<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1996
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CLEAR CHANNEL COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
TEXAS 74-1787539
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
L. LOWRY MAYS
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
STEPHEN C. MOUNT NORMAN R. MILLER
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. WOLIN, FULLER, RIDLEY & MILLER LLP
1500 NATIONSBANK PLAZA 3100 BANK ONE CENTER
300 CONVENT STREET 1717 MAIN STREET
SAN ANTONIO, TEXAS 78205 DALLAS, TEXAS 75201
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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- --------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock................ 2,750,000 Shares $74.31 $204,352,500 $70,466
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 250,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Common Stock, as reported by the New York Stock Exchange on May 17, 1996.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCOR-
DANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION
MAY 24, 1996
2,500,000 SHARES
CLEAR CHANNEL COMMUNICATIONS, INC.
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by Clear
Channel Communications, Inc. (the "Company"). The Common Stock of the Company is
traded on the New York Stock Exchange under the symbol "CCU". On May 23, 1996,
the last reported sale price of the Common Stock was $78.00 per share. See
"Price Range of Common Stock."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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- -------------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
- -------------------------------------------------------------------------------------------------
Total(3)....................... $ $ $
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) See "Underwriting" for information relating to the indemnification of the
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 250,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the Common Stock will be made at the offices of Alex.
Brown & Sons, Incorporated, Baltimore, Maryland, on or about , 1996.
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE> 3
[ARTWORK]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing in the
documents incorporated by reference into this Prospectus. All information set
forth herein has been adjusted to reflect five-for-four stock splits in February
1992, February 1993, and February 1994, and a two-for-one stock split in
November 1995. Unless otherwise indicated, the information in this Prospectus
assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
THE COMPANY
Clear Channel Communications, Inc. (the "Company"), which began operations
in 1972, is a diversified broadcasting company that currently owns or operates
70 radio stations and 16 television stations in 27 domestic markets. In
addition, the Company owns a 50% equity interest in the Australian Radio Network
Pty. Ltd. ("ARN"), which operates eight radio stations in Australia, and a 21.4%
equity interest in Heftel Broadcasting Corporation (NASDAQ:HBCCA) ("Heftel"), a
leading domestic Spanish-language broadcaster. The Company currently has
acquisitions pending for 35 radio stations, including nine stations which the
Company currently operates under Local Marketing Agreements ("LMA") or Joint
Sales Agreements ("JSA"), and one television station in 15 domestic markets.
After completing the pending acquisitions and the divestiture of one station,
the Company will own or operate 33 AM and 62 FM radio stations and 17 television
stations in 32 domestic markets.
The 27 AM and 43 FM radio stations currently owned or operated by the
Company are principally located in the South, Southwest, Northeast and Midwest.
These radio stations employ a wide variety of programming formats, such as
News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The 16
television stations currently owned or operated by the Company are located in
the South, Southwest, New York, Pennsylvania and Minnesota. Six of these
television stations are affiliated with the FOX television network; seven are
affiliated with the UPN television network; one is affiliated with the ABC
television network; one is affiliated with the NBC television network; and one
is affiliated with the CBS television network. Additionally, the Company
operates five radio networks serving Oklahoma, Texas, Iowa, Kentucky, Virginia
and New Mexico. In 1995, the Company derived approximately 58% of its net
broadcasting revenue from radio operations and approximately 42% from television
operations.
The diversity of the Company's radio and television stations and markets,
combined with the Company's successful acquisition and operating strategies,
have enabled the Company to achieve consistent growth in revenue and cash flow.
Since 1991, the Company has achieved compounded annual growth rates of
approximately 39% in net broadcasting revenue, approximately 55% in broadcast
cash flow (defined as station operating income before depreciation, amortization
and corporate expenses) and approximately 66% in after-tax cash flow (defined as
net income plus depreciation, amortization of intangibles (including
non-consolidated affiliates) and deferred taxes).
On February 8, 1996, the Telecommunications Act of 1996 (the "1996 Act")
was signed into law. The 1996 Act represents the most sweeping overhaul of the
country's telecommunications laws since the Communications Act of 1934. The 1996
Act relaxes the broadcast ownership rules and simplifies the process for renewal
of broadcast station licenses. Accordingly, the Company has acted to capitalize
on the opportunities provided by the 1996 Act. Since the 1996 Act became
effective, the Company has closed or entered into agreements to acquire
approximately $580,970,000 of broadcast properties.
The Company's strategy is to identify and acquire under-performing stations
on favorable terms and to utilize management's extensive operating experience to
improve the performance of such stations as well as its existing stations
through effective programming, reduction of costs and
3
<PAGE> 5
aggressive promotion, marketing and sales. In addition, the Company employs a
marketing strategy that emphasizes direct sales to local customers rather than
through advertising agencies and other intermediaries. The Company believes that
this focus has enabled its stations to achieve market revenue shares exceeding
their audience shares.
The Company's radio strategy is to continue to capitalize on the 1996 Act
by attempting to assemble and operate a cluster of radio stations in each of its
principal markets. The Company believes that by controlling a larger share of
the total advertising inventory in a particular market, it can offer advertisers
attractive packages of advertising options while maintaining rate integrity. The
Company also believes that its cluster approach will allow it to operate its
stations with more highly skilled local management teams and eliminate
duplicative operating and overhead expenses. The Company's television strategy
is to own and operate one station in each of its markets and to operate an
additional station under a LMA in each such market. In six of its television
markets, the Company operates an additional television station under an LMA. The
1996 Act should allow the continuation or renewal of these television LMAs. See
"Business -- Federal Regulation of Television and Radio Broadcasting."
RECENT DEVELOPMENTS
Since the enactment of the 1996 Act, the Company has completed the
acquisition of 21 radio stations for $184,550,000, for properties in three
existing markets and six new markets. In addition, the Company has entered into
definitive agreements to acquire 35 radio stations and one television station in
ten existing and five new markets for approximately $396,420,000. There can be
no assurances that such pending acquisitions will be consummated, because such
acquisitions are generally subject to FCC and other regulatory approvals, and
other conditions.
COMPLETED ACQUISITIONS
- In May 1996, the Company acquired all of the common stock of US Radio,
Inc. ("US Radio"), for approximately $142,500,000. US Radio owns or
operates 13 FM and five AM stations in eight domestic markets.
- In February 1996, the Company acquired substantially all of the operating
assets of WOOD-AM/FM and WBCT-FM in Grand Rapids, Michigan; the remaining
assets, including the FCC license, were acquired in May 1996 from WOOD
Radio Limited Partnership. The total amount of the acquisition was
approximately $42,050,000.
PENDING ACQUISITIONS
- In May 1996, the Company entered into a definitive agreement to purchase
15 FM and four AM radio stations in eight U.S. markets from a group of
general partnerships referred to herein collectively as Radio Equity
Partners ("REP") for approximately $240,000,000. The Company's
acquisition of the various REP stations will enhance the Company's
broadcasting presence in New Orleans, Louisiana; Memphis, Tennessee;
Oklahoma City, Oklahoma and Providence, Rhode Island and it will
introduce the Company into new markets in Greensboro, North Carolina;
Springfield, Massachusetts; Columbia, South Carolina; and Ft.
Myers/Naples, Florida.
- In May 1996, US Radio entered into definitive agreements to acquire radio
stations KJMS-FM and KWAM-AM in Memphis, Tennessee, and WTCD-FM in
Raleigh, North Carolina, for approximately $20,000,000.
- In May 1996, the Company entered into a definitive agreement to acquire
radio stations WCUZ-AM/FM in Grand Rapids, Michigan, and KQLL-AM/FM and
KOAS-FM in Tulsa, Oklahoma, from Federated Media for approximately
$15,400,000.
4
<PAGE> 6
- In May 1996, the Company entered into a definitive agreement to acquire
radio stations WTFX-FM and WWKY-AM in Louisville, Kentucky, from SFX
Broadcasting for approximately $6,882,000.
- In May 1996, the Company entered into a definitive agreement to acquire
all of the intellectual property and intangible assets, excluding the FCC
license, of WHKW-FM and all of the assets of WHKW-AM (now WKJK-AM) in
Louisville, Kentucky for $2,000,000.
- In April 1996, the Company entered into a definitive agreement to acquire
WPRI-TV in Providence, Rhode Island, from CBS, Inc. for approximately
$68,000,000.
- In April 1996, the Company formed New Zealand Radio Network ("NZRN") as a
joint venture with two equal partners. NZRN acquired all of the stock of
Radio New Zealand Commercial from the Government of New Zealand. The
Company's one-third share of the total NZ$89,000,000 investment in NZRN
will be approximately $20,372,000 (based on an exchange rate of NZ
$0.6867/U.S.$1.00). NZRN owns 41 radio stations in 26 New Zealand markets
and is the leading radio broadcaster in New Zealand. However, the
transaction is subject to the New Zealand Government's successful
resolution of an appeal by the native inhabitants of New Zealand, the
Maori, challenging a lower court's ruling that the transaction is
permissible under New Zealand law.
- In April 1996, the Company entered into an agreement to acquire radio
stations KEYI-FM and KFON-AM in Austin, Texas, from Mercury Broadcasting
Co., Inc., for approximately $3,166,000.
- In April 1996, US Radio entered into an agreement to swap the assets of
WSVY-AM (now WGPL-AM) plus $2,600,000 for all the assets of WMYK-FM, both
of which serve Norfolk, Virginia.
- In March 1996, the Company entered into a definitive agreement to acquire
radio stations WTVR-AM/FM in Richmond, Virginia, from Park Broadcasting
of Virginia, Inc., for approximately $18,000,000.
THE OFFERING
<TABLE>
<S> <C>
Common Stock to be offered by the Company................... 2,500,000 shares
Common Stock to be outstanding after the Offering........... 37,114,826 shares(1)
Use of proceeds............................................. To repay indebtedness under the
Credit Facility
New York Stock Exchange symbol.............................. CCU
</TABLE>
- ---------------
(1) Excludes 582,159 shares of Common Stock currently issuable upon exercise of
options to purchase shares of the Company's Common Stock at prices ranging
from $3.87 to $46.25 per share.
5
<PAGE> 7
SUMMARY FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------- ---------------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(2) 1995 1996 1996(2)
------- -------- -------- -------- -------- --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1):
Net broadcasting revenue..... $64,384 $ 82,205 $118,183 $173,109 $243,813 $271,305 $ 51,858 $62,209 $69,128
Station operating expenses... 44,981 53,532 75,990 100,437 131,258 146,814 33,182 38,230 42,797
Depreciation and
amortization............... 7,641 12,253 17,447 24,668 33,770 44,881 8,399 8,755 10,965
------- -------- -------- -------- -------- -------- -------- -------- -------
Station operating income... 11,762 16,420 24,746 48,004 78,785 79,610 10,277 15,224 15,366
Corporate expenses........... 2,403 2,890 3,464 5,100 7,414 7,414 1,531 1,674 1,674
------- -------- -------- -------- -------- -------- -------- -------- -------
Operating income........... 9,359 13,530 21,282 42,904 71,371 72,196 8,746 13,550 13,692
Interest expense............. (5,371) (4,739) (5,390) (7,669) (20,751) (30,442) (4,448) (5,424) (7,597)
Other income (expense)....... (1,483) (1,217) (196) 1,161 (803) (752) 259 205 205
Equity in net income of, and
other income from,
nonconsolidated
affiliates................. -- -- -- -- 2,927 2,927 -- 875 875
------- -------- -------- -------- -------- -------- -------- -------- -------
Income before income taxes... 2,505 7,574 15,696 36,396 52,744 43,929 4,557 9,206 7,175
Income taxes............... 1,379 3,281 6,573 14,387 20,730 18,786 1,878 2,968 2,524
------- -------- -------- -------- -------- -------- -------- -------- -------
Net income................. $ 1,126 $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 25,143 $ 2,679 $ 6,238 $ 4,651
======= ======== ======== ======== ======== ======== ======== ======== =======
Net income per common
share.................... $ .04 $ .14 $ .29 $ .63 $ .91 $ .72 $ .08 $ .18 $ .13
======= ======== ======== ======== ======== ======== ======== ======== =======
Weighted average common
shares and common share
equivalents
outstanding.............. 25,976 29,660 31,101 34,663 35,100 35,100 35,039 35,205 35,205
======= ======== ======== ======== ======== ======== ======== ======== =======
After-tax cash flow(3)..... $ 9,300 $ 17,147 $ 26,638 $ 46,866 $ 71,140 $ 75,382 $ 11,079 $16,079 $16,702
======= ======== ======== ======== ======== ======== ======== ======== =======
After-tax cash flow per
share(4)................. $ .36 $ .58 $ .86 $ 1.35 $ 2.03 $ 2.15 $ .32 $ .46 $ .47
======= ======== ======== ======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, -----------------------
--------------------------------------------------- AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED(5)
------- -------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.... $ 3,765 $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 12,006 $ 12,245
Total assets................. 92,450 146,993 227,577 411,594 563,011 594,979 739,901
Long-term debt, net of
current maturities......... 48,110 97,000 87,815 238,204 334,164 366,569 321,881
Shareholders' equity......... 24,787 31,055 98,343 130,533 163,713 170,272 357,460
</TABLE>
- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in certain of the periods presented. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" included herein and incorporated by
reference herein.
(2) Gives effect to the acquisition of US Radio as if such acquisition had been
consummated on January 1, 1995 and 1996 for the periods ended December 31,
1995 and March 31, 1996, respectively. The pro forma information is based on
a preliminary purchase price allocation.
(3) Defined as net income plus depreciation, amortization of intangibles
(including non-consolidated affiliates) and deferred taxes. After-tax cash
flow is presented here not as a measure of operating results and does not
purport to represent cash provided by operating activities. After-tax cash
flow should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles.
(4) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(5) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $187,188,000 and the acquisition of US
Radio as if such acquisition had been consummated on March 31, 1996. The
effect of the acquisition of US Radio is based on a preliminary purchase
price allocation.
6
<PAGE> 8
RISK FACTORS
Prospective purchasers of the Common Stock should consider carefully the
factors set forth below, as well as the other information contained in this
Prospectus.
SIGNIFICANT SHAREHOLDERS
Upon completion of this offering (the "Offering"), the two principal
shareholders of the Company, L. Lowry Mays, Chairman of the Board, President and
Chief Executive Officer of the Company, and B. J. McCombs, a Director of the
Company, collectively will own beneficially approximately 35.79% of the
outstanding shares of Common Stock (or approximately 35.55% if the Underwriters'
over-allotment option is exercised in full). As a result, Messrs. Mays and
McCombs will be able to exert significant influence over the outcome of
elections of the Company's directors and other matters requiring the vote or
consent of the shareholders of the Company. The Company, L. Lowry Mays and B.J.
McCombs are parties to a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of shares of Common Stock owned by Messrs. Mays and
McCombs. See "Description of Capital Stock -- Repurchase Agreement."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its President and Chief Executive Officer, L. Lowry Mays. The Company
has entered into an employment agreement expiring in 2001 with Mr. Mays and
other employment agreements expiring at various times with key programming and
station personnel. The Company does not maintain a key man life insurance policy
on Mr. Mays.
FINANCIAL LEVERAGE
After giving effect to the sale of the Common Stock offered hereby and the
application of the estimated net proceeds therefrom (assuming a public offering
price of $78.00 per share) and the acquisition of US Radio, the Company would
have had at March 31, 1996, borrowings under its credit facility of
approximately $312,812,000, shareholders' equity of $357,460,000 and
$265,688,000 in unused borrowing capacity under its existing revolving credit
facility (the "Credit Facility"), under which it may borrow up to $600,000,000
at floating rates (currently LIBOR plus 0.43%). Accordingly, the Company's
operations are affected by changes in interest rates. The Company has borrowed
and expects to continue borrowing to finance acquisitions of broadcasting and
other media-related properties and for other corporate purposes. In connection
with pending acquisitions, the Company may incur $396,420,000 of additional
indebtedness prior to the application of the proceeds of the Offering if all
such acquisitions are consummated. The Company will use the proceeds from the
Offering to pay down debt under its Credit Facility. After consummation of the
Offering and increasing the Credit Facility to $800,000,000, the Company will
have sufficient funds under the Credit Facility to consummate all of the pending
acquisitions contemplated herein. While the Company has not formally amended the
commitment under the Credit Facility, the Company has been advised by its
Administrative Lender, NationsBank of Texas, N.A., that the Administrative
Lender agrees with expanding the existing Credit Facility to $800,000,000 on
terms that will not be substantially less favorable than the terms of the
existing Credit Facility. However, there can be no assurance that the Company
will be successful in increasing the size of the existing Credit Facility.
Pending and future acquisitions of radio and television stations effected in
connection with the implementation of the Company's acquisition strategy are
expected to be financed from borrowings under the Credit Facility and cash flow
from operations. The Company currently is restricted under its Credit Facility
in its ability to pay dividends to shareholders. See "Dividend Policy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
7
<PAGE> 9
GOVERNMENT REGULATION
The domestic broadcasting industry is subject to extensive federal
regulation which, among other things, requires approval by the Federal
Communications Commission ("FCC") for the issuance, renewal, transfer and
assignment of broadcasting station operating licenses and limits the number of
broadcasting properties the Company may acquire. The 1996 Act, which became law
on February 8, 1996, creates significant new opportunities for broadcasting
companies but also creates uncertainties as to how the FCC and the courts will
enforce and interpret the 1996 Act.
The Company's business will continue to be dependent upon acquiring and
maintaining broadcasting licenses issued by the FCC, which are issued for a
maximum term of eight years. Although it is rare for the FCC to deny a renewal
application, there can be no assurance that future renewal applications will be
approved, or that renewals will not include conditions or qualifications that
could adversely affect the Company's operations. Moreover, governmental
regulations and policies may change over time and there can be no assurance that
such changes would not have a material adverse impact upon the Company's
business, financial condition and results of operations. See
"Business -- Federal Regulation of Television and Radio Broadcasting."
RISK OF ACQUISITION STRATEGY
The Company intends to pursue growth through the opportunistic acquisition
of broadcasting companies, radio station groups and individual radio and
television stations. The Company's acquisition strategy involves numerous risks,
including difficulties in the integration of operations and systems, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired stations. There can be no assurance
such acquisitions will benefit the Company.
The consummation of domestic broadcasting acquisitions requires FCC
approval with respect to the transfer of the broadcast license of the acquired
station. The consummation of acquisitions may also be subject to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Finally, the
consummation of certain acquisitions may also depend upon the Company's ability
to expand its Credit Facility. There can be no assurance that the FCC will
approve future transfers of broadcast licenses, that the Company will be able to
consummate such acquisitions or that the Company will be able to expand its
ability to borrow funds on acceptable terms to fund pending or future
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" and
"Business -- Federal Regulation of Television and Radio Broadcasting."
COMPETITION; BUSINESS RISKS
Broadcasting is a highly competitive business. The Company's radio and
television stations compete for audiences and advertising revenues with other
radio and television stations, as well as with other media, such as newspapers,
magazines, cable television, outdoor advertising and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the revenue of stations located in that market. Future operations are further
subject to many variables which could have an adverse effect upon the Company's
financial performance. These variables include economic conditions, both general
and relative to the broadcasting industry; shifts in population and other
demographics; the level of competition for advertising dollars with other radio
stations, television stations and other entertainment and communications media;
fluctuations in operating costs; technological changes and innovations; changes
in labor conditions; and changes in governmental regulations and policies and
actions of federal regulatory bodies, including the FCC. Although the Company
believes that each of its stations are able to compete effectively in their
respective markets, there can be no assurance that any such station will be able
to maintain or increase its current audience ratings and advertising revenues.
8
<PAGE> 10
CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of the Company as of March 31, 1996 as adjusted to give effect to
the acquisition of US Radio and the consummation of the Offering at an assumed
price of $78.00 per share.
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------------------
ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2)
-------- ------------ -----------------
(In thousands)
<S> <C> <C> <C>
Current portion of long-term debt.............. $ 3,405 $ 3,405 $ 3,405
Credit Facility(3)............................. 357,500 500,000 312,812
Other long-term debt........................... 9,069 9,069 9,069
Shareholders' equity:
Preferred Stock, $1.00 par value, 2,000,000
shares authorized, no shares issued and
outstanding............................... -- -- --
Common Stock, $.10 par value, 100,000,000
shares authorized, 34,605,451 shares
issued and outstanding, (37,105,451 shares
as adjusted).............................. 3,461 3,461 3,711
Additional paid-in capital................... 91,489 91,489 278,427
Retained earnings............................ 74,597 74,597 74,597
Other equity................................. 896 896 896
Cost of shares held in treasury.............. (171) (171) (171)
-------- -------- --------
Total shareholders' equity................ 170,272 170,272 357,460
-------- -------- --------
Total capitalization................. $540,246 $682,746 $ 682,746
======== ======== ========
</TABLE>
- ---------------
(1) Pro forma to give effect to the acquisition of US Radio, Inc. as if it had
been acquired March 31, 1996 for $142,500,000 from borrowings under the
Credit Facility.
(2) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $187,188,000.
(3) The Company may incur additional indebtedness of up to $396,420,000 in
connection with various pending acquisitions.
9
<PAGE> 11
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby, after deducting underwriting discounts and commissions and the
estimated expenses of the Offering, are estimated to be $187,188,000. All of
such net proceeds received by the Company will be used to repay borrowings
outstanding under the Credit Facility. As of May 15, 1996, a total of
approximately $498,000,000 in borrowings was outstanding under the Credit
Facility and the effective interest rate thereon was approximately 6.1%.
Borrowings under the Credit Facility have been used to finance the US Radio
acquisition and other acquisitions discussed in this Prospectus. Borrowings
under the Credit Facility, which must be paid in full by September 2003,
currently bear interest at a floating rate based on the LIBOR plus 0.43%. Upon
repayment of such borrowings, the amount repaid will become immediately
available to the Company for re-borrowing under the Credit Facility, subject to
the satisfaction of certain conditions. The Company expects that amounts
available for re-borrowing under the Credit Facility as a result of the
application of the net proceeds of the Offering, together with additional
amounts that become available for borrowing under the Credit Facility, will be
used to finance the REP acquisitions, the acquisition of WPRI-TV and other
pending acquisitions discussed in this Prospectus. Other future acquisitions of
radio and television stations effected in connection with the implementation of
the Company's acquisition strategy are expected to be financed from borrowings
under the Credit Facility and cash flow from operations.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCU." The following table sets forth, for the periods
indicated, the high and low closing sale prices per share (as adjusted for all
stock splits to date) as reported on the NYSE or, prior to November 1994, the
American Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
First Quarter...................................................... $20.19 $15.85
Second Quarter..................................................... 19.56 16.19
Third Quarter...................................................... 26.00 18.06
Fourth Quarter..................................................... 25.88 20.63
YEAR ENDED DECEMBER 31, 1995:
First Quarter...................................................... $30.25 $25.06
Second Quarter..................................................... 34.75 26.88
Third Quarter...................................................... 40.88 30.81
Fourth Quarter..................................................... 44.13 36.25
YEAR ENDED DECEMBER 31, 1996:
First Quarter...................................................... $58.25 $41.00
Second Quarter (through May 23, 1996).............................. 78.00 54.00
</TABLE>
On May 15, 1996, there were approximately 4,000 shareholders of record of
the Company's Common Stock.
DIVIDEND POLICY
The Company currently expects to retain its earnings for the development
and expansion of its business. Any future decision by the Board of Directors to
pay cash dividends will depend upon, among other factors, the Company's
earnings, financial position and capital requirements. The Company's Credit
Facility restricts the Company's ability to pay dividends, other than dividends
payable wholly in capital stock of the Company.
10
<PAGE> 12
SELECTED FINANCIAL INFORMATION
The selected financial information presented below for the five years ended
December 31, 1995 has been derived from the consolidated financial statements of
the Company, which have been audited by Ernst & Young LLP, independent auditors.
The selected financial information as of March 31, 1996 and for the three months
ended March 31, 1996 and 1995 has been derived from unaudited consolidated
financial statements of the Company. In the opinion of management of the
Company, the unaudited financial statements from which such information is
derived contain all adjustments (consisting only of normal recurring
adjustments) necessary for the fair presentation of the results of operations
for such periods. Results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The pro forma financial information is unaudited and presents results of
operations of the Company as if the acquisition of US Radio had been consummated
on January 1, 1995 and 1996 for the periods ended December 31, 1995 and March
31, 1996, respectively. The pro forma information is not necessarily indicative
of the results of operations of the Company had such acquisition occurred at the
beginning of such period or of the Company's results of operations for any
future periods. The following selected financial information should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company, which are incorporated by reference herein.
SELECTED FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------- ---------------------------------
STATEMENT OF OPERATIONS PRO FORMA PRO FORMA
DATA(1): 1991 1992 1993 1994 1995 1995(2) 1995 1996 1996(2)
------- -------- -------- -------- -------- --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net broadcasting revenue..... $64,384 $ 82,205 $118,183 $173,109 $243,813 $271,305 $ 51,858 $62,209 $69,128
Station operating expenses... 44,981 53,532 75,990 100,437 131,258 146,814 33,182 38,230 42,797
Depreciation and
amortization............... 7,641 12,253 17,447 24,668 33,770 44,881 8,399 8,755 10,965
------- -------- -------- -------- -------- -------- -------- ------- -------
Station operating income... 11,762 16,420 24,746 48,004 78,785 79,610 10,277 15,224 15,366
Corporate expenses........... 2,403 2,890 3,464 5,100 7,414 7,414 1,531 1,674 1,674
------- -------- -------- -------- -------- -------- -------- ------- -------
Operating income........... 9,359 13,530 21,282 42,904 71,371 72,196 8,746 13,550 13,692
Interest expense............. (5,371) (4,739) (5,390) (7,669) (20,751) (30,442) (4,448) (5,424) (7,597)
Other income (expense)....... (1,483) (1,217) (196) 1,161 (803) (752) 259 205 205
Equity in net income of, and
other income from,
nonconsolidated
affiliates................. -- -- -- -- 2,927 2,927 -- 875 875
------- -------- -------- -------- -------- -------- -------- ------- -------
Income before income taxes... 2,505 7,574 15,696 36,396 52,744 43,929 4,557 9,206 7,175
Income taxes............... 1,379 3,281 6,573 14,387 20,730 18,786 1,878 2,968 2,524
------- -------- -------- -------- -------- -------- -------- ------- -------
Net income................... $ 1,126 $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 25,143 $ 2,679 $ 6,238 $ 4,651
======= ======== ======== ======== ======== ======== ======== ======= =======
Net income per common
share...................... $ .04 $ .14 $ .29 $ .63 $ .91 $ .72 $ .08 $ .18 $ .13
======= ======== ======== ======== ======== ======== ======== ======= =======
Weighted average common
shares and common share
equivalents outstanding.... 25,976 29,660 31,101 34,663 35,100 35,100 35,039 35,205 35,205
======= ======== ======== ======== ======== ======== ======== ======= =======
After-tax cash flow(3)....... $ 9,300 $ 17,147 $ 26,638 $ 46,866 $ 71,140 $ 75,382 $ 11,079 $16,079 $16,702
======= ======== ======== ======== ======== ======== ======== ======= =======
After-tax cash flow per
share...................... $ .36 $ .58 $ .86 $ 1.35 $ 2.03 $ 2.15 $ .32 $ .46 $ .47
======= ======== ======== ======== ======== ======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, -----------------------
--------------------------------------------------- AS
BALANCE SHEET DATA: 1991 1992 1993 1994 1995 ACTUAL ADJUSTED(5)
------- -------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents.... $ 3,765 $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 12,006 $ 12,245
Current assets............... 20,521 24,844 38,191 53,945 70,485 68,671 75,701
Property, plant and
equipment -- net........... 27,169 48,017 67,750 85,318 99,885 102,987 113,970
Total assets................. 92,450 146,993 227,577 411,594 563,011 594,979 739,901
Current liabilities.......... 9,960 10,073 26,125 27,679 36,005 31,048 33,470
Long-term debt, net of
current maturities......... 48,110 97,000 87,815 238,204 334,164 366,569 321,881
Shareholders' equity......... 24,787 31,055 98,343 130,533 163,713 170,272 357,460
</TABLE>
11
<PAGE> 13
- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in certain of the periods presented. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations" included herein and as incorporated by reference
herein.
(2) Gives effect to the acquisition of US Radio as if such acquisition had been
consummated on January 1, 1995 and 1996 for the periods ended December 31,
1995 and March 31, 1996, respectively. The pro forma information is based on
a preliminary purchase price allocation.
(3) Defined as net income plus depreciation, amortization of intangibles
(including non-consolidated affiliates) and deferred taxes. After-tax cash
flow is presented here not as a measure of operating results and does not
purport to represent cash provided by operating activities. After-tax cash
flow should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles.
(4) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(5) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $187,188,000 and the acquisition of US
Radio as if such acquisition had been consummated on March 31, 1996. The
effect of the acquisition of US Radio is based on a preliminary purchase
price allocation.
12
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 TO THREE MONTHS ENDED MARCH
31, 1995
Net broadcasting revenue for the three months ended March 31, 1996
increased 20% to $62,209,000 from $51,858,000 for the same quarter of 1995.
Station operating expenses increased 15% to $38,230,000 from $33,182,000.
Depreciation and amortization increased 4% from $8,399,000 to $8,755,000 in the
first quarter of 1996. Station operating income increased $4,947,000 or 48% to
$15,224,000, compared to $10,277,000 for the first quarter of 1995. Interest
expense increased 22% from $4,448,000 to $5,424,000 in the first quarter of
1996. Net income increased 133% from $2,679,000, or $.08 per share to
$6,238,000, or $.18 per share.
The majority of the growth in net broadcasting revenue and station
operating income was due to the improved operating results of the Company's
radio stations in Houston and television stations in Memphis and Little Rock,
the acquisitions of the broadcasting assets of WOOD-AM/FM and WBCT-FM in Grand
Rapids, Michigan on February 14, 1996, the purchase of the broadcasting assets,
except the FCC license, of WLYH-TV in Lancaster/Lebanon, Pennsylvania, the
purchase of the broadcasting assets and the license of the Harrisburg,
Pennsylvania CBS-affiliate, WHP-TV, on October 31, 1995 and the purchase of the
broadcasting assets, except the FCC license, of WNFT-TV in Jacksonville,
Florida. The majority of the increase in depreciation and amortization was due
to the above-mentioned acquisitions. Interest expense increased primarily due to
an increase in the average amount of debt outstanding -- which resulted from the
above-mentioned acquisitions, the purchase in May 1995 of a 50% interest in ARN
and the purchase in May 1995 of a 21.4% interest in Heftel.
The investments in ARN and Heftel are accounted for under the equity
method; together they contributed $875,000 to net earnings in the first quarter
of 1996. The majority of the increase in net income also was primarily due to
the factors stated above, but was partially offset by an increase of $143,000 in
corporate-related expenses.
LIQUIDITY AND CAPITAL RESOURCES
The major sources of capital for the Company have historically been cash
flow from operations, advances on its credit facility and funds supplied by the
Company's stock offerings. As of May 15, 1996, the Company had approximately
$498,000,000 outstanding under the $600,000,000 Credit Facility, a total of
$11,500,000 in guarantees to third parties, a $7,000,000 letter of credit and a
$3,000,000 note payable to a third party, leaving approximately $80,500,000
available for future borrowings under the Credit Facility.
In addition, the Company has entered into agreements to acquire radio and
television stations from various parties for an aggregate consideration of
$396,420,000, including approximately $240,000,000 for REP, approximately
$68,000,000 for WPRI-TV in Providence, Rhode Island and approximately
$20,372,000 for a one-third interest in New Zealand Radio Network.
The Company will use the proceeds from the Offering to pay down debt under
the Credit Facility. After consummation of the Offering and increasing the
Credit Facility to $800,000,000, the Company will have sufficient funds under
the Credit Facility to consummate all of the pending acquisitions contemplated
herein. While the Company has not formally amended the commitment under the
Credit Facility, the Company has been advised by its Administrative Lender,
NationsBank of Texas, N.A. that the Administrative Lender agrees with expanding
the existing Credit Facility to $800,000,000 on terms that will not be
substantially less favorable than the terms of the existing Credit Facility.
However, there can be no assurance that the Company will be successful in
increasing the size of the existing Credit Facility.
13
<PAGE> 15
The Company believes that cash flow from operations, together with amounts
available to it under its anticipated expanded Credit Facility, will be
sufficient to finance the operating requirements of the Company, anticipated
debt service requirements and anticipated capital expenditures for the Company
over the next 12 months and for the foreseeable future thereafter.
BUSINESS
The Company consists of two principal business segments -- radio
broadcasting and television broadcasting. At May 15, 1996, the radio segment
included 55 stations for which the Company was the licensee and 15 stations
operated under LMAs or JSAs. These 70 stations operate in 20 different markets.
The radio segment also operates five networks. Assuming all pending acquisitions
and one divestiture are consummated (which include nine stations which the
Company currently operates under LMAs or JSAs), the Company will own 95 radio
stations in 25 markets.
At May 15, 1996, the television segment included ten television stations
for which the Company was the licensee and six stations operated under LMAs.
These 16 stations operate in ten different markets. The Company has entered into
a definitive agreement to acquire one additional television station, WPRI-TV,
the CBS affiliate in Providence, Rhode Island.
INDUSTRY SEGMENTS
Selected information relating to the Company's two principal business
segments for 1993, 1994 and 1995 is presented in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
RADIO
Net broadcasting revenue.................... $ 71,605,141 $ 94,097,668 $ 141,737,053
Station operating expenses.................. 52,254,074 62,383,246 85,023,929
Depreciation................................ 4,605,256 5,664,700 6,973,801
Amortization of intangibles................. 4,508,583 6,659,726 13,007,026
------------ ------------ ------------
Station operating income.................... $ 10,237,228 $ 19,389,996 $ 36,732,297
============ ============ ============
TELEVISION
Net broadcasting revenue.................... $ 46,577,498 $ 79,011,706 $ 102,076,064
Station operating expenses.................. 23,735,957 38,053,612 46,234,281
Depreciation................................ 4,611,726 6,974,404 8,406,025
Amortization of intangibles................. 3,721,697 5,369,710 5,382,030
------------ ------------ ------------
Station operating income.................... $ 14,508,118 $ 28,613,980 $ 42,053,728
============ ============ ============
CONSOLIDATED
Net broadcasting revenue.................... $ 118,182,639 $ 173,109,374 $ 243,813,117
Station operating expenses.................. 75,990,031 100,436,858 131,258,210
Depreciation................................ 9,216,982 12,639,104 15,379,826
Amortization of intangibles................. 8,230,280 12,029,436 18,389,056
------------ ------------ ------------
Station operating income.................... $ 24,745,346 $ 48,003,976 $ 78,786,025
============ ============ ============
</TABLE>
14
<PAGE> 16
RADIO BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 27 AM and 43 FM radio stations and five radio networks
which it owned or operated as of May 15, 1996, and those stations for which an
acquisition is pending.
<TABLE>
<CAPTION>
TARGET DATE OF FREQUENCY/
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION AMPLITUDE
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
HOUSTON, TX(9)
KPRC-AM(3) Adults 25-54 News/Talk/Sports Jan. 1995 950 AM
KSEV-AM(3) Adults 25-54 News/Talk/Sports Jan. 1995 700 AM
KMJQ-FM Adults 24-54 Adult Urban Jan. 1995 102.1 FM
KBXX-FM Adults 18-49 Urban Contemporary Aug. 1994 97.9 FM
KHYS-FM(4) Adults 25-54 Jazz LMA 98.5 FM
KJOJ-AM Adults 25-54 Religious LMA 880 AM
KJOJ-FM Adults 25-54 Jazz May 1996 103.3 FM
MIAMI/FT. LAUDERDALE, FL(11)
WHYI-FM(5) Adults 18-49 Contemporary Hits Oct. 1994 100.7 FM
WBGG-FM(5) Adults 18-49 Classic Hits Mar. 1994 105.9 FM
TAMPA/ST. PETERSBURG, FL(21)
WMTX-AM(5) Adults 25-54 Adult Contemporary Oct. 1994 1040 AM
WMTX-FM(5) Adults 25-54 Adult Contemporary Oct. 1994 95.7 FM
WRBQ-AM(5) Adults 18-49 Adult Urban July 1992 1380 AM
WRBQ-FM(5) Adults 25-54 Country July 1992 104.7 FM
CLEVELAND, OH(22)
WNCX-FM(5) Adults 25-54 Classic Rock Oct. 1994 98.5 FM
WERE-AM(5) Adults 25-54 News/Talk Oct. 1994 1300 AM
WENZ-FM(5)(6)(7) Adults 18-49 Modern Rock JSA/Pending 107.9 FM
MILWAUKEE, WI(28)
WKKV-FM Adults 18-49 Urban Contemporary May 1996 100.7 FM
PROVIDENCE, RI(31)
WWBB-FM Adults 25-54 Oldies Pending 101.5 FM
WWRX-FM Adults 25-54 Classic Rock Pending 103.7 FM
NORFOLK, VA(33)
WOWI-FM Adults 18-49 Urban Contemporary May 1996 102.9 FM
WJCD-FM Adults 25-54 Jazz May 1996 105.3 FM
WGPL-AM(8) Adults 25-54 Adult Urban May 1996 1350 AM
WMYK-FM(8) Adults 25-54 Adult Urban Pending 92.1 FM
WSVY-FM Adults 25-54 Adult Urban LMA 107.7 FM
SAN ANTONIO, TX(34)
WOAI-AM Adults 25-54 News/Talk/Sports June 1975 1200 AM
KQXT-FM Adults 25-54 Adult Contemporary Feb. 1993 101.9 FM
KTKR-AM Adults 25-54 News/Talk/Sports July 1993 760 AM
KAJA-FM Adults 25-54 Country Mar. 1972 97.3 FM
KSJL-FM(6) Adults 25-54 Adult Urban JSA 96.1 FM
NEW ORLEANS, LA(38)
WODT-AM(5) Adults 25-54 News/Talk/Sports Oct. 1984 1280 AM
WQUE-FM(5) Adults 18-49 Urban Contemporary Oct. 1984 93.3 FM
WYLD-AM(5) Adults 25-54 Gospel Aug. 1995 940 AM
WYLD-FM(5) Adults 25-54 Adult Urban Jan. 1995 98.5 FM
WNOE-FM(5) Adults 25-54 Country Pending 101.1 FM
KLJZ-FM(5) Adults 25-54 Jazz Pending 106.7 FM
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
TARGET DATE OF FREQUENCY/
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION AMPLITUDE
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
GREENSBORO, NC(42)
WXRA-FM Adults 18-49 Rock Pending 94.5 FM
WTQR-FM Adults 25-54 Country Pending 104.1 FM
WSJS-AM Adults 25-54 News/Talk Pending 600 AM
MEMPHIS, TN(43)
WHRK-FM(5) Adults 18-49 Urban Contemporary May 1996 97.1 FM
WDIA-AM(5) Adults 25-54 Adult Urban May 1996 1070 AM
WEGR-FM(5) Adults 25-54 Album Oriented Rock Pending 107.7 FM
WREC-AM(5) Adults 35-64 News/Talk Pending 600 AM
WRXQ-FM(5) Adults 18-49 Modern Rock Pending 95.7 FM
KJMS-FM(5) Adults 18-49 Urban Contemporary Pending 101.1 FM
KWAM-AM(5) Adults 25-54 Religious Pending 990 AM
LOUISVILLE, KY(49)
WHAS-AM(5) Adults 25-54 News/Adult Contemporary Sept. 1986 840 AM
WAMZ-FM(5) Adults 25-54 Country Sept. 1986 97.5 FM
WHKW-FM(5)(4) Adults 25-54 Country LMA 98.9 FM
WTFX-FM(5) Adults 25-54 Album Oriented Rock Pending 100.5 FM
WWKY-AM(5) Adults 25-54 News/Talk Pending 790 AM
WKJK-AM(5) Adults 35-54 Traditional Country LMA/Pending 1080 AM
RALEIGH, NC(50)
WQOK-FM Adults 18-49 Urban Contemporary May 1996 97.5 FM
WTCD-FM(4) Adults 25-54 Jazz LMA 103.9 FM
OKLAHOMA CITY, OK(51)
KTOK-AM Adults 25-54 News/Talk/Sports Oct. 1984 1000 AM
KEBC-FM Adults 18-49 Country Jan. 1994 94.7 FM
KJYO-FM Adults 18-34 Contemporary Hits Oct. 1984 102.7 FM
WKY-AM(6) Adults 25-54 News/Talk LMA 930 AM
KTST-FM Adults 18-34 Country Pending 101.9 FM
KXXY-FM Adults 25-54 Country Pending 96.1 FM
KXXY-AM Adults 25-54 Sports/Talk Pending 1340 AM
AUSTIN, TX(54)
KPEZ-FM Adults 25-54 Classic Rock July 1982 102.3 FM
KHFI-FM Adults 18-49 Contemporary Hits Mar. 1993 96.7 FM
KEYI-FM(6) Adults 25-54 Oldies JSA/Pending 103.5 FM
KFON-AM(6) Adults 25-54 News/Talk JSA/Pending 1490 AM
RICHMOND, VA(56)
WRVA-AM(5) Adults 25-54 News/Talk/Sports July 1992 1140 AM
WRVH-AM(5) Adults 25-54 News/Talk/Sports Sept. 1993 910 AM
WRVQ-FM(5) Adults 18-49 Contemporary Hits July 1992 94.5 FM
WRXL-FM(5) Adults 18-49 Album Oriented Rock Sept. 1993 102.1 FM
WTVR-FM(5) Adults 25-54 Adult Contemporary Pending 98.1 FM
WTVR-AM(5) Adults 35-64 Nostalgia Pending 1380 AM
TULSA, OK(60)
KAKC-AM Adults 25-54 News/Sports/Oldies Oct. 1973 1300 AM
KMOD-FM Adults 25-54 Album Oriented Rock Oct. 1973 97.5 FM
KQLL-AM(6) Adults 25-54 Sports/Talk JSA/Pending 1430 AM
KQLL-FM(6) Adults 25-54 Oldies JSA/Pending 106.1 FM
KOAS-FM(6) Adults 25-54 Jazz JSA/Pending 92.1 FM
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
TARGET DATE OF FREQUENCY/
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION AMPLITUDE
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
GRAND RAPIDS, MI(66)
WOOD-AM(5) Adults 35-64 News/Talk/Sports May 1996 1300 AM
WOOD-FM(5) Adults 25-54 Adult Contemporary May 1996 105.7 FM
WBCT-FM(5) Adults 18-49 Country May 1996 93.7 FM
WCUZ-AM(4)(5) Adults 25-54 Sports/Talk/News LMA/Pending 1230 AM
WCUZ-FM(4)(5) Adults 25-54 Country LMA/Pending 101.3 FM
EL PASO, TX(70)
KPRR-FM Adults 18-49 Contemporary Hits May 1996 102.1 FM
KHEY-FM Adults 25-54 Country May 1996 96.3 FM
KHEY-AM Adults 25-54 Oldies May 1996 690 AM
SPRINGFIELD, MA(76)
WHYN-AM Adults 25-54 News/Talk Pending 560 AM
WHYN-FM Adults 25-54 Adult Contemporary Pending 93.1 FM
FT. MYERS/NAPLES, FL(77)
WCKT-FM Adults 25-54 Country Pending 107.1 FM
WXRM-FM Adults 25-54 Soft Adult Pending 105.5 FM
LITTLE ROCK, AR(82)
KDDK-FM(5) Adults 25-54 Country May 1996 103.3 FM
KMJX-FM(5) Adults 25-54 Classic Rock May 1996 105.1 FM
COLUMBIA, SC(88)
WWDM-FM Adults 25-54 Urban Contemporary Pending 101.3 FM
WARQ-FM Adults 18-49 Modern Rock Pending 93.5 FM
NEW HAVEN, CT(95)
WKCI-FM Adults 18-49 Contemporary Hits May 1992 101.3 FM
WAVZ-AM Adults 25-54 Nostalgia May. 1992 1300 AM
WELI-AM Adults 25-54 News/Talk Oct. 1984 960 AM
READING, PA(129)
WRAW-AM Adults 35-64 Nostalgia May 1996 1340 AM
WRFY-FM Adults 18-49 Contemporary Hits May 1996 102.5 FM
RADIO NETWORKS
LOUISVILLE, KY
Kentucky News Network Adults 25-54 News/Agriculture Jan. 1992 N/A
RICHMOND, VA
Virginia News Network Adults 25-54 News/Agriculture Sept. 1993 N/A
OKLAHOMA CITY, OK
Oklahoma News Network Adults 25-54 News/Agriculture Oct. 1984 N/A
SAN ANGELO, TX
Voice of Southwest Agriculture Adults 25-54 News/Agriculture Oct. 1995 N/A
COLLEGE STATION, TX/DES MOINES, IA
Clear Channel Sports Adults 18-49 College Sports Networks Various N/A
</TABLE>
- ---------------
(1) Number in parenthesis next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Radio 1996 Market
Report, 2nd Edition."
(2) Due to variations that may exist within the same station programming
format(such as variations in the tempo of the music or the age of the songs
broadcast), the primary demographic may be different even though the station
programming format is the same.
(3) 80% owned by the Company.
(4) LMA(FCC license not owned by the Company).
(5) Application for renewal of license pending with the FCC.
17
<PAGE> 19
(6) JSA(FCC license not owned and station not programmed by the Company).
(7) In April 1996, the Company entered into a definitive agreement to acquire
certain broadcasting assets of WENZ-FM, with which the Company has a JSA,
for $1,000,000.
(8) The Company has entered into a definitive agreement to swap WGPL-AM plus
$2,600,000 for WMYK-FM in Norfolk, Virginia.
TELEVISION BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 16 television stations which it owned or operated as of
May 15, 1996, and one pending station acquisition.
<TABLE>
<CAPTION>
NETWORK DATE OF
MARKET (RANK)/STATION(1) AFFILIATION CHANNEL ACQUISITION
- ------------------------------------------------ ----------- -------- ------------
<S> <C> <C> <C>
MINNEAPOLIS, MN(14)
WFTC-TV FOX TV-29 Oct. 1993
MEMPHIS, TN(42)
WPTY-TV ABC TV-24 Apr. 1992
WLMT-TV(2) UPN TV-30 LMA
HARRISBURG/LEBANON/LANCASTER, PA(44)
WHP-TV CBS TV-21 Oct. 1995
WLYH-TV(2) UPN TV-15 LMA
PROVIDENCE/NEW BEDFORD, RI(46)
WPRI-TV CBS TV-13 Pending
ALBANY/SCHENECTADY/TROY, NY(52)
WXXA-TV FOX TV-23 Dec. 1994
JACKSONVILLE, FL(55)
WAWS-TV FOX TV-30 Sept. 1989
WTEV-TV(2) UPN TV-47 LMA
LITTLE ROCK, AR(58)
KLRT-TV FOX TV-16 Feb. 1994
KASN-TV(2) UPN TV-38 LMA
TULSA, OK(59)
KOKI-TV FOX TV-23 Dec. 1989
KTFO-TV(2) UPN TV-41 LMA
MOBILE, AL/PENSACOLA, FL(61)
WPMI-TV NBC TV-15 Dec. 1988
WJTC-TV(2) UPN TV-44 LMA
WICHITA, KS(63)
KSAS-TV FOX TV-24 Aug. 1990
TUCSON, AZ(80)
KTTU-TV(3) UPN TV-18 Feb. 1989
</TABLE>
- ---------------
(1) Number in parenthesis next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Television 1996
Market Report, 2nd Edition."
(2) LMA (FCC license not owned by the Company).
(3) On April 1, 1995, the Commission renewed the license of KTTU-TV for a period
of two years due to a finding of violations of the Commission's rules
limiting the amount of commercial matter that may be aired during children's
programming. The Commission also imposed quarterly reporting requirements
during the license term to show continued compliance with the children's
television rules. The Company owns the FCC license for KTTU-TV but entered
into an LMA under which substantially all of the station's programming is
supplied by another party.
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<PAGE> 20
Sources of programming for the Company's affiliated stations include the
FOX, ABC, NBC, CBS and UPN television networks, which produce and distribute
programming in exchange for each station's commitment to air the programming at
specified times and for commercial announcement time during the programming.
Each FOX contract currently runs for a five-year term expiring in 1998 except
for the FOX contract for WXXA-TV Albany, New York, which expires in 1999, and
may be renewed by FOX or the Company. Based on the performance of its
FOX-affiliated stations to date, the Company expects it will continue to be able
to renew its FOX contracts, although no assurances in this regard can be given.
The network affiliation agreements with ABC (for WPTY-TV in Memphis, Tennessee,
effective December 1, 1995), CBS (for WHP-TV in Harrisburg, Pennsylvania,
renewed and effective December 18, 1995) and NBC (for WPMI-TV in Mobile,
Alabama, effective January 1, 1996) run for ten-year terms. The Company's
network affiliation agreement with UPN for KTTU-TV in Tucson, Arizona, was
entered into in March 1995 and runs for three years.
The Company purchases the broadcast rights for the majority of its
television programming for its FOX and UPN affiliates from various syndicators.
The Company competes with other television stations within each market for these
broadcast rights. The affiliation changes to NBC in Mobile, Alabama/Pensacola,
Florida and to ABC in Memphis, Tennessee have reduced the Company's need to
obtain outside programming in these markets.
Another source of programming is the production of local news programming
on the FOX, CBS, ABC and NBC affiliate stations in Jacksonville, Florida;
Harrisburg, Pennsylvania; Memphis, Tennessee; and Mobile, Alabama/Pensacola,
Florida, respectively. Local news programming traditionally has appealed to a
target audience of adults 25 to 54 years of age. Because these viewers generally
have increased buying power relative to viewers in other demographic groups,
they are one of the most sought-after target audiences for advertisers. With
such programming, these stations are able to attract advertisers to which they
otherwise would not have access.
Revenue is generated primarily from the sale of local and national
advertising, as well as from fees received from the affiliate television
networks. Advertising rates depend primarily on the quantitative and qualitative
characteristics of the audience the Company can deliver to the advertiser. Local
advertising is sold by the Company's sales personnel, while national advertising
is sold by independent national sales representatives. The Company's revenue is
seasonal, with the fourth quarter generating the highest level of revenue and
the first quarter generating the lowest. The fourth quarter generally reflects
higher advertising in preparation for the holiday season and, in the case of
television, the effect of political advertising in election years.
The Company's broadcasting results are dependent on a number of factors,
including the general strength of the economy, population growth, ability to
provide popular programming, relative efficiency of radio and television
broadcasting compared to other advertising media, signal strength, technological
capabilities and developments and governmental regulations and policies.
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<PAGE> 21
DIVERSIFICATION
The following table sets forth the percentage of net broadcasting revenue
of the Company generated from radio and television operations for stations owned
or operated as of December 31, 1995, in each market in 1995.
<TABLE>
<CAPTION>
PERCENTAGE OF 1995
NET BROADCASTING
MARKET REVENUE
- -------------------------------------------------------------------------- ------------------
<S> <C>
Albany/Schenectady/Troy, NY............................................... 3.6%
Austin, TX................................................................ 3.2
Cleveland, OH............................................................. 3.6
Harrisburg/Lebanon/Lancaster, PA.......................................... 0.7
Houston, TX............................................................... 11.1
Jacksonville, FL.......................................................... 5.2
Little Rock, AR........................................................... 3.9
Louisville, KY............................................................ 6.2
Memphis, TN............................................................... 7.7
Miami/Ft. Lauderdale, FL.................................................. 5.2
Minneapolis, MN........................................................... 9.8
Mobile, AL / Pensacola, FL................................................ 3.9
New Haven, CT............................................................. 2.4
New Orleans, LA........................................................... 3.3
Oklahoma City, OK......................................................... 4.1
Richmond, VA.............................................................. 5.1
San Antonio, TX........................................................... 5.9
Tampa, FL................................................................. 6.0
Tulsa, OK................................................................. 6.0
Tucson, AZ................................................................ 0.2
Wichita, KS............................................................... 2.9
-----
100.0%
=====
</TABLE>
The Company believes that the geographic diversity of its operations helps
to protect it from economic downturns in any particular market.
FEDERAL REGULATION OF TELEVISION AND RADIO BROADCASTING
Existing Regulation and Legislation. Television and radio broadcasting are
subject to the jurisdiction of the FCC under the Communications Act of 1934, as
amended (the "Communications Act"). The Communications Act prohibits the
operation of a television or radio broadcasting station except under a license
issued by the FCC and empowers the FCC, among other things, to issue, renew,
revoke and modify broadcasting licenses; assign frequency bands; determine
stations' frequencies, locations and power; regulate the equipment used by
stations; adopt other regulations to carry out the provisions of the
Communications Act; impose penalties for violation of such regulations; and
impose fees for processing applications and other administrative functions. The
Communications Act prohibits the assignment of a license or the transfer of
control of a licensee without prior approval of the FCC. Under the
Communications Act, the FCC also regulates certain aspects of the operation of
cable television systems and other electronic media that compete with broadcast
stations.
The recently enacted the 1996 Act represents the most comprehensive
overhaul of the country's telecommunications laws in more than 60 years. The
1996 Act significantly changes both the broadcast ownership rules and the
process for renewal of broadcast station licenses. The 1996 Act relaxes local
radio ownership restrictions, but leaves local TV restrictions in place pending
further
20
<PAGE> 22
FCC review. The FCC has already implemented some of these changes through
Commission Orders. Additionally, the 1996 Act substantially liberalizes the
national broadcast ownership rules, eliminating the national radio limits and
easing the national restrictions of TV ownership. The 1996 Act establishes a
"two-step" renewal process that limits the FCC's discretion to consider
applications filed in competition with an incumbent's renewal application.
This new regulatory flexibility is likely to engender aggressive local,
regional, and/or national acquisition campaigns. Removal of previous station
ownership limitations on leading incumbents (i.e., existing networks and major
station groups) can be expected to increase sharply the competition for and the
prices of attractive stations.
Multiple Ownership Restrictions. The FCC has promulgated rules that, among
other things, limit the ability of individuals and entities to own or have an
official position or ownership interest above a certain level (an "attributable"
interest, as defined more fully below) in broadcast stations, as well as other
specified mass media entities. Prior to the passage of the 1996 Act, these rules
included limits on the number of radio and television stations that could be
owned on both a national and local basis. On a national basis, the rules
generally precluded any individual or entity from having an attributable
interest in more than 20 AM radio stations, 20 FM radio stations and 12
television stations. Moreover, the aggregate audience reach of the co-owned
television stations could not exceed 25% of all U.S. television households.
The 1996 Act substantially relaxed the television and radio ownership
limitations. The FCC began its implementation of the 1996 Act with several
orders issued on March 8, 1996. With respect to television, the 1996 Act and the
FCC's subsequently issued orders eliminated the 12-station limit for station
ownership and increased the national audience reach limitation from 25% to 35%.
On a local basis, however, the 1996 Act did not alter current FCC rules limiting
an individual entity to maintaining an attributable interest in only one
television station in a market. The 1996 Act did require the FCC to conduct a
rulemaking proceeding, however, to determine whether to narrow the geographic
scope of the local television cross-ownership rule to permit some two-station
combinations in certain large markets (the "TV duopoly rule"). At the time of
the passage of the Act, the FCC had already initiated a rulemaking to consider
whether the TV duopoly rule should be retained, modified or eliminated.
With respect to radio licensees, the 1996 Act and the FCC's subsequently
issued rule changes eliminated the national ownership restriction, allowing a
single entity to own nationally any number of AM or FM broadcast stations. The
1996 Act and the FCC's new rules also greatly eased local radio ownership
restrictions. As with the old rules, the maximum allowable varies depending on
the number of radio stations within a market. In markets with more than 45
stations, one company may own, operate or control eight stations, with no more
than five in any one service (AM or FM). In markets of 30-44 stations, one
company may own seven stations, with no more than four in any one service; in
markets with 15-29 stations, one entity may own six stations, with no more than
four in any one service. In markets with 14 commercial stations or less, one
company may own up to five stations or 50% of all of the stations, whichever is
less, with no more than three in any one service.
In 1992, the FCC placed limitations on LMAs through which the licensee of
one radio station provides the programming for another licensee's station in the
same market. Stations operating in the same service (e.g., where both stations
are AM) and in the same market are prohibited from simulcasting more than 25% of
their programming. Moreover, in determining the number of stations that a single
entity may control, an entity programming a station pursuant to a LMA is
required, under certain circumstances, to count that station toward its maximum
even though it does not own the station. In a pending rulemaking, the FCC is
seeking comment on issues of control and attribution with respect to time
brokerage or LMAs entered into by television stations. The 1996 Act explicitly
stated that none of its provisions should be construed to prohibit the
origination, continuation, or renewal of any television local marketing
agreement that is in compliance with FCC rules. The Conference Committee Report
accompanying the 1996 Act indicated that the purpose of
21
<PAGE> 23
the provision was to grandfather existing LMAs and allow LMAs in the future,
consistent with FCC rules.
A number of cross-ownership rules pertain to licensees of television and
radio stations. FCC rules, the Communications Act or both generally prohibit an
individual or entity from having an attributable interest in both a television
station and a radio station, daily newspaper or cable television system that is
located in the same local market area served by the television station. The FCC
has employed a liberal waiver policy with respect to the TV/radio
cross-ownership restriction (the so-called "one-to-a-market" rule), generally
permitting common ownership of one AM, one FM and one TV station in any of the
25 largest markets, provided there are at least 30 separately owned stations.
The 1996 Act directed the Commission to extend its one-to-a-market waiver policy
to the top 50 markets, consistent with the public interest, convenience and
necessity. Moreover, in a pending 1995 rulemaking the FCC has proposed
eliminating the one-to-a-market rule entirely.
The 1996 Act eliminates a statutory prohibition against common ownership of
television broadcast stations and cable systems serving the same area, but
leaves the current FCC rule in place. The 1996 Act stipulates that the FCC
should not consider the repeal of the statutory ban in any review of its
applicable rules. The recent legislation also eliminates the FCC's former
network/cable cross-ownership limitations, but allows the FCC to adopt
regulations if necessary to ensure carriage, appropriate channel positioning and
nondiscriminatory treatment of non-affiliated broadcast stations on
network-owned cable systems. The FCC has already issued an order dated March 15,
1996 eliminating the network/cable cross-ownership ban, and is expected to
commence proceedings on the local television/cable crossownership limitation
during the second quarter of 1996.
The 1996 Act does not alter the FCC's newspaper/broadcast cross-ownership
restrictions. The 1996 Act does direct the FCC, however, to revise its
long-standing "dual network" rule to permit television broadcast stations to
affiliate with an entity that maintains two or more networks, unless the
combination is composed of (a) two of the four existing networks (ABC, CBS, NBC
or FOX) or (b) any of the four existing networks and one of the two emerging
networks (WBN or UPN). The Commission issued an order implementing this change
on March 8, 1996.
Expansion of the Company's broadcast operations in particular areas and
nationwide will continue to be subject to the FCC's ownership rules and any
further changes the FCC or Congress may adopt. Significantly, the 1996 Act
requires the Commission to review its remaining ownership rules biennially -- as
part of its regulatory reform obligations -- to determine whether its various
rules are still necessary. The Company cannot predict the impact of the biennial
review process or any other agency or legislative initiatives upon the FCC's
broadcast rules. Further, the 1996 Act's relaxation of the FCC's ownership rules
may increase the level of competition in one or more of the markets in which the
Company's stations are located, particularly to the extent that any of the
Company's competitors may have greater resources and thereby be in a better
position to capitalize on such changes.
Under the FCC's ownership rules, a direct or indirect purchaser of certain
types of securities of the Company could violate FCC regulations if that
purchaser owned or acquired an "attributable" or "meaningful" interest in other
media properties in the same areas as stations owned by the Company or in a
manner otherwise prohibited by the FCC. All officers and directors of a
licensee, as well as general partners, limited partners who are not properly
"insulated" from management activities, and stockholders who own five percent or
more of the outstanding voting stock of a licensee (either directly or
indirectly), generally will be deemed to have an attributable interest in the
license. Certain institutional investors who exert no control or influence over
a licensee may own up to ten percent of such outstanding voting stock before
attribution occurs. Under current FCC regulations, debt instruments, non-voting
stock, properly insulated limited partnership interests (as to which the
licensee certifies that the limited partners are not "materially involved" in
the management and operation of the subject media property) and voting stock
held by minority stockholders in cases in which there is a single majority
stockholder generally are not subject to attribution. The FCC's
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<PAGE> 24
"crossinterest" policy, which precludes an individual or entity from having a
"meaningful" (even though not attributable) interest in one media property and
an attributable interest in a broadcast, cable or newspaper property in the same
area, may be invoked in certain circumstances to reach interests not expressly
covered by the multiple ownership rules.
In January 1995, the FCC initiated a rulemaking proceeding designed to
permit a "thorough review of [its] broadcast media attribution rules." Among the
issues on which comment was sought were (i) whether to change the voting stock
attribution benchmarks from five percent to ten percent and, for passive
investors, from ten percent to twenty percent; (ii) whether there are any
circumstances in which non-voting stock interests, which are currently
considered non-attributable, should be considered attributable; (iii) whether
the FCC should eliminate its single majority shareholder exception (pursuant to
which voting interests in excess of five percent are not considered cognizable
if a single shareholder owns more than fifty percent of the voting power); (iv)
whether to relax insulation standards for business development companies and
other widely-held limited partnerships; (v) how to treat limited liability
companies and other new business forms for attribution purposes; (vi) whether to
eliminate or codify the cross-interest policy; and (vii) whether to adopt a new
policy which would consider whether multiple cross interests or other
significant business relationships (such as time brokerage agreements, debt
relationships or holdings of nonattributable interests), which individually do
not raise concerns, raise issues with respect to diversity and competition. The
Company cannot predict with certainty when this proceeding will be concluded or
whether any of these standards will be changed. Should the attribution rules be
changed, the Company is unable to predict what effect, if any, such changes
would have on the Company or its activities. To the best of the Company's
knowledge at present, no officer, director or five percent stockholder of the
Company holds an interest in another television station, radio station, cable
television system or daily newspaper that is inconsistent with the FCC's
ownership rules and policies or the Company's continued ownership of its
television stations.
License Grant and Renewal. Prior to the passage of the 1996 Act, television
and radio broadcasting licenses generally were granted or renewed for a period
of five and seven years, respectively, upon a finding by the FCC that the
"public interest, convenience, and necessity" would be served thereby. At the
time an application is made for renewal of a television or radio license,
parties in interest may file petitions to deny the application, and such
parties, including members of the public, may comment upon the service the
station has provided during the preceding license term. In addition, prior to
passage of the 1996 Act, any person was permitted to file a competing
application for authority to operate on the station's channel and replace the
incumbent licensee. Renewal applications were granted without a hearing if there
were no competing applications or if issues raised by petitioners to deny such
applications were not serious enough to cause the FCC to order a hearing. If
competing applications were filed, a full comparative hearing was required.
Under the 1996 Act, the statutory restriction on the length of broadcast
licenses has been amended to allow the FCC to grant broadcast licenses for terms
of up to eight years. The 1996 Act also requires renewal of a broadcast license
if the FCC finds that (1) the station has served the public interest,
convenience, and necessity; (2) there have been no serious violations of either
the Communications Act or the FCC's rules and regulations by the licensee; and
(3) there have been no other serious violations which taken together constitute
a pattern of abuse. In making its determination, the FCC may still consider
petitions to deny but cannot consider whether the public interest would be
better served by a person other than the renewal applicant. Instead, under the
1996 Act, competing applications for the same frequency may be accepted only
after the Commission has denied an incumbent's application for renewal of
license.
By order dated April 12, 1996, the FCC modified its rules to implement the
new two-step renewal procedure and to eliminate the right to file an application
that is mutually exclusive with a renewal. Also on April 12, 1996, the FCC
issued a notice of Proposed Rulemaking to consider how to implement the new,
longer license term provision of the 1996 Act.
23
<PAGE> 25
Although in the vast majority of cases broadcast licenses are granted by
the FCC even when petitions to deny are filed against them, there can be no
assurance that any of the Company's stations' licenses will be renewed.
Alien Ownership Restrictions. The Communications Act restricts the ability
of foreign entities or individuals to own or hold certain interests in broadcast
licenses. Foreign governments, representatives of foreign governments, non-U.S.
citizens, representatives of non-U.S. citizens, and corporations or partnerships
organized under the laws of a foreign nation are barred from holding broadcast
licenses. Non-U.S. citizens, collectively, may directly or indirectly own or
vote up to twenty percent of the capital stock of a licensee. In addition, a
broadcast license may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than one-
fourth of whose capital stock is owned or voted by non-U.S. citizens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations, if the FCC finds that the public interest will be served by the
refusal or revocation of such license. The FCC has interpreted this provision of
the Communications Act to require an affirmative public interest finding before
a broadcast license may be granted to or held by any such corporation, and the
FCC has made such an affirmative finding only in limited circumstances. The
Company, which serves as a holding company for subsidiaries that serve as
licensees for the stations, therefore may be restricted from having more than
one-fourth of its stock owned or voted directly or indirectly by non-U.S.
citizens, foreign governments, representatives of non-U.S. citizens or foreign
governments, or foreign corporations. The Communications Act previously also
prohibited grant of a broadcast station license (i) to any corporation with an
alien officer or director, or (ii) to any corporation controlled by another
corporation with any alien officers or more than one-fourth alien directors. The
restrictions on non-U.S. citizens serving as officers or directors of licensees
and their parent corporations have been eliminated, however, by the 1996 Act.
Other Regulations Affecting Broadcast Stations. The FCC has significantly
reduced its past regulation of broadcast stations, including elimination of
formal ascertainment requirements and guidelines concerning amounts of certain
types of programming and commercial matter that may be broadcast. In 1990, the
U.S. Supreme Court refused to review a lower court decision that upheld the
FCC's 1987 action invalidating most aspects of the Fairness Doctrine, which had
required broadcasters to present contrasting views on controversial issues of
public importance. The FCC may, however, continue to regulate other aspects of
fairness obligations in connection with certain types of broadcasts. In
addition, there are FCC rules and policies, and rules and policies of other
federal agencies, that regulate matters such as network-affiliate relations, the
ability of stations to obtain exclusive rights to air syndicated programming,
cable systems' carriage of syndicated and network programming on distant
stations, political advertising practices, equal employment opportunity,
application procedures and other areas affecting the business or operations of
broadcast stations. The FCC has adopted rules to implement the Children's
Television Act of 1990 ("Children's Television Act"), which, among other
provisions, limits the permissible amount of commercial matter in children's
programs and requires each television station to present "educational and
informational" children's programming.
Recent Developments, Proposed Legislation and Regulation. The FCC recently
decided to eliminate the prime time access rule ("PTAR"), effective August 30,
1996. The PTAR currently limits the ability of television stations within the
fifty largest markets that are affiliated with ABC, CBS, or NBC to broadcast
network programming (including syndicated programming previously broadcast over
any of these networks) during certain prime time hours. The elimination of the
PTAR could increase the amount of network programming broadcast over a station
affiliated with ABC, CBS or NBC. Such elimination also could result in (i) an
increase in the compensation paid by the network (due to the additional prime
time hours during which network programming could be aired by a
network-affiliated station) and (ii) increased competition for syndicated
network programming that previously was unavailable for broadcast by network
affiliates during prime time. The FCC also recently announced the elimination of
its remaining financial interest and syndication
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<PAGE> 26
("Fin/syn") rules. The original rules, first adopted in 1970, severely
restricted the ability of ABC, CBS and NBC to obtain financial interests in, or
participate in syndication of, prime-time entertainment programming created by
independent producers for airing during the networks' evening schedules. The FCC
previously lifted the financial interest rules and restraints on foreign
syndication. In January 1996, the Supreme Court refused to review lower court
decisions that upheld the FCC's restrictions on the broadcast of indecent
material and also upheld the agency's policy of imposing substantial monetary
sanctions on repeat offenders of the indecency rules. The rules require stations
to limit the airing of indecent programming to a 10 p.m.-6 a.m. "safe harbor"
period.
The FCC presently is seeking comment on its policies designed to increase
minority ownership of mass media facilities. Congress, however, recently enacted
legislation that eliminated the minority tax certificate program of the FCC,
which gave favorable tax treatment to entities selling broadcast stations to
entities controlled by an ethnic minority. In addition, a recent Supreme Court
decision has cast into doubt the continued validity of other FCC programs
designed to increase minority ownership of mass media facilities.
Congress and the FCC currently have under consideration, and may in the
future adopt, new laws, regulations and policies regarding a wide variety of
matters that could affect, directly or indirectly, the operation and ownership
of the Company's broadcast properties. In addition to the changes and proposed
changes noted above, such matters include, for example, the license renewal
process, spectrum use fees, political advertising rates, potential restrictions
on the advertising of certain products (beer and wine, for example), the rules
and policies to be applied in enforcing the FCC's equal employment opportunity
regulations, standards to more strictly define the type and quantify the amount
of educational and informational programming required under the Children's
Television Act, and regulatory schemes to control the amount of violent
television programming accessible to children (including implementation, as
required under the 1996 Act, of the so-called "V-chip technology," which would
permit parents to program television sets so that certain programming would be
inaccessible to children). Other matters that could affect the Company's
broadcast properties include technological innovations and developments
generally affecting competition in the mass communications industry, such as the
recent initiation of direct broadcast satellite service, the continued
establishment of wireless cable systems and low power television stations, and
the advent of telephone company participation in the provision of video
programming service.
The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, or the 1996 Act, nor of the regulations
and policies of the FCC thereunder. The 1996 Act and the rules and regulations
thereunder also apply to the distribution of video services by telephone
companies and revisions to the subject matter of the Cable Television Consumer
Protection and Competition Act of 1992. The FCC has under consideration the
initiation of advanced television service, digital audio radio service, and the
expansion of direct broadcast satellite service. Proposals for additional or
revised regulations and requirements are pending before and are being considered
by Congress and federal regulatory agencies from time to time. Also, various of
the foregoing matters are now, or may become, the subject of court litigation,
and the Company cannot predict the outcome of any such litigation or the impact
on its broadcast business. For additional information relating to regulatory
matters, see "Business -- Federal Regulation of Television and Radio
Broadcasting" set forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as amended, incorporated by reference herein.
MANAGEMENT
The Company believes that one of its most important assets is its
experienced management team. General managers are responsible for the day-to-day
operation of their respective stations. The Company believes that the autonomy
of its station management enables it to attract top quality managers capable of
implementing the Company's aggressive marketing strategy and reacting to
competition in the local markets. Most general managers have stock options in
the Company. As an
25
<PAGE> 27
additional incentive, a portion of each manager's compensation is related to the
performance of the station or stations for which he or she is responsible. In an
effort to monitor expenses, corporate management routinely reviews staffing
levels and programming costs. Combined with the centralized accounting
functions, this monitoring enables the Company to control expenses effectively.
Corporate management also advises local station managers on programming and
other broad policy matters and is responsible for long-range planning,
allocating resources, and financial reporting and controls.
The Company, which began operations in 1972, has its principal executive
offices at 200 Concord Plaza, Suite 600, San Antonio, Texas 78216 (telephone:
210-822-2828).
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 2,000,000 shares of
preferred stock, $1.00 par value per share ("Preferred Stock"), and 100,000,000
shares of Common Stock, $.10 par value per share, of which no shares of
Preferred Stock and 34,614,826 shares of Common Stock were issued and
outstanding at May 15, 1996.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
privileges and qualifications thereof without any further vote or action by the
shareholders. The issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock, and
adversely affect the rights and powers, including voting rights, of such holders
and may have the effect of delaying, deferring or preventing a change in control
of the Company. No shares of Preferred Stock have ever been issued, and the
Company does not presently contemplate the issuance of Preferred Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of shareholders of the Company and to ratably receive
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor, subject to the payment of any
preferential dividends declared with respect to any Preferred Stock that from
time to time may be outstanding. Upon liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in any assets
available for distribution to shareholders after payment of all obligations of
the Company, subject to the rights to receive preferential distributions of the
holders of any Preferred Stock then outstanding.
Shareholders do not have cumulative voting rights or preemptive or other
rights to acquire or subscribe to additional, unissued or treasury shares. The
shares of Common Stock currently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance thereof, validly issued, fully paid and
nonassessable.
REPURCHASE AGREEMENT
In May 1977, the Company and its then shareholders, including L. Lowry Mays
and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of the outstanding shares of Common Stock owned by
L. Lowry Mays and B.J. McCombs and their heirs, legal representatives,
successors and assigns (collectively, the "Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party desires to dispose
of his shares, other than by disposition by will or intestacy or through gifts
to such Restricted Party's spouse or children, such shares must be offered for a
period of 30 days to the Company. Any shares not purchased by the Company must
then be offered for a period of 30 days to the other Restricted
26
<PAGE> 28
Parties. If all of the offered shares are not purchased by the Company or the
other Restricted Parties, the Restricted Party offering his shares may sell them
to a third party during a period of 90 days thereafter at a price and on terms
not more favorable than those offered to the Company and the other Restricted
Parties. In addition, a Restricted Party may not individually or in concert with
others sell any shares so as to deliver voting control to a third party without
providing in any such sale that all Restricted Parties will be offered the same
price and terms for their shares. The Repurchase Agreement will continue in
effect following the Offering and may preserve the control of the present
principal shareholders.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act on
ownership of Common Stock by aliens, the Company's bylaws were amended effective
December 31, 1983 to provide that (i) not more than one-fifth of the shares
outstanding shall at any time be owned of record, or voted, by or for the
account of aliens, their representatives, a foreign government or a corporation
organized under the laws of a foreign country, (ii) the Company shall not be
owned or controlled directly or indirectly by any other corporation of which any
officer or more than one-fourth of the directors are aliens or of which more
than one-fourth of the shares are owned of record or voted by aliens, (iii) no
person who is an alien may be elected or serve as an officer or director of the
Company, and (iv) if the stock records of the Company shall at any time reflect
one-fifth ownership, no transfers of additional shares to aliens shall be made
and, if it shall thereafter be found that any such additional shares are in fact
held by or for the account of an alien, such shares shall not be entitled to
vote, to receive dividends or to have any other rights. The holder of such
shares will be required to transfer them to a United States citizen or to the
Company. This restriction will be applicable to the shares of Common Stock
offered hereby and to the issuance or transfer of such shares after the date of
this Prospectus. The Company's stock certificates will bear a legend setting
forth this restriction.
27
<PAGE> 29
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") have severally agreed to purchase
from the Company the following respective number of shares of Common Stock at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- -------------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated.................................................
CS First Boston Corporation.....................................................
Goldman, Sachs & Co. ...........................................................
Lehman Brothers Inc. ...........................................................
---------
Total................................................................. 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of Common Stock offered hereby if any of
such shares are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus, and to certain dealers at
such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the Offering, the
offering price and other selling terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 250,000
additional shares of Common Stock at the public offering price less the
underwriting discounts and commission set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 250,000, and the Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those in
which the 2,500,000 shares are being offered.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company and Messrs. L. Lowry Mays and B.J. McCombs have agreed that
they will not, directly or indirectly, offer, sell or otherwise dispose of any
equity securities of the Company or any securities convertible into, or
exchangeable for, or any rights to purchase or acquire, equity securities of the
Company (other than employee stock options granted by the Company in the
ordinary course of business) for a period of 90 days after the date of this
Prospectus, without the prior written consent of Alex. Brown & Sons
Incorporated.
28
<PAGE> 30
LEGAL OPINIONS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by its special counsel, Akin, Gump,
Strauss, Hauer & Feld, L.L.P. (a partnership including professional
corporations), San Antonio, Texas, and for the Underwriters by their special
counsel, Wolin, Fuller, Ridley & Miller LLP, Dallas, Texas. Alan D. Feld, the
sole shareholder of a professional corporation which is a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns 34,615
shares of Common Stock (including presently exercisable nonqualified options to
acquire 14,375 shares).
EXPERTS
The consolidated financial statements (including schedules) of the Company
included or incorporated by reference in the Company's Annual Report (Form 10-K)
for the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included or
incorporated by reference therein and incorporated herein by reference which, as
to the year 1995, is based in part on the report of KPMG, independent auditors.
The financial statements referred to above are incorporated herein by reference
in reliance upon such reports given upon the authority of such firms as experts
in accounting and auditing.
The consolidated financial statements of Australian Radio Network Pty Ltd
incorporated by reference in the Company's Current Report (Form 8-K) dated May
26, 1995, as amended by Form 8-K/A dated July 27, 1995, have been audited by
KPMG, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. The financial statements referred
to above are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Wesgo Limited and controlled
entities at June 30, 1994 for the year ended June 30, 1994 and at December 31,
1994 for the six month period ended December 31, 1994, and the combined
financial statements of Albert's radio stations, acquired by the Australian
Radio Network Pty Limited, at June 30, 1994 for the year ended June 30, 1994 and
at December 31, 1994 for the six month period ended December 31, 1994, included
in the Company's Current Report (Form 8-K/A) dated July 27, 1995, have been
incorporated by reference herein in reliance upon the reports of KPMG,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
The consolidated financial statements of US Radio, Inc. for the years ended
December 31, 1995 and 1994, included in the Company's Current Report (Form 8-K)
dated May 24, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of Ragan Henry Communications Group,
L.P., US Radio, L.P. and US Radio Stations, L.P. for the year ended December 31,
1994, included in the Company's Current Report (Form 8-K) dated May 24, 1996
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
29
<PAGE> 31
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 14th Floor, New
York, New York, 10048, Los Angeles Regional Office, Suite 500 East, Tishman
Building, 5757 Wilshire Boulevard, Los Angeles, California, 90036, and Chicago
Regional Office, 500 W. Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, reports, proxy statements and other information concerning
the Company can be inspected and copied at the offices of the New York Stock
Exchange ("NYSE"), 20 Broad Street, New York, New York 10005, on which the
Common Stock of the Company (symbol: "CCU") is listed.
This Prospectus, which constitutes a part of a Registration Statement filed
by the Company with the Commission under the Securities Act, omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company and the Common Stock offered hereby.
Statements contained herein concerning provisions of any document are not
necessarily complete, and each statement is qualified in its entirety by
reference to the copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
into this Prospectus and made a part hereof:
i. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, dated March 29, 1996, as amended by Form 10-K/A, dated
April 19, 1996.
ii. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1995, dated May 15, 1996.
iii. The Company's Current Report on Form 8-K dated May 24, 1996.
iv. The Company's Current Report on Form 8-K dated May 26, 1995, as
amended by Form 8-K/A dated July 27,1995.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. To the extent that any
proxy statement is incorporated by reference herein, such incorporation shall
not include any information contained in such proxy statement which is not,
pursuant to the Commission's rules, deemed to be "filed" with the Commission or
subject to the liabilities of Section 18 of the Exchange Act.
30
<PAGE> 32
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits, unless such exhibits are specifically incorporated
by reference). Requests for such copies should be directed, to Randall Mays,
Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio,
Texas 78216 (telephone: (210) 822-2828).
31
<PAGE> 33
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Capitalization........................ 9
Use of Proceeds....................... 10
Price Range of Common Stock........... 10
Dividend Policy....................... 10
Selected Financial Information........ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 14
Description of Capital Stock.......... 26
Underwriting.......................... 28
Legal Opinions........................ 29
Experts............................... 29
Available Information................. 30
Incorporation of Certain Documents by
Reference........................... 30
- --------------------------------------------
- --------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
2,500,000 SHARES
CLEAR CHANNEL
COMMUNICATIONS, INC.
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses (other than underwriting discounts and commissions)
in connection with the issuance and distribution of the Common Stock registered
hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $70,466
NASD filing fee................................................... $20,936
NYSE listing fee.................................................. *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Blue Sky fees and expenses........................................ *
Printing and engraving expenses Miscellaneous..................... *
-------
Total................................................... *
</TABLE>
- ---------------
* Estimated.
The foregoing expenses will be paid by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides for
indemnification of directors and officers in certain circumstances. In addition,
the Texas Miscellaneous Corporation Law provides that a corporation may amend
its Articles of Incorporation to provide that no director shall be liable to the
registrant or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, provided that the liability of a director
is not eliminated or limited (i) for any breach of the director's duty of
loyalty to the registrant or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) any transaction from which such director derived an improper personal
benefit, or (iv) an act or omission for which the liability of a director is
expressly provided by an applicable statute. The registrant has amended its
Articles of Incorporation and added Article Eleven adopting such limitations on
a director's liability. The registrant's Articles of Incorporation also provide
in Article Nine, for indemnification of directors or officers in connection with
the defense or settlement of suits brought against them in their capacities as
directors or officers of the Company, except in respect of liabilities arising
from gross negligence or willful misconduct in the performance of their duties.
Article IX(8) of the registrant's bylaws provides for indemnification of
any person made a party to a proceeding by reason of such person's status as a
director, officer, employee, partner or trustee of the Company, except in
respect of liabilities arising from negligence or misconduct in the performance
of their duties.
The Underwriting Agreement provides for indemnification by the Underwriters
of the registrant, its directors and officers, and by the registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Securities Act.
An insurance policy obtained by the registrant provides for indemnification
of officers and directors of the registrant and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
II-1
<PAGE> 35
ITEM 16. EXHIBITS
EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement.
2.1 Stock Purchase Agreement dated March 4, 1996, by and between US Radio
Station, L.P., Blackstone USR Capital Partners L.P., Blackstone USR Offshore
Capital Partners L.P., Blackstone Family Investment Partnership II L.P., BCP
Radio L.P., BCP Offshore Radio L.P., US Radio, Inc., Clear Channel
Communications of Memphis, Inc. and Clear Channel Communications, Inc.
(Incorporated by reference to the exhibits of the Company's Form 8-K dated
May 24, 1996).
2.2* Asset Purchase Agreement dated May 9, 1996, by and between REP New England.
G.P., REP Southeast G.P., REP Ft. Myers G.P., REP Rhode Island G.P., REP
Florida G.P., REP WHYN G.P., REP WWBB G.P., S.E. Licensee G.P., REP WCKT
G.P., RI Licensee G.P., Radio Station Management, Inc., Clear Channel Radio,
Inc. and Clear Channel Radio Licenses, Inc.
2.3* Asset Purchase Agreement dated April 12, 1996 by and between CBS, Inc.,
Clear Channel Television, Inc., Clear Channel Television Licenses, Inc. and
Clear Channel Communications, Inc.
5* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of KPMG.
23.5* Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in opinion
filed as Exhibit 5).
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions
II-2
<PAGE> 36
set forth or described in Item 15 of the Registration Statement, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Exchange Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Exchange Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 37
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SAN ANTONIO, STATE OF TEXAS, ON MAY 24, 1996.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ L. LOWRY MAYS
----------------------------------
L. Lowry Mays
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED BELOW.
<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- ------------------------------ -------------
<S> <C> <C>
/s/ L. LOWRY MAYS President, Chief Executive May 24, 1996
- --------------------------------------------- Officer and Director
L. Lowry Mays
/s/ HERBERT W. HILL, JR. Vice President/Controller May 24, 1996
- --------------------------------------------- (Principal Financial and
Herbert W. Hill, Jr. Accounting Officer)
/s/ ALAN D. FELD Director May 24, 1996
- ---------------------------------------------
Alan D. Feld
/s/ B.J. McCOMBS Director May 24, 1996
- ---------------------------------------------
B.J. McCombs
/s/ THEODORE H. STRAUSS Director May 24, 1996
- ---------------------------------------------
Theodore H. Strauss
/s/ JOHN H. WILLIAMS Director May 24, 1996
- ---------------------------------------------
John H. Williams
</TABLE>
II-4
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ---------------------------------------------------------------------- ------------
<C> <S> <C>
1 Form of Underwriting Agreement........................................
2.1 Stock Purchase Agreement dated March 4, 1996, by and between US Radio
Station, L.P., Blackstone USR Capital Partners L.P., Blackstone USR
Offshore Capital Partners L.P., Blackstone Family Investment
Partnership II L.P., BCP Radio L.P., BCP Offshore Radio L.P., US
Radio, Inc., Clear Channel Communications of Memphis, Inc. and Clear
Channel Communications, Inc. (Incorporated by reference to the
exhibits of the Company's Form 8-K dated May 24, 1996)................
2.2* Asset Purchase Agreement dated May 9, 1996, by and between REP New
England. G.P., REP Southeast G.P., REP Ft. Myers G.P., REP Rhode
Island G.P., REP Florida G.P., REP WHYN G.P., REP WWBB G.P., S.E.
Licensee G.P., REP WCKT G.P., RI Licensee G.P., Radio Station
Management, Inc., Clear Channel Radio, Inc. and Clear Channel Radio
Licenses, Inc. .......................................................
2.3* Asset Purchase Agreement dated April 12, 1996 by and between CBS,
Inc., Clear Channel Television, Inc., Clear Channel Television
Licenses, Inc. and Clear Channel Communications, Inc. ................
5* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. .................
23.1 Consent of Ernst & Young LLP..........................................
23.2 Consent of Ernst & Young LLP..........................................
23.3 Consent of Ernst & Young LLP..........................................
23.4 Consent of KPMG.......................................................
23.5* Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in
opinion filed as Exhibit 5)...........................................
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
2,500,000 Shares
Clear Channel Communications, Inc.
Common Stock
[FORM OF UNDERWRITING AGREEMENT]
___________, 1996
Alex. Brown & Sons Incorporated
CS First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
Clear Channel Communications, Inc. a Texas corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 2,500,000 shares of the Company's Common
Stock, $.10 par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to 250,000 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
As to the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option
Shares if you elect to exercise the over-allotment option in whole or in part
for the accounts of the several Underwriters. The Firm Shares and the Option
Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
<PAGE> 2
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters as follows:
(a) A registration statement of Form S-3 (File No.
33-______) with respect to the Shares has been carefully prepared by
the Company in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder and has been filed with the Commission
under the Act. The Company has complied with the conditions for the
use of Form S-3 or obtained a waiver thereof. Copies of such
registration statement, including any amendments thereto, and the
preliminary prospectuses (meeting the requirements of Rule 430A of the
Rules and Regulations), exhibits, financial statements and schedules
contained therein, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement,
together with any registration statement filed by the Company pursuant
to Rule 462(b) of the Act, herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has been declared effective by the Commission under
the Act and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. "Prospectus" means
the form of prospectus first filed by the Company with the Commission
pursuant to its Rule 424(b) and Rule 430A, or the last preliminary
prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the
Act that is delivered by the Company to the Underwriters for delivery
to purchasers of the Shares, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule
424(b)(7) under the Act. Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective as
contemplated by Rule 430A is herein referred to as a "Preliminary
Prospectus." Any reference herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein, as of the
date of such Preliminary Prospectus or Prospectus, as the case may be,
and, in the case of any reference herein to any Prospectus, also shall
be deemed to include any documents or portions thereof incorporated by
reference therein, and any supplements or amendments thereto, filed
with the Commission after the date of filing of the Prospectus under
Rules 424(b) and 430A, and prior to the termination of the offering of
the Shares by the Underwriters.
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Texas, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement
and to issue, sell and deliver the Firm Shares and the Option Shares
as herein contemplated.
<PAGE> 3
(c) Each of the subsidiaries of the Company as
contemplated pursuant to Item 601(b)(22) of Regulation S-K of the
Rules and Regulations (collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and corporate authority to own or lease its properties
and conduct its business as described in the Registration Statement.
The Subsidiaries are the only subsidiaries, direct or indirect, of the
Company.
(d) Except as indicated in Schedule II hereto, all of the
issued and outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company or another
Subsidiary, free and clear of any outstanding liens, encumbrances and
adverse claims, and, except as indicated on Schedule II hereto, no
options, warrants or other rights to purchase, agreements, or other
obligations to sell, transfer, dispose of or issue or other rights to
convert any obligations or interests of capital stock of any
Subsidiary are outstanding.
(e) The Company and each of the Subsidiaries are duly
qualified or licensed to transact business in all jurisdictions
(domestic and foreign) in which the conduct of their respective
businesses requires such qualification or licensing and in which the
failure, individually or in the aggregate, to be so qualified or
licensed could have a material adverse effect on the business,
operations or condition of the Company and the Subsidiaries taken as a
whole; and the Company and each of the Subsidiaries are in compliance
in all material respects with the laws, orders, rules, regulations and
directives issued or administered by such jurisdictions.
(f) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. The capital
stock of the Company, including the Shares, conforms to the
description thereof contained in the Registration Statement and
Prospectus, and the certificates for the Shares are in proper form.
(g) The Board of Directors of the Company has duly
adopted resolutions authorizing the issuance and sale of the Firm
Shares and the Option Shares by the Company; the Company has
authorized capitalization as set forth in the Registration Statement
and the Prospectus; all of the issued and outstanding shares of
capital stock, including Common Stock, of the Company have been duly
and validly authorized and issued and are fully paid and
nonassessable; and the Firm Shares and the Option Shares, when issued
and delivered to the Underwriters as contemplated hereby, will be duly
and validly authorized, fully paid, nonassessable and free and clear
of any lien, encumbrance, preemptive right or other adverse claim.
Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement
of the Company, enforceable against
3
<PAGE> 4
the Company in accordance with its terms except as rights to indemnity
and contribution hereunder may be limited by federal or state
securities laws and except as the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of
equity.
(i) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus relating to the
offering of the Shares nor instituted proceedings for that purpose.
The Registration Statement contains and the Prospectus and any
amendments or supplements thereto will contain all statements which
are required to be stated therein by, and in all respects conform or
will conform, as the case may be, to, the requirements of the Act and
the Rules and Regulations. The documents incorporated by reference in
the Registration Statement and the Prospectus pursuant to Item 12 of
Form S-3 under the Act, at the time they were filed with the
Commission, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the rules and regulations of the Commission thereunder, and any
additional documents deemed to be incorporated by reference in the
Registration Statement and the Prospectus pursuant to Item 12 of Form
S-3 under the Act will, when they are filed with the Commission,
comply in all material respects with the requirements of the Exchange
Act, and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the
Registration Statement nor any amendment thereto, and neither the
Prospectus nor any supplement thereto, including any documents
incorporated by reference therein, contains or will contain, as the
case may be, any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, or any documents
incorporated by reference therein, in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of
any Underwriter, specifically for use in the preparation thereof.
(j) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes and schedules as set
forth or incorporated by reference in the Registration Statement,
present fairly the consolidated financial position and results of
operations and cash flow of the Company and Subsidiaries, at the
indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of results for such periods have been made;
provided, however, as to unaudited financial information, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of the Company,
necessary for a fair statement of results. The summary financial and
statistical data included or incorporated by reference in the
Registration Statement presents fairly the information shown therein
and have been compiled on a basis consistent with the financial
statements presented therein and the books and
4
<PAGE> 5
records of the Company. The pro forma financial statements and other
pro forma financial information included in the Registration Statement
and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion
of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(k) Except for those license renewal applications of the
Company currently pending before the Federal Communications Commission
(the "FCC"), a description of which is set forth on Schedule II
hereto, there is no action or proceeding pending or, to the knowledge
of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency which might
result in any material adverse change in the business or condition of
the Company and the Subsidiaries taken as a whole.
(l) The Company and each of the Subsidiaries, as the case
may be, have good and marketable title to all of the properties and
assets reflected in the financial statements (or as described in the
Registration Statement) hereinabove described, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those (i)
reflected in such financial statements, (ii) described in the
Registration Statement, (iii) disclosed on Schedule II hereto or (iv)
which are not material in amount. The Company and the Subsidiaries
occupy their leased properties under valid and binding leases
conforming to the description thereof set forth in the Registration
Statement with such exceptions as are not material to the Company and
the Subsidiaries taken as a whole and do not materially interfere with
the use made and proposed to be made of such properties by the Company
and the Subsidiaries.
(m) The Company and the Subsidiaries have filed all
federal, state and foreign income and franchise tax returns which have
been required to be filed and have paid all taxes indicated by said
returns and all assessments received by them or any of them to the
extent that such taxes have become due. The Company has no knowledge
of any tax deficiency that has been or might be asserted against the
Company.
(n) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and
the Subsidiaries taken as a whole, or the earnings, business affairs,
management or business prospects of the Company and the Subsidiaries
taken as a whole, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into
by the Company or the Subsidiaries, other than transactions in the
ordinary course of business and changes and transactions described or
contemplated by the Registration Statement, as it may be amended or
supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Registration
Statement, as it may be amended or supplemented.
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<PAGE> 6
(o) Complete and accurate copies of all contracts and
other documents of the Company or any Subsidiary that are required,
under the Rules and Regulations, to be filed as exhibits to the
Registration Statement have been so filed or incorporated by
reference. Neither the Company nor any of the Subsidiaries is in
default under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it or any
of its properties is bound and which default is of material
significance in respect of the business or financial condition of the
Company and the Subsidiaries taken as a whole. The consummation of
the transactions herein contemplated and the fulfillment of the terms
hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party, or of the articles of
incorporation or bylaws of the Company or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or
of any regulatory body or administrative agency or other governmental
body having jurisdiction.
(p) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body, including, without
limitation, the FCC, in connection with the execution and delivery by
the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required
by the National Association of Securities Dealers, Inc. ("NASD") or
the New York Stock Exchange ("NYSE") or may be necessary to qualify
the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(q) The Company and each of the Subsidiaries holds all
licenses, certificates and permits from governmental authorities,
including, without limitation, the FCC, which are necessary to the
conduct of their respective businesses, and the Company and each of
the Subsidiaries are in compliance therewith. Except as indicated on
Schedule II, there are no license renewal applications of the Company
or any of the Subsidiaries currently pending before the FCC which have
been contested.
(r) Neither the Company nor any Subsidiary is aware of or
has received any notice of infringement of, or conflict or claimed
conflict with, asserted rights of others with respect to any licenses,
patents, patent rights, patent applications, inventions, trade
secrets, know-how, proprietary information or techniques, including
processes, trademarks, service marks, trade names, computer software
or copyrights, which infringement, conflict or claimed conflict is
material to the business of the Company and the Subsidiaries taken as
a whole.
(s) Ernst & Young LLP and KPMG, each of which have
certified certain of the financial statements filed with the
Commission as part of, and/or incorporated by reference in, the
Registration Statement, are independent public accountants as required
by the Act and the Rules and Regulations.
6
<PAGE> 7
(t) No person has the right, contractual or otherwise, to
cause the Company to issue to it, or register pursuant to the Act, any
securities of the Company upon the issue and sale of the Shares to the
Underwriters hereunder (or, if any person holds such a right, such
person has fully and irrevocably waived such right), nor does any
person have preemptive rights, rights of first refusal or other rights
to purchase any of the Shares.
(u) The Company has not taken and will not take, directly
or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the
Exchange Act, or otherwise, in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(v) Other than as discussed in the Registration Statement
and the Prospectus, neither the Company nor any Subsidiary is involved
or engaged in any material negotiations or discussions, or has any
agreement or understanding, with any other person or entity for the
acquisition of any stock, other securities, assets or operations of
such person or entity, which acquisition would be material to the
Company and its Subsidiaries taken as a whole.
(w) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or
affecting the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise), or prospects
of the Company and the Subsidiaries taken as a whole, whether or not
occurring in the ordinary course of business, and there has not been
any material transaction entered into or any material transaction that
is probable of being entered into by the Company or the Subsidiaries,
other than transactions in the ordinary course of business and changes
and transactions described in the Registration Statement, as it may be
amended or supplemented.
(x) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended ("1940 Act"), and the rules
and regulations of the Commission thereunder.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
[(z) The Company and each of its Subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective
7
<PAGE> 8
businesses and the value of their respective properties and as is
customary for companies engaged in similar industries.]
(aa) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"), no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"), and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
[(bb) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date
is later, or if the information reported or incorporated by reference
in the Prospectus, if any, concerning the Company's business with Cuba
or with any person or affiliate located in Cuba changes in any
material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the
Department.]
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set
forth, the Company agrees to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase at a price
of $_____ per share, the number of Firm Shares set forth opposite the
name of each Underwriter in Schedule I hereof, subject to adjustments
in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is
to be made in New York Clearing House funds by certified or bank
cashier's checks drawn to the order of the Company against delivery of
certificates therefor to the Representatives for the several accounts
of the Underwriters. Such payment and delivery are to be made at the
offices of Alex. Brown & Sons Incorporated, 135 East Baltimore Street,
Baltimore, Maryland, at 10:00 a.m., Baltimore time, on the third
business day after the date of this Agreement or at such other time
and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to
as the "Closing Date." (As used herein, "business day" means a day on
which the New York Stock Exchange is open for
8
<PAGE> 9
trading and on which banks in New York are open for business and not
permitted by law or executive order to be closed.) The certificates
for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives requests in writing not
later than the second full business day prior to the Closing Date, and
will be made available for inspection by the Representatives at least
one business day prior to the Closing Date.
(c) In addition, on the basis of representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the several
Underwriters to purchase the Option Shares at the price per share as
set forth in the first paragraph of this Section 2. The option
granted hereby may be exercised in whole or in part by giving written
notice only once at any within 30 days after the date of this
Agreement, by you, as Representatives of the several Underwriters, to
the Company, setting forth the number of Option Shares as to which the
several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the
time and date at which such certificates are to be delivered. The
time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be
earlier than three nor later than ten full business days after the
exercise of such option, nor in any event prior to the Closing Date
(such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days
before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the
total number of Option Shares being purchased as the number of Firm
Shares being purchased by such Underwriter bears to the total number
of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters. You, as Representatives of
the several Underwriters, may cancel such option at any time prior to
its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in New
York Clearing House funds by certified or bank cashier's check drawn
to the order of the Company against delivery of certificates therefor
at the offices of Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland.
3. OFFERING BY THE UNDERWRITERS. It is understood that the
several Underwriters are to make a public offering of the Firm Shares as soon
as the Representatives deem it advisable to do so. The Firm Shares are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 2 hereof, the
Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters (the "AAU").
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<PAGE> 10
4. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) use its best efforts to
cause the Registration Statement to become effective or, if
the procedure in Rule 430A of the Rules and Regulations is
followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information
previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules
and Regulations, and (B) not file any amendment to the
Registration Statement or supplement to the Prospectus or
document incorporated by reference therein of which the
Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in
compliance with the Rules and Regulations, and (C) file on a
timely basis all reports and any definitive proxy or
information statements required to be filed by the Company
with the Commission subsequent to the date of the Prospectus
and prior to the termination of the offering of the Shares by
the Underwriters.
(ii) The Company will advise the Representatives
promptly (A) when the Registration Statement or any
post-effective amendment thereto shall have become effective,
(B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any
additional information, or (D) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) The Company will cooperate with the
Representatives in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions as the
Representatives may reasonably have designated in writing and
will make such applications, file such documents and furnish
such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify
as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company
will, from time to time, prepare and file such statements,
reports and other documents as are or may be required to
continue such qualifications in effect for so long a period as
the Representatives may reasonably request for distribution of
the Shares.
(iv) The Company will deliver to, or upon the
order of, the Representatives from time to time as many copies
of any Preliminary Prospectus as
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<PAGE> 11
the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during
the period when delivery of a Prospectus is required under the
Act, as many copies of the Prospectus in final form, or as
thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the
Representatives, at or before the Closing Date, four signed
copies of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will
deliver to the Representatives such number of copies of the
Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested),
including documents incorporated by reference therein but
without exhibits, and of all amendments thereto, as the
Representatives may reasonably request.
(v) The Company will comply with the Act, the
Rules and Regulations, the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated
in this Agreement and the Prospectus. If, during the period
in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements
therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading,
or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will
either (A) prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the
Prospectus or (B) prepare and file with the Commission an
appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus so that the
Prospectus as so amended or supplemented will not, in light of
the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with the law.
(vi) The Company will make generally available to
its security holders, as soon as it is practicable to do so,
but in any event not later than 15 months after the effective
date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning
statement shall satisfy the requirements of Section 11(a) of
the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made
available.
(vii) The Company will, for a period of five years
from the Closing Date, deliver or otherwise make available to
the Representatives copies of annual reports and copies of all
other documents, reports and information furnished by the
Company to its stockholders or filed with any securities
exchange pursuant to the requirements of such exchange or with
the Commission pursuant to the Act or the Exchange Act.
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<PAGE> 12
(viii) No offering, sale, short sale or other
disposition of any shares of Common Stock of the Company or
other securities convertible into or exchangeable or
exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 90
days after the date of this Agreement, directly or indirectly,
by the Company otherwise than hereunder or with the prior
written consent of Alex. Brown & Sons Incorporated, except
that the Company may, without such employee consent, grant
options or issue shares of Common Stock pursuant to the
Company's stock option plans.
(ix) The Company has caused L. Lowry Mays and B.J.
McCombs to furnish to you, on or prior to the date of this
Agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise
dispose of any shares of Common Stock of the Company or other
capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by such person or request the
registration for the offer or sale of any of the foregoing (or
as to which such person has the right to direct the
disposition of) for a period of 90 days after the date of this
Agreement, directly or indirectly, except with the prior
written consent of Alex. Brown & Sons Incorporated ("Lockup
Agreements").
(x) The Company shall apply the net proceeds from
the sale of the Shares as set forth in the Prospectus.
(xi) The Company shall not invest, or otherwise
use, the proceeds received by the Company from its sale of the
Shares in such a manner as would require the Company or any of
the Subsidiaries to register as an investment company under
the 1940 Act.
(xii) The Company will not take, directly or
indirectly, any action designed to cause or result in, or that
has constituted or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any
securities of the Company.
5. COSTS AND EXPENSES. Unless otherwise agreed to by the Company
and the Underwriters, the Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the AAU, the
Underwriters' Selling Memorandum, the Underwriters' Invitation Letter,
Questionnaire and Power of Attorney, the Listing Application, the preliminary
and final Blue Sky Survey and any supplements or amendments thereto; the filing
fees of the Commission; the filing fees and expenses (including legal fees and
disbursements) incident to securing any required review by the NASD of
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<PAGE> 13
the terms of the sale of the Shares; the listing fee of the New York Stock
Exchange; and the expenses, including the fees and disbursements of counsel for
the Underwriters, incurred in connection with the qualification of the Shares
under state securities or Blue Sky laws. The Company shall not, however, be
required to pay for any of the Underwriters' expenses (other than those related
to qualification of the Shares under NASD regulation and state securities or
Blue Sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by
reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on its part to be performed, unless such failure
to satisfy such condition or to comply with said terms be due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder, but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares or other special or consequential
damages.
6. CONDITIONS TO OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date are subject to the
accuracy, as of the Closing Date or the Option Closing Date, as the case may
be, of the representations and warranties of the Company contained herein, and
to the performance by the Company of its respective covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall
have been made, and any request of the Commission for additional
information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order
suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued, and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company,
shall be contemplated by the Commission, and no injunction,
restraining order, or order of any nature by a federal or state court
of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the
opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., special counsel
to the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it
may be relied upon by counsel to the Underwriters) to the effect that:
(i) The Company is validly existing as a
corporation in good standing under the laws of the State of
Texas, with corporate power and authority to own or
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<PAGE> 14
lease its properties and conduct its business as described in
the Registration Statement and the Prospectus;
(ii) Each of the Subsidiaries is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its properties and conduct its business as
described in the Registration Statement and Prospectus;
(iii) All of the issued and outstanding shares of
capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable and are owned by the Company or another
Subsidiary; and, to the best of such counsel's knowledge,
except (A) as reflected in the Company's financial statements,
(B) as described in the Registration Statement or (C) as
disclosed on Schedule II hereto, such shares are so owned free
and clear of any pledge, lien, charge, encumbrance, security
interest or other adverse claim, and there are no outstanding
rights, subscriptions, warrants, calls, preemptive rights,
options or agreements of any kind with respect to the capital
stock of any of the Subsidiaries;
(iv) The Company and each of the Subsidiaries are
duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such
qualification, except in which the failure to qualify would
not have a material adverse effect upon the business of the
Company and the Subsidiaries taken as a whole;
(v) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization"
in the Registration Statement and the Prospectus; the
outstanding shares of capital stock, including the Common
Stock, of the Company have been duly authorized and validly
issued and are fully paid and nonassessable; the capital stock
of the Company, including the Shares, conforms in all material
respects to the description thereof contained in the
Registration Statement and the Prospectus; the certificates
for the Shares are in due and proper form; the Firm Shares and
the Option Shares, if any, to be sold by the Company pursuant
to this Agreement have been duly authorized and will be
validly issued, fully paid and nonassessable when issued and
paid for as contemplated by this Agreement; no preemptive
rights of shareholders exist with respect to any of the Shares
or the issue and sale thereof; and the Underwriters have
acquired good and marketable title to the Shares being sold by
the Company on the Closing Date and Option Closing Date, if
any, free and clear of all claims, liens, encumbrances and
adverse claims whatsoever;
(vi) The Registration Statement, all Preliminary
Prospectuses, the Prospectus and each amendment or supplement
thereto and document incorporated by reference therein comply
as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the applicable
rules and regulations thereunder (except that such counsel
need express no opinion as to the
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<PAGE> 15
financial statements, schedules and other financial
information included or incorporated by reference therein);
(vii) The Registration Statement has become
effective under the Act and, to the best of such counsel's
knowledge, no stop order proceedings with respect thereto have
been instituted or are pending or threatened under the Act;
(viii) To the best of such counsel's knowledge,
there are no contracts, licenses, agreements, leases or other
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required,
and such contracts, licenses, agreements, leases and documents
as are summarized in the Registration Statement or the
Prospectus are fairly summarized in all material respects;
(ix) To the best of such counsel's knowledge,
there are no material legal proceedings pending or threatened
against the Company or any of the Subsidiaries except as set
forth in the Registration Statement and the Prospectus;
(x) To the best of such counsel's knowledge,
there are no material legal proceedings pending or threatened
against any of the Company's or any Subsidiary's directors or
officers relating in any way to their status or service as
directors or officers, as the case may be, except as set forth
in the Registration Statement and the Prospectus;
(xi) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
do not and will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under,
the articles of incorporation or bylaws of the Company, or any
agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound, or under any
federal, state or local law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the
Subsidiaries;
(xii) This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable against the
Company in accordance with its terms except as rights to
indemnity and contribution hereunder may be limited by federal
or state securities laws and except as the enforceability
hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and by general principles of
equity;
(xiii) No approval, license, consent, order,
authorization, designation, declaration or filing by or with
any regulatory, administrative or other governmental body is
necessary in connection with the execution and delivery of
this Agreement
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<PAGE> 16
and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or NYSE or as
required by state securities and Blue Sky laws as to which
such counsel need express no opinion) except such as have been
obtained or made and is in full force and effect;
(xiv) To the best of such counsel's knowledge, the
Company and each of the Subsidiaries have all necessary and
material licenses (excluding those issued or issuable by the
FCC), certificates, permits, authorizations, consents and
approvals and have made all necessary filings required under
any federal, state, local or international law, regulation or
rule and have obtained all necessary authorizations, consents
and approvals from other persons which are necessary in order
to conduct their respective businesses as described in the
Registration Statement and the Prospectus, except where the
failure to have such licenses, authorizations, consents or
approvals or the failure to do so, would not have a material
adverse effect on the Company and the Subsidiaries taken as a
whole, and to the best of such counsel's knowledge, neither
the Company nor any of the Subsidiaries is in violation of, or
in default under, any license, (excluding those issued or
issuable by the FCC) certificates, permits, authorization,
consent or approval or any law, regulation or rule or any
decree, order or judgment applicable to the Company or the
Subsidiaries, where such violation or default could have a
material adverse effect on the Company and the Subsidiaries
taken as a whole;
(xv) To such counsel's knowledge, no person holds
a right, contractual or otherwise, to cause the Company to
register, pursuant to the Act, any securities of the Company
upon the issuance and sale of its Shares to the Underwriters
hereunder or, if any person holds such aright, such person has
fully and irrevocably waived such right;
In rendering such opinion, Akin, Gump, Strauss, Hauer & Feld,
L.L.P. may rely as to matters governed by the laws of states other
than Texas or federal laws on local counsel in such jurisdictions,
provided that in each case Akin, Gump, Strauss, Hauer & Feld, L.L.P.
shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the
matters set forth above, such opinion shall also include a statement
to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, at
the time it became effective under the Act (but after giving effect to
any modifications incorporated therein pursuant to Rule 430A under the
Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in light of the
circumstances under which they are made, not misleading (except that
such counsel need express no view as to financial statements,
16
<PAGE> 17
schedules or statistical or financial information contained or
incorporated by reference therein). With respect to such statement,
Akin, Gump, Strauss, Hauer & Feld, L.L.P. may state that their belief
is based upon the procedures set forth therein, but is without
independent check and verification.
(c) The Underwriters shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of
Wiley, Rein & Fielding, special communications counsel for the
Company, dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters to the effect that:
(i) No consent, approval, authorization or order
of, or filing or declaration with, the FCC is required for or
in connection with the authorization, issuance, transfer, sale
or delivery of the Shares by the Company as described in the
Prospectus assuming that (A) no individual or entity will
acquire an attributable ownership interest in the Company as
that term is defined by the FCC; and (B) less than 25% of the
capital stock of the Company will be owned by alien
individuals or entities; provided, however, certain of the
transaction documents may be subject to a requirement that
they be filed with the FCC pursuant to Section 73.3613 of its
rules following the execution of such transaction documents.
(ii) The authorization, issuance, transfer, sale
and delivery of the Shares by the Company as described in the
Prospectus will not result in a breach or violation of any
term or provision of the Communications Act, or any orders,
rules or regulations of the FCC, assuming that (A) no
individual or entity will acquire an attributable ownership
interest in the Company as that term is defined by the FCC;
and (B) less than 25% of the capital stock of the Company will
be owned by alien individuals or entities.
(iii) Except as noted in Schedule II hereto, the
Company and the Subsidiaries hold valid authorizations from
the FCC ("Licenses") for the U.S. radio stations and
television stations (collectively, the "Stations") identified
in the Prospectus, and all of the Licenses are in full force
and effect. To counsel's knowledge, the Licenses contain no
materially burdensome restrictions not customarily imposed by
the FCC on radio or television stations of the same class and
type.
(iv) Except as noted in Schedule II hereto, to
such counsel's actual knowledge, the operation of the Stations
in the manner and to the full extent now operated is in
material compliance with the Licenses, the Communications Act
and the rules, regulations and policies promulgated by the
FCC.
(v) Except as noted in Schedule II hereto, to
such counsel's actual knowledge, other than rule-making
proceedings or similar proceedings of general applicability to
the radio and television broadcasting industry, no event has
occurred
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<PAGE> 18
which permits (nor has an event occurred which with notice or
lapse of time or both would permit) the revocation or
termination of the Licenses or which might result in any other
material impairment of the rights of the Company or the
Subsidiaries.
(vi) Except as noted in Schedule II hereto, to
such counsel's actual knowledge, the Company and the
Subsidiaries are in material compliance with all statutes,
orders, rules or regulations of the FCC relating to or
affecting the broadcasting operations of the Stations
generally.
(vii) Except as noted in Schedule II hereto, to
such counsel's actual knowledge, other than rule making
proceedings or similar proceedings of general applicability to
the radio and television broadcasting industry, there is no
action, suit, or proceeding pending or threatened against or
affecting the Company or any of the Subsidiaries which might
materially and adversely impact or cause substantial
disruption of the broadcasting operations of the Stations
generally.
(viii) Those portions of the Prospectus under the
caption "Risk Factors -- Government Regulation" and "Business
-- Federal Regulation of Television and Radio Broadcasting,"
in the Company's Annual Report on Form 10-K incorporated
therein by reference, under the captions, "Item 1. Business -
Licenses, Renewals and Ownership" and "Item 1. Business -
Proposed Legislation and Regulations" are accurate and fairly
present the information regarding the Licenses. These
portions also accurately describe in general terms the types
of issues that are of concern to and subject to the
jurisdiction of the FCC.
(ix) The description of completed and pending
acquisitions of the Company and the Subsidiaries under the
caption "Recent Developments" in the Prospectus Summary is
accurate and complete.
(d) The Representatives shall have received from Wolin,
Fuller, Ridley & Miller LLP, counsel for the Underwriters, an opinion
dated the Closing Date or the Option Closing Date, as the case may be,
with regard to the Company, the Subsidiaries, the validity of the
Shares, the Registration Statement, the Prospectus and such other
matters as the Representatives may reasonably request. In rendering
such opinion, Wolin, Fuller, Ridley & Miller LLP may rely as to all
matters governed other than by the laws of the state of Texas or
federal laws on the opinion of counsel referred to in Paragraph (b) of
this Section 6. In addition to the matters set forth above, such
opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel which leads them to believe that
(i) the Registration Statement, or any amendment thereto, as of the
time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the
Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Prospectus,
or any supplement thereto, on the date it was filed pursuant to the
Rules
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<PAGE> 19
and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements, in light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to
financial statements, schedules or statistical or financial
information contained or incorporated by reference therein). With
respect to such statement, Wolin, Fuller, Ridley & Miller LLP may
state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
(e) The Representatives shall have received at or prior
to the Closing Date from Wolin, Fuller, Ridley & Miller LLP a
memorandum or summary, in form and substance satisfactory to the
Representatives, with respect to the qualification for offering and
sale by the Underwriters of the Shares under the state securities or
Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) You shall have received, on each of the dates hereof,
the Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof, the Closing Date or the Option Closing
Date, as the case may be, in form and substance satisfactory to you,
of Ernst & Young, L.L.P. confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules of the Company and U.S. Radio,
Inc. examined by them and incorporated in the Registration Statement
comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations; and containing such other statements and information as
is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration
Statement and Prospectus.
(g) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, a
certificate or certificates of the President and Chief Executive
Officer and the Vice President and Controller of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the
case may be, each of them severally represents as follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the
effectiveness of the Registration Statement has been issued,
and no proceedings for such purpose have been taken or are, to
the best of his knowledge, contemplated by the Commission;
(ii) To the best of his knowledge, the
representations and warranties of the Company contained in
Section 1 hereof are true and correct in all material respects
as of the Closing Date or the Option Closing Date, as the case
may be;
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<PAGE> 20
(iii) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the
effective date of the Registration Statement, the statements
contained in the Registration Statement were true and correct,
and such Registration Statement and Prospectus did not omit to
state a material fact require to be stated therein or
necessary in order to make the statements therein not
misleading and, since the effective date of the Registration
Statement, no event has occurred which should have been set
forth in a supplement to or an amendment of the Prospectus
which has not been so set forth in such supplement or
amendment;
(iv) To the best of his knowledge, since the
respective dates as of which information is given in the
Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a
prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, except as referred to in the
Registration Statement;
(v) There has been no material transaction
entered into by the Company or the Subsidiaries since December
31, 1995, other than the completed or contemplated
transactions referred to in the Prospectus, transactions in
the ordinary course of business and transactions as to which
the Underwriters have given their prior written consent ; and
(vi) No material legal or governmental proceeding
is pending or, to the best of his knowledge, threatened
against the Company or any of the Subsidiaries that is likely
to have a material adverse effect on the business, operations,
financial condition or prospects of the Company and the
Subsidiaries, taken as a whole.
(h) The Company shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained
herein and related matters as the Representatives may reasonably have
requested.
(i) The Firm Shares and Option Shares, if any, have been
approved for listing, subject to notice of issuance, on the New York
Stock Exchange.
(j) The Lockup Agreements described in Section 4(x) have
been executed and deliverd and are in full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Wolin, Fuller,
Ridley & Miller LLP, counsel for the Underwriters.
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<PAGE> 21
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to sell and deliver the portion of the Shares required to be
delivered as and when specified in this Agreement are subject to the conditions
that at the Closing Date or the Option Closing Date, as the case may be, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and in effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling person
may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or
incorporated by reference in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
and each such controlling person upon demand for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to a
subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a
party to any action or proceeding; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation
thereof, and provided further that the Company shall not be liable
with respect to any untrue statement contained in or any omission from
a Preliminary Prospectus if the untrue statement contained in or such
omission from such Preliminary Prospectus was corrected in the
applicable Prospectus and the person asserting any such loss,
liability, claim or damage was not given or sent a copy of the
applicable Prospectus (excluding the documents incorporated by
reference therein) in the manner and at such time as required by the
Act, providing the Company has furnished
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<PAGE> 22
you copies of such applicable Prospectus. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the
Act, against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances under which they were made, and will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability,
action or proceeding; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to
the Company by such Underwriter or through the Representatives on
behalf of such Underwriter specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 8, such person
(the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in
writing. No indemnification provided for in Section 8(a) or (b) shall
be available to any party who shall fail to give notice as provided in
this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party
or parties from any liability which it or they may have to the
indemnified party for contribution or otherwise than on account of the
provisions of Sections 8(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party
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<PAGE> 23
in the event (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel, or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such indemnified parties. Such firm
shall be designated in writing by you in the case of parties
indemnified pursuant to Section 8(a) and by the Company in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of
which indemnification may be sought hereunder (whether or not any
indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the
Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other
23
<PAGE> 24
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this Section 8(d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 8(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), (i) no
Underwriter shall be required to contribute any amount in excess of
the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations
in this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any
supplement or amendment thereto, each party against whom contribution
may be sought under this Section 8 hereby consents to the jurisdiction
of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or
it by any other contributing party and consents to the service of such
process and agrees that any other contributing party may join him or
it as an additional defendant in any such proceeding in which such
other contributing party is a party.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and
pay for the portion of the Shares which such Underwriter has agreed to purchase
and pay for on such date (otherwise than by reason of any default on the part
of the Company), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company such amounts as
may be agreed upon and upon the terms set forth herein, of the Firm Shares or
Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as
Representatives, shall not have procured such other Underwriters, or any
others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of shares with respect to which such default shall
occur does not exceed 10% of the Firm Shares or Option Shares, as the case may
be, covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of Firm Shares or Option Shares,
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<PAGE> 25
as the case may be, with respect to which such default shall occur, exceeds 10%
of the Firm Shares or Option Shares, as the case may be, covered hereby, the
Company or you, as the Representatives of the Underwriters, will have the
right, by written notice given within the next 36-hour period to the parties to
this Agreement, to terminate this Agreement without liability on the part of
the nondefaulting Underwriters or of the Company except to the extent provided
in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option
Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. NOTICES. All communications hereunder shall be in writing
and, except as otherwise provided herein, will be mailed, delivered, telecopied
or telegraphed and confirmed as follows: if to the Underwriters, to Alex.
Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland
21202, Attention: Mr. Jeffrey Amling; with a copy to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202, Attention:
General Counsel; if to the Company, to Clear Channel Communications, Inc., 200
Concord Plaza, Suite 600, San Antonio, Texas 78216, Attention: Mr. Randall
Mays, Vice President.
11. TERMINATION. This Agreement may be terminated by you by
notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the
Shares are released by you for sale by notice to the Underwriters, or
(ii) 11:30 a.m., Baltimore, Maryland time, on the first business day
following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole, whether or not arising
in the ordinary course of business; (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make
it impracticable to market the Shares or to enforce contracts for the
sale of the Shares; (iii) suspension of trading in securities
generally on the New York Stock Exchange or limitation on prices
(other than limitations on hours or numbers of days of trading) for
securities on such exchange; (iv) the enactment, publication, decree
or other promulgation of any statute, regulation, rule or order of any
court or other governmental authority which
25
<PAGE> 26
in your opinion materially and adversely affects or may materially or
adversely affect the business or operations of the Company; (v)
declaration of a banking moratorium by either United States or New
York State authorities; (vi) the suspension of trading of the
Company's Common Stock by the Commission or the New York Stock
Exchange; or (vii) the taking of any action by any governmental body
or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS. This Agreement has been and is made solely for
the benefit of the Underwriters and the Company and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS. The Company and the
Underwriters acknowledge and agree that the only information furnished or to be
furnished by any Underwriter to the Company for inclusion in any Prospectus or
the Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or its directors or officers, and
(c) delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
26
<PAGE> 27
Very truly yours,
CLEAR CHANNEL COMMUNICATIONS, INC.
By:
----------------------------------
Authorized Officer
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
ALEX. BROWN & SONS INCORPORATED
CS FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:
----------------------------------
Authorized Officer
27
<PAGE> 28
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
---------------------
Underwriter to be Purchased
----------- ---------------
Alex. Brown & Sons Incorporated
CS First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers, Inc.
_________
Total 2,500,000
=========
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the references to our firm under the captions "Selected
Financial Information" and "Experts" in the Registration Statement (Form S-3 No.
33- ) and related Prospectus of Clear Channel Communications, Inc. for
the registration of 2,750,000 shares of its common stock and to the
incorporation by reference therein of our reports dated February 16, 1996, and
March 25, 1996, with respect to the consolidated financial statements of Clear
Channel Communications, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1995 and the related financial
statement schedules included therein, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
May 23, 1996
San Antonio, Texas
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 4, 1996, with respect to the consolidated
financial statements of US Radio, Inc. incorporated by reference in the
Registration Statement (Form S-3) and related Prospectus of Clear Channel
Communications, Inc. for the registration of 2,750,000 shares of its common
stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 1995, with respect to the combined
financial statements of Ragan Henry Communications Group, L.P., US Radio, L.P.
and US Radio Stations, L.P. incorporated by reference in the Registration
Statement (Form S-3) and related Prospectus of Clear Channel Communications,
Inc. for the registration of 2,750,000 shares of its common stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF KPMG
Board of Directors
Clear Channel Communications, Inc.
We consent to the incorporation by reference in the registration statement
on Form S-3 of Clear Channel Communications, Inc. of our report dated 12
February 1996, with respect to the consolidated balance sheet for the Australian
Radio Network Pty Limited and its controlled entities as at 31 December 1995 and
the related consolidated profit and loss account and statement of cash flows for
the year then ended.
Additionally, we consent to the incorporation by reference in the
aforementioned registration statement of our reports dated 25 July 1995, with
respect to the consolidated balance sheet of Wesgo Limited and its controlled
entities as at 30 June 1994 and 31 December 1994, and the related consolidated
profit and loss accounts and statements of cash flows for the year ended 30 June
1994 and for the six month period ended 31 December 1994 respectively, and with
respect to the combined balance sheets of Albert's radio stations, acquired by
the Australian Radio Network Pty Limited, as at 30 June 1994 and 31 December
1994, and the related combined profit and loss accounts and statement of cash
flows for the year ended 30 June 1994 and for the six month period ended 31
December 1994 respectively, which reports appear in the Form 8-K/A of Clear
Channel Communications, Inc. dated 27 July 1995.
Finally we consent to the references to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG
Sydney, Australia
21 May 1996
