in the demographic groups targeted by its advertisers,
as principally measured by Arbitron Metro Area Ratings Surveys.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
GENERAL, Continued
Most advertising contracts are short-term and run only for a few
weeks. Most of the Company's revenue is generated from local
advertising, which is sold by the station's sales staff. In
1996, approximately 80% of the Company's gross revenues was from
local advertising and approximately 20% was from national
advertising. A station's local sales staff solicits advertising,
either directly from the local advertiser or through an
advertising agency for the local advertiser. National
advertising sales for most of the Company's radio stations are
made by the Company's national sales managers in conjunction with
the efforts of an independent advertising representative who
specializes in national sales and is compensated on a commission-
only basis.
Sports broadcasting and the full-service programming features
play an integral part in the Company's operating strategy. As a
result, because of the rights fees and related costs of
broadcasting professional baseball, football and hockey, as well
as the costs related to the full-service programming features of
its AM radio stations, the Company's broadcast cash flow margins
are typically lower than its competitors'.
LIQUIDITY AND CAPITAL RESOURCES
Acquisitions and Dispositions completed during 1996
In February 1996, Jacor sold the business and certain operating
assets of radio stations WMYU-FM and WWST-FM in Knoxville. Jacor
received approximately $6.5 million in cash for this sale,
generating a gain of approximately $2.5 million. In March 1996,
Jacor entered into an agreement for the sale of the assets of
WBRD-AM in Tampa for approximately $0.5 million in cash. The
sale of WBRD-AM was completed in June 1996.
In March 1996, the Company entered into an agreement to acquire
the FCC licenses of WCTQ-FM and WAMR-AM in Venice, Florida and to
purchase certain real estate and transmission facilities
necessary to operate the stations. In June 1996, the Company
consummated this acquisition for a purchase price of
approximately $4.4 million in cash.
In June 1996, the Company entered into an agreement to acquire
the FCC licenses of WLAP-AM, WMXL-FM and WWYC-FM in Lexington,
Kentucky and to purchase real estate and transmission facilities
necessary to operate the stations. In August 1996, the Company
consummated this acquisition for a purchase price of
approximately $14 million in cash.
In July 1996, the Company completed the acquisition of Noble,
which owned ten radio stations serving Denver, St. Louis and
Toledo. Previously, the Company purchased Noble's operating
assets in San Diego which included an exclusive sales agency
agreement under which Noble, and now the Company, provides
programming to and sells air time for two radio stations serving
San Diego (XTRA-AM and XTRA-FM). The aggregate value of the
completed Noble acquisition is approximately $160 million,
including related fees and expenses.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
In September 1996, the Company completed the acquisition of
Citicasters through a merger of a wholly owned Jacor subsidiary
with and into Citicasters. Citicasters owned and/or operated 19
radio stations, located in the United States in Atlanta, Phoenix,
Tampa, Portland, Kansas City, Cincinnati, Sacramento, Columbus
and two television stations, one located in Tampa and one in
Cincinnati. The Company consummated the Citicasters merger for
an approximate aggregate value of $801.2 million, which included
(i) the purchase of all outstanding shares of Citicasters common
stock at $29.50 per share for approximately $624.5 million in
cash, (ii) the assumption of Citicasters 9 3/4% notes ($125
million), (iii) the payoff of Citicasters outstanding bank loan
($20 million), and (iv) the issuance of warrants to purchase an
aggregate of 4.4 million shares of common stock (valued at $26.5
million).
Citicasters' outstanding 9 3/4% notes became obligations of the
surviving corporation in the merger. As a result of a change in
control covenant in the indenture pursuant to which such notes
were issued, the holders of the 9 3/4% notes were permitted to
cause the Company to purchase the notes at 101% of the principal
amount thereof. Approximately $107 million of the 9 3/4% notes
were put to the Company pursuant to the change in control
covenant. The remaining $10 million of the 9 3/4% notes have
since been retired.
Also in September 1996, Jacor entered into a binding agreement
with a subsidiary of Gannett to effect an exchange of the
Company's Tampa television station, WTSP-TV, acquired by Jacor in
the Citicasters merger, for six of Gannett's radio stations. In
December 1996, Jacor and Gannett consummated the Gannett
exchange. The stations Jacor acquired are KIIS-FM and KIIS-AM in
Los Angeles, KSDO-AM and KKBH-FM in San Diego and WUSA-FM (now
WAKS-FM) and WDAE-AM in Tampa-St. Petersburg. Jacor believes
that this transaction constituted a tax-free like-kind exchange.
In October 1996, Jacor entered into a binding agreement with
Clear Channel Radio, Inc. ("Clear Channel") to purchase KTWO-AM,
KMGW-FM and the Wyoming Radio Network in Casper, Wyoming for a
purchase price of $1.9 million. In December 1996, Jacor and
Clear Channel consummated the transaction.
The acquisitions completed during 1996 were funded as follows:
(i) $303.6 million proceeds from the public offering of 11.25
million shares of Common Stock, (ii) $115.2 million in proceeds
from the Liquid Yield Option Notes public offering, (iii) $100
million from the 10 1/8% Senior Subordinated Notes public
offering, (iv) $170 million from the 9 3/4% Senior Subordinated
Notes public offering and (v) $400 million in borrowings under
the New Credit Facility.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Acquisitions pending as of December 31, 1996
In May 1996, Jacor entered into an agreement with Enterprise
Media of Toledo, L.P. to acquire the FCC licenses of WIOT-FM and
WCWA-AM in Toledo, Ohio and to purchase real estate and
transmission facilities necessary to operate the stations. The
purchase price for the assets is $13.0 million which amount has
been placed in escrow pending the closing of the transaction.
In October 1996, the Company entered into a definitive merger
agreement with Regent whereby Regent will merge with and into the
Company. Regent owned, operated or represented 19 radio stations
located in Kansas City, Salt Lake City, Las Vegas, Louisville and
Charleston. During February 1997, the Company consummated the
Regent merger for the approximate aggregate value of $185
million, which included (i) the issuance of 3.55 million shares
of Jacor common stock valued at $105.9 million, (ii) the issuance
of warrants to acquire 500,000 shares of the Company's common
stock at $40 per share valued at $5 million and (iii) the
assumption of approximately $6 million of debt and other
liabilities and $68 million in cash.
Also in October 1996, Jacor entered into a binding agreement with
Colfax Communications, Inc. ("Colfax") to acquire KIDO-AM and
KLTB-FM in Boise, Idaho and KARO-FM in Caldwell, Idaho for a
purchase price of $11.0 million in cash. Jacor and Colfax
consummated the transaction in January 1997.
Additionally in October 1996, Jacor entered into a binding
agreement with Palmer Broadcasting Limited Partnership whereby
Jacor would acquire the FCC licenses and assets of WHO-AM and
KLYF-FM in Des Moines and WMT-AM and WMT-FM in Cedar Rapids for a
purchase price of $52.5 million in cash. The Company consummated
this transaction in March 1997.
The Company also has acquisitions pending in the following
broadcast areas: (i) Sarasota, Florida, (ii) San Diego,
California, (iii) Circleville, Marysville and Lima, Ohio, (iv)
Lexington and Louisville, Kentucky, (v) Ft. Collins and Greely,
Colorado, (vi) Rochester, New York, (vii) Santa Barbara,
California, and (viii) Portland, Oregon. The net cash to be paid
for the acquisitions pending as of December 31, 1996 after giving
effect to escrow deposits of $33.3 million, totals approximately
$230 million.
Credit Facilities and Other
In June 1996, the Company entered into a new credit facility (the
"Credit Facility") which provided availability of $600 million.
During February 1997, the Credit Facility was amended resulting
in expanded availability of up to $750 million. The Credit
Facility provides loans to Jacor in three components: (i) a
reducing revolving credit facility of up to $450 million under
which the aggregate commitments would reduce on a semi-annual
basis commencing in June 1999; (ii) a $200 million amortizing
term loan that would reduce on a semi-annual basis commencing in
December 1997; and (iii) a $100 million amortizing term loan that
would reduce on a semi-annual basis commencing in December 1998.
The Credit Facility also provides the Company with additional
credit for future acquisitions as well as working capital and
other general corporate purposes. As of February 28, 1997 the
Company had $380 million of outstanding indebtedness under the
Credit Facility.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
The pending acquisitions will be primarily funded by the Credit
Facility and excess cash on hand which includes: (i) Hanna
Barbera escrow proceeds of $13.2 million received in December
1996, (ii) the proceeds related to the sale of the Company's
investment in a News Corp. Warrant of $44.5 million received in
February 1997 and (iii) the proceeds related to the sale of the
Company's investment in Australia's Wonderland of $9.0 million
received in March 1997. The Company believes that various
additional sources are also available to fund the pending and
future acquisitions. Such sources include the issuance of
additional equity and/or debt securities of the Company. During
the first quarter of 1997, the Company filed an omnibus shelf
registration statement for the subsequent issuance of up to $250
million of additional equity and/or debt securities.
The issuance of additional debt would negatively impact the
Company's debt-to-equity ratio and its results of operations and
cash flows due to higher amounts of interest expense. Any
issuance of additional equity would soften this impact to some
extent.
RESULTS OF OPERATIONS
The Year Ended 1996 Compared to the Year Ended 1995
Broadcast revenue for 1996 was $250.5 million, an increase of
$117.4 million or 88.2% from $133.1 million during 1995. This
increase resulted from the revenue generated at those properties
owned or operated during 1996 but not during the comparable 1995
period. On a "same station" basis - reflecting results from
stations operated for the entire twelve months of both 1996 and
1995 - broadcast revenue for 1996 was $135.5 million, an increase
of $13.8 million or 11.3% from $121.7 million for 1995. This
increase resulted from an increase in advertising rates in both
local and national advertising.
Agency commissions for 1996 were $26.7 million, an increase of
$12.5 million or 87.9% from $14.2 million during 1995 due to the
increase in broadcast revenue.
Broadcast operating expenses for 1996 were $151.1 million, an
increase of $63.8 million or 73.1% from $87.3 million during
1995. These expenses increased as a result of expenses incurred
at those properties owned or operated during 1996 but not during
the comparable 1995 period. On a "same station" basis, broadcast
operating expenses for 1996 were $82.9 million, an increase of
$4.9 million or 6.3% from $78.0 million for 1995. This increase
resulted from increased selling, payroll and programming costs.
Depreciation and amortization for 1996 and 1995 was $23.4 million
and $9.5 million, respectively. This increase was due to the
acquisitions in 1996.
Operating income for 1996 was $39.4 million, an increase of $20.8
million or 111.4% from an operating income of $18.6 million for
1995.
In 1996 the Company recognized an extraordinary loss of
approximately $3.0 million related to the write off of debt
financing costs. Also, in the first quarter of 1997, the Company
recognized an extraordinary loss of approximately $5.8 million
related to the write off of debt financing costs.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
The Year Ended 1996 Compared to the Year Ended 1995, Continued
Interest expense in 1996 was $32.2 million, an increase of $30.8
million from $1.4 million in 1995. Interest expense increased
due to an increase in outstanding debt that was incurred in
connection with acquisitions.
Net income for 1996 was $5.1 million, compared to net income of
$11.0 million reported by the Company for 1995.
Income tax was $7.3 million for 1996 and 1995. The effective tax
rate increased in 1996 due to an increase in non-deductible
goodwill resulting from the 1996 acquisitions.
The Year Ended 1995 Compared to The Year Ended 1994
Broadcast revenue for 1995 was $133.1 million, an increase of
$13.5 million or 11.3% from $119.6 million during 1994. This
increase resulted from an increase in advertising rates in both
local and national advertising and from the revenue generated at
those properties owned or operated during 1995 but not during the
comparable 1994 period. On a "same station" basis - reflecting
results from stations operated for the entire twelve months of
both 1995 and 1994 - broadcast revenue for 1995 was $125.3
million, an increase of $8.4 million or 7.2% from $116.9 million
for 1994.
Agency commissions for 1995 were $14.2 million, an increase of
$1.6 million or 12.6% from $12.6 million during 1994 due to the
increase in broadcast revenue. Agency commissions increased at a
greater rate than broadcast revenue due to a greater proportion
of agency sales.
Broadcast operating expenses for 1995 were $87.3 million, an
increase of $6.8 million or 8.5% from $80.5 million during 1994.
These expenses increased as a result of increased selling and
other payroll costs, programming costs and expenses incurred at
those properties owned or operated during 1995 but not during the
comparable 1994 period. On a "same station" basis, broadcast
operating expenses for 1995 were $81.3 million, an increase of
$4.2 million or 5.5% from $77.1 million for 1994.
Depreciation and amortization for 1995 and 1994 was $9.5 million
and $9.7 million, respectively.
Operating income for 1995 was $18.6 million, an increase of $5.1
million or 38.1% from an operating income of $13.5 million for
1994.
Interest expense for 1995 was $1.4 million, an increase of $0.9
million or 170.1% from $0.5 million for 1994. Interest expense
increased due to an increase in outstanding debt that was
incurred in connection with acquisitions and stock repurchases.
Net income for 1995 was $11.0 million, compared to net income of
$7.9 million reported by the Company for 1994. The 1994 period
includes income tax expense of $6.3 million, while the 1995
period includes $7.3 million of income tax expense.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CASH FLOWS
Cash flows provided by operating activities, inclusive of working
capital, were $24.9 million, $20.6 million and $11.3 million for
1996, 1995 and 1994, respectively. Cash flows provided by
operating activities in 1996 resulted primarily from $28.7
million in non-cash expenses, a $3.0 million add-back of the
write-off of debt related financing costs, partially offset by
the ($2.5) million gain on the sale of radio stations and the net
change in working capital of ($10.5) million. Cash flows
provided by operating activities in 1995 resulted primarily from
the add-back of $9.5 million of depreciation and amortization
expense to net income of $11.0 million for the period. Cash
flows provided by operating activities in 1994 resulted primarily
from net income of $7.9 million generated during the year. The
additional $3.4 million resulted principally from the excess of
the sum of the depreciation and amortization add-back of $9.7
million, together with the add-back of $1.4 million for provision
for losses on accounts and notes receivable over the net change
in working capital of ($7.6) million.
Cash flows used by investing activities were $859.3 million,
$64.3 million and $13.7 million for 1996, 1995 and 1994,
respectively. Investing activities include capital expenditures
of $11.9 million, $5.0 million and $2.2 million in 1996, 1995 and
1994, respectively. Investing activities in 1996 and 1995
included expenditures of $854.0 million and $59.8 million,
respectively, for acquisitions, the purchase of intangible assets
and loans made in connection with the Company's JSAs. In
addition, 1996 investing activities were net of $6.6 million of
proceeds from the sale of radio stations and 1994 investing
activities were net of $3.2 million of payments received on notes
and from the sale of assets.
Cash flows provided by financing activities were $905.1 million,
$24.2 million and $0.7 million for 1996, 1995 and 1994,
respectively. Cash flows provided by financing activities in
1996 resulted primarily from: (i) the $115.2 million issuance of
Liquid Yield Option Notes; (ii) the $100.0 million issuance of 10
1/8% Senior Subordinated Notes; (iii) the $170.0 million issuance
of 9 3/4% Senior Subordinated Notes; (iv) net proceeds of $316.7
million from the issuance of common stock; and (v) borrowings,
net of repayments, of $354.5 million under the Bank Credit
Facilities. These proceeds were partially offset by the payment
of $27.4 million in financing costs and the $123.1 million payoff
of the Citicasters 9 3/4% Senior Subordinated Notes. Cash flows
provided by financing activities in 1995 resulted primarily from
the $45.5 million in borrowings under the 1993 Credit Agreement,
together with $0.8 million in proceeds received from the issuance
of common stock to the Company's employee stock purchase plan and
upon the exercise of outstanding stock options net of the $21.7
million used to repurchase common stock. Cash flows from
financing activities in 1994 resulted primarily from the proceeds
received from the issuance of common stock upon the exercise of
outstanding stock options.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CASH FLOWS, Continued
The foregoing discussion sets forth forward looking statements
within the meaning of Section 27A of the Securities Act of 1933.
Such statements are subject to a number of risks and
uncertainties. Actual results in the future could differ
materially from those described in the forward looking
statements. Factors that could cause actual results to differ
materially include, but are not limited to, the ability to
consummate the pending acquisitions, interest rates, competition
and the economy and industry conditions in general.
Item 8. Financial Statements and Supplementary Data
Page
Report of Independent Accountants 47
Consolidated Balance Sheets: December 31, 1996 and 1995 48
Consolidated Statements of Operations:
Years ended December 31, 1996, 1995 and 1994 49
Consolidated Statements of Shareholders' Equity:
Years ended December 31, 1996, 1995 and 1994 50
Consolidated Statements of Cash Flows:
Years ended December 31, 1996, 1995 and 1994 51
Notes to Consolidated Financial Statements 53
Quarterly Financial Data 70
PART III
The information required by the following items will be included
in Jacor Communications, Inc.'s definitive Proxy Statement which
will be provided within 120 days after the end of the
Registrant's fiscal year:
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and
Management
Item 13 Certain Relationships and Related Transactions
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying consolidated balance sheets of
Jacor Communications, Inc. and Subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the 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 Jacor Communications, Inc. and Subsidiaries
as of December 31, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
February 27, 1997
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(In thousands, except share data)
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 78,137 $ 7,437
Accounts receivable, less allowance for
doubtful accounts of $3,950 in 1996
and $1,606 in 1995 79,502 25,262
Prepaid expenses and other current assets 8,963 3,916
Total current assets 166,602 36,615
Property and equipment, net 131,488 30,801
Intangible assets, net 1,290,172 127,158
Other assets 116,680 14,265
Total assets $ 1,704,942 $ 208,839
LIABILITIES
Current liabilities:
Accounts payable $ 12,600 $ 2,313
Accrued expenses and other
current liabilities 30,774 3,463
Accrued payroll 7,562 3,178
Accrued federal, state and
local income tax 4,596 3,226
Total current liabilities 55,532 12,180
Long-term debt 670,000 45,500
5 1/2% Liquid Yield Option Notes 118,682 -
Other liabilities 108,914 3,469
Deferred tax liability 264,878 8,617
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred Stock, authorized and unissued
4,000,000 shares - -
Common Stock, no par value, $0.01 per share
stated value; authorized 100,000,000
shares, issued and outstanding shares:
31,287,221 in 1996 and 18,157,209 in 1995 313 182
Additional paid-in capital 432,721 118,248
Common stock warrants 26,500 388
Unrealized gain on investments 2,042 -
Retained earnings 25,360 20,255
Total shareholders' equity 486,936 139,073
Total liabilities and
shareholders' equity $ 1,704,942 $ 208,839
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1996, 1995 and 1994
(In thousands, except per share amounts)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Broadcast revenue $ 250,461 $ 133,103 $ 119,635
Less agency commissions 26,700 14,212 12,625
Net revenue 223,761 118,891 107,010
Broadcast operating expenses 151,065 87,290 80,468
Depreciation and amortization 23,404 9,483 9,698
Corporate general and
administrative expenses 7,629 3,501 3,361
Special bonuses 2,303 - -
Operating income 39,360 18,617 13,483
Interest expense (32,244) (1,444) (534)
Gain on sale of radio stations 2,539 - -
Other income, net 5,716 1,092 1,216
Income before
income taxes and
extraordinary loss 15,371 18,265 14,165
Income tax expense (7,300) (7,300) (6,313)
Income before
extraordinary loss 8,071 10,965 7,852
Extraordinary loss, net
of income tax benefit (2,966) - -
Net income $ 5,105 $ 10,965 $ 7,852
Net Income Per Common Share:
Before extraordinary loss $ 0.30 $ 0.52 $ 0.37
Extraordinary loss (0.11) - -
Net income per
common share $ 0.19 $ 0.52 $ 0.37
Number of common shares used
in per share calculation 26,830 20,913 21,409
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1996, 1995 and 1994
(in thousands)
<CAPTION>
Common Stock Additional Common Unrealized
Shares Stated Paid-In Stock Gain on Retained
Value Capital Warrants Investments Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Balances,
January 1, 1994 19,500 $ 195 $138,390 $ 390 $ - $ 1,438 $140,413
Exercise of
stock options 89 1 768 - - - 769
Other 1 - 10 - - - 10
Net income - - - - - 7,852 7,852
- --------------------------------------------------------------------------------------------
Balances,
December 31,
1994 19,590 196 139,168 390 - 9,290 149,044
Purchase and
retirement
of stock (1,515) (15) (21,679) - - - (21,694)
Purchase of
stock by
employee stock
purchase plan 44 1 474 - - - 475
Exercise of
stock options 28 - 195 - - - 195
Other 10 - 90 (2) - - 88
Net income - - - - - 10,965 10,965
- --------------------------------------------------------------------------------------------
Balances,
December 31,
1995 18,157 182 118,248 388 - 20,255 139,073
Common stock
offering 11,250 113 301,636 - - - 301,749
Purchase of
stock by
employee stock
purchase plan 48 - 672 - - - 672
Exercise of
stock options 106 1 650 - - - 651
Conversion of
warrants 1,726 17 14,704 (374) - - 14,347
Purchase of
warrants - - (5,080) (14) - - (5,094)
Issuance of
warrants - - - 26,500 - - 26,500
Unrealized gain
on investments - - - - 2,042 - 2,042
Stock related
compensation - - 1,891 - - - 1,891
Net income - - - - - 5,105 5,105
- --------------------------------------------------------------------------------------------
Balances,
December 31,
1996 31,287 $313 $432,721 $26,500 $ 2,042 $25,360 $486,936
============================================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
(In thousands)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,105 $ 10,965 $ 7,852
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 7,661 3,251 2,507
Amortization of intangible assets 15,743 6,232 7,191
Extraordinary loss 2,966 - -
Non-cash interest expense 4,327 - -
Provision for losses on accounts
and notes receivable 978 1,137 1,442
Deferred income tax benefit (233) (560) (355)
Gain on sale of radio stations (2,539) - -
Other 892 237 (478)
Changes in operating assets and
liabilities, net of effects
of acquisitions and disposals:
Accounts receivable (18,626) (2,344) (5,766)
Other current assets (4,076) 1,029 (2,008)
Accounts payable 10,054 (424) 372
Accrued expenses and other
liabilities 2,655 1,102 591
Net cash provided by
operating activities 24,907 20,625 11,348
(Continued)
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
(In thousands)
(Continued)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from investing activities:
Capital expenditures $ (11,852) $ (4,969) $ (2,221)
Cash paid for acquisitions (826,302) (34,008) (4,904)
Deposits on broadcast stations (23,608) - -
Purchase of intangible assets - (15,536) (6,262)
Proceeds from sale of assets 6,595 - 1,919
Loans originated and other (4,097) (9,827) (2,182)
Net cash used by investing
activities (859,264) (64,340) (13,650)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt 973,000 45,500 -
Proceeds from the issuance of LYONs 115,172 - -
Purchase of common stock - (21,694) -
Proceeds from issuance of common stock 316,726 758 779
Repayment of long-term debt (471,600) - -
Payment of financing costs (27,435) - -
Other (806) (387) (120)
Net cash provided by
financing activities 905,057 24,177 659
Net increase (decrease) in cash
and cash equivalents 70,700 (19,538) (1,643)
Cash and cash equivalents at
beginning of year 7,437 26,975 28,618
Cash and cash equivalents at
end of year $ 78,137 $ 7,437 $ 26,975
Supplemental disclosures of cash
flow information:
Cash paid for:
Interest $ 5,300 $ 1,400 $ -
Income taxes $ 4,992 $ 6,662 $ 5,545
Supplemental schedule of non-cash
investing and financing activities:
Fair value of assets exchanged $ 170,000 - -
Liabilities assumed in acquisitions $ 296,187 - -
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
Description of Business
As of December 31, 1996 the Company owned and/or
operated 85 radio stations and one television station
in 21 broadcast areas throughout the United States.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of Jacor Communications, Inc. and
its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Revenues
Revenues for commercial broadcasting advertisements are
recognized when the commercial is broadcast.
Barter Transactions
Revenue from barter transactions (advertising provided
in exchange for goods and services) is recognized as
income when advertisements are broadcast, and
merchandise or services received are charged to expense
when received or used. If merchandise or services are
received prior to the broadcast of the advertising, a
liability (deferred barter revenue) is recorded. If
the advertising is broadcast before the receipt of the
goods or services, a receivable is recorded.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid
investments with an original maturity of three months
or less, when purchased, to be cash equivalents. The
effect of barter transactions has been eliminated.
Concentrations of Credit Risk
Financial instruments which potentially subject the
Company to concentrations of credit risk consist
principally of temporary cash investments and accounts
receivable. Concentrations of credit risk with respect
to accounts receivable are limited due to the large
number of customers comprising the Company's customer
base and their dispersion across many different
geographic areas of the country.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS,
Continued
Property and Equipment
Property and equipment are stated at cost less
accumulated depreciation; depreciation is provided on
the straight-line basis over the estimated useful lives
of the assets as follows:
Land improvements 20 Years
Buildings 25 Years
Equipment 3 to 20 Years
Furniture and fixtures 5 to 12 Years
Leasehold improvements Life of lease
Intangible Assets
Intangible assets are stated at cost less accumulated
amortization; amortization is provided principally on
the straight-line basis over the following lives:
Broadcasting licenses
and goodwill 40 Years
Other intangibles 5 to 25 Years
Other intangible assets consist primarily of various
contracts and purchased intellectual property.
The carrying value of intangible assets is reviewed by
the Company when events or circumstances suggest that
the recoverability of an asset may be impaired. If
this review indicates that goodwill and licenses will
not be recoverable, as determined based on the
undiscounted cash flows of the entity over the
remaining amortization period, the carrying value of
the goodwill and licenses will be reduced accordingly.
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities,
and disclosure of contingent assets and liabilities, at
the dates of the financial statements and the reported
amounts of revenues and expenses during the reporting
periods. Actual results could differ from those
estimates.
Fair Value of Financial Instruments
The fair value of the Company's publicly traded debt is
based on quoted market prices. It was not practicable
to estimate the fair value of borrowings under the
Company's Credit Facility since there is no liquid
market for this debt.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS,
Continued
Marketable Equity Securities
Marketable equity securities are classified as
available for sale and included in other assets.
Per Share Data
Income per share for the three years ended December 31,
1996 is based on the weighted average number of common
shares outstanding and gives effect to both dilutive
stock options and dilutive stock purchase warrants
during the year. Fully diluted income per share is not
presented since it approximates income per share.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS
Completed Acquisitions
In August 1995, the Company acquired certain operating
assets of radio stations WDUV-FM and WBRD-AM in Tampa,
Florida for approximately $14 million in cash.
In 1995, the Company acquired the call letters,
programming and certain contracts of radio station WOFX-
FM in Cincinnati, Ohio and then changed the call
letters of its FM broadcast station WPPT to WOFX. The
Company also acquired radio stations WSOL-FM (formerly
WHJX), WJBT-FM and WZAZ-AM in Jacksonville, Florida.
The aggregate cash purchase price for these
acquisitions was approximately $9.75 million.
During 1996, the Company acquired Noble Broadcast
Group, Inc. ("Noble"), for approximately $152 million
in cash plus related costs and expenses. Noble's San
Diego operations, which provided programming to and
sold the air time for two radio stations serving San
Diego (one AM, one FM) were acquired in February 1996.
Ten radio stations owned by Noble, serving Denver (two
AM and two FM), St. Louis (one AM, two FM) and Toledo
(one AM, two FM) were acquired on July 15, 1996.
In September 1996, the Company acquired Citicasters
Inc. ("Citicasters") for an approximate aggregate value
of $801.2 million, which included the purchase of all
outstanding shares of Citicasters common stock, the
assumption of Citicasters outstanding indebtedness and
the issuance of warrants to purchase an aggregate of
4,400,000 shares of common stock. Each Citicasters
Warrant is exercisable for .2035247 of a share of the
Company's common stock at an exercise price of $28.00
per full share. Citicasters owned and/or operated 19
radio stations, located in Atlanta, Phoenix, Tampa,
Portland, Kansas City, Cincinnati, Sacramento, Columbus
and two television stations, one located in Tampa and
one in Cincinnati.
In June 1996, the Company acquired the FCC licenses of
WCTQ-FM and WAMR-AM in Venice, Florida and certain real
estate and transmission facilities necessary to operate
the stations for a purchase price of approximately $4.4
million in cash.
In August 1996, the Company acquired the FCC licenses
of WLAP-AM, WMXL-FM and WWYC-FM in Lexington, Kentucky
and certain real estate and transmission facilities
necessary to operate the stations for a purchase price
of approximately $14 million in cash.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
Completed Acquisitions, Continued
In June 1996, the Company financed the purchase by
Critical Mass Media, Inc. ("CMM") of a 40% interest in
a newly formed limited liability company which
purchased for $540,000 the assets of Duncan American
Radio, Inc. CMM is a marketing research and radio
consulting business which is owned by a limited
partnership of which the Company is the 5% general
partner and a corporation wholly owned by the Chief
Executive Officer of the Company, is the 95% limited
partner.
In December 1996, the Company exchanged Tampa
television station, WTSP-TV, acquired by the Company in
the Citicasters Merger, for six radio stations owned by
Gannett. The stations the Company acquired are KIIS-FM
and KIIS-AM in Los Angeles, KSDO-AM and KKBH-FM in San
Diego and WAKS-FM and WDAE-AM in Tampa-St. Petersburg.
In December 1996, the Company purchased from Clear
Channel Radio, Inc. radio stations KTWO-AM, KMGW-FM and
the Wyoming Radio Network in Casper, Wyoming for a
purchase price of $1.9 million.
All of the above acquisitions have been accounted for
as purchases. The excess cost over the fair value of
net assets acquired is being amortized over 40 years.
The results of operations of the acquired businesses
are included in the Company's financial statements
since the respective dates of acquisition. Assuming
each of the 1995 and 1996 acquisitions had taken place
at the beginning of 1995, unaudited pro forma
consolidated results of operations would have been as
follows:
Pro Forma (Unaudited)
Year Ended December 31,
1996 1995
Net revenue $ 342,649 $ 314,830
Net loss (8,131) (7,944)
Net loss per common share ($0.26) ($0.25)
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
Acquisitions pending as of December 31, 1996
In May 1996, Jacor entered into an agreement with
Enterprise Media of Toledo, L.P. to acquire the FCC
licenses of WIOT-FM and WCWA-AM in Toledo, Ohio and to
purchase real estate and transmission facilities
necessary to operate the stations. The purchase price
for the assets is $13.0 million which amount has been
placed in escrow pending the closing of the
transaction.
In October 1996, the Company entered into a definitive
merger agreement with Regent whereby Regent will merge
with and into the Company. Regent owned, operated or
represented 19 radio stations located in Kansas City,
Salt Lake City, Las Vegas, Louisville and Charleston.
During February 1997, the Company consummated the
Regent merger for the approximate aggregate value of
$185 million, which included (i) the issuance of 3.55
million shares of Jacor common stock valued at $105.9
million, (ii) the issuance of warrants to acquire
500,000 shares of the Company's common stock at $40 per
share valued at $5 million and (iii) the assumption of
approximately $6 million of debt and other liabilities
and $68 million in cash.
Also in October 1996, Jacor entered into a binding
agreement with Colfax Communications, Inc. ("Colfax")
to acquire KIDO-AM and KLTB-FM in Boise, Idaho and KARO-
FM in Caldwell, Idaho for a purchase price of $11.0
million in cash. Jacor and Colfax consummated the
transaction in January 1997.
Additionally in October 1996, Jacor entered into a
binding agreement with Palmer Broadcasting Limited
Partnership whereby Jacor would acquire the FCC
licenses and assets of WHO-AM and KLYF-FM in Des Moines
and WMT-AM and WMT-FM in Cedar Rapids for a purchase
price of $52.5 million in cash. The Company
consummated this transaction in March 1997.
The Company also has acquisitions pending in the
following broadcast areas: (i) Sarasota, Florida, (ii)
San Diego, California, (iii) Circleville, Marysville
and Lima, Ohio, (iv) Lexington and Louisville,
Kentucky, (v) Ft. Collins and Greely, Colorado, (vi)
Rochester, New York, (vii) Santa Barbara, California,
and (viii) Portland, Oregon. The net cash to be paid
for the acquisitions pending as of December 31, 1996
after giving effect to escrow deposits of $33.3
million, totals approximately $230 million.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and 1995
consist of the following (in thousands):
1996 1995
Land and land improvements $ 14,269 $ 2,575
Buildings 20,249 2,585
Equipment 97,491 26,674
Furniture and fixtures 7,524 3,505
Leasehold improvements 5,872 3,185
145,405 38,524
Less accumulated depreciation (13,917) (7,723)
$131,488 $30,801
4. INTANGIBLE ASSETS
Intangible assets at December 31, 1996 and 1995 consist
of the following (in thousands):
1996 1995
Broadcasting licenses and
goodwill $1,277,364 $120,948
Other intangible assets 47,962 27,489
1,325,326 148,437
Less accumulated amortization (35,154) (21,279)
$1,290,172 $127,158
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. OTHER ASSETS
The Company's other assets at December 31, 1996 and
December 31, 1995 consist of the following (in
thousands):
December 31, December 31,
1996 1995
News Corp Warrants $ 39,800 $ -
Acquisition escrows 30,804 -
Marketable securities 13,965 -
Other 32,111 14,265
$116,680 $ 14,265
The News Corp Warrants were included in the Citicasters
acquisition. The Company sold the News Corp Warrants
in February 1997 for $44.5 million in cash and will
record a pretax gain of $4.7 million in the first
quarter of 1997.
JACOR COMMUNICATIONS,INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT
The Company's debt obligations at December 31, 1996 and
1995 consist of the following (in thousands):
1996 1995
Credit facility borrowings........ $400,000 $ 45,500
10 1/8% Senior Subordinated Notes,
due 2006....................... 100,000 -
9 3/4% Notes, due 2006............ 170,000 -
$670,000 $ 45,500
New Credit Facility
In June 1996, the Company entered into a new credit
facility (the "Credit Facility"). The Credit Facility
is with a syndicate of banks and other financial
institutions. In February 1997, the Credit Facility
was amended and restated to expand the availability to
$750 million of loans in three components: (i) a
revolving credit facility of up to $450 million with a
mandatory commitment reduction of $27.5 million on June
12, 1999 continuing semi-annually through June 2002,
and a final maturity date of June 12, 2003; (ii) a term
loan of up to $200 million with a scheduled reduction
of $8.5 million on December 12, 1997 with increasing
semi-annual reductions thereafter and a final maturity
date of June 12, 2003; and (iii) a term loan of up to
$100 million with a scheduled reduction of $.5 million
on December 12, 1998 with increasing semi-annual
reductions thereafter and a final maturity date of June
12, 2004.
Borrowings under the Credit Facility bear interest at
rates that fluctuate with a bank base rate and/or the
Eurodollar rate. The weighted average interest rate at
December 31, 1996 was 7.83%.
Loans under the Credit Facility are guaranteed by the
Company and each of the Company's direct and indirect
subsidiaries. The Company's obligations with respect
to the Credit Facility and each guarantor's obligations
with respect to the related guaranty is collateralized
by substantially all of their respective assets, and,
in the case of the Company's subsidiaries, capital
stock.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT, Continued
The Credit Facility contains covenants and provisions
that restrict, among other things, the Company's
ability to: (i) incur additional indebtedness; (ii)
incur liens on its property; (iii) make investments and
advances; (iv) enter into guarantees and other
contingent obligations; (v) merge or consolidate with
or acquire another person or engage in other
fundamental changes; (vi) engage in certain sales of
assets; (vii) make capital expenditures; (viii) enter
into leases; (ix) engage in certain transactions with
affiliates; and (x) make restricted junior payments.
The Credit Facility also requires satisfaction of
certain financial performance criteria (including a
consolidated interest coverage ratio, a leverage-to-
operating cash flow ratio and a consolidated operating
cash flow available for fixed charges ratio) and the
repayment of loans under the Credit Facility with
proceeds of certain sales of assets and debt issuances,
and with 50% of the Company's Consolidated Excess Cash
Flow (as defined in the Credit Facility).
During 1996 the Company recognized an extraordinary
loss of approximately $3 million related to the write
off of debt financing costs. Also, in the first
quarter of 1997, the Company recognized an
extraordinary loss of approximately $5.8 million
related to the write off of debt financing costs.
10 1/8% Senior Subordinated Notes Due 2006
In June 1996, the Company completed an offering of $100
million of its 10 1/8% Senior Subordinated Notes (the
"Notes"). The Notes will mature on June 15, 2006.
Interest on the Notes is payable semi-annually on June
15 and December 15 of each year, commencing December
15, 1996. The Notes will be redeemable at the option
of the Company, in whole or in part, at any time on or
after June 15, 2001. The redemption prices commence at
105.063% and are reduced by 1.688% annually until June
15, 2004 when the redemption price is 100%. At
December 31, 1996 the market value of the Notes
exceeded carrying value by approximately $3 million.
9 3/4% Notes Due 2006
In December 1996, the Company completed an offering of
$170 million of its 9 3/4% Notes (the "9 3/4% Notes").
The 9 3/4% Notes will mature on December 15, 2006.
Interest on the 9 3/4% Notes is payable semi-annually
on June 15 and December 15 of each year, commencing on
June 15, 1997. The 9 3/4% Notes will be redeemable at
the option of the Company, in whole or part, at any
time on or after December 15, 2001. The redemption
prices commence at 104.875% and are reduced by 1.625%
annually until December 15, 2004 when the redemption
price is 100%. At December 31, 1996, the market value
of the 9 3/4% Notes exceeded carrying value by
approximately $3.4 million.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT, Continued
The Notes and the 9 3/4% Notes were issued by JCAC,
Inc., a wholly owned subsidiary formed for the purpose
of completing the merger of Citicasters Inc., the predecessor
to Jacor Communications Company ("JCC"), and are jointly and
severally, fully and unconditionally guaranteed on a
senior subordinated basis by Jacor and substantially
all subsidiaries of Jacor (the "Subsidiary
Guarantors"). JCC (the successor to JCAC, Inc.) and each
of the Subsidiary Guarantors are wholly owned direct or
indirect subsidiaries of Jacor. Separate financial statements
of JCC and each of the Subsidiary Guarantors are not presented
because Jacor believes that such information would not be
material to investors. The direct and indirect non-guarantor
subsidiaries of Jacor are inconsequential, both
individually and in the aggregate.
In addition, Jacor and JCC have a pending registration
statement on Form S-3 (File No. 333-19291) for up to
$250 million of debt securities that would be jointly
and severally, fully and unconditionally guaranteed on
a senior subordinated basis by Jacor and each of the
Subsidiary Guarantors if such debt securities are
issued by JCC and by JCC and each of the Subsidiary
Guarantors if such debt securities are issued by Jacor.
Summarized financial information with respect to Jacor
and with respect to the Subsidiary Guarantors on a
combined basis as of December 31, 1996 and 1995 and for
each of the three years in the period ended December
31, 1996; and with respect to JCC as of December 31,
1996 and for the period from June 6, 1996 to December 31,
1996 is as follows:
<TABLE>
<CAPTION>
Combined
Jacor JCC Subsidiary Guarantors
1996 1995 1994 1996 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue - - - - $ 223,761 $118,891 $107,010
Equity in earnings
of subsidiaries $10,237 $10,965 $ 7,852 $11,864 - - -
Operating income 305 10,965 7,852 11,864 49,292 18,617 13,483
Income before
extraordinary items 5,105 10,965 7,852 13,203 11,864 18,617 13,483
Net income 5,105 10,965 7,852 10,237 11,864 10,965 7,852
Balance Sheet Data
(in thousands):
Current assets $ 1,538 $ 6,802 $ 75,626 $ 166,602 $ 36,615
Non-current assets 722,918 186,589 1,264,081 1,538,340 172,224
Current liabilities 16,253 160 9,975 55,532 12,180
Non-current
liabilities 221,267 54,158 1,056,348 1,162,474 57,586
Shareholders equity 486,936 139,073 273,384 486,936 139,073
</TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LIQUID YIELD OPTION NOTES
In June 1996, the Company issued 5 1/2% Liquid Yield
Option Notes ("LYONs") due 2011 in the aggregate
principal amount at maturity of $259.9 million. Each
LYON had an issue price of $443.14 and a principal
amount at maturity of $1,000. At December 31, 1996 the
accreted value of the LYONs was $118.7 million which
included $3.5 million of interest accreted during 1996.
Each LYON is convertible, at the option of the holder,
at any time on or prior to maturity, into Common Stock
at a conversion rate of 13.412 shares per LYON.
The LYONs are not redeemable by the Company prior to
June 12, 2001. Thereafter, the LYONs are redeemable
for cash at any time at the option of the Company, in
whole or in part, at redemption prices equal to the
issue price plus accrued original issue discount to the
date of redemption.
The LYONs will be purchased by the Company, at the
option of the holder, on June 12, 2001 and June 12,
2006, for a Purchase Price of $581.25 and $762.39
(representing issue price plus accrued original issue
discount to each date), respectively, representing a 5
1/2% yield per annum to the holder on such date. The
Company, at its option, may elect to pay the purchase
price on any such purchase date in cash or common
stock, or any combination thereof.
At December 31, 1996 the market value of the LYONs was
less than the carrying value by approximately $3
million.
8. CAPITAL STOCK
Warrants
In connection with a Stock Offering during 1996, the
Company determined that it would convert the 1,983,605
outstanding 1993 Warrants into the right to receive the
Fair Market Value (as defined) calculated to be $19.70
per Warrant. Prior to the conversion, the Company
issued 1,726,004 shares of Common Stock with proceeds
aggregating approximately $14.3 million upon exercise
of such warrants by the holders. The Company used
approximately $5.1 million of these proceeds to fund
the conversion of the remaining 1993 Warrants presented
for redemption.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. STOCK BASED COMPENSATION PLANS
In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"). The Company has elected
not to adopt the cost recognition provisions of SFAS
123 as permitted by the statement. The Company
continues to apply APB Opinion No. 25 in accounting for
its stock based compensation plans.
1993 Stock Option Plan
Under the Company's 1993 stock option plan, options to
acquire up to 2,769,218 shares of common stock can be
granted to directors, officers and key employees at no
less than the fair market value of the underlying stock
on the date of grant. The plan permits the granting of
non-qualified stock options as well as incentive stock
options. Between 25% and 30% of the options vest on
the date of grant and between 20% and 30% vest on each
of the next three anniversaries of the grant date.
Options expire 10 years after grant and the plan will
terminate no later than February 7, 2003. Information
pertaining to the plan for the years ended December 31,
1994, 1995 and 1996 is as follows:
Number of Weighted Average
Shares Exercise Price
1994:
Outstanding at beginning of year.. 1,405,620 $ 6.06
Granted........................... 35,000 $14.22
Exercised......................... (89,310) $ 5.81
Outstanding at end of year........ 1,351,310 $ 6.16
Exercisable at end of year........ 766,170 $ 5.90
Available for grant at end of year 87,618
1995:
Outstanding at beginning of year.. 1,351,310 $ 6.16
Granted........................... 245,000 $14.61
Exercised......................... (27,790) $ 5.81
Outstanding at end of year........ 1,568,520 $ 7.52
Exercisable at end of year........ 1,093,340 $ 6.57
Available for grant at end of year 1,092,618
1996:
Outstanding at beginning of year.. 1,568,520 $ 7.52
Granted........................... 594,500 $23.63
Exercised......................... (106,410) $ 6.10
Outstanding at end of year........ 2,056,610 $12.26
Exercisable at end of year........ 1,507,000 $ 8.68
Available for grant at end of year 523,118
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. STOCK BASED COMPENSATION PLANS, Continued
The fair value of each stock option granted is
estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions for
grants in 1995 and 1996, respectively: risk-free
interest rates are different for each grant and range
from 5.24% to 6.45%; the expected lives of options are
5 years; and volatility of 35.1% for all grants. A
summary of the fair value of options granted in 1996
and 1995 follows:
1996 1995
Weighted-average fair value of
options granted at-the-money $ 9.42 $ 5.70
Weighted-average fair value of
options granted at a premium $ 8.46 $ 5.33
Weighted-average fair value of all
options granted during the year $ 9.07 $ 5.44
The following table summarizes information about stock
options outstanding at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Weighted Weighted Weighted
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/96 Life Price at 12/31/96 Price
<S> <C> <C> <C> <C> <C>
$5.74 to $6.46 1,182,110 6.16 $ 6.08 1,182,110 $ 6.08
$12.75 to $19.40 305,000 8.34 $14.60 182,500 $13.96
$21.25 to $28.74 569,500 9.76 $23.63 142,390 $23.63
$ 5.74 to $28.74 2,056,610 9.03 $12.27 1,507,000 $ 8.66
</TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. STOCK BASED COMPENSATION PLANS, Continued
Employee Stock Purchase Plan
Under the 1995 Employee Stock Purchase Plan, the
Company is authorized to issue up to 200,000 shares of
common stock to its full-time and part-time employees,
all of whom are eligible to participate. Under the
terms of the Plan, employees can choose each year to
have up to 10 percent of their annual base earnings
withheld to purchase the Company's common stock. The
purchase price of the stock is 85 percent of the lower
of its beginning-of-year or end-of-year market price.
Under the Plan, the Company sold 47,232 shares for
$14.24 per share in 1996 and 43,785 shares for $10.84
per share in 1995. The fair market value of the right
to acquire common stock under the Stock Purchase Plan
was $4.81 per share in 1996 and $3.71 per share in
1995.
Had the compensation cost for the Company's stock-based
compensation plans been determined consistent with SFAS
123, the Company's net income and net income per common
share for 1996 and 1995 would approximate amounts below
(in thousands, except per share amounts):
1996 1995
Net income:
As reported $ 5,105 $10,965
Pro forma 3,826 10,398
Net income per common share:
As reported $ 0.19 $ 0.52
Pro forma $ 0.14 $ 0.50
In 1996, the Company recorded compensation expense of
approximately $1.9 million related to stock units
issued to directors and stock options issued to non-
employees of the Company. The expense related to the
stock units was equal to the fair value of the stock
for which the units can be converted into on the date
of grant. The fair value of the options was determined
using the following assumptions: risk-free interest
rate of 5.79%; expected life of 5 years; and volatility
of 35.1%. The options were 100% vested on the date of
grant.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. INCOME TAXES
Income tax expense for the years ended December 31,
1996, 1995 and 1994 is summarized as follows (in
thousands):
Federal State Total
1996:
Current $ 6,185 $1,348 $7,533
Deferred (185) (48) (233)
6,000 1,300 7,300
Tax benefit from
extraordinary loss (1,631) (346) (1,977)
$ 4,369 $ 954 $5,323
1995:
Current $ 6,600 $1,260 $7,860
Deferred (500) (60) (560)
$ 6,100 $1,200 $7,300
1994:
Current $ 5,594 $1,075 $6,669
Deferred (300) (56) (356)
$ 5,294 $1,019 $6,313
The provisions for income tax differ from the amount
computed by applying the statutory federal income tax
rate due to the following:
1996 1995 1994
Federal income tax at
the statutory rate $ 3,650 $ 6,393 $ 4,958
Amortization not deductible 1,262 606 606
State income taxes, net of any
current federal income tax
benefit 620 780 662
Other (209) (479) 87
$ 5,323 $ 7,300 $ 6,313
The tax effects of the significant temporary
differences which comprise the deferred tax liability
at December 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994
Deferred tax assets:
Accrued expenses $ (9,290) $(1,992) $(2,184)
Reserve for pending sale
of assets (1,814)
Net operating loss
carryforwards (12,000)
Other (2,098) (142) 1,160
(25,202) (2,134) (1,024)
Deferred tax liabilities:
Property and equipment 32,427 12,208 11,062
Intangibles 257,653 (1,457) (861)
290,080 10,751 10,201
Net Liability $264,878 $ 8,617 $ 9,177
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. COMMITMENTS AND CONTINGENCIES
Lease and Contractual Obligations
The Company and its subsidiaries lease certain land and
facilities used in their operations. The Company also
has various employment agreements with broadcast
personalities that provide base compensation. Future
minimum payments under leases and employment agreements
as of December 31, 1996 are payable as follows (in
thousands):
1997 $ 9,367
1998 8,830
1999 8,965
2000 3,912
2001 3,238
Thereafter 9,912
$44,224
Rental expense was approximately $3,996, $3,471 and
$3,336 for the years ended December 31, 1996, 1995 and
1994, respectively.
Legal Proceedings
From time to time, the Company becomes involved in
various claims and lawsuits that are incidental to its
business. In the opinion of the Company's management,
there are no material legal proceedings pending against
the Company.
12. RETIREMENT PLAN
The Company maintains a defined contribution retirement
plan covering substantially all employees who have met
eligibility requirements. The Company matches
participating employee contributions, subject to a
maximum contribution by the Company of between 1 1/2%
to 3% of such employee's annual compensation up to
$150,000 of such compensation. Total expense related
to this plan was $756,618, $334,253 and $289,487 in
1996, 1995 and 1994, respectively.
13. RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
128, "Earnings Per Share". The Company will implement
the Statement in the fourth quarter 1997, the effect of
which has not yet been determined.
Supplementary Data
Quarterly Financial Data
for the years ended December 31, 1996 and 1995 (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
1996
Net revenue $ 30,074 $ 43,120 $ 54,326 $ 96,241 $ 223,761
Operating income 2,544 9,372 9,229 18,215 39,360
Net income before
extraordinary loss 1,842 3,761 2,100 368 8,071
Net income 891 3,761 85 368 5,105
Net income per
common share: (1)
Before extraordinary
loss 0.09 0.17 0.06 0.01 0.30
Extraordinary loss (0.05) 0.00 (0.06) 0.00 (0.11)
Net income per
common share 0.04 0.17 0.00 0.01 0.19
1995
Net revenue $ 24,016 $ 30,866 $ 32,294 $ 31,715 $ 118,891
Operating income 1,061 5,628 5,899 6,029 18,617
Net income 751 3,529 3,488 3,197 10,965
Net income per
common share (1) 0.04 0.17 0.17 0.16 0.52
</TABLE>
[FN]
NOTE:
(1) The sum of the quarterly net income (loss) per
share amounts does not equal the annual amount
reported as per share amounts are computed
independently for each quarter.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
(a) List of Documents filed as part of this Report:
(1) Financial Statements
The financial statements of Registrant as set
forth under Item 8 of this Report on Form 10-K
(2) Exhibits
See Exhibit Index
(b) Reports on Form 8-K:
During the fourth quarter of 1996 to
date, the Company has also filed additional Form 8-
Ks on the following dates: October 3, 1996
(relating to the consummation of the Citicasters
Merger), October 11, 1996 (relating to the
execution of the definitive agreement for the
Gannett Exchange), October 23, 1996, as amended on
December 20, 1996 and March 7, 1997 (relating to
the execution and completion of the definitive
agreement for the Regent Merger), November 6, 1996
(relating to various other pending acquisitions
announced by the Company during October 1996),
December 12, 1996 (relating to the completion of
the Gannett Exchange), January 9, 1997 (relating
to the execution of the definitive agreements to
dispose of WKRQ-FM in Cincinnati), January 24,
1997 (relating to various other pending
acquisitions announced by the Company in January,
1997), and March 21, 1997, as amended on March 26,
1997 (relating to the execution of a definitive
agreement to acquire EFM Media Management, Inc.,
EFM Publishing, Inc. and Pam Media, Inc.)
JACOR COMMUNICATIONS, INC, AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(The Company)
Date March 24, 1997 By R. Christopher Weber
R. Christopher Weber,
Senior 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 Company and in the capacities and
on the dates indicated.
Date March 24, 1997 Randy Michaels
Randy Michaels,
Chief Executive Officer, Director
(Principal Executive Officer)
Date March 24, 1997 Robert L. Lawrence
Robert L. Lawrence,
President and Director
Date March 24, 1997 Sheli Z. Rosenberg
Sheli Z. Rosenberg,
Board Chair and Director
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SIGNATURES, Continued
Date March 24, 1997 John W. Alexander
John W. Alexander,
Director
Date March 24, 1997 Rod F. Dammeyer
Rod F. Dammeyer,
Director
Date March 24, 1997 F. Philip Handy
F. Philip Handy,
Director
Date March 24, 1997 Marc Lasry
Marc Lasry,
Director
Date March 24, 1997 R. Christopher Weber
R. Christopher Weber
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
INDEX TO EXHIBITS
Exhibit Description of Exhibit Sequen-
Number tially
Numbered
Page
2.1 Agreement and Plan of Merger dated as of October 8,
1996 ("Regent Merger Agreement") between Jacor *
Communications, Inc. ("Jacor") and Regent
Communications, Inc. (omitting schedules and exhibits
not deemed material). Incorporated by reference to
Exhibit 2.1 to Jacor's Current Report on Form 8-K
dated October 23, 1996, as amended.
2.2 Form of Warrant Agreement between Jacor and KeyCorp *
Shareholder Services, Inc., as warrant agent (included
as Exhibit B to Regent Merger Agreement). Incorporated
by reference to Exhibit 2.2 to Jacor's Current Report
on Form 8-K dated October 23, 1996, as amended.
2.3 Registration Rights Agreement dated as of October 8, *
1996 among Jacor and the parties listed in Schedule I
thereto (included as Exhibit I to Regent Merger
Agreement). Incorporated by reference to Exhibit 2.4
to Jacor's Current Report on Form 8-K dated
October 23,1996, as amended.
2.4 Agreement and Plan of Merger dated February 12, 1996 *
among Citicasters Inc. ("Citicasters"), Jacor and
JCAC, Inc. Incorporated by reference to Exhibit 2.1 to
Jacor's Current Report on Form 8-K dated February 27,
1996, as amended.
2.5 Warrant Agreement dated as of September 18, 1996 *
between Jacor and KeyCorp Shareholder Services, Inc.,
as warrant agent. Incorporated by reference to
Exhibit 4.1 to Jacor's Current Report on Form 8-K
dated October 3, 1996.
2.6 Supplemental Agreement dated as of September 18, 1996 *
between Jacor and KeyCorp Shareholder Services, Inc.,
as warrant agent. Incorporated by reference to
Exhibit 4.2 of Jacor's Current Report on Form 8-K
dated October 3, 1996.
2.7 Registration Rights Agreement dated as of August 5, *
1996 among Jacor, JCAC, Inc., Great American Insurance
Company, American Financial Corporation, American
Financial Enterprises, Inc., Carl H. Lindner, The
Carl H. Lindner Foundation, and S. Craig Lindner.
Incorporated by reference to Exhibit 2.22 to Jacor's
Post-Effective Amendment No. 1 on Form S-3 to Form S-4
(File No. 333-6639).
2.8 Stock Purchase and Stock Warrant Redemption Agreement *
dated as of February 20, 1996 among Jacor, Prudential
Venture Partners II, L.P., Northeast Ventures, II,
John T. Lynch, Frank A. DeFrancesco, Thomas R.
Jiminez, William R. Arbenz, CIHC, Incorporated,
Bankers Life Holding Corporation and Noble Broadcast
Group, Inc. ("Noble") (omitting exhibits not deemed
material or filed separately in executed form).
Incorporated by reference to Exhibit 2.1 to Jacor's
Current Report on Form 8-K dated March 6, 1996, as
amended.
2.9 Investment Agreement dated as of February 20, 1996, *
among Jacor, Noble and the Class B Stockholders
(omitting exhibits not deemed material). Incorporated
by reference to Exhibit 2.2 to Jacor's Current Report
on Form 8-K dated March 6, 1996, as amended.
2.10 Asset Exchange Agreement dated as of September 26, *
1996 between Citicasters Co. and Pacific and Southern
Company, Inc. (omitting schedules and exhibits not
deemed material). Incorporated by reference to
Exhibit 2.1 to Jacor's Current Report on Form 8-K
dated October 11, 1996.
3.1 Articles of Incorporation of Jacor. Incorporated by *
reference to Exhibit 5 to Jacor's Form 8-A dated
February 13, 1997.
3.2 Bylaws of Jacor. Incorporated by reference to *
Exhibit 6 to Jacor's Form 8-A dated February 13, 1997.
4.1 Indenture dated as of December 17, 1996 between Jacor *
Communications Company ("JCC") and The Bank of New
York for JCC's 9 3 4% Senior Subordinated Notes due
2006 and Jacor's Guaranty thereof. Incorporated by
reference to Exhibit 4.11 to Jacor's Form S-3
Registration Statement (File No. 333-19291).
4.2 Indenture dated as of June 12, 1996 between Jacor and *
The Bank of New York for Jacor's Liquid Yield Option
Notes Due 2011. Incorporated by reference to
Exhibit 4.23 to Jacor's Form S-4 Registration
Statement (File No. 333-6639).
4.3 Indenture dated as of June 12, 1996 among Jacor, JCAC, *
Inc. and First Trust of Illinois, National Association
for JCAC, Inc.'s 10 1 8% Senior Subordinated Notes due
2006 and Jacor's Guaranty thereof. Incorporated by
reference to Exhibit 4.24 to Jacor's Form S-4
Registration Statement (File No. 333-6639).
4.4 Credit Agreement dated as of June 12, 1996 ("Credit *
Agreement") by and among JCAC, Inc., the Lenders named
therein (the "Lenders"), Chemical Bank, as
Administrative Agent, Banque Paribas, as Documentation
Agent, and Bank of America Illinois, as Syndication
Agent. Incorporated by reference to Exhibit 4.27 to
Jacor's Form S-4 Registration Statement (File
No. 333-6639).
4.5 Security Agreement dated as of June 12, 1996 by and *
between JCAC, Inc. and Chemical Bank as Administrative
Agent. Incorporated by reference to Exhibit 4.28 to
Jacor's Form S-4 Registration Statement (File
No. 333-6639).
4.6 Parent Guaranty dated as of June 12, 1996 by Jacor in *
favor of Chemical Bank, as Administrative Agent, for
the Lenders and any Interest Rate Hedge Providers (as
defined in the Credit Agreement). Incorporated by
reference to Exhibit 4.29 to Jacor's Form S-4
Registration Statement (File No. 333-6639).
4.7 Pledge Agreement dated as of June 12, 1996 by and *
between Jacor and Chemical Bank, as Administrative
Agent for the Agents (as defined in the Credit
Agreement), the Lenders and any Interest Rate Hedge
Providers. Incorporated by reference to Exhibit 4.30
to Jacor's Form S-4 Registration Statement (File
No. 333-6639).
4.8 First Amendment dated as of June 18, 1996 to Credit *
Agreement dated as of June 12, 1996 by and among
JCAC, Inc., the Lenders named therein, Chemical Bank,
as Administrative Agent, Banque Paribas, as
Documentation Agent, and Bank of America Illinois, as
Syndication Agent. Incorporated by reference to
Exhibit 4 to Jacor's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, as amended.
4.9 Second Amendment dated as of September 18, 1996 to *
Credit Agreement dated as of June 12, 1996 by and
among Citicasters (as successor by merger to
JCAC, Inc.), the Lenders named therein, The Chase
Manhattan Bank (as successor by merger to Chemical
Bank), as Administrative Agent, Banque Paribas, as
Documentation Agent, and Bank of America Illinois, as
Syndication Agent (omitting exhibits not deemed
material). Incorporated by reference to Exhibit 4.1 to
Jacor's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, as amended.
4.10 Third Amendment dated as of October 8, 1996 to Credit *
Agreement dated as of June 12, 1996 by and among
Citicasters (as successor by merger to JCAC, Inc.),
the Lenders named therein, The Chase Manhattan Bank
(as successor by merger to Chemical Bank), as
Administrative Agent, Banque Paribas, as Documentation
Agent, and Bank of America Illinois, as Syndication
Agent (omitting exhibits not deemed material).
Incorporated by reference to Exhibit 4.2 to Jacor's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, as amended.
4.11(#) Stock Option Agreement dated as of June 23, 1993 *
between Jacor and Rod F. Dammeyer covering 10,000
shares of Jacor's common stock. (1) Incorporated by
reference to Exhibit 4.3 to Jacor's Quarterly Report
on Form 10-Q dated August 13, 1993.
4.12(#) Stock Option Agreement dated as of December 15, 1994 *
between Jacor and Rod F. Dammeyer covering 5,000
shares of Jacor's common stock. (2) Incorporated by
reference to Exhibit 4.23 to Jacor's Quarterly Report
on Form 10-Q dated August 13,1993.
10.1(+) Employment Agreement dated February 20, 1996 by and *
between Noble Broadcast Group, Inc. and John T. Lynch,
as assumed by the Registrant effective July 15, 1996.
Incorporated by reference to Exhibit 10.1 to Jacor's
Quarterly Report on Form 10-Q dated November 14,
1996,as amended.*
10.2(+) Employment Agreement dated February 20, 1996 by and *
between Noble Broadcast Group, Inc. and Frank A.
DeFrancesco, assumed by the Registrant effective July
15, 1996. Incorporated by reference to Exhibit 10.2
to Jacor's Quarterly Report on Form 10-Q dated
November 14, 1996, as amended.*
10.3(+) Jacor Communications, Inc. 1993 Stock Option Plan. *
Incorporated by reference to Exhibit 99 to Jacor's
Quarterly Report on Form 10-Q dated August 13, 1993.*
10.4(+) Jacor Communications, Inc. 1995 Employee Stock *
Purchase Plan. Incorporated by reference to Exhibit
4.01 to Jacor's Registration Statement on Form S-8,
filed on November 9, 1994.*
10.5(+) Jacor Communications, Inc. Executive Stock Unit Plan
effective as of November 7, 1996. 78
10.6(+) Jacor Communications, Inc. 1996 Non-Employee Directors
Stock Units. 87
11 Statement re: computation of per share earnings. 88
21 Subsidiaries of Registrant. 89
23.1 Consent of Independent Accountants. 91
__________________
(*) Incorporated by reference as indicated.
(+) Management Contracts and Compensatory Arrangements.
(1) Identical documents were entered into with John W.
Alexander, F. Philip Handy and Marc Lasry.
(2) Identical documents were entered into with John W.
Alexander, F. Philip Handy, Marc Lasry and Sheli Z.
Rosenberg. An additional grant of 5,000 stock options
was made to each of these five individuals in February
1996 pursuant to substantially identical documents.
EXHIBIT 10.5
JACOR COMMUNICATIONS, INC.
EXECUTIVE STOCK UNIT PLAN
JACOR COMMUNICATIONS, INC.
EXECUTIVE STOCK UNIT PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1. Establishment of the Plan. Jacor Communications,
Inc., a Delaware corporation ("Jacor"), hereby establishes,
effective November 7, 1996, a stock compensation plan known
as the "Executive Stock Unit Plan" (the "Plan"), which
permits the grant of Stock Units to Key Employees of the
Company. The Plan was approved by the Board of Directors of
Jacor on November 7, 1996.
1.2. Purpose of the Plan. The purpose of the Plan is
to promote the success of the Company and its Subsidiaries
by providing stock-based incentives to Key Employees that
will link their personal interests to the long-term
financial success of the Company and its Subsidiaries and to
growth in shareholder value. The Plan is designed to
provide flexibility to the Company in its ability to
motivate and retain the services of Key Employees upon whose
judgment, interest, and special effort the successful
conduct of its operations is largely dependent.
1.3. Duration of the Plan. The Plan commences on
November 7, 1996, as described in Section 1.1 herein. The
Plan shall remain in effect, subject to the right of the
Board of Directors to terminate the Plan at any time
pursuant to Article 8 herein, until all Shares subject to it
shall have been purchased or acquired according to the
provisions herein.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1. Definitions. Whenever used in the Plan, the
following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word
is capitalized:
(a) "Award" means, individually or collectively, a
grant under this Plan of Stock Units.
(b) "Beneficial Owner" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules
and Regulations under the Exchange Act.
(c) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(d) "Change in Control" shall be deemed to have
occurred at such time as (i) any person (as the
term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) other than
Zell/Chilmark Fund L.P., Jacor, any subsidiary of
Jacor, or any employee benefit plan of either
Jacor or any Subsidiary of Jacor, files a Schedule
13D or 14D-1 under the Securities Exchange Act of
1934 (or any successor schedule, form or report)
disclosing that such person has become the
beneficial owner of 50% or more of the Common
Stock or other capital stock of Jacor into which
such Common Stock is reclassified or changed, with
certain exceptions, or (ii) there shall be
consummated any consolidation or merger of
Jacor (a) into which Jacor is not the continuing or
surviving corporation or (b) pursuant to which the
Common Stock would be converted into cash,
securities or other property, in each case,
whether than a consolidation or merger of Jacor in
which the holders of Common Sock immediately prior
to the consolidation or merger own, directly or
indirectly, at least a majority of Common Stock of
the continuing or surviving corporation
immediately after the consolidation or merger.
(e) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Company" means Jacor, or any successor thereto as
provided in Article 15 herein.
(g) "Fair Market Value" means the average of the
highest price and lowest price at which the Common
Stock was traded on the relevant date, or on the
most recent date on which the Stock was traded
prior to such date, as reported on the Nasdaq
National Market or any stock exchange which may
then constitute the primary public trading market
for the Common Stock.
(h) "Key Employee" means an employee of the Company or
any of its Subsidiaries, including an employee who
is an officer or a director of the Company or any
of its Subsidiaries, who, in the opinion of the
Board, can contribute significantly to the growth
and profitability of the Company and its
Subsidiaries. The granting of an Award under this
Plan shall be deemed a determination by the Board
that such employee is a Key Employee, but shall
not create a right to remain a Key Employee.
(i) "Participant" means a Key Employee who has been
granted an Award under the Plan.
(j) "Stock Unit" means a derivative interest in Common
Stock of the Company which may be converted on the
date of grant into cash, or which may be credited
to a bookkeeping account and then paid out on a
one-for-one basis into Common Stock of the Company
upon the occurrence of certain Trigger Events (as
defined herein).
(k) "Subsidiary" shall mean any corporation of which
more than 50% (by number of votes) of the Voting
Stock at the time outstanding is owned, directly
or indirectly, by the Company.
(l) "Common Stock" or "Shares" means the common stock,
$.01 par value, of the Company.
(m) "Voting Stock" shall mean securities of any class
or classes of stock of a corporation, the holders
of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the
corporate directors.
2.2. Gender and Number. Except where otherwise
indicated by the context, any masculine term used herein
also shall include the feminine, the plural shall include
the singular, and the singular shall include the plural.
2.3. Severability. In the event any provision of the
Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
ARTICLE 3. ADMINISTRATION
3.1. Authority of the Board of Directors. The Plan
shall be administered by the Board of Directors of the
Company or, if designated by the Board, by any committee
comprised solely of two or more non-employee directors (as
defined in Rule 16b-3 under the Securities Exchange Act of
1934) (the "Board"). Subject to the provisions of the Plan,
the Board shall have full power to construe and interpret
the Plan; to establish, amend or waive rules and regulations
for its administration; to grant Awards on such terms and
conditions as the Board deems appropriate, including any
vesting provisions and the determination of the cash value
of each Stock Unit as of the date of the grant; to
accelerate the vesting of any Award; and to amend the terms
and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Board
as provided in the Plan. Also notwithstanding the foregoing,
no action of the Board (other than pursuant to Section 4.3
hereof or Section 6.5 hereof) may, without the consent of
the person or persons entitled to receive payment of any
other outstanding Award, adversely affect the rights of such
person or persons.
3.2. Selection of Participants. The Board shall have
the authority to grant Awards under the Plan, from time to
time, to such Key Employees as may be selected by it.
3.3. Decisions Binding. All determinations and
decisions made by the Board pursuant to the provisions of
the Plan and all related orders or resolutions of the Board
shall be final, conclusive and binding on all persons,
including the Company and its Subsidiaries, its
stockholders, employees, and Participants and their estates
and beneficiaries, and such determinations and decisions
shall not be reviewable.
3.4. Delegation of Certain Responsibilities. The Board
may, in its sole discretion, delegate to an officer or
officers of the Company the administration of the Plan under
this Article 3; provided, however, that the Board may not
delegate its authority to correct errors, omissions or
inconsistencies in the Plan. All authority delegated by the
Board under this Section 3.4 shall be exercised in
accordance with the provisions of the Plan and any
guidelines for the exercise of such authority that may from
time to time be established by the Board.
3.5. Rule 16b-3 Requirements. Notwithstanding any
other provision of the Plan, the Board may impose such
conditions on any Award (including, without limitation, the
right of the Board or the Board to limit the time of
exercise to specified periods) as may be required to satisfy
the requirements of Rule 16b-3 (or any successor rule),
under the Securities and Exchange Act of 1934 ("Rule
16b-3").
ARTICLE 4. COMMON STOCK SUBJECT TO THE PLAN
4.1. Issuance of Shares. Common Stock delivered under
the Plan may consist, in whole or in part, of authorized
and unissued Shares or treasury Shares. The award of Stock
Units shall not be deemed to constitute an issuance of
Common Stock under the Plan unless payment is made in Common
Stock, in which case only the number of Shares to be issued
in payment of such Stock Unit Award shall constitute an
issuance of Common Stock under the Plan. In the event that
a Participant's elections with respect to the Stock Unit
Awards, in the aggregate, would result in the issuance of
such number of shares of the Company Common Stock so as to
require the approval of the Plan by the Company's
shareholders pursuant to the rules and regulations of the
Nasdaq National Market or any stock exchange on which the
Company's Common Stock is traded, the Company shall submit
the Plan for approval by shareholders at its next annual
meeting of shareholders. Pending such approval, the Company
may not issue shares in excess of the number triggering the
need for shareholder approval and the Company may pay cash
in lieu of issuing such shares in an amount equal to Fair
Market Value.
4.2. Lapsed Awards. If any Award granted under this
Plan terminates, expires, or lapses for any reason, any
Common Stock subject to such Award again shall be available
for the grant of an Award under the Plan.
4.3. Adjustments in Authorized Shares. In the event of
any merger, reorganization, consolidation, recapitalization,
separation, liquidation, Common Stock dividend, split-up,
share combination, or other change in the corporate
structure of the Company affecting the Common Stock, such
adjustment shall be made in the number and class of shares
which may be delivered under the Plan, and in the number and
class of and/or price of shares subject to outstanding
Common Stock Units granted under the Plan, as may be
determined to be appropriate and equitable by the Board, in
its sole discretion, to prevent dilution or enlargement of
rights; and provided that the number of shares subject to
any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Persons eligible to participate in this Plan include
all employees of the Company and its Subsidiaries who, in
the opinion of the Board, are Key Employees. "Key
Employees" may include employees who are members of the
Board, but may not include directors who are not employees.
Subject to the provisions of the Plan, the Board may from
time to time select those Key Employees to whom Awards shall
be granted and determine the nature and amount of each
Award. No employee shall have any right to be granted an
Award under this Plan even if previously granted an Award.
ARTICLE 6. STOCK UNITS
6.1. Grant of Stock Units. Subject to the terms and
provisions of the Plan, Stock Units may be granted to
Participants at any time and from time to time on such terms
as shall be determined by the Board. The Board shall have
complete discretion in determining the number of Stock Units
granted to each Participant.
6.2. Election Regarding Payment of Stock Units. Each
Participant must elect, by completing and signing an
Election Form in substantially the form attached hereto as
Exhibit A, to either (i) convert all or part of his or her
Stock Unit Award into cash, equivalent to the cash value of
the Stock Units established by the Board on the date of
grant, receive a cash award for the corresponding number of
Stock Units converted to cash, and receive the remaining
Stock Units in shares of Common Stock payable upon the
occurrence of certain trigger events set forth on the
Participant's election form in his or her complete
discretion ("Trigger Events"); or (ii) receive his or her
entire Stock Unit Award in shares of Common Stock, payable
upon the occurrence of certain Trigger Events. The terms
and conditions of the Trigger Events may vary by Stock Unit
Award, by Participant, or both. The Election Form shall be
filed with the Secretary of the Company prior to the date on
which any Stock Unit Award is made. Such election will be
irrevocable as to any Stock Unit Award made after delivery
of the election form to the Company, and it shall continue
in effect until revoked, increased or decreased
prospectively by Participant prior to the grant of any
future Stock Unit Award for which the change is effective.
6.3 Accounting for Stock Units. Any portion of a
participant's Stock Unit Award which is not converted to
cash as set forth in Section 6.2(i) above shall be credited
by the Company to a bookkeeping account to reflect the
Company's liability to that Participant (the "Stock Unit
Account"). Each Stock Unit is credited as a Common Stock
equivalent on the date so credited. Additional stock
equivalents may be added to the Stock Unit Account equal to
the amount of Common Stock that could be purchased with
dividends equal to that paid on one share of Common Stock,
multiplied by the number of stock equivalents then existing
in the Stock Unit Account, based on the Fair Market Value of
the Common Stock on the date a dividend is paid on the
Common Stock. If a stock dividend or stock split occurs, a
Participant's Stock Unit Account shall be credited with a
number of Common Stock equivalents equal to the number of
shares which were distributed with respect to each share of
issued and outstanding Common Stock, multiplied by the
number of stock equivalents recorded to the Participant's
Stock Unit Account on the record date for such distribution.
Because the Trigger Events for each Stock Unit Award may
differ, the Company shall establish a separate Stock Unit
Account for each separate Stock Unit Award.
6.4. Distribution of Stock Unit Accounts. Upon the
occurrence of particular Trigger Events, the holder of a
Stock Unit Award shall be entitled to receive a number of
shares of Common Stock which corresponds to the number of
Stock Units granted as part of the initial Stock Unit Award.
6.5. Termination of Employment. In the case of death,
disability, retirement or termination of employment (each of
disability and retirement as defined under the established
rules of the Company or any of its Subsidiaries, as the case
may be), the holder of a Stock Unit shall receive in Common
Stock the number of fully vested Stock Units held by the
Participant as if the Trigger Events had occurred.
ARTICLE 7. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named
contingently or successively and who may include a trustee
under a will or living trust) to whom any benefit under the
Plan is to be paid in case of his death before he receives
any or all of such benefit. Each designation will revoke
all prior designations by the same Participant, shall be in
a form prescribed by the Board, and will be effective only
when filed by the Participant in writing with the Board
during his lifetime. In the absence of any such designation
or if all designated beneficiaries predecease the
Participant, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's estate.
ARTICLE 8. MISCELLANEOUS
8.1. Rights of Employees. Nothing in the Plan shall
interfere with or limit in any way the right of the Company
or any of its Subsidiaries to terminate any Participant's
employment at any time, nor confer upon any Participant any
right to continue in the employ of the Company or any of its
Subsidiaries. No employee shall have a right to be selected
as a Participant, or, having been so selected, to be
selected again as a Participant. Neither the establishment
of the Plan nor any amendment thereof shall be construed as
giving any Participant, beneficiary, or any other person any
legal or equitable right, unless such right shall be
specifically provided for in the Plan or conferred by
specific action of the Board in accordance with the terms
and provisions of the Plan. Except as expressly provided in
this Plan, neither the Company nor any of its Subsidiaries
shall be required or be liable to make any payment under the
Plan. Neither the Participant nor any other person shall
acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company or any of its
Subsidiaries whatsoever including, without limiting the
generality of the foregoing, any specific funds, assets, or
other property which the Company or any of its Subsidiaries,
in its sole discretion, may set aside in anticipation of a
liability hereunder. Any benefits which become payable
hereunder shall be paid from the general assets of the
Company or the applicable subsidiary. The Participant shall
have only a contractual right to the amounts, if any,
payable hereunder unsecured by any asset of the Company or
any of its Subsidiaries, and the status of a Participant
with respect to any liabilities of the Company hereunder
shall be solely those of an unsecured creditor of the
Company. Nothing contained in the Plan constitutes a
guarantee by the Company or any of its Subsidiaries that the
assets of the Company or the applicable subsidiary shall be
sufficient to pay any benefit to any person.
8.2. Change in Control. Notwithstanding any other
provisions of the Plan, in the event of a Change in Control,
all Stock Unit Awards granted and outstanding under this
Plan shall vest in full and be immediately paid out in
Common Stock.
8.3. Amendment, Modification and Termination. At
any time and from time to time, the Board may terminate,
amend, or modify the Plan. No termination, amendment or
modification of the Plan other than pursuant to Section 4.3
hereof shall in any manner adversely affect any Award
theretofore granted under the Plan, without the written
consent of the Participant.
8.4. Tax Withholding. The Company and any of its
Subsidiaries shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company
or any of its Subsidiaries, an amount sufficient to satisfy
Federal, state and local taxes (including the Participant's
FICA obligation) required by law to be withheld with respect
to any grant, exercise, or payment made under or as a result
of this Plan.
8.5. Securities Laws and Shareholder Rights. Common
Stock shall not be distributed to Participants upon
distribution from their Stock Unit Accounts unless the
issuance complies with all relevant provisions of law,
including without limitation, (i) securities laws of any
appropriate state, and (ii) the Securities Act of 1933 and
the Securities Exchange Act of 1934 and rules and
regulations promulgated thereunder by the Securities and
Exchange Commission. Participants shall not be deemed for
any purpose to be or have rights as shareholders of the
Company with respect to any stock equivalents credited to a
Participant's Stock Unit Account, until and unless a
certificate for Common Stock is issued upon distribution
hereunder.
8.6. Successors. All obligations of the Company under
the Plan, with respect to Awards granted hereunder, shall be
binding on any successor to the Company, whether the
existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of
the Company.
8.7. Requirements of Law. The granting of Awards and
the issuance of Shares of Common Stock under this Plan shall
be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or
national securities exchanges as may be required.
8.8. Governing Law. The Plan, and all agreements
hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
EXHIBIT A
EXECUTIVE STOCK UNIT PLAN
ELECTION FORM
Pursuant to Section 6.2 of the Plan, I hereby elect for the period
commencing on the date hereof, and ending on the third business day after
delivery to the Company of any written notice that I change or revoke my
election, that the following percentage of any Stock Unit Award that may be
granted to me be converted immediately to cash, with the remainder of any
such Stock Unit Award to be deferred and credited into a Stock Unit Account,
all in accordance with Section 6.2 of the Plan:
_________% (0-100) of any Stock Unit Award to be converted immediately
to cash
I understand the amounts deferred under the Plan are not actually
invested in the Common Stock of the Company, and such Stock Unit is merely an
index for the calculation of a bookkeeping account related to my deferrals,
and no representation has been made to me to the contrary. The Participant
shall have only a contractual right to the amounts, if any, payable hereunder
unsecured by any asset of the Company or any of its Subsidiaries, and the
status of a Participant with respect to any liabilities of the Company
hereunder shall be solely those of an unsecured creditor of the Company.
I hereby elect to have the remainder of my Stock Unit Award payable in
the form of Common Stock upon the occurrence of the following Trigger Events:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
___________
I acknowledge and agree that this election is irrevocable and may not be
changed with respect to any Stock Unit Award(s) granted to me prior to the
effective date of my change in election. I also acknowledge and understand
that the distribution of any future Stock Unit Award granted to me under the
Plan may be changed by me prior to the date of any such Award.
EXECUTIVE:
____________________________________
(Signature)
____________________________________
(Date)
Exhibit 10.6
In July 1996, the Registrant's Board of Directors granted to each of the
Registrant's five non-employee directors (Mrs. Rosenberg and Messrs.
Dammeyer, Alexander, Handy and Lasry) units to acquire 3,740 shares of the
Registrant's common stock (for an aggregate of 18,700 shares). Such units
were issued to the non-employee directors in lieu of cash director fees and a
special bonus. Each unit entitles a director to receive a share of the
Registrant's common stock upon the earlier of the director no longer serving
as a director, or except for units issued to Mr. Dammeyer, when the value of
a share of the Registrant's common stock equals or exceeds $53.50 for five
consecutive trading days.
These stock units were not issued pursuant to any written contract or
compensatory plan. Accordingly, this description of the units is being filed
in accordance with Item 601(10)(iii)(A) of Regulation S-K promulgated under
the Securities Act of 1933, as amended.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income (Loss) Per Common Share
for the Years ended December 31, 1996, 1995 and 1994
(In thousands, except per share amounts)
1996 1995 1994
Income for primary and fully
diluted computation:
Income $ 5,105 $ 10,965 $ 7,852
Primary (1):
Weighted average common shares
and dilutive common stock
equivalents:
Common stock outstanding 25,433 18,908 19,573
Stock purchase warrants - 911 797
Stock options 1,097 794 739
Contingently issuable
common shares 300 300 300
26,830 20,913 21,409
Primary income per common share:
Before extraordinary item $ 0.30 $ 0.52 $ 0.37
Extraordinary item (0.11) - -
$ 0.19 $ 0.52 $ 0.37
NOTE:
1. Fully diluted earnings per share is not presented since it approximates
primary income per share.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 21
The following is a list of the subsidiaries of the Company as of December 31,
1996. All of these subsidiaries are included in the Consolidated Financial
Statements which are a part of this report.
Percentage
State of of Equity
Name of Company Relationship Incorporation Ownership
Jacor Broadcasting
Corporation Subsidiary Ohio 100%
Broadcast Finance, Inc. Subsidiary Ohio 100%
Jacor Broadcasting
of Florida, Inc. Subsidiary Florida 100%
Jacor Broadcasting
of Atlanta, Inc. Subsidiary Georgia 100%
Jacor Broadcasting
of Colorado, Inc. Subsidiary Colorado 100%
Jacor Broadcasting
of Lexington, Inc. Subsidiary Kentucky 100%
Jacor Broadcasting
of Knoxville,Inc. Subsidiary Delaware 100%
Jacor Broadcasting
of Tampa Bay, Inc. Subsidiary Florida 100%
Jacor Cable, Inc. Subsidiary Kentucky 100%
Georgia Network
Equipment, Inc. Subsidiary Georgia 100%
Jacor Broadcasting
of San Diego, Inc. Subsidiary Delaware 100%
Jacor Broadcasting
of St. Louis, Inc. Subsidiary Missouri 100%
Jacor Broadcasting
of Sarasota, Inc. Subsidiary Florida 100%
Jacor Broadcasting
of Idaho, Inc. Subsidiary Delaware 100%
Inmobiliaria Radial,
S.A. de C.V. Subsidiary Mexico 100%
Jacor Broadcasting
of Iowa, Inc. Subsidiary Delaware 100%
Noble Broadcast Group,
Inc. Subsidiary Delaware 100%
Noble Broadcast of
Colorado, Inc. Subsidiary California 100%
Noble Broadcast of
San Diego, Inc. Subsidiary California 100%
Noble Broadcast of
St. Louis, Inc. Subsidiary Delaware 100%
Noble Broadcast of
Toledo, Inc. Subsidiary California 100%
Nova Marketing Group
Inc. Subsidiary California 70% (1)
Noble Broadcast
Licenses, Inc. Subsidiary California 100%
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 21, Continued
Percentage
State of of Equity
Name of Company Relationship Incorporation Ownership
Noble Broadcast
Holdings, Inc. Subsidiary Delaware 100%
Sports Radio
Broadcasting, Inc. Subsidiary California 100%
Nobro, S.C. Subsidiary Mexico 100%
Sports Radio, Inc. Subsidiary California 100%
Noble Broadcast
Center, Inc. Subsidiary California 100%
Citicasters Co. Subsidiary Ohio 100%
GACC-N26LB. Inc. Subsidiary Delaware 100%
GACC-340, Inc. Subsidiary Delaware 100%
Cine Guarantors, Inc. Subsidiary California 100%
Great American
Television
Productions, Inc. Subsidiary California 100%
Cine Guarantors II, Inc. Subsidiary California 100%
Great American
Merchandising
Group, Inc. Subsidiary New York 100%
Taft-TCI Satellite
Services, Inc. Subsidiary Colorado 100%
Cine Films, Inc. Subsidiary California 100%
The Sy Fischer Company
Agency, Inc. Subsidiary California 100%
Location Productions,
Inc. Subsidiary California 100%
Location Productions
II, Inc. Subsidiary California 100%
Cine Mobile Systems
Int'l, N.V. Subsidiary Antille 100%
Cine Movil S.A. de C.V. Subsidiary Mexico 100%
Cine Guarantors II, LTD. Subsidiary Canada 100%
Jacor National Corp. Subsidiary Delaware 100%
Marathon Communications,
Inc. Subsidiary New York 100%
WIBX, Inc. Subsidiary New York 100%
(1) Nova Marketing Group, Inc. became a 100% owned subsidiary in
February 1997.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Jacor Communications, Inc. on Forms S-8 (File No. 33-65126, File No. 33-
10329, and File No. 33-56385) and on Forms S-3 (File No. 33-53612 and File
No. 333-06639) of our report dated February 27, 1997, on our audits of the
consolidated financial statements of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1996 and 1995 and for the years ended
December 31, 1996, 1995 and 1994, which reports are included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
March 27, 1997
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<PERIOD-END> DEC-31-1996
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